EXHIBIT 13.1


                        1997 ANNUAL REPORT, AS CORRECTED

STOCK LISTING AND TRADING INFORMATION

The common stock of E.W. Blanch Holdings, Inc. is traded on the New York Stock
Exchange under the symbol "EWB". The following table sets forth the high, low
and closing prices and the amounts of cash dividends per common share for E.W.
Blanch Holdings, Inc. common stock for each quarter of 1997 and 1996.

--------------------------------------------------------------------------------
                                  1997 MARKET PRICE                   DIVIDENDS
QUARTER ENDED            HIGH            LOW            CLOSE         PER SHARE
--------------------------------------------------------------------------------
March 31                23 1/4         19 3/4            22 3/8         $0.10
June 30                 27 1/8             22          26 11/16         $0.10
September 30            31 7/8         26 3/4          30 15/16         $0.10
December 31            35 9/16             30           34 7/16         $0.10
Year                                                                    $0.40
--------------------------------------------------------------------------------

--------------------------------------------------------------------------------
                                  1996 MARKET PRICE                   DIVIDENDS
QUARTER ENDED            HIGH           LOW            CLOSE          PER SHARE
--------------------------------------------------------------------------------
March 31                25 1/2         19              20               $0.10
June 30                 22 5/8         19 1/2          19 7/8           $0.10
September 30            21 1/4         17 3/4          19 1/4           $0.10
December 31             21 1/8         18              20 1/8           $0.10
Year                                                                    $0.40
--------------------------------------------------------------------------------

As of December 31, 1997 there were 266 registered shareholders of E.W. Blanch
Holdings, Inc. common stock.

<PAGE>


SIX YEAR FINANCIAL SUMMARY

<TABLE>
<CAPTION>

Year Ended December 31
(dollars in thousands, except per share amounts)                    1997       1996        1995      1994       1993       1992
---------------------------------------------------------------------------------------------------------------------------------
<S>                                                               <C>        <C>        <C>        <C>        <C>        <C>     
OPERATING RESULTS:
Revenues:
Brokerage commissions and fees                                    $158,103   $101,905   $ 87,203   $ 75,917   $ 59,993   $ 51,792
Investment income                                                    8,694      7,133      7,733      4,801      4,681      3,696
---------------------------------------------------------------------------------------------------------------------------------
Total revenues                                                     166,797    109,038     94,936     80,718     64,674     55,488

Expenses:
Salaries and benefits                                               75,908     44,762     39,738     32,458     27,401     24,956
Travel and marketing                                                13,681      7,569      6,112      4,914      4,102      3,509
General and administrative                                          29,711     20,387     15,965     12,964     10,404     10,406
Amortization of goodwill                                             3,009      3,078      2,980      1,307        734        623
Interest and other expense                                           1,326        231        351        397        437        702
Restructuring charge (4)                                              --       22,750       --         --         --         --
---------------------------------------------------------------------------------------------------------------------------------
Total expenses                                                     123,635     98,777     65,146     52,040     43,078     40,196
---------------------------------------------------------------------------------------------------------------------------------

Income before taxes (4)                                             43,162     10,261     29,790     28,678     21,596     15,292

Income taxes (1)                                                    17,008      3,970     11,584     11,615      8,623      6,055
---------------------------------------------------------------------------------------------------------------------------------
Net income before minority interest                                 26,154      6,291     18,206     17,063     12,973      9,237
Minority interest, net of tax                                          451       --         --         --         --         --
---------------------------------------------------------------------------------------------------------------------------------
Net income (1) (4)                                                $ 25,703   $  6,291   $ 18,206   $ 17,063   $ 12,973   $  9,237
---------------------------------------------------------------------------------------------------------------------------------
PER COMMON SHARE:
Net income - basic (1) (2) (4) (5)                                $   2.03   $   0.48   $   1.34   $   1.22   $   0.97   $   0.75
Net income - assuming dilution (1) (2) (4) (5)                        1.99       0.48       1.34       1.22       0.97       0.75
Cash dividends (3)                                                    0.40       0.40       0.40       0.32       0.08       --
Book value (2)                                                        6.08       5.16       5.05       3.88       4.13       1.25
---------------------------------------------------------------------------------------------------------------------------------
BALANCE SHEET:
Current assets                                                      51,381   $ 35,840   $ 25,055   $ 17,836   $ 11,962   $  4,699
Long-term investments                                               14,939      9,793      7,035     15,837     37,519        550
Goodwill, net (4)                                                   34,916     17,490     38,939     41,575     10,596      9,973
Total assets                                                       919,767    514,756    497,413    529,897    432,055    394,161
Current liabilities                                                 37,033     13,154     13,620     21,107      5,286      8,605
Long-term debt,
  less current portion                                              13,675      1,188        350        665        946      3,288
Shareholders' equity                                                76,452     68,453     66,679     52,908     58,276     15,343
---------------------------------------------------------------------------------------------------------------------------------
FINANCIAL RATIOS:
Profit margin (pre-tax) (4)                                             26%         9%        31%        36%        33%        28%
Return on average
  shareholders' equity (1) (4)                                          35          9         30         31         35         74
---------------------------------------------------------------------------------------------------------------------------------
OTHER:
Weighted average number of
shares outstanding (000) (2) (5)
   Basic                                                            12,656     13,220     13,558     14,007     13,436     12,300
   Assuming dilution                                                12,945     13,230     13,590     14,007     13,436     12,300
Number of shares outstanding
  at year-end (000) (2)                                             12,580     13,260     13,208     13,647     14,115     12,300
Number of employees at year-end                                      1,130        648        566        603        349        329
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>

(1) Prior to the May 1993 initial public offering, the Company operated as a
    partnership and therefore was not liable for corporate income taxes. Pro
    forma income taxes (unaudited) of $3.5 million, and $6.1 million have been
    included in income taxes for the years ended December 31, 1993 and 1992,
    respectively to illustrate what the tax consequences would have been had the
    partnership been subject to corporate income taxes.

(2) Assumes 12.3 million shares of common stock issued and outstanding prior to
    the May 1993 reorganization from a partnership to a corporation.

(3) Regular quarterly cash dividend of $0.08 per share initiated fourth quarter
    1993; increased to $0.10 first quarter 1995. Cash dividends were declared
    and paid in the same fiscal year.

(4) A $22.75 million charge was recognized in 1996 to reflect the restructuring
    of the San Antonio based managing general agency operation. The charge
    includes a $19.5 million write-down of goodwill as well as a $3.25 million
    reserve for office lease and other related restructuring expenses. Prior to
    the restructuring charge, certain 1996 operating results were: Income before
    taxes, $33.0 million; Net income, $20.2 million; Net income per share,
    $1.53; Profit margin (pre-tax), 30%; and Return on average shareholders'
    equity, 27%.

(5) The earnings per share amounts prior to 1997 have been restated as required
    to comply with Statement of Financial Standards No. 128, EARNINGS PER SHARE.
    For further discussion of earnings per share and the impact of Statement No.
    128, see the notes to the consolidated financial statements.

<PAGE>


MANAGEMENT'S DISCUSSION AND ANALYSIS

GENERAL

Recent Developments
E.W. Blanch Holdings, Inc. and subsidiaries ("the Company") is a leading
provider of integrated risk management and distribution services including
reinsurance and insurance intermediary services, risk management consulting and
administration services, primary insurance distribution services, and financial
and pension consultancy services.

         In February 1997, the Company purchased a 70% interest in Swire Fraser
Insurance (Holdings) Limited ("Swire Fraser") resulting in an additional 20%
interest in the Swire Blanch joint venture. The combined operations of Swire
Fraser and Swire Blanch operate under the Swire Blanch name, which is owned 70%
by the Company and 30% by Swire Pacific Limited ("Swire Pacific"). The
consideration for the purchase included the assumption of certain existing
indebtedness of (pound)6.2 million ($10.2 million at purchase date) and a cash
payment of (pound)1.8 million ($2.9 million).

         In February 1997, the Company purchased 750,000 shares of its common
stock, at a negotiated price of $19.40 per share, from its Chairman and Chief
Executive, E.W. Blanch, Jr. Total consideration was $14.6 million. As part of
the stock repurchase agreement, Mr. Blanch has agreed that he will not make any
open market or private sales of his remaining stock for at least a two-year
period, except with the approval of a select committee of the Company's outside
directors.

         As part of the restructuring of its primary insurance distribution
operations, the Company completed the sale of its premium finance business in
February 1997. The Company received $15.1 million in exchange for the
outstanding stock of the premium finance subsidiaries. The net proceeds equaled
the Company's investment in the business, resulting in no gain or loss from the
transaction.

         The Company has signed an agreement to purchase Walbaum Americana, S.A.
("Walbaum") a leading provider of insurance and reinsurance intermediary
services in Latin America, based in Buenos Aires, Argentina. Walbaum had $3.5
million of revenues in 1996. The Company expects this transaction to be
completed in the second quarter of 1998.

         During 1998, the Company will begin consolidating its international
corporate headquarters in Dallas, Texas. Currently senior management is located
in Minneapolis, Dallas and London. The Company believes the costs associated
with this change will not be material.

