SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-K

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                 For the fiscal year ended December 31, 2000, 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 2-35669

                    Southern Security Life Insurance Company
              ____________________________________________________
             (Exact name of registrant as specified in its Charter)

           FLORIDA                                  59-1231733
___________________________________             _________________________
(State or other jurisdiction                     (I.R.S. Employer
 of incorporation or organization)               Identification Number)

       755 Rinehart Road, Lake Mary, Florida             32746
_____________________________________________   _________________________
     (Address of principal executive offices)          (Zip Code)


Registrant's telephone number, including area code:   (407) 321-7113

Securities registered pursuant to Section 12(b) of the Act:

                                          Name of each exchange
Title of each Class                        on which registered
____________________                      ______________________
      None                                        None

Securities registered pursuant to Section 12(g) of the Act:

                                          Name of each exchange
Title of each Class                        on which registered
___________________                       _______________________
      None                                        None


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 the  filing
requirements for the past 90 days. X Yes No

Indicate by check mark if disclosure of delinquent  filers  pursuant to Item 405
of Regulation  S-K is not contained  herein,  and will not be contained,  to the
best of Company's  knowledge,  in  definitive  proxy or  information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. [ ]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant as of March 28, 2001 was approximately $5,962,000.

As of March 28, 2001,  registrant had issued and outstanding 1,907,989 shares of
Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  definitive  Proxy  Statement for the  Registrant's  2001 Annual
Meeting of Stockholders' are incorporated by reference into Part III hereof.

<PAGE>

                                     PART I

Item 1.  Business.

Southern Security Life Insurance Company (the "Company") is a legal reserve life
insurance  company  authorized  to  transact  business in the states of Alabama,
Florida,  Georgia, Hawaii, Indiana,  Illinois,  Kentucky,  Louisiana,  Michigan,
Missouri,  Oklahoma,  South Carolina,  Tennessee and Texas. It was  incorporated
under Florida law in 1966 and was licensed and commenced  business in 1969.  The
Company will continue the process of seeking  authorization to transact business
in additional states during 2001.  During 2000  approximately 41% of the premium
income  of the  Company  was from  business  in force in  Florida,  its state of
domicile. The Company's only industry segment is the ordinary life, accident and
health and annuity business.

Effective December 17, 1998, Security National Financial  Corporation  ("SNFC"),
an SEC registrant,  acquired 100% of the assets of Consolidare Enterprises, Inc.
("Consolidare")  which owned  57.4% of the  outstanding  shares of the  Company.
During March 1999,  SNFC changed  Consolidare's  name to SSLIC Holding  Company,
Inc.

The Company at present  writes  universal  life policies with various  companion
riders as well as a traditional life product. In the past it has written various
forms of ordinary life insurance policies and annuity  contracts.  The Company's
accident and health insurance  business has never been a significant  portion of
the Company's  business.  It does not presently  write  industrial life or group
life  insurance  other than  through its  participation  as a  reinsurer  in the
Servicemen's  Group  Life  Insurance  Program  ("SGLI").  In 1996,  the  Company
introduced  a new whole life  product  designed  to appeal to the final  expense
market.

The Company  introduced  its first  universal life product in 1986 and currently
has two  principal  universal  life  products  in force.  These  universal  life
products  offer  flexibility  to the  client  as  well as tax  advantages,  both
currently and upon the death of the insured. These products allow the Company to
better compete in the current market environment.  In excess of 15% of the first
year  premiums  collected  by the Company in 2000 and 1999,  respectively,  were
universal life products.

During 1996,  the Company  introduced a new series of products  designed for the
seniors market.  This new series targets the needs of senior citizens especially
as they plan for  their  final  expenses.  These new  policies  are  traditional
endowment  type  policies.  Because they are written to a senior market they are
designed to accommodate  adverse health  conditions.  Because of the size of the
policies they are usually  issued with only limited  underwriting.  The coverage
size of the policy is roughly  equivalent to the insured's  anticipated  funeral
costs. This new series  represented 85% of the first year premiums  collected in
2000 and 1999. New field sales  representatives  are being actively recruited to
market the product.

The Company is continuing to support its traditional universal life marketing as
well. The Company  established a lead generation  program which has been coupled
with a recruiting program for new sales agents to help rebuild the market.  This
has helped to  increase  opportunities  to expand  sales of its  universal  life
products which are designed to provide an insurance program as well as a savings
vehicle through the cash values of the policy.

The following table provides  information (on a statutory basis)  concerning the
amount and  percentage of premium income  resulting from the principal  lines of
insurance written by the Company during the periods indicated:
<PAGE>

                        2000                1999                   1998
                        ____                ____                   ____
                            Per-                   Per-                  Per-
                   Amount   centage    Amount     centage    Amount     centage
                  _______   _______    ______     _______    ______     _______
Life
Insurance-
Ordinary (1)(2) $7,568,550   91%     $8,103,864    92%      $7,602,811   91%

Individual
Annuities (1)       89,623    1%         46,348     1%          90,289    1%

Life
Insurance-
Group (SGLI)       497,070    6%        438,124     5%         460,029    6%

Other -
Accident & Health   169,203   2%        205,872     2%         158,882    2%

                $8,324,446  100%     $8,794,208   100%      $8,312,011  100%

(1)  A portion  of each of the  deposit  term  policies  previously  sold by the
     Company  represents  ordinary life insurance and the balance  represents an
     individual annuity.

(2)  The 2000, 1999, and 1998 premium income for life insurance-ordinary are net
     of reductions of $923,648,  $1,236,735,  and $1,329,814,  respectively,  in
     ceded premium paid to all reinsurers, including Mega Life.

The  following  table  gives  information  on a  generally  accepted  accounting
principles  basis  concerning  operating  ratios of the  Company for the periods
indicated:

                                 2000               1999                1998
                                ------              ----                ----
Total Net Insurance
 Revenues                   $6,698,869         $6,901,546         $7,228,227

Benefit Costs Paid or
 Provided:
  Amount                    $5,109,411         $4,453,564         $4,346,820
  Ratio to Net Insurance
   Revenue                        76.3%              64.5%              60.1%

Amortization of Deferred Policy
 Acquisition Expenses:
  Amount                    $1,797,320         $3,029,223         $3,484,689
  Ratio to Net Insurance
   Revenue                       26.8%              43.9%              48.2%
General Insurance Expenses:
  Amount                    $3,529,381         $3,261,134         $4,134,686
  Ratio to Net Insurance
   Revenue                        52.7%              47.3%              57.2%

Income (Loss) Before Income
 Taxes:
  Amount                    $  198,365         $  782,126         $ (625,640)
  Ratio to Net Insurance
   Revenue                         3.0%              11.3%              (8.7%)
  Ratio to Total Revenue and
   Investment Income               1.9%               6.8%              (5.5%)
  Ratio to Equity                  1.2%               5.0%              (4.0%)
<PAGE>

The following table provides information about the Company concerning changes in
life insurance in force during the periods indicated  (exclusive of acciden- tal
death benefits):

                                      2000             1999                1998
                                         (In thousands except lapse ratios)
Total life insurance in force
at beginning of period:
  Ordinary Whole Life &
   Endowment-Participating     $      238        $      532        $       381
  Ordinary Whole Life &
   Endowment-Non-Participating    892,962           913,683          1,019,179
  Term                              3,646             4,799              6,478
  Reinsurance Assumed             558,571           548,515            532,772
                               ----------        ----------         ----------
  Total                        $1,455,417        $1,467,529         $1,558,810
Additions (including re-
insurance assumed):
  Ordinary Whole Life &
   Endowment-Participating     $    --           $     --          $      --
  Ordinary Whole Life &
   Endowment-Non-Participating     60,589            66,591             68,935
  Term                               --                 --                 --
  Reinsurance Assumed               4,121            22,402             21,617
                               ----------        ----------         ----------
  Total                        $   64,710        $   88,993         $   90,552

Terminations:
  Death                             2,313             2,172         $    1,605
  Lapse and Expiry                 22,398            31,418             48,034
  Surrender                       125,086            67,515            132,184
  Other                               522              --                   10
                               ----------        ----------         ----------
  Total                        $  150,319        $  101,105         $  181,833

Life Insurance in force at
end of period:
  Ordinary Whole Life &
   Endowment-Participating     $       30        $      238         $      532
  Ordinary Whole Life &
   Endowment-Non-Participating    732,433           892,962            913,683
  Term                             78,770             3,646              4,799
  Reinsurance Assumed             558,575           558,571            548,515
                               ----------        ----------         ----------
  Total                        $1,369,808        $1,455,417         $1,467,529
Reinsurance Ceded                (210,365)         (250,691)          (297,913)
                               ----------        ----------         ----------
Total after Reinsurance Ceded  $1,159,443        $1,204,726         $1,169,616
                               ==========        ==========         ==========
Lapse Ratio (Reflecting termina-
tion by surrender and lapse;
ordinary life insurance only):       16.1%              9.1%              17.4%

The Company invests and reinvests  portions of its funds in securities which are
permitted  investments  under the laws of the State of Florida,  and part of its
revenue is derived from this source. Generally,  securities comprising permitted
investments  include  obligations  of  Federal,  state  and  local  governments;
corporate  bonds and  preferred  and common  stocks;  real estate  mortgages and
certain leases. The following table summarizes certain information regarding the
Company's investment activities:

           Average                Gross                 Net
Fiscal    Investment            Investment           Investment       Net
Year      Assets (1)             Income(2)           Income (3)     Yield (4)
------    ----------            ----------           -----------    ---------
2000      $50,444,329           $3,959,061           $3,935,607     7.80%
1999      $50,221,950           $3,924,271           $3,909,373     7.78%
1998      $52,227,057           $3,599,547           $3,587,147     6.87%


(1)    Computed by summing the beginning and ending investment balances and
       dividing by 2.
(2)    Excludes investment gains and losses.
(3)    Net of investment expense and before income taxes.
(4)    Computed on an annualized basis.  Represents ratio of net
       investment income to average invested assets.
<PAGE>

The Company  continues its  activities  as a qualified  lender under the Federal
Family Educational Loan Program.  Through this program the Company makes various
types of student  and parent  loans  available.  All  student  loans made by the
Company are  guaranteed by the Federal  Government.  As it has in the past,  the
Company  sells  these  student  loans on a periodic  basis to the  Student  Loan
Marketing Association ("SLMA") thereby keeping these funds liquid.

The Company  presently  sells its policies on a general  agency basis  through a
field force consisting of approximately 937 agents. All such agents are licensed
as agents of, and sell for, the Company and are independent  contractors who are
paid exclusively on a commission basis for sales of the Company's policies. Some
of the Company's agents are part-time  insurance  agents.  Most of the Company's
agents are associated with Insuradyne Corporation,  a wholly-owned subsidiary of
Security National Financial Corporation.  See "Certain Relationships and Related
Transactions" in item 13, Part III of this Report.

Effective January 1, 1999, the Company entered into an  Administrative  Services
Agreement  with its ultimate  parent  Security  National  Financial  Corporation
(Security National).  Under the terms of the Administrative  Services Agreement,
all  of  the  Company's   employees  became  employees  of  Security   National.
Administrative  functions  previously  performed  by the  Company  are now being
furnished to the Company under this Agreement.  The Company will pay to Security
National  $250,000  per  month or $3  million  per  year for the  Administrative
services.

Section 624.408 of the Florida Statutes  requires a stock life insurance company
to maintain minimum surplus on a statutory basis at the greater of $1,500,000 or
four percent (4%) of total liabilities. The Company's required statutory minimum
surplus calculated in accordance with this section is approximately  $1,858,000.
If the capital and  surplus of the  Company  computed on such basis  should fall
below that amount,  then the Company's license to transact insurance business in
the State of Florida,  the Company's most significant  market,  could be revoked
unless the  deficiency  is promptly  corrected.  As of December  31,  2000,  the
Company had statutory  capital and surplus of $8,405,211,  well in excess of the
required minimum.

The  Risk-Based  Capital for Life and/or Health  Insurers  Model Act (the "Model
Act") was adopted by the National Association of Insurance  Commissioners (NAIC)
in 1992.  The main  purpose of the Model Act is to provide a tool for  insurance
regulators  to  evaluate  the  capital  resources  of insurers as related to the
specific  risks which they have incurred and is used to determine  whether there
is a need for possible  corrective action. The Model Act or similar  regulations
may have been or may be enacted by the various states.

The Model Act provides for four different levels of regulatory  action,  each of
which may be  triggered if an insurer's  Total  Adjusted  Capital is less than a
corresponding "level" of Risk-Based Capital ("RBC").

     The "Company  Action  Level" is triggered  if an insurer's  Total  Adjusted
     Capital is less than 200% of its "Authorized Control Level RBC" (as defined
     in the Model Act),  or less than 250% of its  Authorized  Control Level RBC
     and the insurer has a negative trend ("the Company Action  Level").  At the
     Company Action Level,  the insurer must submit a comprehensive  plan to the
     regulatory  authority  of its state of domicile  which  discusses  proposed
     corrective actions to improve its capital position.

     The  "Regulatory  Action Level" is triggered if an insurer's Total Adjusted
     Capital  is less than 150% of its  Authorized  Control  Level  RBC.  At the
     Regulatory  Action Level,  the regulatory  authority will perform a special
     examination of the insurer and issue an order specifying corrective actions
     that must be followed.

     The "Authorized  Control Level" is triggered if an insurer's Total Adjusted
     Capital is less than 100% of its Authorized  Control Level RBC, and at that
     level the  regulatory  authority is  authorized  (although not mandated) to
     take regulatory control of the insurer.

     The "Mandatory  Control Level" is triggered if an insurer's  Total Adjusted
     Capital is less than 70% of its  Authorized  Control level RBC, and at that
     level the regulatory authority must take regulatory control of the insurer.
     Regulatory control may lead to rehabilitation or liquidation of an insurer.
<PAGE>

Based on  calculations  using the NAIC  formula as of  December  31,  2000,  the
Company was well in excess of all four of the control levels listed.

The industry in which the Company is engaged is highly competitive. There are in
excess of 850 life insurance companies licensed in Florida,  where a substantial
amount of the Company's  premium  income is produced,  and there are  comparable
numbers of insurance companies licensed in Alabama,  Georgia,  Hawaii,  Indiana,
Illinois,  Kentucky,  Louisiana,  Michigan,  Missouri, Oklahoma, South Carolina,
Tennessee and Texas. Many of the Company's competitors have been in business for
longer periods of time, have substantially  greater financial resources,  larger
sales organizations,  and have broader  diversification of risks. A large number
of the  Company's  competitors  engage in business in many states and  advertise
nationally  while the Company  conducts  its business on a regional  basis.  The
Company is not a significant  factor in the life insurance business in any state
where the Company does business.

The states of Alabama,  Florida, Georgia, Hawaii, Illinois,  Indiana,  Kentucky,
Louisiana,  Michigan,  Missouri,  Oklahoma, South Carolina,  Tennessee and Texas
require that insurers  secure and retain a license or a certificate of authority
based on compliance with established  standards of solvency and demonstration of
managerial  competence.  The Company,  like other life  insurers,  is subject to
extensive regulation and supervision by state insurance regulatory  authorities.
Such regulation relates generally to such matters as minimum capitalization, the
nature of and  limitations on  investments,  the licensing of insurers and their
agents,  deposits of securities for the benefit and protection of policyholders,
the  approval of policy forms and premium  rates,  periodic  examination  of the
affairs of insurance  companies,  the  requirement of filing annual reports on a
specified form and the provision for various reserves and accounting standards.

The  Company  reinsures  or places a portion  of its  insured  risks  with other
insurers.  Reinsurance  reduces the amount of risk  retained  on any  particular
policy  and,  correspondingly,  reduces  the risk of loss to the  Company,  thus
giving it greater financial  stability.  Reinsurance also enables the Company to
write more  policies  and  policies in larger  amounts  than it would  otherwise
consider prudent. On the other hand,  reinsurance  potentially reduces earnings,
since a portion of the premiums  received must be paid to the insurers  assuming
the reinsured portion of the risk.

The Company  currently  cedes its new  reinsurance  to  Businessmen's  Assurance
Company  ("BMA")  and the  Reinsurance  Company of  Hannover,  both of which are
unaffiliated  reinsurers.  Under the terms of the  reinsurance  agreements,  the
Company cedes all risks in excess of the Company's current retention limits.

The  Company  currently  retains a maximum of $75,000 on any one life and lesser
amounts on substandard risks.

Reinsurance  for policy amounts in excess of the Company's  retention  limits is
ceded on a renewable  term  basis,  under  which the amount  reinsured  normally
decreases annually by the amount of increase in the policy reserve. In addition,
the  Company has  coinsurance  agreements  with  several  insurers,  under which
premiums are shared based upon the share of the risk assumed.

