UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D. C. 20549

                                    FORM 10-Q



(Mark One)

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

For the quarterly period ended SEPTEMBER 30, 1996
                               ------------------

                                       OR

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

For the Transition period from __________________ to _________________.

Commission File Number  1-10640

                            RELIASTAR FINANCIAL CORP.
         --------------------------------------------------------------
             (Exact name of registrant as specified in its charter)

             DELAWARE                                      41-1620373
---------------------------------                     -----------------------
 (State or other jurisdiction of                        (I.R.S. Employer
incorporation or organization)                          Identification No.)

            20 WASHINGTON AVENUE SOUTH, MINNEAPOLIS, MINNESOTA 55401
            --------------------------------------------------------
                    (Address of principal executive offices)
                                   (Zip Code)

                                 (612) 372-5432
                                 --------------
              (Registrant's telephone number, including area code)


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

Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days.

YES  X       NO
   ------      -------

Number  of shares  of  common  stock  outstanding  as of  October  31,  1996 was
37,363,931.

<PAGE>

PART I-FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS

                            RELIASTAR FINANCIAL CORP.
                      Condensed Consolidated Balance Sheets
                                  (in millions)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                   SEPTEMBER 30, 1996          DECEMBER 31, 1995
                                                                   ------------------          -----------------
ASSETS
<S>                                                                    <C>                         <C>         
Fixed Maturity Securities, Available-for-Sale                          $    9,002.7                $    9,053.7
Equity Securities                                                              41.0                        35.9
Mortgage Loans on Real Estate                                               1,913.1                     1,948.4
Real Estate and Leases                                                         88.8                        97.9
Policy Loans                                                                  539.4                       499.8
Other Invested Assets                                                          53.7                        47.0
Short-Term Investments                                                        126.1                       131.5
                                                                       ------------                ------------
     Total Investments                                                     11,764.8                    11,814.2
Cash                                                                           34.0                        48.5
Accounts and Notes Receivable                                                 170.8                       165.3
Reinsurance Receivable                                                        179.8                       162.9
Deferred Policy Acquisition Costs                                             998.6                       860.7
Present Value of Future Profits                                               222.6                       192.0
Property and Equipment, Net                                                   120.9                       123.2
Accrued Investment Income                                                     171.5                       164.7
Other Assets                                                                  342.5                       299.1
Participation Fund Account Assets                                             316.9                       319.6
Assets Held in Separate Accounts                                            1,897.5                     1,369.0
                                                                       ------------                ------------
       TOTAL ASSETS                                                    $   16,219.9                $   15,519.2
                                                                       ============                ============

LIABILITIES
Future Policy and Contract Benefits                                    $   11,207.7                $   11,033.2
Pending Policy Claims                                                         284.6                       257.7
Other Policyholder Funds                                                      193.4                       174.4
Notes and Mortgages Payable                                                   407.4                       422.3
Income Taxes                                                                  107.4                       170.2
Other Liabilities                                                             367.1                       358.8
Participation Fund Account Liabilities                                        316.9                       319.6
Liabilities Related to Separate Accounts                                    1,892.0                     1,362.9
                                                                       ------------                ------------
       TOTAL LIABILITIES                                                   14,776.5                    14,099.1
                                                                       ------------                ------------

Company-Obligated Mandatorily Redeemable Preferred
   Securities Issued by a Consolidated Subsidiary                             120.9                           -

SHAREHOLDERS' EQUITY
10% Senior Cumulative Preferred Stock                                            -                         63.2
ESOP Convertible Preferred Stock                                               28.7                        28.9
Note Receivable from ESOP                                                     (22.3)                      (23.4)
Common Stock (Shares Issued:  39.8)                                           541.5                       566.5
Unamortized Restricted Stock Awards                                            (2.0)                       (3.0)
Net Unrealized Investment Gains                                                89.1                       246.8
Retained Earnings                                                             756.0                       647.2
Less Treasury Common Stock, at Cost (Shares Held: 1996, 2.5;
   1995, 3.5)                                                                 (68.5)                     (106.1)
                                                                       ------------                ------------
       TOTAL SHAREHOLDERS' EQUITY                                           1,322.5                     1,420.1
                                                                       ------------                ------------

       TOTAL LIABILITIES AND
       SHAREHOLDERS' EQUITY                                            $   16,219.9                $   15,519.2
                                                                       ============                ============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                      2
<PAGE>

                            RELIASTAR FINANCIAL CORP.
                   Condensed Consolidated Statements of Income
                      (in millions, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                              THREE MONTHS ENDED SEPTEMBER 30        NINE MONTHS ENDED SEPTEMBER 30
                                                                   1996             1995                1996                1995
REVENUES
<S>                                                           <C>                 <C>                <C>                 <C>        
Premiums                                                      $     205.6         $     207.1        $     619.2         $     627.0
Net Investment Income                                               233.7               228.2              703.2               660.7
Realized Investment Gains (Losses)                                      -                 (.3)               8.7                 5.0
Policy and Contract Charges                                          61.2                55.2              181.8               161.1
Other Income                                                         44.1                32.5              111.8                94.5
                                                              -----------         -----------        -----------         -----------
     Total                                                          544.6               522.7            1,624.7             1,548.3
                                                              -----------         -----------        -----------         -----------

BENEFITS AND EXPENSES
Benefits to Policyholders                                           314.6               328.3              966.9               981.0
Sales and Operating Expenses                                        111.1                90.6              312.0               265.2
Amortization of Deferred Policy Acquisition Costs
    and Present Value of Future Profits                              28.2                23.2               82.4                70.5
Interest Expense                                                      7.2                 7.4               21.4                19.6
Dividends and Experience Refunds to Policyholders                     7.7                 7.0               15.8                17.9
                                                              -----------         -----------        -----------         -----------
     Total                                                          468.8               456.5            1,398.5             1,354.2
                                                              -----------         -----------        -----------         -----------
Income Before Income Taxes and Net Dividends on Preferred
    Securities of Subsidiary                                         75.8                66.2              226.2               194.1
Income Tax Expense                                                   26.3                23.5               79.2                68.8
Net Dividends on Preferred Securities of Subsidiary                   1.6                   -                3.3                   -
                                                              -----------         -----------        -----------         -----------

Net Income                                                    $      47.9         $      42.7        $     143.7         $     125.3
                                                              ===========         ===========        ===========         ===========

NET INCOME PER COMMON SHARE
Primary                                                       $      1.26         $      1.10        $      3.74         $      3.23
                                                              ===========         ===========        ===========         ===========

Fully Diluted                                                 $      1.19         $      1.03        $      3.53         $      3.04
                                                              ===========         ===========        ===========         ===========

Net Income Available to Common Shareholders                   $      47.4         $      40.6        $     139.0         $     119.1
                                                              ===========         ===========        ===========         ===========

Weighted Average Shares
  Common and Common Equivalent Shares (Primary)                      37.7                37.0               37.2                36.9
  Common Shares Assuming Maximum Dilution (Fully Diluted)            40.3                39.7               39.8                39.6
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       3
<PAGE>

                            RELIASTAR FINANCIAL CORP.
            Condensed Consolidated Statements of Shareholders' Equity
                      (in millions, except per share data)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                                NINE MONTHS ENDED SEPTEMBER 30
                                                                                  1996                  1995
10% SENIOR CUMULATIVE PREFERRED STOCK
<S>                                                                          <C>                  <C>           
   Beginning of Period                                                       $        63.2          $       63.2
   Redeemed                                                                          (63.2)                    -
                                                                             -------------          ------------
      End of Period                                                                      -                  63.2
                                                                             -------------          ------------

ESOP CONVERTIBLE PREFERRED STOCK
   Beginning of Year                                                                  28.9                  29.3
   Redeemed                                                                            (.2)                  (.3)
                                                                             -------------          ------------
      End of Period                                                                   28.7                  29.0
                                                                             -------------          ------------

NOTE RECEIVABLE FROM ESOP
   Beginning of Year                                                                 (23.4)                (24.6)
   Repayments, Accrued or Paid                                                         1.1                    .9
                                                                             -------------          ------------
      End of Period                                                                  (22.3)                (23.7)
                                                                             -------------          ------------

COMMON STOCK
   Beginning of Year                                                                 566.5                 293.4
   Issued for Benefit Plans                                                              -                    .2
   Issued for Acquisition                                                                -                 265.9
   Loss on Treasury Shares Reissued for Benefit Plans                                 (2.9)                 (2.6)
   (Loss) Gain on Treasury Shares Reissued for Acquisitions                          (23.9)                 10.1
   Tax Benefit on Stock Options Exercised                                              1.8                   1.1
                                                                             -------------          ------------
      End of Period                                                                  541.5                 568.1
                                                                             -------------          ------------

UNAMORTIZED RESTRICTED STOCK AWARDS
   Beginning of Year                                                                  (3.0)                 (2.1)
   Awards, Net                                                                         (.1)                 (2.1)
   Amortization of Restricted Stock Awards                                             1.1                    .9
                                                                             -------------          ------------
      End of Period                                                                   (2.0)                 (3.3)
                                                                             -------------          ------------

NET UNREALIZED INVESTMENT GAINS (LOSSES)
   Beginning of Year                                                                 246.8                 (79.4)
   Change for the Period                                                            (157.7)                209.2
                                                                             -------------          ------------
      End of Period                                                                   89.1                 129.8
                                                                             -------------          ------------