NATURE OF BUSINESS

Risk Management Services
As a reinsurance intermediary, the Company structures and arranges reinsurance
between insurers seeking to cede insurance risk and reinsurers willing to assume
such risk. The Company's revenue is comprised primarily of reinsurance brokerage
which is generally based either upon a percentage of reinsurance premiums placed
or a negotiated fee. In either case, the remuneration varies with the level of
ceded premium, the type of reinsurance contract, the expected frequency of loss,
and the effective date and duration of the contract.

<PAGE>


         Reinsurance continues to be an important part of the strategy of
insurance companies to manage exposure on insured risks in order to achieve
their financial objectives. Market factors, including the level of surplus
capacity in the insurance and reinsurance markets, prevailing premium rates,
underwriting experience, regulatory considerations, changes in the investment
environment, and general economic conditions and business trends, affect the
amount of reinsurance brokerage received by the Company. The Company seeks to
mitigate the effect of these market factors by diversifying its products
available for its clients, along with establishing long-term relationships with
a diverse group of insurance companies, and providing these insurance companies
with solutions to their risk management problems and the best possible
reinsurance services. The Company believes it is well positioned to take
advantage of opportunities to grow its reinsurance intermediary business.

         The Company provides reinsurance intermediary services to both domestic
and international insurance companies. As discussed above, in February 1997, the
Company purchased 70% of Swire Fraser and increased its ownership in the Swire
Blanch joint venture to 70%. This transaction is expected to provide increased
opportunities for international growth.

         The Company provides risk management consulting and administration
services to insurance and reinsurance companies, government entities,
underwriting facilities and other interested parties. The Company also licenses
a reinsurance software system. Such services are generally provided as part of
the Company's core reinsurance intermediary services, as well as directly to
third parties.

         The Company plans to continue to expand the development of its risk
management capabilities through the continued expansion of its catastrophe
consulting and modeling services and other technology-based services.

Primary Insurance Distribution Services
The Company provides wholesale insurance services to retail insurance agents on
behalf of primary insurance companies through its domestic operations. These
services, reported as program policy and distribution fees and general agency
operations, include underwriting and claims processing, and enable the Company's
independent insurance agent clients to access a variety of insurance companies
and products. In addition, the Company develops, markets, quotes, and processes
specialized insurance programs for targeted insurance companies and its
independent insurance agent clients. Through the wholesale distribution
mechanism, the Company believes that insurance companies are able to produce new
lines of business in various geographic locations without incurring high
start-up costs.

Financial and Pension Consultancy Services
Through Swire Blanch, the Company provides independent advice on various aspects
of the financial services industry, including the design, administration and
financial control of employee benefits packages, personal financial planning and
pension fund administration. These services are provided, outside of the United
States, to individuals, professional intermediaries, owner-managed businesses
and corporations of all sizes. The Company plans to continue to develop these
services.

<PAGE>


Investment Income
The Company's investment income is derived from two sources: fiduciary
investments and corporate investments. As an intermediary, the Company acts as a
conduit for insurance and reinsurance premiums and loss payments which are paid
to and remitted from fiduciary accounts. Under applicable regulations, the
Company is required to hold fiduciary funds in appropriate bank and investment
accounts subject to restrictions on withdrawals and prohibitions on commingling.
The Company earns investment income on funds held in these accounts. Corporate
investment income represents interest and dividends earned on the investment of
the Company's capital, which is primarily generated through cash from
operations. Capital gains and losses may be realized from sales of the Company's
investments. The Company sold its premium finance business, previously a part of
the Company's primary insurance distribution operation, in February 1997.

Year 2000 Compliance
The Company has performed an assessment of its Year 2000 issues and is in the
process of implementing steps to ensure Year 2000 compliance. The Company
expects to complete the Year 2000 compliance process for its current software by
December 31, 1998. The Company's investment in new software includes the
requirements associated with Year 2000 compliance. Certain costs associated with
the purchase or development of new software which is Year 2000 compliant are
being capitalized. All other costs are being expensed as incurred. The
additional investment to ensure all current software is Year 2000 compliant is
not expected to be material. The Company could be adversely affected by the Year
2000 issue if other entities (i.e., clients and vendors) not affiliated with the
Company do not adequately address their own Year 2000 compliance issues.

Seasonality
The Company historically has tended to realize a greater amount of its annual
brokerage revenue and net income in the first and third quarters due primarily
to semi-annual deposits on property catastrophe reinsurance contracts and the
prevalence of January and July effective dates on such contracts. In 1997, due
to softer market conditions, quarterly deposits became more frequent, which
should have a smoothing effect on the Company's quarterly results. The Company's
risk management consulting and administration, wholesale, and financial and
pension consulting businesses, as well as certain larger transactions, are
generally not seasonal in nature. Based upon these factors and current business
opportunities, and given the increased significance of these non-seasonal
revenue sources to the Company's business, management believes that historical
quarterly results may not be indicative of future period results.

<PAGE>


Geographic Segment Information
Due to the integrated nature of the Company's risk management and distribution
business, and because the primary insurance distribution operations after
restructuring are no longer significant, the Company has discontinued its
financial reporting by business segment. Current year operations reflect the
operations from the Swire Blanch acquisition discussed above on a consolidated
basis from the date of acquisition, due to the Company's 70% controlling
interest. Prior year results of foreign operations include only the equity in
the income of the Swire Blanch international reinsurance intermediary, jointly
owned 50% by the Company and 50% by Swire Pacific. The following is a summary of
revenues and income before taxes by geographic area for the years ended December
31:

                                              Income
(in thousands)                Revenues     Before Taxes
--------------                --------     ------------
1997
Domestic operations           $128,959       $ 38,390
Foreign operations              37,912          4,772
Eliminations                       (74)            --
                          -------------------------------
                              $166,797       $ 43,162
                          ===============================

                                              Income
(in thousands)                Revenues     Before Taxes
--------------                --------     ------------
1996
Domestic operations           $108,955       $ 10,178
Foreign operations                  83             83
                          -------------------------------
                              $109,038       $ 10,261
                          ===============================

         Domestic operations include reinsurance intermediary services, risk
management consulting and administration services, program distribution
services, policy distribution capabilities, and the general agency operations.
All of these services, except general agency operations, are focused on
providing solutions for the management and distribution of risk to a client base
which is primarily comprised of property and casualty insurance companies. These
services are generally recurring and, due to the Company's expertise and the
value-added nature of its services, have been able to operate at relatively
higher operating margins. General agency operations are focused on the primary
distribution of insurance to property and casualty insurance companies, largely
through independent insurance agents. Due to the competitive nature of the
general agency business, the Company's profit margins for these services are
relatively lower. Additionally, domestic operations includes the operations of
the holding company.

         Foreign operations include Swire Blanch, the Company's international
insurance and reinsurance broker headquartered in London. Swire Blanch includes
a Lloyd's insurance and reinsurance broking operation and international
reinsurance intermediary operations. The Company also provides financial
services through the sale of pension plan products for insurance companies.
Insurance brokerage services include the retail operations, located in northern
England and Hong Kong. Approximately 75% of foreign operations revenues are
generated in the United Kingdom with the remainder primarily from the Pacific
Rim. Although many Pacific Rim financial markets have recently experienced some
unusual changes in value, the Company does not anticipate a significant impact
to its business in that area of the world. The Company's foreign operations

<PAGE>


currently do not benefit from the relatively higher profit margins of the
Company's domestic risk management and distribution services. This is due to a
number of factors, including competitive market conditions for Lloyd's brokers,
the small, start-up nature of many of the international offices, the
competitiveness of insurance brokerage business, and the amortization of
goodwill associated with the purchase of Swire Fraser. The Company seeks to grow
its international profitability through the integration of systems, services and
expertise in order to increase revenue production and processing efficiencies.

1997 COMPARED TO 1996
Brokerage Commissions and Fees

The following are the components of brokerage commissions and fees for the years
ended December 31:

(in thousands)                                  1997            1996
--------------                                  ----            ----
Domestic Operations:
   Reinsurance brokerage                      $101,393        $ 86,065
   Risk management fees                          7,276           3,833
   Paragon and policy distribution fees          3,705           1,402
   General agency commissions                   10,054          10,522
                                          -------------------------------
                                               122,428         101,822
                                          ===============================

Foreign Operations:
   Reinsurance brokerage                        10,000              83
   Specialty insurance lines                    10,585              --
   Financial and pension services fees           9,068              --
   Insurance brokerage                           6,022              --
                                          -------------------------------
                                                35,675              83
                                          -------------------------------
                                              $158,103        $101,905
                                          ===============================

         For the year ended December 31, 1997, domestic operations reinsurance
brokerage increased $15.3 million, or 17.8%, from the prior year primarily as a
result of growth in existing accounts and new production. Risk management fees
include the consulting and administration services and software licensing and
maintenance business, a business which began July 1, 1996. These fees were $7.3
million for the year ended December 31, 1997 compared to $3.8 million the prior
year, an increase of $3.5 million, or 89.8%. This increase is attributable to
fees related to a full year of operations of its software licensing and
maintenance business, $2.5 million, and additional administrative services, $1.0
million. Program and policy distribution fees increased $2.3 million, or 164.3%,
to $3.7 million for the year ended December 31. This increase is primarily the
result of new production which commenced in late 1996. General agency
commissions decreased $0.4 million, or 4.4%, to $10.1 million for the year ended
December 31, 1997 compared to $10.5 million the prior year.

