content: UNITED STATES
                        SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549
  
  
                                    FORM 10-Q
  
  
  [ X  ]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
  
                For the Quarterly Period Ended September 30, 2000
  
  [    ]        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: 2-17039
  
  
                     NATIONAL WESTERN LIFE INSURANCE COMPANY
              (Exact name of Registrant as specified in its charter)
  
  
        COLORADO                                     84-0467208
  (State of Incorporation)              (I.R.S. Employer Identification Number)
  
  
        850 EAST ANDERSON LANE
       AUSTIN, TEXAS 78752-1602                         (512) 836-1010
  (Address of Principal Executive Offices             (Telephone Number)
  
  
  Indicate by check mark whether the Registrant (1) has filed all reports
  required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
  1934 during the preceding 12 months (or for such shorter period that the
  Registrant was required to file such reports), and (2) has been subject to
  such filing requirements for the past 90 days:
  
  Yes [ X  ]     No  [      ]
  
  
  As of November 10, 2000, the number of shares of Registrant's common stock
  outstanding was:  Class A - 3,303,155 and Class B - 200,000.
  
  
  
  
  
             NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                                      INDEX
  
  
  
  Part I.  Financial Information:                                        Page
  
  Item 1.  Financial Statements
  
  Condensed Consolidated Balance Sheets
  September 30, 2000 (Unaudited) and December 31, 1999
  
  Condensed Consolidated Statements of Earnings
  For the Three Months Ended September 30, 2000 and 1999 (Unaudited)
  
  Condensed Consolidated Statements of Earnings
  For the Nine Months Ended September 30, 2000 and 1999 (Unaudited)
  
  Condensed Consolidated Statements of Comprehensive Income
  For the Three Months Ended September 30, 2000 and 1999 (Unaudited)
  
  Condensed Consolidated Statements of Comprehensive Income
  For the Nine Months Ended September 30, 2000 and 1999 (Unaudited)
  
  Condensed Consolidated Statements of Stockholders' Equity
  For the Nine Months Ended September 30, 2000 and 1999 (Unaudited)
  
  Condensed Consolidated Statements of Cash Flows
  For the Nine Months Ended September 30, 2000 and 1999 (Unaudited)
  
  Notes to Condensed Consolidated Financial Statements (Unaudited)
  
  Item 2.  Management's Discussion and Analysis of
  Financial Condition and Results of Operations
  
  Item 3.  Quantitative and Qualitative Disclosures About Market Risk
  
  Part II.  Other Information:
  
  Item 1.  Legal Proceedings
  
  Item 6.  Exhibits and Reports on Form 8-K
  
  Signatures
  
  Exhibit 11 - Computation of Earnings per Share
  For the Three Months Ended September 30, 2000 and 1999 (Unaudited)
  
  Exhibit 11 - Computation of Earnings per Share
  For the Nine Months Ended September 30, 2000 and 1999 (Unaudited)
  
  
  
  
  
                            PART I.  FINANCIAL INFORMATION
  
                            ITEM 1.  FINANCIAL STATEMENTS
  
               NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                                    (In thousands)
  
  <TABLE>
  <CAPTION>
  
                                                    (Unaudited)
                                                   September 30,  December 31,
                    ASSETS                              2000          1999
  
  <S>                                             <C>               <C>
  
  Cash and investments:
      Securities held to maturity,
      at amortized cost                           $   2,129,024     2,151,924
      Securities available for sale,
      at fair value                                     723,906       717,948
      Securities held to maturity,
      for possible
      losses ($4,215 and $4,104)                        202,224       183,902
      Policy loans                                      113,953       117,309
      Index options                                      16,277        32,820
      Other long-term investments                        39,765        32,766
      Cash and short-term investments                    11,432        14,010
  
  
  Total cash and investments                          3,236,581     3,250,679
  
  Deferred policy acquisition costs                     390,043       369,665
  Accrued investment income                              46,452        47,756
  Federal income tax receivable                            -              237
  Deferred Federal income tax asset                       3,058          -
  Other assets                                           21,030        14,491
  
                                                  $   3,697,164     3,682,828
  
  <FN>
  Note:  The balance sheet at December 31, 1999, has been taken from the audited
  financial statements at that date.
  
  See accompanying notes to condensed consolidated financial statements.
  </FN>
  </TABLE>
  
  
               NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                         (In thousands except share amounts)
  
  <TABLE>
  <CAPTION>
  
                                                    (Unaudited)
                                                   September 30,  December 31,
        LIABILITIES AND STOCKHOLDERS' EQUITY            2000          1999
  
  <S>                                             <C>               <C>
  
  LIABILITIES:
  
  Future policy benefits:
      Traditional life and annuity products       $     160,449       165,020
      Universal life and investment
      annuity contracts                               2,974,022     2,983,060
  Other policyholder liabilities                         27,926        24,103
  Federal income taxes payable:
      Current                                             2,429         4,763
      Deferred                                              -           4,659
  Other liabilities                                      37,455        25,701
  
  Total liabilities                                   3,202,281     3,207,306
  
  
  COMMITMENTS AND CONTINGENCIES (Note 3)
  
  STOCKHOLDERS' EQUITY:
  
  Common stock:
      Class A - $1 par value; 7,500,000
      shares authorized; 3,302,155
      and 3,300,728 shares issued and
      outstanding in 2000 and 1999                        3,302         3,301
      Class B - $1 par value; 200,000
      shares authorized, issued,
      and outstanding in 2000 and 1999                      200           200
  Additional paid-in capital                             25,090        25,028
  Accumulated other comprehensive loss                  (13,200)       (3,566)
  Retained earnings                                     479,491       450,559
  
  
  Total stockholders' equity                            494,883       475,522
  
  
                                                  $   3,697,164     3,682,828
  
  <FN>
  Note:  The balance sheet at December 31, 1999, has been taken from the audited
  financial statements at that date.
  
  See accompanying notes to condensed consolidated financial statements.
  </FN>
  </TABLE>
  
  
  
               NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                For the Three Months Ended September 30, 2000 and 1999
                                     (Unaudited)
                       (In thousands except per share amounts)
  
  <TABLE>
  <CAPTION>
  
                                                        2000          1999
  
  <S>                                             <C>                  <C>
  
  Premiums and other revenue:
      Life and annuity premiums                   $       2,658         2,559
      Universal life and investment
      annuity contract revenues                          23,082        21,131
      Net investment income                              52,829        44,562
      Other income                                          149         8,583
      Realized gains (losses) on investments               (124)          191
  
  Total premiums and other revenue                       78,594        77,026
  
  Benefits and expenses:
      Life and other policy benefits                     10,484         9,654
      Decrease in liabilities for
      future policy benefits                             (1,357)         (941)
      Amortization of deferred policy
      acquisition costs                                  15,009         9,705
      Universal life and investment
      annuity contract interest                          33,701        32,565
      Other operating expenses                            7,112         6,973
  
  Total benefits and expenses                            64,949        57,956
  
  Earnings before Federal income taxes                   13,645        19,070
  
  Provision (benefit) for Federal income taxes:
      Current                                             7,927        (1,136)
      Deferred                                           (3,288)        7,620
  
  Total Federal income taxes                              4,639         6,484
  
  Net earnings                                    $       9,006        12,586
  
  Basic Earnings Per Share:
      Net earnings                                $        2.57          3.60
  
  
  Diluted Earnings Per Share:
      Net earnings                                $        2.56          3.57
  
  
  <FN>
  See accompanying notes to condensed consolidated financial statements.
  </FN>
  </TABLE>
  
  
  
               NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                For the Nine Months Ended September 30, 2000 and 1999
                                     (Unaudited)
                       (In thousands except per share amounts)
  
  <TABLE>
  <CAPTION>
  
                                                        2000          1999
  
  <S>                                             <C>                 <C>
  
  Premiums and other revenue:
      Life and annuity premiums                   $       7,930         8,351
      Universal life and investment
      annuity contract revenues                          69,369        63,321
      Net investment income                             159,384       167,118
      Other income                                          403         8,860
      Realized gains (losses) on investments             (6,536)        5,869
  
  Total premiums and other revenue                      230,550       253,519
  
  Benefits and expenses:
      Life and other policy benefits                     30,077        26,807
      Decrease in liabilities for
      future policy benefits                             (4,850)       (1,590)
      Amortization of deferred policy
      acquisition costs                                  37,187        29,711
      Universal life and investment
      annuity contract interest                         103,112       118,169
      Other operating expenses                           21,189        21,502
  
  Total benefits and expenses                           186,715       194,599
  
  Earnings before Federal income taxes                   43,835        58,920
  
  Provision (benefit) for
  Federal income taxes:
      Current                                            17,432        11,988
      Deferred                                           (2,529)        8,045
  
  Total Federal income taxes                             14,903        20,033
  
  Net earnings                                    $      28,932        38,887
  
  Basic Earnings Per Share:
      Net earnings                                $        8.26         11.11
  
  Diluted Earnings Per Share:
      Net earnings                                $        8.22         11.01
  
  <FN>
  See accompanying notes to condensed consolidated financial statements.
  </FN>
  </TABLE>
  
  
  
               NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                For the Three Months Ended September 30, 2000 and 1999
                                     (Unaudited)
                                    (In thousands)
  <TABLE>
  <CAPTION>
  
                                                        2000          1999
  
  <S>                                             <C>                  <C>
  
  Net earnings                                    $       9,006        12,586
  
  Other comprehensive income (loss),
  net of effects of
  deferred policy acquisition costs and taxes:
      Unrealized gains (losses) on securities:
          Unrealized holding gains (losses)
          arising during period                           2,455        (3,518)
          Reclassification adjustment for
          gains included in net earnings                    (25)         (529)
          Amortization of net unrealized gains
          related to transferred securities                (156)         (114)
  
          Net unrealized gains (losses)
          on securities                                   2,274        (4,161)
  
      Foreign currency translation adjustments              650           335
  
  Other comprehensive income (loss)                       2,924        (3,826)
  
  Comprehensive income                            $      11,930         8,760
  
  <FN>
  See accompanying notes to condensed consolidated financial statements.
  </FN>
  </TABLE>
  
  
               NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                For the Nine Months Ended September 30, 2000 and 1999
                                     (Unaudited)
                                    (In thousands)
  
  <TABLE>
  <CAPTION>
  
                                                         2000          1999
  
  <S>                                             <C>                 <C>
  
  Net earnings                                    $      28,932        38,887
  
  Other comprehensive income (loss),
  net of effects of
  deferred policy acquisition costs
  and taxes:
      Unrealized losses on securities:
          Unrealized holding losses
          arising during period                          (5,319)      (15,464)
          Reclassification adjustment for
          losses (gains) included
          in net earnings                                 4,178        (2,577)
          Amortization of net unrealized gains
          related to transferred securities                (335)         (145)
          Unrealized losses on securities
          transferred during period
          from held to maturity to
          available for sale                             (9,166)         -
  
          Net unrealized losses on securities           (10,642)      (18,186)
  
      Foreign currency translation adjustments            1,008           257
  
  Other comprehensive loss                               (9,634)      (17,929)
  
  Comprehensive income                            $      19,298        20,958
  
  
  <FN>
  See accompanying notes to condensed consolidated financial statements.
  </FN>
  </TABLE>
  
  
               NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                For the Nine Months Ended September 30, 2000 and 1999
                                     (Unaudited)
                                    (In thousands)
  
  <TABLE>
  <CAPTION>
  
                                                        2000          1999
  
  <S>                                             <C>                 <C>
  
  Common stock:
      Balance at beginning of year                $       3,501         3,498
      Shares exercised under stock option plan                1             3
  
  Balance at end of period                                3,502         3,501
  
  Additional paid-in capital:
      Balance at beginning of year                       25,028        24,899
      Shares exercised under stock option plan               62           129
  
  Balance at end of period                               25,090        25,028
  
  Accumulated other comprehensive
  income (loss):
       Unrealized gains (losses)
       on securities:
          Balance at beginning of year                   (6,412)       16,000
          Change in unrealized
          losses during period                          (10,642)      (18,186)
  
          Balance at end of period                      (17,054)       (2,186)
  
      Foreign currency translation adjustments:
          Balance at beginning of year                    2,846         2,634
          Change in translation adjustments
          during period                                   1,008           257
  
          Balance at end of period                        3,854         2,891
  
  Accumulated other comprehensive
  income (loss) at end of period                        (13,200)          705
  
  Retained earnings:
      Balance at beginning of year                      450,559       391,334
      Net earnings                                       28,932        38,887
  
  Balance at end of  period                             479,491       430,221
  
  Total stockholders' equity                      $     494,883       459,455
  
  
  <FN>
  See accompanying notes to condensed consolidated financial statements.
  </FN>
  </TABLE>
  
  
  
               NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                For the Nine Months Ended September 30, 2000 and 1999
                                     (Unaudited)
                                    (In thousands)
  
  <TABLE>
  <CAPTION>
  
                                                         2000          1999
  
  <S>                                             <C>                <C>
  
  Cash flows from operating activities:
      Net earnings                                $      28,932        38,887
      Adjustments to reconcile net
      earnings to net cash
      from operating activities:
      Universal life and investment
      annuity contract interest                         103,112       118,169
      Surrender charges and other
      policy revenues                                   (33,597)      (29,131)
      Realized losses (gains) on investments              6,536        (5,869)
      Accrual and amortization of
      investment income                                  (3,492)       (3,761)
      Depreciation and amortization                         816           735
      Decrease in insurance receivables
      and other assets                                      305         6,309
      Decrease (increase) in accrued
      investment income                                   1,304          (976)
      Increase in deferred policy
      acquisition costs                                  (8,503)      (18,795)
      Decrease in liability for
      future policy benefits                             (4,850)       (1,590)
      Increase (decrease) in other
      policyholder liabilities                            3,823          (536)
      Decrease in Federal income taxes payable           (3,840)       (4,067)
      Increase (decrease) in other liabilities           11,754       (25,342)
      Decrease in value of index options                 15,961        12,039
      Other                                                (582)         (364)
  
  Net cash provided by operating activities             117,679        85,708
  
  Cash flows from investing activities:
      Proceeds from sales of:
         Securities held to maturity                       -             -
         Securities available for sale                   15,167        50,897
         Other investments                               22,546        15,910
      Proceeds from maturities and
      redemptions of:
         Securities held to maturity                     24,215        59,573
         Securities available for sale                   31,971        46,808
      Purchases of:
         Securities held to maturity                    (64,815)     (178,121)
         Securities available for sale                  (20,935)     (115,600)
         Other investments                              (29,114)      (31,679)
      Principal payments on mortgage loans               13,068        36,113
      Cost of mortgage loans acquired                   (30,949)      (29,315)
      Decrease in policy loans                            3,356         7,155
      Decrease in assets of
      discontinued operations                              -               48
      Decrease in liabilities of
      discontinued operations                              -              (48)
      Other                                              (6,831)         (982)
  
  Net cash used in investing activities                 (42,321)     (139,241)
  
  <FN>
  (Continued on next page)
  </FN>
  </TABLE>
  
  
               NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
                For the Nine Months Ended September 30, 2000 and 1999
                                     (Unaudited)
                                    (In thousands)
  
  <TABLE>
  <CAPTION>
  
                                                        2000          1999
  
  <S>                                             <C>                <C>
  
  Cash flows from financing activities:
      Deposits to account balances for
      universal life
      and investment annuity contracts            $     274,336       310,217
      Return of account balances
      on universal life
      and investment annuity contracts                 (352,335)     (277,433)
      Issuance of common stock under
      stock option plan                                      63           132
  
  Net cash provided by (used
  in) financing activities                              (77,936)       32,916
  
  Net decrease in cash and
  short-term investments                                 (2,578)      (20,617)
  Cash and short-term investments
  at beginning of year                                   14,010        24,508
  
  Cash and short-term investments
  at end of period                                $      11,432         3,891
  
  <FN>
  See accompanying notes to condensed consolidated financial statements.
  </FN>
  </TABLE>
  
  
               NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                     (Unaudited)
  
  
  (1)  BASIS OF PRESENTATION
  
  The accompanying condensed consolidated financial statements include the
  accounts of National Western Life Insurance Company  and its  wholly owned
  subsidiaries  (the  Company),  The  Westcap  Corporation  (Westcap),  NWL
  Investments, Inc., NWL Properties, Inc., NWL 806 Main, Inc., NWL Services,
  Inc., and NWL Financial, Inc.  The Westcap Corporation ceased brokerage
  operations during 1995 and filed for reorganization under Chapter 11 of the
  U.S. Bankruptcy Code in 1996.  The bankruptcy reorganization was completed in
  January, 1999, and National Western retained 100% continuing ownership of the
  reorganized subsidiary.  As a result, The Westcap Corporation is reflected as
  discontinued operations in the accompanying financial statements for portions
  of 1999 and prior years.  Westcap is currently operating as a real estate
  management company.  All significant intercorporate transactions and accounts
  have been eliminated in consolidation.
  
  In the opinion of  the Company, the accompanying consolidated financial
  statements contain all adjustments necessary to present fairly the financial
  position of the Company as of September 30, 2000,  and  the  results of its
  operations for the three months and nine months ended September 30, 2000 and
  1999, and its cash flows for the nine months ended September 30, 2000 and
  1999.  The results of operations for the three months and nine months ended
  September 30, 2000 and 1999 are not necessarily indicative of the results to
  be expected  for the full year.
  
  
  (2) STOCKHOLDERS' EQUITY
  
  (A) Changes in Common Stock Shares Outstanding
  
  Details of changes in shares of common stock outstanding are provided below:
  
  <TABLE>
  <CAPTION>
  
                                               Nine Months Ended September 30,
                                                       2000         1999
                                                       (In thousands)
  
  <S>                                                  <C>           <C>
  
  Common stock shares outstanding:
     Shares outstanding at beginning of year           3,501         3,498
     Shares exercised under stock option plan              1             3
  
  Shares outstanding at end of period                  3,502         3,501
  
  </TABLE>
  
  (B)  Dividends
  
  The Company paid no cash dividends on common stock during the nine months
  ended September 30, 2000 and 1999.
  
  
  (3) LEGAL PROCEEDINGS
  
  On March 28, 1994, the Community College District No. 508, County of Cook and
  State of Illinois (The City Colleges) filed a complaint in the United States
  District Court for the Northern District of Illinois, Eastern Division,
  against National Western Life Insurance Company (the Company or National
  Western) and subsidiaries of The Westcap Corporation (Westcap), a wholly owned
  subsidiary of the Company.  The suit sought rescission of securities purchase
  transactions by The City Colleges from Westcap between September 9, 1993, and
  November 3, 1993, alleged compensatory damages, punitive damages, injunctive
  relief, declaratory relief, fees, and costs.  National Western was named as a
  "controlling person" of the Westcap defendants.  In the meantime, Westcap
  filed Chapter 11 bankruptcy, and The City Colleges filed a claim in the
  bankruptcy court against Westcap.  The claim was tried before the bankruptcy
  court, and in September, 1997, a $56,173,000 judgment was entered against
  Westcap favorable to The City Colleges.  Westcap  appealed this decision to
  the United States District Court for the Southern District of Texas (Houston
  Division).  On July 24, 1998, the District Court affirmed the orders of the
  bankruptcy court with respect to their underlying conclusion that Westcap was
  liable to The City Colleges under the Texas Securities Act, but the Court
  vacated the orders and remanded them to the bankruptcy court to determine the
  correct amount of damages in a manner consistent with the Court's opinion and
  the Texas Securities Act.  The bankruptcy court on November 16, 1998, entered
  an order allowing  a  claim  of  The  City  Colleges  against  the  Westcap
  estate  of $51,738,868.  Westcap appealed the bankruptcy court's and District
  Court's judgment to the United States Court of Appeals for the Fifth Circuit,
  New Orleans, Louisiana. Westcap prevailed in this appeal in an October 13,
  2000, decision by the Appellate Court which reversed the $51,738,868 judgment
  entered in 1998 by the District Court and the bankruptcy court in favor of
  The City Colleges.  The Appellate Court ruled in favor of Westcap and
  determined that there had been no violations by Westcap of the Texas
  securities laws.  The Appellate Court remanded the case to the District Court
  for entry of a new judgment in favor of Westcap.  The Appellate decision is
  subject to further review by the Fifth Circuit Court of Appeals upon filed
  motion for rehearing en banc on November 3, 2000, and possible appeal to the
  United States Supreme Court by The City Colleges.
  
  The ruling does not affect the consolidated financial statements of National
  Western Life Insurance Company as no liability had been previously accrued for
  the District Court judgment.  However, National Western will be entitled to
  recover a portion of the settlement of the Westcap bankruptcy, but not to
  exceed $600,000, should the Appellate Court decision become final. While
  Westcap is a wholly owned subsidiary of the Company, the Company is not a
  party to the bankruptcy or the judgment against Westcap by the bankruptcy
  court or the United States District Court.  The lawsuit of The City Colleges
  against the Company was stayed in September, 1994, pending resolution of
  The City Colleges' claim against Westcap.  Following the judgment against
  Westcap in the bankruptcy court, on December 2, 1997, the stay was lifted
  by the United States District Court in Illinois, and The City Colleges filed
  an amended complaint seeking to hold the Company liable for the claim allowed
  in the bankruptcy court against Westcap under the "control person" provision
  of the Texas Securities Act.  The suit seeks approximately $56 million plus
  fees and costs.  The maximum sought by The City Colleges will be determined
  by the final amount allowed The City Colleges in the Westcap bankruptcy
  appeal discussed above.  The Company filed jurisdictional and venue motions
  to have the case transferred to the United States District Court for the
  Western District of Texas, which motions were agreed to by the Plaintiff,
  and the case is now pending in the United States District Court for the
  Western District of Texas, where the parties have engaged in discovery
  activities.  The case is awaiting the final outcome of the Westcap bankruptcy
  appeal discussed above.  If the current decision of the Fifth Circuit Court of
  Appeals in the bankruptcy case becomes final, the Company will move to
  dismiss the City Colleges case.  Otherwise, the Company believes it has
  reasonable and adequate defenses to the suit.  Although the alleged
  damages, if sustained, would be material to the Company's financial
  statements, a reasonable estimate of any actual losses which may result
  from the suit cannot be made at this time.  Accordingly, no provision for
  any liability that may result from this suit has been recognized in National
  Western's financial statements.
  
  
  (4) SEGMENT AND OTHER OPERATING INFORMATION
  
  The Company's reportable operating segments include domestic life insurance,
  international life insurance, and annuities. These segments are organized
  based on product types and geographic marketing areas.  A summary of segment
  information for the three and nine months ended September 30, 2000 and 1999 is
  provided below.
  
  Selected Segment Information:
  
  <TABLE>
  <CAPTION>
  
                      Domestic International
                        Life        Life                    All
                      Insurance  Insurance   Annuities    Others      Totals
                                           (In thousands)
  
  <S>                <C>            <C>       <C>            <C>      <C>
  
  September 30,
  2000:
  Selected Balance
  Sheet Items:
  Deferred policy
   acquisition
   costs             $   73,821      76,350     239,872        -        390,043
  Total segment
   assets               403,336     383,636   2,843,253      42,851   3,673,076
  Future policy
   benefits             319,319     297,756   2,517,396        -      3,134,471
  Other
   policyholder
   liabilities            9,442       7,929      10,555        -         27,926
  
  Three Months
  Ended
  September 30,
  2000:
  Condensed
  Income
  Statements:
  Premiums and
   contract
   revenues          $    5,609      11,654       8,477        -         25,740
  Net investment
   income                 6,607       5,693      39,936         593      52,829
  Other income                3           8          84          54         149
   Total revenues        12,219      17,355      48,497         647      78,718
  Policy benefits         4,125       4,955          47        -          9,127
  Amortization of
   deferred
   policy
   acquisition
   costs                  1,357       3,540      10,112        -         15,009
  Universal life
   and investment
   annuity
   contract
   interest               2,459       3,981      27,261        -         33,701
  Other operating
   expenses               1,980       2,036       2,729         367       7,112
  Federal income
   taxes                    782         967       2,839          94       4,682
   Total expenses        10,703      15,479      42,988         461      69,631
  Segment earnings   $    1,516       1,876       5,509         186       9,087
  
  Nine Months Ended
  September 30,
  2000:
  Condensed Income
   Statements:
  Premiums and
   contract
   revenues          $   17,546      33,362      26,391        -         77,299
  Net investment
   income                19,642      17,112     119,278       3,352     159,384
  Other income               25          37         287          54         403
   Total revenues        37,213      50,511     145,956       3,406     237,086
  Policy benefits        12,323      12,749         155        -         25,227
  Amortization of
   deferred
   policy
   acquisition
   costs                  3,555      10,491      23,141        -         37,187
  Universal life
   and investment
   annuity
   contract
   interest               7,099      11,867      84,146        -        103,112
  Other operating
   expenses               6,363       6,079       8,140         607      21,189
  Federal income
   taxes                  2,687       3,182      10,366         955      17,190
   Total expenses        32,027      44,368     125,948       1,562     203,905
  Segment earnings   $    5,186       6,143      20,008       1,844      33,181
  
  </TABLE>
  
  Selected Segment Information:
  
  <TABLE>
  <CAPTION>
  
                      Domestic International
                        Life        Life                    All
                      Insurance  Insurance   Annuities    Others      Totals
                                           (In thousands)
  
  <S>                <C>            <C>       <C>            <C>      <C>
  
  September 30,
  1999:
  Selected Balance
  Sheet Items:
  Deferred policy
   acquisition
   costs             $   71,207      75,765     209,268        -        356,240
  Total segment
   assets               406,900     374,964   2,786,552      36,140   3,604,556
  Future policy
   benefits             323,374     289,023   2,486,952        -      3,099,349
  
  Other
   policyholder
   liabilities            9,185       7,196       7,038        -         23,419
  
  Three Months
  Ended
  September 30,
  1999:
  Condensed Income
  Statements:
  Premiums and
   contract
   revenues          $    6,194      11,075       6,421        -         23,690
  Net investment
   income                 6,318       5,484      32,335         425      44,562
  Other income              (35)        (21)      8,639        -          8,583
   Total revenues        12,477      16,538      47,395         425      76,835
  Policy benefits         3,194       4,663         856        -          8,713
  Amortization of
   deferred
   policy
   acquisition
   costs                  1,222       2,872       5,611        -          9,705
  Universal life
   and investment
   annuity
   contract
   interest               2,430       3,503      26,632        -         32,565
  Other operating
   expenses               1,965       2,073       2,935        -          6,973
  Federal income
   taxes                  1,245       1,164       3,864         144       6,417
   Total expenses        10,056      14,275      39,898         144      64,373
  Segment earnings   $    2,421       2,263       7,497         281      12,462
  
  Nine Months Ended
  September 30, 1999:
  Condensed Income
  Statements:
  Premiums and
   contract
   revenues          $   18,474      31,819      21,379        -         71,672
  Net investment
   income                18,996      16,387     129,095       2,640     167,118
  Other income               32          32       8,796        -          8,860
   Total revenues        37,502      48,238     159,270       2,640     247,650
  Policy benefits        11,894      13,070         253        -         25,217
  Amortization of
   deferred
   policy
   acquisition
   costs                  3,614       9,434      16,663        -         29,711
  Universal life
   and investment
   annuity
   contract
   interest               7,315      10,397     100,457        -        118,169
  Other operating
   expenses               6,784       6,476       8,242        -         21,502
  Federal income
   taxes                  2,676       3,003      11,407         893      17,979
   Total expenses        32,283      42,380     137,022         893     212,578
  Segment earnings   $    5,219       5,858      22,248       1,747      35,072
  
  </TABLE>
  
  
  Reconciliations of segment information to the Company's consolidated financial
  statements are provided below:
  
  <TABLE>
  <CAPTION>
  
                              Three Months Ended         Nine Months Ended
                                 September 30,              September 30,
                               2000         1999         2000         1999
                                              (In thousands)
  
  <S>                     <C>                <C>         <C>          <C>
  
  Premiums and Other
  Revenue:
  Premiums and
  contract revenues       $     25,740       23,690       77,299       71,672
  Net investment income         52,829       44,562      159,384      167,118
  Other income                     149        8,583          403        8,860
  Realized gains
  (losses) on
  investments                     (124)         191       (6,536)       5,869
  
  Total consolidated
   premiums
   and other revenue      $     78,594       77,026      230,550      253,519
  
  </TABLE>
  
  
  <TABLE>
  <CAPTION>
  
                              Three Months Ended         Nine Months Ended
                                 September 30,              September 30,
                               2000         1999         2000         1999
                                              (In thousands)
  
  <S>                      <C>                <C>         <C>          <C>
  
  Federal Income Taxes:
  Total segment
  Federal income taxes     $     4,682        6,417       17,190       17,979
  Taxes (benefits)
   on realized
   gains (losses)
   on investments                  (43)          67       (2,287)       2,054
  
  Total consolidated
   Federal income taxes    $     4,639        6,484       14,903       20,033
  
  </TABLE>
  
  <TABLE>
  <CAPTION>
  
  
                              Three Months Ended         Nine Months Ended
                                 September 30,              September 30,
                               2000         1999         2000         1999
                                              (In thousands)
  
  <S>                      <C>               <C>          <C>          <C>
  
  Net Earnings:
  Total segment earnings   $     9,087       12,462       33,181       35,072
  Realized gains
   (losses) on
   investments, net
   of taxes                        (81)         124       (4,249)       3,815
  
  Total consolidated
   net earnings            $     9,006       12,586       28,932       38,887
  
  </TABLE>
  
  
  <TABLE>
  <CAPTION>
  
                                              September 30,
                                            2000          1999
                                              (In thousands)
  
  <S>                                 <C>               <C>
  
  Assets:
  Total segment assets                $   3,673,076     3,604,556
  Other unallocated assets                   24,088        21,653
  
  Total consolidated assets           $   3,697,164     3,626,209
  
  </TABLE>
  
  
                     ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
                   OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
  
  GENERAL
  
  National Western Life Insurance Company is a life insurance company, chartered
  in the State of Colorado in 1956, and doing business in forty-three states and
  the District of Columbia. The Company also accepts applications from and
  issues policies to residents of various Central and South American, Caribbean,
  and Pacific Rim countries.  A distribution of the Company's direct premium
  revenues and deposits by domestic and international markets is provided below:
  
  <TABLE>
  <CAPTION>
  
                                        Nine Months Ended September 30,
                                               2000          1999
  
  <S>                                          <C>           <C>
  
  United States domestic market:
       Investment annuities                     77.0%         80.8%
       Life insurance                            6.3           6.1
  
  Total domestic market                         83.3          86.9
  
  International market:
       Investment annuities                      2.8           0.9
       Life insurance                           13.9          12.2
  
  Total international market                    16.7          13.1
  
  Total direct premiums collected              100.0%        100.0%
  
  </TABLE>
  
  Insurance Operations - Domestic
  
  The Company's domestic operations concentrate marketing efforts on federal
  employees, seniors, and specific employee groups in private industry, as well
  as individual sales.  The products marketed are annuities, universal life
  insurance, and traditional life insurance, which includes both term and whole
  life products.  The majority of products sold are the Company's annuities,
  which include single and flexible premium deferred annuities, single premium
  immediate annuities, and equity-indexed annuities.  Most of these annuities
  can be sold as tax qualified or nonqualified products.
  