RETAINED EARNINGS
   Beginning  of Year                                                                647.2                 528.4
   Net Income                                                                        143.7                 125.3
   Dividends to Shareholders:
      10% Senior Cumulative Preferred Stock (Per Share:  1996, $5.00;
          1995, $7.50)                                                                (3.2)                 (4.7)
      ESOP Convertible Preferred Stock ($1.643 Per Share)                             (2.1)                 (2.1)
      Common Stock (Per Share: 1996, $.81; 1995, $.725)                              (29.6)                (26.7)
   Tax Benefit on ESOP Convertible Preferred Stock Dividend                             .6                    .6
   Redemption of ESOP Convertible Preferred Stock                                      (.6)                  (.6)
                                                                             -------------          ------------
      End of Period                                                                  756.0                 620.2
                                                                             -------------          ------------

TREASURY COMMON STOCK
   Beginning of Year                                                                (106.1)                 (9.7)
   Acquired with Acquisition                                                             -                 (72.7)
   Reissued for Acquisitions                                                          25.2                   9.7
   Acquired, Other                                                                    (3.5)                (50.4)
   Reissued, Other                                                                    15.9                  14.1
                                                                             -------------          ------------
      End of Period                                                                  (68.5)               (109.0)
                                                                             -------------          ------------

TOTAL SHAREHOLDERS' EQUITY                                                   $     1,322.5          $    1,274.3
                                                                             =============          ============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       4
<PAGE>

                            RELIASTAR FINANCIAL CORP.
                 Condensed Consolidated Statements of Cash Flows
                                  (in millions)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                               NINE MONTHS ENDED SEPTEMBER 30
                                                                                   1996                 1995
OPERATING ACTIVITIES
<S>                                                                          <C>                  <C>           
Net Income                                                                   $       143.7        $        125.3
Adjustments to Reconcile Net Income to Net Cash Provided by
  Operating Activities
     Interest Credited to Insurance Contracts                                        370.9                 369.2
     Future Policy Benefits                                                         (180.4)                (88.4)
     Capitalization of Deferred Policy Acquisition Costs                            (149.0)               (133.3)
     Amortization of Deferred Policy Acquisition Costs                                82.4                  70.5
     Deferred Income Taxes                                                            14.3                   8.8
     Net Change in Receivables and Payables                                           47.5                 (33.2)
     Other Assets                                                                    (50.2)                (94.4)
     Realized Investment Gains, Net                                                   (8.7)                 (5.0)
     Other                                                                             5.7                   7.9
                                                                             -------------        --------------
          Net Cash Provided by Operating Activities                                  276.2                 227.4
                                                                             -------------        --------------

INVESTING ACTIVITIES
Proceeds from Sales of Available-for-Sale Fixed Maturity Securities                  161.3                 148.2
Proceeds from Maturities or Repayment of Fixed Maturity Securities                   675.2                 516.0
Cost of Fixed Maturity Securities Acquired                                        (1,140.8)             (1,056.5)
Sales (Purchases) of Equity Securities, Net                                           (1.0)                 16.9
Proceeds of Mortgage Loans Sold, Matured or Repaid                                   316.7                 217.2
Cost of Mortgage Loans Acquired                                                     (291.9)               (256.2)
Sales of Real Estate and Leases, Net                                                  19.0                  21.6
Policy Loans Issued, Net                                                             (39.6)                (60.6)
Sales of Other Invested Assets, Net                                                     .5                  12.3
Sales (Purchases) of Short-Term Investments, Net                                       5.4                 (72.0)
Net Cash Acquired with Acquisition of USLICO Corp.                                       -                   1.3
                                                                             -------------        --------------
          Net Cash Used by Investing Activities                                     (295.2)               (511.8)
                                                                             -------------        --------------

FINANCING ACTIVITIES
Deposits to Insurance Contracts                                                      855.4                 967.8
Maturities and Withdrawals from Insurance Contracts                                 (866.2)               (745.4)
Retirement of Senior Cumulative Preferred Stock                                      (63.2)                    -
Net Proceeds from Issuance of Preferred Securities                                   120.8                     -
Increase in Notes and Mortgages Payable                                               51.3                 238.3
Repayment of Notes and Mortgages Payable                                             (66.2)                (96.1)
Payments Received on Note Receivable from ESOP                                           -                    .9
Issuance of Common Stock Under Stock Option and Other Plans                           11.0                   5.9
Dividends on 10% Senior Cumulative Preferred Stock                                    (3.2)                 (4.7)
Dividends on ESOP Convertible Preferred Stock                                         (2.1)                 (2.1)
Dividends on Common Stock                                                            (29.6)                (26.7)
Acquisition of Treasury Common Stock                                                  (3.5)                (50.4)
                                                                             -------------        --------------
          Net Cash Provided by Financing Activities                                    4.5                 287.5
                                                                             -------------        --------------
Increase (Decrease) in Cash                                                          (14.5)                  3.1
Cash at Beginning of Period                                                           48.5                  20.3
                                                                             -------------        --------------
Cash at End of Period                                                        $        34.0        $         23.4
                                                                             =============        ==============
</TABLE>

See accompanying notes to condensed consolidated financial statements.

                                       5
<PAGE>


                            RELIASTAR FINANCIAL CORP.
              Notes to Condensed Consolidated Financial Statements
                                   (unaudited)

Note 1. Basis of Presentation

The condensed consolidated financial statements have been prepared in conformity
with generally accepted  accounting  principles and such principles were applied
on a basis  consistent  with that reflected in the 1995 Annual Report filed with
the Securities and Exchange  Commission (SEC) except for the accounting  changes
as described in Note 2. The financial  information  included herein,  other than
the  condensed  consolidated  balance  sheet as of December 31,  1995,  has been
prepared  by  management   without  audit  by   independent   certified   public
accountants.  The condensed  consolidated  balance sheet as of December 31, 1995
has been derived from, and does not include all the disclosures contained in the
audited consolidated financial statements for the year ended December 31, 1995.

The information  furnished includes all adjustments and accruals consisting only
of  normal,   recurring  accrual  adjustments  which  are,  in  the  opinion  of
management,  necessary for a fair  statement of results for the interim  period.
The results of operations for any interim period are not necessarily  indicative
of results  for the full year.  The  unaudited  interim  condensed  consolidated
financial statements should be read in conjunction with the financial statements
and notes thereto  contained in the Annual Report of ReliaStar  Financial Corp.
(the Company or ReliaStar) for the year ended December 31, 1995.

Note 2. Accounting Changes

ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED  ASSETS AND FOR LONG-LIVED ASSETS TO
BE DISPOSED OF

Effective January 1, 1996, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 121 "Accounting for the Impairment of Long-Lived Assets and
for Long-Lived  Assets to be Disposed Of." SFAS No. 121  establishes  accounting
standards  for  the  impairment  of  long-lived  assets,   certain  identifiable
intangibles,  and  goodwill  related to those assets to be held and used and for
long-lived assets and certain  identifiable  intangibles to be disposed of. This
Statement requires that long-lived assets and certain  identifiable  intangibles
to be held and used by an entity be reviewed for impairment  whenever  events or
changes in  circumstances  indicate that the carrying amount of an asset may not
be  recoverable.  Measurement of an impairment  loss for  long-lived  assets and
identifiable  intangibles that an entity expects to hold and use should be based
on the fair  value of the asset.  Long-lived  assets  and  certain  identifiable
intangibles  to be disposed of must be reported at the lower of carrying  amount
or fair value less cost to sell.  The  adoption of this  standard did not have a
significant effect on the financial results of the Company.

ACCOUNTING FOR STOCK-BASED COMPENSATION

Effective  January 1, 1996, the Company  adopted SFAS No. 123,  "Accounting  for
Stock-Based  Compensation."  SFAS  No.  123  requires  expanded  disclosures  of
stock-based  compensation  arrangements  with employees and encourages (but does
not  require)  compensation  cost to be measured  based on the fair value of the
equity  instrument  awarded.  Companies are permitted,  however,  to continue to
apply  Accounting  Principles  Board  (APB)  Opinion  No. 25,  which  recognizes
compensation cost based on the intrinsic value of the equity instrument awarded.
The  Company  will  continue  to apply APB  Opinion  No.  25 to its  stock-based
compensation  awards to employees  and  directors and will disclose the required
proforma  effect  on net  income  and  earnings  per  share in its  consolidated
financial statements for the year ending December 31, 1996.