         International operations had $35.7 million of brokerage commissions and
fees in the year ended December 31, 1997. Reinsurance intermediary services,
which include those in London and other international offices, had $10.0 million
in brokerage. Specialty lines, which includes the specialty insurance
distribution services based in London, contributed $10.6 million of revenues.
Financial services fees, generated from the sale of various pension plan
products for insurance

<PAGE>


companies, were $9.1 million. Finally, insurance brokerage generated $6.0
million from offices in northern England and Hong Kong. For the year ended
December 31, 1996 foreign revenues were $0.1 million and comprised only the
Company's 50% equity in the net income of the Swire Blanch joint venture.

Investment Income
The following are the components of investment income for the years ended
December 31:

(in thousands)                            1997          1996
--------------                            ----          ----
Domestic Operations:
  Fiduciary investment income            $5,603        $4,527
  Corporate investment income               741           377
  Premium finance interest and fees         187         2,229
                                      --------------------------
                                          6,531         7,133
                                      ==========================

Foreign Operations:
  Fiduciary investment income             1,633            --
  Corporate investment income               530            --
                                      --------------------------
                                          2,163            --
                                      --------------------------
                                         $8,694        $7,133
                                      ==========================

         Fiduciary investment income from domestic operations was $5.6 million
for the year ended December 31, 1997 compared to $4.5 million the prior year, an
increase of $1.1 million or 23.8%. The average balance of domestic funds for the
year ended December 31, 1997 was $104.9 million (compared to $85.0 million for
the prior year), at an average yield of 5.3% (compared to 5.3% the prior year).

         Swire Blanch also earned $1.6 million of fiduciary investment income in
the year ended December 31, 1997. The average balance for the year ended
December 31, 1997 international funds was $32.7 at an average rate of 5.5%.

         Corporate investment income from domestic operations increased as a
result of larger invested balances in 1997.

         Premium finance interest and fees decreased as a result of the sale of
the premium finance business in February 1997.

Expenses
Domestic operating expenses decreased $8.3 million to $90.5 million, or 8.4%,
for the year ended December 31, 1997 compared to $98.8 million the prior year.
The decrease in expenses is primarily the result of the $22.75 million
restructuring charge recorded in the fourth quarter of fiscal 1996. This
decrease is offset by increases in salaries and benefits expenses including
normal salary progression, increased employee benefit cost and an increase of
employees as of December 31, 1997 compared to the prior year. The increase in
employees is due to increased business levels and businesses acquired or started
in 1996. Domestic operations also experienced increases in travel and marketing
and general and administrative expenses offset by a reduction in goodwill
amortization, the result of the goodwill writedown recorded in fiscal 1996.

         Operating expenses for the eleven months of international operations
included in the year ended December 31, 1997 were $33.1 million. Similar to the
Company's domestic operations, approximately two-thirds of these expenses relate
to salaries and benefits for employees.

<PAGE>


Profit Margins
Operating profit margins, calculated as income before taxes as a percentage of
total revenues, were 29.8% for domestic operations for the year ended December
31, 1997, compared to 9.3% for the same period in the prior year. Gross profit
margins, calculated as income before corporate services expenses and before
taxes, were a loss of 10.6% for the Company's general agency operations for the
year ended December 31, 1997, compared to a loss of 188.3% for the same period
in the prior year. The Company's remaining domestic risk management and
distributions services earned a gross profit margin of 51.8% for the year ended
December 31, 1997, compared to a gross profit margin of 48.5% for the same
period in the prior year. The increase in the domestic risk management and
distribution services group is primarily a result of revenue growth. The
improvement in the Company's general agency operations and overall profit
margins is the result of the restructuring charge recorded in the fourth quarter
of fiscal 1996.

         Operating profit margins were 12.6% for foreign operations for the
eleven months ended December 31, 1997. Gross profit margins for the eleven
months ended December 31, 1997 were 2.5% for the insurance brokerage operations
and 14.1% for the remaining foreign reinsurance and specialty risk management
and distribution services, including a number of start-up operations around the
globe. The majority of operating profit from insurance brokerage operations is
recorded in the first half of the year.

Income Taxes
         The Company's combined federal and state effective tax rate for
domestic operations continues to be 39%. The effective tax rate provided for the
Company's foreign operations is expected to be 35%. The Company expects its tax
rate to increase to approximately 40% in 1998, due to changes in the
apportionment of state taxes and taxes on foreign operations.

1996 COMPARED TO 1995
Brokerage Commissions and Fees
The following are the components of brokerage commissions and fees for the years
ended December 31:

(in thousands)                               1996          1995
--------------                               ----          ----
Domestic Operations:
  Reinsurance brokerage                    $ 86,065      $74,473
  Risk management fees                        3,833        1,717
  Program and policy distribution fees        1,402           --
  General agency commissions                 10,522       10,927
                                        ---------------------------
                                            101,822       87,117
                                        ===========================

Foreign Operations:
  Reinsurance brokerage                          83           86
                                        ---------------------------
                                                 83           86
                                        ---------------------------
                                           $101,905      $87,203
                                        ===========================

         Reinsurance brokerage increased $11.6 million or 15.6% to $86.1 million
for the year ended December 31, 1996 compared to $74.5 million the prior year.
The net increase is primarily the result of new account production and growth in
existing accounts offset by non-continuing business and declines on existing
business.

<PAGE>


         Risk management fees were $3.8 million for the year ended December 31,
1996 compared to $1.7 million the prior year. The increase from the prior period
is primarily the result of sales and maintenance fees associated with the new
reinsurance software business started on July 1, 1996, which contributed $1.0
million of fees, and $0.7 million of revenue from other administrative services.

         Wholesale commissions and fees decreased $0.4 million, or 3.7% to $10.5
million for the year ended December 31, 1996 compared to $10.9 million for the
year ended December 31, 1995. Commissions and fees from the general agency
declined due to decreases in commercial lines and NAFTA/Mexican National
business. These decreases were offset by increases in both personal lines and
special risks. Although the premiums and related revenues in personal lines
increased as a result of lower rates, this line of business experienced
unfavorable loss ratios. As of January 1, 1997, the Company discontinued the
non-standard auto portion of its personal lines business. In January 1997, the
Company assumed a book of commercial lines business which management expects
will generate revenues similar to those lost in the reduction of personal lines.
Foreign operations for the year ended December 31, 1996 and 1995 comprised only
the Company's 50% equity in the net income or loss of the previous Swire Blanch
joint venture.

Investment Income
The following are the components of investment income for the years ended
December 31:

(in thousands)                           1996           1995
--------------                           ----           ----
Domestic Operations:
  Fiduciary investment income           $4,527         $5,177
  Corporate investment income              377            555
  Premium finance interest and fees      2,229          2,001
                                     ---------------------------
                                         7,133          7,733
                                     ===========================

Foreign Operations:
  Fiduciary investment income               --             --
  Corporate investment income               --             --
                                     ---------------------------
                                            --             --
                                     ---------------------------
                                        $7,133         $7,733
                                     ===========================

         Fiduciary investment income declined $0.7 million, or 12.6%, to $4.5
million for the year ended December 31, 1996 compared to $5.2 million the prior
year. The average invested balance for the year ended December 31, 1996 was
$85.4 million at a weighted average rate of 5.3% compared to an average balance
of $87.7 million at a weighted average rate of 5.9% the prior year.

         Premium finance interest and fees increased $0.2 million, or 11.3%, to
$2.2 million for the year ended December 31, 1996 compared to $2.0 million the
prior year primarily due to an increase in the premium finance note portfolio.
The outstanding balance of premium finance notes was $14.9 million at a weighted
average rate of 12.5% at December 31, 1996 and $12.2 million at 13.5% at
December 31, 1995.

         Corporate investment income declined due to smaller invested balances
as a result of sales of investments to fund a treasury stock purchase in October
1995.

Prior to 1997, the Company's international operations did not have investment
income.

<PAGE>


Expenses
Expenses increased $33.6 million, or 51.6%, to $98.8 million for the year ended
December 31, 1996 compared to $65.1 million the prior year. The increase is
primarily the result of a $22.75 million restructuring charge related to the
Company's wholesale operation in San Antonio in the fourth quarter of fiscal
1996. This charge included $19.5 million for the write-down of the goodwill
associated with the 1994 Elton George acquisition, and a $3.25 million reserve
for the restructuring of the Company's wholesale operations and its related
lease. In addition, salaries and benefits expense increased as a result of key
additions in the risk management services, alternative distribution and direct
marketing businesses, normal salary progressions, along with other increases.
Travel and marketing expense and general and administrative expenses also
increased as a result of increased catastrophe modeling expenses, expenses
associated with the acquired reinsurance software system, office rent, and other
increases resulting from growth of operations.

Profit Margins
Operating profit margins, calculated as income before taxes as a percentage of
total revenues, were 9.3% for domestic operations for the year ended December
31, 1996, compared to 31.4% for the same period in the prior year. Gross profit
margins, calculated as income before corporate services expenses and before
taxes, were a loss of 188.3% for the Company's general agency operations for the
year ended December 31, 1996, compared to a loss of 29.2% for the same period in
the prior year. The Company's remaining domestic risk management and
distributions services earned a gross profit margin of 48.5% for the year ended
December 31, 1996, compared to a gross profit margin of 46.1% for the same
period in the prior year. The decline in the Company's general agency operations
and overall profit margins is the result of the restructuring charge discussed
above. The profit margin for international operations for 1996 and 1995 is not
meaningful.

Income Taxes
The Company's effective tax rate was approximately 39% in 1996 and 1995.