  National Western markets and distributes its domestic products primarily
  through independent marketing organizations (IMOs).   These IMOs assist the
  Company in recruiting, contracting, and supervising agents.  The Company
  currently has over 80 IMOs contracted for sales of life and annuity products.
  
  Insurance Operations - International
  
  The Company's international operations focus marketing efforts on foreign
  nationals in upper socioeconomic classes with substantial financial resources.
  Insurance sales are on insureds from countries in Central and South America,
  the Caribbean, and the Pacific Rim.  Policy sales on insureds from numerous
  countries in these different regions provides diversification that helps to
  minimize large fluctuations in sales that can occur due to various economic,
  political, and competitive pressures that may occur from one country to
  another.  Products sold in the international market are almost entirely
  universal life and traditional life insurance products.  However, certain
  annuity and investment contracts are also available in this market.
  
  International sales production is from broker-agents, many of whom have been
  selling National Western products for 20 or more years.  The Company continues
  to expand its sales networks in specifically targeted South American and
  Pacific Rim countries which have higher growth potential than other countries.
  
  There are inherent risks of conducting international business that are not
  present within the domestic market.  The risks involved with international
  business are reduced substantially by the Company in several ways.  As
  previously described, the Company focuses its marketing efforts on a specific
  niche group, which is foreign nationals in upper socioeconomic classes who
  have substantial financial resources.  This targeted customer base coupled
  with National Western's conservative, yet competitive, underwriting practices
  have historically resulted in claims experience similar to that in the United
  States.  The Company also minimizes exposure to foreign currency risks, as
  almost all foreign policies require payment of premiums and claims in United
  States dollars.  Finally, the Company's experience in the international market
  and its strong broker-agent relationships, which in many cases exceed 20
  years, help minimize risks and problems when selling products to foreign
  nationals.
  
  
  INVESTMENTS IN DEBT AND EQUITY SECURITIES
  
  Investment Philosophy
  
  The Company's investment philosophy is to maintain a diversified portfolio of
  investment grade debt and equity securities that provide adequate liquidity to
  meet policyholder obligations and other cash needs.  The prevailing strategy
  within this philosophy is the intent to hold investments in debt securities to
  maturity. However, the Company manages its portfolio, which entails monitoring
  and reacting to all components which affect changes in the price, value, or
  credit rating of investments in debt and equity securities.
  
  Investments in debt and equity securities are classified and reported as
  either securities held to maturity or securities available for sale.  The
  Company does not maintain a portfolio of trading securities.  The reporting
  category chosen for the Company's securities investments depends on various
  factors including the type and quality of the particular security and how it
  will be incorporated into the Company's overall asset/liability management
  strategy.  At September 30, 2000, approximately 25.8% of the Company's total
  debt  and  equity  securities,  based  on  fair  values,  were  classified  as
  securities available for sale.  These holdings provide flexibility to the
  Company to react to market opportunities and conditions and to practice active
  management  within  the  portfolio  to  provide  adequate  liquidity  to  meet
  policyholder obligations and other cash needs.
  
  Securities the Company purchases with the intent to hold to maturity are
  classified as securities held to maturity. Because the Company has strong cash
  flows and matches expected maturities of assets and liabilities, the Company
  has the ability to hold the securities, as it would be unlikely that forced
  sales of securities would be required prior to maturity to cover payments of
  liabilities. As a result, securities held to maturity are carried at amortized
  cost less declines in value that are other than temporary. However, certain
  situations may change the Company's intent to hold a particular security to
  maturity, the most notable of which is a deterioration in the issuer's
  creditworthiness. Accordingly, a security may be sold to avoid a further
  decline in realizable value when there has been a significant change in the
  credit risk of the issuer.
  
  Securities that are not classified as held to maturity are reported as
  securities available for sale. These securities may be sold if market or other
  measurement factors change unexpectedly after the securities are acquired. For
  example, opportunities arise that allow the Company to improve the performance
  and credit quality of the investment portfolio by replacing an existing
  security with an alternative security while still maintaining an appropriate
  matching of expected maturities of assets and liabilities. Examples of such
  improvements are as follows: improving the yield earned on invested assets,
  improving the credit quality, changing the duration of the portfolio, and
  selling securities in advance of anticipated calls or other prepayments.
  Securities  available  for  sale  are  reported  in  the  Company's  financial
  statements at fair value. Any unrealized gains or losses resulting from
  changes in the fair value of the securities are reflected in accumulated other
  comprehensive income.
  
  As an integral part of its investment philosophy, the Company performs an
  ongoing process of monitoring the creditworthiness of issuers within the
  investment portfolio.  Review procedures are also performed on securities that
  have had significant declines in fair value. The Company's objective in these
  circumstances is to determine if the decline in fair value is due to changing
  market expectations regarding inflation and general interest rates or other
  factors.  Additionally, the Company closely monitors financial, economic, and
  interest rate conditions to manage prepayment and extension risks in its
  mortgage-backed securities portfolio.
  
  The Company's overall conservative investment philosophy is reflected in the
  allocation of its investments which is detailed below as of September 30, 2000
  and  December  31,  1999.    The  Company  emphasizes  investment  grade  debt
  securities, with smaller holdings in mortgage loans and real estate.
  
  <TABLE>
  <CAPTION>
  
                                            Percent of Investments
                                         September 30,    December 31,
                                             2000            1999
  
  <S>                                        <C>             <C>
  
  Debt securities                             87.7%           87.8%
  Mortgage loans                               6.2             5.7
  Policy loans                                 3.5             3.6
  Index options                                0.5             1.0
  Equity securities                            0.5             0.5
  Real estate                                  0.4             0.4
  Other                                        1.2             1.0
  
  Totals                                     100.0%          100.0%
  
  </TABLE>
  
  Portfolio Analysis
  
  The Company maintains a diversified debt securities portfolio which consists
  of various types of fixed income securities including primarily corporate,
  mortgage-backed   securities,   and   public   utilities.   Investments   in
  mortgage-backed  securities  include  primarily  U.S.  government  agency
  pass-through securities and collateralized mortgage obligations (CMOs).
  
  An important aspect of the Company's investment philosophy is managing the
  credit quality of its investments in debt securities.  Thorough credit
  analysis  is  performed  on  existing  and  potential  corporate  investments
  including examination of a company's credit and industry outlook, financial
  strength, effectiveness of management, and event risks.  In the past few
  years, credit analysis has become one of the most critical activities of the
  Company's portfolio management.
  
  National Western continues to follow its conservative investment philosophy by
  minimizing its holdings of  below investment grade debt securities, as these
  securities generally have greater default risk than higher rated corporate
  debt. These issuers usually are more sensitive to adverse industry or economic
  conditions than are investment grade issuers. The Company's holdings of below
  investment grade debt securities, which are lower than industry averages, are
  summarized below.
  
  <TABLE>
  <CAPTION>
  
                                           Below Investment
                                        Grade Debt Securities
                                                                      % of
                           Amortized     Carrying      Market      Invested
                             Cost         Value        Value        Assets
                                  (In thousands except percentages)
  
  <S>                   <C>                <C>          <C>             <C>
  
  September 30, 2000    $    103,652       76,586       73,929          2.4%
  
  December 31, 1999     $     73,607       70,900       63,864          2.2%
  
  December 31, 1998     $     46,453       44,974       45,317          1.4%
  
  </TABLE>
  
  Although National Western purchases only investment grade debt securities, a
  growing number of companies have become more leveraged due to an environment
  of heightened acquisition activity and large share repurchase programs.
  Therefore, continued monitoring of credit quality after the purchase of a
  company's debt securities is crucial in order for National Western to maintain
  a high quality portfolio with a low percentage of below investment grade debt
  securities.  While the Company's holdings of below investment grade debt
  securities remain low, these holdings have increased from $44,974,000 at
  December 31, 1998, to $76,586,000 at September 30, 2000.  This increase is due
  to downgrades of investment grade debt securities as opposed to purchases of
  such holdings.  Historically, the Company's strong credit risk management and
  commitment to quality has resulted in minimal defaults in the debt securities
  portfolio.
  
  During the third and fourth quarters of 1999, the Company recorded permanent
  impairment writedowns totaling $4,403,000 related to two separate securities.
  The writedowns were reflected as realized losses.  One of these securities was
  classified as available for sale and the other as held to maturity.  The
  Company subsequently transferred the held to maturity holding to securities
  available for sale during the first quarter of 2000.  Subsequently, three
  additional debt securities experienced significant credit deterioration.  As a
  result  of  the  significant  deterioration  of  the  issuing  companies'
  creditworthiness, National Western also transferred these three securities
  from held to maturity to available for sale during the first quarter of 2000.
  Amortized cost, net of writedowns, of the four transferred securities totaled
  $49,528,000.  Unrealized losses resulting from recording the securities at
  fair value, before effects of taxes and deferred policy acquisitions costs,
  totaled $20,376,000.  Upon the transfers, the unrealized losses were recorded
  as a component of accumulated other comprehensive loss.
  
  During the second quarter of 2000, an additional below investment grade debt
  security, which the Company has been monitoring closely due to credit
  deterioration, defaulted on its interest payment.  Based on the current
  condition of the issuing company, complete recovery of National Western's
  investment in this security is not expected.  As a result, the Company
  recorded  a  permanent  impairment  writedown  for  this  security  totaling
  $6,715,000 during the quarter ended June 30, 2000 and also transferred the
  security from held to maturity to available for sale.  The writedown was
  recorded as a realized investment loss.  Amortized cost, net of writedowns, of
  this  security  totaled  $8,250,000  and  unrealized  losses  resulting  from
  recording the security at fair value, before the effects of taxes and deferred
  policy  acquisition  costs,  totaled  $4,000,000.    Upon  the  transfer,  the
  unrealized  losses  were  recorded  as  a  component  of  accumulated  other
  comprehensive loss.  Reductions to investment income due to this security
  totaled $734,000 for the nine months ended September 30, 2000.
  
  The Company is closely monitoring the previously described securities as well
  as its other below investment grade holdings.  While additional losses are not
  currently anticipated based on the existing status and condition of these
  securities, continued credit deterioration of some securities is possible,
  which may result in further writedowns.
  
  Although there is loss exposure related to its below investment grade debt
  securities, the Company is firmly committed to minimizing credit risks and
  maintaining a high quality portfolio.  This commitment is reflected in the
  high average credit rating of the Company's portfolio.  In the table below,
  investments in debt securities are classified according to credit ratings by
  Standard  and  Poor's  (S&P),  a  nationally  recognized  statistical  rating
  organization (NRSRO).  If securities were not rated by S&P, the equivalent
  rating of another NRSRO or the National Association of Insurance Commissioners
  was used.
  
  <TABLE>
  <CAPTION>
  
                                            September 30,    December 31,
                                                2000            1999
  
  <S>                                            <C>             <C>
  
  AAA and U.S. government                         28.2%           28.7%
  AA                                               8.0             8.8
  A                                               33.8            34.1
  BBB                                             27.3            25.9
  BB and other below investment grade              2.7             2.5
  
                                                 100.0%          100.0%
  </TABLE>
  
  Another important part of the Company's investment philosophy is managing the
  cash flow stability of the portfolio.  Because expected maturities of
  securities  may  differ  from  contractual  maturities  due  to  prepayments,
  extensions, and calls, the Company takes steps to manage and minimize these
  risks.  The Company reduced its exposure to prepayment and extension risks by
  lowering its holdings of mortgage-backed securities.  This strategy began in
  1994 when mortgage-backed securities totaled 47.6% of the entire portfolio,
  but at September 30, 2000, totaled only 20.0% which is comparable to the life
  insurance industry average.  The majority of this reduction has been achieved
  by shifting investments into corporate securities and public utilities, as
  these holdings have increased from 47.0% at December 31, 1994 to 69.7% at
  September 30, 2000.  Also, most of these additions have been noncallable
  corporates, which help reduce prepayment and call risks.
  
  As indicated above, the Company's holdings of mortgage-backed securities are
  also subject to prepayment risk, as well as extension risk.  Both of these
  risks are addressed by specific portfolio management strategies.  The Company
  has substantially reduced both prepayment and extension risks by investing
  primarily in collateralized mortgage obligations, which have more predictable
  cash flow patterns than pass-through  securities.  These securities, known as
  planned amortization class I (PAC I) CMOs, are designed to amortize in a more
  predictable manner than other CMO classes or pass-throughs.  Using this
  strategy, the Company can more effectively manage and reduce prepayment and
  extension risks, thereby helping to maintain the appropriate matching of the
  Company's assets and liabilities.
  
  As of September 30, 2000, CMOs represent approximately 93% of the Company's
  mortgage-backed securities. The CMOs in the Company's portfolio have been
  modeled and subjected to detailed, comprehensive analysis by the Company's
  investment staff.  The overall structure of the CMO as well as the individual
  tranche being considered for purchase have been evaluated to ensure that the
  security fits appropriately within the Company's investment philosophy and
  asset/liability management parameters.  The Company's investment mix between
  mortgage-backed securities and other fixed income securities helps effectively
  balance prepayment, extension, and credit risks.
  
  At  September  30,  2000,  the  Company's  debt  and  equity  securities  were
  classified as follows:
  
  <TABLE>
  <CAPTION>
  
                                         Fair        Amortized      Unrealized
                                        Value          Cost       Gains (Losses)
                                                  (In thousands)
  
  <S>                                <C>               <C>            <C>
  
  Securities held to maturity:
      Debt securities                $   2,077,757     2,129,024       (51,267)
  Securities available for sale:
      Debt securities                      707,892       762,448       (54,556)
      Equity securities                     16,014        12,669         3,345
  
  Totals                             $   2,801,663     2,904,141      (102,478)
  
  </TABLE>
  
  As detailed above, debt securities classified as held to maturity comprise the
  majority of the Company's securities portfolio, while equity securities are a
  small component of the portfolio.  Unrealized losses totaling $102,478,000 on
  the securities portfolio at September 30, 2000, are a reflection of market
  conditions at quarter-end.  The fair values, or market values, of fixed income
  debt  securities  generally  correlate  to  external  market  interest  rate
  conditions.  Because the interest rates are fixed on almost all of the
  Company's debt securities, market values typically increase when market
  interest  rates  decline,  and  decrease  when  market  interest  rates  rise.
  However, market values may fluctuate for other reasons, such as changing
  economic conditions or increasing event-risk concerns.  An analysis of the
  change in unrealized gains and losses on the Company's securities portfolio
  for the quarter ended September 30, 2000, is detailed below:
  
  
  <TABLE>
  <CAPTION>
  
                                                                     Change in
                                     Unrealized Gains (Losses)      Unrealized
                                          At             At       Gains (Losses)
                                     September 30,    June 30,      During 3rd
                                         2000           2000       Quarter 2000
                                                   (In thousands)
  
  <S>                              <C>                  <C>             <C>
  
  Securities held to maturity:
      Debt securities              $      (51,267)       (75,295)       24,028
  Securities available for sale:
      Debt securities                     (54,556)       (59,846)        5,290
      Equity securities                     3,345          3,315            30
  
  Totals                           $     (102,478)      (131,826)       29,348
  
  </TABLE>
  
  While unrealized losses did decrease during the third quarter of 2000 as
  reflected above, unrealized losses at September 30, 2000, have still increased
  13% from year-end 1999.  Unrealized losses have increased for the year even
  though market interest rates of the ten year U.S. Treasury bond actually
  decreased approximately 64 basis points during this nine month period.  With
  lower market interest rates, it would be expected that market values of debt
  securities would be higher.  However, market values actually decreased over
  the nine months ended September 30, 2000, because of the substantial widening
  of the yield premium for corporate bonds over comparable Treasury securities.
  Approximately 70% of National Western's bond portfolio consists of corporate
  bonds, including public utilities.  The increase of the yield premium has
  primarily been event-risk driven as companies increase their leverage through
  stock buyback programs and acquisitions.  Because the majority of the
  Company's debt securities are classified as held to maturity, which are
  recorded at amortized cost, changes in market values have had relatively small
  effects on the Company's financial statements.
  
  Changes in fair values of securities due to changes in market interest rates
  is an example of market risk.  Market risk is the risk of change in market
  values of financial instruments due to changes in interest rates, currency
  exchange rates, commodity prices, or equity prices.  The most significant
  market risk exposure for National Western is interest rate risk. The Company
  manages interest rate risk through on-going cash flow testing required for
  insurance regulatory purposes. Computer models are used to perform cash flow
  testing under various commonly used stress test interest rate scenarios to
  determine if existing assets would be sufficient to meet projected liability
  outflows.  Management strives to closely match the durations of its assets and
  liabilities.   Sensitivity analysis allows the Company to measure the
  potential gain or loss in fair value of its interest-sensitive instruments and
  to seek to protect its economic value and achieve a predictable spread between
  what is earned on invested assets and what is paid on liabilities.  The
  Company seeks to minimize the impact of interest risk through surrender
  charges that are imposed to discourage policy surrenders.  Interest rate
  changes can be anticipated and risk may be limited due to management actions
  regarding asset and liability instruments.  However, potential changes in the
  values of financial instruments indicated by hypothetical interest changes
  will likely be different from actual changes experienced, and the differences
  may be material.
  
  The Company's market risk-sensitive assets include debt securities, equity
  securities which are almost entirely preferred stocks, mortgage loans, policy
  loans, and index options.  The Company does not maintain a securities trading
  portfolio.  Market risk-sensitive liabilities include policy liabilities for
  deferred  and  immediate  investment  annuity  contracts  and  supplemental
  contracts.  Sensitivity analysis expresses the potential gain or loss in fair
  value, over a selected time period, from one or more selected hypothetical
  changes in interest rates which are reasonably possible in the near term.  The
  Company performed detailed sensitivity analysis at December 31, 1999, for its
  interest rate-sensitive assets.  Based on the recent changes in market
  conditions in the first nine months of 2000, the changes in market values of
  the Company's debt securities fell somewhat outside the expected range of
  results of this analysis.  The deviation from the expected results was due to
  the volatility in the corporate bond market as previously described above.
  
  In addition to the securities described above, the Company invests in index
  options which are derivative financial instruments used to hedge the equity
  return component of the Company's equity-indexed annuities.  The values of
  these options are primarily impacted by equity price risk, as the options'
  fair values are dependent on the performance of the S&P 500 Composite Stock
  Price Index.  However, increases or decreases in investment returns from these
  options are substantially offset by corresponding increases or decreases in
  amounts paid to equity-indexed annuity policyholders, subject to minimum
  guaranteed policy interest rates.
  
  The Company's market risk liabilities, which include policy liabilities for
  investment annuity and supplemental contracts, are managed for interest rate
  risk through cash flow testing as previously described.  As part of this cash
  flow testing, the Company has analyzed the potential impact on net earnings of
  both a 100 basis point increase and decrease in the U.S. Treasury yield curve
  as of December 31, 1999.  A 100 basis point interest rate decline would
  decrease net earnings for 2000 by approximately $300,000, based on the
  Company's projections.  A 100 basis point increase in interest rates would
  increase net earnings by approximately $200,000, based on the Company's
  projections.  These estimated impacts to earnings are net of tax effects
  determined at a tax rate of 35% and are also net of the estimated effects of
  deferred policy acquisition costs.
  
  The Company has modeled these scenarios, as a change in market interest rates
  could pose potential risks to the current profitability levels of this
  business.  These movements in interest rates are also reasonably possible
  near-term scenarios given the current interest rate environment.  The risks
  from such changes are primarily due to changes in interest rate spreads, which
  are the differences between investment income earned and credited interest
  paid to policyholders.  Also, the changes in interest rates can effect the
  level of surrenders and timing of cash flows related to policy liabilities.
  
  The above-described scenarios produce estimated changes in cash flows as well
  as cash flow reinvestment projections.  Estimated cash flows in the Company's
  model assume cash flow reinvestments which are representative of the Company's
  current  investment  strategy.    Calls  and  prepayments  include  scheduled
  maturities and those expected to occur which would benefit the security
  issuers.  Assumed policy surrenders consider differences and relationships
  between credited interest rates and market interest rates as well as surrender
  charges on individual policies.  The impact to earnings also includes the
  expected effects on amortization of deferred policy acquisition costs.  The
  model considers only investment annuity and supplemental contracts in-force at
  December 31, 1999, and does not consider new product sales or the possible
  impact of interest rate changes on sales.
  
  
  MORTGAGE LOANS AND REAL ESTATE
  
  Investment Philosophy
  
  In general, the Company seeks loans on high quality, income producing
  properties such as shopping centers, freestanding retail stores, office
  buildings, industrial and sales or service facilities, selected apartment
  buildings, motels, and health care facilities.  The location of these loans is
  typically  in  growth  areas  that  offer  a  potential  for  property  value
  appreciation.  These growth areas are found primarily in major metropolitan
  areas, but occasionally in selected smaller communities.
  
  The Company seeks to minimize the credit and default risk in its mortgage loan
  portfolio  through  strict  underwriting  guidelines  and  diversification  of
  underlying property types and geographic locations.   In addition to being
  secured by the property, mortgage loans with leases on the underlying property
  are often guaranteed by the lessee, in which case the Company approves the
  loan based on the credit strength of the lessee.  This approach has resulted
  in higher quality mortgage loans with fewer defaults.
  
  The Company's direct investments in real estate are not a significant portion
  of its total investment portfolio.  Many of these investments were acquired
  through mortgage loan foreclosures.  However, the Company also participates in
  several real estate joint ventures and limited partnerships.  The joint
  ventures  and  partnerships  invest  primarily  in  income-producing  retail
  properties.    These  investments  have  typically  enhanced  the  Company's
  investment portfolio returns.
  
  Portfolio Analysis
  
  The Company held net investments in mortgage loans totaling $202,224,000 and
  $183,902,000, or 6.2% and 5.7% of total invested assets, at September 30,
  2000,  and  December  31,  1999,  respectively.  The  loans  are  real  estate
  mortgages, substantially all of which are related to commercial properties and
  developments and have fixed interest rates.
  
  The diversification of the mortgage loan portfolio by geographic regions of
  the United States and by property type as of September 30, 2000, and December
  31, 1999, was as follows:
  
  <TABLE>
  <CAPTION>
  
                                         September 30,    December 31,
  Geographic Region:                         2000            1999
  
  <S>                                        <C>             <C>
  
  West South Central                          53.9%           58.8%
  Mountain                                    23.8            20.5
  Pacific                                     10.7            11.0
  South Atlantic                               4.5             5.1
  East South Central                           3.8             4.2
  Other                                        3.3             0.4
  
  Totals                                     100.0%          100.0%
  
  </TABLE>
  
  <TABLE>
  <CAPTION>
  
                                         September 30,    December 31,
  Property Type:                             2000            1999
  
  <S>                                        <C>             <C>
  
  Retail                                      61.1%           56.1%
  Office                                      24.0            27.4
  Hotel/Motel                                  6.3             7.2
  Land/Lots                                    3.2             2.5
  Nursing Homes                                2.0             2.4
  Apartment                                    1.0             1.6
  Other                                        2.4             2.8
  
  Totals                                     100.0%          100.0%
  
  </TABLE>
  
  As of September 30, 2000, the allowance for possible losses on mortgage loans
  was $4,215,000.  Additions to the allowance of $111,000 were made for the
  three and nine months ended September 30, 2000, and were reflected as realized
  losses on investments in the accompanying financial statements.  Although
  management believes that the current balance is adequate, future additions to
  the allowance may be necessary based on changes in economic conditions,
  particularly in the West South Central region which includes Texas, Louisiana,
  Oklahoma, and Arkansas, as this area contains the highest concentrations of
  the Company's mortgage loans.
  
  The Company currently places all loans past due three months or more on
  nonaccrual status, thus recognizing no interest income on the loans.  The
  Company had mortgage loan principal balances on nonaccrual status totaling
  $3,012,000 and $3,014,000 at September 30, 2000 and December 31, 1999,
  respectively.  Also, the Company will at times restructure mortgage loans
  under certain conditions which may involve changes in interest rates, payment
  terms, or other modifications.  For the nine months ended September 30, 2000,
  the reductions in interest income due to nonaccrual and restructured mortgage
  loans were approximately $232,000.  For the nine months ended September 30,
  1999, the reductions in interest income due to nonaccrual and restructured
  mortgage loans were not significant.
  