Note 3. Company-Obligated  Mandatorily Redeemable Preferred Securities Issued by
a Consolidated Subsidiary

On  March  29,  1996,   ReliaStar  Financing  I  (the  "Subsidiary   Trust"),  a
consolidated  wholly owned  subsidiary  of ReliaStar,  issued $125.0  million of
8.20%  Trust-Originated  Preferred Securities (the "Preferred  Securities").  In
connection with the Subsidiary Trust's issuance of the Preferred  Securities and
the related  purchase  by  ReliaStar  of all of the  Subsidiary  Trust's  common
securities (the "Common  Securities"),  ReliaStar issued to the Subsidiary Trust
$128.9 million principal amount of its 8.20%  Subordinated  Deferrable  Interest
Notes, due March 15, 2016 (the "Junior Subordinated Debt Securities").  The sole
assets of the Subsidiary Trust are and will be the Junior

                                       6

Subordinated Debt Securities. The interest and other payment dates on the Junior
Subordinated  Debt Securities  correspond to the  distribution and other payment
dates on the  Preferred  Securities  and the Common  Securities.  Under  certain
circumstances,  the Junior  Subordinated  Debt  Securities may be distributed to
holders  of  Preferred  Securities  and  holders  of the  Common  Securities  in
liquidation of the Subsidiary Trust. The Junior Subordinated Debt Securities are
redeemable  at the  option  of  ReliaStar  on or  after  March  29,  2001,  at a
redemption price of $25 per Junior  Subordinated  Debt Security plus accrued and
unpaid  interest.  The Preferred  Securities and the Common  Securities  will be
redeemed  on a PRO RATA basis to the same  extent  that the Junior  Subordinated
Debt  Securities are repaid,  at $25 per Preferred  Security and Common Security
plus accumulated and unpaid  distributions.  ReliaStar's  obligations  under the
Junior  Subordinated  Debt  Securities and related  agreements,  taken together,
constitute  a full and  unconditional  guarantee by ReliaStar of payments due on
the  Preferred  Securities.  On March 29,  1996,  5,000,000  shares of Preferred
Securities were issued and all remain outstanding.

Note 4. Redemption of 10% Senior Cumulative Preferred Stock

On July 1, 1996, the Company redeemed,  at par, all of the outstanding shares of
its 10%  Senior  Cumulative  Preferred  Stock.  The par value of the 10%  Senior
Cumulative  Preferred Stock was $63.25 million. The redemption was funded with a
portion of the proceeds from the issuance of the Preferred  Securities (See Note
3).

Note 5. Acquisitions

During  September  1996,  the  Company  acquired   Successful  Money  Management
Seminars,  Inc. (SMMS). SMMS,  headquartered in Portland,  Oregon,  develops and
distributes educational materials used primarily in the presentation of seminars
to consumers on personal financial  planning.  The acquisition was accounted for
using the  pooling-of-interests  method of  accounting.  Prior  periods were not
restated due to immateriality.

Note 6. Subsequent Event

During  October  1996,  the  Company  completed  the  acquisition  of  PrimeVest
Financial Services, Inc. (PrimeVest).  PrimeVest is a full-service,  third-party
marketing  firm  located  in  St.  Cloud,   Minnesota,   which   specializes  in
distributing mutual funds, stocks and bonds,  variable and fixed annuities,  and
other   financial   products  and  services   through  a  network  of  financial
institutions.   The  purchase  price  was  approximately  $16  million  and  the
acquisition will be accounted for using the purchase method of accounting.

                                       7
<PAGE>

ITEM 2.                     RELIASTAR FINANCIAL CORP.

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

RESULTS OF OPERATIONS

Pretax  results of  operations  by  business  segment are  summarized  below (in
millions):

<TABLE>
<CAPTION>
                                                            THREE MONTHS                 NINE MONTHS
                                                          ENDED SEPTEMBER 30          ENDED SEPTEMBER 30
                                                          1996          1995          1996         1995
Pretax Income (Loss) Excluding Realized
<S>                                                    <C>           <C>            <C>         <C>    
 Investment Gains and Losses:
   Individual Insurance                                $  52.2       $  45.7        $ 149.8     $ 128.4
   Employee Benefits                                      12.4          11.4           34.4        33.5
   Life and Health Reinsurance                            11.7          11.2           35.9        33.1
   Pension                                                 3.6           2.7           11.2         8.1
   Corporate and Other                                    (4.1)         (4.5)         (13.8)      (14.0)
                                                       -------       -------        -------     -------
Pretax Operating Income                                   75.8          66.5          217.5       189.1
   Net Pretax Realized Investment Gains (Losses)             -           (.3)           8.7         5.0
                                                       -------       -------        -------     -------
Pretax Income Before Net Dividends
  on Preferred Securities of Subsidiary                   75.8          66.2          226.2       194.1
Income Tax Expense                                        26.3          23.5           79.2        68.8
Net Dividends on Preferred Securities of Subsidiary        1.6             -            3.3           -
                                                       -------       -------        -------     -------
Net Income                                             $  47.9       $  42.7        $ 143.7     $ 125.3
                                                       =======       =======        =======     =======
</TABLE>

The  discussion  of business  segment  results that follows  refers to the above
pretax segment  results and, in each  instance,  amounts are before income taxes
unless otherwise noted.

INDIVIDUAL INSURANCE

The  Individual  Insurance  segment of the Company is composed of the individual
insurance  division of  ReliaStar  Life  Insurance  Company  ("ReliaStar  Life",
formerly Northwestern National Life Insurance Company),  Northern Life Insurance
Company  (Northern),  United Services Life Insurance Company (USL) and ReliaStar
Bankers Security Life Insurance Company ("RBSL",  formerly Bankers Security Life
Insurance  Society).  The North Atlantic Life  Insurance  Company of America was
merged  into RBSL  on  December  28,  1995.  These  subsidiaries  are  sometimes
collectively referred to as the Insurers.

Pretax  operating  income for the third  quarter of 1996  increased 14% to $52.2
million  compared to the third quarter of 1995.  Pretax operating income for the
first nine months of 1996  increased  $21.4 million or 17 percent  compared with
the same period in 1995. The increase in quarterly  earnings is primarily due to
an increase in interest  spreads  and an eight  percent  growth in assets  under
management. The average interest spread of 249 basis points in the third quarter
of 1996  increased 22 basis points  compared  with 227 basis points in the third
quarter of 1995. This increase in spreads reflects a 27 basis point reduction in
the average  crediting rate and a 5 basis point decrease in the portfolio yield.
Year-to-date  earnings also  increased  primarily due to the increased  interest
spreads  and the six  percent  growth in  assets  under  management.  Management
expects interest spreads in the fourth quarter of 1996 to decline from the third
quarter  level.  It should be noted that the interest  spread  calculation is an
annualized  measure and can be overly influenced in a particular  quarter by the
level of investment  prepayment premiums,  recoveries on problem investments and
other quarterly variances in the level of net investment income. For most of the
business,  crediting  rates on in  force  business  are  reset  annually  at the
beginning of the calendar year and are guaranteed for one year.  Crediting rates
offered on new  business  can be changed at any time in response to  competition
and market interest rates,  and are guaranteed on most new premiums  received to
the end of the calendar year.

                                       8

EMPLOYEE BENEFITS

Pretax operating income for the third quarter of 1996, increased $1.0 million or
9% compared to the same period of 1995.  Pretax  operating  income for the first
nine months of 1996  increased  3% to $34.4  million  compared to the first nine
months of 1995. Third quarter pretax operating income increased primarily due to
more favorable  group life  mortality  experience,  more favorable  group health
morbidity experience and higher net investment income. These favorable variances
were  partially  offset  by the  impact  of  higher  operating  expense  ratios.
Long-term disability business continued to be profitable in the third quarter of
1996.  Year-to-date pretax operating income increased primarily due to favorable
morbidity experience and higher net investment income.

LIFE AND HEALTH REINSURANCE

Pretax operating income of the Life and Health Reinsurance segment for the third
quarter of 1996  increased  4% to $11.7  million  compared to the same period in
1995.  Pretax  operating income increased $2.8 million for the first nine months
of 1996 when compared  with the same period in 1995.  Segment  pretax  operating
income for the  year-to-date  and the third  quarter of 1996 was higher than the
same periods in 1995 due primarily to increased  earned premium,  and higher net
investment income.  These positive earnings variances were partially offset by a
slightly less  favorable  overall loss ratio as compared with 1995.  Earnings in
the reinsurance business can fluctuate based upon a number of factors, including
pricing,  market  capacity,  the  availability  and  pricing  of  retrocessional
programs, loss experience and the risk profile of the book of business.

PENSION

Pretax operating income of the Pension segment for the third quarter of 1996 was
$.9 million  higher than for the same period of 1995.  Pretax  operating  income
increased  $3.1 million for the nine months ended  September  30, 1996  compared
with the same period in 1995.  Third quarter  pretax  operating  income from the
small  employer  401(k)  line of  business  increased  to $1.3  million  in 1996
compared  with $.6  million  in 1995.  Income  in the  401(k)  line of  business
increased primarily due to higher fee revenues  attributable to growth in assets
under management.  Pretax operating income in the participating  pension and GIC
lines of business for the third quarter of 1996  increased $.2 million  compared
with the second quarter of 1995.  Year-to-date  segment earnings  increased $3.1
million  compared  with 1995 due  primarily  to higher fee revenues in the small
employer   401(k)  line  of  business  and  higher   interest   margins  in  the
participating pension and GIC lines of business.

CORPORATE AND OTHER

The pretax  operating loss for Corporate and Other for the third quarter of 1996
was $.4  million  lower than for the same period of 1995.  The pretax  operating
loss for the first nine months of 1996 was $.2  million  lower than for the same
period of 1995. The lower quarterly loss was due primarily to higher earnings in
the  Company's  mortgage  banking  subsidiary  and lower losses in the Company's
mutual  fund  operations.  The lower  year-to-date  losses  compared to the same
period in 1995 are primarily  due to lower losses in the  Company's  mutual fund
operations and short-term  interest  income on the proceeds from the issuance of
$125.0 million in Trust-Originated  Preferred  Securities (TOPrSsm) prior to the
redemption  of $63.25  million of 10%  Senior  Cumulative  Preferred  Stock (see
FINANCIAL  CONDITION - Liquidity  and  Capital  Resources - ReliaStar  Financial
Corp.).  The short term interest income from the TOPrSsm  proceeds was offset by
TOPrSsm  dividend expense ($3.3 million) which is reported on a separate line on
the results of operations by business  segment table shown on the previous page.
Offsetting  the  favorable  variances  are lower  year-to-date  earnings  of the
Company's  mortgage  banking  subsidiary  resulting  from gains of $4.8  million
recognized  in the first  quarter of 1995 from bulk sales of mortgage  servicing
rights. There have been no such sales in 1996.