LIQUIDITY AND CAPITAL RESOURCES

The Company's sources of funds consist primarily of brokerage commissions and
fees and investment income. Funds are applied generally to the payment of
operating expenses, the purchase of equipment used in the ordinary course of
business, the repayment of outstanding indebtedness and the distribution of
earnings.

         The Company generated $33.2 million of cash from operations in 1997,
compared with $15.6 million in 1996. The increase in operating cash flow in 1997
is primarily due to the increase in net income compared to the prior year and
the timing of changes in operating assets and liabilities.

         In 1997, the primary uses of cash in investing activities were the
purchase of $5.9 million of investments and the purchase of $12.9 million of
property and equipment, primarily computerized systems. The Company intends to
continue to increase its investment in such systems. These uses of cash in
investing activities were offset by the sale of investments and the sale of the
Company's premium finance operations. In 1996, in addition to similar uses of
cash to increase investments, premium finance notes and equipment, the Company
sold $11.1 million of investments to fund both

<PAGE>


the purchase of treasury stock and the settlement of a $4.9 million
pre-acquisition liability from the Elton George transaction.

         The increase in cash used in financing activities in 1997 is primarily
due to a $14.6 million purchase of treasury stock from its Chairman and Chief
Executive.

         The Company's cash and cash equivalents were $11.6 million at December
31, 1997, compared with $1.1 million in the prior year. The Company's long-term
investment portfolio at December 31, 1997 was $14.9 million, which is comprised
of equity and debt investments. These investments are classified as available
for sale. The market value of the Company's investment portfolio at December 31,
1997 was $0.3 million above cost. Cash, investments and the Company's lines of
credit are available and managed for the payment of its operating and capital
expenditures. The Company is not subject to any regulatory capital requirements
in connection with its business.

         In February 1997, the Company sold its premium finance operation for
$15.1 million, purchased 750,000 common shares from its Chairman for $14.6
million, and purchased 70% of Swire Fraser for consideration of (pound)1.8 ($2.9
million) in cash and the assumption of (pound)6.2 million in debt ($10.2 million
at acquisition date). The Company believes the operations of Swire Fraser will
provide sufficient cash flows to service its debt obligation. The net funds used
in these transactions were from existing cash.

         The Company continues to have available a $30.0 million credit facility
with a syndicate of banks expiring in April 1999. The facility includes two
borrowing methods: short term based on a floating rate, generally equal to the
prime rate less a margin, and longer term at a stated rate over the LIBOR rate.
Additionally, the Company pays a commitment fee on unused balances. Covenants
contained in the agreement require the Company to exceed minimum levels of net
worth and meet a fixed charge ratio. The Company had $1.2 million outstanding,
under this credit facility at December 31, 1997. The Company previously had an
additional credit facility with Ranger Funding Corporation ("Ranger"), a special
purpose corporation established by NationsBank, N.A., pursuant to which Ranger
issued commercial paper for the benefit of the Company. The above line of credit
functioned as a backup liquidity facility whose capacity was reduced by any
amounts borrowed from Ranger. This facility expired in the third quarter of
1997.

         The Company paid a quarterly dividend of $0.10 per share during 1997
and 1996. The Company intends to continue paying quarterly dividends subject to
declaration by the Board of Directors. On January 22, 1998, the Board of
Directors declared a cash dividend of $0.10 per share payable March 2, 1998 to
shareholders of record as of February 9, 1998.

         The Company believes that its cash and investments, combined with its
borrowing facilities and internally generated funds, will be sufficient to meet
its present and reasonably foreseeable long-term capital needs.

<PAGE>


FORWARD-LOOKING STATEMENTS

Statements other than historical information contained in this Annual Report are
considered forward-looking and involve a number of risks and uncertainties.
Forward-looking statements are made pursuant to the safe harbor provisions of
the Private Securities Litigation Reform Act of 1995. There are certain
important factors that could cause results to differ materially from those
anticipated by some of the statements made above. In addition to the risk
factors discussed, among the other factors that could cause actual results to
differ materially are the following: market dynamics, interest rate changes,
regulatory changes, competition, and the failure of the Company and its
subsidiaries or significant third parties to achieve Year 2000 compliance or
material expense in connection with such compliance. Additional information
concerning those and other factors are contained in the Company's Securities and
Exchange Commission filings, including but not limited to the current Form 10-k,
copies of which are available from the Company without charge.


REPORT OF INDEPENDENT AUDITORS

The Board of Directors
E. W. Blanch Holdings, Inc.

We have audited the accompanying consolidated balance sheets of E. W. Blanch
Holdings, Inc. as of December 31, 1997 and 1996, and the related consolidated
statements of income, shareholders' equity and cash flows for each of the three
years in the period ended December 31, 1997. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.

         We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

         In our opinion, the financial statements referred to above present
fairly, in all material respects, the consolidated financial position of E. W.
Blanch Holdings, Inc. at December 31, 1997 and 1996, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1997, in conformity with generally accepted accounting
principles.


                                                           /s/ Ernst & Young LLP

Minneapolis, Minnesota
January 15, 1998

<PAGE>


CONSOLIDATED STATEMENTS OF INCOME

<TABLE>
<CAPTION>

Year Ended December 31,
(in thousands, except per share amounts)            1997        1996        1995
----------------------------------------            ----        ----        ----
<S>                                               <C>         <C>         <C>     
REVENUES
Brokerage commissions and fees                    $158,103    $101,905    $ 87,203
Investment income                                    8,694       7,133       7,733
                                                  --------------------------------
Total revenues                                     166,797     109,038      94,936

EXPENSES
Salaries and benefits                               75,908      44,762      39,738
Travel and marketing                                13,681       7,569       6,112
General and administrative                          29,711      20,387      15,965
Amortization of goodwill                             3,009       3,078       2,980
Interest and other expense                           1,326         231         351
Restructuring charge                                  --        22,750        --
                                                  --------------------------------
Total expenses                                     123,635      98,777      65,146
                                                  --------------------------------

Income before taxes                                 43,162      10,261      29,790

Income taxes                                        17,008       3,970      11,584
                                                  --------------------------------

Net income before minority interest                 26,154       6,291      18,206
Minority interest, net of tax                          451        --          --
                                                  --------------------------------
Net income                                        $ 25,703    $  6,291    $ 18,206
                                                  --------------------------------

Net income per common share                       $   2.03    $   0.48    $   1.34
Net income per common share- assuming dilution    $   1.99    $   0.48    $   1.34

</TABLE>

SEE ACCOMPANYING NOTES.

<PAGE>


CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>

At December 31,
(in thousands)                                                     1997        1996
--------------                                                     ----        ----
<S>                                                              <C>         <C>     
ASSETS
Current assets:
Cash and cash equivalents                                        $ 11,608    $  1,069
Due from fiduciary accounts                                        30,874      13,624
Premium finance notes                                                --        14,931
Prepaid insurance                                                   1,471       1,749
Other current assets                                                7,428       4,467
                                                                 --------------------
Total current assets                                               51,381      35,840

Long-term investments                                              14,939       9,793
Property and equipment, net                                        26,309      13,001
Goodwill, net                                                      34,916      17,490
Other assets                                                       11,772       9,452

Fiduciary accounts -- assets                                      780,450     429,180
                                                                 --------------------
Total assets                                                     $919,767    $514,756
                                                                 --------------------

LIABILITIES, MINORITY INTEREST AND SHAREHOLDER'S EQUITY
Current liabilities:
Accrued compensation                                             $  6,628    $  4,176
Accounts payable                                                   14,420       3,939
Notes payable to banks                                              1,379       1,340
Current portion of long-term liabilities                            2,586       1,685
Other current liabilities                                          12,020       2,014
                                                                 --------------------
Total current liabilities                                          37,033      13,154

Long-term debt, less current portion                               13,675       1,188
Other liabilities, less current portion                            10,536       2,781
Commitments and contingencies                                        --          --

Fiduciary accounts -- liabilities                                 780,450     429,180
                                                                 --------------------
Total liabilities                                                 841,694     446,303

Minority interest                                                   1,621        --

Shareholders' equity                                               76,452      68,453
                                                                 --------------------
Total liabilities, minority interest and shareholders' equity    $919,767    $514,756
                                                                 ====================
</TABLE>

SEE ACCOMPANYING NOTES.

