content: SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
  
  
  
                                      FORM 8-K
  
                Current Report Pursuant to Section 13 or 15(d) of the
                           Securities Exchange Act of 1934
  
                           Date of Report: December 17, 1996
  
  
  
                                    CONSECO, INC.
  
                               State of Incorporation:
                                       Indiana
  
        Commission File Number                           IRS Employer Id. Number
              No. 1-9250                                      No. 35-1468632
  
                       Address of Principal Executive Offices:
                           11825 North Pennsylvania Street
                                Carmel, Indiana 46032
  
                                    Telephone No.
                                   (317) 817-6100
  
  <PAGE>
    
                           CONSECO, INC. AND SUBSIDIARIES
  
  
  
  
  
                                                         INDEX
  
  <TABLE>
  <CAPTION>
                                                                                                         Page
  <S>                                                                                                     <C>    
  
  Item 2.   Acquisition or Disposition of Assets.........................................................   3
  
  Item 7.   Financial Statements and Exhibits
            (a)  American Travelers Corporation and Subsidiaries Unaudited
                 Consolidated Financial Statements as of September 30, 1996,
                 and for the nine months ended September 30, 1996 and 1995
                    Consolidated Balance Sheets...........................................................   5
                    Consolidated Statements of Income.....................................................   6
                    Consolidated Statements of Cash Flows.................................................   8
                    Consolidated Statements of Shareholders' Equity.......................................   9   
                    Notes to Consolidated Financial Statements............................................   10
  
                 American Travelers Corporation and Subsidiaries Audited
                 Consolidated Financial Statements as of December 31,
                 1995 and 1994, and for each of the three years ended
                 December 31, 1995
                    Report of Independent Public Accountants ............................................   13
                    Consolidated Balance Sheets..........................................................   14
                    Consolidated Statements of Income....................................................   15
                    Consolidated Statements of Shareholders' Equity......................................   16
                    Consolidated Statements of Cash Flows................................................   17
                    Notes to Consolidated Financial Statements...........................................   18
  
            (b)  Pro Forma Consolidated Financial Information of Conseco, Inc. and Subsidiaries..........   30
                    Pro forma Consolidated Statement of Operations for the nine months
                       ended September 30, 1996 .........................................................   31
                    Pro forma Consolidated Statement of Operations for the year ended
                       December 31, 1995 ................................................................   33
                    Pro Forma Consolidated Balance Sheet as of September 30, 1996........................   35
                    Notes to Pro Forma Consolidated Financial Statements.................................   38
  
            
            (c)  Exhibits
  
  
                     2.6    Agreement and Plan of Merger dated as of August 25, 1996, by and between Conseco, Inc.
                            and American Travellers Corporation*
  
                    4.17    Credit Agreement dated November 22, 1996
  
                            * Previously filed with Form 8-K dated August 25, 1996.
  
  </TABLE>
  
  
  
  
                                          2
  
  <PAGE>
  
  
  
                           CONSECO, INC. AND SUBSIDIARIES
  
  
  ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS.
  
       On December 17, 1996, Conseco,  Inc. ("Conseco")  completed its merger with
  American Travellers  Corporation ("ATC"), in a transaction pursuant to which ATC
  was merged with and into Conseco,  with Conseco being the surviving  corporation
  (the "ATC Merger").  The ATC Merger was consummated pursuant to an Agreement and
  Plan of Merger dated as of August 25, 1996. In the ATC Merger,  each outstanding
  share of ATC common stock was exchanged for .5836 of a share of Conseco's common
  stock  determined  based on the average of the closing  price of Conseco  common
  stock on the NYSE  Composite  Transactions  Reporting  System for the 10 trading
  days  immediately  preceding  the second  trading  day prior to the ATC  Merger.
  Conseco  issued  approximately  10.4 million  shares of Conseco  common stock or
  common  stock   equivalents with a value of $629 million to acquire ATC's common
  stock. In addition,  Conseco assumed ATC's convertible  subordinated debentures,
  which are convertible  into  approximately  4.0 million shares of Conseco common
  stock with a value of $239 million.
  
  
         The acquisition of ATC will be accounted for under the purchase method of
  accounting in the fourth quarter of 1996. Under this method, the cost to acquire
  ATC will be  allocated  to the assets  and  liabilities  acquired  based on fair
  values as of the date of the ATC Merger,  with the excess of the total  purchase
  cost over the fair  value of the  assets  acquired  less the fair  values of the
  liabilities assumed recorded as goodwill.
  
                                          3
  
  
  <PAGE>
  
  
                           CONSECO, INC. AND SUBSIDIARIES
  
  
  
  ITEM 7(a).     Financial Statements and Exhibits
  
                 (a)  American Travellers Corporation and  Subsidiaries   
                      Unaudited Consolidated  Financial Statements as of September
                      30, 1996, and for the nine months ended September 30, 1996 
                      and 1995.
  
                                          4
  <PAGE>
                        
  <TABLE>
  <CAPTION>
  
    AMERICAN TRAVELLERS COPRORATION AND SUBSIDIARIES                            
  
              CONSOLIDATED BALANCE SHEETS                                       
  
                     (In thousands)                    (Unaudited)
                                                       September 30, December 31,
                                                           1996        1995       
                                                           ----        ----       
  <S>                                                   <C>           <C> 
  
  ASSETS                                                                        
  Investments-                                                                  
    Bonds, available for sale, at fair value (cost      $689,646      $582,621 
       $705,541 and $566,859)                                                
    Mortgage loan                                            435           447       
                                                         -------       -------       
         Total investments                               690,081       583,068       
  
                                                                                
  Cash and cash equivalents                               12,205        70,214       
  Accrued investment income                                7,732         6,781       
  Premiums due and unpaid                                  7,431         7,027       
  Deferred acquisition costs                             168,691       144,767       
  Value of business acquired (accumulated
    amortization $14,759 and $12,619)                     10,861        12,846       
  Property and equipment, at cost ( accumulated
    depreciation $4,289 and $3,682)                        3,850         4,176       
  Other assets                                             6,761         7,262       
                                                        --------      --------       
         Total assets                                   $907,612      $836,141
                                                        ========      ========
                                                                               
  LIABILITIES AND SHAREHOLDERS' EQUITY                                          
  Policy liabilities-                                                           
    Future policy benefit reserves                      $283,145     $247,562
    Claim reserves                                       240,582       210,073       
    Unearned premium reserves                             62,613        60,477       
                                                        --------      --------       
  
         Total policy liabilities                        586,340       518,112       
                                                                               
  Other liabilities                                       10,892         7,785       
  Current and deferred income taxes                       26,148        35,939       
  6.5% convertible subordinated debentures               102,900       103,500       
  ---                                                    -------       -------       
  
         Total liabilities                               726,280       665,336       
  
                                                                                
  Shareholders' equity-                                                         
    Preferred stock, $.01 par value; 5,000,000 shares
      authorized; no shares issued                            --            --       
    Common stock, $.01 par value; 50,000,000 shares                              
      authorized; 16,322,986 and
      16,053,105 shares issued, respectively                 163           161       
    Capital in excess of par value                        64,282        59,961       
    Net unrealized (loss)/gain on investments            (10,332)       10,245       
    Retained earnings                                    127,219       101,187       
    Less: Shares of common stock held in treasury           
        cost $200)                                            --          (749)
                                                         -------       -------
         Total shareholders' equity                      181,332       170,805       
                                                         -------       ------- 
  