  The Company owns real estate that was acquired through foreclosure and through
  direct investment totaling $12,047,000 and $11,388,000 at September 30, 2000,
  and December 31, 1999, respectively.  This small concentration of properties
  represents less than one percent of the Company's entire investment portfolio.
  The real estate holdings consist primarily of income-producing properties
  which are being operated by the Company.  The Company recognized operating
  income on these properties of approximately $588,000 and $698,000 for the nine
  months ended September 30, 2000 and 1999.  Also during the first nine months
  of 2000 and 1999, the Company sold real estate properties resulting in
  realized gains on investments totaling $255,000 and  $1,419,000, respectively.
  
  The Company monitors the conditions and market values of these properties on a
  regular basis.  No significant realized losses were recognized due to declines
  in values of properties for the nine months ended September 30, 2000 and 1999,
  respectively.  The Company makes repairs and capital improvements to keep the
  properties in good condition and will continue this maintenance as needed.
  
  
  RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
  
  Consolidated Operations
  
  Summary of Consolidated Operating Results
  
  A summary of operating results for the three months ended September 30, 2000
  and 1999 is provided below:
  
  <TABLE>
  <CAPTION>
  
  
                                              Three Months Ended September 30,
                                                      2000           1999
                                            (In thousands except per share data)
  
  <S>                                         <C>                  <C>
  
  Revenues:
  Revenues, excluding realized
  investment gains (losses)
  and index options                           $        85,020        89,886
  Index options                                        (6,302)      (13,051)
  Realized gains (losses)
  on investments                                         (124)          191
  
  Total revenues                              $        78,594        77,026
  
  Earnings:
  Earnings from operations                    $         9,087        12,462
  Net realized gains (losses)
  on investments                                          (81)          124
  
  Net earnings                                $         9,006        12,586
  
  Basic Earnings Per Share:
  Earnings from operations                    $          2.59          3.56
  Net realized gains (losses)
  on investments                                        (0.02)         0.04
  
  Net earnings                                $          2.57          3.60
  
  Diluted Earnings Per Share:
  Earnings from operations                    $          2.58          3.53
  Net realized gains (losses)
  on investments                                        (0.02)         0.04
  
  Net earnings                                $          2.56          3.57
  
  </TABLE>
  
  Consolidated Operating Results:  Earnings from operations, excluding net
  realized gains and losses on investments, totaled $9,087,000 for the quarter
  ended September 30, 2000, compared to $12,462,000 for the third quarter of
  1999.  Earnings for the current quarter were affected by the Company's annuity
  business.  Although slowing in the third quarter, the Company has experienced
  higher policy surrenders for certain annuity products in 2000.  As a result,
  amortization of deferred policy acquisition costs was higher this quarter
  primarily due to effects from the Company's periodic refinements to its
  actuarial assumptions.  Although to a lesser extent, earnings for the quarter
  ended September 30, 2000, were also lower due to reductions in investment
  income and higher universal life and annuity contract interest expenses.
  
  Earnings from operations for the comparable 1999 third quarter included two
  significant items.  The Company experienced a decrease in 1999 third quarter
  earnings of over $5 million from equity-indexed annuity business due to
  significant volatility and declines in the S&P 500 Index.  Equity-indexed
  annuities combine features associated with traditional fixed annuities with an
  option to have interest rates linked in part to an equity index, the S&P 500
  Index.  The second significant item affecting third quarter 1999 earnings was
  the resolution of pending litigation which resulted in additional income to
  the Company totaling $5,513,000, net of taxes.  While there continues to be
  significant volatility and declines in the S&P 500 Index during 2000,
  including the third quarter, the financial impact on the Company's equity-
  indexed annuity business was significantly less than the comparable 1999 third
  quarter.
  
  Revenues  for  the  quarters  ended  September  30,  2000  and  1999  totaled
  $78,594,000 and $77,026,000, respectively.  Excluding index option revenues,
  realized investment gains and losses, and nonrecurring litigation settlement
  income,  third  quarter  2000  revenues  totaled  $85,020,000  compared  to
  $81,404,000.  This reflects revenue growth of 4.4% over comparable 1999
  quarterly results.
  
  The Company recorded realized losses on investments, net of taxes, totaling
  $81,000 for the quarter ended September 30, 2000, compared to gains of
  $124,000 for the third quarter of 1999.  The loss in the third quarter of 2000
  is primarily due to additions to the allowances for mortgage loan losses
  totaling $111,000.  The 1999 gains were primarily from sales of investments in
  debt securities, net of permanent impairment adjustments for debt securities
  and mortgage loans.
  
  Universal Life and Investment Annuity Contract Revenues: Contract revenues
  increased during the quarter ended September 30, 2000 totaling $23,082,000
  compared to $21,131,000 for the comparable 1999 period.  This increase of over
  9.2% is primarily due to higher annuity surrender charge income.  Surrenders
  for single-tier annuities were significantly higher during the third quarter
  of 2000.
  
  Net Investment Income:  Net investment income increased 18.6% from the third
  quarter of 1999, primarily due to increases in fair values of index options
  used to hedge the equity return component of the Company's equity-indexed
  annuity product. The index options, which act as hedges to match closely the
  returns on the S&P 500 Index, are reported at fair value in the accompanying
  financial statements. The changes in the values of the index options and the
  credited interest on policyholder liabilities for equity-indexed annuities are
  both reflected in the statement of earnings.  Although there was an increase
  in index option fair values in the 2000 third quarter compared to the same
  period of 1999, value changes for these options still reduced investment
  income in both periods.  The reductions to investment income from index
  options for the quarters ended September 30, 2000 and 1999 totaled $6,302,000
  and $13,051,000, respectively.  The significant reductions are directly
  attributable to the volatility and declines in the S&P 500 Index.  While net
  investment income decreased due to these options, these reductions were
  partially offset by lower annuity contract interest expense as the credited
  return on the Company's equity-indexed annuities are also based on the same
  S&P 500 Index.  Investment income from mortgage loans has increased from
  $3,821,000 for the third quarter of 1999 to $4,695,000 for the comparable 2000
  quarter.  This increase is consistent with the 20% increase in mortgage loans
  from September 30, 1999 to September 30, 2000.  A detail of net investment
  income is provided below:
  
  <TABLE>
  <CAPTION>
  
                                              Three Months Ended September 30,
                                                      2000           1999
                                                         (In thousands)
  
  <S>                                         <C>                    <C>
  
  Investment income:
      Debt securities                         $       51,712         51,347
      Mortgage loans                                   4,695          3,821
      Policy loans                                     2,056          2,024
      Index options                                   (6,302)       (13,051)
      Other investment income                          1,144          1,034
  
  Total investment income                             53,305         45,175
  Investment expenses                                    476            613
  
  Net investment income                       $       52,829         44,562
  
  </TABLE>
  
  Life and Other Policy Benefits: Policy benefits in the third quarter of 2000
  increased 8.6% over the 1999 third quarter.  The higher expenses were
  primarily due to increases totaling $307,000 and $483,000 in life insurance
  benefit claims and surrenders of traditional products, respectively.  However,
  much  of  the  increase  in  traditional  surrender  expense  was  offset  by
  corresponding  decreases  in  liabilities  for  future  policy  benefits.    A
  comparative detail of life and other policy benefits is provided below:
  
  <TABLE>
  <CAPTION>
  
                                             Three Months Ended September 30,
                                                    2000           1999
                                                       (In thousands)
  
  <S>                                       <C>                     <C>
  
  Life insurance benefit claims             $        6,813          6,506
  Surrenders of traditional products                 3,341          2,858
  Other policy benefits                                330            290
  
  Totals                                    $       10,484          9,654
  
  </TABLE>
  
  Amortization of Deferred Policy Acquisition Costs:  Amortization of deferred
  policy acquisition costs was significantly higher in 2000 totaling $15,009,000
  compared to $9,705,000 in 1999.  These expenses represent the amortization of
  the costs of acquiring or producing new business, which consists primarily of
  agents' commissions.  As described in more detail in the annuity operations
  section, amortization was higher primarily relating to higher annuity policy
  surrenders during 2000.
  
  Universal Life and Investment Annuity Contract Interest:  The Company closely
  monitors its credited interest rates, taking into consideration such factors
  as profitability goals, policyholder benefits, product marketability, and
  economic market conditions.  Rates are established or adjusted after careful
  consideration and evaluation of these factors against established objectives.
  As market interest rates fluctuate, the Company's credited interest rates are
  often adjusted accordingly, while also taking into consideration other factors
  as described above.  Contract interest totaled $33.7 million and $32.6 million
  for the quarters ended September 30, 2000 and 1999, respectively.
  
  Federal Income Taxes:  Federal income taxes include no unusual items as
  effective tax rates for the quarters ended September  30, 2000 and 1999 were
  both 34.0%.
  
  Segment Operations
  
  Summary of Segment Earnings
  
  A summary of segment earnings for the quarters ended September 30, 2000 and
  1999 is provided below.  The segment earnings exclude realized gains and
  losses on investments, net of taxes.
  
  <TABLE>
  <CAPTION>
  
                      Domestic International
                        Life        Life                    All
                      Insurance  Insurance   Annuities    Others      Totals
                                           (In thousands)
  
  <S>                 <C>             <C>         <C>           <C>      <C>
  
  Segment earnings:
  
  September 30,
   2000               $   1,516       1,876       5,509         186       9,087
  
  September 30,
   1999               $   2,421       2,263       7,497         281      12,462
  
  </TABLE>
  
  Domestic Life Insurance Operations
  
  The Company's domestic life insurance operations concentrate marketing efforts
  on federal employees, seniors, and specific employee groups in private
  industry, as well as individual sales.  The products marketed are universal
  life insurance and traditional life insurance, which includes both term and
  whole life products.  National Western markets and distributes its domestic
  products primarily through independent agents and brokers and independent
  marketing  organizations  (IMOs).    The  IMOs  also  assist  the  Company  in
  recruiting,  contracting,  and  supervising  agents  as  well  as  providing
  additional financial resources for product marketing.  Geographically, the
  domestic life insurance operations market products in most of the United
  States, which encompasses 43 states and the District of Columbia.  The states
  in which the Company does not conduct business are primarily in the northeast
  and include Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey,
  New York, and Vermont.
  
  Earnings for the domestic life insurance operating segment were $1,516,000 and
  $2,421,000  for  the  three  months  ended  September  30,  2000  and  1999,
  respectively.  The decrease in earnings in 2000 is primarily due to lower
  premiums and contract revenues and higher policy benefits.
  
  A comparative analysis of results of operations for the Company's domestic
  life insurance segment is detailed below:
  
  <TABLE>
  <CAPTION>
  
                                            Three Months Ended September 30,
  Domestic Life Insurance Operations:              2000           1999
                                                     (In thousands)
  
  <S>                                       <C>                    <C>
  
  Premiums and other revenue:
      Premiums and contract revenues        $        5,609          6,194
      Net investment income                          6,607          6,318
      Other income                                       3            (35)
  
  Total premiums and other revenue                  12,219         12,477
  
  Benefits and expenses:
      Policy benefits                                4,125          3,194
      Amortization of deferred
      policy acquisition costs                       1,357          1,222
      Universal life insurance
      contract interest                              2,459          2,430
      Other operating expenses                       1,980          1,965
  
  Total benefits and expenses                        9,921          8,811
  
  Segment earnings before
  Federal income taxes                               2,298          3,666
  
  Federal income taxes                                 782          1,245
  
  Segment earnings                          $        1,516          2,421
  
  </TABLE>
  
  Revenues from domestic life insurance operations include life insurance
  premiums on traditional type products and revenues from universal life
  insurance.  The Company's current marketing efforts focus more on universal
  life insurance, and, as a result, revenues from these products continue to
  increase over traditional products.  Revenues from traditional products are
  simply premiums collected, while revenues from universal life insurance
  consist of policy charges for the cost of insurance, policy administration
  fees, and surrender charges assessed during the period.  A comparative detail
  of premiums and contract revenues is provided below:
  
  <TABLE>
  <CAPTION>
                                            Three Months Ended September 30,
                                                    2000          1999
                                                      (In thousands)
  
  <S>                                       <C>                   <C>
  
  Universal life insurance:
      Cost of insurance                     $       3,048         2,993
      Surrender charges                               413           416
      Policy fees and other revenues                  333           535
  Traditional life insurance premiums               1,815         2,250
  
  Totals                                    $       5,609         6,194
  
  </TABLE>
  
  Actual universal life insurance deposits collected for the quarters ended
  September 30, 2000 and 1999 are detailed below.  Deposits collected on these
  nontraditional products are not reflected as revenues in the Company's
  statements  of  earnings,  as  they  are  recorded  directly  to  policyholder
  liabilities upon receipt, in accordance with generally accepted accounting
  principles. While the Company did experience higher collected deposits in the
  first two quarters of 2000, deposits were down in the third quarter primarily
  due to lower first year premiums.
  
  <TABLE>
  <CAPTION>
  
                                           Three Months Ended September 30,
                                                    2000           1999
                                                      (In thousands)
  
  <S>                                      <C>                    <C>
  
  Universal life insurance:
      First year and single premiums       $           599         1,626
      Renewal premiums                               3,388         3,614
  
  Totals                                   $         3,987         5,240
  
  </TABLE>
  
  Policy benefits were higher in the third quarter of 2000 totaling $4,125,000
  compared to $3,194,000 for the comparable 1999 period. The increase is due to
  higher surrenders of traditional products net of related changes in policy
  liabilities.  Life insurance benefit claims were relatively consistent between
  quarters.
  
  Universal life insurance contract interest remained relatively constant at
  $2,459,000 in 2000 compared to $2,430,000 in 1999.  This is consistent with
  the relative stable to declining size of this block of business.
  
  International Life Insurance Operations
  
  The Company's international life insurance operations focus marketing efforts
  on foreign nationals in upper socioeconomic classes with substantial financial
  resources.  Insurance sales are primarily on insureds from countries in
  Central and South America, the Caribbean, and the Pacific Rim.  Policy sales
  on insureds from numerous countries in these different regions provides
  diversification that helps to minimize large fluctuations in sales that can
  occur due to various economic, political, and competitive pressures that may
  occur from one country to another.  Products sold in the international market
  include both universal life and traditional life insurance products.  The
  Company minimizes exposure to foreign currency risks, as almost all foreign
  policies require payment of premiums and claims in United States dollars.
  Sales production from the international market is from independent broker-
  agents, many of whom have been selling National Western products for 20 or
  more years.
  
  Earnings  for  the  international  life  insurance  operating  segment  were
  $1,876,000 and $2,263,000 for the quarters ended September 30, 2000 and 1999,
  respectively.  Earnings in 2000 were somewhat lower due to higher amortization
  of deferred policy acquisition costs and contract interest, partially offset
  by increases in premiums and contract revenues.
  
  A  comparative  analysis  of  results  of  operations  for  the  Company's
  international life insurance segment is detailed below:
  
  <TABLE>
  <CAPTION>
  
                                              Three Months Ended September 30,
                                                    2000           1999
                                                       (In thousands)
  
  <S>                                        <C>                    <C>
  
  International Life Insurance Operations:
  
  Premiums and other revenue:
      Premiums and contract revenues         $       11,654         11,075
      Net investment income                           5,693          5,484
      Other income                                        8            (21)
  
  Total premiums and other revenue                   17,355         16,538
  
  Benefits and expenses:
      Policy benefits                                 4,955          4,663
      Amortization of deferred policy
      acquisition costs                               3,540          2,872
      Universal life insurance contract
      contract interest                               3,981          3,503
      Other operating expenses                        2,036          2,073
  
  Total benefits and expenses                        14,512         13,111
  
  Segment earnings before Federal income
  income taxes                                        2,843          3,427
  
  Federal income taxes                                  967          1,164
  
  Segment earnings                           $        1,876          2,263
  
  </TABLE>
  
  As with domestic operations, revenues from the international life insurance
  segment include both premiums on traditional type products and revenues from
  universal life insurance.  The international operations' marketing efforts are
  also focused more on universal life insurance, and, as a result, revenues from
  these products continue to increase over traditional products.  Cost of
  insurance revenues continue to increase as the international block of business
  grows.   A comparative detail of premiums and contract revenues is provided
  below:
  
  <TABLE>
  <CAPTION>
                                           Three Months Ended September 30,
                                                   2000           1999
                                                     (In thousands)
  
  <S>                                       <C>                   <C>
  
  Universal life insurance:
      Cost of insurance                     $        7,772         7,406
      Surrender charges                              2,091         2,330
      Policy fees and other revenues                   964         1,050
  Traditional life insurance premiums                  827           289
  
  Totals                                    $       11,654        11,075
  
  </TABLE>
  
  Actual universal life insurance deposits collected for the quarters ended
  September 30, 2000 and 1999 are detailed below.  Deposits collected on these
  nontraditional products are not reflected as revenues in the Company's
  statements  of  earnings,  as  they  are  recorded  directly  to  policyholder
  liabilities upon receipt, in accordance with generally accepted accounting
  principles.
  
  <TABLE>
  <CAPTION>
  
                                          Three Months Ended September 30,
                                                  2000           1999
                                                     (In thousands)
  
  <S>                                      <C>                    <C>
  
  Universal life insurance:
      First year and single premiums       $        3,638          3,618
      Renewal premiums                              9,868          9,783
  
  Totals                                   $       13,506         13,401
  
  </TABLE>
  
  Life insurance benefit claims, which are reflected in policy benefits for
  segment reporting purposes, were slightly higher in 2000 at $3,532,000
  compared to $3,324,000 in 1999. Mortality claims fluctuate from period to
  period and these deviations, which can at times be significant, are not
  uncommon in the life insurance industry.  Over extended periods of time,
  higher claims experience tends to be offset by periods of lower claims
  experience.  Additionally, the Company utilizes reinsurance to help minimize
  its exposure to adverse mortality experience.  The Company's general policy is
  to reinsure amounts in excess of $200,000 on the life of any one individual.
  
  Amortization of deferred policy acquisition costs increased $668,000 from
  $2,872,000 in 1999 to $3,540,000 in 2000.  These expenses represent the
  amortization of the costs of acquiring or producing new business, which
  consists primarily of agents' commissions.  The majority of such costs are
  amortized in direct relation to the anticipated future gross profits of the
  applicable blocks of business.
  
  Universal life insurance contract interest increased from $3,503,000 in 1999
  to $3,981,000 in 2000.  The increase in contract interest is consistent with
  growth in the universal life insurance business.
  
  Annuity Operations
  
  The Company's annuity operations are almost exclusively in the United States.
  Like the Company's domestic life insurance operations, annuities are marketed
  in 43 states and the District of Columbia using independent agents, brokers,
  and  independent  marketing  organizations  (IMOs).  For  most  of  these
  organizations, annuity sales are much more significant and are the primary
  focus of their business operations.  Although some of the Company's annuities
  are available in the international market, current sales are insignificant to
  total annuity sales.
  
  Annuities sold include single and flexible premium deferred annuities, single
  premium immediate annuities, and equity-indexed annuities.  These products can
  be tax qualified or nonqualified annuities.  In recent years the majority of
  annuities sold have been nonqualified deferred annuities.  The Company also
  continues to collect additional premiums on existing two-tier annuities, as a
  large portion of the two-tier block of business is flexible premium annuities
  on which renewal premiums continue to be collected.  However, the Company has
  not sold two-tier annuities since 1992.
  
  Earnings for the annuity operating segment were $5,509,000 and $7,497,000 for
  the quarters ended September 30, 2000 and 1999, respectively.  Earnings for
  2000 were down from 1999 primarily due to higher amortization of deferred
  policy acquisition costs, but offset significantly by higher net investment
  income, higher premium and contract revenues, and lower traditional policy
  benefits.  Third quarter 1999 earnings were affected by several significant
  items which substantially offset each other.  Results for the 1999 third
  quarter  include  higher  income  from  a  litigation  settlement,  offset  by
  decreases in surrender charge revenues and lower earnings from the Company's
  equity-indexed annuity business.
  
  A comparative analysis of results of operations for the Company's annuity
  segment is detailed below:
  
  <TABLE>
  <CAPTION>
  
                                           Three Months Ended September 30,
                                                     2000           1999
                                                      (In thousands)
  
  <S>                                        <C>                    <C>
  
  Annuity Operations:
  
  Premiums and other revenue:
      Premiums and contract revenues         $        8,477          6,421
      Net investment income                          39,936         32,335
      Other income                                       84          8,639
  
  Total premiums and other revenue                   48,497         47,395
  
  Benefits and expenses:
      Policy benefits                                    47            856
      Amortization of deferred
      policy acquisition costs                       10,112          5,611
      Annuity contract interest                      27,261         26,632
      Other operating expenses                        2,729          2,935
  
  Total benefits and expenses                        40,149         36,034
  
  Segment earnings before
  Federal income taxes                                8,348         11,361
  
  Federal income taxes                                2,839          3,864
  
  Segment earnings                           $        5,509          7,497
  
  </TABLE>
  
  Revenues from annuity operations include primarily surrender charges and
  recognition of deferred revenues relating to immediate or payout annuities.
  Annuitizations result in transfers of policies from deferred to immediate or
  payout status.  The deferred revenues related to these annuities are amortized
  into income during the payout period.  Surrender charge revenues were up 42%
  in 2000 compared to 1999 due to increases in surrender charges primarily from
  single-tier  annuities.  Although actual policy surrenders for two-tier
  annuities were basically stable, policy surrenders for single-tier annuities
  were abnormally high increasing 51% in the third quarter of 2000 from the
  comparable period of 1999. Although slowing in the third quarter, the Company
  has also experienced higher annuity policy surrenders in the first and second
  quarters of 2000.  A comparative detail of the components of premiums and
  annuity contract revenues is provided below.
  
  <TABLE>
  <CAPTION>
  
                                             Three Months Ended September 30,
                                                   2000            1999
                                                      (In thousands)
  
  <S>                                        <C>                      <C>
  
  Surrender charges:
     Two-tier annuities                      $        3,109           3,088
     Single-tier annuities                            3,888           1,826
  
  Total surrender charges                             6,997           4,914
  Payout annuity and other revenues                   1,464           1,487
  Traditional annuity premiums                           16              20
  
  Totals                                     $        8,477           6,421
  
  </TABLE>
  
  Actual annuity deposits collected for the quarters ended September 30, 2000
  and 1999 are detailed below.  Deposits collected on these nontraditional
  products are not reflected as revenues in the Company's statements of
  earnings, as they are recorded directly to policyholder liabilities upon
  receipt, in accordance with generally accepted accounting principles.
  
  <TABLE>
  <CAPTION>
  
                                         Three Months Ended September 30,
                                                  2000          1999
                                                    (In thousands)
  
  <S>                                       <C>                 <C>
  
  Deferred annuities:
      Equity-indexed                        $      21,669        33,572
      Other                                        52,938        50,271
  
  Total deferred annuities                         74,607        83,843
  Immediate annuities                               5,940         9,457
  
  Totals                                    $      80,547        93,300
  
  </TABLE>
  
  Although total annuity deposits for the quarter ended September 30, 2000, were
  lower than the comparable 1999 period, the decline is primarily attributable
  to equity-indexed annuities.  While sales have been lower in 2000, equity-
  indexed  annuities  are  a  major  portion  of  the  Company's  total  annuity
  production.  The Company's equity-indexed annuities are flexible premium
  deferred annuities which combine the features associated with traditional
  fixed annuities, with the option to have interest rates that are linked in
  part to an equity index, the S&P 500 Index.  These annuities are long-term
  contracts designed as planning vehicles for retirement security.  These
  annuities are attractive to customers, as they have guaranteed minimum
  interest rates, coupled with the potential for significantly higher returns
  based on an equity index component.  Also, because the Company does not offer
  variable products or mutual funds, these products provide a key equity-based
  alternative to the Company's existing fixed annuity products.  In conjunction
  with the sale of these annuities, the Company uses an investment hedging
  program to offset the potential higher returns that could be paid on these
  products.  Specifically, the Company purchases index options from highly rated
  banks and brokerage firms.  These index options act as hedges to match closely
  the returns based on the S&P 500 Index which may be paid to policyholders.
  
  Sales of equity-indexed annuities began declining during the year ended
  December 31, 1999, primarily due to volatility in the stock market.  This
  volatility affects both the immediate demand for these annuities and the
  pricing of these products.  Increased product costs from stock market
  volatility, particularly costs of index options used to hedge the equity
  return component of these annuities, can reduce potential credited interest to
  policyholders.  The lower production level has continued in the first nine
  months of 2000, which is consistent with volatility in the stock market.
  
  Net investment income for annuity operations for the third quarters of 2000
  and 1999 totaled $39,936,000 and $32,335,000, respectively.  Declines in fair
  values of index options resulted in reductions to net investment income
  totaling $6,302,000 and $13,051,000 for the quarters ended September 30, 2000
  and 1999.  These significant declines are directly attributable to the
  declines in the S&P 500 Index over the same periods.  While net investment
  income was lower due to these options, these reductions were partially offset
  by lower annuity contract interest expense as the credited interest on the
  Company's equity-indexed annuities are also based on the same S&P 500 Index.
  The  correlation  of  investment  income  with  annuity  contract  expense  is
  explained in more detail below.
  
  Amortization of deferred policy acquisition costs represents the amortization
  of the costs of acquiring or producing new business, primarily agents'
  commissions, the majority of which are amortized in direct relation to the
  anticipated future gross profits of the applicable blocks of business.
  Amortization is also impacted by the level of policy surrenders.  Amortization
  for 2000 and 1999 was $10,112,000 and $5,611,000, respectively.  The increase
  in amortization is related to increases in annuity surrenders.  Although
  slowing in the third quarter, the Company has experienced higher policy
  surrenders for certain annuity products in 2000.  As a result, amortization of
  deferred policy acquisition costs was higher this quarter primarily due to
  effects from the Company's periodic refinements to its actuarial assumptions.
  
  Annuity contract interest was $27,261,000 in 2000 compared to $26,632,000 in
  1999.  Contract interest amounts can be affected significantly by the
  Company's equity-indexed annuities which have interest rates that are linked
  in part to the S&P 500 Index.  The substantial decline of the S&P 500 Index in
  the third quarter of 1999 resulted in lower interest credited to equity-
  indexed annuity contracts.  However, primarily because of policy liability
  reserving  treatments  related  to  minimum  guaranteed  interest  rates,  the
  reduction in annuity contract interest expense was much less than the decline
  in net investment income.
  
  Differences between income from index options and contract interest credited
  to policyholders will occur for several reasons, some of which may only be
  timing differences between the recognition of income and expenses.  One reason
  is the costs of the index options are essentially amortized against net
  investment income as the options are marked to fair value each reporting
  period.  The costs of options are covered by additional income earned on debt
  securities purchased with equity-indexed annuity premiums. Other differences
  are  due  to  asset  fees  charged  against  policyholder  contract  interest,
  surrenders and death benefits on annuities within the annual hedging period,
  and inherent differences between index option fair values and policy liability
  reserving treatments related to minimum guaranteed interest rates.
  
  The impact of these equity-indexed annuity issues decreased annuity operations
  earnings by over $5 million, net of taxes, for the third quarter of 1999.  The
  Company's  equity-indexed  annuity  products  are  long-term  policies  with
  contractual periods of either nine or fifteen years. The Company routinely
  analyzes the profitability of its equity-indexed annuity products under
  numerous economic scenarios, including both positive and negative equity
  market conditions.  Although earnings may not be level or constant for this
  product due to timing of market conditions and policy liability reserving
  methods,  the  Company  anticipates  the  equity-indexed  annuities  will  be
  profitable over the long-term contractual periods of the policies.
  