<PAGE>


CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY

<TABLE>
<CAPTION>

Year Ended December 31,
(in thousands, except per share amounts)               1997         1996         1995
----------------------------------------               ----         ----         ----
<S>                                                  <C>          <C>          <C>     
PREFERRED STOCK, $0.01 PAR VALUE                         --           --           --

COMMON STOCK $0.01 PAR VALUE
                                                     ----------------------------------
Balance, beginning of year                           $    141     $    141     $    141
                                                     ----------------------------------
Issuance of common stock                                 --           --           --
Balance, end of year                                      141          141          141

COMMON SHARES SUBJECT TO REDEMPTION
Balance, beginning of year                               --           --         (7,791)
Exercise of put option by former executive               --           --          7,791
                                                     ----------------------------------
Balance, end of year                                     --           --           --
                                                     ----------------------------------

ADDITIONAL PAID-IN CAPITAL
Balance, beginning of year                             52,769       52,723       52,531
Issuance of common stock                                 --           --            188
Other                                                    --             46            4
                                                     ----------------------------------
Balance, end of year                                   52,769       52,769       52,723
                                                     ----------------------------------

TREASURY STOCK
Balance, beginning of year                            (16,366)     (17,370)      (9,575)
Issuance of treasury stock under
employee benefit plans                                  1,353        1,004         --
Purchase of treasury stock                            (14,550)        --         (7,795)
                                                     ----------------------------------
Balance, end of year                                  (29,563)     (16,366)     (17,370)
                                                     ----------------------------------

UNREALIZED GAIN(LOSS) ON INVESTMENTS
Balance, beginning of year                               (329)         (59)        (853)
Change in net unrealized gain(loss) on investment         629         (270)         794
                                                     ----------------------------------
Balance, end of year                                      300         (329)         (59)
                                                     ----------------------------------

CUMULATIVE TRANSLATION ADJUSTMENT
Balance, beginning of year                               --           --           --
Translation adjustments                                   (37)        --           --
                                                     ----------------------------------
Balance, end of year                                      (37)        --           --
                                                     ----------------------------------

RETAINED EARNINGS
Balance, beginning of year                             32,238       31,244       18,455
Net income                                             25,703        6,291       18,206
Dividends                                              (5,099)      (5,297)      (5,417)
                                                     ----------------------------------
Balance, end of year                                   52,842       32,238       31,244
                                                     ----------------------------------

Total Shareholders' Equity                           $ 76,452     $ 68,453     $ 66,679
                                                     ==================================
</TABLE>

THERE ARE 10 MILLION PREFERRED SHARES AUTHORIZED; NONE ISSUED.

THERE ARE 30 MILLION COMMON SHARES AUTHORIZED. THE NUMBER OF SHARES ISSUED AND
OUTSTANDING WERE 12,680,000, 13,260,000, AND 13,208,000 AT DECEMBER 31, 1997,
1996, AND 1995 RESPECTIVELY.

THE SHARES OUTSTANDING AT DECEMBER 31, 1997, 1996, AND 1995 ARE NET OF
1,562,000, 882,000, AND 932,000 TREASURY SHARES, RESPECTIVELY.

SEE ACCOMPANYING NOTES.

<PAGE>


CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>

Year Ended December 31, (in thousands)                    1997         1996         1995
--------------------------------------                    ----         ----         ----
<S>                                                     <C>          <C>          <C>     
OPERATING ACTIVITIES
Net income                                              $ 25,703     $  6,291     $ 18,206
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation and amortization                              8.718        6,073        5,119
Deferred income tax provision (benefit)                      233       (8,176)         126
Restructuring charge                                        --         22,750         --
Changes in operating assets and liabilities:
Due from fiduciary accounts                              (11,171)      (9,087)       3,150
Other current assets                                      (2,009)      (2,687)      (1,165)
Accrued compensation                                       2,452          746         --
Accounts payable and other current liabilities             8,931          406          630
Other, net                                                   297         (703)         (72)
                                                        ----------------------------------
Net cash provided by operating activities                 33,154       15,613       25,994

INVESTING ACTIVITIES
Purchases of investments                                  (5,919)      (3,627)      (1,600)
Purchases of property and equipment, net                 (12,907)      (4,654)      (3,918)
Issuance of finance notes receivable, net                    (14)      (2,756)      (5,773)
Acquisition of subsidiary, net of cash acquired              480         --         (4,874)
Sale of subsidiary                                        15,092         --           --
Sales of investments                                       1,118          596       11,122
Other, net                                                  (147)         (82)        (308)
                                                        ----------------------------------
Net cash used in investing activities                     (2,297)     (10,523)      (5,351)

FINANCING ACTIVITIES
Dividends paid                                            (5,099)      (5,297)      (5,417)
Proceeds from issuance of treasury shares                  1,353        1,004         --
Purchase of treasury stock                               (14,550)        --         (7,795)
Net (repayments) borrowings on lines of credit              (140)      (3,203)      (3,175)
Payments on long-term debt                                (2,353)      (1,288)        (281)
Other financing activities, net                              471         (214)        (336)
                                                        ----------------------------------
Net cash used in financing activities                    (20,318)      (8,998)     (17,004)
                                                        ----------------------------------

Net increase (decrease) in cash and cash equivalents      10,539       (3,908)       3,639
Cash and cash equivalents at beginning of year             1,069        4,977        1,338
                                                        ----------------------------------
Cash and cash equivalents at end of year                $ 11,608     $  1,069     $  4,977
                                                        ==================================
</TABLE>

SEE ACCOMPANYING NOTES.

<PAGE>


1 ORGANIZATION AND BASIS OF PRESENTATION

E. W. Blanch Holdings, Inc. and its subsidiaries ("the Company") and its
predecessor organizations have been in operation since 1957. The consolidated
financial statements include the accounts of the Company and its wholly and
majority owned subsidiaries. In 1997, the Company purchased a 70% interest in
Swire Fraser Insurance (Holdings) Limited ("Swire Fraser") resulting in an
additional 20% interest in the Swire Blanch joint venture. The combined
operations of Swire Fraser and Swire Blanch were merged into a single operation
under the Swire Blanch name, which is owned 70% by the Company and 30% by Swire
Pacific Limited ("Swire Pacific"). The Company categorizes its business
operations into two geographic areas, domestic and international operations.

         As part of the restructuring of its primary insurance distribution
operations, the Company completed the sale of its premium finance business in
February 1997. The Company received $15.1 million in exchange for the
outstanding stock of the premium finance subsidiaries. The net proceeds equaled
the Company's investment in the business, resulting in no gain or loss from the
transaction.

Nature of Business
The Company is a provider of integrated risk management services including
reinsurance and insurance intermediary services, risk management consulting and
administration services, and primary insurance distribution services. The
Company also provides financial and pension consultancy services outside of the
United States. In its capacity as a reinsurance intermediary, the Company
structures and arranges reinsurance between insurers seeking to cede insurance
risks and reinsurers willing to assume such risks. The Company receives and
disburses funds for premium and loss transactions under reinsurance contracts on
behalf of insurance and reinsurance companies and provides reinsurance
transaction reporting and reinsurance consulting services. The Company receives
brokerage revenue for its reinsurance intermediary services, which is generally
based upon either a percentage of the related contract premiums or a negotiated
fee. In addition, the Company earns commissions and fees in its primary
insurance distribution business from the distribution of primary insurance
policies and from providing financial and pension consultancy services. The
Company also earns fees from providing risk management consulting and
administration services.

         Investment income is earned from the temporary investment of fiduciary
funds held by the Company, and from investments owned by the Company.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Principles of Consolidation
The accompanying consolidated financial statements include the accounts and
operations of the Company and its wholly and majority owned subsidiaries. All
material intercompany accounts and transactions have been eliminated.

Use of Estimates in Preparation of Financial Statements
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting periods.
Actual results could differ from those estimates.

<PAGE>


Revenue Recognition
Reinsurance and insurance brokerage is recognized as premium reports or deposit
premiums are due. Any subsequent adjustments, including cancellations, are
recognized upon notification from the ceding companies, unless these amounts are
subject to reasonable estimation by the Company.

         Primary insurance distribution commissions and fees are recognized when
the underlying premiums are invoiced, provided that substantially all services
relating to the placement of the insurance are complete, the policy premium is
known or can be reasonably estimated and coverage is provided under the
insurance policy. Any adjustments to commissions, primarily from cancellations,
are estimated when the initial commission on the policy is recognized.

         Risk management fees and financial and pension consultancy commissions
and fees are recognized during the period when services are provided or
according to the terms specified in the contract.

Financial Instruments
Management has classified its investments in debt and equity securities as
available for sale. As a result, the investment portfolio is carried at fair
value and the corresponding unrealized gains or losses, net of applicable
deferred taxes, are recognized as a separate component of equity. Fair values
are generally based on quoted market prices. Where an active market does not
exist, fair values of debt securities and equity securities are based on the
most recent financial statements. Realized gains and losses on sales of
investments are determined using the specific identification method.

         Financial instruments held by the Company other than investments
include notes receivable, notes payable to banks, and long-term debt. These
instruments are carried at their net unpaid principal balances which approximate
fair value.

Cash and Cash Equivalents
The Company considers investments in money market funds to be cash equivalents.
The carrying amount of cash and cash equivalents reported in the balance sheet
approximates fair value.

Depreciation and Amortization
Fixed assets are recorded at cost and are depreciated on a straight-line basis
over the estimated useful lives of the respective assets. Leasehold improvements
are amortized on a straight-line basis over the life of the improvement or the
remaining term of the respective lease, whichever is shorter. Amortization of
amounts capitalized under capital leases is included with depreciation expense.

Intangibles
The excess of cost over the fair value of net assets acquired (or goodwill) is
amortized on a straight-line basis over its estimated useful life. Amortization
periods range from 5 to 40 years. Accumulated amortization of goodwill at
December 31, 1997 and 1996 was $36.8 million and $29.2 million, respectively,
including amounts attributable to Swire Blanch minority interest. Management
annually reviews the recoverability of intangibles using undiscounted cash flow
modeling. A write-down is recorded when the sum of the expected future net cash
flows is less than the book value (See Note 3).

