MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Segment Results - Career Agency 

                             For the year ended December 31,
                                 2000      1999       1998  
                                       (In thousands)
Net premiums and
 policyholder fees:
 Life and annuity  . . . . .  $ 17,258   $ 7,198    $     -
 Accident & Health . . . . .   112,100    48,365          - 
 Net premiums  . . . . . . .   129,358    55,563          -
Net investment income  . . .    31,714    12,133          -
Other income . . . . . . . .       647       228          - 
 Total revenue . . . . . . .   161,719    67,924          - 

Policyholder benefits  . . .    81,432    30,396          -
Interest credited
 to policyholders  . . . . .     1,657       437          -
Change in deferred
 acquisition costs . . . . .   (12,476)   (2,919)         -
Amortization of present
 value of future profits
 and goodwill  . . . . . . .      (584)     (427)         -
Commissions and
 general expenses,
 net of allowances . . . . .    62,264    28,239          - 
Total benefits, claims
 and other deductions  . . .   132,293    55,726          - 
Segment operating
 income  . . . . . . . . . .  $ 29,426   $12,198    $     -

Years ended December 31, 2000 and 1999

Operating income from the Career Agency segment increased by $17.2 million, reflecting the impact of a full year's results in 2000 compared to five months in 1999.

Revenues. Net premiums for the year fell by approximately 3% for the segment compared to 1999 on an annualized basis. Canadian operations accounted for approximately 36% of the net premiums for both 2000 and 1999. During the year, the Company began to develop new products for the Career Agency sales force which are based on the Senior Market Brokerage products. Additionally, the Company was focused on the recruiting and training of new agents during the year. Management expects that the impact of these efforts will begin to be reflected in the Segment's results during the first half of 2001.

Net investment income increased by approximately 9% over 1999 on an annualized basis. The increase results from the increase in the average invested assets for the comparable periods. Average invested assets increased as a result of earnings for the year, as well as the movement of the proceeds from certain acquisition related transactions from short-term in 1999 to long-term investments in 2000.

Benefits, Claims and Other Deductions.

Policyholder benefits, including the change in reserves, increased by approximately 12% compared to 1999 on an annualized basis. This was due to higher overall loss ratios.

The increase in deferred acquisition costs was approximately $5.5 million more in 2000, compared to the increase in 1999 on an annualized basis and is directly related to the new business sold in 2000. The deferred acquisition costs in this segment relates solely to business sold subsequent to the Penn Union acquisition.

Commissions and other operating expenses decreased by approximately $5.5 million or 8% in 2000 compared to 1999 on an annualized basis. Approximately $2.2 million of the decrease relates to a reduction in the overall commission rate for the Career Agents, as well as a reduction in stock-based compensation related to agent production. The remaining decrease relates to the decrease in production as compared to 1999 on an annualized basis.