         Total liabilities and shareholders' equity     $907,612      $836,141
                                                        ========      ========
  
                                                                                
  
  All share amounts have been adjusted to reflect a three-for-two
               stock split paid on April 10, 1996.
  </TABLE>
                                         5
  
  <PAGE>
  <TABLE>
  <CAPTION>
                                
  
                AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
  
                          CONSOLIDATED STATEMENT OF INCOME
  
                 (In thousands, except per share data)(Unaudited)
  
                
  
                                For the three months ended   
                                       September 30,
                                        1996       1995      
                                        ----       ----      
  <S>                                <C>        <C> 
  
  Revenues-                                                  
    Accident and health premiums     $94,394    $61,435      
    Life premiums                      2,057      2,101      
    Net investment income             11,834      4,587      
    Realized investment                  (30)       155      
      (losses)/gains                  ------     ------  
  
         Total revenues              108,255     68,278       
  
                                                             
  Benefits and expenses-                                     
    Benefits to policyholders                                
      Paid claims                     41,809     25,939      
      Change in claim reserves        11,374      7,765      
      Change in future policy
         benefit reserves             11,713      5,230      
                                      ------     ------      
  
        Total benefits to     
          policyholders               64,896     38,934      
  
                                                             
    Commissions                       24,351     17,531      
    General and administrative         8,409      5,653      
    Premium taxes                      2,224      1,610      
    Amortization of value of          
      business acquired                  375        676      
    Amortization of deferred          
     acquisition costs                 5,053      5,440      
    Less:  policy acquisition costs  
           deferred                  (12,984)   (10,496)      
  
    Interest expense                   1,787        614      
                                      ------     ------      
  
        Total expenses                29,215     21,028      
                                      ------     ------      
  
         Total benefits and expenses  94,111     59,962      
                                                            
  Income before provision for income 
    taxes                             14,144      8,316      
  Provision for income taxes           4,936      2,589      
                                      ------      -----      
  
  Net income                          $9,208     $5,727      
                                      ======     ======      
                                                      
  Primary number of  shares
  outstanding                         17,040     16,266       
                                      ======     ======       
                                                           
  Primary earnings per common share    $0.54      $0.35
                                       =====      =====
  
                                                             
  
  Net income                          $9,208     $5,727      
  Add: interest on convertible         
       debentures (net of tax)         1,144        109      
                                      ------     ------      
  Net income for fully diluted 
   earnings per  common share        $10,352     $5,836      
                                     =======     ======      
  
  Primary number of  shares                            
  outstanding                         17,040     16,266
  Add: incremental shares                                    
       representing-
    Stock option plans                   147         --      
    Shares issuable on convertible   
     debentures                        6,822        683      
                                      ------     ------
  Fully diluted number of shares                             
    outstanding                       24,009     16,949
                                      ======     ======
                                      
                                                           
  Fully diluted earnings per common                          
  share                                $0.43      $0.34
                                       =====      =====
  
                                
  
     All share and per share amounts have been adjusted to reflect a
           three-for-two stock split paid on April 10, 1996.
  </TABLE>
                                         6
  
  <PAGE>
  <TABLE>
  <CAPTION>
    
  
             AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
  
                      CONSOLIDATED STATEMENT OF INCOME
                            
              (In thousands, except per share data)(Unaudited)
           
  
                               For the nine months ended
                                      September 30,
                                     1996       1995      
                                     ----       ----      
  <S>                                <C>        <C> 
  
  Revenues-                                                  
    Accident and health premiums     $277,187   $179,898      
    Life premiums                       6,138      6,294      
    Net investment income              33,134     12,697      
    Realized investment gains           1,329        179      
                                      -------     ------      
  
         Total revenues               317,788    199,068       
  
                                                             
  Benefits and expenses-                                     
    Benefits to policyholders                                
      Paid claims                     126,028     74,184      
      Change in claim reserves         30,515     20,150      
      Change in future policy
       benefit reserves                35,657     17,390      
                                      -------    -------      
        Total benefits to
         policyholders                192,200    111,724      
                                                            
    Commissions                        71,909     54,011      
    General and administrative         23,887     17,532      
    Premium taxes                       6,772      4,700      
    Amortization of value of
     business acquired                  2,139      1,557      
    Amortization of deferred           
      acquisition costs                14,240     16,394      
    Less:  policy acquisition costs 
           deferred                   (38,163)   (32,269)      
    Interest expense                    5,762      1,477      
                                      -------    -------      
  
        Total expenses                 86,546     63,402      
                                      -------    -------      
         Total benefits and expenses  278,746    175,126      
                                      -------    -------      
  
                                                             
  Income before provision for income
   taxes                               39,042     23,942      
  
  Provision for income taxes           13,010      7,483      
                                      -------    -------      
  Net income                          $26,032    $16,459      
                                      =======    =======      
                                                       
  Primary number of  shares
   outstanding                         16,820     16,254 
                                       ======     ====== 
                                                            
  Primary earnings per common share     $1.55      $1.01
                                        =====      =====
                                                            
  Net income                          $26,032    $16,459      
  Add: interest on convertible
       debentures (net of tax)          3,415        109      
                                      -------    -------      
  Net income for fully diluted
    earnings per  common share        $29,447    $16,568      
                                      =======    =======      
  Primary number of  shares
    outstanding                        16,820     16,254      
  Add: incremental shares                                    
  representing-
    Stock option plans                    189         --      
    Shares issuable on convertible
    debentures                          6,824        226      
                                       ------     ------      
  Fully diluted number of shares                             
    outstanding                        23,833     16,480
                                       ======     ======
                                                           
  Fully diluted earnings per common                          
  share                                 $1.24      $1.01
                                        =====      =====
  
  
  
  
  All share and per share amounts have been adjusted to reflect a three-for-two
                       stock split paid on April 10, 1996.
  
  </TABLE>                           
  
                                         7
  <PAGE>
  <TABLE>
  <CAPTION>
  
  
              AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
  
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)
  
  
                                      For the nine months ended September 30,
                                                    1996     1995       
                                                    ----     ----       
  <S>                                              <C>      <C>    
  Cash flows-operating activities
  Net income                                       $26,032  $16,459
                                                   -------  -------
  Adjustments to reconcile net income to cash                      
  provided by operating activities-
    Amortization of deferred policy acquisition 
       costs                                        14,240   16,394
    Amortization of discount and premium            (1,146)     550
    Depreciation and amortization                      967    1,619
    Realized securities (gains)                     (1,329)    (153)
    Increase/(Decrease) in current and deferred      
     income taxes                                    3,474   (5,317)              
    Increase in reserves                            68,228   40,980
    Increase in other liabilities                    3,107    1,488
    Deferred policy acquisition costs              (38,163) (32,269)
    Decrease in  other assets and value of
       business acquired                               750      424
                                                    ------   ------
  Total adjustments                                 50,128   23,716
                                                                   
  Net cash provided by operating activities         76,160   40,175
                                                    ------   ------
                                                                   
  Cash flows-investing activities                                  
    Proceeds from sales of investments             156,657       --
    Proceeds from calls and maturities on          260,911   29,045
     investments                                           
    Purchase of investments                       (553,763)(105,396)
    Purchase of fixed assets                          (282)    (439)
                                                   -------  ------- 
                                                                  
  Net cash used in investing activities           (136,477) (76,790)
                                                  --------  ------- 
                                                                   