<PAGE>


Fiduciary Accounts
As an intermediary, the Company acts as a conduit for insurance and reinsurance
premiums and loss payments which are paid to and remitted from fiduciary
accounts. Receivables and payables for premiums and losses under reinsurance
contracts are recorded in the fiduciary accounts when due or reported.
Receivables for premiums under wholesale insurance products are recorded when
the policy is invoiced. The majority of the fiduciary account assets and
represent receivables and offsetting payables between insurers and reinsurers.
Reinsurance and insurance brokerage, primary distribution commissions and fees,
fiduciary investment income and reimbursement of loss advances by the Company
are transferred periodically from the fiduciary accounts to the Company's bank
accounts.

         In accordance with applicable regulations, the Company maintains cash
resulting from fiduciary transactions in separate bank and investment accounts.
The balances and weighted average interest rates in these accounts were $117.2
million and 5.65%, and $41.9 million and 5.07% at December 31, 1997 and 1996,
respectively.

Foreign Currency Translation
The Company's primary functional currency is the U.S. dollar. The functional
currency of the Company's foreign operations is the applicable local currency.
The Company translates income and expense accounts at the average rate in effect
for the period. Balance sheet accounts are translated at the period end exchange
rate. Adjustments resulting from the balance sheet translation are reflected in
Shareholder's Equity. The cumulative translation adjustment at December 31, 1997
is a $37,000 loss.

Income Taxes
Deferred taxes are recognized for all temporary differences between the tax and
financial reporting basis of the Company's assets and liabilities using tax
rates in effect for the year in which the differences are expected to reverse.

Earnings Per Share
In 1997, the Financial Accounting Standards Board issued Statement of Financial
Accounting Standard ("SFAS") No. 128, "Earnings per Share". SFAS No. 128
replaced the calculation of primary and fully diluted earnings per share with
basic and earnings per share assuming dilution. Unlike primary earnings per
share, basic earnings per share excludes any dilutive effects of options,
warrants and convertible securities. Earnings per share assuming dilution is
very similar to the previously reported fully diluted earnings per share.
Earnings per share amounts for all periods have been restated to conform to the
SFAS No. 128 requirements.

Stock Based Compensation
In accordance with SFAS No. 123, "Accounting for Stock Based Compensation" the
Company continues to follow Accounting Principles Board Opinion (APB) No. 25,
"Accounting for Stock Issued to Employees", and the related interpretations in
accounting for its stock options. The disclosures required by SFAS No. 123 have
been included in the accompanying notes to the Company's financial statements.

<PAGE>


Other New Accounting Pronouncements
In 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Reporting Comprehensive Income". SFAS No. 130 defines the financial statement
presentation for "all changes in a company's equity during a period except those
resulting from investments by owners and distributions to owners." SFAS No. 130
is effective for fiscal years beginning after December 31, 1997 and will be
adopted by the Company in the first quarter of 1998. Because this statement is
merely an adjustment of presentation, the Company does not expect the adoption
of this statement to have any impact on the amount of net income, earnings per
share or total shareholders' equity reported.

         Also in 1997 the Financial Accounting Standards Board issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information." SFAS
No. 131 supercedes SFAS No. 14 "Financial Reporting for Segments of a Business
Enterprisei and defines financial and descriptive information about a Company's
operating segments that is to be disclosed in financial statements. The Company
is developing allocation methods to assess performance on a business segment
basis. Once completed, additional disclosures will be provided in accordance
with this Statement. SFAS No. 131 is required for fiscal years beginning after
December 15, 1997.

Reclassifications
Certain prior year amounts have been reclassified to conform with the current
year presentation.

3 RESTRUCTURING CHARGE

During the fourth quarter of 1996, the Company recorded a $22.75 million
restructuring charge for its San Antonio based managing general agency
operations. The charge included a $19.5 million write-down of goodwill
associated with the 1994 acquisition of the Elton George Companies and a $3.25
million reserve for restructuring of the San Antonio operation and its related
lease expense. This charge reduced earnings per share for the quarter and year
by $1.05.

4 LONG-TERM INVESTMENTS

The Company's investments at December 31 are summarized as follows:

                        Gross              Unrealized                Fair
(in thousands)          Cost           Gains       (Losses)          Value
--------------          ----           -----       --------          -----
1997
Debt investments      $  4,826       $      3      $     (7)       $  4,822
Equity investments       9,713            637          (233)         10,117
                      -----------------------------------------------------
                      $ 14,539       $    640      $   (240)       $ 14,939
                      -----------------------------------------------------
1996
Debt investments      $  5,458       $      5      $    (24)       $  5,439
Equity investments       4,664              4          (314)          4,354
                      -----------------------------------------------------
                      $ 10,122       $      9      $   (338)       $  9,793
                      -----------------------------------------------------
                                                                 
         Gross gains realized on the sales of investments were $10,000 for the
year ended December 31, 1996. Gross losses realized on the sales of investments
were $0.2 million, $48,000, and $0.1 million for the years ended December 31,
1997, 1996, and 1995, respectively.

<PAGE>


         The cost and fair values of debt securities at December 31, 1997, by
contractual maturity, are summarized as follows:

                                                                     Fair
(in thousands)                                       Cost           Value
--------------                                       ----           -----
Due in one year or less                           $ 1,390         $ 1,392
Due after one year through five years               2,924           2,919
Due after five years                                  512             511
                                               ------------------------------
                                                  $ 4,826         $ 4,822
                                               ------------------------------
                                          
5 PROPERTY AND EQUIPMENT

The Company's property and equipment at December 31 are summarized as follows:

(in thousands)                                       1997            1996
---------------                                      ----            ----
Office computer hardware and software             $ 30,974        $ 15,576
Office furniture and equipment                      12,759           7,201
Leasehold improvements                               3,940           1,559
                                               -------------------------------
                                                    47,673          24,336
Less accumulated depreciation and amortization     (21,364)        (11,335)
                                               -------------------------------
                                                  $ 26,309        $ 13,001
                                               -------------------------------

6 LONG-TERM DEBT

The Company's long-term debt at December 31 is summarized as follows:

(in thousands)                                      1997           1996
--------------                                      ----           ----
Notes payable with annual payments
   through January 1999,
variable rate                                     $12,661         $   --
Loan stock with annual payments
   through January 1999,
variable rate                                       1,494             --
Note payable with annual payments
   through January 1997,
interest at 11.78%                                     --            300
Capital lease obligations                           1,184          1,465
                                               -----------------------------
                                                   15,339          1,765
Less current portion                               (1,664)          (577)
                                               -----------------------------
                                                  $13,675         $1,188
                                               =============================

         Maturities of long-term debt are summarized as follows:

(in thousands)
----------------------
1998                                                             $  1,664
1999                                                               13,181
2000                                                                  313
2001                                                                  181
2002                                                                   --

<PAGE>


7 LINES OF CREDIT

The Company has a $30.0 million credit facility with a syndicate of banks,
expiring in April 1999. The facility includes two borrowing methods: short term
based on a floating rate and longer term (30, 60, or 90 days) at 75 basis points
over the LIBOR rate. For the floating rate portion, interest is generally
calculated at 75 basis points less than the base rate. The base rate is defined
as the greater of the prime rate or 150 basis points over the federal funds
rate. Additionally, the Company pays a commitment fee of 25 basis points on
unused balances. Covenants contained in the agreement require the Company to
exceed minimum levels of net worth and meet a fixed charge ratio. The Company
had $1.2 million outstanding under this credit facility at December 31, 1997 at
a rate of 7.75%.

8 SHAREHOLDER'S EQUITY

Preferred Stock
The Board of Directors may from time to time direct the issuance of preferred
stock in one or more series and may, at the time of issuance, determine the
rights, preferences, and limitations of each series. The issuance of preferred
stock may adversely affect various rights, including dividend and voting rights,
of the common shareholders and may be used as an anti-takeover device.

         On January 24, 1997, the Board of Directors approved a shareholder
rights plan, which provides protection against hostile takeovers and market
activities that could result in a sale of the Company. The Board of Directors
retains the right to approve a sale of the Company or redeem the rights under
certain circumstances. The Company paid a dividend of one right for each common
share outstanding on February 7, 1997. Each right will entitle a shareholder to
buy 1/100 of a share of the Company's newly created Series A Junior
Participating Preferred Stock at an exercise price of $100. The rights will
become exercisable in the event that a person or group acquires, or makes a
tender offer for, 15% or more of the Company's common shares, subject to certain
exceptions.

<PAGE>


Earnings Per Share
The following table sets forth the computation of basic and diluted earnings per
share, for the years ended December 31:

                                           1997           1996          1995
                                           ----           ----          ----
Numerator for earnings per
share - basic and assuming dilution
Net income                               $25,703        $ 6,291       $18,206
                                      ------------------------------------------

Denominator:
   Denominator for per
   share, basic - weighted
   average shares                         12,656         13,220        13,558

Effect of dilutive securities:
   Employee stock options                    289             10            32

Denominator for earnings
   per share, assuming
   dilution - adjusted
   weighted-average
   shares and assumed
   conversions                            12,945         13,230        13,590
                                      ------------------------------------------

Earnings per share - basic               $  2.03        $  0.48       $  1.34
Earnings per share -
assuming dilution                        $  1.99        $  0.48       $  1.34

Dividends
The Company initiated the payment of a quarterly cash dividend during the fourth
quarter of 1993. In January 1995, the Board of Directors increased the quarterly
cash dividend to $0.10 per share from $0.08 per share. The Company intends to
continue paying quarterly dividends subject to declaration by the Board of
Directors. The Company is not subject to any regulatory or capital requirements
that restrict its ability to pay dividends, except for the minimum net worth
requirement in its credit facility (see Note 7).