                                       9

<PAGE>

REALIZED INVESTMENT GAINS AND LOSSES

The sources of the pretax realized investment gains (losses) were as follows (in
millions):

<TABLE>
<CAPTION>
                                                            THREE MONTHS                 NINE MONTHS
                                                         ENDED SEPTEMBER 30          ENDED SEPTEMBER 30
                                                         1996           1995          1996         1995
Net Gains (Losses) on Sales of Investments
<S>                                                     <C>            <C>            <C>         <C>    
    Fixed Maturity Securities                           $  (3.5)       $   .4         $  2.5      $   2.5
    Equity Securities                                       1.6             -            1.7          9.2
    Mortgage Loans                                          0.1             -            0.1            -
    Foreclosed Real Estate                                   .3            .7             .6           .4
    Real Estate                                             2.0            .9            2.7          1.6
    Other                                                   1.6           2.0            7.3          1.6
                                                        -------        ------         ------      -------
                                                            2.1        $  4.0           14.9         15.3
                                                        -------        ------         ------      -------
Provision for Losses on Investments
   Fixed Maturity Securities                                  -          (1.4)          (1.1)        (3.0)
   Equity Securities                                          -             -              -          (.1)
   Mortgage Loans                                           (.7)          (.6)          (1.9)        (3.0)
   Foreclosed Real Estate                                  (1.3)         (2.3)          (2.7)        (4.2)
   Real Estate                                              (.1)            -            (.5)           -
                                                        --------       ------         -------      ------
                                                           (2.1)         (4.3)          (6.2)       (10.3)
                                                        -------        ------         ------      -------
Net Pretax Realized Investment Gains (Losses)           $     -        $  (.3)        $  8.7      $   5.0
                                                        =======        ======         ======      =======
</TABLE>

Gross  realized  gains  and  losses  from the sale of  available-for-sale  fixed
maturity securities were as follows (in millions):
                                                               NINE MONTHS
                                                           ENDED SEPTEMBER 30
                                                            1996        1995

Gross Realized Gains                                      $  6.1       $ 5.7

Gross Realized Losses                                     $ (3.6)     $ (3.2)

The Company establishes  allowances and writes down the value of specific assets
based  upon  its  continuing  review  of  individual  problem  investments.  The
Company's  practice of recording  allowances and write-downs based upon a review
of  individual  problem  assets  results  in  fluctuations  in the  level of the
provision for losses on investments  reported in each period.  The provision for
losses on  investments is affected to a significant  degree by general  economic
conditions and the status of the real estate market.  While the Company believes
it has set aside  appropriate  reserves and allowances for problem  investments,
subsequent  economic  and market  conditions  may require the  establishment  of
additional reserves.

DISCONTINUED OPERATIONS

In connection with the March 1992 sale of Chartwell Re Corporation  (Chartwell),
the Company and the acquiring company entered into a separate reciprocal reserve
indemnification  agreement  with  respect to the  adequacy  of the loss and loss
adjustment expense reserves of Chartwell. On June 28, 1996 a final settlement of
the reserve  indemnification  agreement  was  reached.  The  Company's  previous
accruals for this liability were adequate.

ACQUISITIONS

During  September  1996,  the  Company  acquired   Successful  Money  Management
Seminars,  Inc. (SMMS). SMMS,  headquartered in Portland,  Oregon,  develops and
distributes educational materials used primarily in the presentation of seminars
to consumers on personal financial  planning.  The acquisition was accounted for
using the  pooling-of-interests  method of  accounting.  Prior  periods were not
restated due to immateriality.

                                       10

During  October  1996,  the  Company  completed  the  acquisition  of  PrimeVest
Financial Services, Inc. (PrimeVest).  PrimeVest is a full-service,  third-party
marketing  firm  located  in  St.  Cloud,   Minnesota,   which   specializes  in
distributing  mutual funds,  stocks and bonds,  variable and fixed annuities and
other   financial   products  and  services   through  a  network  of  financial
institutions.   The  purchase  price  was  approximately  $16  million  and  the
acquisition will be accounted for using the purchase method of accounting.

FINANCIAL CONDITION

LIQUIDITY AND CAPITAL RESOURCES - RELIASTAR FINANCIAL CORP.

ReliaStar,  as parent,  is dependent upon  dividends,  interest and payments for
other charges  received from its  subsidiaries to pay dividends to shareholders,
service its debt and pay other obligations.  The payment of dividends,  interest
or  other  charges  by the  Insurers  is  subject  to  restrictions  imposed  by
applicable insurance laws and regulations.

The payment of future dividends by ReliaStar will be largely  dependent upon the
ability of ReliaStar Life to pay dividends to it. Under Minnesota  insurance law
regulating the payment of dividends by ReliaStar  Life, any such payment must be
in an amount deemed prudent by ReliaStar  Life's board of directors and,  unless
otherwise  approved by the Commissioner of the Minnesota  Department of Commerce
(the  Commissioner),  must be paid solely from the  adjusted  earned  surplus of
ReliaStar  Life.  Adjusted earned surplus means the earned surplus as determined
in accordance with statutory accounting practices (unassigned funds) less 25% of
the  amount of such  earned  surplus  which is  attributable  to net  unrealized
capital gains. Further, without approval of the Commissioner, ReliaStar Life may
not pay in any  calendar  year any  dividend  which,  when  combined  with other
dividends paid within the preceding 12 months, exceeds the greater of (i) 10% of
ReliaStar  Life's  statutory  surplus  at the  prior  year-end  or (ii)  100% of
ReliaStar  Life's  statutory net gain from  operations  (not including  realized
capital  gains) for the prior  calendar  year. For 1996, the amount of dividends
which can be paid by  ReliaStar  Life  without  Commissioner  approval is $117.7
million.

On December 18, 1995, the Company filed a shelf registration  statement with the
Securities  and Exchange  Commission for the issuance of up to $250.0 million of
debt or equity  securities.  This  filing  replaced  and  superseded  the unused
portion ($140.0 million) of a previous shelf registration. On March 27, 1996 the
Company sold $125.0 million of 8.20% TOPrSsm. The Company used the proceeds from
this offering to redeem, at par, all of the outstanding shares of its 10% Senior
Cumulative  Preferred Stock on July 1, 1996,  repay short-term bank debt and for
general corporate purposes.

LIQUIDITY AND CAPITAL RESOURCES - INSURERS

Liquidity  for life  insurance  companies  is measured  by their  ability to pay
scheduled  contractual  benefits,  pay  operating  expenses and fund  investment
commitments.  Sources of liquidity include  scheduled and unscheduled  principal
and interest payments on investments, premium payments and deposits and the sale
of liquid investments. These sources of liquidity for the Insurers significantly
exceed scheduled uses.

Liquidity is also affected by  unscheduled  benefit  payments,  including  death
benefits,  benefits  under  insured  accident  and health  policies and contract
withdrawals and surrenders. The amount of withdrawals and surrenders is affected
by a variety of factors such as credited interest rates for competing  products,
general economic  conditions,  the Insurers' claims paying ratings and events in
the industry which affect policyholders' confidence.

The Insurers'  investment  portfolios  represent a significant  source of liquid
assets. As of September 30, 1996, the Insurers'  investment  portfolio  included
$6.6 billion (41% of total  assets) of  short-term  investments  and  investment
grade  marketable  bonds.  The  September  30, 1996  investment  portfolio  also
included $2.0 billion of investment  grade privately  placed bonds which,  while
not publicly traded, are a source of liquidity.

The policies and annuities  issued by the Individual  Insurance  segment contain
provisions which allow  contractholders to withdraw or surrender their contracts
under defined  circumstances.  These  policies and annuities  generally  contain
provisions   which  apply  penalties  or  otherwise   restrict  the  ability  of
contractholders  to make  unscheduled  withdrawals or  surrenders.  The Insurers
closely  monitor  the  surrender  and policy loan  activity  of their  insurance
products and manage the composition of their  investment  portfolios,  including
liquidity,  in light of 

                                       11

such  activity.  The  Insurers  have not  experienced  any  material  changes in
withdrawal and surrender  activity  attributable to their  individual  insurance
products which would have a material effect on liquidity.

Changes in interest  rates may affect the  incidence  of policy  surrenders  and
other   withdrawals.   In  addition  to  the  potential   impact  on  liquidity,
unanticipated withdrawals in a changed interest rate environment could adversely
affect  earnings if the Company  were  required to sell  investments  at reduced
values in order to meet  liquidity  demands.  The Company  manages the asset and
liability  portfolios  in order to  minimize  the  adverse  earnings  impact  of
changing  market  interest  rates.  The Company seeks assets which have duration
characteristics  similar to the liabilities which they support. The Company also
uses derivative instruments,  such as interest rate swaps and futures contracts,
to adjust the duration of the asset and liability  portfolios  (see  INVESTMENTS
Derivative Financial  Instruments).  The Company closely monitors its derivative
usage and has  procedures  in place to manage  counter-party  risks and  related
exposures.