  Although annuity operations earnings were significantly lower due to its
  equity-indexed annuity business for the third quarter of 1999, the Company
  recorded  nonrecurring  income  resulting  from  a  lawsuit  settlement  that
  essentially offset the lower earnings.  As a result of the litigation
  settlement,  which  involved  an  independent  marketing  organization  under
  contract with the Company, accrued commission liabilities were released by the
  Company in the quarter ended September 30, 1999, resulting in additional other
  income of $8,482,000, or $5,513,000, net of taxes.
  
  Other Operations
  
  Earnings for other operations totaled $186,000 and $281,000 for the third
  quarters of 2000 and 1999, respectively. While National Western's primary
  business encompasses its domestic and international life insurance operations
  and its annuity operations, the Company also has small real estate, nursing
  home, and other investment operations through the following wholly owned
  subsidiaries: NWL Investments, Inc., NWL Properties, Inc., NWL 806 Main, Inc.,
  NWL Services, Inc., and NWL Financial, Inc.  Also, during January, 1999, the
  Company's wholly owned subsidiary, The Westcap Corporation, completed its
  Chapter 11 bankruptcy reorganization.  With the reorganization complete,
  National Western transferred its investment real estate holdings totaling
  approximately $11,589,000 to Westcap and the subsidiary is now operating as a
  real estate management company.
  
  
  RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
  
  Consolidated Operations
  
  Summary of Consolidated Operating Results
  
  A summary of operating results for the nine months ended September 30, 2000
  and 1999 is provided below:
  
  <TABLE>
  <CAPTION>
  
                                              Nine Months Ended September 30,
                                                      2000            1999
                                           (In thousands except per share data)
  
  <S>                                        <C>                    <C>
  
  Revenues:
  Revenues, excluding realized
  investment gains (losses)
  and index options                          $       257,603        253,174
  Index options                                      (20,517)        (5,524)
  Realized gains
  (losses) on investments                             (6,536)         5,869
  
  Total revenues                             $       230,550        253,519
  
  Earnings:
  Earnings from operations                   $        33,181         35,072
  Net realized gains
  (losses) on investments                             (4,249)         3,815
  
  Net earnings                               $        28,932         38,887
  
  Basic Earnings Per Share:
  Earnings from operations                   $          9.47          10.02
  Net realized gains
  (losses) on investments                              (1.21)          1.09
  
  Net earnings                               $          8.26          11.11
  
  Diluted Earnings Per Share:
  Earnings from operations                   $          9.43           9.93
  Net realized gains
  (losses) on investments                              (1.21)          1.08
  
  Net earnings                               $          8.22          11.01
  
  </TABLE>
  
  Consolidated Operating Results:  For the nine months ended September 30, 2000,
  earnings  from  operations,  excluding  net  realized  gains  and  losses  on
  investments, totaled $33,181,000 compared to $35,072,000 for the same period
  of 1999.  This 5.4% decrease in earnings is largely attributable to higher
  amortization of deferred policy acquisition costs as previously described for
  the quarter ended September 30, 2000.  However, these higher costs were
  substantially offset by an increase in universal life and investment annuity
  contract revenues of 9.6% for the nine months ended September 30, 2000, over
  the comparable 1999 period.  Additionally, while life insurance benefit claims
  were significantly higher in the first nine months of 2000, this increase was
  largely mitigated by reductions in traditional policy liabilities.
  
  The Company recorded realized losses on investments, net of taxes, totaling
  $4,249,000 for the nine months ended September 30, 2000, compared to gains of
  $3,815,000 for the first nine months of 1999.  The losses in 2000 are
  primarily due to a permanent impairment writedown for a specific debt security
  which defaulted during the second quarter.  The Company's policy is to record
  an impairment writedown when a decline in value is other than temporary and
  full recovery of the investment costs is not expected.  Overall, the Company's
  debt securities portfolio remains high quality with small holdings of below
  investment grade securities.  The 1999 gains were primarily from sales and
  calls of investments in debt securities totaling $2,662,000, net of taxes.
  Also included in 1999 was a net gain totaling $922,000 from the sale of
  investment real estate owned by one of National Western's subsidiaries,  NWL
  806 Main, Inc.
  
  As previously described for the three months ended September 30, 1999, equity-
  indexed annuity issues decreased net earnings by over $5 million in 1999.
  Also affecting year-to-date 1999 earnings was the resolution of pending
  litigation which resulted in additional other income to the Company totaling
  $8,482,000, or $5,513,000 net of taxes.
  
  As previously reported, the bankruptcy reorganization of the Company's wholly
  owned subsidiary,  The Westcap Corporation, was completed in the first quarter
  of 1999.  Pursuant to the reorganization plan, National Western retained 100%
  continuing ownership of the reorganized Westcap and the subsidiary is now
  operating as a real estate management company.  No losses were reported for
  discontinued brokerage operations in the nine months ended September 30, 1999,
  as the entire $14,125,000 settlement payment was accrued and reported as a
  loss in the third quarter of 1998.
  
  Segment Operations
  
  Summary of Segment Earnings
  
  A summary of segment earnings for the nine months ended September 30, 2000 and
  1999 is provided below.  The segment earnings exclude realized gains and
  losses on investments, net of taxes.
  
  <TABLE>
  <CAPTION>
  
                      Domestic International
                        Life        Life                    All
                      Insurance  Insurance   Annuities    Others      Totals
                                           (In thousands)
  
  <S>              <C>              <C>        <C>          <C>        <C>
  
  Segment
  earnings:
  
  September 30,
   2000            $    5,186       6,143      20,008       1,844      33,181
  
  September 30,
   1999            $    5,219       5,858      22,248       1,747      35,072
  
  </TABLE>
  
  Domestic Life Insurance Operations
  
  Earnings for the domestic life insurance operating segment were $5,186,000 and
  $5,219,000  for  the  nine  months  ended  September  30,  2000  and  1999,
  respectively.  While premiums and contract revenues were lower and policy
  benefits were higher for the nine months ended September 30, 2000, these
  negative impacts to earnings were substantially reduced by increases in net
  investment income and lower other operating expenses.  These balancing
  fluctuations resulted in the relatively comparable net earnings between 2000
  and 1999.
  
  A comparative analysis of results of operations for the Company's domestic
  life insurance segment is detailed below:
  
  <TABLE>
  <CAPTION>
  
                                             Nine Months Ended September 30,
                                                    2000           1999
                                                      (In thousands)
  
  <S>                                        <C>                    <C>
  
  Domestic Life Insurance Operations:
  
  Premiums and other revenue:
      Premiums and contract revenues         $       17,546         18,474
      Net investment income                          19,642         18,996
      Other income                                       25             32
  
  Total premiums and other revenue                   37,213         37,502
  
  Benefits and expenses:
      Policy benefits                                12,323         11,894
      Amortization of deferred
      policy acquisition costs                        3,555          3,614
      Universal life insurance
      contract interest                               7,099          7,315
      Other operating expenses                        6,363          6,784
  
  Total benefits and expenses                        29,340         29,607
  
  Segment earnings before
  Federal income taxes                                7,873          7,895
  
  Federal income taxes                                2,687          2,676
  
  Segment earnings                           $        5,186          5,219
  
  </TABLE>
  
  Revenues from domestic life insurance operations include life insurance
  premiums on traditional type products and revenues from universal life
  insurance.  Concentration on sales of universal life insurance as opposed to
  traditional products continue to result in increases in cost of insurance
  revenues and declines in traditional premiums. A comparative detail of
  premiums and contract revenues is provided below:
  
  <TABLE>
  <CAPTION>
  
                                          Nine Months Ended September 30,
                                                  2000          1999
                                                    (In thousands)
  
  <S>                                       <C>                  <C>
  
  Universal life insurance:
      Cost of insurance                     $       9,108         8,777
      Surrender charges                             1,371         1,299
      Policy fees and other revenues                  946         1,178
  Traditional life insurance premiums               6,121         7,220
  
  Totals                                    $      17,546        18,474
  
  </TABLE>
  
  Actual universal life insurance deposits, which are recorded directly to
  policyholder liabilities upon receipt, for the nine months ended September 30,
  2000 and 1999 are detailed below.
  
  <TABLE>
  <CAPTION>
  
                                         Nine Months Ended September 30,
                                                 2000           1999
                                                    (In thousands)
  
  <S>                                       <C>                  <C>
  
  Universal life insurance:
  
      First year and single premiums        $     3,490           4,001
      Renewal premiums                           10,732          10,874
  
  Totals                                    $    14,222          14,875
  
  </TABLE>
  
  Consistent with the third quarter of 2000, policy benefits were higher for the
  nine months ended September 30, 2000, totaling $12,323,000 compared to
  $11,894,000 for the comparable 1999 period.  The increase is due to higher
  life insurance benefit claims and surrenders of traditional products net of
  related changes in policy liabilities.
  
  Other operating expenses totaled $6,363,000 and $6,784,000 for the nine months
  ended September 30, 2000 and 1999, respectively.  Expenses for 2000 were lower
  as 1999 expenses include an additional accrual for state income taxes.
  
  International Life Insurance Operations
  
  Earnings  for  the  international  life  insurance  operating  segment  were
  $6,143,000 and $5,858,000 for the nine months ended September 30, 2000 and
  1999, respectively.  The 4.9% increase in net earnings is primarily due to
  higher cost of insurance revenues and net investment income, tempered by
  increases in expenses, primarily contract interest.
  
  A  comparative  analysis  of  results  of  operations  for  the  Company's
  international life insurance segment is detailed below:
  
  <TABLE>
  <CAPTION>
                                             Nine Months Ended September 30,
                                                    2000           1999
                                                      (In thousands)
  
  <S>                                        <C>                    <C>
  
  International Life Insurance
  Operations:
  
  Premiums and other revenue:
      Premiums and contract revenues         $       33,362         31,819
      Net investment income                          17,112         16,387
      Other income                                       37             32
  
  Total premiums and other revenue                   50,511         48,238
  
  Benefits and expenses:
  
      Policy benefits                                12,749         13,070
      Amortization of deferred
      policy acquisition costs                       10,491          9,434
      Universal life insurance
      contract interest                              11,867         10,397
      Other operating expenses                        6,079          6,476
  
  Total benefits and expenses                        41,186         39,377
  
  Segment earnings before
  Federal income taxes                                9,325          8,861
  
  Federal income taxes                                3,182          3,003
  
  Segment earnings                           $        6,143          5,858
  
  </TABLE>
  
  A comparative detail of premiums and contract revenues, which reflects the
  increase in universal life cost of insurance revenues as previously described,
  is provided below:
  
  <TABLE>
  <CAPTION>
  
                                            Nine Months Ended September 30,
                                                   2000            1999
                                                     (In thousands)
  
  <S>                                       <C>                     <C>
  
  Universal life insurance:
      Cost of insurance                     $        23,055         21,919
      Surrender charges                               5,864          5,993
      Policy fees and other revenues                  2,686          2,835
  Traditional life insurance premiums                 1,757          1,072
  
  Totals                                    $        33,362         31,819
  
  </TABLE>
  
  Actual universal life insurance deposits collected for the nine months ended
  September 30, 2000 and 1999 are detailed below.  Increases in current year
  premiums  are  due  to  improving  economic  conditions  during  2000  in  the
  international Central and South American markets and higher sales production
  from the Pacific Rim market.
  
  <TABLE>
  <CAPTION>
                                             Nine Months Ended September 30,
                                                    2000            1999
                                                      (In thousands)
  
  <S>                                        <C>                     <C>
  
  Universal life insurance:
  
      First year and single premiums         $        10,137          9,504
      Renewal premiums                                27,780         27,247
  
  Totals                                     $        37,917         36,751
  
  </TABLE>
  
  Universal life insurance contract interest increased from $10,397,000 in 1999
  to $11,867,000 in 2000.  The increase in contract interest is consistent with
  growth in the universal life insurance business.  Interest is also higher due
  to  increasing  policyholder  persistency  bonuses  credited  to  specific
  international products.  Certain products are credited with bonus interest if
  the policies remain in force for specified time periods.
  
  Annuity Operations
  
  Earnings for the annuity operating segment were $20,008,000 and $22,248,000
  for  the  nine  months  ended  September  30,  2000  and  1999,  respectively.
  Consistent with the third quarter results as previously described, earnings
  for the nine months ended September 30, 2000, were lower than 1999 primarily
  due to higher amortization of deferred policy acquisition costs.  However,
  increases in annuity contract revenues, primarily from policy surrender
  charges, mitigated a significant portion of this effect.  Also, as previously
  described for the third quarter results, year-to-date earnings for 1999 were
  affected by several significant items which substantially negated each other.
  Results for the nine months ended September 30, 2000, include higher income
  from a litigation settlement, offset by decreases in surrender charge revenues
  and lower earnings from the Company's equity-indexed annuity business.
  
  A comparative analysis of results of operations for the Company's annuity
  segment is detailed below:
  
  <TABLE>
  <CAPTION>
  
                                              Nine Months Ended September 30,
                                                     2000           1999
                                                       (In thousands)
  
  <S>                                         <C>                   <C>
  
  Annuity Operations:
  
  Premiums and other revenue:
      Premiums and contract revenues          $       26,391         21,379
      Net investment income                          119,278        129,095
      Other income                                       287          8,796
  
  Total premiums and other revenue                   145,956        159,270
  
  Benefits and expenses:
      Policy benefits                                    155            253
      Amortization of deferred
      policy acquisition costs                        23,141         16,663
      Annuity contract interest                       84,146        100,457
      Other operating expenses                         8,140          8,242
  
  Total benefits and expenses                        115,582        125,615
  
  Segment earnings before
  Federal income taxes                                30,374         33,655
  
  Federal income taxes                                10,366         11,407
  
  Segment earnings                            $       20,008         22,248
  
  </TABLE>
  
  Premiums and annuity contract revenues were up $5,012,000, or 23.4%, from
  $21,379,000 in 1999 to $26,391,000 in 2000. This increase is due to higher
  surrender charge revenues from single-tier annuities.  As previously described
  for the third quarter results, actual policy surrenders were abnormally high
  through the first nine months of 2000 resulting in increased revenues.
  However, the surrenders peaked in the second quarter and have begun to slow in
  the third quarter of 2000. A comparative detail of the components of premiums
  and annuity contract revenues is provided below.
  
  <TABLE>
  <CAPTION>
  
                                                Nine Months Ended September 30,
                                                       2000            1999
                                                         (In thousands)
  
  <S>                                          <C>                      <C>
  
  Surrender charges:
     Two-tier annuities                        $         11,575         11,655
     Single-tier annuities                               10,316          5,234
  
  Total surrender charges                                21,891         16,889
  Payout annuity and other revenues                       4,448          4,431
  Traditional annuity premiums                               52             59
  
  Totals                                       $         26,391         21,379
  
  </TABLE>
  
  Annuity deposits for 2000 reflect a decline of 11.9% compared to the same
  period of 1999, resulting substantially from decreases in equity-indexed
  annuity deposits.  Sales of these annuities continue to slow, largely a result
  of volatility in the stock market as previously described for the quarter
  ended September 30, 2000.  Some of the decline in equity-indexed annuity sales
  is being countered with increases in sales of other deferred annuities, which
  reflect growth of 5.8% for 2000.  Actual annuity deposits collected for the
  nine months ended September 30, 2000 and 1999 are detailed below.
  
  <TABLE>
  <CAPTION>
  
                                             Nine Months Ended September 30,
                                                    2000           1999
                                                       (In thousands)
  
  <S>                                         <C>                   <C>
  
  Deferred annuities:
      Equity-indexed                          $       82,991        123,491
      Other                                          157,015        148,376
  
  Total deferred annuities                           240,006        271,867
  Immediate annuities                                 19,940         23,124
  
  Totals                                      $      259,946        294,991
  
  </TABLE>
  
  Net investment income for the nine months ended September 30, 2000 and 1999
  totaled $119.3 million and $129.1 million, respectively. Declines in fair
  values of index options resulted in reductions to net investment income
  totaling $20,517,000 and $5,524,000 for the nine months ended September 30,
  2000 and 1999, respectively.   Index options are used to hedge the equity
  return component of the Company's equity-indexed annuities.  Fluctuations in
  the income from index options correlates to the performance of the stock
  market, more specifically the S&P 500 Index.  The significant decline in
  investment income resulting from the index options is substantially offset by
  lower annuity contract interest expense.  However, as more fully described for
  third quarter 1999 results, primarily because of policy liability reserving
  treatments related to minimums guaranteed interest rates, the reduction in
  1999 annuity contract interest expense was much less than the decline in net
  investment income.
  
  Annuity contract interest was $84.1 million in 2000 compared to $100.5 million
  in 1999.  The decrease is primarily due to lower interest credited on equity-
  indexed annuities resulting from the volatility and decline in the S&P 500
  Index.  Also as described above, decreases in index option income were
  experienced during the nine months ended September 30, 2000, reflecting the
  hedging policy implemented for the equity-indexed annuity business.  However,
  differences between income from index options and contract interest credited
  to policyholders will occur for several reasons as previously explained in
  detail for the three months ended September 30, 2000.
  
  Amortization for the nine months ended September 30, 2000 and 1999 totaled
  $23,141,000 and $16,663,000, respectively.  The increase in amortization is
  related to the increase in annuity policy surrenders as previously described
  for the three months ended September 30, 2000.
  
  Other Operations
  
  As previously described for the three months ended September 30, 2000,
  National Western has small real estate, nursing home,  and other investment
  operations through its wholly owned subsidiaries.  Earnings for these other
  operations totaled $1,844,000 and $1,747,000 for the nine months ended
  September 30, 2000 and 1999, respectively.  Currently, most of the income from
  these operations is from a life interest in the Libbie Shearn Moody Trust.
  This asset was owned by National Western Life Insurance Company during 1996
  but was transferred to NWL Services, Inc., in 1997.  Dividend distributions
  from the Trust are declared semi-annually in June and December each year.
  Because the asset is a life interest, these distributions are only accrued in
  the Company's financial statements when declared.  Semi-annual distributions
  totaled $1,793,000 and $1,751,000 in June 2000 and 1999, respectively.
  
  During the first quarter of 2000, the Company acquired a nursing home facility
  through an affiliated limited partnership.  The acquisition, which totaled
  approximately $6.6 million, was made by a newly formed limited partnership,
  the partners of which are downstream subsidiaries of National Western.  The
  nursing home facility, which opened in late July, 2000, is operated by an
  affiliated  limited  partnership  and  the  financial  operating  results  are
  consolidated with those of the Company.  Daily operations and management of
  the nursing home are performed by an experienced management company through a
  contract with the limited partnership.  Initial start up expenses in 2000
  could generate minimum operating losses of approximately $900,000, before
  taxes.  Currently, operating losses before taxes from initial start up costs
  totaled approximately $540,000 for the period from inception to September 30,
  2000.
  
  
  LIQUIDITY AND CAPITAL RESOURCES
  
  Liquidity
  
  The liquidity requirements of the Company are met primarily by funds provided
  from  operations.  Premium  deposits  and  revenues,  investment  income,  and
  investment maturities are the primary sources of funds, while investment
  purchases and policy benefits are the primary uses of funds.  Primary sources
  of liquidity to meet cash needs are the Company's securities available for
  sale portfolio, net cash provided by operations, and a bank line of credit.
  The Company's investments consist primarily of marketable debt securities that
  could be readily converted to cash for liquidity needs.  The Company may also
  borrow up to $60 million on its bank line of credit for short-term cash needs.
  
  A primary liquidity concern for the Company's life insurance operations is the
  risk of early policyholder withdrawals.  Consequently, the Company closely
  evaluates and manages the risk of early surrenders or withdrawals.  The
  Company includes provisions within annuity and universal life insurance
  policies, such as surrender charges, that help limit early withdrawals.  The
  Company also prepares cash flow projections and performs cash flow tests under
  various market interest rate scenarios to assist in evaluating liquidity needs
  and adequacy.  The Company currently expects available liquidity sources and
  future cash flows to be adequate to meet the demand for funds.
  
  In the past, cash flows from the Company's insurance operations have been more
  than adequate to meet current needs.  Cash flows from operating activities
  were $117.7 million and $85.7 million for the nine months ended September 30,
  2000 and 1999, respectively.  Net cash flows from the Company's deposit
  product operations, which includes universal life and investment annuity
  products, totaled $32.8 million for the first nine months of 1999, but
  reflected cash outflows of $78.0 million for the comparable period of 2000.
  The negative cash flow in the Company's deposit product operations is
  primarily due to abnormally high annuity surrenders during 2000.  While
  increased surrenders may continue, this high rate of surrenders has slowed
  from its peak in the second quarter.  Premium deposits have also been lower in
  the first nine months of 2000 due to lower equity-indexed annuity sales, which
  have been affected by the volatility in the stock market.  The Company
  primarily used cash generated from operations and some short-term borrowings
  to manage this negative cash flow.
  
  The  Company  also  has  significant  cash  flows  from  both  scheduled  and
  unscheduled investment security maturities, redemptions, and prepayments.
  These cash flows totaled $56.2 million and $106.4 million for the nine months
  ended September 30, 2000 and 1999, respectively.  The Company expects
  significant cash flows from these sources throughout the remainder of 2000.
  
  Capital Resources
  
  The Company relies on stockholders' equity for its capital resources, as there
  has been no long-term debt outstanding in 2000 or recent years.  The Company
  does not anticipate the need for any long-term debt in the near future.  There
  are  also  no  current  or  anticipated  material  commitments  for  capital
  expenditures in 2000.
  
  Stockholders' equity totaled $494.9 million at September 30, 2000, reflecting
  an increase of $19.4 million from December 31, 1999.  The increase in capital
  is primarily from net earnings of $28.9 million, offset by an increase in net
  unrealized losses on investment securities totaling $10.6 million during the
  first nine months of 2000.  The increase in unrealized losses was due to
  market interest rate conditions and transfers of securities from held to
  maturity to available for sale.  As previously described in Investments in
  Debt and Equity Securities, the debt securities transfers were executed due to
  significant credit deterioration of the issuing companies.  Book value per
  share at September 30, 2000, was $141.31.
  
  
  CHANGES IN ACCOUNTING PRINCIPLES
  
  In  June,  1998,  the  Financial  Accounting  Standards  Board  (FASB)  issued
  Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
  Derivative Instruments and Hedging Activities."  In June, 1999, SFAS No. 137,
  "Accounting for Derivative Instruments and Hedging Activities - Deferral of
  the Effective Date of FASB Statement No. 133," was issued deferring SFAS No.
  133, which will now be effective for all fiscal quarters of all fiscal years
  beginning after June 15, 2000.  SFAS No. 133 establishes accounting and
  reporting standards for derivative instruments, including certain derivative
  instruments embedded in other contracts, and for hedging activities.  It
  requires that an entity recognize all derivatives as either assets or
  liabilities  in  the  statement  of  financial  position  and  measure  those
  instruments at fair value.  The statement defines several designations of
  derivatives  based  on  the  instrument's  intended  use  and  specifies  the
  appropriate accounting treatment for changes in the fair value of the
  derivative based on its resulting designation.  In June, 2000, the FASB also
  issued SFAS No. 138, "Accounting for Certain Derivative Instruments and
  Certain  Hedging  Activities,"  which  amends  SFAS  No.  133  for  certain
  specifically identified derivative instruments and hedging activities.  This
  statement is to be adopted concurrently with SFAS No. 133.
  
  The Company currently sells equity-indexed annuities that contain an equity
  return component for policyholders which is an embedded derivative instrument.
  The Company purchases index options, which are also derivative instruments, to
  hedge this equity return component.  The index options are reported at fair
  value in the Company's financial statements, which is in accordance with SFAS
  No. 133 requirements.  The Company also uses a fair value approach in
  recording policy liabilities for the equity-indexed annuities. However, one of
  the more complex and challenging aspects of interpreting and implementing SFAS
  No. 133 is how the insurance industry is to apply the statement's provisions
  to  policy  liabilities  for  equity-indexed  products.    The  Derivative
  Implementation Group of the FASB is in the process of addressing this policy
  liability issue and has only recently released what may ultimately be
  definitive guidance.  The Company is still in the process of reviewing the
  guidance provided by the Derivatives Implementation Group.  The initial review
  indicates that the policy liability methodology is somewhat different from the
  Company's, even though both calculations follow a fair value approach.
  Additional review and system programming will be completed by the Company
  during the fourth quarter of 2000 to determine policy liabilities under the
  new method.  Until this process is completed, the Company is unable to
  determine if there will be any material changes to total policy liabilities
  for its equity-indexed annuities.  As a result, the ultimate implementation of
  SFAS No. 133 could have a significant effect on the Company's results of
  operations.  The Company expects to implement the new statement in the first
  quarter of 2001.
  
  
  FORWARD-LOOKING STATEMENTS
  
  The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
  for forward-looking statements.  Certain information contained herein or in
  other written or oral statements made by or on behalf of National Western Life
  Insurance Company or its subsidiaries are or may be viewed as forward-looking.
  Although the Company has used appropriate care in developing any such
  information, forward-looking information involves risks and uncertainties that
  could significantly impact actual results.  These risks and uncertainties
  include, but are not limited to, matters described in the Company's SEC
  filings such as exposure to market risks, anticipated cash flows or operating
  performance, future capital needs, and statutory or regulatory related issues.
  However, National Western, as a matter of policy, does not make any specific
  projections as to future earnings, nor does it endorse any projections
  regarding future performance that may be made by others.  Whether or not
  actual results differ materially from forward-looking statements may depend on
  numerous foreseeable and unforeseeable events or developments.  Also, the
  Company undertakes no obligation to publicly update or revise any forward-
  looking  statements,  whether  as  a  result  of  new  information,  future
  developments, or otherwise.
  
  
                ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                ABOUT MARKET RISK
  
  
  This information is included in Item 2, Management's Discussion and Analysis
  of Financial Condition and Results of Operations, in the Investments in Debt
  and Equity Securities section.
  
  
                           PART II.  OTHER INFORMATION
  
                            ITEM 1.  LEGAL PROCEEDINGS
  
  
  As more fully described in note 3 to the accompanying financial statements,
  National Western Life Insurance Company's wholly owned subsidiary, The Westcap
  Corporation, has prevailed in an October 13, 2000, decision issued by the
  United States Court of Appeals for the Fifth Circuit, New Orleans, Louisiana.
  The Court of Appeals decision reversed a $51,738,868 judgment entered in 1998
  by the United States District Court for the Southern District of Texas
  (Houston Division) and the United States Bankruptcy Court in Houston in favor
  of The City Colleges of Chicago.  The Appellate Court ruled in favor of The
  Westcap Corporation and determined that there had been no violations by The
  Westcap Corporation of the Texas securities laws.  The Appellate Court
  remanded the case to the U.S. District Court for entry of a new judgment in
  favor of Westcap.  The Appellate decision is subject to further review by the
  Fifth Circuit Court of Appeals upon filed motion for rehearing en banc on
  November 3, 2000, and possible appeal to the United States Supreme Court by
  The City Colleges of Chicago.
  
  The ruling does not affect the consolidated financial statements of National
  Western Life Insurance Company as no liability had been previously accrued for
  the District Court judgment.  However, National Western will be entitled to
  recover a portion of the settlement of the Westcap bankruptcy, but not to
  exceed $600,000, should the Appellate Court decision become final.
  
  
                    ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
  
  
  (a) Exhibits
  
  Exhibit 11    -Computation of Earnings Per Share (filed on pages __
                  and __ of this report).
  