  Cash flows-financing activities                                  
  Proceeds from issuance of Subordinated              
     Debentures                                         --  103,500       
  Debentures issue costs                                --   (3,905)
  Repayments on notes payable                           --  (20,000)
    Exercise of stock options                        2,308      404
                                                  --------  -------
                                                                  
  Net cash provided by financing activities          2,308   79,999
                                                  --------  -------
                                                                  
  Net (decrease)/ increase in cash and cash        
     equivalents                                   (58,009)  43,384
  Cash and cash equivalents, beginning of period    70,214    9,133
                                                    ------    -----
                                                                   
  Cash and cash equivalents, end of period         $12,205  $52,517
                                                   =======  =======
                                                                  
  Supplemental disclosure of cash flow                             
  information:
                                                                  
  Cash paid during the period for:                                 
    Interest                                       $ 3,583  $ 1,262
    Income Taxes                                   $ 9,962  $12,800
  
  
  </TABLE>
  
                                         8
  
  <PAGE>
  <TABLE>
  <CAPTION>
                                                                  
                               
        AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                         (In thousands)
                           (Unaudited)
                                
  
                                                Net                               
                           Common Capital in Unrealized   Re-    Treas- Share-    
                    Common Stock  Excess of  gain/(loss)  tained ury    holders'
                    Shares Amount Par Value  on Invest.   Earn.  Stock  Equity
                    ------ ------ ---------  ----------   -----  -----  ------
  
  
  <S>              <C>       <C>    <C>        <C>      <C>       <C>   <C>
  
  Balance,
    12/31/95        16,053   $161   $59,961    $10,245  $101,187 ($749) $170,805
  
  Net income            --     --        --         --    26,032    --  $ 26,032
  Exercise of  
    stock options      430      4     2,306         --        --    --  $  2,310                                                     
  Tax benefit from                                                        
   exercise of
   stock options        --     --     2,184          --       --    --  $  2,184
  Conversion of
   debentures           40     --       578          --       --    --  $    578                                                    
  Change in                                                               
    unrealized gain/
    (loss) on  
    investments         --     --        --     (20,577)      --    -- ($20,577)                                                     
  Retirement of
    treasury stock    (200)    (2)     (747)         --            749  $     0   
                    ------    ---    ------    --------   -------- ---  -------             
                                                                          
  Balance, 9/30/96  16,323   $163    $64,282   ($10,332)  $127,219  $0  $181,332
                    ======   ====    =======   ========   ========  ==  ========
  
     
  
  
                                
  
                                
  
            All share amounts have been adjusted to reflect a three-for-two
                         stock split paid on April 10, 1996.
  
  </TABLE>
  
                                         9
  <PAGE>
  
  
  
  
                                
  
        AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       SEPTEMBER 30, 1996
                (In thousands, except share data)
                           (Unaudited)
  
  
  
  (1)  Basis of Presentation:
  
  The accompanying unaudited consolidated financial statements have
  been  prepared  in accordance with generally accepted  accounting
  principles  ("GAAP")  for interim financial information  and  the
  instructions  to  Form  10-Q and Article 10  of  Regulation  S-X.
  Accordingly,  they  do  not include all of  the  information  and
  footnotes  required  by generally accepted accounting  principles
  for  annual  financial statements.  In the opinion of management,
  all adjustments considered necessary for a fair presentation have
  been  included.   All  adjustments were  of  a  normal  recurring
  nature, unless otherwise noted in the Management's Discussion and
  Analysis of Financial Condition and Results of Operations and the
  Notes  to  Consolidated Financial Statements.  Operating  results
  for  the quarter or the nine months ended September 30, 1996, are
  not  necessarily indicative of the results that may  be  expected
  for  the year ending December 31, 1996.  For further information,
  refer  to  the  Consolidated Financial Statements and  the  Notes
  thereto included in the Company's Annual Report on Form 10-K  for
  the year then ended December 31, 1995.
  
  Certain  amounts  in  the  1995 financial  statements  have  been
  reclassified   to   conform  to  the  1996  financial   statement
  presentation.
  
  (2)  Summary of significant accounting policies:
  
  Principles of consolidation-
  
  The  accompanying consolidated financial statements  include  the
  accounts  of  American  Travellers Corporation  ("ATC")  and  its
  wholly  owned  subsidiaries, American Travellers  Life  Insurance
  Company  ("ATL"), United General Life Insurance Company  ("UGL"),
  American Travellers Insurance Company of New York ("ATICNY")  and
  American  Travellers Insurance Services Company,  Inc.  ("ATIS").
  ATC,  ATL, UGL, ATICNY and ATIS are collectively referred  to  as
  the   "Company."    All   material  intercompany   accounts   and
  transactions have been eliminated in consolidation.
  
  General-
  
  The Company's operations consist of the underwriting and sale  of
  life   and  accident  and  health  insurance.   The  Company   is
  principally  a  marketer  and  underwriter  of  long  term   care
  insurance.  The Company's long term care products consist of both
  nursing  home and home health care policies which provide limited
  benefit payments primarily to senior citizens.  The Company  also
  markets  and underwrites other supplemental accident  and  health
  insurance policies, as well as life insurance.
  
  The  preparation of financial statements in conformity with  GAAP
  requires the use of estimates which requires management  to  make
  estimates  and  assumptions that affect the reported  amounts  of
  assets  and liabilities, the disclosure of contingent assets  and
  liabilities  at  the  date of the financial  statements  and  the
  reported  amounts of revenues and expenses during  the  reporting
  period.  Actual results could differ from those estimates.
  
  Investments-
  
  The  Company  adopted  the provisions of Statement  of  Financial
  Accounting  Standards No. 115, Accounting for Certain investments
  in  Debt  and  Equity Securities ("SFAS 115"), as of  January  1,
  1994.   Under SFAS 115, investments in equity and debt securities
  are  classified in three categories and accounted for based  upon
  the  classification.   In December 1995, the Company  transferred
  its investments from the "held to maturity" classification to the
  "available for sale" classification pursuant to SFAS 115 and  has
  recorded such investments at fair value with unrealized gains and
  losses  reported as a component of shareholders' equity,  net  of
  tax.
  
                                         10
  
  
  Earnings per share-
  
  Primary  earnings  per  common share are based  on  the  weighted
  average  number of shares outstanding during the period  and  the
  dilutive   effect  of  stock  options  and  other  common   stock
  equivalents.  Fully diluted earnings per common share  are  based
  on  the  weighted  average  number  of  shares  outstanding,  the
  dilutive  effect  of common stock equivalents,  and  the  assumed
  conversion  of the 6.5% convertible subordinated debentures  (the
  "Debentures").   Net income is increased by the interest  on  the
  Debentures, net of related income taxes.
  
  Stock split-
  
  On March 4, 1996, the board of directors declared a three-for-two
  stock  split  for security holders of record on March  20,  1996,
  which  was  paid on April 10, 1996.  Share and per share  amounts
  have  been retroactively adjusted to reflect this split  for  all
  periods presented.
  
  Accounting Pronouncements-
  
  SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
  and for Long-Lived Assets to be Disposed of," was adopted in 1996
  with  no  impact  on  the  Company's financial  condition.   This
  accounting pronouncement establishes accounting standards for the
  impairment of long lived assets, certain identifiable intangibles
  and  goodwill related to (i) those assets to be held and used  in
  the business, and (ii) assets to be disposed of.
  
