Allied Life: Further Information on Complaint ALLIED LIFE FINANCIAL CORPORATION REPORTS Contact Wendell Crosser 515-280-4622 Des Moines, Iowa, February 2, 1998 - ALLIED Life Financial Corporation (the "Company") announced further information with respect to a complaint filed by a policyholder of ALLIED Life Insurance Company ("ALLIED Life") in the Superior Court of the State of California for the County of Los Angeles, against the Company, ALLIED Life, and ALLIED Mutual Insurance Company. The lawsuit alleges that ALLIED Life fraudulently increased the cost of insurance rates charged to policyholders of certain universal life policies, and the Company believes the allegations relate to a claim that ALLIED Life collected a federal tax, known as the deferred acquisition cost tax ("DAC tax"), as well as other increased costs of doing business from its policyholders. The Company believes the amount of DAC tax and other costs claimed to have been collected from each policyholder is minimal, but the plaintiff in the case has asked the California court to treat the case as a class action representing all ALLIED Life policyholders from whom the claimed costs were collected. Similar class actions have been filed against other life insurance companies since the federal DAC tax law was enacted in 1990. The Company believes the action will raise the issue of whether the DAC tax may be included in the cost of insurance charged to policyholders under the terms of the universal life contracts. The ALLIED companies believe the increased costs charged to policyholders never violated the contracts. The Company believes the increased costs complained of relate to universal life policies issued during and prior to 1991, and that ALLIED Life charged the increased costs to universal life policyholders primarily during the 1992 through 1995 accounting periods. The Company, ALLIED Life, and ALLIED Mutual do not expect the lawsuit to materially impact their claims paying ratings or daily business operations. The Company, ALLIED Life, and ALLIED Mutual intend to vigorously defend this action. The Company also released life insurance and annuity production information for the fourth quarter of 1997 and 1996 and for the full year 1997 and 1996. ALLIED Life Financial Corporation New Production Information (000s) Three Months Ended December 31, Percent 1997 1996 Change New production information Face amount of new life insurance sold and first-year annuity premiums collected during the period Life insurance sold directly by agents Universal life $144,453 $136,877 6% Term life 350,936 303,189 16% Whole life 1,471 847 74% Subtotal 496,860 440,913 13% Life insurance-other 3,967 1,047 279% Total $500,827 $441,960 13% Annuities $16,284 $20,861 -22% Policyholder assessments collected on universal life First-year $777 $758 3% Renewal 4,889 4,529 8% Total $5,667 $5,286 7% Statutory information Premiums and annuity considerations, net Universal life insurance $7,389 $7,577 -2% Term life insurance 2,112 2,122 -1% Annuities 16,783 21,788 -23% Other 249 206 21% Total $26,533 $31,694 -16% ALLIED Life Financial Corporation New Production Information (000s) Twelve Months Ended December 31, Percent 1997 1996 Change Life insurance face amount in force Directly produced by agents Universal life $4,575,824 $4,340,601 5% Term life 4,611,799 4,198,504 10% Whole life 51,118 49,079 4% Total produced by agents 9,238,741 8,588,184 8% Other 390,899 371,130 5% Total $9,629,640 $8,959,314 7% New production information Face amount of new life insurance sold and first-year annuity premiums collected during the period Life insurance sold directly by agents Universal life $574,920 $410,635 40% Term life 1,285,370 1,475,977 -13% Whole life 7,198 4,239 70% Subtotal 1,867,488 1,890,851 -1% Life insurance-other 8,266 9,431 -12% Total $1,875,754 $1,900,282 -1% Annuities $71,509 $68,063 5% Policyholder assessments collected on universal life First-year $2,865 $2,886 -1% Renewal 19,085 17,805 7% Total $21,950 $20,691 6% Statutory information Premiums and annuity considerations, net Universal life insurance $30,980 $29,371 5% Term life insurance 9,079 8,411 8% Annuities 74,866 72,231 4% Other 1,116 662 69% Total $116,041 $110,675 5% ALLIED Life Financial Corporation New Production by Distribution System (000s) Three Months Ended December 31, Percent 1997 1996 Change Life insurance face amount sold Directly produced by agents Property--casualty agencies Universal life $84,526 $93,620 -10% Term life 265,709 250,353 6% Whole life 1,022 946 8% Subtotal 351,257 344,919 2% Traditional agencies Universal life $59,927 $43,257 39% Term life 85,227 52,836 61% Whole life 449 (99) 554% Subtotal 145,603 95,994 52% Total produced by agents 496,860 440,913 13% Other 3,967 1,047 279% Total $500,827 $441,960 13% Life insurance policies sold Property--casualty agencies Universal life 576 655 -12% Term life 1,336 1,170 14% Total 1,912 1,825 5% Traditional agencies Universal life 369 175 111% Term life 455 234 94% Total 824 409 101% Annuity premiums Deferred annuities Property--casualty agencie $8,436 $7,628 11% Traditional agencies 8,065 14,028 -43% Subtotal 16,501 21,656 -24% Immediate annuities 282 132 114% Total $16,783 $21,788 -23% ALLIED Life Financial Corporation New Production by Distribution System (000s) Twelve Months Ended December 31, Percent 1997 1996 Change Life insurance face amount in force Directly produced by agents Property--casualty agencies Universal life $2,867,625 $2,809,270 2% Term life 3,530,113 3,200,793 10% Whole life 35,500 34,521 3% Subtotal 6,433,239 6,044,584 6% Traditional agencies Universal life 1,708,199 1,531,331 12% Term life 1,081,686 997,711 8% Whole life 15,618 14,558 7% Subtotal 2,805,502 2,543,600 10% Total produced by agents 9,238,741 8,588,184 8% Other 390,899 371,130 5% Total $9,629,640 $8,959,314 7% Life insurance face amount sold Directly produced by agents Property--casualty agencies Universal life $311,600 $282,388 10% Term life 946,842 1,127,060 -16% Whole life 4,888 3,115 57% Subtotal 1,263,330 1,412,563 -11% Traditional agencies Universal life $263,320 $128,247 105% Term life 338,528 348,917 -3% Whole life 2,310 1,124 106% Subtotal 604,158 478,288 26% Total produced by agents 1,867,488 1,890,851 -1% Other 8,266 9,431 -12% Total $1,875,754 $1,900,282 -1% Life insurance policies sold Property--casualty agencies Universal life 2,234 2,162 3% Term life 4,879 6,464 -25% Total 7,113 8,626 -18% Traditional agencies Universal life 1,425 769 85% Term life 1,484 1,683 -12% Total 2,909 2,452 19% Annuity premiums Deferred annuities Property--casualty agencie $30,212 $30,816 -2% Traditional agencies 42,872 40,188 7% Subtotal 73,084 71,004 3% Immediate annuities 1,782 1,226 45% Total $74,866 $72,231 4% END