Statutory  surplus is computed  according  to rules  prescribed  by the National
Association  of Insurance  Commissioners  (NAIC),  as modified by each Insurer's
state of domicile.  Statutory  accounting  rules are different from GAAP and are
intended to reflect a more conservative  perspective by, for example,  requiring
immediate recognition of selling expenses.  The Company's long-term growth goals
contemplate  continued  growth in its  insurance  businesses.  To achieve  these
growth  goals,  the  Insurers  will need to increase  their  statutory  surplus.
Additional  statutory  surplus may be secured  through  various  sources such as
internally generated statutory earnings,  equity sales by a subsidiary or equity
infusions by the Company with funds generated through debt or equity offerings.

The state of domicile of each of the Insurers imposes minimum risk-based capital
requirements on insurance  enterprises.  The formulas for determining the amount
of risk-based  capital  specify  various  weighting  factors that are applied to
financial  balances or various levels of activity based on the perceived  degree
of  risk.  Regulatory  compliance  is  determined  by a  ratio  of  a  company's
regulatory total adjusted capital,  as defined,  to its authorized control level
risk-based  capital,  as defined.  Companies  below  specific  trigger points or
ratios are classified  within certain levels,  each of which requires  specified
corrective  action.  The  risk-based  capital  ratio  of  each  of the  Insurers
significantly  exceeds the ratios at which regulatory corrective action would be
required.

CONSOLIDATED CASH FLOWS

The Company's cash balance at September 30, 1996 was $34.0  million.  During the
first  nine  months  of 1996,  net cash  provided  by  operating  and  financing
activities was $276.2 million and $4.5 million,  respectively,  which was offset
by net cash used by investing activities of $295.2 million.

The $276.2  million of net cash provided by operating  activities  was primarily
the result of positive cash flow from premiums and investment income receipts in
excess of cash outflows for insurance benefits and sales and operating expenses.
Net cash  provided by financing  activities  of $4.5 million was  primarily  the
result of  positive  cash flow from the net  proceeds  from the  issuance of the
TOPrSsm  securities  offset  by the  redemption  of the  10%  Senior  Cumulative
Preferred Securities and dividends on common stock.

INVESTMENTS

The  investment  strategy  for the Company is  designed to maintain  the overall
quality of the portfolios,  to maintain an appropriate  liquidity  position,  to
assure   appropriate   asset/liability   structures,   to  achieve   asset  type
diversification and to avoid issuer concentration.

The Company  intends to direct most of its  investment  cash flow in 1996 to the
acquisition  of investment  grade  marketable  and privately  placed bonds.  The
marketable bonds category includes both corporate issues and structured  finance
securities  such  as  collateralized   mortgage  obligations  (CMOs)  and  other
mortgage-backed  securities. The Company will make new investments in commercial
mortgages and below investment grade bonds subject to overall limitations.

The assets held by each of the Insurers are legally  segregated and support only
their  respective  contractual  obligations.  The investment  portfolios of each
Insurer are structured to reflect the  characteristics  of the liabilities which
they support. The Company internally allocates assets within ReliaStar Life, USL
and RBSL to facilitate  

                                       12

segment  asset/liability  matching.  These  segment  allocations  are solely for
portfolio  management  purposes,  and generally all of the assets allocated to a
segment are  available to satisfy the  respective  liabilities  of all segments.
Assets within these portfolios are selected to provide compatible duration, cash
flow  and  return  characteristics.  All of  the  investments  in the  Insurers'
portfolios are subject to diversification, quality and reserving requirements of
state laws regulating the Insurers.

The  following  table  provides  information  regarding the  composition  of the
Company's invested assets as of the indicated dates:

<TABLE>
<CAPTION>
                                                        SEPTEMBER 30, 1996         DECEMBER 31, 1995
(In Millions)                                          AMOUNT       PERCENT        AMOUNT      PERCENT
<S>                                                   <C>            <C>         <C>            <C>   
Investment Grade Bonds:
    Marketable                                        $ 6,464.8       55.0%     $  6,551.5       55.5%
    Private Placements                                  2,035.7       17.3         2,062.1       17.4
                                                     ----------     ------     -----------     ------
        Subtotal                                        8,500.5       72.3         8,613.6       72.9

Below Investment Grade Bonds:
    Marketable                                            254.9        2.1           198.8        1.7
    Private Placements                                    245.3        2.1           239.3        2.0
                                                    -----------    -------    ------------    -------
           Subtotal                                       500.2        4.2           438.1        3.7

Equity Securities                                          41.0         .3            35.9         .3
Commercial Mortgages                                    1,406.7       12.0         1,465.0       12.4
Mortgages, Residential and Other                          506.4        4.3           483.4        4.1
Real Estate                                                88.8         .7            97.9         .8
Short-Term Investments                                    126.1        1.1           131.5        1.1
Other                                                     595.1        5.1           548.8        4.7
                                                    -----------    -------     -----------    -------
    Total Invested Assets                             $11,764.8      100.0%      $11,814.2      100.0%
                                                      =========      =====       =========      =====
</TABLE>

FIXED MATURITY SECURITIES

The amount  invested in fixed  maturity  securities as of September 30, 1996 and
December 31, 1995, was $9.0 billion and $9.1 billion,  respectively. The average
marketable and private  placement bond  investments in a single corporate issuer
(excluding  structured  finance  securities such as CMOs,  mortgage-backed  pass
throughs and asset-backed securities) as of September 30, 1996 were $9.3 million
and $7.6 million, respectively.

All of the Company's  marketable  and privately  placed bonds are required to be
evaluated  by the  Securities  Valuation  Office  (SVO)  of the  NAIC.  The  SVO
evaluates the  investments  of insurers for  regulatory  reporting  purposes and
assigns  securities to one of six investment  categories.  The NAIC's categories
closely follow the public rating agencies' definition for marketable bonds. NAIC
categories 1 and 2 include bonds considered  investment grade (BBB or higher) by
the public  rating  agencies.  Categories  3 through 6 are  referred to as below
investment grade (BB or lower).

As of September  30, 1996,  the  weighted  average book yields of the  Company's
investment  grade portfolio and below  investment  grade portfolio were 7.8% and
9.0%,  respectively.   The  weighted  average  book  yield  is  not  necessarily
reflective  of the net  investment  income  ultimately  realized by the Company.
Investments  with  greater  credit  risk have a  greater  risk of  default  than
investment  grade  securities,  and,  accordingly,  some of the incremental book
yield of the below investment grade portfolio may not be realized.

                                       13

<PAGE>

The  following  tables  identify  the  amortized  cost and the fair value of the
Company's   fixed  maturity   securities   with  respect  to  each  NAIC  credit
classification as of the indicated dates (in millions):

<TABLE>
<CAPTION>
                                                    SEPTEMBER 30, 1996
----------------------------------------------------------------------------------------------------------
                                MARKETABLES                                PRIVATE PLACEMENTS
NAIC            AMORTIZED     GROSS UNREALIZED       FAIR      AMORTIZED     GROSS UNREALIZED       FAIR
                              ----------------                               ----------------
RATING            COST        GAINS     (LOSSES)     VALUE       COST        GAINS    (LOSSES)      VALUE
------            ----        -----     --------     -----       ----        -----    --------      -----
<C>             <C>           <C>         <C>       <C>        <C>            <C>      <C>        <C>     
1               $4,699.5      $155.1      $(33.3)   $4,821.3   $  766.1       $23.3    $  (5.5)   $  783.9
2                1,599.6        57.0       (13.1)    1,643.5    1,223.7        35.5       (7.4)    1,251.8
3                  229.4         4.9        (3.2)      231.1      158.7         4.9       (1.6)      162.0
4                   21.2          .3         (.9)       20.6       39.3          .7        (.5)       39.5
5                    3.9          .2         (.9)        3.2       46.0          .3       (3.2)       43.1
6                      -           -           -          -          .7          -           -          .7
Redeemable
  Preferred
  Stock               .5           -           -          .5        1.6          -         (.1)        1.5
                --------     -------     -------   ---------  ---------       -----     -------   --------
    Total       $6,554.1      $217.5      $(51.4)   $6,720.2   $2,236.1       $64.7     $(18.3)   $2,282.5
                ========      ======      ======    ========   ========       =====     ======    ========

<CAPTION>

                                                     DECEMBER 31, 1995
                                MARKETABLES                                PRIVATE PLACEMENTS
NAIC            AMORTIZED     GROSS UNREALIZED       FAIR      AMORTIZED     GROSS UNREALIZED       FAIR
                              ----------------                               ----------------
RATING            COST        GAINS     (LOSSES)     VALUE       COST        GAINS    (LOSSES)      VALUE
------            ----        -----     --------     -----       ----        -----    --------      -----
<S>             <C>           <C>         <C>       <C>        <C>           <C>        <C>       <C>     
1               $4,578.5    $  309.7    $   (8.3)   $4,879.9   $  810.2     $  59.9    $  (1.0)  $   869.1
2                1,546.9       126.6        (1.9)    1,671.6    1,113.9        79.4        (.3)    1,193.0
3                  175.7         8.4        (2.6)      181.5      143.5         7.2       (3.0)      147.7
4                   17.1          .5        (2.2)       15.4       22.3         1.0        (.1)       23.2
5                    2.0          .1         (.2)        1.9       72.4          .8       (5.6)       67.6
6                      -           -           -          -          .8           -          -          .8
Redeemable
  Preferred
  Stock               .5           -           -          .5        1.6           -        (.1)        1.5
           -------------   ---------  ----------   ---------  ---------   ---------    --------   --------
    Total       $6,320.7      $445.3      $(15.2)   $6,750.8   $2,164.7      $148.3     $(10.1)   $2,302.9
                ========      ======      ======    ========   ========      ======     ======    ========
</TABLE>

The amortized  cost and fair value of fixed  maturity  securities by contractual
maturity  are shown  below.  Expected  maturities  will differ from  contractual
maturities  because  borrowers may have the right to call or prepay  obligations
with or without call or prepayment penalties (in millions).