The Company remains directly liable to policyholders  for the full amount of all
insurance  directly  written by it,  even though all or a portion of the risk is
reinsured.  Reinsurers,  however, are obligated to reimburse the Company for the
reinsured  portion of any claims paid.  Consequently,  if any reinsurer  becomes
insolvent or is otherwise unable to make such  reimbursement,  the Company would
suffer an unexpected  loss. The Company has no reason to believe that any of its
reinsurers  will  be  unable  to  perform  their   obligations   under  existing
reinsurance agreements.

On  December  31,  1992,  the Company  entered  into a  Coinsurance  Reinsurance
Agreement with United Group Insurance Company  ("UGIC"),  now Mega Life. In this
agreement,  UGIC agreed to indemnify and the Company  agreed to transfer risk to
UGIC in the amount of 18% of all  universal  life premium  paying  polices which
were in force on December  31, 1992.  Mega Life is an A rated  company with A.M.
Best and is an authorized reinsurer in the State of Florida.

As a result of the 1992 agreement,  the Company will continue to pay reinsurance
premiums  to Mega Life  while  receiving  ceding  commissions.  As a part of the
coinsurance  agreement,  Mega  Life  agreed  to share in the  expenses  of death
claims, surrenders, commissions, taxes and the funding of policy loans.
<PAGE>

The Company does not assume any  reinsurance  at the present time other than its
minor  participation  in  Servicemembers'  Group Life  Insurance and other small
blocks of business.

For  reporting  to state  regulatory  authorities  the  Company is  required  to
establish  policy  benefit and other reserves which are calculated in accordance
with statutory  requirements and standards of actuarial practice and established
at amounts  which,  with  additions  from  premiums to be  received  and assumed
interest on policy reserves compounded  annually,  are believed to be sufficient
to meet policy  obligations  as they mature.  Life  reserves for the Company are
based  upon  the  Commissioner's  1958  and  1980  Standard  Ordinary  Table  of
Mortality,  with interest on policies computed at 3, 3-1/2, 4 or 4-1/2%. Annuity
reserves are based on the 1937 Standard Annuity Table, with interest on policies
computed  at 3-1/2 or 4%.  Reserves  on the  annuity  portion  of the  Company's
deposit  term  policies are computed on the  accumulation  method.  Reserves for
universal  life  policies,  which  comprise most of the  Company's  insurance in
force, have been valued by using the CRVM method.

In  preparing  financial   statements  in  accordance  with  generally  accepted
accounting  principles,  the cost of  insurance,  expense  charges and surrender
charges on universal  life  products  are  recognized  as revenue.  For "Annuity
Contracts"  with flexible terms,  amounts  received from  policyholders  are not
recognized  as revenue  but are  recorded  as  deposits  in a manner  similar to
interest-bearing instruments.  Accumulations on these universal life and annuity
contracts are held as "Policyholders'  Account Balances." For all other policies
(primarily  whole-life)  premiums  are  recorded  as revenue  and  reserves  are
calculated  using the net level premium  method.  Accumulation  values for these
types of policies are held as benefit reserves.  See "Future Policy Benefits" in
Note 1 of the Notes to Financial Statements included in this report.

The Company maintains its own policy files,  prepares its own policy forms (with
the assistance of its consulting actuaries), selects risks, calculates premiums,
prepares premium notices,  preauthorized checks and commission  statements,  and
maintains all of its accounting records.

The Company is not affected by Federal,  state or local  provisions  relating to
discharge  of  materials  into the  environment.  The  Company  has not  spent a
material  amount of money  during the last three  fiscal  years on research  and
development  activities.  The  business of the Company is not seasonal in nature
and is not  dependent  on the sources and  availability  of raw  materials.  The
business  of the  Company  is not  dependent  upon a  single  customer  or a few
customers,  and no  material  portion of the  Company's  business  is subject to
renegotiation of profits or termination at the election of the Government.

Item 2.  Properties.
--------------------
The Company's  corporate  headquarters is located in a two story office building
in Lake Mary,  Florida,  which is owned by the  Company.  The  Company  occupies
approximately one-half of the second floor of the building. Approximately 38% of
the remaining rentable space is leased as of December 31, 2000.

Item 3. Legal  Proceedings.  ---------------------------  An action was  brought
against the Company in July 1999 by Dorothy Ruth  Campbell in the Circuit  Court
of Escambia County, Alabama. The action arises out of a denial of coverage under
a $10,000 insurance policy. The claims are for breach of contract, bad faith and
fraudulent  misrepresentation.  In the action,  Campbell seeks  compensatory and
punitive  damages  plus  interest.  The  Company  has filed its  response to the
complaint and intends to vigorously defend the matter.

An action  was  brought  against  the  Company in late 1999 by Larry Boyd in the
Circuit  Court of Jefferson  County,  Alabama.  The action  involves the alleged
purchase  by Boyd and his  deceased  wife of two college  funds with  respective
death  benefits of $58,454 and $58,556 for Boyd's two sons.  The  allegations in
the complaint include an alleged representation by the Company through its sales
agent that when  Boyd's  sons,  the  insureds,  reached  college  age they would
receive  monthly  payments for college.  Boyd further  contends that he does not
have the  college  funds  promised  to him,  and  suffered  mental  anguish  and
emotional distress.
<PAGE>

The claims are based on fraud,  misrepresentation  and negligence by the Company
in hiring, training and supervising the sales agent. Boyd seeks compensatory and
punitive damages, plus costs. The complaint was responded to and discovery is in
progress. The Company intents to vigorously defend the action.

An action was brought against the Company in February 2001 by Willow Newberry in
the County Court at Law No. 1, Grayson  County,  Texas.  The action involves the
denial of  coverage  under a  $10,000  insurance  policy.  The  complaint  seeks
recovery  of  the  policy  amount,   statutory  penalties,   exemplary  damages,
attorney's fees and prejudgment  and post judgment  interest.  The Company is in
the process of evaluating the case and preparing an answer to the complaint. The
Company intends to vigorously defend the case.

The Company is not a party to any other legal  proceedings  outside the ordinary
course of the Company's  business or to any other legal  proceedings  which,  if
adversely determined, would have a material adverse effect on the Company or its
business.

Item   4.   Submission   of   Matters   to   a   Vote   of   Security   Holders.
-------------------------------------------------------------------------------
During the fourth quarter of the Company's  fiscal year, no matter was submitted
to a vote of security holders.

                                     PART II

Item 5. Market for the Company's Common Stock and Related  Stockholder  Matters.
-------------------------------------------------------------------------------

(a)  Principal  Market  and  Stock  Price.  The  principal  market  on which the
     Company's common stock is traded is the  over-the-counter  market.  Trading
     information with respect to the Company's  shares is available  through the
     National  Association of Securities  Dealers Automated  Quotation  (NASDAQ)
     System under the symbol SSLI.

The table below presents the high and low market prices for the Company's common
stock during the calendar  quarters  indicated,  as quoted in the NASDAQ system.
The quotations represent prices between dealers in securities and do not include
retail markups, markdowns or commissions and do not necessarily represent actual
transactions.

                                      QUARTER ENDED
-------------------------------------------------------------------------------
                           2000                            1999
-------------------------------------------------------------------------------
          Mar.31  Jun.30  Sep.30  Dec.31    Mar.31  Jun.30  Sep.30  Dec.31
          ------  ------  ------  ------    ------  ------  ------  ------
Common
Shares:
  High      5.00    5.00   4.69     4.38      3.81    4.22    4.75    4.94
  Low       4.66    4.00   4.00     3.50      3.75    4.22    4.75    4.94

(b)  Approximate  Number of Holders of Common Stock. There were 1,299 holders of
     record of the Company's Common Stock at December 31, 2000.

(c)  Dividends.  The Company has paid no cash dividends to  stockholders  during
     the past two years,  and it is not anticipated that any cash dividends will
     be paid at any time in the foreseeable  future. The payment of dividends by
     the Company is subject to the regulation of the State of Florida Department
     of Insurance. Under such regulation an insurance company may pay dividends,
     without  prior  approval of the State of Florida  Department  of Insurance,
     equal to or less than the  greater  of (a) 10% of its  accumulated  capital
     gains (losses) and accumulated  operating income (losses) (i.e.  unassigned
     surplus) or (b) certain net operating profits (losses) and realized capital
     gains  (losses)  of the  Company,  as defined in the  applicable  insurance
     statutes.  In no case can such  dividends  be paid if the Company will have
     less  than  115%  of  the  minimum   required   statutory   surplus  as  to
     policyholders  after the  dividend is paid.  The maximum  amount  which the
     Company could pay as a dividend  during 2001 pursuant to such regulation is
     approximately $92,200.
<PAGE>

Item 6.  Selected  Financial  Data
-----------------------------------

The  following  table  presents  selected  financial  data  (on  a  GAAP  basis)
concerning the Company and its financial results during the periods indicated.
<TABLE>
<CAPTION>
                                    YEARS ENDED DECEMBER 31,
                                    ------------------------

                           2000          1999            1998           1997            1996
                        ---------      -------         -------        --------        -------
<S>                   <C>           <C>             <C>              <C>            <C>
Revenues:
Life insurance
  premiums and
  policy charge       $  6,698,869 $   6,901,546     $7,228,227      $7,643,650     $7,915,027

Net investment
  income                 3,935,607     3,909,373      3,587,147       3,545,311      3,318,627
Realized Gain
  (loss) on
  investments                --          --             525,181         506,795        869,502
Other revenue, net           --          715,128         --              --             --
                       -----------   -----------    -----------    ------------   ------------
Total Revenue           10,634,476    11,526,047     11,340,555      11,695,756     12,103,156

Benefits, Losses
  & Expenses:
 Insurance living
  benefits               2,243,331     2,614,754      2,483,197       2,459,638      2,420,021
 Insurance death
  benefits               1,549,116     1,917,134      1,529,294       1,847,375      1,398,541
 Increase (decrease)
  in policy
  reserves               1,316,964       (78,324)       334,329         124,461        (5,201)
 Amortization of
  deferred policy
  acquisition
  costs                  1,797,320     3,029,223      3,484,689       3,542,617      3,364,738
 Commissions and
  general
  expenses               3,529,381     3,261,134      4,134,686       3,472,255      3,336,552
                       -----------   -----------    -----------     -----------   ------------
Total expenses          10,436,112    10,743,921     11,966,195      11,446,346     10,514,651
Income (loss)
  before income
  taxes                    198,365       782,126       (625,640)        249,410      1,588,505
Income tax expense
  (benefit)                 38,105       150,168       (241 907)         54,200        196,000
                      ------------  ------------  -------------   -------------   ------------
NET INCOME (LOSS)     $    160,260  $    631,958  $    (383,733)  $     195,210   $  1,392,505
                      -===========  ============  =============   =============   ============
Weighted average
  number of
  shares
  outstanding
  (basic and
  diluted)              1,907,989      1,907,989      1,907,989       1,907,989      1,907,989
                      -----------    -----------  -------------   -------------   ------------
Basic income (loss)
  per common share           $0.08          $.33          $(.20)           $.10           $.73
                             -----          ----          -----            ----           ----
Diluted income (loss)
  per common share           $0.08          $.33          $(.20)           $.10           $.73
                             -----          ----          -----            ----           ----
Shareholders'
  Equity             $  16,198,535  $ 15,637,320  $  15,912,106  $   16,132,018   $ 15,661,588
                     =============  ============  =============  ==============   ============
Shareholders'
  equity per
  common
  share                      $8.49         $8.20          $8.34           $8.45          $8.20
                             =====         =====          =====           =====          =====
Assets               $  77,125,931  $ 77,208,941  $   81,205,193 $   82,142,465   $ 81,809,360
                     -------------  ------------  -------------- --------------    -----------
Life Insurance:
  Insurance in
  force            $1,369,808,000  $1,455,417,000  $1,467,529,000 $1,558,810,000 $1,703,650,000
                   --------------  --------------  -------------- -------------- --------------
Individual
  insurance
  issued during
  current
  year               $ 64,710,000  $   66,591,000  $   68,935,000 $   82,390,000 $  121,646,000
                     ------------  --------------  -------------- -------------- --------------
Long term
  obligation         $  1,000,000  $    1,000,000  $    1,000,000 $    1,000,000 $    1,000,000
                     ------------  --------------  -------------- -------------- --------------
Dividends
  declared per
  common share              $0.00           $0.00           $0.00          $0.00          $0.00
                            =====           =====           =====          =====          =====
</TABLE>
<PAGE>

Item 7.  Management's discussion and analysis of financial condition and results
of operation.

Overview.

This analysis of the results of operations  and financial  condition of Southern
Security Life should be read in conjunction with the Selected Financial Data and
Financial  Statements  and Notes to the  Financial  Statements  included in this
report.

In recent  years,  the  Company  has  primarily  issued  two types of  insurance
products:  universal  life and final expense  products.  Universal life provides
insurance   coverage  with  flexible  premiums,   within  limits,   which  allow
policyholders  to  accumulate  cash  values.  The  accumulated  cash  values are
credited with  tax-deferred  interest,  as adjusted by the Company on a periodic
basis.  Deducted  from the cash  accumulations  are  administrative  charges and
mortality  costs.  Should a policy  surrender  in its early  years,  the Company
assesses a surrender fee against the cash value  accumulations based on a graded
formula.

Final expense products are traditional endowment type insurance policies written
for the senior market.  Because the products are written to a senior market they
are designed to accommodate  adverse health  conditions.  Because of the size of
the policies,  the products are usually  issued with only limited  underwriting.
The  coverage  size  of the  policy  is  roughly  equivalent  to  the  insured's
anticipated funeral costs.

An additional source of income to the Company is investment  income. The Company
invests those funds  deposited by  policyholders  of universal  life and annuity
products in debt and equity  securities,  mortgage loans, and warehouse mortgage
loans on a short-term  basis before selling the loans to investors in accordance
with the requirements and laws governing life insurance  companies,  in order to
earn  interest and dividend  income,  a portion of which is credited back to the
policyholders.  Interest  rates  and  maturities  of  the  Company's  investment
portfolio play an important  part in determining  the interest rates credited to
policyholders.

Product  profitability  is  affected  by  several  different  factors,  such  as
mortality  experience  (actual versus  expected),  interest rate spreads (excess
interest earned over interest credited to policyholders)  and controlling policy
acquisition costs and other costs of operation. The results of any one reporting
period  may be  significantly  affected  by the  level of death  claims or other
policyholder benefits incurred due to the Company's relatively small size.

Results of Operations

2000 Compared to 1999

Total revenues  decreased by $892,000,  or 7.7%, to $10,634,000  for fiscal year
2000 from  $11,526,000  for fiscal year 1999.  Contributing  to this decrease in
total revenues was a $203,000 decrease in net insurance  revenues and a $715,000
increase in other revenue.

Net insurance revenues decreased by $203,000,  or 2.9%, to $6,699,000 for fiscal
year 2000, from $6,902,000 for fiscal year 1999. This decrease was primarily the
result of a change in the sales mix of the Company's insurance  products.  Since
March 1998,  the sales of the Company's  funeral plan products have been greater
than the universal life  products.  The universal life products were for greater
face  amounts  than the  funeral  plan  products.  Consequently,  the  insurance
revenues from final expense  products were less than those from  universal  life
products.

Net  investment  income  increased by $26,000,  or .7%, to $3,936,000 for fiscal
year 2000 from  $3,909,000  for fiscal  year  1999.  Investment  yield  slightly
increased for the fiscal year 2000 from 7.78% in 1999 to 7.8% in 2000.
<PAGE>

There was no other  revenue  for fiscal  year 2000,  as  compared to $715,000 in
other  revenue  in  1999.  The  amount  of other  revenue  was the  result  of a
settlement from insurance claims filed for the recovery of the costs to litigate
a case against a former officer of the Company.

Benefits and claims  increased by $655,000,  or 14.7%,  to $5,109,000 for fiscal
year 2000, from  $4,454,000 for the comparable  period in 1999. The increase was
primarily  due to an  increase  in  traditional  life  reserves  as a result  of
additional policies in force of traditional life products.

The amortization of deferred policy acquisition costs decreased by $1,232,000 or
40.7%,  to $1,797,000,  for fiscal year 2000, from $3,029,000 for the comparable
period in 1999.  The  decrease  in  amortization  expense was  primarily  due to
adjusting the amortization rate to the Company's current assumptions.

Operating expenses increased by $269,000,  or 8.3% to $3,530,000 for fiscal year
2000 from $3,261,000 for the same period in 1999. The increase was primarily due
to increased marketing and home office building expenses.

1999 Compared to 1998

Total revenues  increased by $186,000,  or 1.6%, to $11,526,000  for fiscal year
1999 from  $11,340,000  for fiscal year 1998.  Contributing  to this increase in
total revenues was a $322,000  increase in net investment  income and a $715,000
increase in other revenue.