  SFAS No. 123, "Accounting for Stock-Based Compensation," will  be
  adopted   by  the  Company  in  1996.   This  statement  provides
  alternative   methods   for   accounting   for   employee   stock
  compensation  plans.  A company can elect to use  the  new  fair-
  value  based method of accounting for employee stock compensation
  plans,  under which compensation cost is measured and  recognized
  in  results of operations, or continue to account for these plans
  under  the  current accounting standards.  Entities  electing  to
  remain  with  the present accounting method must make disclosures
  of  what net income and earnings per share would have been if the
  fair-value-based  method of accounting  had  been  applied.   The
  Company  plans to continue to account for employee stock  options
  using  the  present  accounting method and include  the  required
  disclosures in its financial statements.
  
  (3)  Investments:
  
  As  of  December  31,  1994 the Company  classified  all  of  its
  investments  as "held to maturity" pursuant to the provisions  of
  SFAS 115.  As a result of changes in the investment portfolio and
  strategy and as a result of the acquisition discussed in Note  15
  to   the  Consolidated  Financial  Statements  included  in   the
  Company's Annual Report on Form 10-K for the years ended December
  31,   1995   and   other   factors,  the  Company   changed   the
  classification  of  its  investments  to  "available  for  sale,"
  effective December 1995.
  
  (4)  Pending Merger:
  
  On  August  25,  1996, the Company and Conseco, Inc.  ("Conseco")
  jointly  entered  into a definitive agreement providing  for  all
  shareholders  of  the  Company to receive an  amount  of  Conseco
  Common  Stock  for each of their shares through a share  exchange
  based  upon  the  following exchange ratio: (I)  if  the  average
  closing  prices of Conseco Common Stock for the ten trading  days
  immediately  preceding  the  second  trading  day  prior  to  the
  consummation of the Merger ("the Conseco Share Price") is greater
  than  or  equal  to $42.25 per share and less than  or  equal  to
  $46.25 per share, 0.7574 of a share of Conseco Common Stock, (II)
  if  the  Conseco Share Price is less than $42.25 per  share,  the
  fraction  of  a  share  of  Conseco Common  Stock  determined  by
  dividing  $32.00  by the Conseco Share Price,  or  (III)  if  the
  Conseco  Share  Price  is  greater than  $46.25  per  share,  the
  fraction  of  a  share  of  Conseco Common  Stock  determined  by
  dividing  $35.03  by the Conseco Share Price.   Accordingly,  the
  Company's shareholders will receive Conseco Common Stock  with  a
  value  of  not less than $32.00 and up to $35.03 per share.   The
  Company's  Debentures  will  become convertible  into  shares  of
  Conseco Common Stock on an equivalent basis.
  
  
                                         11
  
  
  
  
  
  
  <PAGE>
  
                     CONSECO, INC. AND SUBSIDIARIES
  
  
  
  ITEM 7(a).     Financial Statements and Exhibits, continued
  
                 (a), continued
  
                      American Travellers Corporation and   Subsidiaries   Audited
                      Consolidated  Financial  Statements  as of December 31, 1995
                      and 1994, and for each of the three years ended December 31,
                      1995.
  
                                         12
  <PAGE>
                   REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
  
  To The Board of Directors of American Travellers Corporation:
  
  We have  audited  the  accompanying   consolidated  balance  sheets  of American
  Travellers  Corporation (a  Pennsylvania  corporation)  and  subsidiaries  as of
  December 31, 1995 and 1994, and the related  consolidated  statements of income,
  shareholders'  equity and cash  flows for each of the three  years in the period
  ended December 31, 1995. These financial  statements are the  responsibility  of
  the Company's  management.  Our responsibility is to express an opinion on these
  financial statements and schedules based on our audits.
  
  We  conducted  our  audits   in  accordance  with  generally  accepted  auditing
  standards.  Those standards require that we plan and perform the audit to obtain
  reasonable assurance about whether the financial statements are free of material
  misstatement.  An audit includes examining, on a test basis, evidence supporting
  the amounts and disclosures in the financial statements.  An audit also includes
  assessing the  accounting  principles  used and  significant  estimates  made by
  management,  as well as evaluating the overall financial statement presentation.
  We believe that our audits provide a reasonable basis for our opinion.
  
  In our opinion,  the   financial statements referred to above present fairly, in
  all material respects, the financial position of American Travellers Corporation
  and  subsidiaries  as of December  31,  1995 and 1994,  and the results of their
  operations  and their cash flows for each of the three years in the period ended
  December 31, 1995 in conformity with generally accepted accounting principles.
  
  
  
  
  /s/ARTHUR ANDERSEN LLP
  ----------------------
  ARTHUR ANDERSEN LLP
  
  Philadelphia, Pa.
  March 4, 1996
  
                                         13
  
  
  <PAGE>
  
  <TABLE>
  <CAPTION>
  
  
  
                    AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS
                         (In thousands, except share data)
  
                                       ASSETS
  
                                                          December 31,
                                                         ---------------
                                                         1995       1994 
                                                         ----       ----
  <S>                                                 <C>        <C>
  Investments:
   Bonds, available for sale, at fair value
   (cost $566,859)                                    $ 582,621  $       -
   Bonds, held to maturity, at amortized cost
   (market $228,971)                                       -       238,198
   Mortgage loan                                            447          -
                                                       --------  ---------
    Total investments                                   583,068    238,198
  Cash and cash equivalents                              70,214      9,133
  Accrued investment income                               6,781      4,192
  Premiums due and deferred                               7,027      5,518
  Deferred policy acquisition costs                     144,767    122,070
  Value of business acquired (net of accumulated
  amortization $12,619 and $10,603)                      12,846     14,316
  Property and equipment, at cost (net of
  accumulated depreciation of $3,682 and $4,192)          4,176      5,168
  Other assets                                            7,262      2,209
                                                       --------   --------
     Total assets                                      $836,141   $400,804
                                                       ========   ========
  
                        LIABILITIES AND SHAREHOLDERS' EQUITY
  Policy liabilities:
   Future policy benefits                              $247,562    $83,995
   Claim reserves                                       210,073     85,290
   Unearned premium reserve                              60,477     35,133
                                                       --------   --------
     Total policy liabilities                           518,112    204,418
  Other liabilities                                       7,785      5,185
  Bank borrowings                                             -     20,000
  Current and deferred income taxes                      35,939     34,862
  6.5% convertible subordinated debentures              103,500        -
                                                       --------   --------
     Total liabilities                                  665,336    264,465
  
  Shareholders' equity:
   Preferred stock, $.0l par value; 5,000,000
   shares authorized; no shares issued                      -          -
   Common stock, $.01 par value; 37,500,000
   shares authorized; 16,053,105 and
   15,962,268 shares issued                                 107        106
   Capital in excess of par value                        60,015     59,480
   Net unrealized gain on investments                    10,245       -
   Retained earnings                                    101,187     77,502
   Less-Shares of common stock held in treasury,
   at cost (200,159 shares)                                (749)      (749)
                                                       --------   -------- 
    Total shareholders' equity                          170,805    136,339
                                                       --------   --------
     Total liabilities and shareholders' equity        $836,141   $400,804
                                                       ========   ========
  
  
  All share and per share  amounts have been  adjusted to reflect a 3-for-2  stock
  split payable on April 10, 1996.
  
          The accompanying notes are an integral part of these statements.
  