Treasury Shares
The Company uses treasury shares to fund its equity-based contributions to the
employee benefit plans.

<PAGE>


9 INCOME TAXES

Income taxes for the years ended December 31 are summarized as follows:

(in thousands)                       1997              1996             1995
--------------                       ----              ----             ----
Current:
Federal                            $ 12,592         $ 10,702         $  9,986
State                                 1,864            1,444            1,472
Foreign                               2,319               --               --
                                 -----------------------------------------------
                                     16,775           12,146           11,458
Deferred taxes:
Federal                                 745           (7,226)              50
State                                    16             (950)              76
Foreign                                (528)             --               --
                                 -----------------------------------------------
                                        233           (8,176)             126
                                 -----------------------------------------------
                                   $ 17,008         $  3,970         $ 11,584
                                 -----------------------------------------------

         The reconciliation between income tax expense and the amount computed
by applying the statutory federal income tax rate for the years ended December
31 is summarized as follows:

(in thousands)                       1997              1996             1995
--------------                       ----              ----             ----
Income tax at the federal
   statutory rate                  $ 15,107         $  3,592         $ 10,427
State taxes, net of federal
   tax benefit                        1,212              321              957
Foreign taxes at rate
   other than U.S. rate                 252               --               --
Goodwill amortization                   526              257              257
Other                                   (89)            (200)             (57)
                                 -----------------------------------------------
                                   $ 17,008         $  3,970         $ 11,584
                                 -----------------------------------------------

         The components of the deferred income tax provision for the years ended
December 31 are summarized as follows:

(in thousands)                       1997              1996             1995
                                     ----              ----             ----
Prepaid expense                     $(104)           $   495          $ (147)
Depreciation                          132                (38)            412
Goodwill amortization                 (49)            (6,900)             --
Deferred compensation                (376)                --              --
Accrued lease expense                 731             (1,100)             67
Other                                (101)              (633)           (206)
                                 -----------------------------------------------
Total                               $ 233            $(8,176)         $  126
                                 -----------------------------------------------

         Pre-tax income attributed to domestic operations was $38.4 million, and
pre-tax income attributable to foreign operations was $4.8 million for the year
ended December 31, 1997.

<PAGE>


         Gross deferred tax assets and liabilities at December 31 are summarized
as follows:

(in thousands)                Current            Non-current
--------------                -------            -----------
1997
Deferred tax liabilities       $(519)            $ (2,114)
Deferred tax assets              747                8,758
Valuation allowance               --                   --
                            --------------------------------
Total                          $ 228             $  6,644
                            --------------------------------
1996
Deferred tax liabilities       $(658)            $ (1,733)
Deferred tax assets              461                8,896
Valuation allowance             (128)                  --
                            --------------------------------
Total                          $(325)            $  7,163
                            --------------------------------

         Management recorded a valuation allowance against the deferred tax
asset related to unrealized losses in the Company's investment portfolio.
Management has determined some uncertainty exists regarding the Company's
ability to utilize the tax benefits associated with the realization of the
capital losses. In 1997, the market value of the Company's investment portfolio
exceeded cost. Therefore, there is no valuation allowance recorded at December
31, 1997.

10 STOCK PLANS

The Company adopted the E. W. Blanch Holdings, Inc. Employee Stock Purchase Plan
("the ESPP") in May 1994. Pursuant to the ESPP, eligible employees of the
Company may purchase shares of the Company's common stock at 90% of fair market
value, subject to certain limitations and qualifications. The Company has
reserved 300,000 shares of common stock for issuance under the ESPP. At December
31, 1997, approximately 21,500 shares had been issued under the ESPP.

         The Company adopted the 1993 Stock Incentive Plan ("the 1993 Stock
Plan") in May 1993. Pursuant to the 1993 Stock Plan, key employees of the
Company who have been selected as participants are eligible to receive awards of
various forms of equity-based incentive compensation including stock options,
stock appreciation rights, stock bonuses, restricted stock awards, performance
units, phantom stock, and awards consisting of combinations of such incentives.
The Company has reserved 2,400,000 shares of common stock for issuance under the
1993 Stock Plan.

         Outstanding grants of shares under the 1993 Stock Plan were 1,793,000
and 785,333 at December 31, 1997 and 1996, respectively. In addition, the
Company had reserved 396,000 and 446,000 shares at December 31, 1997 and 1996,
respectively, for future grant, resulting in 211,000 and 1,168,667 shares
available for grant under the Stock Plan at December 31, 1997 and 1996,
respectively. The original term of such options is 10 years and options become
exercisable over the first five years of the term.

<PAGE>



         The following is a summary of options outstanding under the 1993 Stock
Plan by range of grant price:

                                            $ 17.50-        $26.32-
                                              $26.25         $31.38
--------------------------------------------------------------------
Options outstanding                        1,225,500        567,500
Average option price per share                $21.01         $31.38
Weighted average contractual life                7.5            9.8
Options exercisable                          224,167             --
Average option price per share                $18.85             --

         The Company adopted the 1997 Stock Incentive Plan ("1997 Stock Plan"),
in October 1997. Pursuant to the Stock Incentive Plan, employees who have been
selected as participants are eligible to receive awards of various forms of
equity-based incentive compensation including stock options, stock appreciation
rights, restricted stock, restricted stock units, performance awards, or other
stock-based awards. The Company has reserved 1,000,000 treasury shares for
issuance under the 1997 Stock Plan.

         Outstanding grants under the 1997 Stock Plan were 250,000 at December
31, 1997, with an exercise price of $31.38 and a weighted average contractual
life of 9.8 years. The original term of all stock options is 10 years and the
options become exercisable over the first three years of the term. There were no
options exercisable at December 31, 1997.

         Option activity during 1997, 1996 and 1995 was as follows:

                                                              Average
                                                               Option
                                                            Price per
                                              Shares            Share
------------------------------------------------------------------------
Outstanding at December 31, 1994             472,500           $19.13
Granted                                      215,000            18.88
Canceled                                     (61,000)           22.01
                                        --------------------------------
Outstanding at December 31, 1995             626,500           $18.76
                                        --------------------------------

Granted                                      239,000            22.01
Canceled                                     (80,167)           18.26
                                        --------------------------------
Outstanding at December 31, 1996             785,333           $19.80
                                        --------------------------------

Granted                                    1,296,500            28.20
Canceled                                     (37,165)           20.22
Exercised                                     (1,668)           18.50
                                        --------------------------------
Outstanding at December 31, 1997           2,043,000           $25.16
                                        --------------------------------

<PAGE>


         As permitted under SFAS No. 123, the Company continues to apply APB
Opinion No. 25 and related interpretations and, accordingly, does not recognize
compensation expense for grants under its stock plans. If the Company had
elected to recognize compensation expense based on the fair value of the stock
on the grant date as prescribed by SFAS No. 123, net income and earnings per
share would have been reduced to the pro forma amounts indicated in the table
below:

(in thousands except per share amounts)        1997        1996         1995
---------------------------------------        ----        ----         ----
Net income -- as reported                    $25,703      $6,291      $18,206
Net income -- pro forma                       24,470       5,864       18,013
Earnings per share, basic
--as reported                                   2.03        0.48         1.34
Earnings per share, basic
--pro forma                                     1.93        0.44         1.33

         The fair value of each option grant is estimated on the date of grant
using the Black-Scholes option-pricing model with the following assumptions:

                                              1997         1996          1995
                                              ----         ----          ----
Expected dividend yield                        1.20%        1.80%        1.80%
Expected stock price volatility               20.85%       21.80%       19.90%
Expected life of options                     7 years      7 years      7 years

         The Company used the seven year United States Treasury Note rate at the
date of grant for the risk-free interest rate assumption. The range of these
rates was 6.0% to 6.9% in 1997, 5.6% to 6.6% in 1996 and 6.4% to 7.9% in 1995.
The weighted average fair value of options granted during 1997, 1996 and 1995
was $11.28, $7.49 and $7.33 per share, respectively.

         The Company has a Non-Employee Directors' Stock Plan ("the Directors'
Plan"). The Directors' Plan permits each participant to elect to receive or
defer all or a portion of the Director's fees in common stock of the Company.
The Company has reserved 25,000 shares of Common Stock for issuance under the
Directors' Plan. At December 31, 1997, approximately 2,100 shares of stock have
been earned under this plan at an average cost of $19.47 per share.

         The Company has also reserved an additional 191,000 shares of common
stock for issuance under its Incentive Plan (see Note 11).

         The Company adopted the Restricted Stock Incentive Plan ("the
Restricted Stock Plan") in April 1997. Pursuant to the Restricted Stock Plan,
eligible participants may elect to forego a specified percentage of eligible
base compensation, in exchange for the right to receive a restricted stock
grant. This election is irrevocable for the performance period. The amount of
the restricted stock received is tied to the achievement of certain objective
performance goals established by the Compensation Committee of the Board of
Directors. The goals may be based on various business criteria including stock
price, market share, sales, earnings per share, return on equity, return on
invested capital or net assets employed, cumulative total return to
shareholders, consolidated pre-tax earnings, net earnings, operating income, net
earnings, operating income, earnings before interest and taxes, and cash flow
all as computed in accordance with generally accepted accounting principles. If
target performance goals are achieved and the Compensation Committee so
certifies, the participant is awarded restricted stock equal to two times the
amount of base compensation

<PAGE>


foregone, subject to a three-year vesting schedule. If target performance is not
achieved the participant is awarded restricted stock equal in value to 50% of
base compensation foregone, fully vesting on April 1 following the end of the
performance period. The Company achieved its target performance goal in 1997 and
will award 168,845 shares of restricted stock to participants subject to a
three-year vesting period.