Net insurance revenues decreased by $326,000,  or 4.5%, to $6,902,000 for fiscal
year 1999, from $7,228,000 for fiscal year 1998. This decrease was primarily the
result of a change in the sales mix of the Company's insurance  products.  Since
March 1998,  the sales of the Company's  funeral plan products have been greater
than the universal life  products.  The universal life products were for greater
face  amounts  than the  funeral  plan  products.  Consequently,  the  insurance
revenues from final expense  products were less than those from  universal  life
products.

Net investment  income increased by $322,000,  or 9.0%, to $3,909,000 for fiscal
year 1999 from  $3,587,000  for fiscal year 1998. The increase was primarily due
to a rental  income being paid to the Company from Security  National  Financial
Corporation, the Company's ultimate parent under the terms of the Administrative
Services  Agreement  entered into by the Company on January 1, 1999. See Note 11
to the Notes to Financial  Statements  included in this report.  In addition the
Company was able to increase its yield by investing in mortgage loans.

Realized gains on investments  decreased from $525,000 in fiscal year 1998 to no
gains in fiscal  year  1999.  The gains in 1998 were the  result of the  Company
trading  its  available-for-sale  securities.  The Company did not engage in the
trading of any of its available-for-sale securities in 1999.

Other  revenue  totaled  $715,000 for fiscal year 1999,  as compared to no other
revenue for the same period in 1998.  This amount was the result of a settlement
from  insurance  claims  filed for the  recovery of the costs to litigate a case
against a former officer of the Company.

Benefits and claims  increased by $107,000,  or 2.5%, to  $4,454,000  for fiscal
year 1999, from  $4,347,000 for the comparable  period in 1998. The increase was
primarily due to additional death claims.

The amortization of deferred policy acquisition costs decreased by $456,000,  or
13.1%,  to $3,029,000,  for fiscal year 1999, from $3,485,000 for the comparable
period in 1998. The decrease in  amortization  expenses was primarily due to the
reduction in net insurance revenues.

Operating expenses decreased by $874,000, or 21.1% to $3,261,000 for fiscal year
1999 from  $4,135,000 for the same period in 1998.  This reduction was primarily
due to the lump sum payment to the Company's  former  President in December 1998
in connection with the acquisition of Company's parent company.
<PAGE>

Liquidity and Capital Resources.

The  Company  attempts  to  match  the  duration  of  invested  assets  with its
policyholder  liabilities.  The  Company may sell  investments  other than those
held-  to-maturity  in the portfolio to help in this timing;  however,  to date,
that has not been necessary.  The Company purchases short-term  investments on a
temporary  basis to meet the  expectations  of  short-term  requirements  of the
Company's products. The Company's investment philosophy is intended to provide a
rate of return which will persist during the expected  duration of  policyholder
liabilities regardless of future interest rate movements.

The Company's  investment  policy is to invest  predominantly  in fixed maturity
securities,  mortgage loans, and warehouse  mortgage loans on a short-term basis
before selling the loans to investors in accordance  with the  requirements  and
laws governing life insurance companies.  Bonds owned by the Company amounted to
$28,742,000  as of December 31, 2000 as compared to  $27,930,000  as of December
31,  1999.  This  represents  60.6%  and 59.8% of the  total  investments  as of
December  31, 2000 and December 31,  1999,  respectively.  Generally,  all bonds
owned  by the  Company  are  rated  by the  National  Association  of  Insurance
Commissioners.  Under this rating  system,  there are nine  categories  used for
rating bonds.  At December 31, 2000,  and at December 31, 1999,  the Company did
not have investments in bonds in rating categories three through nine, which are
considered non-investment grade.

If market conditions were to cause interest rates to change, the market value of
the fixed income portfolio  (approximately  $30.939 million) could change by the
following  amounts  based on the  respective  basis  point  swing (the change in
market values were calculated using a modeling technique):

(in millions of dollars)   -200bps       -100bps       +100bps       +200bps
-----------------------    --------      -------       --------      -------
Change in Market Value     $2.023        $.974         $(.905)       $(1.748)

The  Company  has no other  financial  instruments  which  would  be  materially
susceptible to market risk.

The Company's insurance operations have historically  provided adequate positive
cash flow enabling the Company to continue to meet operational  needs as well as
increase  its  investment-grade  securities  to  provide  ample  protection  for
policyholders.

The Company has classified  certain of its fixed income  securities as available
for  sale,  with the  remainder  classified  as held to  maturity.  However,  in
accordance with Company policy, any such securities purchased in the future will
be classified as held to maturity. Business conditions,  however, may develop in
the future  which may  indicate a need for a higher  level of  liquidity  in the
investment  portfolio.  In that event the Company  believes it could sell short-
term investment grade securities before liquidating  higher-yielding longer term
securities.

The Company is subject to risk based capital guidelines established by statutory
regulators  requiring  minimum  capital  levels based on the  perceived  risk of
assets, liabilities,  disintermediation, and business risk. At December 31, 2000
and December 31, 1999, the Company exceeded the regulatory criteria.

Lapse  rates  measure the amount of  insurance  terminated  during a  particular
period.  The  Company's  lapse  rate for  life  insurance  in 2000 was  16.1% as
compared to a rate of 9.1% for 1999.

Effective December 17, 1998, the Company entered into an Administrative Services
Agreement with Security National Financial Corporation ("SNFC"). Under the terms
of the  agreement,  SNFC has agreed to provide the Company with certain  defined
administrative and financial services,  including accounting services, financial
reports and statements,  actuarial,  policyholder services,  underwriting,  data
processing,   legal,  building  management,   marketing  advisory  services  and
investment  services.  In consideration for the services to be provided by SNFC,
the Company shall pay SNFC an administrative services fee of $250,000 per month,
provided,  however,  that such fee shall be  reduced  to zero for so long as the
capital and surplus of the Company is less than or equal to  $6,000,000,  unless
the Company and SNFC  otherwise  agree in writing and such agreement is approved
by the Florida Department of Insurance.
<PAGE>

The administrative services fee may be increased,  beginning on January 1, 2001,
to reflect  increases in the Consumer  Price Index,  over the index amount as of
January 1, 2000. The  Administrative  Services  Agreement shall remain in effect
for an initial term expiring on December 16, 2003. The term of the agreement may
be  automatically  extended for  additional  one-year  terms  unless  either the
Company or SNFC shall deliver a written notice on or before September 30, of any
year  stating to the other its  desire not to extend the term of the  agreement.
However, in no event can the agreement be terminated prior to December 16, 2003.
It is  anticipated  that the Company will realize a reduced level of general and
administrative  costs in the future as a result of the  Administrative  Services
Agreement.

Student loans are a service the Company has  historically  made available to the
public as well as an  investment.  While the Company  anticipates  the  seasonal
demand  for  student  loan  funds and the  subsequent  sale of such loans to the
Student Loan Marketing Association (SLMA), there are times when additional funds
are  required  to meet  demand  for  student  loans  until such time as the sale
thereof to SLMA can be  completed.  In 1997 the Company  renewed its  $5,000,000
line of credit  with SLMA until 2007 in order to meet these  seasonal  borrowing
requirements.  The Company  made no draws  against  this line of credit  through
December 31, 2000.

The Company began a new association with USA Group, CAP Program in 1996, for the
purpose of making more student loan funds available  without  increased costs to
the Company. This association aided in eliminating borrowings for 2000 and 1999.

The Company has leased approximately 38% of the available space in its principal
office building and does not anticipate  significant capital expenditures to the
rental space.

The Private  Securities  Litigation  Reform Act of 1995 (the  "Act")  provides a
"safe harbor" for  forward-looking  statements to encourage companies to provide
prospective  information  about their  businesses  without fear of litigation so
long as those statements are identified as  forward-looking  and are accompanied
by meaningful  cautionary  statements  identifying  important factors that could
cause  actual  results  to  differ  materially  from  those  projected  in  such
statements.  The  company  desires  to  take  advantage  of  the  "safe  harbor"
provisions of the Act.

This Annual Report of Form 10-K contains  forward-looking  statements,  together
with related  data and  projections,  about the  Company's  projected  financial
results and its future plans and strategies.  However,  actual results and needs
of  the  Company  may  vary  materially  from  forward-looking   statements  and
projections  made from time to time by the Company on the basis of  management's
then-current expectations. The business in which the Company is engaged involves
changing and competitive  markets,  which may involve a high degree of risk, and
there can be no assurance that  forward-looking  statements and projections will
prove accurate.

Factors that may cause the Company's  actual results to differ  materially  from
those contemplated or projected, forecast, estimated or budgeted in such forward
looking  statements  include among  others,  the  following  possibilities:  (i)
heightened competition,  including the intensification of price competition, the
entry  of new  competitors,  and the  introduction  of new  products  by new and
existing competitors;  (ii) adverse state and federal legislation or regulation,
including  decreases  in rates,  limitations  on premium  levels,  increases  in
minimum capital and reserve requirements,  benefit mandates and tax treatment of
insurance products;  (iii) fluctuations in interest rates causing a reduction of
investment  income or increase in  interest  expense and in the market  value of
interest rate sensitive investment;  (iv) failure to obtain new customer, retain
existing customers or reductions in policies in force by existing customers; (v)
higher  service,  administrative,  or  general  expense  due  to  the  need  for
additional  advertising,  marketing,  administrative  or management  information
systems  expenditures;  (vi) loss or retirement of key  executives or employees;
(vii) increases in medical costs;  (viii) changes in the Company's liquidity due
to changes in asset and  liability  matching;  (ix)  restrictions  on  insurance
underwriting based on genetic testing and other criteria; (x) adverse changes in
the ratings obtained by independent  rating  agencies;  (xi) failure to maintain
adequate  reinsurance;  (xii) possible  claims  relating to sales  practices for
insurance  products and claim denials and (xiii)  adverse trends in morality and
morbidity.
<PAGE>

SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities,  was
issued in June 1998 and  amended  by SFAS No.  138,  issued  in June  2000.  The
requirements  of SFAS No. 133, as amended,  will be effective for the Company in
the first  quarter of the fiscal year  beginning  January 1, 2001.  The standard
establishes  accounting  and  reporting  standards  for  derivative  instruments
embedded in other  contracts  and for hedging  activities.  Under the  standard,
certain contracts that were not formerly considered derivatives may now meet the
definition  of a  derivative.  The  Company has  determined  SFAS 133 to have no
impact on the Company's financial position and results of operations because the
Company has no derivative activity.

SFAS No. 140,  Accounting  for Transfers  and Servicing of Financial  Assets and
Extinguishments of Liabilities,  was issued in September 2000. SFAS No. 140 is a
replacement of SFAS No. 125, Accounting for Transfers and Servicing of Financial
Assets and  Extinguishments  of Liabilities.  Most of the provisions of SFAS No.
125  were  carried  forward  to SFAS  No.  140  without  reconsideration  by the
Financial Accounting Standards Board (FASB), and some were changed only in minor
ways. In issuing SFAS No. 140, the FASB included  issues and decisions  that had
been  addressed and determined  since the original  publication of SFAS No. 125.
SFAS No. 140 is effective for transfers  after March 31, 2001.  Management  does
not expect the  adoption  of SFAS No.  140 to have a  significant  impact on the
financial position or results of operations of the Company.
<PAGE>

Item 8.  Financial Statements and Supplementary Data.
-----------------------------------------------------

The following  financial  statements of Southern Security Life Insurance Company
are included in Part II, Item 8:

                                                                   Page Number

Independent Auditors' Report............. . . . . . . . . . . . . . . . 16

Balance Sheet-December 31, 2000 and 1999. . . . . . . . . . . . . . . . 17

Statement of Operations - years ended
December 31, 2000, 1999 and 1998......... . . . . . . . . . . . . . . . 19

Statement of Shareholders' Equity-years
ended December 31, 2000, 1999 and 1998... . . . . . . . . . . . . . . . 20

Statement of Cash Flows - years ended
December 31, 2000, 1999 and 1998......... . . . . . . . . . . . . . . . 21

Notes to Financial Statements............ . . . . . . . . . . . . . . . 23
<PAGE>

                         Report of Independent Auditors



Board of Directors & Shareholders
Southern Security Life Insurance Company:

We have  audited  the  accompanying  balance  sheet of  Southern  Security  Life
Insurance Company as of December 31, 2000 and 1999 and the related statements of
operations,  shareholders'  equity,  and cash flows for the years then ended. In
connection with our audit of the financial statements,  we have also audited the
amounts  included  in  the  financial  statement  schedules  as  listed  in  the
accompanying  index under Item 14(a).  These financial  statements and financial
statement  schedules are the  responsibility  of the Company's  management.  Our
responsibility  is to  express  an opinion  on these  financial  statements  and
financial statement schedules based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of  Southern  Security  Life
Insurance  Company  at  December  31,  2000 and  1999,  and the  results  of its
operations  and its cash flows for the two years then ended in  conformity  with
generally  accepted  accounting  principles.  Also in our  opinion,  the related
financial  statement  schedules,  when  considered  in  relation  to  the  basic
financial statements taken as a whole, present fairly, in all material respects,
the information set forth therein.

Tanner + Co.

Salt Lake City, Utah
March 23, 2001
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                  Balance Sheet

                           December 31, 2000 and 1999

Assets                                              2000                1999
Investments (note 3):
   Fixed maturities held-to-maturity
     (fair value, $5,273,032 and
     $3,985,336 at December 31,
     2000 and 1999, respectively)               $5,374,204         $3,978,871
   Securities available-for-sale,
     at fair value:
     Fixed maturities (cost of
       $23,419,358 at December 31,
       2000 and $24,789,267 at
       December 31, 1999)                       23,367,483         23,951,111
     Equity securities
       (cost, $327,674 and
       $225,980 at December 31,
       2000 and 1999, respectively)                358,932            378,440
   Mortgage loans                                2,298,163          1,497,688
   Policy and student loans                      8,220,736          8,458,972
   Short-term investments (note 11)              7,814,813          8,595,093
                                               -----------        -----------
                                                47,434,331         46,860,175

Cash and cash equivalents                        2,513,668          4,080,484
Accrued investment income                          610,474            582,908
Deferred policy acquisition costs
   (note 4)                                     13,211,413         12,874,219
Policyholders' account balances on
   deposit with reinsurer (note 7)               7,434,750          7,806,866
Reinsurance receivable (note 7)                    324,793            373,459
Receivables:
   Agent balances                                1,208,378          1,215,756
   Other                                           279,567            193,506
Refundable income taxes                              --                34,951
Property and equipment, net,
   at cost (note 5)                              2,542,384          2,435,565
Investment in affiliate at cost                  1,566,173            751,052
                                               -----------        -----------
                                               $77,125,931        $77,208,941
                                               ===========        ===========























See accompanying notes to financial statements.
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                            Balance Sheet (continued)

                           December 31, 2000 and 1999



Liabilities and Shareholders' Equity               2000              1999
-------------------------------------
Liabilities:
   Policy liabilities and accruals
     (notes 6 and 7):                         $ 2,965,940        $ 1,648,976
  Future policy benefits:
     Policyholders' account balances           48,722,138         50,377,101
     Unearned revenue                           4,948,989          5,323,954
     Other policy claims and benefits
       payable                                    580,196            540,407
   Other policyholders' funds, dividend
     and endowment accumulations                   72,890             69,789
   Funds held related to reinsurance
     treaties (note 7)                          1,417,216          1,475,512
   Note payable to related party
     (note 9)                                   1,000,000          1,000,000
   Due to affiliated insurance
     agency (note 11)                             151,689            195,785
   General expenses accrued                       157,944            137,884
   Unearned investment income                     323,830            324,750
   Other liabilities                               28,488             63,753
   Income taxes (note 10)                         558,076            413,710
                                              -----------        -----------
                                               60,927,396         61,571,621
                                              -----------        -----------

Shareholders' equity (notes 2,3 and 12):
   Common stock, $1 par, authorized
     3,000,000 shares; issued and out-
     standing, 1,907,989 shares                 1,907,989          1,907,989
   Capital in excess of par                     4,011,519          4,011,519
   Accumulated other comprehensive
       income (loss)                              (75,628)          (476,583)
   Retained earnings                           10,354,655         10,194,395
                                              -----------        -----------
                                               16,198,535         15,637,320
Commitments and contingencies
   (notes 7 and 15)                                 --                 --
                                              -----------        -----------
                                              $77,125,931        $77,208,941
                                              ===========        ===========
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                             Statement of Operations

                  Years ended December 31, 2000, 1999, and 1998


                                        2000           1999              1998
Revenues:
   Net insurance revenues        $ 6,698,869     $ 6,901,546       $ 7,228,227
   Net investment income
     (notes 3 and 11)              3,935,607       3,909,373         3,587,147
   Realized gain on
     investments (note 3)              --              --              525,181
   Other revenue, net                  --            715,128             --
                                -----------     ------------       -----------
                                 10,634,476       11,526,047        11,340,555
                                -----------     ------------       -----------
Benefits, claims and expenses:

   Benefits and claims             5,109,411       4,453,564         4,346,820
   Amortization of deferred
     policy acquisition
     costs (note 4)                1,797,320       3,029,223         3,484,689
   Operating expenses
     (notes 9 and 11)              3,529,381       3,261,134         4,134,686
                                 -----------     -----------       -----------
                                  10,436,112      10,743,921        11,966,195
                                 -----------     -----------       -----------
    Income(Loss) before
     income taxes                    198,365         782,126          (625,640)

Income tax expense (benefit)
     (note 10)                        38,105         150,168          (241,907)
                                 -----------     -----------       -----------
   Net income(loss)              $   160,260     $   631,958       $  (383,733)
                                 ===========     ===========       ===========
Basic and diluted net
   income (loss) per share
   of common stock (note 12)           $0.08            $.33             $(.20)
                                       =====            ====             =====

























See accompanying notes to financial statements.
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                        Statement of Shareholders' Equity

                    Years ended December 31, 2000, 1999, 1998

<TABLE>
<CAPTION>

                                                                                Accumulated
                                                                   Capital         other
                                      Common           Stock      in excess    comprehensive   Retained
                                       Shares         Amount        of par       income        earnings            Total
                                     ---------      --------     ----------    --------------  ---------      -------------
<S>                                 <C>           <C>            <C>           <C>           <C>              <C>
Balances,
  December 31, 1997                 1,907,989     $1,907,989     $4,011,519    $ 266,340     $ 9,946,170      $16,132,018
                                   ----------
Comprehensive Income
  (Loss):
  Net loss for
      the year                          --             --             --           --           (383,733)        (383,733)
  Unrealized appreciation of
  securities available
      for sale                          --             --             --         163,821           --             163,821
Total comprehensive loss                                                                                         (219,912)

Balances,
 December 31, 1998                  1,907,989      1,907,989      4,011,519      430,161       9,562,437       15,912,106

Comprehensive Income (loss):
  Net gain for the year                --             --             --            --            631,958          631,958
  Unrealized depreciation of
      securities available
      for sale                         --             --              --        (906,744)          --            (906,744)
Total comprehensive loss                                                                                         (274,786)

Balances,
 December 31, 1999                  1,907,989      1,907,989      4,011,519     (476,583)     10,194,395       15,637,320

Comprehensive Income (loss):
  Net gain for the year                --             --             --            --            160,260          160,260
  Unrealized depreciation of
      securities available
      for sale                         --             --              --         400,955           --             400,955
Total comprehensive gain                                                                                          561,215

Balances,
 December 31, 2000                  1,907,989     $1,907,989     $4,011,519     $(75,628)    $10,354,655      $16,198,535

See accompanying notes to financial statements.
</TABLE>
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                             Statement of Cash Flows

                    Years ended December 31, 2000, 1999, 1998

                                           2000            1999         1998
                                          ------          ------       ------
Cash flows provided by (used in)
operating activities:
    Net income (loss)                  $  160,260    $   631,958  $  (383,733)
    Adjustments to reconcile net
         cash provided by (used in)
         operating activities:
    Depreciation and amortization          260,956        286,514      301,970
    Net realized (gains) on investments      --            --        (525,182)
    Loss on disposal of property,
         plant & equipment                   1,886         15,180        2,956
    Deferred income taxes                   (9,426)        11,009      175,274
    Amortization of deferred
         policy acquisition costs        1,797,320      3,029,223    3,484,689
    Acquisition costs deferred          (2,206,125)    (2,084,438)  (1,911,282)
    Change in assets and liabilities
         affecting cash provided by
         operations:
         Accrued investment income         (27,566)       (18,790)      73,342
         Accounts receivable               (78,683)       (63,291)    (344,122)
         Reinsurance receivable             48,666        (67,201)      53,430
         Other policy claims and
             future benefits payable     1,356,753        (78,706)     431,409
         Policyholders' account
           balances                      2,080,769      2,585,204    2,356,804
         Funds held under reinsurance      (58,296)        56,155       79,430
         Unearned premiums                (331,998)      (840,474)  (1,160,706)
         Dividend and endowment
             accumulations                   3,101          5,051        5,052
         Payable to affiliated
             insurance agent               (44,096)       172,914      (45,775)
         Income taxes payable              (46,738)       139,159        --
         Other liabilities                 (16,125)      (651,872)    (133,376)
                                       -----------    -----------  -----------
    Net cash provided by operating
         activities                    $ 2,890,658    $ 3,127,595  $ 2,460,180
                                       -----------    -----------  -----------
Cash flows from (used in) investing activities:
    Purchase of investments:
    Purchase of investments
         held-to-maturity             $ (2,606,749)   $  (477,150) $     --
    Purchase of investments
         available-for-sale                 --              --     (6,180,178)
    Purchase of equity securities         (916,815)      (766,662)    (610,370)
    Proceeds from maturity of
         held-to maturity securities     1,210,272      1,446,315    5,536,006
    Proceeds from maturity of
         available-for-sale securities   1,225,522      2,739,662      299,281
    Proceeds from sale of available-
         for-sale securities (equity and
         fixed maturity)                     --             --      10,675,217
    Purchase of mortgage loan             (825,000)    (1,500,000)       --
    Repayment of mortgage loans             24,525          2,312        --
    Net change in short-term
         investments                       780,280      2,839,890  (11,334,983)
    Net change in policy and
         student loans                     238,236          3,466     (517,057)
    Acquisition of property and
         equipment                        (224,129)          (635)     (71,356)
                                       -----------    -----------  -----------
    Net cash provided by (used in)
         investing activities          $(1,093,858)   $ 4,287,198  $(2,203,440)
                                       ===========    ===========  ===========
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                             Statement of Cash Flows

                    Years ended December 31, 2000, 1999, 1998

                                                2000       1999        1998
                                              -------     ------
Cash flows from financing activities:
    Receipts from universal life and
         certain annuity policies
         credited to policyholder
         account balances                  5,765,790    6,662,558   7,524,375
    Return of policyholder account
         balances on universal life
         and certain annuity policies     (9,129,406) (10,679,256) (9,547,720)

Net cash used in financing
    activities                           $(3,363,616) $ (4,016,698)$(2,023,345)

Increase (decrease) in cash and
    cash equivalents                      (1,566,816)    3,398,095  (1,766,605)

Cash and cash equivalents at
    beginning of year                      4,080,484       682,389   2,448,994
                                         -----------  ------------  ----------
Cash and cash equivalents at
    end of year                          $ 2,513,668  $  4,080,484 $   682,389
                                         ===========  ============ ===========
Supplemental schedule of cash flow
    information:
    Interest paid during the
         year                            $   105,000  $     90,000 $    90,000
                                         ===========  ============ ===========
    Income taxes paid during the
         year                            $    94,365  $      --    $    45,500
                                         ===========  ===========  ===========
Change in market value adjustments-
investments available-for-sale:
    Fixed maturities                     $   786,282   $(1,645,893) $  204,802
    Equity securities                       (121,202)      112,598        (111)

Change in deferred acquisition
    costs                                    (71,611)      235,048    (294,326)
Change in premium deposit funds               42,967      (141,029)     79,440
Deferred income tax asset
    (liability)                             (235,481)      532,532     174,016
                                         -----------   -----------  ----------
Accumulated comprehensive income
Net change in unrealized
    appreciation (depreciation)          $   400,955   $  (906,744) $   163,821
                                         ===========   ===========  ===========

















See accompanying notes to financial statements.
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                          Notes to Financial Statements
                          December 31, 2000, 1999, 1998

1.   Nature of business and summary of significant accounting policies:
     -----------------------------------------------------------------
     (a)   Nature of business

          The primary business of Southern  Security Life Insurance Company (the
          "Company") is the issuance of long duration  universal  life insurance
          contracts.  The majority of the Company's business is conducted in the
          states of Alabama  (11%),  Florida  (41%),  Georgia  (11%),  and Texas
          (11%).  None of the  remaining  ten  states  in which the  Company  is
          licensed to conduct  business  account  for over 10% of the  Company's
          total business.

          Prior to December 17, 1998,  certain executive  officers and directors
          of the Company were  shareholders of  approximately  60 percent of the
          shares  of  SSLIC  Holding  Company,   Inc.,   (formerly   Consolidare
          Enterprises,  Inc.).  SSLIC  Holding  Company,  Inc. owns 71.5% of the
          Company's voting securities at December 31, 2000.

          Effective December 17, 1998, 100% of the common stock of SSLIC Holding
          Company,  Inc. was acquired by Security National Financial Corporation
          ("SNFC").  Accordingly, from December 17, 1998, the Company is a 71.5%
          owned, indirect subsidiary of SNFC.

          The following is a description  of the most  significant  risks facing
          life and health insurers and how the Company mitigates those risks:

          Legal/regulatory  risk  is the  risk  that  changes  in the  legal  or
          regulatory  environment  in  which an  insurer  operates  will  create
          additional  expenses  not  anticipated  by the  insurer in pricing its
          products.  That is, regulatory  initiatives designed to reduce insurer
          profits,  new legal theories or insurance company insolvencies through
          guaranty  fund  assessments  may create  costs for the insurer  beyond
          those recorded in the consolidated  financial statements.  The Company
          seeks to mitigate  this risk  through  geographic  marketing  of their
          insurance products.

          Credit  risk is the  risk  that  issuers  of  securities  owned by the
          Company  will  default or that other  parties,  including  reinsurers,
          which owe the Company  money,  will not pay.  The Company  attempts to
          mitigate this risk by adhering to a conservative  investment strategy,
          by  maintaining  sound  reinsurance  and by providing  for any amounts
          deemed uncollectible.

          Interest  rate risk is the risk that  interest  rates will  change and
          cause a decrease in the value of an insurer's investments. This change
          in rates  may  cause  certain  interest-sensitive  products  to become
          uncompetitive,  may cause disintermediation,  or may cause the Company
          to not achieve its target interest  margins between interest earned on
          invested  assets and interest  required to be credited to policyholder
          account balances. The Company mitigates this risk by charging fees for
          nonconformance  with certain policy  provisions,  by offering products
          that  transfer  this risk to the  purchaser,  and/or by  attempting to
          match the maturity schedule of its assets with the expected payouts of
          its liabilities.  To the extent that liabilities come due more quickly
          than assets  mature,  an insurer  would have to sell  assets  prior to
          maturity and potentially recognize a gain or loss.

     (b)   Basis of financial statements

          The financial  statements have been prepared on the basis of generally
          accepted  accounting  principles  ("GAAP"),  which vary from reporting
          practices prescribed or permitted by regulatory authorities.

          The  accompanying  financial  statements  have been prepared using the
          historic cost basis of accounting  and do not reflect any  adjustments
          related to allocation of the purchase  price of the Company's  parent,
          SSLIC Holding (Formerly  Consolidare) by Security  National  Financial
          Corporation at December 17, 1998.
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


1. Nature of business and summary of significant accounting policies, continued
   ----------------------------------------------------------------------------
     (c)   Use of estimates

          In preparing the financial statements,  management is required to make
          estimates and assumptions  that affect the reported  amounts of assets
          and liabilities.  Actual results could differ significantly from those
          estimates.

          The  estimates  susceptible  to  significant  change are those used in
          determining  the  liability  for future  policy  benefits  and claims,
          deferred income taxes and deferred policy acquisition costs.  Although
          some variability is inherent in these estimates,  management  believes
          that the amounts provided are adequate.

     (d)   Investments

          Investments in all debt  securities and those equity  securities  with
          readily  determinable  market values are classified  into one of three
          categories:   held-   to-maturity,   trading  or   available-for-sale.
          Classification  of  investments  is based  upon  management's  current
          intent.  Debt  securities  which  management has a positive intent and
          ability  to  hold  until   maturity  are   classified   as  securities
          held-to-maturity and are carried at amortized cost. Unrealized holding
          gains and losses on securities  held-to-maturity  are not reflected in
          the  financial  statements.   Debt  and  equity  securities  that  are
          purchased  for  short-term  resale  would  be  classified  as  trading
          securities.  Trading  securities would be carried at fair value,  with
          unrealized holding gains and losses included in earnings;  the Company
          has no securities classified as trading securities. All other debt and
          equity  securities  not  included  in the  above  two  categories  are
          classified     as    securities     available-for-sale.     Securities
          available-for-sale  are carried at fair value, with unrealized holding
          gains and losses reported in accumulated  other  comprehensive  income
          which  is  included  in  stockholders'  equity  after  adjustment  for
          deferred  income  taxes and  deferred  acquisition  costs  related  to
          universal life products.

          The Company's  carrying value for investments in the  held-to-maturity
          and   available-for-sale   categories  is  reduced  to  its  estimated
          realizable value if a decline in the market value is deemed other than
          temporary.  Such  reductions  in  carrying  values are  recognized  as
          realized losses and charged to income.

          Interest on fixed maturities and short-term  investments is recognized
          to income as it accrues on the principal amounts outstanding  adjusted
          for amortization of premiums and discounts  computed by the scientific
          method which  approximates the effective yield method.  Realized gains
          and losses on disposition  of investments  are included in net income.
          The  cost  of   investments   sold  is   determined  on  the  specific
          identification  method.  Dividends  are  recorded  as  income  on  the
          ex-dividend dates.

          Mortgage  loans on real estate and  mortgage  loans held as short term
          investments are reported at the unpaid  principal  balances,  adjusted
          for  amortization of premium or accretion of discount,  less allowance
          for possible losses.

          Policy  loans and student  loans are  carried at the unpaid  principal
          balance,  less any amounts deemed to be  uncollectible.  The Company's
          policy is that policy  loans are not made for amounts in excess of the
          cash surrender value of the related policy. Accordingly,  policy loans
          are fully  collateralized  by the related  liability for future policy
          benefits for traditional  insurance policies and by the policyholders'
          account balance for interest sensitive policies.
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


1. Nature of business and summary of significant accounting policies, continued:
   ----------------------------------------------------------------------------
     (e)   Cash and cash equivalents

          For purposes of the  statements of cash flows,  the Company  considers
          all highly liquid debt instruments purchased with an original maturity
          of three months or less to be cash equivalents.

     (f)   Deferred policy acquisition costs

          The  costs  of  acquiring  new   business,   net  of  the  effects  of
          reinsurance,  principally  commissions  and those home office expenses
          that tend to vary with and are primarily  related to the production of
          new business, have been deferred to the extent recoverable from future
          profit  margins.  Deferred  policy  acquisition  costs  applicable  to
          traditional life policies are being amortized over the  premium-paying
          period of the  related  policies  in a manner  that will  charge  each
          year's  operations  in  direct  proportion  to the  estimated  premium
          revenue over the life of the policies.  Premium revenue  estimates are
          made using the same interest,  mortality and withdrawal assumptions as
          are  used  for  computing  liabilities  for  future  policy  benefits.
          Acquisition  costs  relating  to  universal  life  policies  are being
          amortized in relation to the incidence of expected  gross profits over
          the life of the policies.  Gross profits for universal  life contracts
          consist  of  revenue  representing  policy  charges  for  the  cost of
          insurance,  administration of the contracts and surrender charges plus
          investment  income less expenses for interest credited to policyholder
          account balances,  policy administrative expenses and expected benefit
          payments  in  excess  of  policy  account  balances.  Deferred  policy
          acquisition  costs are  adjusted to reflect  the impact of  unrealized
          gains and losses on fixed maturity securities available for sale.

          The Company has  performed  tests  concerning  the  recoverability  of
          deferred acquisition costs. These methods include those typically used
          by many companies in the life insurance industry. Further, the Company
          conducts a sensitivity  analysis of its  assumptions  that are used to
          estimate the future expected gross profits,  which management has used
          to determine  the future  recoverability  of the deferred  acquisition
          costs.

     (g)   Property and Equipment

          Property  and  equipment  are  recorded  at  cost,  less   accumulated
          depreciation.  Depreciation  and  amortization  on capital  leases and
          property and equipment are determined using the  straight-line  method
          over the  estimated  useful lives of the assets or terms of the lease.
          Expenditures  for  maintenance  and repairs are expensed when incurred
          and betterments are capitalized.  Gains and losses on sale of property
          and equipment are reflected in operations.

     (h)   Investment in affiliate

          The Company holds  investments in its parent  company's  common stock.
          This  reciprocal  stockholding  is accounted for based on the treasury
          stock  approach.  The value of the  investment is recorded at cost and
          will be  classified  as  treasury  stock upon  consolidation  with its
          parent company.

     (i)   Future policy benefits

          The liability for future policy benefits for traditional life policies
          has been provided on a net level  premium  basis based upon  estimated
          investment yields,  withdrawals,  mortality and other assumptions that
          were appropriate at the time the policies were issued.  Such estimates
          are based upon  industry  data and the  Company's  past  experience as
          adjusted to provide for possible adverse deviation from the estimates.