  
  Exhibit 27    -Financial Data Schedule (filed electronically pursuant
                  to Regulation S-K).
  
  (b) Reports on Form 8-K
  
  A report on Form 8-K dated October 13, 2000, was filed by the Company
  disclosing the favorable court decision for the Company's wholly owned
  subsidiary, The Westcap Corporation, as described above in Item 1, Legal
  Proceedings.
  
  
                                    SIGNATURES
  
  Pursuant to the  requirements of the Securities Exchange Act  of 1934, the
  Registrant has duly caused this report to be signed on its behalf  by the
  undersigned thereunto duly authorized.
  
  
                     NATIONAL WESTERN LIFE INSURANCE COMPANY
                                   (Registrant)
  
  
  Date: November 10, 2000                  /S/ Ross R. Moody
                                           Ross R. Moody
                                           President, Chief Operating Officer,
                                           and Director
                                           (Authorized Officer)
  
  
  
  Date: November 10, 2000                  /S/ Robert L. Busby, III
                                           Robert L. Busby, III
                                           Senior Vice President -
                                           Chief Administrative Officer,
                                           Chief Financial Officer and Treasurer
                                           (Principal Financial Officer)
  
  
  
  Date: November 10, 2000                  /S/ Vincent L. Kasch
                                           Vincent L. Kasch
                                           Vice President - Controller
                                           and Assistant Treasurer
                                           (Principal Accounting Officer)
  
  
  
  
                                    EXHIBIT 11
  
             NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                        COMPUTATION OF EARNINGS PER SHARE
              For the Three Months Ended September 30, 2000 and 1999
                                   (Unaudited)
                       (In thousands except per share data)
  
  <TABLE>
  <CAPTION>
  
                                                        2000          1999
  
  <S>                                             <C>                  <C>
  
  Numerator for basic and diluted
  earnings per share:
      Earnings available to common
      stockholders before and after
      assumed conversions:
      Net earnings                                $       9,006        12,586
  
  
  Denominator:
      Basic earnings per share -
      weighted-average shares                             3,502         3,501
  
      Effect of dilutive stock options                       18            27
  
      Diluted earnings per share -
      adjusted weighted-average
      shares for assumed conversions                      3,520         3,528
  
  
  Basic earnings per share:
      Net earnings                                $        2.57          3.60
  
  
  Diluted earnings per share:
      Net earnings                                $        2.56          3.57
  
  
  </TABLE>
  
  
                                    EXHIBIT 11
  
             NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                        COMPUTATION OF EARNINGS PER SHARE
              For the Nine Months Ended September 30, 2000 and 1999
                                   (Unaudited)
                       (In thousands except per share data)
  
  <TABLE>
  <CAPTION>
  
                                                         2000          1999
  
  <S>                                              <C>                  <C>
  
  Numerator for basic and diluted
  earnings per share:
      Earnings available to common stockholders
      before and after assumed conversions:
      Net earnings                                 $       28,932       38,887
  
  Denominator:
      Basic earnings per share -
      weighted-average shares                               3,501        3,499
  
      Effect of dilutive stock options                         18           32
  
      Diluted earnings per share -
      adjusted weighted-average
      shares for assumed conversions                        3,519        3,531
  
  
  Basic earnings per share:
      Net earnings                                 $         8.26        11.11
  
  
  Diluted earnings per share:
      Net earnings                                 $         8.22        11.01
  
  </TABLE>
metadata_filer: {"company-data": {"conformed-name": "NATIONAL WESTERN LIFE INSURANCE CO", "cik": "0000070684", "assigned-sic": "6311", "irs-number": "840467208", "state-of-incorporation": "CO", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "002-17039", "film-number": "768737"}, "business-address": {"street1": "850 E ANDERSON LN", "city": "AUSTIN", "state": "TX", "zip": "78752-1602", "phone": "5128361010"}}
text: UNITED STATES
                        SECURITIES AND EXCHANGE COMMISSION
                              Washington, D.C. 20549
  
                                    FORM 10-Q
  
  [ X  ]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
  
                For the Quarterly Period Ended September 30, 2000
  
  [    ]        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: 2-17039
  
                     NATIONAL WESTERN LIFE INSURANCE COMPANY
              (Exact name of Registrant as specified in its charter)
  
        COLORADO                                     84-0467208
  (State of Incorporation)              (I.R.S. Employer Identification Number)
  
        850 EAST ANDERSON LANE
       AUSTIN, TEXAS 78752-1602                         (512) 836-1010
  (Address of Principal Executive Offices             (Telephone Number)
  
  Indicate by check mark whether the Registrant (1) has filed all reports
  required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
  1934 during the preceding 12 months (or for such shorter period that the
  Registrant was required to file such reports), and (2) has been subject to
  such filing requirements for the past 90 days:
  
  Yes [ X  ]     No  [      ]
  
  As of November 10, 2000, the number of shares of Registrant's common stock
  outstanding was:  Class A - 3,303,155 and Class B - 200,000.
  
             NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                                      INDEX
  
  Part I.  Financial Information:                                        Page
  
  Item 1.  Financial Statements
  
  Condensed Consolidated Balance Sheets
  September 30, 2000 (Unaudited) and December 31, 1999
  
  Condensed Consolidated Statements of Earnings
  For the Three Months Ended September 30, 2000 and 1999 (Unaudited)
  
  Condensed Consolidated Statements of Earnings
  For the Nine Months Ended September 30, 2000 and 1999 (Unaudited)
  
  Condensed Consolidated Statements of Comprehensive Income
  For the Three Months Ended September 30, 2000 and 1999 (Unaudited)
  
  Condensed Consolidated Statements of Comprehensive Income
  For the Nine Months Ended September 30, 2000 and 1999 (Unaudited)
  
  Condensed Consolidated Statements of Stockholders' Equity
  For the Nine Months Ended September 30, 2000 and 1999 (Unaudited)
  
  Condensed Consolidated Statements of Cash Flows
  For the Nine Months Ended September 30, 2000 and 1999 (Unaudited)
  
  Notes to Condensed Consolidated Financial Statements (Unaudited)
  
  Item 2.  Management's Discussion and Analysis of
  Financial Condition and Results of Operations
  
  Item 3.  Quantitative and Qualitative Disclosures About Market Risk
  
  Part II.  Other Information:
  
  Item 1.  Legal Proceedings
  
  Item 6.  Exhibits and Reports on Form 8-K
  
  Signatures
  
  Exhibit 11 - Computation of Earnings per Share
  For the Three Months Ended September 30, 2000 and 1999 (Unaudited)
  
  Exhibit 11 - Computation of Earnings per Share
  For the Nine Months Ended September 30, 2000 and 1999 (Unaudited)
  
                            PART I.  FINANCIAL INFORMATION
  
                            ITEM 1.  FINANCIAL STATEMENTS
  
               NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                                    (In thousands)
  (Unaudited)
                                                   September 30,  December 31,
                    ASSETS                              2000          1999
  Cash and investments:
      Securities held to maturity,
      at amortized cost                           $   2,129,024     2,151,924
      Securities available for sale,
      at fair value                                     723,906       717,948
      Securities held to maturity,
      for possible
      losses ($4,215 and $4,104)                        202,224       183,902
      Policy loans                                      113,953       117,309
      Index options                                      16,277        32,820
      Other long-term investments                        39,765        32,766
      Cash and short-term investments                    11,432        14,010
  
  Total cash and investments                          3,236,581     3,250,679
  
  Deferred policy acquisition costs                     390,043       369,665
  Accrued investment income                              46,452        47,756
  Federal income tax receivable                            -              237
  Deferred Federal income tax asset                       3,058          -
  Other assets                                           21,030        14,491
  
                                                  $   3,697,164     3,682,828
  Note:  The balance sheet at December 31, 1999, has been taken from the audited
  financial statements at that date.
  
  See accompanying notes to condensed consolidated financial statements.
  NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                        CONDENSED CONSOLIDATED BALANCE SHEETS
                         (In thousands except share amounts)
  (Unaudited)
                                                   September 30,  December 31,
        LIABILITIES AND STOCKHOLDERS' EQUITY            2000          1999
  LIABILITIES:
  
  Future policy benefits:
      Traditional life and annuity products       $     160,449       165,020
      Universal life and investment
      annuity contracts                               2,974,022     2,983,060
  Other policyholder liabilities                         27,926        24,103
  Federal income taxes payable:
      Current                                             2,429         4,763
      Deferred                                              -           4,659
  Other liabilities                                      37,455        25,701
  
  Total liabilities                                   3,202,281     3,207,306
  
  COMMITMENTS AND CONTINGENCIES (Note 3)
  
  STOCKHOLDERS' EQUITY:
  
  Common stock:
      Class A - $1 par value; 7,500,000
      shares authorized; 3,302,155
      and 3,300,728 shares issued and
      outstanding in 2000 and 1999                        3,302         3,301
      Class B - $1 par value; 200,000
      shares authorized, issued,
      and outstanding in 2000 and 1999                      200           200
  Additional paid-in capital                             25,090        25,028
  Accumulated other comprehensive loss                  (13,200)       (3,566)
  Retained earnings                                     479,491       450,559
  
  Total stockholders' equity                            494,883       475,522
  
                                                  $   3,697,164     3,682,828
  Note:  The balance sheet at December 31, 1999, has been taken from the audited
  financial statements at that date.
  
  See accompanying notes to condensed consolidated financial statements.
  NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                For the Three Months Ended September 30, 2000 and 1999
                                     (Unaudited)
                       (In thousands except per share amounts)
  2000          1999
  Premiums and other revenue:
      Life and annuity premiums                   $       2,658         2,559
      Universal life and investment
      annuity contract revenues                          23,082        21,131
      Net investment income                              52,829        44,562
      Other income                                          149         8,583
      Realized gains (losses) on investments               (124)          191
  
  Total premiums and other revenue                       78,594        77,026
  
  Benefits and expenses:
      Life and other policy benefits                     10,484         9,654
      Decrease in liabilities for
      future policy benefits                             (1,357)         (941)
      Amortization of deferred policy
      acquisition costs                                  15,009         9,705
      Universal life and investment
      annuity contract interest                          33,701        32,565
      Other operating expenses                            7,112         6,973
  
  Total benefits and expenses                            64,949        57,956
  
  Earnings before Federal income taxes                   13,645        19,070
  
  Provision (benefit) for Federal income taxes:
      Current                                             7,927        (1,136)
      Deferred                                           (3,288)        7,620
  
  Total Federal income taxes                              4,639         6,484
  
  Net earnings                                    $       9,006        12,586
  
  Basic Earnings Per Share:
      Net earnings                                $        2.57          3.60
  
  Diluted Earnings Per Share:
      Net earnings                                $        2.56          3.57
  See accompanying notes to condensed consolidated financial statements.
  NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                    CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
                For the Nine Months Ended September 30, 2000 and 1999
                                     (Unaudited)
                       (In thousands except per share amounts)
  2000          1999
  Premiums and other revenue:
      Life and annuity premiums                   $       7,930         8,351
      Universal life and investment
      annuity contract revenues                          69,369        63,321
      Net investment income                             159,384       167,118
      Other income                                          403         8,860
      Realized gains (losses) on investments             (6,536)        5,869
  
  Total premiums and other revenue                      230,550       253,519
  
  Benefits and expenses:
      Life and other policy benefits                     30,077        26,807
      Decrease in liabilities for
      future policy benefits                             (4,850)       (1,590)
      Amortization of deferred policy
      acquisition costs                                  37,187        29,711
      Universal life and investment
      annuity contract interest                         103,112       118,169
      Other operating expenses                           21,189        21,502
  
  Total benefits and expenses                           186,715       194,599
  
  Earnings before Federal income taxes                   43,835        58,920
  
  Provision (benefit) for
  Federal income taxes:
      Current                                            17,432        11,988
      Deferred                                           (2,529)        8,045
  
  Total Federal income taxes                             14,903        20,033
  
  Net earnings                                    $      28,932        38,887
  
  Basic Earnings Per Share:
      Net earnings                                $        8.26         11.11
  
  Diluted Earnings Per Share:
      Net earnings                                $        8.22         11.01
  See accompanying notes to condensed consolidated financial statements.
  NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                For the Three Months Ended September 30, 2000 and 1999
                                     (Unaudited)
                                    (In thousands)
  2000          1999
  Net earnings                                    $       9,006        12,586
  
  Other comprehensive income (loss),
  net of effects of
  deferred policy acquisition costs and taxes:
      Unrealized gains (losses) on securities:
          Unrealized holding gains (losses)
          arising during period                           2,455        (3,518)
          Reclassification adjustment for
          gains included in net earnings                    (25)         (529)
          Amortization of net unrealized gains
          related to transferred securities                (156)         (114)
  
          Net unrealized gains (losses)
          on securities                                   2,274        (4,161)
  
      Foreign currency translation adjustments              650           335
  
  Other comprehensive income (loss)                       2,924        (3,826)
  
  Comprehensive income                            $      11,930         8,760
  See accompanying notes to condensed consolidated financial statements.
  NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                For the Nine Months Ended September 30, 2000 and 1999
                                     (Unaudited)
                                    (In thousands)
  2000          1999
  Net earnings                                    $      28,932        38,887
  
  Other comprehensive income (loss),
  net of effects of
  deferred policy acquisition costs
  and taxes:
      Unrealized losses on securities:
          Unrealized holding losses
          arising during period                          (5,319)      (15,464)
          Reclassification adjustment for
          losses (gains) included
          in net earnings                                 4,178        (2,577)
          Amortization of net unrealized gains
          related to transferred securities                (335)         (145)
          Unrealized losses on securities
          transferred during period
          from held to maturity to
          available for sale                             (9,166)         -
  
          Net unrealized losses on securities           (10,642)      (18,186)
  
      Foreign currency translation adjustments            1,008           257
  
  Other comprehensive loss                               (9,634)      (17,929)
  
  Comprehensive income                            $      19,298        20,958
  See accompanying notes to condensed consolidated financial statements.
  NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
                For the Nine Months Ended September 30, 2000 and 1999
                                     (Unaudited)
                                    (In thousands)
  2000          1999
  Common stock:
      Balance at beginning of year                $       3,501         3,498
      Shares exercised under stock option plan                1             3
  
  Balance at end of period                                3,502         3,501
  
  Additional paid-in capital:
      Balance at beginning of year                       25,028        24,899
      Shares exercised under stock option plan               62           129
  
  Balance at end of period                               25,090        25,028
  
  Accumulated other comprehensive
  income (loss):
       Unrealized gains (losses)
       on securities:
          Balance at beginning of year                   (6,412)       16,000
          Change in unrealized
          losses during period                          (10,642)      (18,186)
  
          Balance at end of period                      (17,054)       (2,186)
  
      Foreign currency translation adjustments:
          Balance at beginning of year                    2,846         2,634
          Change in translation adjustments
          during period                                   1,008           257
  
          Balance at end of period                        3,854         2,891
  
  Accumulated other comprehensive
  income (loss) at end of period                        (13,200)          705
  
  Retained earnings:
      Balance at beginning of year                      450,559       391,334
      Net earnings                                       28,932        38,887
  
  Balance at end of  period                             479,491       430,221
  
  Total stockholders' equity                      $     494,883       459,455
  See accompanying notes to condensed consolidated financial statements.
  NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                   CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
                For the Nine Months Ended September 30, 2000 and 1999
                                     (Unaudited)
                                    (In thousands)
  2000          1999
  Cash flows from operating activities:
      Net earnings                                $      28,932        38,887
      Adjustments to reconcile net
      earnings to net cash
      from operating activities:
      Universal life and investment
      annuity contract interest                         103,112       118,169
      Surrender charges and other
      policy revenues                                   (33,597)      (29,131)
      Realized losses (gains) on investments              6,536        (5,869)
      Accrual and amortization of
      investment income                                  (3,492)       (3,761)
      Depreciation and amortization                         816           735
      Decrease in insurance receivables
      and other assets                                      305         6,309
      Decrease (increase) in accrued
      investment income                                   1,304          (976)
      Increase in deferred policy
      acquisition costs                                  (8,503)      (18,795)
      Decrease in liability for
      future policy benefits                             (4,850)       (1,590)
      Increase (decrease) in other
      policyholder liabilities                            3,823          (536)
      Decrease in Federal income taxes payable           (3,840)       (4,067)
      Increase (decrease) in other liabilities           11,754       (25,342)
      Decrease in value of index options                 15,961        12,039
      Other                                                (582)         (364)
  
  Net cash provided by operating activities             117,679        85,708
  
  Cash flows from investing activities:
      Proceeds from sales of:
         Securities held to maturity                       -             -
         Securities available for sale                   15,167        50,897
         Other investments                               22,546        15,910
      Proceeds from maturities and
      redemptions of:
         Securities held to maturity                     24,215        59,573
         Securities available for sale                   31,971        46,808
      Purchases of:
         Securities held to maturity                    (64,815)     (178,121)
         Securities available for sale                  (20,935)     (115,600)
         Other investments                              (29,114)      (31,679)
      Principal payments on mortgage loans               13,068        36,113
      Cost of mortgage loans acquired                   (30,949)      (29,315)
      Decrease in policy loans                            3,356         7,155
      Decrease in assets of
      discontinued operations                              -               48
      Decrease in liabilities of
      discontinued operations                              -              (48)
      Other                                              (6,831)         (982)
  
  Net cash used in investing activities                 (42,321)     (139,241)
  (Continued on next page)
  NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
              CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
                For the Nine Months Ended September 30, 2000 and 1999
                                     (Unaudited)
                                    (In thousands)
  2000          1999
  Cash flows from financing activities:
      Deposits to account balances for
      universal life
      and investment annuity contracts            $     274,336       310,217
      Return of account balances
      on universal life
      and investment annuity contracts                 (352,335)     (277,433)
      Issuance of common stock under
      stock option plan                                      63           132
  
  Net cash provided by (used
  in) financing activities                              (77,936)       32,916
  
  Net decrease in cash and
  short-term investments                                 (2,578)      (20,617)
  Cash and short-term investments
  at beginning of year                                   14,010        24,508
  
  Cash and short-term investments
  at end of period                                $      11,432         3,891
  See accompanying notes to condensed consolidated financial statements.
  NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                     (Unaudited)
  
  (1)  BASIS OF PRESENTATION
  
  The accompanying condensed consolidated financial statements include the
  accounts of National Western Life Insurance Company  and its  wholly owned
  subsidiaries  (the  Company),  The  Westcap  Corporation  (Westcap),  NWL
  Investments, Inc., NWL Properties, Inc., NWL 806 Main, Inc., NWL Services,
  Inc., and NWL Financial, Inc.  The Westcap Corporation ceased brokerage
  operations during 1995 and filed for reorganization under Chapter 11 of the
  U.S. Bankruptcy Code in 1996.  The bankruptcy reorganization was completed in
  January, 1999, and National Western retained 100% continuing ownership of the
  reorganized subsidiary.  As a result, The Westcap Corporation is reflected as
  discontinued operations in the accompanying financial statements for portions
  of 1999 and prior years.  Westcap is currently operating as a real estate
  management company.  All significant intercorporate transactions and accounts
  have been eliminated in consolidation.
  
  In the opinion of  the Company, the accompanying consolidated financial
  statements contain all adjustments necessary to present fairly the financial
  position of the Company as of September 30, 2000,  and  the  results of its
  operations for the three months and nine months ended September 30, 2000 and
  1999, and its cash flows for the nine months ended September 30, 2000 and
  1999.  The results of operations for the three months and nine months ended
  September 30, 2000 and 1999 are not necessarily indicative of the results to
  be expected  for the full year.
  
  (2) STOCKHOLDERS' EQUITY
  
  (A) Changes in Common Stock Shares Outstanding
  
  Details of changes in shares of common stock outstanding are provided below:
  Nine Months Ended September 30,
                                                       2000         1999
                                                       (In thousands)
  Common stock shares outstanding:
     Shares outstanding at beginning of year           3,501         3,498
     Shares exercised under stock option plan              1             3
  
  Shares outstanding at end of period                  3,502         3,501
  (B)  Dividends
  
  The Company paid no cash dividends on common stock during the nine months
  ended September 30, 2000 and 1999.
  
  (3) LEGAL PROCEEDINGS
  
  On March 28, 1994, the Community College District No. 508, County of Cook and
  State of Illinois (The City Colleges) filed a complaint in the United States
  District Court for the Northern District of Illinois, Eastern Division,
  against National Western Life Insurance Company (the Company or National
  Western) and subsidiaries of The Westcap Corporation (Westcap), a wholly owned
  subsidiary of the Company.  The suit sought rescission of securities purchase
  transactions by The City Colleges from Westcap between September 9, 1993, and
  November 3, 1993, alleged compensatory damages, punitive damages, injunctive
  relief, declaratory relief, fees, and costs.  National Western was named as a
  "controlling person" of the Westcap defendants.  In the meantime, Westcap
  filed Chapter 11 bankruptcy, and The City Colleges filed a claim in the
  bankruptcy court against Westcap.  The claim was tried before the bankruptcy
  court, and in September, 1997, a $56,173,000 judgment was entered against
  Westcap favorable to The City Colleges.  Westcap  appealed this decision to
  the United States District Court for the Southern District of Texas (Houston
  Division).  On July 24, 1998, the District Court affirmed the orders of the
  bankruptcy court with respect to their underlying conclusion that Westcap was
  liable to The City Colleges under the Texas Securities Act, but the Court
  vacated the orders and remanded them to the bankruptcy court to determine the
  correct amount of damages in a manner consistent with the Court's opinion and
  the Texas Securities Act.  The bankruptcy court on November 16, 1998, entered
  an order allowing  a  claim  of  The  City  Colleges  against  the  Westcap
  estate  of $51,738,868.  Westcap appealed the bankruptcy court's and District
  Court's judgment to the United States Court of Appeals for the Fifth Circuit,
  New Orleans, Louisiana. Westcap prevailed in this appeal in an October 13,
  2000, decision by the Appellate Court which reversed the $51,738,868 judgment
  entered in 1998 by the District Court and the bankruptcy court in favor of
  The City Colleges.  The Appellate Court ruled in favor of Westcap and
  determined that there had been no violations by Westcap of the Texas
  securities laws.  The Appellate Court remanded the case to the District Court
  for entry of a new judgment in favor of Westcap.  The Appellate decision is
  subject to further review by the Fifth Circuit Court of Appeals upon filed
  motion for rehearing en banc on November 3, 2000, and possible appeal to the
  United States Supreme Court by The City Colleges.
  
  The ruling does not affect the consolidated financial statements of National
  Western Life Insurance Company as no liability had been previously accrued for
  the District Court judgment.  However, National Western will be entitled to
  recover a portion of the settlement of the Westcap bankruptcy, but not to
  exceed $600,000, should the Appellate Court decision become final. While
  Westcap is a wholly owned subsidiary of the Company, the Company is not a
  party to the bankruptcy or the judgment against Westcap by the bankruptcy
  court or the United States District Court.  The lawsuit of The City Colleges
  against the Company was stayed in September, 1994, pending resolution of
  The City Colleges' claim against Westcap.  Following the judgment against
  Westcap in the bankruptcy court, on December 2, 1997, the stay was lifted
  by the United States District Court in Illinois, and The City Colleges filed
  an amended complaint seeking to hold the Company liable for the claim allowed
  in the bankruptcy court against Westcap under the "control person" provision
  of the Texas Securities Act.  The suit seeks approximately $56 million plus
  fees and costs.  The maximum sought by The City Colleges will be determined
  by the final amount allowed The City Colleges in the Westcap bankruptcy
  appeal discussed above.  The Company filed jurisdictional and venue motions
  to have the case transferred to the United States District Court for the
  Western District of Texas, which motions were agreed to by the Plaintiff,
  and the case is now pending in the United States District Court for the
  Western District of Texas, where the parties have engaged in discovery
  activities.  The case is awaiting the final outcome of the Westcap bankruptcy
  appeal discussed above.  If the current decision of the Fifth Circuit Court of
  Appeals in the bankruptcy case becomes final, the Company will move to
  dismiss the City Colleges case.  Otherwise, the Company believes it has
  reasonable and adequate defenses to the suit.  Although the alleged
  damages, if sustained, would be material to the Company's financial
  statements, a reasonable estimate of any actual losses which may result
  from the suit cannot be made at this time.  Accordingly, no provision for
  any liability that may result from this suit has been recognized in National
  Western's financial statements.
  
  (4) SEGMENT AND OTHER OPERATING INFORMATION
  
  The Company's reportable operating segments include domestic life insurance,
  international life insurance, and annuities. These segments are organized
  based on product types and geographic marketing areas.  A summary of segment
  information for the three and nine months ended September 30, 2000 and 1999 is
  provided below.
  