  </TABLE>
  
                                         14
  
  <PAGE>
  <TABLE>
  <CAPTION>
  
                  AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF INCOME
                       (In thousands, except per share data)
  
  
                                                 Year ended December 31,
                                                 -----------------------
                                                 1995      1994     1993
                                                 ----      ----     ----
  <S>                                         <C>       <C>      <C>
  Revenues:
  Accident and health premiums                $265,732  $195,024 $162,322
  Life premiums                                  8,235     6,864    4,052
  Investment income                             23,190    11,023    9,395
  Securities gains (losses)                        175       (10)     227
                                              --------  -------- --------
  Total revenues                               297,332   212,901  175,996
                                              --------  -------- --------
  
  Benefits and expenses:
  Benefits to policyholders                    172,903   114,200   88,347
  Commissions                                   76,080    63,819   56,728
  General and administrative                    25,071    22,831   22,086
  Premium taxes                                  6,007     4,187    4,231
  Amortization of deferred policy
   acquisition costs                            20,687    19,815   18,298
  Amortization of value of business acquired     2,014     2,122    2,987
  Less-policy acquisition costs deferred       (43,384)  (42,045) (40,036)
  Interest expense                               3,260       990       32
                                              --------  -------- --------
  Total benefits and expenses                  262,638   185,919  152,673
                                              --------  -------- --------
  Income before provision for income taxes      34,694    26,982   23,323
  Provision for income taxes                    11,009     8,554    8,715
                                              --------  --------  -------
  Net income                                   $23,685   $18,428  $14,608
                                              ========  ========  =======
  Net income per share:
  Primary                                        $1.45     $1.14    $.92
                                                 =====     =====    ====
  Fully diluted                                  $1.36     $1.14    $.92
                                                 =====     =====    ====
  Weighted average common shares
   and common equivalents:
  Primary                                       16,316   16,133    15,804
                                                ======   ======    ======
  Fully diluted                                 18,362   16,133    15,804
                                                ======   ======    ======
  
  
  
  Share and  per-share  amounts  have been  adjusted to reflect the  three-for-two
  stock split payable on April 10, 1996.
  
  
  
  
          The accompanying notes are an integral part of these statements.
  
  </TABLE>
                                         15
  
  <PAGE>
  <TABLE>
  <CAPTION>
  
                AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (In thousands)
                                                                                        Net
                                                     Common  Stock       Capital in   Unrealized                             Total 
                                                   -------------------    excess of   gain on     Retained     Treasury  shareholders'
                                                   Shares      Amounts   par value   investment   earnings       stock     equity
                                                   ------      -------   ---------   ----------   --------       -----    -------
  
  <S>                                              <C>          <C>       <C>        <C>          <C>         <C>          <C>     
  Balance, 12/31/92                                 15,438      $103      $57,342     $  --       $ 44,466     $   (749)    $ 101,162
  Net income                                          --         --           --                    14,608           --        14,608
  Exercise of stock options                            226         1          404                      --            --           405
                                                   -------      ----      -------     ------      --------     --------     ---------
  
  Balance, 12/31/93                                 15,664       104       57,746        --         59,074         (749)      116,175
  Net income                                          --         --           --                    18,428           --        18,428
  Exercise of stock options                            299         2          939                      --            --           941
  Tax benefit from exercise of stock options          --         --           795                      --            --           795
                                                   -------      ----      -------     ------      --------     --------     ---------
  Balance, 12/31/94                                 15,963       106       59,480        --         77,502         (749)      136,339
  Net income                                                                                        23,685                     23,685
  Exercise of stock option                              90         1          400                                                 401
  Tax benefit from exercise of stock options                                  135                                                 135
  Unrealized gain investments                                                          10,245                                  10,245
                                                   -------      ----      -------     -------    ---------     --------      --------
  Balance 12/31/95                                  16,053      $107      $60,015     $10,245    $ 101,187        $(749)     $170,805
                                                   =======      ====      =======     =======    =========     ========      ========
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  
  Share and  per-share  amounts  have been  adjusted to reflect the  three-for-two
  stock split payable on April 10, 1996.
  
  
  
  
  
  
  
  
  
  
  
          The accompanying notes are an integral part of these statements.
  
  </TABLE>
  
                                         16
  
  
  <PAGE>
  <TABLE>
  <CAPTION>
  
  
  
                  AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (In thousands)
  
  
                                                  Year ended December 31,
                                                ------------------------------
                                                1995          1994        1993
                                                ----          ----        ----
  
  <S>                                          <C>           <C>          <C>
  Cash flows-operating activities
  Net income                                   $23,685       $18,428      $14,608
                                               -------       -------      -------
  Adjustments to reconcile net income to net
  cash provided by operating activities
    Amortization of deferred policy 
      acquisition costs                         20,687        19,815       18,298
    Depreciation and amortization                5,381         5,774        6,015
    Realized securities (gains) losses            (174)           10         (227)
    (Decrease) increase current and
      deferred income taxes                     (4,437)        5,207        8,316
    Increase in reserves                        61,981        39,519       23,982
    Increase (decrease) in other liabilities     2,600           533       (1,225)
    Deferred policy acquisition costs          (43,384)      (42,045)     (40,036)
    (Increase) decrease in all other assets     (4,651)       (1,793)         600
                                               -------       -------      -------
  Total adjustments                             38,003        27,020       15,723
                                               -------       -------      -------
  Net cash provided by operating
   activities                                   61,688        45,448       30,331
                                               -------       -------      -------
  Cash flows-investing activities
    Proceeds from sales of investments          16,615           156        3,910
    Proceeds from calls and maturities
      of investments                            33,037        15,295       24,275
    Purchase of investments                   (380,116)      (99,551)     (63,282)
    Purchase of fixed assets                      (352)         (626)        (693)
    Proceeds from acquisitions                 249,969        29,186          -
                                               -------       -------      -------
  Net cash used in investing activities        (80,847)      (55,540)     (35,790)
                                               -------       -------      -------
  Cash flows-financing activities
    Debenture issue costs                       (3,796)           -            -
    Proceeds from issuance
      of Subordinated Debentures               103,500            -            -
    Bank borrowings                                -           8,000       12,000
    Exercise of options                            536           939          405
    Repayment of Bank borrowings               (20,000)           -            -
                                               -------       -------      -------
  Net cash provided by financing
   activities                                   80,240         8,939       12,405
                                               -------       -------      -------
  Net increase (decrease) in
   cash and cash equivalents                    61,081        (1,153)       6,946
  Cash and cash equivalents,
   beginning of year                             9,133        10,286        3,340
                                               -------       -------      -------
  Cash and cash equivalents,
   end of year                                 $70,214        $9,133      $10,286
                                               =======       =======      =======
  Supplemental disclosure of cash
   flow information Cash paid during
   the year for:
  Interest                                     $ 1,319        $  990      $    -
                                               =======        ======      =======
  Income taxes                                 $15,300        $3,465      $   970
                                               =======        ======      =======
  
  
  
  The accompanying notes are an integral part of these statements.
  
  
  
  </TABLE>
  
                                         17
  
  
  <PAGE>
  
  
  
  
                  AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 DECEMBER 31, 1995
                         (In Thousands, except share data)
  
  (l) Summary of significant accounting policies:
  
   Principles of consolidation-
  
  The accompanying  consolidated  financial  statements  include the   accounts of
  American  Travellers  Corporation  ("ATC")  and its wholly  owned  subsidiaries,
  American  Travellers  Life  Insurance  Company  ("ATL"),   United  General  Life
  Insurance  Company ("UGL"),  American  Travellers  Insurance Company of New York
  ("ATICNY") and American  Travellers  Insurance Services Company,  Inc. ("ATIS").
  ATC, ATL, UGL,  ATICNY and ATIS are  collectively  referred to as the "Company."
  All material  intercompany  accounts and  transactions  have been  eliminated in
  consolidation.
  