     (j)   Policyholder account balance

          Insurance   reserves  for  universal   life  policies  are  determined
          following  the  retrospective  deposit  method  and  consist of policy
          values that accrue to the benefit of the  policyholder,  unreduced  by
          surrender charges.
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


1. Nature of business and summary of significant accounting policies, continued:
   ----------------------------------------------------------------------------
     (k)   Recognition of premium revenue and related costs

          Premiums are recognized as revenue as follows:

          Universal  life policies - premiums  received from  policyholders  are
          reported as deposits.  Cost of insurance,  policy  administration  and
          surrender  charges which are charged against the policyholder  account
          balance  during  the  period,  are  recognized  as  revenue as earned.
          Amounts  assessed  against  the  policyholder   account  balance  that
          represent  compensation  to the Company for services to be provided in
          future  periods are  reported as unearned  revenue and  recognized  in
          income  using  the  same  assumptions  and  factors  used to  amortize
          acquisition costs capitalized.

          Annuity  contracts  with  flexible  terms  -  premiums  received  from
          policyholders are reported as deposits.

          All other  policies - recognized  as revenue  over the premium  paying
          period.

     (l)   Income taxes

          Deferred tax assets and  liabilities are recognized for the future tax
          consequences   attributable  to  differences   between  the  financial
          statement  carrying  amounts of existing  assets and  liabilities  and
          their  respective tax bases.  Deferred tax assets and  liabilities are
          measured  using enacted tax rates  expected to apply to taxable income
          in the years in which those  temporary  differences are expected to be
          recovered   or  settled.   The  effect  on  deferred  tax  assets  and
          liabilities  of a change in tax rates is  recognized  in income in the
          period that includes the enactment date.

     (m)   Impairment of Long-Lived Assets

          The Company  reviews its  long-lived  assets for  impairment  whenever
          events or changes in  circumstances  indicate that the carrying amount
          of the assets may not be recoverable through  undiscounted future cash
          flows.  If it is determined that an impairment loss has occurred based
          on expected  cash flows,  such loss is  recognized in the statement of
          operations.

     (n)   Earnings (Loss) Per Common Share

          The  computation of basic earnings (loss) per common share is based on
          the weighted average number of shares outstanding during each year.

          The  computation of diluted  earnings per common share is based on the
          weighted  average number of shares  outstanding  during the year, plus
          the common  stock  equivalents  that would arise from the  exercise of
          stock  options  outstanding,  using the treasury  stock method and the
          average  market price per share during the year.  There were no common
          stock equivalents outstanding during the years ended December 31, 2000
          and 1999.  Common  stock  equivalents  are not included in the diluted
          earnings   (loss)  per  share   calculation   when  their   effect  is
          antidilutive.

     (o)   Reclassification

          Certain  amounts  presented in the 1999 and 1998 financial  statements
          have been reclassified to conform to the 2000 presentation.

     (p)   Pending accounting change

          SFAS No.  133,  Accounting  for  Derivative  Instruments  and  Hedging
          Activities,  was  issued in June  1998 and  amended  by SFAS No.  138,
          issued in June 2000.  The  requirements  of SFAS No.  133, as amended,
          will be effective  for the Company in the first  quarter of the fiscal
          year beginning  January 1, 2001. The standard  establishes  accounting
          and reporting standards for derivative
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


1. Nature of business and summary of significant accounting policies, continued:
   ----------------------------------------------------------------------------
     (p)   Pending accounting change (continued)

          instruments  embedded in other  contracts and for hedging  activities.
          Under  the  standard,   certain   contracts  that  were  not  formerly
          considered  derivatives  may now meet the  definition of a derivative.
          The Company has determined SFAS 133 to have no impact on the Company's
          financial  position and results of operations  because the Company has
          no derivative activity.

          SFAS No. 140,  Accounting  for  Transfers  and  Servicing of Financial
          Assets and  Extinguishments  of  Liabilities,  was issued in September
          2000.  SFAS No. 140 is a replacement  of SFAS No. 125,  Accounting for
          Transfers and  Servicing of Financial  Assets and  Extinguishments  of
          Liabilities.  Most of the  provisions  of SFAS No.  125  were  carried
          forward  to SFAS No.  140  without  reconsideration  by the  Financial
          Accounting Standards Board (FASB), and some were changed only in minor
          ways. In issuing SFAS No. 140, the FASB included  issues and decisions
          that had been addressed and determined since the original  publication
          of SFAS No. 125. SFAS No. 140 is effective  for transfers  after March
          31, 2001.  Management  does not expect the adoption of SFAS No. 140 to
          have a  significant  impact on the  financial  position  or results of
          operations of the Company.

2.   Basis of financial statements
     -----------------------------
     The more significant  generally accepted  accounting  principles applied in
     the  preparation  of financial  statements  that differ from life insurance
     statutory  accounting  practices  prescribed  or  permitted  by  regulatory
     authorities are as follows:

     a.   Costs of acquiring  new business  are deferred and  amortized,  rather
          than being charged to operations as incurred.

     b.   The  liability  for future  policy  benefits  and expenses is based on
          reasonable  estimates  of  expected  mortality,  morbidity,  interest,
          withdrawals  and future  maintenance and settlement  expenses,  rather
          than on statutory rates for mortality and interest.

     c.   The liability for  policyholder  funds  associated with universal life
          and certain annuity contracts are based on the provisions of Statement
          of Financial Accounting Standards No. 97, rather than on the statutory
          rates for mortality and interest.

     d.   Investments  in  securities  are  reported as described in Note 1.(d),
          rather than in accordance with valuations  established by the National
          Association  of  Insurance  Commissioners  ("NAIC").  Pursuant to NAIC
          valuations,  bonds eligible for amortization are reported at amortized
          value;  other securities are carried at values prescribed by or deemed
          acceptable by NAIC.

     e.   Deferred  income taxes,  if applicable,  are recognized for future tax
          consequences   attributable  to  differences   between  the  financial
          statement  carrying  amounts of existing  assets and  liabilities  and
          their respective tax bases.

     f.   The statutory liabilities for the asset valuation reserve and interest
          maintenance   reserve  have  not  been   provided  in  the   financial
          statements.

     g.   Certain assets, principally receivables from agents and equipment, are
          reported as assets rather than being charged directly to surplus.

     h.   Costs  attributable  to the public  offering of the common shares have
          been  reclassified  from  accumulated  surplus to capital in excess of
          par.

     i.   Realized  gains or losses on the sale or maturity of  investments  are
          included in the  statement of income and not recorded net of taxes and
          amounts transferred to the interest maintenance reserve as required by
          statutory accounting practices.
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


2.  Basis of financial statements, continued
    ----------------------------------------
     j.   Certain  proceeds  from a note  payable  (note 9) that are  treated as
          shareholders' equity for statutory purposes are treated as a liability
          under generally accepted accounting principles.

     k.   Reinsurance  assets and  liabilities  are  reported  on a gross  basis
          rather than shown on a net basis as permitted by statutory  accounting
          practices.

     A  reconciliation  of net income  (loss) for the years ended  December  31,
     2000, 1999, 1998 and shareholders'  equity as of December 31, 2000 and 1999
     between the amounts  reported on a statutory  basis and the related amounts
     presented on the basis of generally  accepted  accounting  principles is as
     follows:
<TABLE>
<CAPTION>

                                    Net Income (loss)                        Shareholders'
                                       Years ended                              Equity
                                      December 31,                             December 31,
                                    -----------------                        ---------------
                          2000             1999           1998             2000           1999
                      ---------          -------        -------          --------       -------
<S>                    <C>             <C>           <C>             <C>            <C>
As reported
on a statutory
 basis                 $  80,477       $  533,233   $  (486,823)     $ 8,405,211    $ 8,976,516
Adjustments:
  Deferred policy
  acquisition
  costs, net             408,805         (709,737)   (1,867,733)      13,211,413     12,874,219
Future policy
  benefits, un-
  earned premiums
  and policy-
  holders' funds        (203,129)       1,097,132     1,719,926       (6,355,753)    (6,195,591)
 Deferred
  income taxes            15,008          382,364       153,626         (500,605)      (413,710)
 Asset valuation
  reserve                   --               --           --             347,134        542,585
 Interest main-
  tenance reserve        (36,063)         (35,191)      231,507          499,099        535,161
 Non-admitted
  assets                    --               --            --          1,412,229      1,078,348
 Unrealized gains
  -SFAS 115                 --               --            --            666,899       (899,956)
Capital and
  surplus note              --               --            --         (1,000,000)    (1,000,000)
 Other adjustments,
  net                   (104,838)        (635,843)     (134,236)        (487,092)       139,748
                       ---------       ----------    ----------     ------------    -----------
 Net difference           79,783           98,725       103,090        7,793,324      6,660,804
                       ---------       ----------    ----------      -----------    -----------
As reported on a
 GAAP basis            $ 160,260       $  631,958    $ (383,733)     $16,198,535    $15,637,320
                       =========       ==========    ==========      ===========    ===========
</TABLE>

Under  applicable  laws and  regulations,  the  Company is  required to maintain
minimum  surplus as to  policyholders,  determined in accordance with regulatory
accounting practices, in the aggregate amount of approximately $1,900,000.

The  payment of  dividends  by the Company is subject to the  regulation  of the
State of Florida Department of Insurance.

The Insurance  Commissioner's  approval is not required if the dividend is equal
to or  less  than  the  greater  of:  (a)  10% of the  Company's  surplus  as to
policyholders'  derived from realized net operating  profits on its business and
net realized  capital gains; or (b) the Company's  entire net operating  profits
and realized net capital gains derived during the immediately preceding calendar
year, if the Company will have surplus as to policyholders equal to or exceeding
115% of the minimum required  statutory  surplus as to  policyholders  after the
dividend is declared  and paid.  As a result of such  restrictions,  the maximum
dividend  which may be paid by the Company during 2000 without prior approval is
approximately $92,000.  Accordingly, GAAP excess earnings over a statutory basis
are not available for dividends.
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


2.   Basis of financial statements, continued
     ----------------------------------------
     The Risk-Based  Capital  ("RBC") for Life and/or Health  Insurers Model Act
     (the "Model  Act") was adopted by the  National  Association  of  Insurance
     Commissioners  (NAIC)  in 1992.  The main  purpose  of the  Model Act is to
     provide  a tool  for  insurance  regulators  to  evaluate  the  capital  of
     insurers.  Based on calculations  using the appropriate  NAIC formula,  the
     Company exceeded the RBC requirements at December 31, 2000.

     The  National  Association  of  Insurance  Commissioners  has  adopted  the
     Codification   of   Statutory   Accounting   Principles   ("Codification").
     Codification  changes current statutory  accountintg rules in several areas
     and is effective  January 1, 2001.  Although the Company has not  estimated
     the potential effect, it does not believe Codificaiton will have a material
     effect on the financial position, results of operation, or liquidity of the
     Company.

3. Investments
   -----------
   (a)    Equity securities and fixed maturities

     Equity securities  consist of $358,932 and $378,440 of common stock at fair
     value at December 31, 2000 and 1999 respectively.

     Unrealized (depreciation)  appreciation in investments in equity securities
     for the years  ended  December  31,  2000,  1999,  and 1998 is  $(121,203),
     $112,598 and $(111), respectively.

     The  amortized  cost and  estimated  fair  values  of  investments  in debt
     securities are as follows:

                                               Gross       Gross      Estimated
                                Amortized    Unrealized  Unrealized     Fair
                                   Cost        Gains      Losses        Value
                                ---------    ----------  ----------   ---------
December 31, 2000:
   Held-to-maturity:
     U.S. Treasury
     securities and obligations
     of U.S. government
     corporations and
     agencies (guaranteed)      $ 2,001,985    $ 13,327  $   --     $ 2,015,312

   Corporate securities           2,587,861      64,419    188,876    2,463,404

   Mortgage-backed
     securities                     784,358       9,958      --         794,316
                                -----------    --------  ---------  -----------
                                  5,374,204      87,704    188,876    5,273,032
                                -----------    --------  ---------  -----------
   Available-for-sale:
     U.S. Treasury
     securities and obligations
     of U.S. government
     corporations and
     agencies (guaranteed)        3,367,086      45,003        648    3,411,441

   Corporate securities          19,987,436      91,913    188,214   19,891,135

   Mortgage-backed
     securities                      64,836          71      --          64,907
                                -----------    --------   --------  -----------
                                 23,419,358     136,987    188,862   23,367,483
                                -----------    --------   --------  -----------
                                $28,793,562    $224,691   $377,738  $28,640,515
                                ===========    ========   ========= ===========
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


3.  Investments, continued
    ----------------------
    (a)  Equity securities and fixed maturities, continued

                                           Gross          Gross     Estimated
                           Amortized     Unrealized    Unrealized     Fair
                             Cost          Gains         Losses       Value
                           ----------    ----------    ----------   ----------
December 31, 1999:
   Held-to-maturity:
     U.S. Treasury
     securities and obligations
     of U.S. government
     corporations and
     agencies (guaranteed)    $ 1,007,021   $  15,789    $    --    $ 1,022,810

   Corporate securities         1,977,976       2,151        8,952    1,971,175

   Mortgage-backed securities     993,874      11,355       13,878      991,351
                              -----------   ---------     --------  -----------
                                3,978,871      29,295       22,830    3,985,336
                              -----------   ---------     --------  -----------
   Available-for-sale:
     U.S. Treasury
     securities and obligations
     of U.S. government
     corporations and
     agencies (guaranteed)      4,596,187       4,599       21,561    4,579,225

   Corporate securities        20,102,739        --        820,966   19,281,773

   Mortgage-backed securities      90,341        --            228       90,113
                              -----------    --------    ---------  -----------
                               24,789,267       4,599      842,755   23,951,111
                              -----------    --------    ---------  -----------
                              $28,768,138    $ 33,894    $ 865,585  $27,936,447
                              ===========    ========    =========  ===========

     Fair values reflected in available-for-sale and held-to-maturity categories
     are based on NAIC  values,  versus  values  associated  with normal  market
     pricing  services.   The  estimated  difference  for  both  categories  was
     immaterial for all years presented.

     Unrealized appreciation (depreciation) of fixed maturities for years ending
     December  31,  2000,  1999,  1998 is  $678,644,  $(1,747,058)  and $183,142
     respectively.

     The amortized cost and estimated fair value of fixed maturities at December
     31,  2000,  by  contractual   maturity,   are  summarized  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.

    Fixed maturity securities held-to-maturity:

                                             Amortized              Estimated
                                               Cost                Fair value
          Due in 2001                      $ 1,502,062              $1,504,375
          Due in 2002 through 2005               --                      --
          Due in 2006 through 2010           1,331,825               1,176,383
          Due after 2010                     1,755,960               1,797,958
                                           -----------            ------------
                                             4,589,847               4,478,716
          Mortgage-backed securities           784,357                 794,316
                                           -----------             -----------
                                           $ 5,374,204             $ 5,273,032
                                           ===========             ===========

    Fixed maturity securities available-for-sale:

          Due in 2001                      $ 2,771,882             $ 2,772,970
          Due in 2002 through 2005          14,075,954              14,014,590
          Due in 2006 through 2010           6,408,951               6,406,860
          Due after 2010                        97,735                 108,156
                                           -----------             -----------
                                            23,354,522              23,302,576
          Mortgage-backed securities            64,836                  64,907
                                           -----------             -----------
                                           $23,419,358             $23,367,483
                                           ===========             ===========
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


3.  Investments, continued
    ----------------------
    (a)  Equity securities and fixed maturities, continued

          Proceeds  from the sale of  equity  securities  and  fixed  maturities
          available  for sale and the  related  realized  gains and  losses  are
          summarized as follows:

                                   2000             1999             1998
                                ---------         -------          --------
      Proceeds from sale of
          equity securities     $   --          $     --         $ 1,405,248
                               ----------      ----------        ------------
      Proceeds from sale of
          fixed maturities
          available-for-sale   $1,200,000      $2,739,662        $9,569,250
                               ----------      ----------        ----------
      Realized gains (losses)
      Fixed maturities:
      Gross realized gains          --              --           $  319,934
      Gross realized (losses)       --              --                --
      Equity securities:
      Gross realized gains          --              --              205,247
      Gross realized (losses)       --              --                --
                              -----------     ---------         ------------
                              $     --        $     --           $  525,181
                              ===========     ==========       =============

     Certain of the fixed maturity securities  classified as  available-for-sale
     and  held-to-maturity  were called during the year ended December 31, 2000,
     1999, 1998 resulting in the following realized gains and losses:

                                     2000              1999             1998
                                    ------            ------           ------
       Held-to-maturity:
          Gross realized gains     $  --              $  --             $ --
       Available-for-sale:
          Gross realized gains        --                 --              1,740
                                   --------           -------           ------
                                   $  --              $  --             $1,740
                                   ========           ========          =======

     Investments, aggregated by issuer, in excess of 10% of shareholders' equity
     (before net unrealized gains and losses on  available-for-sale  securities)
     at December 31, 2000 and 1999, other than investments  issued or guaranteed
     by the United States government are as follows:

       2000                                             Carrying Amount
          Federal Express                               $2,072,820
          Dean Witter Discover                           4,105,788
          Philip Morris Inc.                             5,469,305

       1999
          Federal Express                               $2,100,000
          Dean Witter Discover                           3,964,767
          Philip Morris, Inc.                            5,260,000

    (b)  Concentrations of credit risk

          At December 31, 2000 and 1999, the Company did not hold any unrated or
          less-  than-investment  grade corporate debt  securities.  The Company
          also invests in subsidized  and  unsubsidized  student loans  totaling
          $61,576  and  $149,198 at  December  31, 2000 and 1999,  respectively,
          which are  guaranteed by the U.S.  government.  Subsequent to December
          31,  2000,  all of these  loans  were sold at their  unpaid  principal
          balance.
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


3.  Investments, continued
    ----------------------
    (c)  Investment income

          Net investment income for the years ended December 31, 2000, 1999, and
          1998 consists of the following:

                               2000               1999                1998
     Interest:
     Fixed maturities      $2,014,883         $2,123,671           $2,633,888
     Policy and student
         loans                505,319            579,774              489,991
     Short-term
         investments          937,077            859,699              474,949
     Mortgage loans           190,068             25,759                 --
     Rental income            278,302            319,758                 --

     Dividends on equity
        securities common
        stock, including
        mutual fund            33,412             15,610                  719
                           ----------        -----------          -----------
                            3,959,061          3,924,271            3,599,547
     Less investment
        expenses               23,454             14,898               12,400
                           ----------         ----------           ----------
                           $3,935,607         $3,909,373           $3,587,147
                           ==========         ==========           ==========

    (d)  Investments on deposit

          In order to comply with  statutory  regulations,  investments  were on
          deposit with the Insurance Departments of certain states as follows:

                                2000               1999                1998

            Florida        $1,708,735         $1,708,530           $1,718,097
            Alabama           100,199            100,702              101,170
            South Carolina    300,596            302,106              303,511
            Georgia           250,496            251,755              252,926
            Indiana           200,000            199,855              199,578
                           ----------         ----------           ----------
                           $2,560,025         $2,562,948           $2,575,282
                           ==========         ==========           ==========

     Certain of these assets,  totaling  approximately  $850,000 for each of the
     years ended  December  31,  2000 and 1999,  are  restricted  for the future
     benefit of policyholders in a particular state.