<TABLE>
<CAPTION>
                                                     SEPTEMBER 30, 1996               DECEMBER 31, 1995
                                                    ---------------------            -------------------
                                                      AMORTIZED    FAIR               AMORTIZED    FAIR
                                                        COST       VALUE                COST       VALUE
<S>                                                  <C>        <C>                   <C>        <C>      
Due in One Year or Less                              $   141.5  $   142.8             $   123.1  $   122.8
Due After One Year Through Five Years                  2,947.1    3,014.7               2,497.4    2,634.3
Due After Five Years Through Ten Years                 2,531.9    2,599.9               2,750.4    2,965.4
Due After Ten Years                                    1,013.4    1,049.1               1,056.5    1,172.9
Mortgage-Backed/Structured Finance
  Securities                                           2,156.3    2,196.2               2,058.0    2,158.3
                                                     ---------  ---------             ---------  ---------
   Total                                              $8,790.2   $9,002.7              $8,485.4   $9,053.7
                                                      ========   ========              ========   ========
</TABLE>

The fair values for the marketable bonds are based upon the quoted market prices
for bonds  actively  traded.  The fair values for  marketable  bonds  without an
active market,  are obtained through several  commercial  pricing services which
provide the estimated fair values. Fair market values for privately placed bonds
which are not  considered  problems  are  determined  utilizing  a  commercially
available  pricing  model.  The model  considers  the current level of risk-free
interest rates,  current corporate spreads, the credit quality of the issuer and
cash flow  characteristics  of the  security.  Utilizing  these data,  the model
generates estimated market values which the Company considers  reflective of the
fair value of each privately placed bond. Fair values for privately placed bonds

                                       14

which are considered  problems are determined  through  consideration of factors
such as the net  worth  of  borrower,  the  value  of  collateral,  the  capital
structure  of the  borrower,  the  presence  of  guarantees  and  the  Company's
evaluation  of the  borrower's  ability to compete in the  relevant  market (see
Problem Investments).

Fair values of fixed  income  securities  fluctuate  due to a number of factors,
including  the market level of interest  rates,  fluctuations  in the  corporate
spreads over the  risk-free  rate and changes in the credit  quality of specific
investments.

The Company's  marketable and private placement bond portfolios were diversified
by industry  (based upon amortized  cost) as of the indicated dates as set forth
in the following table:

<TABLE>
<CAPTION>
                                                PERCENT OF MARKETABLE            PERCENT OF PRIVATE
                                                   BOND PORTFOLIO                 PLACEMENT PORTFOLIO
                                            SEPTEMBER 30     DECEMBER 31     SEPTEMBER 30      DECEMBER 31
                                                1996            1995             1996             1995
                                                ----            ----             ----             ----
<S>                                              <C>             <C>              <C>              <C> 
Basic Material                                   6.7%            4.2%             9.5%             7.1%
Consumer Non-Cyclical                            5.8             5.8             17.7             18.4
Consumer Products/Services                       7.0             6.9             19.9             18.9
Energy                                           6.1             6.4              7.0              7.1
Financial Services                              19.4            17.9             17.2             16.3
Government                                       3.8             4.4               .8              1.0
Industrial                                       3.7             6.3              8.9             11.4
Mortgage Backed/Structured
   Finance Securities                           32.4            31.9              1.6              1.4
Real Estate                                       .2              .1              1.4              1.6
Retailing                                        2.4             2.6              6.3              6.4
Technology                                       2.5             2.4              3.8              4.6
Utilities                                       10.0            11.1              5.9              5.8
                                              ------          ------          -------          -------
    Total                                      100.0%          100.0%           100.0%           100.0%
                                               =====           =====            =====            =====
</TABLE>

BELOW INVESTMENT GRADE INVESTMENTS

Issuers of below investment grade debt frequently have relatively high levels of
indebtedness  and are more  sensitive to adverse  economic  conditions,  such as
recession or increasing  interest  rates,  than are issuers of investment  grade
securities.

The largest  investment in below  investment grade bonds of any one borrower was
approximately  two-tenths  of one percent of invested  assets at  September  30,
1996. The largest investment in below investment grade bonds of any one industry
grouping  was  approximately  2.2% of invested  assets at  September  30,  1996.
Concentrations  of the portfolio in below  investment  grade bonds are regularly
analyzed and adjusted as appropriate.

                                       15

<PAGE>

MORTGAGE-BACKED SECURITIES

The Company's  investment  policy  permits the  acquisition  of  mortgage-backed
securities and collateralized mortgage obligations  (collectively referred to as
MBS  securities)  provided  that  the  Company's  aggregate  investment  in  MBS
securities  shall not exceed 50% of its  statutory  assets and the Company shall
not acquire any interests in residual,  interest only, principal only or inverse
floater tranches of MBS securities.  The Company's  investment strategy has been
to invest  primarily in actively  traded MBS securities  which are structured to
reduce  prepayment  risk as compared  to direct  investments  in the  underlying
mortgage collateral.  The amortized cost and estimated fair value of investments
in MBS securities  categorized  by interest  rates on the underlying  collateral
were comprised of the following (in millions):

                                                         SEPTEMBER 30, 1996
                                                    ---------------------------
                                                     AMORTIZED
                                                       COST          FAIR VALUE
Adjustable Rate Pass Through MBS Securities:
Below 5%                                          $     34.9       $     35.1
5% - 6%                                                168.6            168.9
6% - 7%                                                328.4            329.1
Above 7%                                                41.5             41.7

Fixed Rate Pass Through MBS Securities:
Below 8%                                                 6.5              6.9
8% - 9%                                                  9.4             10.0
Above 9%                                               313.2            318.0

Planned Amortization Class MBS Securities:
Below 7%                                               344.9            357.5
7% - 8%                                                119.1            124.6
8% - 9%                                                 21.9             22.5
Above 9%                                               197.1            199.0

Other MBS Securities:
Below 7%                                                92.1             97.2
7% - 8%                                                 20.5             21.7
8% - 9%                                                 12.9             13.4
                                                 -----------      -----------
Total MBS Securities                                $1,711.0         $1,745.6
                                                    ========         ========

The Company invests in asset-backed securities in addition to the MBS securities
described  above.  As of September  30, 1996,  the  Insurers  held  asset-backed
securities  with an amortized  cost of $445.3 million and a fair value of $450.6
million.

MORTGAGE LOANS

The Company's  commercial  mortgage loans  generally  range in size from $1.5 to
$11.0  million,  with the average  commercial  mortgage  loan  investment  as of
September 30, 1996 being approximately $2.1 million.

                                       16

<PAGE>

The  commercial  mortgage loan  portfolio  diversification  by property type and
geographic region of the country was as follows:
                                                          PROPERTY TYPE
                                                 ------------------------------
                                                 SEPTEMBER 30       DECEMBER 31
                                                     1996              1995
                                                     ----              ----

Office                                               25.6%             30.0%
Industrial                                           24.2              26.2
Special Purpose                                      19.0              17.1
Retail                                               14.6              12.8
Apartment                                            13.5               9.4
Hotel/Motel                                           3.1               4.5
                                                  -------           -------
Total                                               100.0%            100.0%
                                                    =====             =====


                                                         GEOGRAPHIC REGION
                                                 ------------------------------
                                                 SEPTEMBER 30       DECEMBER 31
                                                     1996              1995
                                                     ----              ----

Midwest                                              33.3%             32.5%
Pacific                                              30.4              30.7
Southeast                                            17.9              18.9
Northeast                                             7.4               5.9
Mountain                                              6.4               7.1
Southwest                                             4.6               4.9
                                                  -------               ---
Total                                               100.0%            100.0%
                                                    =====             =====

The weighted  average  yield of the  commercial  mortgage  loan  portfolio as of
September 30, 1996 was 8.8%.  The weighted  average  maturity of these loans was
5.7 years.

The principal  balance of commercial  mortgage loans with  scheduled  maturities
during the remainder of 1996 and for the year ending December 31, 1997 is $135.2
million and $157.8  million,  respectively.  Of the $202.0 million of commercial
mortgage loans with maturities  scheduled  during 1995,  approximately  57% were
paid in full at or near the scheduled  maturity  date.  Approximately  3% of the
commercial mortgage loans with maturities scheduled during 1995 were declared to
be  in  default.  Approximately  40%  of  the  commercial  mortgage  loans  with
maturities scheduled during 1995 were rewritten by the Company at current market
terms and conditions.