  Selected Segment Information:
  Domestic International
                        Life        Life                    All
                      Insurance  Insurance   Annuities    Others      Totals
                                           (In thousands)
  September 30,
  2000:
  Selected Balance
  Sheet Items:
  Deferred policy
   acquisition
   costs             $   73,821      76,350     239,872        -        390,043
  Total segment
   assets               403,336     383,636   2,843,253      42,851   3,673,076
  Future policy
   benefits             319,319     297,756   2,517,396        -      3,134,471
  Other
   policyholder
   liabilities            9,442       7,929      10,555        -         27,926
  
  Three Months
  Ended
  September 30,
  2000:
  Condensed
  Income
  Statements:
  Premiums and
   contract
   revenues          $    5,609      11,654       8,477        -         25,740
  Net investment
   income                 6,607       5,693      39,936         593      52,829
  Other income                3           8          84          54         149
   Total revenues        12,219      17,355      48,497         647      78,718
  Policy benefits         4,125       4,955          47        -          9,127
  Amortization of
   deferred
   policy
   acquisition
   costs                  1,357       3,540      10,112        -         15,009
  Universal life
   and investment
   annuity
   contract
   interest               2,459       3,981      27,261        -         33,701
  Other operating
   expenses               1,980       2,036       2,729         367       7,112
  Federal income
   taxes                    782         967       2,839          94       4,682
   Total expenses        10,703      15,479      42,988         461      69,631
  Segment earnings   $    1,516       1,876       5,509         186       9,087
  
  Nine Months Ended
  September 30,
  2000:
  Condensed Income
   Statements:
  Premiums and
   contract
   revenues          $   17,546      33,362      26,391        -         77,299
  Net investment
   income                19,642      17,112     119,278       3,352     159,384
  Other income               25          37         287          54         403
   Total revenues        37,213      50,511     145,956       3,406     237,086
  Policy benefits        12,323      12,749         155        -         25,227
  Amortization of
   deferred
   policy
   acquisition
   costs                  3,555      10,491      23,141        -         37,187
  Universal life
   and investment
   annuity
   contract
   interest               7,099      11,867      84,146        -        103,112
  Other operating
   expenses               6,363       6,079       8,140         607      21,189
  Federal income
   taxes                  2,687       3,182      10,366         955      17,190
   Total expenses        32,027      44,368     125,948       1,562     203,905
  Segment earnings   $    5,186       6,143      20,008       1,844      33,181
  Selected Segment Information:
  Domestic International
                        Life        Life                    All
                      Insurance  Insurance   Annuities    Others      Totals
                                           (In thousands)
  September 30,
  1999:
  Selected Balance
  Sheet Items:
  Deferred policy
   acquisition
   costs             $   71,207      75,765     209,268        -        356,240
  Total segment
   assets               406,900     374,964   2,786,552      36,140   3,604,556
  Future policy
   benefits             323,374     289,023   2,486,952        -      3,099,349
  
  Other
   policyholder
   liabilities            9,185       7,196       7,038        -         23,419
  
  Three Months
  Ended
  September 30,
  1999:
  Condensed Income
  Statements:
  Premiums and
   contract
   revenues          $    6,194      11,075       6,421        -         23,690
  Net investment
   income                 6,318       5,484      32,335         425      44,562
  Other income              (35)        (21)      8,639        -          8,583
   Total revenues        12,477      16,538      47,395         425      76,835
  Policy benefits         3,194       4,663         856        -          8,713
  Amortization of
   deferred
   policy
   acquisition
   costs                  1,222       2,872       5,611        -          9,705
  Universal life
   and investment
   annuity
   contract
   interest               2,430       3,503      26,632        -         32,565
  Other operating
   expenses               1,965       2,073       2,935        -          6,973
  Federal income
   taxes                  1,245       1,164       3,864         144       6,417
   Total expenses        10,056      14,275      39,898         144      64,373
  Segment earnings   $    2,421       2,263       7,497         281      12,462
  
  Nine Months Ended
  September 30, 1999:
  Condensed Income
  Statements:
  Premiums and
   contract
   revenues          $   18,474      31,819      21,379        -         71,672
  Net investment
   income                18,996      16,387     129,095       2,640     167,118
  Other income               32          32       8,796        -          8,860
   Total revenues        37,502      48,238     159,270       2,640     247,650
  Policy benefits        11,894      13,070         253        -         25,217
  Amortization of
   deferred
   policy
   acquisition
   costs                  3,614       9,434      16,663        -         29,711
  Universal life
   and investment
   annuity
   contract
   interest               7,315      10,397     100,457        -        118,169
  Other operating
   expenses               6,784       6,476       8,242        -         21,502
  Federal income
   taxes                  2,676       3,003      11,407         893      17,979
   Total expenses        32,283      42,380     137,022         893     212,578
  Segment earnings   $    5,219       5,858      22,248       1,747      35,072
  Reconciliations of segment information to the Company's consolidated financial
  statements are provided below:
  Three Months Ended         Nine Months Ended
                                 September 30,              September 30,
                               2000         1999         2000         1999
                                              (In thousands)
  Premiums and Other
  Revenue:
  Premiums and
  contract revenues       $     25,740       23,690       77,299       71,672
  Net investment income         52,829       44,562      159,384      167,118
  Other income                     149        8,583          403        8,860
  Realized gains
  (losses) on
  investments                     (124)         191       (6,536)       5,869
  
  Total consolidated
   premiums
   and other revenue      $     78,594       77,026      230,550      253,519
  Three Months Ended         Nine Months Ended
                                 September 30,              September 30,
                               2000         1999         2000         1999
                                              (In thousands)
  Federal Income Taxes:
  Total segment
  Federal income taxes     $     4,682        6,417       17,190       17,979
  Taxes (benefits)
   on realized
   gains (losses)
   on investments                  (43)          67       (2,287)       2,054
  
  Total consolidated
   Federal income taxes    $     4,639        6,484       14,903       20,033
  Three Months Ended         Nine Months Ended
                                 September 30,              September 30,
                               2000         1999         2000         1999
                                              (In thousands)
  Net Earnings:
  Total segment earnings   $     9,087       12,462       33,181       35,072
  Realized gains
   (losses) on
   investments, net
   of taxes                        (81)         124       (4,249)       3,815
  
  Total consolidated
   net earnings            $     9,006       12,586       28,932       38,887
  September 30,
                                            2000          1999
                                              (In thousands)
  Assets:
  Total segment assets                $   3,673,076     3,604,556
  Other unallocated assets                   24,088        21,653
  
  Total consolidated assets           $   3,697,164     3,626,209
  ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
                   OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
  
  GENERAL
  
  National Western Life Insurance Company is a life insurance company, chartered
  in the State of Colorado in 1956, and doing business in forty-three states and
  the District of Columbia. The Company also accepts applications from and
  issues policies to residents of various Central and South American, Caribbean,
  and Pacific Rim countries.  A distribution of the Company's direct premium
  revenues and deposits by domestic and international markets is provided below:
  Nine Months Ended September 30,
                                               2000          1999
  United States domestic market:
       Investment annuities                     77.0%         80.8%
       Life insurance                            6.3           6.1
  
  Total domestic market                         83.3          86.9
  
  International market:
       Investment annuities                      2.8           0.9
       Life insurance                           13.9          12.2
  
  Total international market                    16.7          13.1
  
  Total direct premiums collected              100.0%        100.0%
  Insurance Operations - Domestic
  
  The Company's domestic operations concentrate marketing efforts on federal
  employees, seniors, and specific employee groups in private industry, as well
  as individual sales.  The products marketed are annuities, universal life
  insurance, and traditional life insurance, which includes both term and whole
  life products.  The majority of products sold are the Company's annuities,
  which include single and flexible premium deferred annuities, single premium
  immediate annuities, and equity-indexed annuities.  Most of these annuities
  can be sold as tax qualified or nonqualified products.
  
  National Western markets and distributes its domestic products primarily
  through independent marketing organizations (IMOs).   These IMOs assist the
  Company in recruiting, contracting, and supervising agents.  The Company
  currently has over 80 IMOs contracted for sales of life and annuity products.
  
  Insurance Operations - International
  
  The Company's international operations focus marketing efforts on foreign
  nationals in upper socioeconomic classes with substantial financial resources.
  Insurance sales are on insureds from countries in Central and South America,
  the Caribbean, and the Pacific Rim.  Policy sales on insureds from numerous
  countries in these different regions provides diversification that helps to
  minimize large fluctuations in sales that can occur due to various economic,
  political, and competitive pressures that may occur from one country to
  another.  Products sold in the international market are almost entirely
  universal life and traditional life insurance products.  However, certain
  annuity and investment contracts are also available in this market.
  
  International sales production is from broker-agents, many of whom have been
  selling National Western products for 20 or more years.  The Company continues
  to expand its sales networks in specifically targeted South American and
  Pacific Rim countries which have higher growth potential than other countries.
  
  There are inherent risks of conducting international business that are not
  present within the domestic market.  The risks involved with international
  business are reduced substantially by the Company in several ways.  As
  previously described, the Company focuses its marketing efforts on a specific
  niche group, which is foreign nationals in upper socioeconomic classes who
  have substantial financial resources.  This targeted customer base coupled
  with National Western's conservative, yet competitive, underwriting practices
  have historically resulted in claims experience similar to that in the United
  States.  The Company also minimizes exposure to foreign currency risks, as
  almost all foreign policies require payment of premiums and claims in United
  States dollars.  Finally, the Company's experience in the international market
  and its strong broker-agent relationships, which in many cases exceed 20
  years, help minimize risks and problems when selling products to foreign
  nationals.
  
  INVESTMENTS IN DEBT AND EQUITY SECURITIES
  
  Investment Philosophy
  
  The Company's investment philosophy is to maintain a diversified portfolio of
  investment grade debt and equity securities that provide adequate liquidity to
  meet policyholder obligations and other cash needs.  The prevailing strategy
  within this philosophy is the intent to hold investments in debt securities to
  maturity. However, the Company manages its portfolio, which entails monitoring
  and reacting to all components which affect changes in the price, value, or
  credit rating of investments in debt and equity securities.
  
  Investments in debt and equity securities are classified and reported as
  either securities held to maturity or securities available for sale.  The
  Company does not maintain a portfolio of trading securities.  The reporting
  category chosen for the Company's securities investments depends on various
  factors including the type and quality of the particular security and how it
  will be incorporated into the Company's overall asset/liability management
  strategy.  At September 30, 2000, approximately 25.8% of the Company's total
  debt  and  equity  securities,  based  on  fair  values,  were  classified  as
  securities available for sale.  These holdings provide flexibility to the
  Company to react to market opportunities and conditions and to practice active
  management  within  the  portfolio  to  provide  adequate  liquidity  to  meet
  policyholder obligations and other cash needs.
  
  Securities the Company purchases with the intent to hold to maturity are
  classified as securities held to maturity. Because the Company has strong cash
  flows and matches expected maturities of assets and liabilities, the Company
  has the ability to hold the securities, as it would be unlikely that forced
  sales of securities would be required prior to maturity to cover payments of
  liabilities. As a result, securities held to maturity are carried at amortized
  cost less declines in value that are other than temporary. However, certain
  situations may change the Company's intent to hold a particular security to
  maturity, the most notable of which is a deterioration in the issuer's
  creditworthiness. Accordingly, a security may be sold to avoid a further
  decline in realizable value when there has been a significant change in the
  credit risk of the issuer.
  
  Securities that are not classified as held to maturity are reported as
  securities available for sale. These securities may be sold if market or other
  measurement factors change unexpectedly after the securities are acquired. For
  example, opportunities arise that allow the Company to improve the performance
  and credit quality of the investment portfolio by replacing an existing
  security with an alternative security while still maintaining an appropriate
  matching of expected maturities of assets and liabilities. Examples of such
  improvements are as follows: improving the yield earned on invested assets,
  improving the credit quality, changing the duration of the portfolio, and
  selling securities in advance of anticipated calls or other prepayments.
  Securities  available  for  sale  are  reported  in  the  Company's  financial
  statements at fair value. Any unrealized gains or losses resulting from
  changes in the fair value of the securities are reflected in accumulated other
  comprehensive income.
  
  As an integral part of its investment philosophy, the Company performs an
  ongoing process of monitoring the creditworthiness of issuers within the
  investment portfolio.  Review procedures are also performed on securities that
  have had significant declines in fair value. The Company's objective in these
  circumstances is to determine if the decline in fair value is due to changing
  market expectations regarding inflation and general interest rates or other
  factors.  Additionally, the Company closely monitors financial, economic, and
  interest rate conditions to manage prepayment and extension risks in its
  mortgage-backed securities portfolio.
  
  The Company's overall conservative investment philosophy is reflected in the
  allocation of its investments which is detailed below as of September 30, 2000
  and  December  31,  1999.    The  Company  emphasizes  investment  grade  debt
  securities, with smaller holdings in mortgage loans and real estate.
  Percent of Investments
                                         September 30,    December 31,
                                             2000            1999
  Debt securities                             87.7%           87.8%
  Mortgage loans                               6.2             5.7
  Policy loans                                 3.5             3.6
  Index options                                0.5             1.0
  Equity securities                            0.5             0.5
  Real estate                                  0.4             0.4
  Other                                        1.2             1.0
  
  Totals                                     100.0%          100.0%
  Portfolio Analysis
  
  The Company maintains a diversified debt securities portfolio which consists
  of various types of fixed income securities including primarily corporate,
  mortgage-backed   securities,   and   public   utilities.   Investments   in
  mortgage-backed  securities  include  primarily  U.S.  government  agency
  pass-through securities and collateralized mortgage obligations (CMOs).
  
  An important aspect of the Company's investment philosophy is managing the
  credit quality of its investments in debt securities.  Thorough credit
  analysis  is  performed  on  existing  and  potential  corporate  investments
  including examination of a company's credit and industry outlook, financial
  strength, effectiveness of management, and event risks.  In the past few
  years, credit analysis has become one of the most critical activities of the
  Company's portfolio management.
  
  National Western continues to follow its conservative investment philosophy by
  minimizing its holdings of  below investment grade debt securities, as these
  securities generally have greater default risk than higher rated corporate
  debt. These issuers usually are more sensitive to adverse industry or economic
  conditions than are investment grade issuers. The Company's holdings of below
  investment grade debt securities, which are lower than industry averages, are
  summarized below.
  Below Investment
                                        Grade Debt Securities
                                                                      % of
                           Amortized     Carrying      Market      Invested
                             Cost         Value        Value        Assets
                                  (In thousands except percentages)
  September 30, 2000    $    103,652       76,586       73,929          2.4%
  
  December 31, 1999     $     73,607       70,900       63,864          2.2%
  
  December 31, 1998     $     46,453       44,974       45,317          1.4%
  Although National Western purchases only investment grade debt securities, a
  growing number of companies have become more leveraged due to an environment
  of heightened acquisition activity and large share repurchase programs.
  Therefore, continued monitoring of credit quality after the purchase of a
  company's debt securities is crucial in order for National Western to maintain
  a high quality portfolio with a low percentage of below investment grade debt
  securities.  While the Company's holdings of below investment grade debt
  securities remain low, these holdings have increased from $44,974,000 at
  December 31, 1998, to $76,586,000 at September 30, 2000.  This increase is due
  to downgrades of investment grade debt securities as opposed to purchases of
  such holdings.  Historically, the Company's strong credit risk management and
  commitment to quality has resulted in minimal defaults in the debt securities
  portfolio.
  
  During the third and fourth quarters of 1999, the Company recorded permanent
  impairment writedowns totaling $4,403,000 related to two separate securities.
  The writedowns were reflected as realized losses.  One of these securities was
  classified as available for sale and the other as held to maturity.  The
  Company subsequently transferred the held to maturity holding to securities
  available for sale during the first quarter of 2000.  Subsequently, three
  additional debt securities experienced significant credit deterioration.  As a
  result  of  the  significant  deterioration  of  the  issuing  companies'
  creditworthiness, National Western also transferred these three securities
  from held to maturity to available for sale during the first quarter of 2000.
  Amortized cost, net of writedowns, of the four transferred securities totaled
  $49,528,000.  Unrealized losses resulting from recording the securities at
  fair value, before effects of taxes and deferred policy acquisitions costs,
  totaled $20,376,000.  Upon the transfers, the unrealized losses were recorded
  as a component of accumulated other comprehensive loss.
  
  During the second quarter of 2000, an additional below investment grade debt
  security, which the Company has been monitoring closely due to credit
  deterioration, defaulted on its interest payment.  Based on the current
  condition of the issuing company, complete recovery of National Western's
  investment in this security is not expected.  As a result, the Company
  recorded  a  permanent  impairment  writedown  for  this  security  totaling
  $6,715,000 during the quarter ended June 30, 2000 and also transferred the
  security from held to maturity to available for sale.  The writedown was
  recorded as a realized investment loss.  Amortized cost, net of writedowns, of
  this  security  totaled  $8,250,000  and  unrealized  losses  resulting  from
  recording the security at fair value, before the effects of taxes and deferred
  policy  acquisition  costs,  totaled  $4,000,000.    Upon  the  transfer,  the
  unrealized  losses  were  recorded  as  a  component  of  accumulated  other
  comprehensive loss.  Reductions to investment income due to this security
  totaled $734,000 for the nine months ended September 30, 2000.
  
  The Company is closely monitoring the previously described securities as well
  as its other below investment grade holdings.  While additional losses are not
  currently anticipated based on the existing status and condition of these
  securities, continued credit deterioration of some securities is possible,
  which may result in further writedowns.
  
  Although there is loss exposure related to its below investment grade debt
  securities, the Company is firmly committed to minimizing credit risks and
  maintaining a high quality portfolio.  This commitment is reflected in the
  high average credit rating of the Company's portfolio.  In the table below,
  investments in debt securities are classified according to credit ratings by
  Standard  and  Poor's  (S&P),  a  nationally  recognized  statistical  rating
  organization (NRSRO).  If securities were not rated by S&P, the equivalent
  rating of another NRSRO or the National Association of Insurance Commissioners
  was used.
  September 30,    December 31,
                                                2000            1999
  AAA and U.S. government                         28.2%           28.7%
  AA                                               8.0             8.8
  A                                               33.8            34.1
  BBB                                             27.3            25.9
  BB and other below investment grade              2.7             2.5
  
                                                 100.0%          100.0%
  Another important part of the Company's investment philosophy is managing the
  cash flow stability of the portfolio.  Because expected maturities of
  securities  may  differ  from  contractual  maturities  due  to  prepayments,
  extensions, and calls, the Company takes steps to manage and minimize these
  risks.  The Company reduced its exposure to prepayment and extension risks by
  lowering its holdings of mortgage-backed securities.  This strategy began in
  1994 when mortgage-backed securities totaled 47.6% of the entire portfolio,
  but at September 30, 2000, totaled only 20.0% which is comparable to the life
  insurance industry average.  The majority of this reduction has been achieved
  by shifting investments into corporate securities and public utilities, as
  these holdings have increased from 47.0% at December 31, 1994 to 69.7% at
  September 30, 2000.  Also, most of these additions have been noncallable
  corporates, which help reduce prepayment and call risks.
  
  As indicated above, the Company's holdings of mortgage-backed securities are
  also subject to prepayment risk, as well as extension risk.  Both of these
  risks are addressed by specific portfolio management strategies.  The Company
  has substantially reduced both prepayment and extension risks by investing
  primarily in collateralized mortgage obligations, which have more predictable
  cash flow patterns than pass-through  securities.  These securities, known as
  planned amortization class I (PAC I) CMOs, are designed to amortize in a more
  predictable manner than other CMO classes or pass-throughs.  Using this
  strategy, the Company can more effectively manage and reduce prepayment and
  extension risks, thereby helping to maintain the appropriate matching of the
  Company's assets and liabilities.
  
  As of September 30, 2000, CMOs represent approximately 93% of the Company's
  mortgage-backed securities. The CMOs in the Company's portfolio have been
  modeled and subjected to detailed, comprehensive analysis by the Company's
  investment staff.  The overall structure of the CMO as well as the individual
  tranche being considered for purchase have been evaluated to ensure that the
  security fits appropriately within the Company's investment philosophy and
  asset/liability management parameters.  The Company's investment mix between
  mortgage-backed securities and other fixed income securities helps effectively
  balance prepayment, extension, and credit risks.
  
  At  September  30,  2000,  the  Company's  debt  and  equity  securities  were
  classified as follows:
  Fair        Amortized      Unrealized
                                        Value          Cost       Gains (Losses)
                                                  (In thousands)
  Securities held to maturity:
      Debt securities                $   2,077,757     2,129,024       (51,267)
  Securities available for sale:
      Debt securities                      707,892       762,448       (54,556)
      Equity securities                     16,014        12,669         3,345
  
  Totals                             $   2,801,663     2,904,141      (102,478)
  As detailed above, debt securities classified as held to maturity comprise the
  majority of the Company's securities portfolio, while equity securities are a
  small component of the portfolio.  Unrealized losses totaling $102,478,000 on
  the securities portfolio at September 30, 2000, are a reflection of market
  conditions at quarter-end.  The fair values, or market values, of fixed income
  debt  securities  generally  correlate  to  external  market  interest  rate
  conditions.  Because the interest rates are fixed on almost all of the
  Company's debt securities, market values typically increase when market
  interest  rates  decline,  and  decrease  when  market  interest  rates  rise.
  However, market values may fluctuate for other reasons, such as changing
  economic conditions or increasing event-risk concerns.  An analysis of the
  change in unrealized gains and losses on the Company's securities portfolio
  for the quarter ended September 30, 2000, is detailed below:
  Change in
                                     Unrealized Gains (Losses)      Unrealized
                                          At             At       Gains (Losses)
                                     September 30,    June 30,      During 3rd
                                         2000           2000       Quarter 2000
                                                   (In thousands)
  Securities held to maturity:
      Debt securities              $      (51,267)       (75,295)       24,028
  Securities available for sale:
      Debt securities                     (54,556)       (59,846)        5,290
      Equity securities                     3,345          3,315            30
  
  Totals                           $     (102,478)      (131,826)       29,348
  While unrealized losses did decrease during the third quarter of 2000 as
  reflected above, unrealized losses at September 30, 2000, have still increased
  13% from year-end 1999.  Unrealized losses have increased for the year even
  though market interest rates of the ten year U.S. Treasury bond actually
  decreased approximately 64 basis points during this nine month period.  With
  lower market interest rates, it would be expected that market values of debt
  securities would be higher.  However, market values actually decreased over
  the nine months ended September 30, 2000, because of the substantial widening
  of the yield premium for corporate bonds over comparable Treasury securities.
  Approximately 70% of National Western's bond portfolio consists of corporate
  bonds, including public utilities.  The increase of the yield premium has
  primarily been event-risk driven as companies increase their leverage through
  stock buyback programs and acquisitions.  Because the majority of the
  Company's debt securities are classified as held to maturity, which are
  recorded at amortized cost, changes in market values have had relatively small
  effects on the Company's financial statements.
  
  Changes in fair values of securities due to changes in market interest rates
  is an example of market risk.  Market risk is the risk of change in market
  values of financial instruments due to changes in interest rates, currency
  exchange rates, commodity prices, or equity prices.  The most significant
  market risk exposure for National Western is interest rate risk. The Company
  manages interest rate risk through on-going cash flow testing required for
  insurance regulatory purposes. Computer models are used to perform cash flow
  testing under various commonly used stress test interest rate scenarios to
  determine if existing assets would be sufficient to meet projected liability
  outflows.  Management strives to closely match the durations of its assets and
  liabilities.   Sensitivity analysis allows the Company to measure the
  potential gain or loss in fair value of its interest-sensitive instruments and
  to seek to protect its economic value and achieve a predictable spread between
  what is earned on invested assets and what is paid on liabilities.  The
  Company seeks to minimize the impact of interest risk through surrender
  charges that are imposed to discourage policy surrenders.  Interest rate
  changes can be anticipated and risk may be limited due to management actions
  regarding asset and liability instruments.  However, potential changes in the
  values of financial instruments indicated by hypothetical interest changes
  will likely be different from actual changes experienced, and the differences
  may be material.
  
  The Company's market risk-sensitive assets include debt securities, equity
  securities which are almost entirely preferred stocks, mortgage loans, policy
  loans, and index options.  The Company does not maintain a securities trading
  portfolio.  Market risk-sensitive liabilities include policy liabilities for
  deferred  and  immediate  investment  annuity  contracts  and  supplemental
  contracts.  Sensitivity analysis expresses the potential gain or loss in fair
  value, over a selected time period, from one or more selected hypothetical
  changes in interest rates which are reasonably possible in the near term.  The
  Company performed detailed sensitivity analysis at December 31, 1999, for its
  interest rate-sensitive assets.  Based on the recent changes in market
  conditions in the first nine months of 2000, the changes in market values of
  the Company's debt securities fell somewhat outside the expected range of
  results of this analysis.  The deviation from the expected results was due to
  the volatility in the corporate bond market as previously described above.
  
  In addition to the securities described above, the Company invests in index
  options which are derivative financial instruments used to hedge the equity
  return component of the Company's equity-indexed annuities.  The values of
  these options are primarily impacted by equity price risk, as the options'
  fair values are dependent on the performance of the S&P 500 Composite Stock
  Price Index.  However, increases or decreases in investment returns from these
  options are substantially offset by corresponding increases or decreases in
  amounts paid to equity-indexed annuity policyholders, subject to minimum
  guaranteed policy interest rates.
  
  The Company's market risk liabilities, which include policy liabilities for
  investment annuity and supplemental contracts, are managed for interest rate
  risk through cash flow testing as previously described.  As part of this cash
  flow testing, the Company has analyzed the potential impact on net earnings of
  both a 100 basis point increase and decrease in the U.S. Treasury yield curve
  as of December 31, 1999.  A 100 basis point interest rate decline would
  decrease net earnings for 2000 by approximately $300,000, based on the
  Company's projections.  A 100 basis point increase in interest rates would
  increase net earnings by approximately $200,000, based on the Company's
  projections.  These estimated impacts to earnings are net of tax effects
  determined at a tax rate of 35% and are also net of the estimated effects of
  deferred policy acquisition costs.
  
  The Company has modeled these scenarios, as a change in market interest rates
  could pose potential risks to the current profitability levels of this
  business.  These movements in interest rates are also reasonably possible
  near-term scenarios given the current interest rate environment.  The risks
  from such changes are primarily due to changes in interest rate spreads, which
  are the differences between investment income earned and credited interest
  paid to policyholders.  Also, the changes in interest rates can effect the
  level of surrenders and timing of cash flows related to policy liabilities.
  
  The above-described scenarios produce estimated changes in cash flows as well
  as cash flow reinvestment projections.  Estimated cash flows in the Company's
  model assume cash flow reinvestments which are representative of the Company's
  current  investment  strategy.    Calls  and  prepayments  include  scheduled
  maturities and those expected to occur which would benefit the security
  issuers.  Assumed policy surrenders consider differences and relationships
  between credited interest rates and market interest rates as well as surrender
  charges on individual policies.  The impact to earnings also includes the
  expected effects on amortization of deferred policy acquisition costs.  The
  model considers only investment annuity and supplemental contracts in-force at
  December 31, 1999, and does not consider new product sales or the possible
  impact of interest rate changes on sales.
  
  MORTGAGE LOANS AND REAL ESTATE
  
  Investment Philosophy
  
  In general, the Company seeks loans on high quality, income producing
  properties such as shopping centers, freestanding retail stores, office
  buildings, industrial and sales or service facilities, selected apartment
  buildings, motels, and health care facilities.  The location of these loans is
  typically  in  growth  areas  that  offer  a  potential  for  property  value
  appreciation.  These growth areas are found primarily in major metropolitan
  areas, but occasionally in selected smaller communities.
  
  The Company seeks to minimize the credit and default risk in its mortgage loan
  portfolio  through  strict  underwriting  guidelines  and  diversification  of
  underlying property types and geographic locations.   In addition to being
  secured by the property, mortgage loans with leases on the underlying property
  are often guaranteed by the lessee, in which case the Company approves the
  loan based on the credit strength of the lessee.  This approach has resulted
  in higher quality mortgage loans with fewer defaults.
  
  The Company's direct investments in real estate are not a significant portion
  of its total investment portfolio.  Many of these investments were acquired
  through mortgage loan foreclosures.  However, the Company also participates in
  several real estate joint ventures and limited partnerships.  The joint
  ventures  and  partnerships  invest  primarily  in  income-producing  retail
  properties.    These  investments  have  typically  enhanced  the  Company's
  investment portfolio returns.
  
  Portfolio Analysis
  
  The Company held net investments in mortgage loans totaling $202,224,000 and
  $183,902,000, or 6.2% and 5.7% of total invested assets, at September 30,
  2000,  and  December  31,  1999,  respectively.  The  loans  are  real  estate
  mortgages, substantially all of which are related to commercial properties and
  developments and have fixed interest rates.
  
  The diversification of the mortgage loan portfolio by geographic regions of
  the United States and by property type as of September 30, 2000, and December
  31, 1999, was as follows:
  September 30,    December 31,
  Geographic Region:                         2000            1999
  West South Central                          53.9%           58.8%
  Mountain                                    23.8            20.5
  Pacific                                     10.7            11.0
  South Atlantic                               4.5             5.1
  East South Central                           3.8             4.2
  Other                                        3.3             0.4
  
  Totals                                     100.0%          100.0%
  September 30,    December 31,
  Property Type:                             2000            1999
  Retail                                      61.1%           56.1%
  Office                                      24.0            27.4
  Hotel/Motel                                  6.3             7.2
  Land/Lots                                    3.2             2.5
  Nursing Homes                                2.0             2.4
  Apartment                                    1.0             1.6
  Other                                        2.4             2.8
  
  Totals                                     100.0%          100.0%
  As of September 30, 2000, the allowance for possible losses on mortgage loans
  was $4,215,000.  Additions to the allowance of $111,000 were made for the
  three and nine months ended September 30, 2000, and were reflected as realized
  losses on investments in the accompanying financial statements.  Although
  management believes that the current balance is adequate, future additions to
  the allowance may be necessary based on changes in economic conditions,
  particularly in the West South Central region which includes Texas, Louisiana,
  Oklahoma, and Arkansas, as this area contains the highest concentrations of
  the Company's mortgage loans.
  