   General-
  
  The  Company's  operations  consist of the  underwriting  and   sale of life and
  accident  and  health  insurance.   The  accompanying   consolidated   financial
  statements have been prepared in accordance with generally  accepted  accounting
  principles  (GAAP).  The Company is a marketer and underwriter of long term care
  insurance.  The Company's  long term care products  consist of both nursing home
  and home health care policies which provide limited benefit  payments  primarily
  to senior citizens.  The Company also markets and underwrites other supplemental
  accident and health insurance policies, as well as life insurance. The Company's
  long term care products accounted for 89.3%,  82.4%, and 74.5% of its annualized
  premiums in force at December 31, 1995, 1994, and 1993, respectively.
  
  The  preparation of financial  statements in conformity  with  GAAP requires the
  use of estimates and assumptions  that affect the reported amounts of assets and
  liabilities at the date of the financial  statements and the reported amounts of
  revenues  and  expenses  during  the  reporting  period.   Management  does  not
  anticipate that actual results will differ significantly from these estimates.
  
   Revenue recognition-
  
  Premiums  are  reflected  as  revenues  primarily  on a pro-rata  basis   as the
  premiums are earned. Expenses are associated with earned premiums,  resulting in
  a recognition  of profits over the lives of the contracts.  This  association is
  accomplished  by  providing  liabilities  for  future  policy  benefits  and  by
  deferring, and then amortizing, policy acquisition costs.
  
   Investments-
  
  The Company  adopted   the  provisions  of  Statement  of  Financial  Accounting
  Standards  ("SFAS"),  Accounting  for  Certain  investments  in Debt and  Equity
  Securities  (SFAS 115), as of January 1, 1994.  Under SFAS 115,  investments  in
  equity and debt securities are classified in three  categories and accounted for
  based upon the  classification.  In December 1995, the Company  transferred  its
  investments  from the "held to maturity"  classification  to the  "available for
  sale"  classification  pursuant to SFAS 115 and has recorded such investments at
  fair  value  with  unrealized  gains  and  losses  reported  as a  component  of
  shareholders' equity, net of tax. See Note 3.
  
   Deferred policy acquisition costs-
  
  Policy  acquisition  costs,  which vary with and   are  directly  related to the
  production  of new  business,  are  deferred.  The  costs  deferred,  consisting
  principally of commissions and policy  issuance costs,  are being amortized with
  interest in accordance with actuarial assumptions which consider the anticipated
  period the policy will be in force in relation  to the  premiums  expected to be
  earned.  These  assumptions are consistent with those used in developing  policy
  reserves.
  
                                         18
  <PAGE>
  
   Property and equipment-
  
  Property  and  equipment  are stated at cost.  Improvements    which  materially
  increase the estimated  useful life of the asset are  capitalized.  Expenditures
  for repairs and maintenance are charged to operations as incurred.  Depreciation
  is provided  principally on the straight-line  method over the related estimated
  lives of the assets which range from 3 to 40 years. Upon sale or retirement, the
  cost of the asset and the related accumulated  depreciation are removed from the
  accounts and the resulting gain or loss, if any, is included in income.
  
   Policy benefits-
  
  Future policy benefits and claim reserves are   determined  based upon generally
  accepted actuarial  methods.  Unpaid claim reserves are based upon the aggregate
  of claim  estimates for reported and  unreported  losses based upon  experience.
  While the  ultimate  amount of claims  incurred  and the  related  expenses  are
  dependent on future  developments,  in  management's  opinion,  the reserves for
  future policy benefits and claims are adequate to cover  anticipated  losses and
  expenses.
  
   Income taxes-
  
  Deferred  income  taxes are recorded for  temporary    differences  in reporting
  certain   transactions   for  financial   statement  and  income  tax  purposes,
  principally deferred policy acquisition costs and policy benefits.  Income taxes
  are accounted for using the asset and liability  method in accordance  with SFAS
  109. This method requires that deferred tax assets and liabilities at the end of
  the year be  determined  using the tax rates and  limitations  expected to be in
  effect  at such  time  as the  taxes  are  projected  to be  paid or  recovered.
  Consequently,  income tax  expense  will  increase  or decrease in the period in
  which a change in tax law or rates is enacted.
  
   Earnings per share-
  
  Primary  earnings per common share are based on the weighted   average number of
  shares  outstanding  during the period and the dilutive  effect of stock options
  and other common stock  equivalents.  Fully diluted earnings per share are based
  on the weighted average number of shares outstanding,  dilutive effect of common
  stock   equivalents,   and  the  assumed  conversion  of  the  6.5%  convertible
  subordinated  debenture.  Net  income  is  increased  by  the  interest  on  the
  debenture, net of related income taxes.
  
   Stock split-
  
  On March 4, 1996, the board of directors  declared a  three-for-two  stock split
  for  securityholders  of record as of March 20, 1996, payable on April 10, 1996.
  Share and per share  amounts  have been  retroactively  adjusted to reflect this
  split for all years presented.
  
  Statements of cash flows-
  
  For purposes of reporting cash flows,  cash   and cash  equivalents  include all
  cash and short-term deposits available on demand.
  
   Accounting Pronouncements
  
  The  Company  adopted  the  provisions  of  Statement  of  Financial  Accounting
  Standards  No.115,   "Accounting  for  Certain  Investments  in  Debt  &  Equity
  Securities"  (SFAS 115) as of at January 1, 1994.  Under SFAS 115 investments in
  debt and equity securities are accounted as follows:
  
  "Held  to maturity" securities are securities that the Company has  the positive
  intent and  ability to hold to maturity  and are  reported  at  amortized  cost.
  Securities  that are brought and held  principally for the purpose of selling in
  the near term are classified as "trading securities" and reported at fair value,
  with unrealized gains and losses included in earnings. Securities not classified
  in these two  categories  are classified as "available for sale" and reported at
  fair value,  with unrealized  gains and losses reported net of tax in a separate
  component of shareholders' equity.
  
  As further  discussed in Note 3 to the   financial  statements,  the Company has
  classified  all of its  investments as "available for sale" at December 31, 1995
  and as "Held to maturity" at December 31, 1994.
  
                                         19
  <PAGE>
  
  The  Company  holds   no  derivative  financial  instruments  subject  to   the
  provisions of SFAS No. 119, "Disclosure About Derivative  Financial  Instruments
  and Fair Value of Financial Instruments."
  
  In March 1995,  the  FASB issued SFAS 121,  Accounting  for   the  Impairment of
  Long-Lived  Assets and for Long Lived Assets to be Disposed of. This  statement,
  which must be adopted by March 31, 1996 establishes accounting standards for the
  impairment of long lived assets,  certain identifiable  intangibles and goodwill
  related  to (1) those  assets to be held and used in the  business,  and (2) for
  assets to be disposed of. The Company does not  anticipate a material  effect on
  the financial statements from this new accounting standard.
  
  SFAS   123,  Accounting  for  Stock-Based  Compensation,  will be adopted by the
  Company in 1996. This statement provides  alternative methods for accounting for
  employee  stock  compensation  plans.  A  company  can  elect  to  use  the  new
  fair-value-based  method of accounting  for employee stock  compensation  plans,
  under  which  compensation  cost  is  measured  and  recognized  in  results  of
  operations,  or continue to account for these plans under the current accounting
  standards.  Entities electing to remain with the present  accounting method must
  make  disclosures  of what net income and  earnings per share would have been if
  the fair-value-  based method of accounting had been applied.  The Company plans
  to continue to account for employee  stock options using the present  accounting
  method and include the required disclosures in the financial statements.
  