4.   Deferred policy acquisition costs
     ---------------------------------
     Deferred policy  acquisition costs at December 31, 2000, 1999, 1998 consist
     of the following:

                                  2000           1999              1998
                                 ------         ------            ------
     Deferred policy acquisition
         costs at beginning
         of year             $12,874,219      $13,583,956       $15,451,689
     Policy acquisition
         costs deferred:
     Commissions               1,384,782        1,223,187         1,053,953
     Underwriting &
       issue costs               398,622          440,200           429,600
     Other                       422,721          421,051           427,729
     Change in unrealized
         appreciation
         (depreciation)          (71,611)         235,048          (294,326)
                             -----------      -----------       -----------
                               2,134,514        2,319,486         1,616,956
     Amortization of
         deferred policy
         acquisition costs    (1,797,320)      (3,029,223)       (3,484,689)
                             -----------      -----------       -----------
     Deferred policy
         acquisition costs
         at end of year      $13,211,413      $12,874,219       $13,583,956
                             ===========      ===========       ===========
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


5.  Property and equipment
    ----------------------
    Property and equipment consists of the following:

                                                   December 31,     December 31,
                                                       2000            1999
          Land                                   $    982,027      $  982,027
          Building and improvements                 2,348,973       2,205,795
          Furniture and equipment                     945,345         993,198
                                                 ------------     -----------
                                                    4,276,345       4,181,020
          Less accumulated depreciation            (1,733,961)     (1,745,455)
                                                 ------------     -----------
                                                 $  2,542,384     $ 2,435,565
                                                 ============     ===========

     Depreciation  expense for the years ended  December  31, 2000,  1999,  1998
     totaled $115,425, $135,145, and $153,348, respectively.

6.   Future policy benefits
     ----------------------
     At  December  31,  2000 and 1999,  future  policy  benefits,  exclusive  of
     universal life and flexible term annuities consist of the following:

                                         December 31,          December 31,
                                            2000                  1999
                                         -------------         ------------
          Life insurance                 $2,677,841           $1,334,887
          Annuities                         235,032              304,414
          Accident & health
            insurance                        53,067                9,675
                                         ----------           ----------
          Total life & health
           future policy benefits        $2,965,940           $1,648,976
                                         ==========           ==========

     Life insurance in-force  aggregated  approximately $1.2 billion at December
     31, 2000, and 1999. Mortality and withdrawal assumptions are based upon the
     Company's  experience and actuarial judgment with an allowance for possible
     unfavorable deviations from the expected experience.

     The mortality tables used in calculating benefit reserves for non universal
     life  contracts are the  1965-1970  Basic Select and Ultimate for males and
     the 1980 U.S.  Population  mortality  table  modified for company  expected
     experience.

     For non-universal life policies written during 1983 through 1988,  interest
     rates used are 8.0 percent for policy years one through five, decreasing by
     .1 percent per year for policy years six through twenty, to 6.5 percent for
     policy years  twenty-one  and  thereafter.  For certain non universal  life
     contracts  written in  1996-2000,  interest  rates of 6.75% level have been
     assumed.  For  non-universal  life  policies  written  in 1982  and  prior,
     interest  rates  vary,  depending  on policy  type,  from 7 percent for all
     policy  years to 6 percent for policy  years one through five and 5 percent
     for years six and  thereafter.  For universal  life policies  written since
     1988,  the interest rate used is a credited rate  generally  based upon the
     Company's investment yield less 1%.

7.   Reinsurance
     -----------
     The Company routinely cedes and, to a limited extent,  assumes  reinsurance
     to limit its  exposure to loss on any single  insured.  Ceded  insurance is
     treated as a risk and liability of the assuming companies.

     As of December 31, 2000,  ordinary  insurance coverage in excess of $75,000
     is  reinsured;  however  for some  policies  previously  issued,  the first
     $30,000,  $40,000  or  $50,000  was  retained  and the  excess  ceded.  The
     retention limit for some substandard risks is less than $75,000.  Reinsured
     risks  would give rise to  liability  to the  Company in the event that the
     reinsuring company were unable to
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


7.   Reinsurance, continued
     ----------------------
     meet its  obligations  under the  reinsurance  agreement  in force,  as the
     Company remains  primarily liable for such  obligations.  Under reinsurance
     agreements exclusive of the MEGA agreement discussed below, the Company has
     ceded premium of $275,288,  $424,255,  and $415,080 included in reinsurance
     premiums ceded, and received  recoveries of $131,886,  $162,871 and $88,457
     included in annuity,  death and other benefits for the years ended December
     31, 2000, 1999, 1998, respectively.

     On December 31, 1992, the Company entered into a reinsurance agreement with
     The MEGA Life and Health Insurance Company ("MEGA"), ceding an 18% share of
     all  universal  life policies in force at December 31, 1992 as a measure to
     manage the future  needs of the  Company.  The  reinsurance  agreement is a
     co-insurance  treaty  entitling  the assuming  company to 18% of all future
     premiums,  while making them  responsible  for 18% of all future claims and
     policyholder loans relating to the ceded policies. In addition, the Company
     receives certain commission and expense reimbursements.

     For the years ended  December  31,  2000,  1999,  1998,  the Company  ceded
     premiums  to  MEGA  of  $419,353,   $424,592  and  $448,355,   included  in
     reinsurance  ceded,  and  received  recoveries  of  $478,485,  $576,194 and
     $469,307, included in annuity, death and other benefits,  respectively. The
     funds held related to  reinsurance  treaties of $1,417,216  and  $1,475,512
     represent  the 18% share of policy loans ceded to the reinsurer at December
     31, 2000 and 1999, respectively.

8.   Notes payable
     -------------
     As of  December  31,  2000,  the  Company  had an unused  line of credit of
     $5,000,000  which is secured by student  loans  equaling 115% of the unpaid
     principal balance. The facility bears interest at a variable rate per annum
     payable monthly and expires on September 18, 2007.

9.   Note payable to related party
     -----------------------------
     A note  payable to a related  party  consists  of amounts  due on demand to
     Security National Life Insurance Company. The note's proceeds were obtained
     in  December  1988 and the  note  qualifies  as  shareholders'  equity  for
     statutory  accounting  purposes in accordance  with Section  628.401 of the
     Florida  Statutes.  At December 31, 2000,  the note bears interest at 11.0%
     percent  (payable  monthly);  principal  repayment is  contingent  upon the
     Company maintaining statutory surplus in excess of $1,900,000 and obtaining
     approval  in advance  by the  Florida  Department  of  Insurance.  Interest
     expense  relating to the balance of the note  payable to the related  party
     during  2000,  1999,  1998  aggregated   $105,000,   $90,000,  and  $90,000
     respectively.

10.  Income taxes
     ------------
     The Company's income tax liability at December 31 is summarized as follows:

                                        2000                       1999
                                       ---------                 --------
      Current                          $ 57,471                  $139,160
      Deferred                          500,605                   274,550
      Total                            $558,076                  $413,710
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


10.  Income taxes, continued
     -----------------------
     Total  income  taxes  including  taxes  on  the  change  in  the  value  of
     investments  for the years ended December 31, 2000,  1999, and 1998 were as
     follows:

                                         2000           1999       1998
                                        ------         ------     ------
      Tax expense (benefit)
        in operations                $ 38,105      $ 150,168    $(241,907)
      Tax on unrealized
        appreciation
        (depreciation) of
        investments                   235,481       (532,532)    (174,016)
                                     --------      ---------    ---------
                                     $273,586      $(382,364)   $(415 923)

     Income tax expense  (benefit) for the years ended December 31, 2000,  1999,
     1998 is summarized as follows:

                                        2000           1999          1998
                                       ------         ------        ------
      Current:
      Federal                        $ 40,812       $123,268    $   9,329
      State                             6,719         15,891        1,207
                                     --------       --------    ---------
                                       47,531        139,159       10,536
                                     --------       ---------   ---------
      Deferred:
       Federal                         (7,073)         9,693     (215,838)
       State                           (2,353)         1,316      (36,605)
                                     --------       --------    ---------
                                       (9,426)        11,009     (252,443)
                                     --------       --------    ---------
                                     $ 38,105       $150,168    $(241,907)
                                     ========       ========    =========

     Income tax expense  (benefit) for the years ended December 31, 2000,  1999,
     1998 differs from  "expected"  tax  (computed by applying the U.S.  federal
     income tax rate to pretax income) as a result of the following:

                                            2000           1999         1998
      Computed "expected" tax expense
         (benefit)                       $ 67,444      $ 265,923    $(212,718)
      Increase (reduction) in income
         taxes resulting from:
           Small life insurance
              company deduction            (3,485)      (139,195)     (12,390)
           Changes in the valuation
              allowance for deferred
              tax assets, allocated to
              income tax expense          (27,338)        17,590      (17,950)
         State taxes, net of federal
           income tax benefit               1,484          5,850        1,207
         Other, net                          --             --            (56)
                                         --------      ---------    ---------
                                         $ 38,105      $ 150,168    $(241,907)
                                         ========      =========    =========

     Under  tax laws in effect  prior to 1984,  a  portion  of a life  insurance
     company's gain from  operations was not currently taxed but was accumulated
     in a memorandum  "Policyholders'  Surplus  Account." As a result of the Tax
     Reform Act of 1984, the balance of the  Policyholders'  Surplus Account has
     been  frozen as of  December  31, 1983 and no  additional  amounts  will be
     accumulated in this account.  However,  distributions from the account will
     continue  to be  taxed,  as under  previous  law,  if any of the  following
     conditions occur:
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


10.  Income taxes, continued
     -----------------------
     a.   The Policyholders' Surplus exceeds a prescribed maximum, or;
     b.   Distributions, other than stock dividends, are made to shareholders in
          excess of Shareholders' Surplus, as defined by prior law, or;
     c.   The entity ceases to qualify for taxation as a life insurance company,
          or;
     d.   the tax  deferred  status of the  Policyholder's  Surplus  Account  is
          modified by future tax legislation.

     At December 31, 2000,  the balance of the  Policyholders'  Surplus  account
     aggregated  approximately  $236,000.  The Company has not recorded deferred
     income taxes totaling  approximately  $80,000 relating to this amount as it
     has no plan to  distribute  the  amounts in  Policyholders'  Surplus in the
     foreseeable  future.  The Tax  Reform  Act of 1986  enacted a new  separate
     parallel  tax  system  referred  to as the  Alternative  Minimum  Tax (AMT)
     system.  AMT is based on a flat rate  applied to a broader tax base.  It is
     calculated separately from the regular federal income tax and the higher of
     the two  taxes is paid.  The  excess of the AMT over  regular  tax is a tax
     credit,  which can be carried  forward  indefinitely  to reduce regular tax
     liabilities of future years. In 2000,  1999, 1998, AMT exceeded regular tax
     by $19,854, $27,338, and $156,820,  respectively. At December 31, 2000, the
     AMT tax credit available to reduce future regular tax totaled $262,528.

     The tax  effect of  temporary  differences  that  give rise to  significant
     portions  of the  deferred  tax  assets and  deferred  tax  liabilities  at
     December 31, 2000 and 1999 are presented below:

                                                      2000            1999
                                                     -------        -------
       Deferred tax assets:
       Unearned revenue, due to deferral of
         "front-end" fee                          $ 1,939,023      $ 1,950,587
       Policy liabilities and accruals,
          principally due to adjustments
          to reserves for tax purposes              2,003,251        1,804,230
       Deferred policy acquisition costs
         related to unrealized appreciation
         (depreciation)                               137,601         (126,830)

       Alternative minimum tax credit
          carry forwards                              262,528          235,190
                                                 ------------      -----------
       Total gross deferred tax assets              4,342,403        3,863,177
       Less valuation allowance                      (262,528)        (235,190)
                                                 ------------      -----------
       Net deferred tax assets                      4,079,875        3,627,987
                                                 ------------      -----------
       Deferred tax liabilities:
       Deferred policy acquisition costs           (4,565,655)      (3,908,348)
       Other                                          (22,576)        (252,011)
       Unrealized (appreciation)
       depreciation of securities                       7,751          257,822
                                                 ------------      -----------
       Total gross deferred tax liabilities        (4,580,480)      (3,902,537)
                                                 ------------      -----------
       Net deferred tax (liability)               $  (500,605)     $  (274,550)
                                                  ===========      ===========

     The net  change  in the  total  valuation  allowance  for the  years  ended
     December  31,  2000  and 1998  was an  increase  of  $27,338  and  $11,100,
     respectively.  The net change in the total valuation allowance for the year
     ended December 31, 1999 was a decrease of $17,590.
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


10.  Income taxes, continued
     -----------------------
     In assessing the realizability of deferred tax assets, management considers
     whether it is more likely than not that some portion or all of the deferred
     tax assets will not be realized.  The ultimate  realization of deferred tax
     assets is dependent upon the generation of future taxable income during the
     periods in which those temporary differences become deductible.  Management
     considers the  scheduled  reversal of deferred tax  liabilities,  projected
     future  taxable  income,  and  tax  planning   strategies  in  making  this
     assessment.   Based  upon  the  level  of  historical  taxable  income  and
     projections  for future  taxable income over the periods which the deferred
     tax assets are deductible,  management  believes it is more likely than not
     the Company will realize the benefits of these deductible differences,  net
     of the existing valuation allowances at December 31, 2000.

11.  Related party transactions
     --------------------------
     The Company's  general  agent,  Insuradyne  Corporation,  is a wholly-owned
     subsidiary of Security National Financial Corporation.  The balances due to
     an affiliated insurance agency reflected in the accompanying balance sheets
     principally  represent  earned  commission due to  Insuradyne.  The Company
     incurred commission expense to Insuradyne  aggregating  $180,941,  $175,409
     and $252,955,  in 2000,  1999,  and 1998,  respectively.  These amounts are
     included  as  components  of   acquisition   costs   deferred  and  related
     amortization.  Insuradyne incurred  insurance-related  expenses aggregating
     $1,147, $495, and $33,374 in 2000, 1999, 1998, respectively.

     Effective  December 31, 1998,  the Company  entered into an  Administrative
     Services  Agreement with its ultimate  parent Security  National  Financial
     Corporation  (Security  National).  Under the  terms of the  Administrative
     Services  Agreement,  all of the Company's  employees  became  employees of
     Security National.  Administrative  functions  previously  performed by the
     Company are now being  furnished to the Company  under the  Agreement.  The
     Company pays to Security National $250,000 per month or $3 million per year
     for the administrative services and Agency Agreement.