The Company invests in individual and pools of individual  residential  mortgage
loans in addition to the  structured  finance  securities  backed by residential
mortgages (see Fixed Maturity Securities). As of September 30, 1996 and December
31, 1995, the Insurers held $504.5 million and $480.8 million,  respectively, of
non-securitized residential mortgage loans.

UNREALIZED INVESTMENT GAINS (LOSSES)

Debt and equity securities classified as available-for-sale  are carried at fair
value on the condensed  consolidated  balance sheets with  unrealized  gains and
losses   excluded   from  income  and  reported  as  a  separate   component  of
shareholders' equity.

The  September 30, 1996 balance of  shareholders'  equity was increased by $89.1
million  (comprised of net unrealized  appreciation in the carrying value of the
securities of $215.8 million, reduced by $78.8 million of related adjustments to
deferred policy  acquisition costs and present value of future profits and $47.9
million  in  deferred  income  taxes)  to  reflect  the net  unrealized  gain on
securities classified as available-for-sale.

Changes  in net  unrealized  gains  or  losses  are  primarily  the  results  of
fluctuations  in market  interest  rates which  impact the market value of fixed
interest  rate  securities.  The change in market value of the  Company's  fixed
maturity  securities is not expected to have a significant  effect on results of
operations  or  liquidity  because:  1) the Company  has the present  intent and
practice to hold most of its  available-for-sale  fixed  maturity  securities to

                                       17

maturity and 2) the Company's asset/liability management activity is designed to
monitor and adjust for the effects of changes in market interest rates.

DERIVATIVE FINANCIAL INSTRUMENTS

The Company has an established program prescribing the use of derivatives in its
asset/liability  management  activity.  The  investment  policy  of  each of the
Insurers  expressly  precludes  the  use of  such  instruments  for  speculative
purposes.  The policy  details  permissible  uses and  instruments  and contains
accounting  and management  controls  designed to assure  compliance  with these
policies. The Company is not a party to leveraged derivatives.

The  insurance  liabilities  of the Company are  sensitive  to changes in market
interest  rates.  The Company has  established  procedures for evaluating  these
liabilities  and  structures   investment   asset   portfolios  with  compatible
characteristics.  Investment  assets are selected which provide yield, cash flow
and interest rate sensitivities appropriate to support the insurance products.

The Company uses  interest  rate swaps and interest rate futures as part of this
asset/liability  management  program.  The  Company has  acquired a  significant
amount  of  certain  shorter  duration  investments,  such as  floating  rate or
adjustable rate  investments.  Acquisition of these assets shortens the duration
of an asset  portfolio.  The  Company  uses  interest  rate  swaps to extend the
duration of these  portfolios as an  alternative to purchasing  longer  duration
investments.

The Company  uses  duration  analysis to estimate the amount of  sensitivity  to
market interest rate changes.  Duration of a bond or portfolio can be thought of
as the life in years of a notional  zero-coupon  bond  whose  fair  value  would
change by the same amount in response  to any change in market  interest  rates.
The following table sets forth the asset duration, portfolio duration and target
duration for the investment  portfolio of each business  segment.  The portfolio
duration  includes the duration impact added by interest rate swaps and interest
rate futures  contracts.  Target  durations are  determined by the Company based
upon  the  subjective   evaluation  of  a  number  of   characteristics  of  the
liabilities,  including  such  factors as the  ability of the  Company to modify
interest  crediting  rates,  the  presence and  magnitude of surrender  charges,
historical and projected  lapse  experience,  the level of market interest rates
and competition.

                                               SEPTEMBER 30, 1996
                                ----------------------------------------------
                                  ASSET             PORTFOLIO          TARGET
                                DURATION            DURATION          DURATION
Individual Insurance               3.86               4.08          3.5 - 5.0
Employee Benefits                  3.36               3.78          3.5 - 8.0
Life and Health Reinsurance        3.99               4.13          3.5 - 8.0
Pension                            2.58               3.30          2.5 - 3.5

At September 30, 1996, the Company had 71 interest rate swap contracts in effect
with an aggregate  notional  amount of $1.14 billion.  At December 31, 1995, the
Company had 73 interest rate swap contracts in effect with an aggregate notional
amount of $1.22 billion.  During the nine months ended September 30, 1996, three
new interest  rate swap  contracts  were entered into with a notional  amount of
$50.0  million and five  interest  rate swap  contracts  matured with a notional
amount of $135.0  million.  There were no  terminations  of interest  rate swaps
prior to maturity  during the nine months ended  September 30, 1996. The Company
has no deferred  gains or losses at September 30, 1996 related to swap contracts
terminated  early.  The estimated fair value of the interest rate swap contracts
in effect at September 30, 1996 was an unrealized gain of $5.6 million.

The following table details the  characteristics  of the Company's interest rate
swap portfolio at September 30, 1996. All of the contracts  described  below are
standard  contracts  whereby  the  Company  pays a  floating  rate  of  interest
(generally  based  upon the  LIBOR  rate as  determined  from  time to time) and
receives a fixed rate (generally a specified contract rate).

                                       18
<PAGE>

                                                   NOTIONAL     RANGE OF FIXED
(In Millions)                                       AMOUNT      RATES RECEIVED

Maturing in One Year or Less                      $   135.0         6.68-9.30%
Maturing After One Year Through Three Years           360.0         5.17-8.68
Maturing After Three Years Through Five Years         552.5         5.34-7.55
Maturing After Five Years Through Seven Years          90.0         6.68-8.18
                                                -----------
Total Notional Amount                              $1,137.5
                                                   ========

The Company closely monitors the effect of the swap position on reported income.
The Company's  investment  portfolio  includes a substantial  amount of floating
rate  investments.  Changes  in market  interest  rates  have an  opposite  (and
approximately offsetting) effect on the reported income from the swap portfolio.
Accordingly,  the reported  investment  income (or losses)  attributable  to the
Company's swap position will be approximately  offset by the changed  investment
income of the Company's  floating or adjustable  rate  investments in a changing
rate  environment.  At  September  30,  1996 the Company  held $1.32  billion of
adjustable rate invested assets, short-term investments and cash.

The Company also enters into futures contracts,  which are contracts for delayed
delivery of securities or money market instruments in which the seller agrees to
make delivery at a specified future date of a U.S.  Treasury Bond at a specified
price or yield. These contracts are entered into to manage interest rate risk of
the Company's GIC  operations.  The contracts  that the Company has entered into
are exchange  traded and marked to market  daily.  The  contract  value of these
futures contracts at September 30, 1996 was $75.3 million.

PROBLEM INVESTMENTS

The Company  classifies  invested assets of the Insurers as problem  investments
where:  (i) an asset  is  delinquent  in a  required  payment  of  principal  or
interest;  (ii) an asset is the subject of a foreclosure  action or the borrower
is in bankruptcy;  (iii) a loan has been  restructured;  or (iv) a loan has been
foreclosed  and the  collateral  is owned  (Problem  Investments).  The  Company
reports a mortgage  loan as delinquent  when a required  payment of principal or
interest  is sixty days past due.  Fixed  maturity  securities  are  reported as
delinquent  following  the  contractual  grace  period  allowed for any required
payment of  principal  or interest.  The Company  generally  considers a loan as
restructured  when one or more of the following terms is changed for the benefit
of the  borrower:  (i) interest  rate for a specified  period of time or for the
life of the loan; (ii) maturity date;  (iii) the principal face amount or timing
of principal  repayments  on a contingent or absolute  basis;  or (iv) amount or
timing of payment of accrued interest.

In addition to the risk of loss of principal,  the Company's Problem Investments
reduce  investment  income because some are not producing  income and others are
producing  income at rates below those agreed upon when the loans were initially
made. For  restructured  loans for the nine months ended September 30, 1996, the
gross interest  income that would have been recorded had such loans been current
in accordance  with their original  terms was $2.7 million  compared with actual
interest  recorded  of $2.3  million.  The Company  does not accrue  interest on
Problem  Investments  when  management  believes the likelihood of collection of
principal or interest is doubtful.

The  amortized  cost of  Problem  Investments,  net of  related  write-offs  and
allowances and  non-recourse  debt, as of the indicated dates was as follows (in
millions):

                                             SEPTEMBER 30       DECEMBER 31
                                                 1996              1995
Fixed Maturity Securities 1                     $  22.0          $  23.9
Commercial Mortgage Loans                          28.9             21.9
Residential and Other Mortgage Loans                5.6              8.1
Investment Real Estate 2                           12.3             14.9
Foreclosed Real Estate                             47.8             50.2
                                               --------          -------
    Total                                        $116.6           $119.0
                                                 ======           ======

1   All problem fixed maturity securities were private placements.
2   The amounts shown represent real estate acquired as an investment which the 
    Company has determined to be Problem Investments.

                                       19

The  amortized  cost of Problem  Investments  in the  preceding  table  reflects
reductions for write-offs  and allowances  taken by the Company.  The cumulative
amounts of such  write-offs  and  allowances on problem  invested  assets of the
Insurers on the condensed  consolidated balance sheets as of the indicated dates
were as follows (in millions):

                                                  SEPTEMBER 30       DECEMBER 31
                                                      1996              1995
Fixed Maturity Securities                             $  9.1           $  8.0
Commercial Mortgage Loans                                9.0             10.9
Residential and Other Mortgage Loans                      .7               .4
Investment Real Estate                                    -               1.0
Foreclosed Real Estate                                  27.1             29.3

The  amount of  Problem  Investments  is  affected  to a  significant  degree by
economic conditions and the status of the real estate markets. While the Company
believes  it has set aside  appropriate  reserves  and  allowances  for  Problem
Investments,   subsequent   economic  and  market  conditions  may  require  the
establishment of additional reserves.