  Reclassifications-
  
  Financial  statements for 1993   and 1994 have been reclassified to conform with
  the 1995 presentation.
  
  (2) Basis of presentation:
  
  The  consolidated  financial  statements have   been prepared in accordance with
  GAAP;  these  principles  differ  from  practices  prescribed  or  permitted  by
  insurance  regulatory   authorities  (statutory  accounting  practices)  in  the
  following material respects-
  
  (a)   Costs  which  vary with and are  directly  related  to the  writing of new
  insurance  policies are deferred and then amortized over the anticipated  period
  the policies will be in force in relation to the premiums  expected to be earned
  on the policies.  Under statutory accounting practices such costs are charged to
  expense as incurred.
  
  (b)    The  accounts  of  wholly-owned  subsidiaries  are  consolidated.   Under
  statutory  accounting  practices such  subsidiaries are carried at cost adjusted
  for  subsequent  operating  results as  determined  under  statutory  accounting
  practices.
  
  (c)   The value of  business  acquired  resulting  from  purchases  of blocks of
  accident and health  business is being  amortized  over the life of the acquired
  policies.  Under statutory accounting practices,  any ceding allowances paid are
  expensed in the year incurred.
  
  (d)   Policy liabilities-
  
    (l) GAAP  basis-Future  policy  benefits are provided on the net level premium
  method which provides for anticipated  rates of morbidity,  mortality,  interest
  and the Company's termination  experience.  Accident and health insurance future
  policy benefits are primarily  calculated using morbidity based on the Company's
  experience. The future policy benefits on ordinary life insurance are calculated
  using the 1965-70 Intercompany male mortality rates. Unearned premium reserve is
  the gross unearned premium reserve less the portion of the premium for expenses,
  overhead and profit.  Investment  income is assumed at rates  between  6.25% and
  8.00%.  Termination  rates,  exclusive  of  mortality,  have been  assumed to be
  between  17.5% and 33.0% in the first year  decreasing to between 5.0% and 10.0%
  of the renewing  policies after the fifteenth year.  These  assumptions  vary by
  plan, year of issue and duration.
  
    (2) Statutory  basis-Future  policy benefits on accident and health  insurance
  consist  primarily  of unearned  premium  reserves.  Future  policy  benefits on
  ordinary  life   insurance   have  been   computed   using  the  l958  and  1980
  Commissioners'  Standard Ordinary Mortality Table with interest assumed at rates
  between 3% and 5% applied on the  Commissioners'  Reserve Valuation Method basis
  with grading to the net level premium method.
  
                                         20
  
  <PAGE>
    (3) Claim reserves (both on a GAAP and Statutory basis) include provisions for
  reported  claims in process of  settlement  as well as claims  incurred  but not
  reported based on prior experience of the Company.  Interest is assumed at rates
  between 5.0% and 7.5%.
  
    (e) Deferred  income taxes,  which for statutory  purposes are not recognized,
  are provided as appropriate for temporary differences.
  
  (3) Investments:
  
  As of   December 31, 1994 the Company classified all of its investments as "held
  to maturity"  pursuant to the provisions of SFAS 115. As a result of the changes
  in the  investment  portfolio  and strategy  and as a result of the  acquisition
  discussed in Note 15 and other factors,  the Company changed the  classification
  of its investments to "available for sale" effective December 1995.
  
  Pursuant to the requirements of SFAS 115,  "available for sale"   securities are
  reported at fair value with unrealized gains and losses reported net of tax as a
  separate  component  of  shareholders'  equity.  As a result of this  change the
  reported  value of the  investment  portfolio,  at December  31,1995,  increased
  $15,762  with  corresponding  increases in  shareholders'  equity of $10,245 and
  deferred income taxes of $5,517.
  
  The components of investment income are as follows-
  <TABLE>
  <CAPTION>
  
                                           Year ended December 3l,
                                         ----------------------------
                                          1995       1994        1993
                                         -----       ----        ----
  <S>                                   <C>        <C>          <C>
  Fixed maturity investments            $15,308    $10,185      $8,926
  Mortgage-backed securities              3,076        223          28
  Cash and short-term investments         1,613        437         342
  Mortgage loan and other                 3,193        178          99
                                        -------    -------      ------
  Investment Income                     $23,190    $11,023      $9,395
                                        =======    =======      ======
  
  </TABLE>
  
  The amortized cost and market values of  investments  in debt  securities are as
  follows:
  <TABLE>
  <CAPTION>
  
                                                    Gross       Gross
                                      Amortized   unrealized  unrealized  Market
                                        cost        gains       losses    value
                                        ----        -----       ------    -----
  <S>                                 <C>            <C>      <C>        <C> 
  December 31, 1995
  -----------------
  U.S. Government Obligations          $133,703    $ 2,836    $  (83)    $136,456
  Mortgage-backed Securities            180,926      2,995        (4)     183,917
  States and Political Subdivisions      78,915      1,497       (62)      80,350
  Corporate Securities                  173,315      8,695      (112)     181,898
                                       --------    -------     -----     --------
  Total                                $566,859    $16,023     $(261)    $582,621
                                       ========    =======     =====     ========
  
  
  December 31, 1994
  -----------------
  U.S. Government Obligations           $52,190       $134   $(2,582)     $49,742
  Mortgage-backed securities              9,975         16       (52)       9,939
  States and Political Subdivisions      95,194          6    (3,822)      91,378
  Corporate Securities                   80,839        135    (3,062)      77,912
                                       --------     ------   -------     --------
  Total                                $238,198     $  291   $(9,518)    $228,971
                                       ========     ======   =======     ========
  </TABLE>
  
                                         21
  
  <PAGE>
  
  The  amortized  cost and market value of debt  securities at   December 31, 1995
  and 1994, by contractual  maturity,  are shown below.  Expected  maturities will
  differ from contractual  maturities because borrowers may have the right to call
  or prepay obligations with or without call or prepayment penalties.
  <TABLE>
  <CAPTION>
    
                                               Amortized Market
                                              ------------------
                                              Cost         Value
                                              ----         -----
  <S>                                       <C>           <C>
  December 31, 1995
  -----------------
  Due in one year or less                   $ 46,383     $ 46,425
  Due after one year through five years      103,326      104,890
  Due after five years through ten years     138,634      145,181
  Due after ten years                         97,590      102,208
  Mortgage-backed securities                 180,926      183,917
                                            --------     --------
  Totals                                    $566,859     $582,621
                                            ========     ========
  </TABLE>
  
  <TABLE>
  <CAPTION>
  
                                               Amortized Market
                                              ------------------
                                              Cost         Value
                                              ----         -----
  <S>                                       <C>          <C>
  December 31, 1994
  ------------------
  
  Due in one year or less                   $ 26,840     $ 26,693
  Due after one year through five years      123,997      118,809
  Due after five years through ten years      70,134       66,378
  Due after ten years                          7,252        7,152
  Mortgage-backed securities                   9,975        9,939
                                            --------     --------
  Totals                                    $238,198     $228,971
                                            ========     ========
  </TABLE>
  
  Proceeds  from   sales of  investments  were  $16,615 in 1995,  $156 in 1994 and
  $3,910 in 1993.  Proceeds  from  maturities  and security  calls were $33,037 in
  1995, $15,295 in 1994 and $24,275 in 1993. Gross gains of $194, $10 and $266 and
  gross  losses of $19,  $20 and $39 in 1995,  1994 and 1993,  respectively,  were
  realized on sales and calls.
  