     On  December  28,  1998 the  Company  entered  into a Loan  Funding and Fee
     Agreement and Agency  Agreement (the  "Agreement")  with Security  National
     Mortgage Company  ("SNMC"),  a subsidiary of Security  National.  Under the
     terms of the Agreement, SNMC assigns their interest in residential mortgage
     loans that have been pre-sold to third party investors to the Company.  The
     Company  purchases  these  loans and holds them as  short-term  investments
     until it receives the proceeds from the third party investors.  The Company
     receives  interest  income  from SNMC  based  upon how long the loans  were
     outstanding. At December 31, 2000 and 1999 the Company had outstanding loan
     purchases  of  $7,814,813  and   $8,595,093,   respectively.   Included  in
     investment income is $732,691 and $457,861 for the years ended December 31,
     2000 and 1999, respectively.

     The  Company  received  for the years  ended  December  31,  2000 and 1999,
     $182,248 and $219,684 respectively, as rental income from Security National
     for a lease of office space in the  Company's  building  under the terms of
     the Administrative Services Agreement.

     The  Company  received  for the years  ended  December  31,  2000 and 1999,
     $123,393  and  $230,639  respectively,  in interest  income  from  Security
     National for short-term loans of which none were outstanding as of December
     31, 2000 and 1999.
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


12.  Earnings per share
     ------------------
     The  following  table  sets  forth the  computation  of basic  and  diluted
     earnings per share:

                                        2000            1999           1998
                                       -------        -------        -------
      Numerator for basic and
        diluted Earnings per share:
          Net income (loss)        $   160,260   $   631,958      $(383,733)
      Denominator:
          Denominator for basic
            earnings per share
            weighted average shares  1,907,989     1,907,989      1,907,989

          Effective dilutive securities:
            Agent stock options          --            --              --

      Dilutive potential common shares   --            --              --
      Denominator for diluted
          earnings per share weighted
          average shares and assumed
            conversions              1,907,989     1,907,989      1,907,989
      Basic earnings per share           $0.08          $.33         $(0.20)
      Diluted earnings per share         $0.08          $.33         $(0.20)

13.  Agents' incentive stock bonus plan
     ----------------------------------
     The Company has an incentive bonus plan for agents that was adopted January
     1, 1995 by the Company's Board of Directors and effective  through December
     31, 2001.  Agents that  qualify  under the plan have the option to purchase
     shares of common stock.  The number of shares of common stock is determined
     on the date of the award as the number of whole  shares  equal to the award
     based on the  applicable  stock  price on December 31 of the year the agent
     has  qualified for the bonus.  For each share of common stock  purchased by
     the agent,  the Company will  concurrently  award an  equivalent  number of
     shares to the agent.  Awards  were  granted  in 1999  under this plan.  The
     Company incurred expenses of approximately $5,010 relating to the Company's
     matching  number of shares.  There were no awards  granted in 2000.  If the
     agent does not purchase the shares within the designated  period,  then the
     agent  forfeits their rights to purchase the shares of common stock as well
     as the matching number of shares to be contributed by the Company.

14.  Disclosures about fair value of financial instruments
     -----------------------------------------------------
     Statement of Financial  Accounting Standards No. 107 Disclosures About Fair
     Value of Financial  Instruments (SFAS 107) requires the Company to disclose
     estimated fair value  information.  The following  methods and  assumptions
     were used by the Company in estimating fair values of financial instruments
     as disclosed herein:

     Cash and cash  equivalents,  short-term  investments and policy and student
     loans:  The  carrying  amount  reported  in the  balance  sheet  for  these
     instruments approximate their fair value.

     Investment securities  available-for-sale and held-to-maturity:  Fair value
     for fixed  maturity and equity  securities is based on quoted market prices
     at the reporting date for those or similar investments.

     Policyholders'  account balances:  The fair values for policyholder account
     balances are based on their approximate surrender values.
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


14.   Disclosures about fair value of financial instruments, continued

     The following table presents the carrying amounts and estimated fair values
     of financial instruments held at December 31, 2000 and 1999. The fair value
     of a financial  instrument is the amount at which the  instrument  could be
     exchanged in a current transaction between willing parties.

<TABLE>
<CAPTION>
                                                 2000                             1999
                                         ----------------------         ------------------------
                                         Carrying     Estimated         Carrying      Estimated
                                          amount      fair value         amount      fair value
                                         --------     ----------        ---------    -----------
       <S>                            <C>             <C>             <C>           <C>

       Financial assets:
       Fixed maturities
          held-to-maturity
          (see note 3)                 $5,374,204     $5,273,032      $ 3,978,871   $ 3,985,336
       Fixed maturities
          available-for-
          sale (see note 3)            23,367,483     23,367,483       23,951,111    23,951,111
       Equity securities
          available-for-sale              358,932        358,932          378,440       378,440
       Mortgage loans                   2,298,163      2,298,163        1,497,688     1,497,688
       Policy and student loans         8,220,736      8,220,736        8,328,847     8,328,847
       Short-term investments           7,814,813      7,814,813        8,595,093     8,595,093
       Cash and cash equivalents        2,513,668      2,513,668        4,013,401     4,013,401

       Financial liabilities:
       Policy liabilities-
          policyholders'
          account balances            $48,722,138    $45,680,048      $50,377,101   $46,586,173
</TABLE>

15.   Legal proceedings

     Lawsuits  against  the  Company  have  arisen in the  normal  course of the
     Company's business. However, contingent liabilities arising from litigation
     and other matters are not considered  material in relation to the financial
     position of the Company.

     To the best of the  Company's  knowledge,  it has no  potential  or pending
     contingent  liabilities  that might be material to the Company's  financial
     condition,  results of  operations  or  liquidity  pursuant  to product and
     environmental liabilities.
<PAGE>
<TABLE>
<CAPTION>

                                                                                                                     Schedule I
                                                        SOUTHERN SECURITY LIFE INSURANCE COMPANY
                                            Summary of Investments Other Than Investments in Related Parties
                                                                      December 31, 2000

                                                            Number of
                                                            shares or                                                Amount at
                                                         units-principal                                            which shown
                                                           amounts of                              Fair                in the
Type of investment                                       bonds or notes          Cost              value           balance sheet
<S>                                                        <C>              <C>                <C>              <C>

Fixed maturities held-for-investment:
  U.S. Government and government
     agencies and authorities                                2,000,000       $ 2,001,985       $ 2,015,312      $ 2,001,985
  Public utilities                                               --                --                --               --
  Industrial and miscellaneous                               2,730,380         2,684,573         2,569,537        2,684,573
  Special revenue and special assessment
     of agencies and authorities of
     governments and political subdivisions                    686,200           687,646           688,183          687,646
                                                            ----------       -----------      ------------      -----------
  Total fixed maturities held for investment                 5,416,580         5,374,204         5,273,032        5,374,204
                                                            ----------       -----------      ------------      -----------
Fixed maturities available-for-sale:
  U.S. Government and government
     agencies and authorities                                3,350,000         3,367,086         3,411,441        3,411,441
  Public utilities                                             655,000           680,708           687,750          687,750
  Industrial and miscellaneous                              18,860,000        19,306,728        19,203,385       19,203,385
  Special revenue and special assessment
     of agencies and authorities of
     governments and political subdivisions                     64,816            64,836            64,907           64,907
                                                           -----------       -----------      ------------      -----------
  Total fixed maturities available for sale                 22,929,816        23,419,358        23,367,483       23,367,483
                                                           -----------       -----------       -----------      -----------
                                                            28,346,396        28,793,562       $28,640,515      $28,741,687
                                                           -----------       -----------      ------------      -----------
Equity securities:
  Common, including investments
     in mutual fund                                             49,067           327,674       $   358,932          358,932
                                                           ===========                         ===========
Mortgage loans                                                                 2,298,163                          2,298,163

Policy loans                                                                   8,159,160                          8,159,160

Student loans                                                                     61,576                             61,576

Short-term investments                                                         7,814,813                          7,814,813
                                                                             -----------                        -----------
  Total investments                                                          $47,454,948                        $47,434,331
                                                                             ===========                        ===========
See accompanying auditors' report.
</TABLE>
<PAGE>

<TABLE>
<CAPTION>
                                                                                               Schedule III
                                                 SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                                    Supplementary Insurance Information

                                                       December 31, 2000, 1999, 1998


                         Future policy                         Other                            Benefits    Amortization
             Deferred     benefits,     Policy-                policy                            claims      of deferred
              policy     losses claims holders'               claims &                 Net      losses &       policy      Other
            acquisition   and loss      account    Unearned   benefits   Premium   investment  settlement    acquisition operating
                cost        expenses   balances    premiums    payable   revenue     income     expenses        costs    expenses
<S>         <C>         <C>           <C>         <C>        <C>        <C>        <C>          <C>        <C>          <C>

2000 Life
  and
  annuities $13,211,413  2,965,940    48,722,138  4,948,989  580,196   6,698,869   3,959,061   5,109,411    1,797,320   3,552,834
            ===========  =========    =========== =========  =======   =========   =========   =========    =========   =========
1999 Life
  and
  annuities $12,874,219  1,648,976    50,377,101  5,323,954  540,407   6,901,546   3,909,373   4,453,564    3,029,223   3,261,134
            ===========  =========    ==========  =========  =======   =========   =========   =========    =========   =========
1998 Life
  and
  annuities $13,583,956  1,727,300    52,520,300  6,023,399  540,789   7,228,227   3,587,147   4,346,820    3,484,689   4,134,686
            ===========  =========    ==========  =========  =======   =========   =========   =========    =========   =========







See accompanying auditors' report.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>

                                                                                                 Schedule IV
                                                 SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                                                Reinsurance

                                                       December 31, 2000, 1999, 1998


                                                                                                                      Percentage
                                                                   Ceded to           Assumed                          of amount
                                                                    other            from other                        assumed
                                             Direct amount         companies          companies        Net amount      to net

<S>                                          <C>                 <C>                <C>             <C>                 <C>
December 31, 2000:
  Life insurance in force                     $811,233,000       210,365,000        558,575,000     1,159,443,000       48%
                                              ============       ===========        ===========     =============       ===
  Premiums:
    Life insurance                            $  6,641,835           668,323            557,352         6,530,864        9%
    Accident & health insurance                    194,323            26,318             --               168,005        --
                                              ------------       -----------        -----------     -------------       ---
  Total Premiums                              $  6,836,158           694,641            557,352         6,698,869        8%
                                              ============       ===========        ===========     =============       ===
December 31, 1999:
  Life insurance in force                     $896,846,000       250,691,000        558,571,000     1,204,726,000       46%
                                              ============       ===========        ===========     =============       ===
  Premiums:
    Life insurance                            $  7,126,938           984,550            537,797         6,680,185        8%
    Accident & health insurance                    236,536            15,175              --              221,361        --
                                              ------------       -----------        -----------     -------------       ---
  Total Premiums                              $  7,363,474           999,725            537,797         6,901,546        8%
                                              ============       ===========        ===========     =============       ===
December 31, 1998:
  Life insurance in force                     $919,014,000       297,913,000        548,515,000     1,169,616,000       47%
                                              ============       ===========        ===========     =============       ===
  Premiums:
    Life insurance                            $  7,366,153           863,436            566,628         7,069,345        8%
    Accident & health insurance                    158,882             --                 --              158,882        --
                                              ------------       -----------         -----------    -------------       ---
  Total Premiums                              $  7,525,035           863,436            566,628         7,228,227        8%
                                              ============       ===========        ===========     =============       ===
</TABLE>
<PAGE>

Item 9.  Change in and disagreements on accounting and financial disclosure.

Southern Security Life, (the "Company") retained Tanner + Co. as its independent
auditors and replaced Ernst & Young LLP effective  December 1, 1999. The Company
retained  Ernst & Young LLP as its  independent  auditors and replaced KPMG Peat
Marwick LLP  effective  February 21, 1999. No report of KPMG Peat Marwick LLP or
Ernst & Young LLP on the  financial  statements of the Company for either of the
past two years contained an adverse  opinion,  or disclaimer of opinion,  or was
qualified or modified as to uncertainty,  audit scope, or accounting principles.
Since the  engagement  of KPMG Peat  Marwick LLP and Ernst & Young,  LLP for the
Company's  two most recent  fiscal  years and  through the date of  replacement,
there were no  disagreements  between the Company and KPMG Peat  Marwick LLP and
Ernst and  Young,  LLP on any  matter of  accounting  principles  or  practices,
financial statement  disclosure,  or auditing scope or procedure.  The change in
independent  accountants  was approved by the  Company's  Board of Directors and
disclosed  in a Form 8-K,  which  was filed  with the  Securities  and  Exchange
Commission on December 21, 1999.

                                    PART III

Item 10.  Directors and executive officers of the Company.
---------------------------------------------------------

The Company's Board of Directors consists of eight persons, four of whom are not
employees of the Company.  There is no family relationship  between or among any
of the directors, except that Scott M. Quist and G. Robert Quist are the sons of
George R. Quist. The following table sets forth certain information with respect
to the directors and executive officers of the Company.

                               Director
Name                Age         Since          Position(s) with the Company
------------       -----    --------------   --------------------------------
George R. Quist      80     December 1998    Chairman of the Board, President
                                             and Chief Executive Officer

William C. Sargent  72      December 1998    Senior Vice President, Secretary
                                             and Director

Scott M. Quist      47      December 1998    First Vice President, General
                                             Counsel, Treasurer and Director

Charles L.
   Crittenden       81      December 1998    Director

H. Craig Moody      47      December 1998    Director

Norman G. Wilbur    62      December 1998    Director

Robert G. Hunter    41      December 1998    Director

G. Robert Quist     49      April 1999       Director

Committees of the Board of Directors  include an executive  committee,  on which
George Quist, Scott Quist, Sargent and Moody serve; an audit committee, on which
Crittenden,  Moody,  and Wilbur serve;  and a compensation  committee,  on which
Crittenden, Wilbur and George Quist serve.

The  following  is a  description  of the  business  experience  of  each of the
directors.

George R. Quist,  age 80, has been  Chairman of the Board,  President  and Chief
Executive Officer of the Company since December 1998. Mr. Quist is also Chairman
of the  Board,  President  and Chief  Executive  Officer  of  Security  National
Financial  Corporation  and has served in this position since October 1979. From
1960 to 1964, he was Executive Vice President and Treasurer of Pacific  Guardian
Life Insurance Company. From 1946 to 1960, he was an agent, District Manager and
Associate General Agent for various insurance  companies.  Mr. Quist also served
from  1981  to  1982  as the  President  of The  National  Association  of  Life
Companies, a trade association of 642 life insurance companies, and from 1982 to
1983 as its Chairman of the Board.
<PAGE>

William C.  Sargent,  age 72, has been Senior Vice  President,  Secretary  and a
director  since  December  1998.  Mr.  Sargent is also  Senior  Vice  President,
Secretary  and a Director of Security  National  Financial  Corporation  and has
served in this position since  February 1980.  Prior to 1980, he was employed by
Security National as a salesman and agency superintendent.

Scott M.  Quist,  age 47,  has  been  General  Counsel,  First  Vice  President,
Treasurer  and a director  since  December  1998.  Mr.  Quist is also First Vice
President,  General  Counsel,  Treasurer  and a Director  of  Security  National
Financial  Corporation and has served in this position since May 1986. From 1980
to 1982, Mr. Quist was a tax specialist with Peat, Marwick,  Mitchell, & Co., in
Dallas,  Texas.  From  1986 to 1991,  he was a  treasurer  and  director  of The
National  Association of Life  Companies,  a trade  association of 642 insurance
companies  until its merger with the  American  Council of Life  Companies.  Mr.
Quist  has been a member  of the Board of  Governors  of the  Forum 500  Section
(representing  small  insurance  companies)  of the  American  Council  of  Life
Insurance.  Mr.  Quist has also served as regional  director of Key Bank of Utah
since  November  1993.  Mr. Quist is currently a director  and  immediated  past
president of the National  Alliance of Life  Companies,  a trade  association of
over 200 life companies.

Charles L. Crittenden, age 81, has been a director of the Company since December
1998.  Mr.  Crittenden  is  also  a  Director  of  Security  National  Financial
Corporation  and has served in this position since October 1979. Mr.  Crittenden
has been sole  stockholder of Crittenden Paint & Glass Company since 1958. He is
also an owner of Crittenden  Enterprises,  a real estate development company and
Chairman of the Board of Linco, Inc.

H. Craig Moody,  age 47, has been a director of the Company since December 1998.
Mr. Moody is also a Director of Security National Financial  Corporation and has
served in this  position  since  September  1995.  Mr. Moody is owner of Moody &
Associates,  a  political  consulting  and real estate  company.  He is a former
Speaker and House Majority Leader of the House of  Representatives  of the State
of Utah.

