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

Segment Results - Corporate

                             For the year ended December 31,
                                2000       1999       1998  
                                       (In thousands)
Net premiums and
 policyholder fees:
 Life and annuity . . . . .  $      -    $     -    $     -
 Accident & Health  . . . .         -          -          - 
 Net premiums . . . . . . .         -          -          -
Net investment income . . .      (941)      (904)      (570)
Other income  . . . . . . .   (17,865)    (6,218)    (6,322)
  Total revenue . . . . . .   (18,806)    (7,122)    (6,892)

Policyholder benefits . . .         -          -          -
Interest credited
 to policyholders . . . . .         -          -          -
Change in deferred
 acquisition costs  . . . .         -          -          -
Amortization of present
 value of future profits
 and goodwill . . . . . . .         -          -          -
Commissions and
 general expenses,
 net of allowances  . . . .    (8,175)      (696)    (5,389)
Total benefits, claims
 and other deductions . . .    (8,175)      (696)    (5,389)
Segment operating loss . .   $(10,631)   $(6,426)   $(1,503)

The above results reflect the elimination of revenues and expenses associated with services performed by the Administrative Services segment for affiliates of $18.1 million, $7.3 million and $6.5 million, respectively for 2000, 1999 and 1998 and the elimination of interest income and expense on bonds issued by the Corporate segment to an affiliate of $0.7 million, $0.7 million and $0.6 million, respectively for 2000, 1999 and 1998.

The following table presents the primary components comprising the segment's operating loss, exclusive of the above noted eliminations:

                             For the year ended December 31,
                                2000       1999       1998  
                                       (In thousands)
Interest cost of
 acquisition financing . .    $ 7,097    $ 2,859    $     -
Amortization of
 capitalized loan
 origination fees  . . . .        528        220          -
Interest expense on
 bonds issued
 to affiliate  . . . . . .        703        672        603
Stock-based
 compensation expense             757        921          -
Other parent
 company expenses  . . . .      1,844      1,789      1,036
Other (revenue)
 expenses, net . . . . . .       (298)       (35)      (136)

Segment
 operating loss  . . . . .    $10,631    $ 6,426    $ 1,503 

Years ended December 31, 2000 and 1999

The increase in the interest cost and the amortization of capitalized loan fees reflects the impact of a full year's costs compared to five months in 1999. The stock-based compensation expense decreased due to termination of options as the result of employees leaving the company prior to vesting.

Years ended December 31, 1999 and 1998

The interest cost and the amortization of capitalized loan fees related to the financing of the 1999 Acquisition on July 31, 1999. Accordingly, 1999 includes five months of these costs. The Corporate segment incurred stock-based compensation expenses of approximately $0.9 million related to the issue of stock options and bonuses to employees and members of management.

In January 2000, the Company announced that it had approved a plan to consolidate the Raleigh location acquired in the 1999 Acquisition into its locations in Toronto (Canada), Pensacola (Florida) and Orlando (Florida) in order to improve operating efficiencies and capabilities. The plan to consolidate this location was being formed at the date of the acquisition and was approved by the Board of Directors. Accordingly, the Company recorded an $11.1 million restructuring liability in its accounting for the 1999 Acquisition. These restructuring costs were accounted for under EITF No 95-3, "Recognition of Liabilities in Connection with a Purchase Business Combination" ("EITF 95-3").

As of December 31, 2000, the remaining liability consisted of employee separation costs ($1.6 million), employee relocation costs ($1.0 million) and other relocation and exit costs ($0.4 million).