The Company  establishes  the  carrying  value of all Problem  Investments.  For
problem  marketable  securities,  the fair value is the quoted market value. For
problem private placement debt securities,  the fair value is determined through
consideration  of factors  such as the net worth of the  borrower,  the value of
collateral,  the capital  structure of the borrower,  the presence of guarantees
and the  Company's  evaluation  of the  borrower's  ability  to  compete  in the
relevant market.

For problem and potential problem  securities,  the Company determines whether a
decline in fair value below the amortized cost is other than  temporary.  If the
decline in fair value is  determined  to be other than  temporary,  the  Company
writes  down the cost basis to fair value and the  amount of the  write-down  is
recorded  as a realized  loss.  Subsequent  changes in the fair value of problem
available-for-sale securities which are determined to be temporary are reflected
directly in equity as unrealized gains or losses.

Fair value for  problem  real estate and problem  mortgage  loans is  determined
taking into consideration one or more of the following factors, depending on the
circumstances for each property,  including:  (i) property valuation  techniques
utilizing  discounted cash flows at the time of stabilization  including capital
expenditures and stabilization costs; (ii) sales of comparable properties; (iii)
geographic  location of the property  and related  market  conditions;  and (iv)
disposition  costs.  In many  instances,  there is not an active market for such
properties.  Therefore,  the fair value determined by the Company may be greater
than the price which may be realized  if the  Company  were forced to  liquidate
such properties on an immediate sale basis. If fair value of a problem  mortgage
loan or real estate  investment  is less than the  carrying  value,  the Company
records a write-off or an increase in the allowance for  uncollectible  amounts.
Foreclosed  properties are actively  managed by the Company in order to maximize
net  realizable  value.  The  Company  has the intent and  ability to hold these
assets until appropriate sales opportunities arise.

The following tables set forth the distribution of problem  commercial  mortgage
loans by property type and geographic region as of the indicated dates:

                                                PROPERTY TYPE
                                        SEPTEMBER 30      DECEMBER 31
                                            1996             1995
                                            ----             ----
Office                                      64.1%            72.8%
Industrial                                  19.7             18.1
Retail                                      13.3              6.1
Hotel/Motel                                  2.9              3.0
                                         -------          -------
Total                                      100.0%           100.0%
                                           =====            =====

                                       20

<PAGE>

                                              GEOGRAPHIC REGION
                                        SEPTEMBER 30      DECEMBER 31
                                            1996             1995
                                            ----             ----
Midwest                                     44.1%            39.2%
Southeast                                   21.8             28.4
Pacific                                     22.3             28.0
Southwest                                    5.3              3.4
Northeast                                    2.2                -
Mountain                                     4.3              1.0
                                         -------          -------
Total                                      100.0%           100.0%
                                           =====            =====

The Company also monitors its  portfolios in an attempt to identify  loans which
are not currently classified as Problem  Investments,  but where the Company has
knowledge  which causes it to have serious doubts as to the ability of borrowers
to comply with the present loan repayment terms.  These loans (Potential Problem
Investments)  are subject to increased  scrutiny and review by the Company.  The
amounts of private  placements and mortgage loan Potential  Problem  Investments
were $11.6 million and $44.9 million, respectively at September 30, 1996.

KNOWN TRENDS AND UNCERTAINTIES WHICH MAY AFFECT FUTURE REPORTED RESULTS

HEALTH CARE MARKETPLACE ENVIRONMENT
The market place for the provision of health care employee  benefits is changing
in response to legislative and regulatory  initiatives and a market trend toward
capitated and managed care plans.  The Company has  determined  that it will not
seek to  directly  provide  capitated  plans,  but,  rather  will  market  plans
maintained  by third  party  managed  care  organizations  through  a series  of
strategic  alliances in selected markets.  The Company intends to jointly market
its group life  coverage  with its  strategic  partners  in these  markets.  The
Company expects that its book of insured health and health related business will
decline over the next several years and the Company does not expect  significant
new sales of insured  health and health  related  products.  The Company  cannot
predict the impact that these market  developments  will have on future reported
earnings.  Excluding  the  earnings of the USL and RBSL  operations  acquired in
1995, the health insurance and managed care businesses have, over the past three
years,  on average,  represented  approximately  10% of the Company's  after tax
earnings.

GUARANTY ASSOCIATION ASSESSMENTS
The Insurers are subject to state guaranty association assessments in all states
in which they are admitted.  Generally these  associations  guarantee  specified
amounts  (commonly  $100,000 of surrender  values or $300,000 of other benefits)
payable to residents of the state under  policies of insolvent  insurers.  State
laws vary widely on coverage  (and  inclusion in the  assessment  base) of GICs.
Most  state laws  permit  assessments  or some  portion  thereof to be  credited
against  future  premium  taxes.  However,  several  states do not permit such a
credit. While the Company believes that it has accrued appropriate amounts based
upon currently available information, the Company could be subject to additional
future assessments in amounts which may be material.

LITIGATION
The  Company is a defendant  in a number of  lawsuits  arising out of the normal
course of the  business  of the  Insurers.  While the  nature  and amount of the
Company's outstanding  litigation has been fairly constant over the past several
years,  some life insurers have recently been subjected to significant  punitive
damages awards in certain  jurisdictions.  While the Company is not aware of any
actions or allegations which should reasonably give rise to any punitive damages
liability, it is possible that the Company could be subjected to such a claim in
an amount which could be material.

                                       21

<PAGE>

Part II-Other Information

                            RELIASTAR FINANCIAL CORP.



Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits:

                  (11)     Statement re Computation of Per Share Earnings

                  (27)     Financial Data Schedule

         (b)      Reports on Form 8-K:
 
                  None

                                       22

<PAGE>



                                   SIGNATURES



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





                                 Dated         NOVEMBER 12, 1996
                                             --------------------

                                 RELIASTAR FINANCIAL CORP.








                                /S/ WAYNE R. HUNEKE
                                ----------------------
                                by Wayne R. Huneke
                                Senior Vice President, Chief Financial Officer 
                                   and Treasurer

                                       23

<PAGE>

                            ReliaStar Financial Corp.                 EXHIBIT 11
                        Computation of Earnings Per Share
                     (in millions, except per share amounts)

<TABLE>
<CAPTION>
                                                                           THREE MONTHS                        NINE MONTHS
                                                                        ENDED SEPTEMBER 30                 ENDED SEPTEMBER 30
                                                                      1996             1995              1996              1995
EARNINGS:
Primary:
<S>                                                               <C>               <C>              <C>               <C>        
   Net Income, as Reported                                        $      47.9       $      42.7      $     143.7       $     125.3
   Dividends on ESOP Convertible Preferred Stock                          (.7)              (.7)            (2.1)             (2.1)
   Tax Benefit on Unallocated ESOP Dividends                               .2                .2               .6                .6
   Dividends on 10% Senior Cumulative Preferred Stock                       -              (1.6)            (3.2)             (4.7)
                                                                  -----------       -----------      -----------       -----------
     Net Income, As Adjusted                                      $      47.4       $      40.6      $     139.0       $     119.1
                                                                  ===========       ===========      ===========       ===========
Fully Diluted:
   Net Income, as Reported                                        $      47.9       $      42.7      $     143.7       $     125.3
   Additional Compensation Expense due to Assumed
     Conversion of ESOP Convertible Preferred Stock                         -                -               -                 (.2)
   Dividends on 10% Senior Cumulative Preferred Stock                       -              (1.6)            (3.2)             (4.7)
                                                                  -----------       -----------      -----------       -----------
      Net Income, as Adjusted                                     $      47.9       $      41.1      $     140.5       $     120.4
                                                                  ===========       ===========      ===========       ===========

SHARES:

Primary:
   Weighted Average Common Shares Outstanding, Unadjusted                37.3              36.4             36.7              36.3
   Dilutive Effect of Outstanding Stock Options                            .4                .6               .5                .6
                                                                  -----------       -----------      -----------       -----------
     Weighted Average Common Shares, as Adjusted                         37.7              37.0             37.2              36.9
                                                                  ===========       ===========      ===========       ===========
Fully Diluted:
   Weighted Average Common Shares Outstanding, Unadjusted                37.3              36.4             36.7              36.3
   Dilutive Effect of:
     ESOP Convertible Preferred Stock                                     2.5               2.6              2.6               2.6
     Outstanding Stock Options                                             .5                .7               .5                .7
                                                                  -----------       -----------      -----------       -----------
   Weighted Average Common Shares, as Adjusted                           40.3              39.7             39.8              39.6
                                                                  ===========       ===========      ===========       ===========

NET INCOME PER COMMON SHARE:

   Primary                                                        $      1.26        $     1.10      $      3.74      $       3.23
                                                                  ===========        ==========      ===========      ============

   Fully Diluted                                                  $      1.19        $     1.03      $      3.53      $       3.04
                                                                  ===========        ==========      ===========      ============
</TABLE>

                                       24