  The Company currently places all loans past due three months or more on
  nonaccrual status, thus recognizing no interest income on the loans.  The
  Company had mortgage loan principal balances on nonaccrual status totaling
  $3,012,000 and $3,014,000 at September 30, 2000 and December 31, 1999,
  respectively.  Also, the Company will at times restructure mortgage loans
  under certain conditions which may involve changes in interest rates, payment
  terms, or other modifications.  For the nine months ended September 30, 2000,
  the reductions in interest income due to nonaccrual and restructured mortgage
  loans were approximately $232,000.  For the nine months ended September 30,
  1999, the reductions in interest income due to nonaccrual and restructured
  mortgage loans were not significant.
  
  The Company owns real estate that was acquired through foreclosure and through
  direct investment totaling $12,047,000 and $11,388,000 at September 30, 2000,
  and December 31, 1999, respectively.  This small concentration of properties
  represents less than one percent of the Company's entire investment portfolio.
  The real estate holdings consist primarily of income-producing properties
  which are being operated by the Company.  The Company recognized operating
  income on these properties of approximately $588,000 and $698,000 for the nine
  months ended September 30, 2000 and 1999.  Also during the first nine months
  of 2000 and 1999, the Company sold real estate properties resulting in
  realized gains on investments totaling $255,000 and  $1,419,000, respectively.
  
  The Company monitors the conditions and market values of these properties on a
  regular basis.  No significant realized losses were recognized due to declines
  in values of properties for the nine months ended September 30, 2000 and 1999,
  respectively.  The Company makes repairs and capital improvements to keep the
  properties in good condition and will continue this maintenance as needed.
  
  RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
  
  Consolidated Operations
  
  Summary of Consolidated Operating Results
  
  A summary of operating results for the three months ended September 30, 2000
  and 1999 is provided below:
  Three Months Ended September 30,
                                                      2000           1999
                                            (In thousands except per share data)
  Revenues:
  Revenues, excluding realized
  investment gains (losses)
  and index options                           $        85,020        89,886
  Index options                                        (6,302)      (13,051)
  Realized gains (losses)
  on investments                                         (124)          191
  
  Total revenues                              $        78,594        77,026
  
  Earnings:
  Earnings from operations                    $         9,087        12,462
  Net realized gains (losses)
  on investments                                          (81)          124
  
  Net earnings                                $         9,006        12,586
  
  Basic Earnings Per Share:
  Earnings from operations                    $          2.59          3.56
  Net realized gains (losses)
  on investments                                        (0.02)         0.04
  
  Net earnings                                $          2.57          3.60
  
  Diluted Earnings Per Share:
  Earnings from operations                    $          2.58          3.53
  Net realized gains (losses)
  on investments                                        (0.02)         0.04
  
  Net earnings                                $          2.56          3.57
  Consolidated Operating Results:  Earnings from operations, excluding net
  realized gains and losses on investments, totaled $9,087,000 for the quarter
  ended September 30, 2000, compared to $12,462,000 for the third quarter of
  1999.  Earnings for the current quarter were affected by the Company's annuity
  business.  Although slowing in the third quarter, the Company has experienced
  higher policy surrenders for certain annuity products in 2000.  As a result,
  amortization of deferred policy acquisition costs was higher this quarter
  primarily due to effects from the Company's periodic refinements to its
  actuarial assumptions.  Although to a lesser extent, earnings for the quarter
  ended September 30, 2000, were also lower due to reductions in investment
  income and higher universal life and annuity contract interest expenses.
  
  Earnings from operations for the comparable 1999 third quarter included two
  significant items.  The Company experienced a decrease in 1999 third quarter
  earnings of over $5 million from equity-indexed annuity business due to
  significant volatility and declines in the S&P 500 Index.  Equity-indexed
  annuities combine features associated with traditional fixed annuities with an
  option to have interest rates linked in part to an equity index, the S&P 500
  Index.  The second significant item affecting third quarter 1999 earnings was
  the resolution of pending litigation which resulted in additional income to
  the Company totaling $5,513,000, net of taxes.  While there continues to be
  significant volatility and declines in the S&P 500 Index during 2000,
  including the third quarter, the financial impact on the Company's equity-
  indexed annuity business was significantly less than the comparable 1999 third
  quarter.
  
  Revenues  for  the  quarters  ended  September  30,  2000  and  1999  totaled
  $78,594,000 and $77,026,000, respectively.  Excluding index option revenues,
  realized investment gains and losses, and nonrecurring litigation settlement
  income,  third  quarter  2000  revenues  totaled  $85,020,000  compared  to
  $81,404,000.  This reflects revenue growth of 4.4% over comparable 1999
  quarterly results.
  
  The Company recorded realized losses on investments, net of taxes, totaling
  $81,000 for the quarter ended September 30, 2000, compared to gains of
  $124,000 for the third quarter of 1999.  The loss in the third quarter of 2000
  is primarily due to additions to the allowances for mortgage loan losses
  totaling $111,000.  The 1999 gains were primarily from sales of investments in
  debt securities, net of permanent impairment adjustments for debt securities
  and mortgage loans.
  
  Universal Life and Investment Annuity Contract Revenues: Contract revenues
  increased during the quarter ended September 30, 2000 totaling $23,082,000
  compared to $21,131,000 for the comparable 1999 period.  This increase of over
  9.2% is primarily due to higher annuity surrender charge income.  Surrenders
  for single-tier annuities were significantly higher during the third quarter
  of 2000.
  
  Net Investment Income:  Net investment income increased 18.6% from the third
  quarter of 1999, primarily due to increases in fair values of index options
  used to hedge the equity return component of the Company's equity-indexed
  annuity product. The index options, which act as hedges to match closely the
  returns on the S&P 500 Index, are reported at fair value in the accompanying
  financial statements. The changes in the values of the index options and the
  credited interest on policyholder liabilities for equity-indexed annuities are
  both reflected in the statement of earnings.  Although there was an increase
  in index option fair values in the 2000 third quarter compared to the same
  period of 1999, value changes for these options still reduced investment
  income in both periods.  The reductions to investment income from index
  options for the quarters ended September 30, 2000 and 1999 totaled $6,302,000
  and $13,051,000, respectively.  The significant reductions are directly
  attributable to the volatility and declines in the S&P 500 Index.  While net
  investment income decreased due to these options, these reductions were
  partially offset by lower annuity contract interest expense as the credited
  return on the Company's equity-indexed annuities are also based on the same
  S&P 500 Index.  Investment income from mortgage loans has increased from
  $3,821,000 for the third quarter of 1999 to $4,695,000 for the comparable 2000
  quarter.  This increase is consistent with the 20% increase in mortgage loans
  from September 30, 1999 to September 30, 2000.  A detail of net investment
  income is provided below:
  Three Months Ended September 30,
                                                      2000           1999
                                                         (In thousands)
  Investment income:
      Debt securities                         $       51,712         51,347
      Mortgage loans                                   4,695          3,821
      Policy loans                                     2,056          2,024
      Index options                                   (6,302)       (13,051)
      Other investment income                          1,144          1,034
  
  Total investment income                             53,305         45,175
  Investment expenses                                    476            613
  
  Net investment income                       $       52,829         44,562
  Life and Other Policy Benefits: Policy benefits in the third quarter of 2000
  increased 8.6% over the 1999 third quarter.  The higher expenses were
  primarily due to increases totaling $307,000 and $483,000 in life insurance
  benefit claims and surrenders of traditional products, respectively.  However,
  much  of  the  increase  in  traditional  surrender  expense  was  offset  by
  corresponding  decreases  in  liabilities  for  future  policy  benefits.    A
  comparative detail of life and other policy benefits is provided below:
  Three Months Ended September 30,
                                                    2000           1999
                                                       (In thousands)
  Life insurance benefit claims             $        6,813          6,506
  Surrenders of traditional products                 3,341          2,858
  Other policy benefits                                330            290
  
  Totals                                    $       10,484          9,654
  Amortization of Deferred Policy Acquisition Costs:  Amortization of deferred
  policy acquisition costs was significantly higher in 2000 totaling $15,009,000
  compared to $9,705,000 in 1999.  These expenses represent the amortization of
  the costs of acquiring or producing new business, which consists primarily of
  agents' commissions.  As described in more detail in the annuity operations
  section, amortization was higher primarily relating to higher annuity policy
  surrenders during 2000.
  
  Universal Life and Investment Annuity Contract Interest:  The Company closely
  monitors its credited interest rates, taking into consideration such factors
  as profitability goals, policyholder benefits, product marketability, and
  economic market conditions.  Rates are established or adjusted after careful
  consideration and evaluation of these factors against established objectives.
  As market interest rates fluctuate, the Company's credited interest rates are
  often adjusted accordingly, while also taking into consideration other factors
  as described above.  Contract interest totaled $33.7 million and $32.6 million
  for the quarters ended September 30, 2000 and 1999, respectively.
  
  Federal Income Taxes:  Federal income taxes include no unusual items as
  effective tax rates for the quarters ended September  30, 2000 and 1999 were
  both 34.0%.
  
  Segment Operations
  
  Summary of Segment Earnings
  
  A summary of segment earnings for the quarters ended September 30, 2000 and
  1999 is provided below.  The segment earnings exclude realized gains and
  losses on investments, net of taxes.
  Domestic International
                        Life        Life                    All
                      Insurance  Insurance   Annuities    Others      Totals
                                           (In thousands)
  Segment earnings:
  
  September 30,
   2000               $   1,516       1,876       5,509         186       9,087
  
  September 30,
   1999               $   2,421       2,263       7,497         281      12,462
  Domestic Life Insurance Operations
  
  The Company's domestic life insurance operations concentrate marketing efforts
  on federal employees, seniors, and specific employee groups in private
  industry, as well as individual sales.  The products marketed are universal
  life insurance and traditional life insurance, which includes both term and
  whole life products.  National Western markets and distributes its domestic
  products primarily through independent agents and brokers and independent
  marketing  organizations  (IMOs).    The  IMOs  also  assist  the  Company  in
  recruiting,  contracting,  and  supervising  agents  as  well  as  providing
  additional financial resources for product marketing.  Geographically, the
  domestic life insurance operations market products in most of the United
  States, which encompasses 43 states and the District of Columbia.  The states
  in which the Company does not conduct business are primarily in the northeast
  and include Connecticut, Delaware, Massachusetts, New Hampshire, New Jersey,
  New York, and Vermont.
  
  Earnings for the domestic life insurance operating segment were $1,516,000 and
  $2,421,000  for  the  three  months  ended  September  30,  2000  and  1999,
  respectively.  The decrease in earnings in 2000 is primarily due to lower
  premiums and contract revenues and higher policy benefits.
  
  A comparative analysis of results of operations for the Company's domestic
  life insurance segment is detailed below:
  Three Months Ended September 30,
  Domestic Life Insurance Operations:              2000           1999
                                                     (In thousands)
  Premiums and other revenue:
      Premiums and contract revenues        $        5,609          6,194
      Net investment income                          6,607          6,318
      Other income                                       3            (35)
  
  Total premiums and other revenue                  12,219         12,477
  
  Benefits and expenses:
      Policy benefits                                4,125          3,194
      Amortization of deferred
      policy acquisition costs                       1,357          1,222
      Universal life insurance
      contract interest                              2,459          2,430
      Other operating expenses                       1,980          1,965
  
  Total benefits and expenses                        9,921          8,811
  
  Segment earnings before
  Federal income taxes                               2,298          3,666
  
  Federal income taxes                                 782          1,245
  
  Segment earnings                          $        1,516          2,421
  Revenues from domestic life insurance operations include life insurance
  premiums on traditional type products and revenues from universal life
  insurance.  The Company's current marketing efforts focus more on universal
  life insurance, and, as a result, revenues from these products continue to
  increase over traditional products.  Revenues from traditional products are
  simply premiums collected, while revenues from universal life insurance
  consist of policy charges for the cost of insurance, policy administration
  fees, and surrender charges assessed during the period.  A comparative detail
  of premiums and contract revenues is provided below:
  Three Months Ended September 30,
                                                    2000          1999
                                                      (In thousands)
  Universal life insurance:
      Cost of insurance                     $       3,048         2,993
      Surrender charges                               413           416
      Policy fees and other revenues                  333           535
  Traditional life insurance premiums               1,815         2,250
  
  Totals                                    $       5,609         6,194
  Actual universal life insurance deposits collected for the quarters ended
  September 30, 2000 and 1999 are detailed below.  Deposits collected on these
  nontraditional products are not reflected as revenues in the Company's
  statements  of  earnings,  as  they  are  recorded  directly  to  policyholder
  liabilities upon receipt, in accordance with generally accepted accounting
  principles. While the Company did experience higher collected deposits in the
  first two quarters of 2000, deposits were down in the third quarter primarily
  due to lower first year premiums.
  Three Months Ended September 30,
                                                    2000           1999
                                                      (In thousands)
  Universal life insurance:
      First year and single premiums       $           599         1,626
      Renewal premiums                               3,388         3,614
  
  Totals                                   $         3,987         5,240
  Policy benefits were higher in the third quarter of 2000 totaling $4,125,000
  compared to $3,194,000 for the comparable 1999 period. The increase is due to
  higher surrenders of traditional products net of related changes in policy
  liabilities.  Life insurance benefit claims were relatively consistent between
  quarters.
  
  Universal life insurance contract interest remained relatively constant at
  $2,459,000 in 2000 compared to $2,430,000 in 1999.  This is consistent with
  the relative stable to declining size of this block of business.
  
  International Life Insurance Operations
  
  The Company's international life insurance operations focus marketing efforts
  on foreign nationals in upper socioeconomic classes with substantial financial
  resources.  Insurance sales are primarily on insureds from countries in
  Central and South America, the Caribbean, and the Pacific Rim.  Policy sales
  on insureds from numerous countries in these different regions provides
  diversification that helps to minimize large fluctuations in sales that can
  occur due to various economic, political, and competitive pressures that may
  occur from one country to another.  Products sold in the international market
  include both universal life and traditional life insurance products.  The
  Company minimizes exposure to foreign currency risks, as almost all foreign
  policies require payment of premiums and claims in United States dollars.
  Sales production from the international market is from independent broker-
  agents, many of whom have been selling National Western products for 20 or
  more years.
  
  Earnings  for  the  international  life  insurance  operating  segment  were
  $1,876,000 and $2,263,000 for the quarters ended September 30, 2000 and 1999,
  respectively.  Earnings in 2000 were somewhat lower due to higher amortization
  of deferred policy acquisition costs and contract interest, partially offset
  by increases in premiums and contract revenues.
  
  A  comparative  analysis  of  results  of  operations  for  the  Company's
  international life insurance segment is detailed below:
  Three Months Ended September 30,
                                                    2000           1999
                                                       (In thousands)
  International Life Insurance Operations:
  
  Premiums and other revenue:
      Premiums and contract revenues         $       11,654         11,075
      Net investment income                           5,693          5,484
      Other income                                        8            (21)
  
  Total premiums and other revenue                   17,355         16,538
  
  Benefits and expenses:
      Policy benefits                                 4,955          4,663
      Amortization of deferred policy
      acquisition costs                               3,540          2,872
      Universal life insurance contract
      contract interest                               3,981          3,503
      Other operating expenses                        2,036          2,073
  
  Total benefits and expenses                        14,512         13,111
  
  Segment earnings before Federal income
  income taxes                                        2,843          3,427
  
  Federal income taxes                                  967          1,164
  
  Segment earnings                           $        1,876          2,263
  As with domestic operations, revenues from the international life insurance
  segment include both premiums on traditional type products and revenues from
  universal life insurance.  The international operations' marketing efforts are
  also focused more on universal life insurance, and, as a result, revenues from
  these products continue to increase over traditional products.  Cost of
  insurance revenues continue to increase as the international block of business
  grows.   A comparative detail of premiums and contract revenues is provided
  below:
  Three Months Ended September 30,
                                                   2000           1999
                                                     (In thousands)
  Universal life insurance:
      Cost of insurance                     $        7,772         7,406
      Surrender charges                              2,091         2,330
      Policy fees and other revenues                   964         1,050
  Traditional life insurance premiums                  827           289
  
  Totals                                    $       11,654        11,075
  Actual universal life insurance deposits collected for the quarters ended
  September 30, 2000 and 1999 are detailed below.  Deposits collected on these
  nontraditional products are not reflected as revenues in the Company's
  statements  of  earnings,  as  they  are  recorded  directly  to  policyholder
  liabilities upon receipt, in accordance with generally accepted accounting
  principles.
  Three Months Ended September 30,
                                                  2000           1999
                                                     (In thousands)
  Universal life insurance:
      First year and single premiums       $        3,638          3,618
      Renewal premiums                              9,868          9,783
  
  Totals                                   $       13,506         13,401
  Life insurance benefit claims, which are reflected in policy benefits for
  segment reporting purposes, were slightly higher in 2000 at $3,532,000
  compared to $3,324,000 in 1999. Mortality claims fluctuate from period to
  period and these deviations, which can at times be significant, are not
  uncommon in the life insurance industry.  Over extended periods of time,
  higher claims experience tends to be offset by periods of lower claims
  experience.  Additionally, the Company utilizes reinsurance to help minimize
  its exposure to adverse mortality experience.  The Company's general policy is
  to reinsure amounts in excess of $200,000 on the life of any one individual.
  
  Amortization of deferred policy acquisition costs increased $668,000 from
  $2,872,000 in 1999 to $3,540,000 in 2000.  These expenses represent the
  amortization of the costs of acquiring or producing new business, which
  consists primarily of agents' commissions.  The majority of such costs are
  amortized in direct relation to the anticipated future gross profits of the
  applicable blocks of business.
  
  Universal life insurance contract interest increased from $3,503,000 in 1999
  to $3,981,000 in 2000.  The increase in contract interest is consistent with
  growth in the universal life insurance business.
  
  Annuity Operations
  
  The Company's annuity operations are almost exclusively in the United States.
  Like the Company's domestic life insurance operations, annuities are marketed
  in 43 states and the District of Columbia using independent agents, brokers,
  and  independent  marketing  organizations  (IMOs).  For  most  of  these
  organizations, annuity sales are much more significant and are the primary
  focus of their business operations.  Although some of the Company's annuities
  are available in the international market, current sales are insignificant to
  total annuity sales.
  
  Annuities sold include single and flexible premium deferred annuities, single
  premium immediate annuities, and equity-indexed annuities.  These products can
  be tax qualified or nonqualified annuities.  In recent years the majority of
  annuities sold have been nonqualified deferred annuities.  The Company also
  continues to collect additional premiums on existing two-tier annuities, as a
  large portion of the two-tier block of business is flexible premium annuities
  on which renewal premiums continue to be collected.  However, the Company has
  not sold two-tier annuities since 1992.
  
  Earnings for the annuity operating segment were $5,509,000 and $7,497,000 for
  the quarters ended September 30, 2000 and 1999, respectively.  Earnings for
  2000 were down from 1999 primarily due to higher amortization of deferred
  policy acquisition costs, but offset significantly by higher net investment
  income, higher premium and contract revenues, and lower traditional policy
  benefits.  Third quarter 1999 earnings were affected by several significant
  items which substantially offset each other.  Results for the 1999 third
  quarter  include  higher  income  from  a  litigation  settlement,  offset  by
  decreases in surrender charge revenues and lower earnings from the Company's
  equity-indexed annuity business.
  
  A comparative analysis of results of operations for the Company's annuity
  segment is detailed below:
  Three Months Ended September 30,
                                                     2000           1999
                                                      (In thousands)
  Annuity Operations:
  
  Premiums and other revenue:
      Premiums and contract revenues         $        8,477          6,421
      Net investment income                          39,936         32,335
      Other income                                       84          8,639
  
  Total premiums and other revenue                   48,497         47,395
  
  Benefits and expenses:
      Policy benefits                                    47            856
      Amortization of deferred
      policy acquisition costs                       10,112          5,611
      Annuity contract interest                      27,261         26,632
      Other operating expenses                        2,729          2,935
  
  Total benefits and expenses                        40,149         36,034
  
  Segment earnings before
  Federal income taxes                                8,348         11,361
  
  Federal income taxes                                2,839          3,864
  
  Segment earnings                           $        5,509          7,497
  Revenues from annuity operations include primarily surrender charges and
  recognition of deferred revenues relating to immediate or payout annuities.
  Annuitizations result in transfers of policies from deferred to immediate or
  payout status.  The deferred revenues related to these annuities are amortized
  into income during the payout period.  Surrender charge revenues were up 42%
  in 2000 compared to 1999 due to increases in surrender charges primarily from
  single-tier  annuities.  Although actual policy surrenders for two-tier
  annuities were basically stable, policy surrenders for single-tier annuities
  were abnormally high increasing 51% in the third quarter of 2000 from the
  comparable period of 1999. Although slowing in the third quarter, the Company
  has also experienced higher annuity policy surrenders in the first and second
  quarters of 2000.  A comparative detail of the components of premiums and
  annuity contract revenues is provided below.
  Three Months Ended September 30,
                                                   2000            1999
                                                      (In thousands)
  Surrender charges:
     Two-tier annuities                      $        3,109           3,088
     Single-tier annuities                            3,888           1,826
  
  Total surrender charges                             6,997           4,914
  Payout annuity and other revenues                   1,464           1,487
  Traditional annuity premiums                           16              20
  
  Totals                                     $        8,477           6,421
  Actual annuity deposits collected for the quarters ended September 30, 2000
  and 1999 are detailed below.  Deposits collected on these nontraditional
  products are not reflected as revenues in the Company's statements of
  earnings, as they are recorded directly to policyholder liabilities upon
  receipt, in accordance with generally accepted accounting principles.
  Three Months Ended September 30,
                                                  2000          1999
                                                    (In thousands)
  Deferred annuities:
      Equity-indexed                        $      21,669        33,572
      Other                                        52,938        50,271
  
  Total deferred annuities                         74,607        83,843
  Immediate annuities                               5,940         9,457
  
  Totals                                    $      80,547        93,300
  Although total annuity deposits for the quarter ended September 30, 2000, were
  lower than the comparable 1999 period, the decline is primarily attributable
  to equity-indexed annuities.  While sales have been lower in 2000, equity-
  indexed  annuities  are  a  major  portion  of  the  Company's  total  annuity
  production.  The Company's equity-indexed annuities are flexible premium
  deferred annuities which combine the features associated with traditional
  fixed annuities, with the option to have interest rates that are linked in
  part to an equity index, the S&P 500 Index.  These annuities are long-term
  contracts designed as planning vehicles for retirement security.  These
  annuities are attractive to customers, as they have guaranteed minimum
  interest rates, coupled with the potential for significantly higher returns
  based on an equity index component.  Also, because the Company does not offer
  variable products or mutual funds, these products provide a key equity-based
  alternative to the Company's existing fixed annuity products.  In conjunction
  with the sale of these annuities, the Company uses an investment hedging
  program to offset the potential higher returns that could be paid on these
  products.  Specifically, the Company purchases index options from highly rated
  banks and brokerage firms.  These index options act as hedges to match closely
  the returns based on the S&P 500 Index which may be paid to policyholders.
  
  Sales of equity-indexed annuities began declining during the year ended
  December 31, 1999, primarily due to volatility in the stock market.  This
  volatility affects both the immediate demand for these annuities and the
  pricing of these products.  Increased product costs from stock market
  volatility, particularly costs of index options used to hedge the equity
  return component of these annuities, can reduce potential credited interest to
  policyholders.  The lower production level has continued in the first nine
  months of 2000, which is consistent with volatility in the stock market.
  
  Net investment income for annuity operations for the third quarters of 2000
  and 1999 totaled $39,936,000 and $32,335,000, respectively.  Declines in fair
  values of index options resulted in reductions to net investment income
  totaling $6,302,000 and $13,051,000 for the quarters ended September 30, 2000
  and 1999.  These significant declines are directly attributable to the
  declines in the S&P 500 Index over the same periods.  While net investment
  income was lower due to these options, these reductions were partially offset
  by lower annuity contract interest expense as the credited interest on the
  Company's equity-indexed annuities are also based on the same S&P 500 Index.
  The  correlation  of  investment  income  with  annuity  contract  expense  is
  explained in more detail below.
  
  Amortization of deferred policy acquisition costs represents the amortization
  of the costs of acquiring or producing new business, primarily agents'
  commissions, the majority of which are amortized in direct relation to the
  anticipated future gross profits of the applicable blocks of business.
  Amortization is also impacted by the level of policy surrenders.  Amortization
  for 2000 and 1999 was $10,112,000 and $5,611,000, respectively.  The increase
  in amortization is related to increases in annuity surrenders.  Although
  slowing in the third quarter, the Company has experienced higher policy
  surrenders for certain annuity products in 2000.  As a result, amortization of
  deferred policy acquisition costs was higher this quarter primarily due to
  effects from the Company's periodic refinements to its actuarial assumptions.
  
  Annuity contract interest was $27,261,000 in 2000 compared to $26,632,000 in
  1999.  Contract interest amounts can be affected significantly by the
  Company's equity-indexed annuities which have interest rates that are linked
  in part to the S&P 500 Index.  The substantial decline of the S&P 500 Index in
  the third quarter of 1999 resulted in lower interest credited to equity-
  indexed annuity contracts.  However, primarily because of policy liability
  reserving  treatments  related  to  minimum  guaranteed  interest  rates,  the
  reduction in annuity contract interest expense was much less than the decline
  in net investment income.
  
  Differences between income from index options and contract interest credited
  to policyholders will occur for several reasons, some of which may only be
  timing differences between the recognition of income and expenses.  One reason
  is the costs of the index options are essentially amortized against net
  investment income as the options are marked to fair value each reporting
  period.  The costs of options are covered by additional income earned on debt
  securities purchased with equity-indexed annuity premiums. Other differences
  are  due  to  asset  fees  charged  against  policyholder  contract  interest,
  surrenders and death benefits on annuities within the annual hedging period,
  and inherent differences between index option fair values and policy liability
  reserving treatments related to minimum guaranteed interest rates.
  
  The impact of these equity-indexed annuity issues decreased annuity operations
  earnings by over $5 million, net of taxes, for the third quarter of 1999.  The
  Company's  equity-indexed  annuity  products  are  long-term  policies  with
  contractual periods of either nine or fifteen years. The Company routinely
  analyzes the profitability of its equity-indexed annuity products under
  numerous economic scenarios, including both positive and negative equity
  market conditions.  Although earnings may not be level or constant for this
  product due to timing of market conditions and policy liability reserving
  methods,  the  Company  anticipates  the  equity-indexed  annuities  will  be
  profitable over the long-term contractual periods of the policies.
  
  Although annuity operations earnings were significantly lower due to its
  equity-indexed annuity business for the third quarter of 1999, the Company
  recorded  nonrecurring  income  resulting  from  a  lawsuit  settlement  that
  essentially offset the lower earnings.  As a result of the litigation
  settlement,  which  involved  an  independent  marketing  organization  under
  contract with the Company, accrued commission liabilities were released by the
  Company in the quarter ended September 30, 1999, resulting in additional other
  income of $8,482,000, or $5,513,000, net of taxes.
  
  Other Operations
  
  Earnings for other operations totaled $186,000 and $281,000 for the third
  quarters of 2000 and 1999, respectively. While National Western's primary
  business encompasses its domestic and international life insurance operations
  and its annuity operations, the Company also has small real estate, nursing
  home, and other investment operations through the following wholly owned
  subsidiaries: NWL Investments, Inc., NWL Properties, Inc., NWL 806 Main, Inc.,
  NWL Services, Inc., and NWL Financial, Inc.  Also, during January, 1999, the
  Company's wholly owned subsidiary, The Westcap Corporation, completed its
  Chapter 11 bankruptcy reorganization.  With the reorganization complete,
  National Western transferred its investment real estate holdings totaling
  approximately $11,589,000 to Westcap and the subsidiary is now operating as a
  real estate management company.
  
  RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
  
  Consolidated Operations
  
  Summary of Consolidated Operating Results
  
  A summary of operating results for the nine months ended September 30, 2000
  and 1999 is provided below:
  Nine Months Ended September 30,
                                                      2000            1999
                                           (In thousands except per share data)
  Revenues:
  Revenues, excluding realized
  investment gains (losses)
  and index options                          $       257,603        253,174
  Index options                                      (20,517)        (5,524)
  Realized gains
  (losses) on investments                             (6,536)         5,869
  
  Total revenues                             $       230,550        253,519
  
  Earnings:
  Earnings from operations                   $        33,181         35,072
  Net realized gains
  (losses) on investments                             (4,249)         3,815
  
  Net earnings                               $        28,932         38,887
  
  Basic Earnings Per Share:
  Earnings from operations                   $          9.47          10.02
  Net realized gains
  (losses) on investments                              (1.21)          1.09
  
  Net earnings                               $          8.26          11.11
  
  Diluted Earnings Per Share:
  Earnings from operations                   $          9.43           9.93
  Net realized gains
  (losses) on investments                              (1.21)          1.08
  
  Net earnings                               $          8.22          11.01
  Consolidated Operating Results:  For the nine months ended September 30, 2000,
  earnings  from  operations,  excluding  net  realized  gains  and  losses  on
  investments, totaled $33,181,000 compared to $35,072,000 for the same period
  of 1999.  This 5.4% decrease in earnings is largely attributable to higher
  amortization of deferred policy acquisition costs as previously described for
  the quarter ended September 30, 2000.  However, these higher costs were
  substantially offset by an increase in universal life and investment annuity
  contract revenues of 9.6% for the nine months ended September 30, 2000, over
  the comparable 1999 period.  Additionally, while life insurance benefit claims
  were significantly higher in the first nine months of 2000, this increase was
  largely mitigated by reductions in traditional policy liabilities.
  
  The Company recorded realized losses on investments, net of taxes, totaling
  $4,249,000 for the nine months ended September 30, 2000, compared to gains of
  $3,815,000 for the first nine months of 1999.  The losses in 2000 are
  primarily due to a permanent impairment writedown for a specific debt security
  which defaulted during the second quarter.  The Company's policy is to record
  an impairment writedown when a decline in value is other than temporary and
  full recovery of the investment costs is not expected.  Overall, the Company's
  debt securities portfolio remains high quality with small holdings of below
  investment grade securities.  The 1999 gains were primarily from sales and
  calls of investments in debt securities totaling $2,662,000, net of taxes.
  Also included in 1999 was a net gain totaling $922,000 from the sale of
  investment real estate owned by one of National Western's subsidiaries,  NWL
  806 Main, Inc.
  
  As previously described for the three months ended September 30, 1999, equity-
  indexed annuity issues decreased net earnings by over $5 million in 1999.
  Also affecting year-to-date 1999 earnings was the resolution of pending
  litigation which resulted in additional other income to the Company totaling
  $8,482,000, or $5,513,000 net of taxes.
  
  As previously reported, the bankruptcy reorganization of the Company's wholly
  owned subsidiary,  The Westcap Corporation, was completed in the first quarter
  of 1999.  Pursuant to the reorganization plan, National Western retained 100%
  continuing ownership of the reorganized Westcap and the subsidiary is now
  operating as a real estate management company.  No losses were reported for
  discontinued brokerage operations in the nine months ended September 30, 1999,
  as the entire $14,125,000 settlement payment was accrued and reported as a
  loss in the third quarter of 1998.
  
  Segment Operations
  
  Summary of Segment Earnings
  
  A summary of segment earnings for the nine months ended September 30, 2000 and
  1999 is provided below.  The segment earnings exclude realized gains and
  losses on investments, net of taxes.
  Domestic International
                        Life        Life                    All
                      Insurance  Insurance   Annuities    Others      Totals
                                           (In thousands)
  Segment
  earnings:
  
  September 30,
   2000            $    5,186       6,143      20,008       1,844      33,181
  
  September 30,
   1999            $    5,219       5,858      22,248       1,747      35,072
  Domestic Life Insurance Operations
  
  Earnings for the domestic life insurance operating segment were $5,186,000 and
  $5,219,000  for  the  nine  months  ended  September  30,  2000  and  1999,
  respectively.  While premiums and contract revenues were lower and policy
  benefits were higher for the nine months ended September 30, 2000, these
  negative impacts to earnings were substantially reduced by increases in net
  investment income and lower other operating expenses.  These balancing
  fluctuations resulted in the relatively comparable net earnings between 2000
  and 1999.
  
  A comparative analysis of results of operations for the Company's domestic
  life insurance segment is detailed below:
  Nine Months Ended September 30,
                                                    2000           1999
                                                      (In thousands)
  Domestic Life Insurance Operations:
  
  Premiums and other revenue:
      Premiums and contract revenues         $       17,546         18,474
      Net investment income                          19,642         18,996
      Other income                                       25             32
  
  Total premiums and other revenue                   37,213         37,502
  
  Benefits and expenses:
      Policy benefits                                12,323         11,894
      Amortization of deferred
      policy acquisition costs                        3,555          3,614
      Universal life insurance
      contract interest                               7,099          7,315
      Other operating expenses                        6,363          6,784
  
  Total benefits and expenses                        29,340         29,607
  
  Segment earnings before
  Federal income taxes                                7,873          7,895
  
  Federal income taxes                                2,687          2,676
  
  Segment earnings                           $        5,186          5,219
  Revenues from domestic life insurance operations include life insurance
  premiums on traditional type products and revenues from universal life
  insurance.  Concentration on sales of universal life insurance as opposed to
  traditional products continue to result in increases in cost of insurance
  revenues and declines in traditional premiums. A comparative detail of
  premiums and contract revenues is provided below:
  Nine Months Ended September 30,
                                                  2000          1999
                                                    (In thousands)
  Universal life insurance:
      Cost of insurance                     $       9,108         8,777
      Surrender charges                             1,371         1,299
      Policy fees and other revenues                  946         1,178
  Traditional life insurance premiums               6,121         7,220
  
  Totals                                    $      17,546        18,474
  Actual universal life insurance deposits, which are recorded directly to
  policyholder liabilities upon receipt, for the nine months ended September 30,
  2000 and 1999 are detailed below.
  Nine Months Ended September 30,
                                                 2000           1999
                                                    (In thousands)
  Universal life insurance:
  
      First year and single premiums        $     3,490           4,001
      Renewal premiums                           10,732          10,874
  
  Totals                                    $    14,222          14,875
  Consistent with the third quarter of 2000, policy benefits were higher for the
  nine months ended September 30, 2000, totaling $12,323,000 compared to
  $11,894,000 for the comparable 1999 period.  The increase is due to higher
  life insurance benefit claims and surrenders of traditional products net of
  related changes in policy liabilities.
  
  Other operating expenses totaled $6,363,000 and $6,784,000 for the nine months
  ended September 30, 2000 and 1999, respectively.  Expenses for 2000 were lower
  as 1999 expenses include an additional accrual for state income taxes.
  
  International Life Insurance Operations
  
  Earnings  for  the  international  life  insurance  operating  segment  were
  $6,143,000 and $5,858,000 for the nine months ended September 30, 2000 and
  1999, respectively.  The 4.9% increase in net earnings is primarily due to
  higher cost of insurance revenues and net investment income, tempered by
  increases in expenses, primarily contract interest.
  
  A  comparative  analysis  of  results  of  operations  for  the  Company's
  international life insurance segment is detailed below:
  Nine Months Ended September 30,
                                                    2000           1999
                                                      (In thousands)
  International Life Insurance
  Operations:
  
  Premiums and other revenue:
      Premiums and contract revenues         $       33,362         31,819
      Net investment income                          17,112         16,387
      Other income                                       37             32
  
  Total premiums and other revenue                   50,511         48,238
  
  Benefits and expenses:
  
      Policy benefits                                12,749         13,070
      Amortization of deferred
      policy acquisition costs                       10,491          9,434
      Universal life insurance
      contract interest                              11,867         10,397
      Other operating expenses                        6,079          6,476
  
  Total benefits and expenses                        41,186         39,377
  
  Segment earnings before
  Federal income taxes                                9,325          8,861
  
  Federal income taxes                                3,182          3,003
  
  Segment earnings                           $        6,143          5,858
  A comparative detail of premiums and contract revenues, which reflects the
  increase in universal life cost of insurance revenues as previously described,
  is provided below:
  Nine Months Ended September 30,
                                                   2000            1999
                                                     (In thousands)
  Universal life insurance:
      Cost of insurance                     $        23,055         21,919
      Surrender charges                               5,864          5,993
      Policy fees and other revenues                  2,686          2,835
  Traditional life insurance premiums                 1,757          1,072
  
  Totals                                    $        33,362         31,819
  Actual universal life insurance deposits collected for the nine months ended
  September 30, 2000 and 1999 are detailed below.  Increases in current year
  premiums  are  due  to  improving  economic  conditions  during  2000  in  the
  international Central and South American markets and higher sales production
  from the Pacific Rim market.
  Nine Months Ended September 30,
                                                    2000            1999
                                                      (In thousands)
  Universal life insurance:
  
      First year and single premiums         $        10,137          9,504
      Renewal premiums                                27,780         27,247
  
  Totals                                     $        37,917         36,751
  Universal life insurance contract interest increased from $10,397,000 in 1999
  to $11,867,000 in 2000.  The increase in contract interest is consistent with
  growth in the universal life insurance business.  Interest is also higher due
  to  increasing  policyholder  persistency  bonuses  credited  to  specific
  international products.  Certain products are credited with bonus interest if
  the policies remain in force for specified time periods.
  
  Annuity Operations
  
  Earnings for the annuity operating segment were $20,008,000 and $22,248,000
  for  the  nine  months  ended  September  30,  2000  and  1999,  respectively.
  Consistent with the third quarter results as previously described, earnings
  for the nine months ended September 30, 2000, were lower than 1999 primarily
  due to higher amortization of deferred policy acquisition costs.  However,
  increases in annuity contract revenues, primarily from policy surrender
  charges, mitigated a significant portion of this effect.  Also, as previously
  described for the third quarter results, year-to-date earnings for 1999 were
  affected by several significant items which substantially negated each other.
  Results for the nine months ended September 30, 2000, include higher income
  from a litigation settlement, offset by decreases in surrender charge revenues
  and lower earnings from the Company's equity-indexed annuity business.
  
  A comparative analysis of results of operations for the Company's annuity
  segment is detailed below:
  Nine Months Ended September 30,
                                                     2000           1999
                                                       (In thousands)
  Annuity Operations:
  
  Premiums and other revenue:
      Premiums and contract revenues          $       26,391         21,379
      Net investment income                          119,278        129,095
      Other income                                       287          8,796
  
  Total premiums and other revenue                   145,956        159,270
  
  Benefits and expenses:
      Policy benefits                                    155            253
      Amortization of deferred
      policy acquisition costs                        23,141         16,663
      Annuity contract interest                       84,146        100,457
      Other operating expenses                         8,140          8,242
  
  Total benefits and expenses                        115,582        125,615
  
  Segment earnings before
  Federal income taxes                                30,374         33,655
  
  Federal income taxes                                10,366         11,407
  
  Segment earnings                            $       20,008         22,248
  Premiums and annuity contract revenues were up $5,012,000, or 23.4%, from
  $21,379,000 in 1999 to $26,391,000 in 2000. This increase is due to higher
  surrender charge revenues from single-tier annuities.  As previously described
  for the third quarter results, actual policy surrenders were abnormally high
  through the first nine months of 2000 resulting in increased revenues.
  However, the surrenders peaked in the second quarter and have begun to slow in
  the third quarter of 2000. A comparative detail of the components of premiums
  and annuity contract revenues is provided below.
  Nine Months Ended September 30,
                                                       2000            1999
                                                         (In thousands)
  Surrender charges:
     Two-tier annuities                        $         11,575         11,655
     Single-tier annuities                               10,316          5,234
  
  Total surrender charges                                21,891         16,889
  Payout annuity and other revenues                       4,448          4,431
  Traditional annuity premiums                               52             59
  
  Totals                                       $         26,391         21,379
  Annuity deposits for 2000 reflect a decline of 11.9% compared to the same
  period of 1999, resulting substantially from decreases in equity-indexed
  annuity deposits.  Sales of these annuities continue to slow, largely a result
  of volatility in the stock market as previously described for the quarter
  ended September 30, 2000.  Some of the decline in equity-indexed annuity sales
  is being countered with increases in sales of other deferred annuities, which
  reflect growth of 5.8% for 2000.  Actual annuity deposits collected for the
  nine months ended September 30, 2000 and 1999 are detailed below.
  Nine Months Ended September 30,
                                                    2000           1999
                                                       (In thousands)
  Deferred annuities:
      Equity-indexed                          $       82,991        123,491
      Other                                          157,015        148,376
  
  Total deferred annuities                           240,006        271,867
  Immediate annuities                                 19,940         23,124
  
  Totals                                      $      259,946        294,991
  Net investment income for the nine months ended September 30, 2000 and 1999
  totaled $119.3 million and $129.1 million, respectively. Declines in fair
  values of index options resulted in reductions to net investment income
  totaling $20,517,000 and $5,524,000 for the nine months ended September 30,
  2000 and 1999, respectively.   Index options are used to hedge the equity
  return component of the Company's equity-indexed annuities.  Fluctuations in
  the income from index options correlates to the performance of the stock
  market, more specifically the S&P 500 Index.  The significant decline in
  investment income resulting from the index options is substantially offset by
  lower annuity contract interest expense.  However, as more fully described for
  third quarter 1999 results, primarily because of policy liability reserving
  treatments related to minimums guaranteed interest rates, the reduction in
  1999 annuity contract interest expense was much less than the decline in net
  investment income.
  
  Annuity contract interest was $84.1 million in 2000 compared to $100.5 million
  in 1999.  The decrease is primarily due to lower interest credited on equity-
  indexed annuities resulting from the volatility and decline in the S&P 500
  Index.  Also as described above, decreases in index option income were
  experienced during the nine months ended September 30, 2000, reflecting the
  hedging policy implemented for the equity-indexed annuity business.  However,
  differences between income from index options and contract interest credited
  to policyholders will occur for several reasons as previously explained in
  detail for the three months ended September 30, 2000.
  
  Amortization for the nine months ended September 30, 2000 and 1999 totaled
  $23,141,000 and $16,663,000, respectively.  The increase in amortization is
  related to the increase in annuity policy surrenders as previously described
  for the three months ended September 30, 2000.
  
  Other Operations
  
  As previously described for the three months ended September 30, 2000,
  National Western has small real estate, nursing home,  and other investment
  operations through its wholly owned subsidiaries.  Earnings for these other
  operations totaled $1,844,000 and $1,747,000 for the nine months ended
  September 30, 2000 and 1999, respectively.  Currently, most of the income from
  these operations is from a life interest in the Libbie Shearn Moody Trust.
  This asset was owned by National Western Life Insurance Company during 1996
  but was transferred to NWL Services, Inc., in 1997.  Dividend distributions
  from the Trust are declared semi-annually in June and December each year.
  Because the asset is a life interest, these distributions are only accrued in
  the Company's financial statements when declared.  Semi-annual distributions
  totaled $1,793,000 and $1,751,000 in June 2000 and 1999, respectively.
  
  During the first quarter of 2000, the Company acquired a nursing home facility
  through an affiliated limited partnership.  The acquisition, which totaled
  approximately $6.6 million, was made by a newly formed limited partnership,
  the partners of which are downstream subsidiaries of National Western.  The
  nursing home facility, which opened in late July, 2000, is operated by an
  affiliated  limited  partnership  and  the  financial  operating  results  are
  consolidated with those of the Company.  Daily operations and management of
  the nursing home are performed by an experienced management company through a
  contract with the limited partnership.  Initial start up expenses in 2000
  could generate minimum operating losses of approximately $900,000, before
  taxes.  Currently, operating losses before taxes from initial start up costs
  totaled approximately $540,000 for the period from inception to September 30,
  2000.
  
  LIQUIDITY AND CAPITAL RESOURCES
  
  Liquidity
  
  The liquidity requirements of the Company are met primarily by funds provided
  from  operations.  Premium  deposits  and  revenues,  investment  income,  and
  investment maturities are the primary sources of funds, while investment
  purchases and policy benefits are the primary uses of funds.  Primary sources
  of liquidity to meet cash needs are the Company's securities available for
  sale portfolio, net cash provided by operations, and a bank line of credit.
  The Company's investments consist primarily of marketable debt securities that
  could be readily converted to cash for liquidity needs.  The Company may also
  borrow up to $60 million on its bank line of credit for short-term cash needs.
  
  A primary liquidity concern for the Company's life insurance operations is the
  risk of early policyholder withdrawals.  Consequently, the Company closely
  evaluates and manages the risk of early surrenders or withdrawals.  The
  Company includes provisions within annuity and universal life insurance
  policies, such as surrender charges, that help limit early withdrawals.  The
  Company also prepares cash flow projections and performs cash flow tests under
  various market interest rate scenarios to assist in evaluating liquidity needs
  and adequacy.  The Company currently expects available liquidity sources and
  future cash flows to be adequate to meet the demand for funds.
  
  In the past, cash flows from the Company's insurance operations have been more
  than adequate to meet current needs.  Cash flows from operating activities
  were $117.7 million and $85.7 million for the nine months ended September 30,
  2000 and 1999, respectively.  Net cash flows from the Company's deposit
  product operations, which includes universal life and investment annuity
  products, totaled $32.8 million for the first nine months of 1999, but
  reflected cash outflows of $78.0 million for the comparable period of 2000.
  The negative cash flow in the Company's deposit product operations is
  primarily due to abnormally high annuity surrenders during 2000.  While
  increased surrenders may continue, this high rate of surrenders has slowed
  from its peak in the second quarter.  Premium deposits have also been lower in
  the first nine months of 2000 due to lower equity-indexed annuity sales, which
  have been affected by the volatility in the stock market.  The Company
  primarily used cash generated from operations and some short-term borrowings
  to manage this negative cash flow.
  
  The  Company  also  has  significant  cash  flows  from  both  scheduled  and
  unscheduled investment security maturities, redemptions, and prepayments.
  These cash flows totaled $56.2 million and $106.4 million for the nine months
  ended September 30, 2000 and 1999, respectively.  The Company expects
  significant cash flows from these sources throughout the remainder of 2000.
  
  Capital Resources
  
  The Company relies on stockholders' equity for its capital resources, as there
  has been no long-term debt outstanding in 2000 or recent years.  The Company
  does not anticipate the need for any long-term debt in the near future.  There
  are  also  no  current  or  anticipated  material  commitments  for  capital
  expenditures in 2000.
  
  Stockholders' equity totaled $494.9 million at September 30, 2000, reflecting
  an increase of $19.4 million from December 31, 1999.  The increase in capital
  is primarily from net earnings of $28.9 million, offset by an increase in net
  unrealized losses on investment securities totaling $10.6 million during the
  first nine months of 2000.  The increase in unrealized losses was due to
  market interest rate conditions and transfers of securities from held to
  maturity to available for sale.  As previously described in Investments in
  Debt and Equity Securities, the debt securities transfers were executed due to
  significant credit deterioration of the issuing companies.  Book value per
  share at September 30, 2000, was $141.31.
  
  CHANGES IN ACCOUNTING PRINCIPLES
  
  In  June,  1998,  the  Financial  Accounting  Standards  Board  (FASB)  issued
  Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
  Derivative Instruments and Hedging Activities."  In June, 1999, SFAS No. 137,
  "Accounting for Derivative Instruments and Hedging Activities - Deferral of
  the Effective Date of FASB Statement No. 133," was issued deferring SFAS No.
  133, which will now be effective for all fiscal quarters of all fiscal years
  beginning after June 15, 2000.  SFAS No. 133 establishes accounting and
  reporting standards for derivative instruments, including certain derivative
  instruments embedded in other contracts, and for hedging activities.  It
  requires that an entity recognize all derivatives as either assets or
  liabilities  in  the  statement  of  financial  position  and  measure  those
  instruments at fair value.  The statement defines several designations of
  derivatives  based  on  the  instrument's  intended  use  and  specifies  the
  appropriate accounting treatment for changes in the fair value of the
  derivative based on its resulting designation.  In June, 2000, the FASB also
  issued SFAS No. 138, "Accounting for Certain Derivative Instruments and
  Certain  Hedging  Activities,"  which  amends  SFAS  No.  133  for  certain
  specifically identified derivative instruments and hedging activities.  This
  statement is to be adopted concurrently with SFAS No. 133.
  
  The Company currently sells equity-indexed annuities that contain an equity
  return component for policyholders which is an embedded derivative instrument.
  The Company purchases index options, which are also derivative instruments, to
  hedge this equity return component.  The index options are reported at fair
  value in the Company's financial statements, which is in accordance with SFAS
  No. 133 requirements.  The Company also uses a fair value approach in
  recording policy liabilities for the equity-indexed annuities. However, one of
  the more complex and challenging aspects of interpreting and implementing SFAS
  No. 133 is how the insurance industry is to apply the statement's provisions
  to  policy  liabilities  for  equity-indexed  products.    The  Derivative
  Implementation Group of the FASB is in the process of addressing this policy
  liability issue and has only recently released what may ultimately be
  definitive guidance.  The Company is still in the process of reviewing the
  guidance provided by the Derivatives Implementation Group.  The initial review
  indicates that the policy liability methodology is somewhat different from the
  Company's, even though both calculations follow a fair value approach.
  Additional review and system programming will be completed by the Company
  during the fourth quarter of 2000 to determine policy liabilities under the
  new method.  Until this process is completed, the Company is unable to
  determine if there will be any material changes to total policy liabilities
  for its equity-indexed annuities.  As a result, the ultimate implementation of
  SFAS No. 133 could have a significant effect on the Company's results of
  operations.  The Company expects to implement the new statement in the first
  quarter of 2001.
  
  FORWARD-LOOKING STATEMENTS
  
  The Private Securities Litigation Reform Act of 1995 provides a "safe harbor"
  for forward-looking statements.  Certain information contained herein or in
  other written or oral statements made by or on behalf of National Western Life
  Insurance Company or its subsidiaries are or may be viewed as forward-looking.
  Although the Company has used appropriate care in developing any such
  information, forward-looking information involves risks and uncertainties that
  could significantly impact actual results.  These risks and uncertainties
  include, but are not limited to, matters described in the Company's SEC
  filings such as exposure to market risks, anticipated cash flows or operating
  performance, future capital needs, and statutory or regulatory related issues.
  However, National Western, as a matter of policy, does not make any specific
  projections as to future earnings, nor does it endorse any projections
  regarding future performance that may be made by others.  Whether or not
  actual results differ materially from forward-looking statements may depend on
  numerous foreseeable and unforeseeable events or developments.  Also, the
  Company undertakes no obligation to publicly update or revise any forward-
  looking  statements,  whether  as  a  result  of  new  information,  future
  developments, or otherwise.
  
                ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES
                                ABOUT MARKET RISK
  
  This information is included in Item 2, Management's Discussion and Analysis
  of Financial Condition and Results of Operations, in the Investments in Debt
  and Equity Securities section.
  
                           PART II.  OTHER INFORMATION
  
                            ITEM 1.  LEGAL PROCEEDINGS
  
  As more fully described in note 3 to the accompanying financial statements,
  National Western Life Insurance Company's wholly owned subsidiary, The Westcap
  Corporation, has prevailed in an October 13, 2000, decision issued by the
  United States Court of Appeals for the Fifth Circuit, New Orleans, Louisiana.
  The Court of Appeals decision reversed a $51,738,868 judgment entered in 1998
  by the United States District Court for the Southern District of Texas
  (Houston Division) and the United States Bankruptcy Court in Houston in favor
  of The City Colleges of Chicago.  The Appellate Court ruled in favor of The
  Westcap Corporation and determined that there had been no violations by The
  Westcap Corporation of the Texas securities laws.  The Appellate Court
  remanded the case to the U.S. District Court for entry of a new judgment in
  favor of Westcap.  The Appellate decision is subject to further review by the
  Fifth Circuit Court of Appeals upon filed motion for rehearing en banc on
  November 3, 2000, and possible appeal to the United States Supreme Court by
  The City Colleges of Chicago.
  
  The ruling does not affect the consolidated financial statements of National
  Western Life Insurance Company as no liability had been previously accrued for
  the District Court judgment.  However, National Western will be entitled to
  recover a portion of the settlement of the Westcap bankruptcy, but not to
  exceed $600,000, should the Appellate Court decision become final.
  
                    ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
  
  (a) Exhibits
  
  Exhibit 11    -Computation of Earnings Per Share (filed on pages __
                  and __ of this report).
  
  Exhibit 27    -Financial Data Schedule (filed electronically pursuant
                  to Regulation S-K).
  
  (b) Reports on Form 8-K
  
  A report on Form 8-K dated October 13, 2000, was filed by the Company
  disclosing the favorable court decision for the Company's wholly owned
  subsidiary, The Westcap Corporation, as described above in Item 1, Legal
  Proceedings.
  
                                    SIGNATURES
  
  Pursuant to the  requirements of the Securities Exchange Act  of 1934, the
  Registrant has duly caused this report to be signed on its behalf  by the
  undersigned thereunto duly authorized.
  
                     NATIONAL WESTERN LIFE INSURANCE COMPANY
                                   (Registrant)
  
  Date: November 10, 2000                  /S/ Ross R. Moody
                                           Ross R. Moody
                                           President, Chief Operating Officer,
                                           and Director
                                           (Authorized Officer)
  
  Date: November 10, 2000                  /S/ Robert L. Busby, III
                                           Robert L. Busby, III
                                           Senior Vice President -
                                           Chief Administrative Officer,
                                           Chief Financial Officer and Treasurer
                                           (Principal Financial Officer)
  
  Date: November 10, 2000                  /S/ Vincent L. Kasch
                                           Vincent L. Kasch
                                           Vice President - Controller
                                           and Assistant Treasurer
                                           (Principal Accounting Officer)
  
                                    EXHIBIT 11
  
             NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                        COMPUTATION OF EARNINGS PER SHARE
              For the Three Months Ended September 30, 2000 and 1999
                                   (Unaudited)
                       (In thousands except per share data)
  2000          1999
  Numerator for basic and diluted
  earnings per share:
      Earnings available to common
      stockholders before and after
      assumed conversions:
      Net earnings                                $       9,006        12,586
  
  Denominator:
      Basic earnings per share -
      weighted-average shares                             3,502         3,501
  
      Effect of dilutive stock options                       18            27
  
      Diluted earnings per share -
      adjusted weighted-average
      shares for assumed conversions                      3,520         3,528
  
  Basic earnings per share:
      Net earnings                                $        2.57          3.60
  
  Diluted earnings per share:
      Net earnings                                $        2.56          3.57
  EXHIBIT 11
  
             NATIONAL WESTERN LIFE INSURANCE COMPANY AND SUBSIDIARIES
                        COMPUTATION OF EARNINGS PER SHARE
              For the Nine Months Ended September 30, 2000 and 1999
                                   (Unaudited)
                       (In thousands except per share data)
  2000          1999
  Numerator for basic and diluted
  earnings per share:
      Earnings available to common stockholders
      before and after assumed conversions:
      Net earnings                                 $       28,932       38,887
  
  Denominator:
      Basic earnings per share -
      weighted-average shares                               3,501        3,499
  
      Effect of dilutive stock options                         18           32
  
      Diluted earnings per share -
      adjusted weighted-average
      shares for assumed conversions                        3,519        3,531
  
  Basic earnings per share:
      Net earnings                                 $         8.26        11.11
  
  Diluted earnings per share:
      Net earnings                                 $         8.22        11.01