Norman G.  Wilbur,  age 62, has been a director  of the Company  since  December
1998. Mr. Wilbur is also a Director of Security National  Financial  Corporation
and has served in this  position  since  October 1998. Mr Wilbur worked for J.C.
Penny's regional offices in budget and analysis.  His final position was Manager
of Planning and Reporting  for J.C.  Penney's  stores.  After 36 years with J.C.
Penny's,  he took an option of an early retirement in 1997. Mr. Wilbur is a past
board member of a homeless organization in Plano, Texas.

Robert G.  Hunter,  M.D.,  age 41,  has been a  director  of the  Company  since
December  1998.  Dr.  Hunter is also a Director of Security  National  Financial
Corporation  and has served in this position  since October 1998.  Dr. Hunter is
currently a practicing  physician in private  practice.  Dr. Hunter  created the
State  Wide  E.N.T.  Organization  (Rocky  Mountain  E.N.T.,  Inc.)  where he is
currently  a member of the  Executive  Committee.  He is  Chairman of Surgery at
Cottonwood  Hospital,  a delegate to the Utah Medical Association and a delegate
representing Utah to the American Medical  Association,  and a member of several
medical advisory boards.

G. Robert  Quist,  age 49, has been a director of the Company  since April 1999.
Mr. Quist has served as  President of Big Willow Water  Company from 1987 to the
present time.  He has served on the Board of Directors of  Associated  Investors
Company   of   Hawaii,   has   served   on  the  Board  of   Directors   and  is
Secretary/Treasurer of the Utah Cemetery Association.

Executive Officers
------------------
The following table sets forth certain information with respect to the executive
officers of the Company (the business biographies set forth above):

Name                    Age               Title
------                 -----         ---------------
George R. Quist (1)     80  Chairman of the Board, President and
                            Chief Executive Officer

William C. Sargent      72  Senior Vice President and Secretary

Scott M. Quist (1)      47  First Vice President, General Counsel and Treasurer

(1) George R. Quist is the father of Scott M. Quist.

The Board of Directors  of the Company has a written  procedure  which  requires
disclosure to the Board of any material  interest or any affiliation on the part
of any of its officers, directors or employees which is in conflict or may be in
conflict with the interests of the Company.

No director,  officer or 5% stockholder of the Company or its  subsidiaries,  or
any  affiliate  thereof  has  had  any  transactions  with  the  Company  or its
subsidiaries during 2000 or 1999.
<PAGE>

Each  of  the  directors  are  board  members  of  Security  National  Financial
Corporation (the ultimate parent of the Company) with the exception of G. Robert
Quist,  which has a class of equity  securities  registered under the Securities
Exchange  Act of 1934,  as amended.  In  addition,  Scott M. Quist is a regional
director of Key Bank of Utah. All directors of the Company hold office until the
next annual meeting of  stockholders,  until their  successors have been elected
and qualified, or until their earlier resignation or removal.

Item 11.  Executive compensation.
---------------------------------
(a)  Summary compensation.  The following summary compensation table is provided
     with respect to the  Company's  Chief  Executive  Officer and its Executive
     Vice President, who constitute all of the executive officers of the Company
     whose total annual salary and bonus exceed $100,000:

<TABLE>
<CAPTION>

                                       SUMMARY COMPENSATION TABLE

                                                                  Long Term Compensation

                                Annual Compensation         Awards        Awards    Payouts

   (a)             (b)      (c)        (d)       (e)        (f)           (g)      (h)        (i)
                                                Other   Restricted    Securities          All other
Name and                                       Annual      Stock      Underlying  LTIP      Compen-
Principal                                   Compensation  Awards       Options/  Payouts    sation
Position          Year   Salary($)  Bonus($)     ($)        ($)         SARs(#)    ($)         $
---------------------------------------------------------------------------------------------------
President
and Chief
Executive
Officer
<S>                 <C>    <C>       <C>        <C>        <C>           <S>       <S>        <S>

George R. Quist(5)  2000   $0          $0       $0          $0            N/A      N/A         N/A

George R. Quist(5)  1999   $0          $0       $0           $0           N/A      N/A         N/A

George Pihakis      1998   $244,800    $0       $13,625(2)   $0           N/A      N/A   $1,050,000 (3)

George R. Quist(1)  1998   $0          $0       $0           $0           N/A      N/A         N/A

Executive Vice
President

David C. Thompson(5)1999   $0          $0       $0           $0           N/A      N/A         N/A

David C. Thompson   1998   $121,275    $0       $13,313(4)   $0           N/A      N/A         N/A
</TABLE>

     (1)  New  officers   appointed  in  December   1998  did  not  receive  any
          compensation in 1998.

     (2)  During  1998  this  amount  included  $6,350  paid  in the  form  of a
          director's fee, and $7,275 paid in the form of a car allowance.

     (3)  Payment of lump sum settlement under Executive Compensation Agreement.
          See "Item 11, Executive Compensation (e) Employee Contracts."

     (4)  During  1998  this  amount  included  $6,350  paid  in the  form  of a
          director's  fee,$6,000  paid in the form of a car allowance,  and $963
          paid in the  form  of  dues at a  social  club  used  exclusively  for
          business purposes.

     (5)  Effective  January 1, 1999, the Company entered into an Administrative
          Services   Agreement  with  its  ultimate  parent  Security   National
          Financial  Corporation  (Security  National).  Under  the terms of the
          Administrative  Services  Agreement,  all of the  Company's  employees
          became  employees  of  Security  National.   Administrative  functions
          previously  performed  by the Company are now being  furnished  to the
          Company under this  Agreement.  The Company pays to Security  National
          $250,000  per  month or $3  million  per  year for the  Administrative
          services.

(b)  Perquisites.  Executive  officers of the Company who are  employees  of the
     Company  are   covered   under  a  group  life,   group   disability,   and
     hospitalization  plan that does not  discriminate  in favor of officers and
     that is generally available to all salaried employees. The Company does not
     have a pension,  retirement  or other  deferred  compensation  plan, or any
     other similar arrangement.

(c)  Director's fees and other fees.  Directors of the Company prior to December
     17,  1998  received  a  director's  fee of $6,600  per year for  serving as
     director of the Company. Each director of the Company also received the sum
     of $275 for each committee meeting  attended,  if such committee meeting is
     not in conjunction  with a meeting of the Company's Board of Directors held
     at the same time and place. New directors  elected in December 1998 did not
     receive any compensation in 1998, 1999 or 2000.
<PAGE>





Item 11.  Executive compensation, continued
-------------------------------------------


(d)  Compensation committee interlocks and insider participation.  The Executive
     Committee of the Company's Board of Directors makes  recommendation  to the
     Board of Directors  concerning the compensation of the Company's  executive
     officers.  Subsequently,  the Board of Directors  makes all final decisions
     concerning such compensation.

(e)  Employee  contracts.  As  part  of the  acquisition  by  Security  National
     Financial  Corporation (SNFC) on December 17, 1998 of SSLIC Holding Company
     (formerly  Consolidare  Enterprises,  Inc.), SNFC caused the Company to pay
     $1,050,000 to George Pihakis,  President and Chief Executive Officer of the
     Company  prior  to  closing,  as a lump  sum  settlement  of the  executive
     compensation agreement between the Company and Mr. Pihakis.

Item 12.  Security ownership of certain beneficial owners and management.
------------------------------------------------------------------------

The  following  table sets forth,  as of December  31,  2000,  information  with
respect to the only persons known by the Company to be the  beneficial  owner of
more than 5% of the Company's outstanding voting securities:

                                                       Number of Shares
  Title                                                 and Nature of
   of             Name and Address of                    Beneficial     Percent
  Class            Beneficial Owner                       Ownership    of Class
--------    -------------------------------------      ------------   ---------
 Common     SSLIC Holding Company Inc., formerly
 Shares     Consolidare Enterprises, Inc.                1,095,496       57.4%
            c/o Security National Life Ins. Co.            Direct
            5300 S 360 W, Suite 200
            Salt Lake City, UT 84123

 Common     Security National Life Insurance Company      267,770        14.0%
 Shares     5300 South 360 West, Suite 200                 Direct
            Salt Lake City, Utah 84123

Item 13.  Certain relationships and related transactions.
--------------------------------------------------------

Insuradyne Corporation, a wholly-owned subsidiary of Security National Financial
Corporation,  serves as general  agent for the  Company,  pursuant  to a general
agency  agreement,  which is terminable by either party with 30 days notice.  In
such capacity, Insuradyne receives a commission on the first year commissionable
premium  on  certain  of the  Company's  policies  as well  as a  small  renewal
commission on certain other policies.  In accordance with the Florida  Insurance
Code,  a  copy  of  the  Company's  General  Agency  Agreement  with  Insuradyne
Corporation was filed with and approved by the Florida  Department of Insurance.
Management  of the  Company  believes  that  the  terms  of its  General  Agency
Agreement  with  Insuradyne are as favorable to the Company as terms which could
be  obtained  from  independent  third  parties.  During  2000 and  1999,  gross
commissions in the amount of $180,941 and $175,409 respectively,  were earned by
Insuradyne  Corporation.  At December  31,  2000,  the Company  owes  $65,103 to
Insuradyne  as a result  of  commissions  earned  by  Insuradyne  but for  which
Insuradyne has not yet requested payment.

No  director  or officer of the  Company or any  associates  of any  director or
officer of the Company was indebted to the Company at December 31, 2000.

The Company  continues  to be indebted to its  parent,  Security  National  Life
Insurance Company, (SNLIC) in the amount of $1,000,000, pursuant to a promissory
note dated  December  1988,  which bears interest at the annual rate of interest
equal to the prime rate (as  hereinafter  defined)  plus 2%, with such  interest
rate  not to be  less  than  9% nor in  excess  of  11%.  For  purposes  of this
promissory  note,  prime rate is defined to mean the prime rate as  announced by
Compass Bank,  Birmingham,  Alabama, from time to time, as its prime rate (which
interest  rate  is  only  a  bench  mark,  is  purely  discretionary  and is not
necessarily  the  best  or  lowest  rate  charged  borrowing  customers).   This
promissory note is due on demand and is payable out of capital surplus in excess
of  $1,900,000,  pursuant to Florida  Statutes  628.401  (1990).  Interest  and
principal  can only be repaid upon the express  written  approval of the Florida
Department of Insurance.
<PAGE>

Item 13.  Certain relationships and related transactions. (Continued)
--------------------------------------------------------------------

The Company entered into an Administrative Services Agreement dated December 17,
1998 with SNFC. Under the terms of the agreement, SNFC has agreed to provide the
Company  with   certain   defined   administrative   and   financial   services,
underwriting,  data processing,  legal, building management,  marketing advisory
services  and  investment  services.  In  consideration  for the  services to be
provided by SNFC, the Company shall pay SNFC an  administrative  services fee of
$250,000 per month,  which may be  increased,  beginning on January 1, 2001,  to
reflect  increases in Consumer Price Index,  over the index amount as of January
1, 2000.

The Administrative Services Agreement shall remain in effect for an initial term
expiring  on  December  16,  2003.  However,  the term of the  agreement  may be
automatically extended for an additional one-year term unless either the Company
or SNFC shall  deliver a written  notice on or before  September  30 of any year
stating to the other its desire not to extend the term of the  agreement.  SSLIC
Holding  Company,  a wholly  owned  subsidiary  of SNLIC,  and owns 71.5% of the
outstanding  shares  of common  stock of the  Company.  SNLIC is a wholly  owned
subsidiary of SNFC. In addition,  George R. Quist,  the Company's  President and
Chef  Executive  Officer is the President and Chief  Executive  Officer of SNFC;
Scott M.  Quist,  the  Company's  First  Vice  President,  General  Counsel  and
Treasurer is the First Vice  President,  General  Counsel and Treasurer of SNFC;
and William C. Sargent, the Company's Senior Vice President and Secretary is the
Senior Vice  President  and  Secretary of SNFC.  Finally,  the  directors of the
Company also serve as the directors of SNFC. See Item 7. Management's Discussion
and Analysis of Financial Condition and Results of Operation.

On December 28, 1998 the Company  entered into a Loan Funding and Fee  Agreement
and Agency Agreement (the  "Agreement")  with Security National Mortgage Company
("SNMC"),  a subsidiary of SNFC.  Under the terms of the Agreement  SNMC assigns
their  interest in  residential  mortgage loans that have been pre-sold to third
party investors to the Company. The Company purchases these loans and holds them
as short-term  investments  until it receives the proceeds from the  third-party
investors.  The  Company  receives  fee income from SNMC based upon how long the
loans  were  outstanding.  At  December  31,  2000  and  1999  the  Company  had
outstanding loan purchases of $7,814,813 and $8,595,093  respectively.  Included
in investment  income is $732,691 and $457,861 for the years ended  December 31,
2000 and 1999, respectively.

The Company  received for the years ended  December 31, 2000 and 1999,  $182,248
and $219,684 respectively as rental income from SNFC for a lease of office space
in the  Company's  building  under  the  terms  of the  Administrative  Services
Agreement.

The Company received for the year ended December 31, 2000 and 1999, $123,393 and
$230,639 respectively in interest income from SNFC for short-term loans of which
none were outstanding as of December 31, 2000.
<PAGE>



                                     PART IV


Item 14.  Financial statements, exhibits filed and reports on Form 10-K.
-----------------------------------------------------------------------
                                                                 Page Number
       (a)    1.     See item 8

              2.     Supplemental Schedules

                     Required Financial Data - for the years
                     ended December 31, 2000, 1999 and 1998 -
                     included in Part II, Item 8:

                     Schedule I - Summary of Investments -
                     Other than Investments in Related
                     Parties.................................. . . . .40

                     Schedule III - Supplementary Insurance
                     Information.............................. . . . .41

                     Schedule IV - Reinsurance................ . . . .42

Schedules  other than those listed above have been omitted  because they are not
applicable  or because the  required  information  is included in the  financial
statements and notes thereto or in Item 7 - Management's Discussion and Analysis
of Financial Condition and Results of Operations.
<PAGE>

3.     Exhibits

     Exhibit  Document
        No.

          3.   Articles of  Incorporation,  as amended,  and Bylaws, as amended,
               dated September  1994,  incorporated by reference from the Annual
               Report on Form 10-K for fiscal year ended December 31, 1994.

          10.A Revolving Financing Agreement between the Company and the Student
               Loan   Marketing   Association,   dated   September   19,   1996,
               incorporated  by  reference  from Annual  Report on Form 10-K for
               fiscal year ended December 31, 1997.

          10.B Reinsurance  Agreement  between  the  Company  and  United  Group
               Insurance  Company,  dated  December  31,  1992  incorporated  by
               reference  from Annual  Report on Form 10-K for fiscal year ended
               December 31, 1992.

          10.C Agency Agreement between the Company and Insuradyne  Corporation,
               incorporated  by  reference  from Annual  Report on Form 10-K for
               fiscal year ended December 31, 1993.

          10.D Administrative   Services   Agreement  between  the  Company  and
               Security National Financial  Corporation dated December 17, 1998,
               incorporated  by  reference  from Annual  Report on Form 10-K for
               fiscal year ended December 31, 1998.

          10.E Agency  Agreement  between  the  Company  and  Security  National
               Mortgage  Company  dated  December  28,  1998,   incorporated  by
               reference  from Annual  Report on Form 10-K for fiscal year ended
               December 31, 1999.

          10.F Loan Funding and Fee  Agreement  between the Company and Security
               National  Mortgage  Company dated December 28, 1998,  from Annual
               Report on Form 10-K for fiscal year ended December 31, 1999.

          11.  Statement Re Computation of Net Income per common share

b)      Reports on Form 8-K

        None
<PAGE>

Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

SOUTHERN SECURITY LIFE INSURANCE COMPANY


Dated: April 12, 2001                     By:   George R. Quist
                                                George R. Quist
                                                Chairman of the Board,
                                                President and Chief
                                                Executive Officer

Pursuant to the requirements of the Securities  Exchange Act of 1934 as amended,
this report has been signed by the following persons in counterpart on behalf of
the Company on the dates indicated:



Signature                Title                                 Date
George R. Quist          Chairman of the                       April 12, 2001
                         Board, President and
                         Chief Executive Officer
                         (Principal Executive
                          Officer)

Scott M. Quist           First Vice President,                 April 12, 2001
                         General Counsel,
                         Treasurer and Director
                         (Principal Financial and
                          Accounting Officer)

William C. Sargent        Senior Vice President,                April 12, 2001
                          Secretary and Director

Charles L. Crittenden     Director                              April 12, 2001

Robert G. Hunter          Director                              April 12, 2001

H. Craig Moody            Director                              April 12, 2001

G. Robert Quist           Director                              April 12, 2001

Norman G. Wilbur          Director                              April 12, 2001
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                   EXHIBIT 11

                            COMPUTATION OF NET INCOME

                                PER COMMON SHARE



                                    2000              1999            1998
Weighted Average
Shares Outstanding              1,907,989         1,907,989     1,907,989
Net Income (Loss)                $160,260          $631,958     $(383,733)
Per Share Amount                     $.08              $.33         $(.20)