11 EMPLOYEE BENEFITS AND INCENTIVE PLANS

The Company has a defined contribution retirement plan ("the Plan") for most of
its employees. Employees of EWB Wholesale became participants in the Plan
effective January 1, 1996. Contributions to the Plan are discretionary and
generally are equal to 7.5% of the employee's base salary. Employees with
salaries that exceed the Internal Revenue Service limit for qualified plans
receive the difference between 7.5% of their salary and the IRS allowable plan
contribution in cash. Total Plan expense for 1997, 1996, and 1995 was $2.3
million, $2.0 million, and $1.6 million, respectively. Of those amounts, $0.3
million, $0.3 million, and $0.3 million were paid in cash in 1997, 1996 and
1995, respectively.

         The Company has a cash bonus incentive plan ("the Incentive Plan")
designed to reward employees for exceptional performance in the production of
new business, servicing of existing business, and management of expenses. Awards
for employees are based on the achievement of goals set for the growth of
revenues and profits. A portion of the awards earned under the Incentive Plan
may be paid in grants of restricted common stock. The Company has reserved
191,000 shares of common stock for issuance under the Incentive Plan; none have
been issued. Total Incentive Plan expense for the years ended December 31, 1997,
1996, and 1995 was $1.8 million, $1.7 million, and $1.7 million, respectively.

         The Company has a cash bonus management incentive plan ("the Management
Incentive Plan") designed to reward senior executives of the Company for
exceptional performance based on achievement of annual Company financial goals.
A portion of the Management Incentive Plan is based on the aggregate awards
earned under the Incentive Plan. Total Management Incentive Plan expense for
1997 was $1.3 million. No Management Incentive Plan expense was recorded in 1996
or 1995.

12 RELATED PARTY TRANSACTIONS

The Company has invested in Conning Insurance Capital Limited Partnership III
("the Fund"), a private equity fund that invests in the insurance industry. One
of the Company's independent directors was Vice Chairman of Conning and Company,
the general partner of the Fund, at the time of the commitment. The Company's
Chairman and Chief Executive Officer is a current member of the Advisory Board
of the Fund. At December 31, 1997, the Company had paid its entire commitment of
$4.0 million. The amounts have been recorded as a long-term investment.

         The Company had outstanding notes receivable from employees totaling
$0.8 million and $0.7 million at December 31, 1997 and 1996, respectively. The
majority of these notes are interest bearing and are payable over ten years
beginning in 1999.

         In February 1997, the Company purchased 750,000 shares of its common
stock, at a negotiated price of $19.40 per share, from its Chairman. Total
consideration was $14.6 million.

<PAGE>


13 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION

Supplemental disclosure of cash flow information for the years ended December 31
is as follows:

(in thousands)                            1997           1996          1995
--------------                            ----           ----          ----
Cash paid during the period for:
   Interest                              $1,178        $   223       $   342
   Income taxes
   (federal, state, and city)             9,391         12,873        12,179
Non-cash investing activities:
   Equipment acquired
   under capital leases                      --          2,149            --
   Purchase of real estate in
   satisfaction of
   note receivable                           --             --           392
Non-cash financing activities:
   Write-offs of notes receivable            26            103           266

14 COMMITMENTS AND CONTINGENCIES

Lease Commitments
The Company has operating leases for its headquarters, branch office facilities,
and certain equipment, including a corporate jet. Total rent expense for such
operating leases was $6.8 million, $5.2 million, and $4.6 million for 1997,
1996, and 1995, respectively.

         Future minimum rental payments required under these leases are
summarized as follows:

(in thousands)
--------------------
1998                                                        $ 8,181
1999                                                          7,088
2000                                                          5,149
2001                                                          4,841
2002                                                          3,625
Thereafter                                                   25,110
                                                            -------
                                                            $53,994
                                                            -------

Common Stock Repurchase Agreement
Effective October 6, 1994, Michael W. Cashman, Sr. retired from his
responsibilities as President, Chief Operating Officer and Director of E. W.
Blanch Holdings, Inc. In conjunction with this event, the Company entered into a
Common Stock Repurchase Agreement (the Agreement) with Mr. Cashman.

         During the third quarter of 1995, Mr. Cashman participated with other
selling shareholders in a managed sale of common shares. Per the Agreement, this
transaction reduced the Company's commitment to purchase common shares from Mr.
Cashman by 500,000 shares. In October 1995, the Company purchased 449,978 shares
of common stock for an aggregate price of $7.8 million, or $17.325 per share,
from Mr. Cashman representing 90% of the average market price during

<PAGE>


September 1995. This transaction fulfilled the Company's commitments which arose
when Mr. Cashman retired.

Acquisition
As a component of the purchase price for the 1994 purchase of the Elton George
Companies, the Company agreed to assume responsibility for up to $5.8 million of
certain pre-acquisition liabilities of the Elton George Companies. To the extent
the liabilities settled for less than $5.8 million, any remaining amounts would
be remitted to the Georges. As of December 31, 1996, the pre-acquisition
liabilities had settled for $5.6 million, and $0.2 million was remitted to the
Georges. The Company has no remaining liability under the terms of the Elton
George Companies purchase agreement.

Legal Proceedings
In the normal course of business, the Company and its subsidiaries are parties
to a number of lawsuits. Management believes that these suits will be resolved
with no material financial impact on the Company.

15 BUSINESS SEGMENT INFORMATION

The business segment information located on page 22 is incorporated herein by
reference. The following is additional business segment information for the year
ended December 31:

                   Identifiable          Depreciation            Capital
(in thousands)           Assets        & Amortization       Expenditures
--------------     ------------        --------------       ------------
1997
Domestic               $677,439              $  6,499           $ 11,116
International           254,706                 2,219              1,791
Eliminations            (12,378)                   --                 --
                   --------------------------------------------------------
                       $919,767              $  8,718           $ 12,907

1996
Domestic               $514,746              $ 25,573           $  4,654
International                10                    --                 --
                   --------------------------------------------------------
                       $514,756              $ 25,573           $  4,654
                   --------------------------------------------------------

<PAGE>


16 QUARTERLY FINANCIAL DATA (unaudited)

<TABLE>
<CAPTION>

Quarter Ended, (in thousands, except per 
share amounts)                                March 31       June 30     September 30   December 31
<S>                                           <C>            <C>           <C>           <C>     
1997
REVENUES:
Brokerage commissions and fees                $ 35,244       $ 37,842      $ 43,009      $ 42,008
Investment income                                1,785          2,222         2,361         2,326
                                              ---------------------------------------------------
Total revenues                                  37,029         40,064        45,370        44,334

Expenses:
Salaries and benefits                           16,478         19,430        20,613        19,387
Travel and marketing                             2,699          3,746         3,020         4,216
General and administrative                       6,577          7,589         7,109         8,436
Amortization of goodwill                           590            688           689         1,042
Interest and other expense                         276            321           365           364
                                              ---------------------------------------------------
Total expenses                                  26,620         31,774        31,796        33,445
                                              ---------------------------------------------------

Income before taxes                             10,409          8,290        13,574        10,889

Income taxes                                     4,006          3,340         5,311         4,351
                                              ---------------------------------------------------

Net income before minority interest              6,403          4,950         8,263         6,538
Minority interest, net of tax                      (41)           130           282            80
                                              ---------------------------------------------------

Net income                                    $  6,444       $  4,820      $  7,981      $  6,458
                                              ---------------------------------------------------

Net income per share - basic                  $   0.50       $   0.38      $   0.63      $   0.51
Net income per share - assuming dilution      $   0.50       $   0.38      $   0.62      $   0.49

1996
Revenues:
Brokerage commissions and fees                $ 24,135       $ 21,112      $ 27,948      $ 28,710
Investment income                                1,743          1,759         1,880         1,751
                                              ---------------------------------------------------
Total revenues                                  25,878         22,871        29,828        30,461

Expenses:
Salaries and benefits                           10,468         10,622        10,985        12,687
Travel and marketing                             1,712          1,866         1,735         2,256
General and administrative                       4,587          4,726         5,091         5,983
Amortization of goodwill                           768            768           784           758
Interest and other expense                          66             44            62            59
Restructuring charge                              --             --            --          22,750
                                              ---------------------------------------------------
Total expenses                                  17,601         18,026        18,657        44,493
                                              ---------------------------------------------------

Income before taxes                              8,277          4,845        11,171       (14,032)

Income taxes                                     3,171          1,910         4,312        (5,423)
                                              ---------------------------------------------------
Net income                                    $  5,106       $  2,935      $  6,859      ($ 8,609)
                                              ---------------------------------------------------

Net income per share - basic                  $   0.39       $   0.22      $   0.52      ($  0.65)

Net income per share - assuming dilution      $   0.39       $   0.22      $   0.52      ($  0.65)

</TABLE>

The 1996 and the first three quarters of 1997 earnings per share amounts have
been restated to comply with Statement of Financial Accounting Standards No.
128, EARNINGS PER SHARE.