  As of  December  31, 1995 and 1994,  the  company did   not have any  individual
  investments in corporate securities which exceeded 10% of shareholders'  equity.
  There were no non-income  producing  investments  during the year ended December
  31, 1995 and 1994.
  
  At December  31,  1995 and 1994,  bonds with   an  amortized  cost of $7,669 and
  $9,153,  respectively,  are  on  deposit  with  various  regulatory  departments
  pursuant to statutory requirements.
  
  (4) Restrictions on shareholders' equity:
  
  The statutory financial statements of ATL, the Company's  principal  subsidiary,
  as filed, reflect the following-
  <TABLE>
  
                                         Year ended December 3l,
                                      ------------------------------
                                      1995         1994         1993
                                      ----         ----         ----
  <S>                              <C>           <C>          <C>
  Statutory net income (loss)      $(43,287)     $ 2,232      $ 4,065
                                   --------      -------      -------
  Statutory capital and surplus    $ 72,137      $57,013      $46,143
                                   ========      =======      =======
  </TABLE>
  
  In 1995, ATL acquired the long term   care business of an unrelated insurer, for
  which  it paid a  $40,000  ceding  allowance.  See  Note  15.  The  cost of this
  acquisition, and its related tax consequences, are primarily responsible for the
  1995 statutory loss.
  
  ATL is   required by insurance laws and regulations to maintain  minimum capital
  and surplus,  determined in accordance  with statutory  accounting  regulations.
  Under  Pennsylvania  insurance  law,  dividends  may be  paid by ATL  only  from
  statutory  profits or surplus  and  require  Pennsylvania  Insurance  Department
  approval  if the  dividend  is in excess of the greater of l0% of surplus or net
  statutory  income of the prior  year.  The  Department  must be  notified of any
  dividend in excess of one-half of l% of admitted assets of ATL.
  
                                         22
  <PAGE>
  
  (5) Federal income taxes:
  
  ATC   and its direct subsidiaries file a consolidated Federal income tax return.
  UGL files a separate  Federal  income tax return.  ATL and UGL are taxed as life
  insurance companies under the Tax Reform Act of 1986 and Revenue  Reconciliation
  Act of 1990. The 1990 Act requires life insurance  companies to capitalize costs
  of  acquiring  certain  insurance  contracts  and to  amortize  such  costs over
  specified  periods.  The 1986 Act taxes  life  insurance  companies  at  general
  corporate rates.
  
  The  Company  adopted  the  accounting  and  disclosure  rules    of  SFAS  109,
  "Accounting for Income Taxes,"  effective  January 1, 1993,  under which the tax
  benefit of the small life insurance  company deduction cannot be anticipated for
  purposes  of  offsetting  a  deferred  tax   liability  for  taxable   temporary
  differences  at the end of the current year.  As a result,  the adoption of SFAS
  109  resulted in an increase in the  deferred  tax  liability of $5,500 based on
  taxable  temporary  differences and the net deferred tax liability at January 1,
  1993.  The  Company has  restated  as  permitted  under SFAS 109,  prior  years'
  financial statements to record the effect of the adoption of this pronouncement.
  
  The components of deferred tax   assets and liabilities, measured under SFAS 109
  as of December 31, 1995 and 1994 are as follows:
  <TABLE>
  <CAPTION>
  
                                                                 1995      1994
                                                                 ----      ----
  <S>                                                         <C>        <C> 
  Deferred tax liabilities
    Deferred policy acquisition cost and other intangibles     $34,934   $37,288
    Unrealized gain on investments available for sale            5,517       - 
    Other                                                        1,106     1,532  
                                                               -------   -------
      Deferred tax liabilities                                  41,557    38,820
                                                               -------   -------
  Deferred tax assets
    Policy liabilities                                           6,031     5,869
    Net operating loss carry forward                               575       670
    Capital loss carryforward                                       47       185
    Alternative minimum tax credit carry forward                     -         6
    Other                                                          503       551
                                                               -------   -------
      Deferred tax assets                                        7,156     7,281
                                                               -------   -------
        Net deferred tax liability                              34,401    31,539
        Current tax liability                                    1,538     3,323
                                                               -------   -------
        Current and deferred income taxes                      $35,939   $34,862
                                                               =======   =======
  </TABLE>
  
  The provision for Federal income taxes are comprised of the following:
  
  <TABLE>
  <CAPTION>
  
                                                       Year ended December 31,
                                                      -------------------------
                                                      1995       1994      1993
                                                      ----       ----      ----
  <S>                                               <C>         <C>       <C>  
  Current taxes                                     $12,061     $7,882    $1,090
                                                    -------     ------    ------
  Deferred taxes relating to: 
    Deferred policy acquisition costs                (2,597)     4,848     7,622
    Future policy benefits, claims and unearned
      premium reserves                                2,154     (1,619)     (323)
    Amortization of intangibles                        (705)      (643)     (884)
    Net operating loss for tax purposes                (518)       118       199
    Tax rate increase on prior year temporary
      differences                                        -          -        702
    Other, net                                          614     (2,032)      309
                                                    -------     ------    ------
  Total deferred taxes                               (1,052)       672     7,625
                                                    -------     ------    ------
  Total provision for income taxes                  $11,009     $8,554    $8,715
                                                    =======     ======    ======
  </TABLE>
  
                                         23
  <PAGE>
  
  
  A  reconciliation  between  the  Federal  statutory  tax rate and the  Company's
  effective tax rate is as follows:
  <TABLE>
  <CAPTION>
  
                                                      Year ended December 31,
                                                     -------------------------
                                                     1995      1994       1993 
                                                     ----      ----       -----
  <S>                                               <C>        <C>        <C>
  Statutory tax rate                                35.0%      35.0%      35.0%
  Increase in taxes resulting from:
  Effect of tax rate increase on temporary
  differences as of January 1, 1993                   -            -       3.0%
  Decrease in taxes resulting from:
  Tax free investment income                        (3.3)%     (3.3)%     (0.6)%
                                                    ----       ----       ----
  Effective tax rate                                31.7%      31.7%      37.4%
                                                    ====       ====       ====
  </TABLE>
  
  Pursuant to   the  requirements of SFAS 109, the Company  recorded an additional
  deferred tax provision of $702 during 1993 to reflect the impact on deferred tax
  assets and  liabilities  resulting from the increase in U.S.  statutory  maximum
  corporate tax rates from 34% to 35%.
  
  ATC has $1,569 in non-life   net operating loss carryforwards  available for tax
  purposes,  and has capital loss  carryforwards of approximately $375 expiring in
  1997.
  
  Prior   to 1984, ATL had accumulated  $170 in a special  policyholders'  surplus
  account which has been excluded from taxation. These amounts will become taxable
  only when  distributed to  shareholders.  No provision for deferred income taxes
  has been made for  these  amounts  since the  Company  does not  anticipate  any
  transactions that would cause any part of the account to become taxable.
  
  The Internal  Revenue Service is conducting a   review of the Company's  federal
  income tax returns for the years ended December 31, 1993,  1992, 1991, and 1990.
  Management  believes  that the ultimate  outcome of the review will not have any
  material  adverse  effect on the financial  condition or results of operation of
  the Company.
  
  (6) Stock option plans:
  
  ATC has adopted  several  stock option plans (the  "Plans").  The   Plans permit
  grants of options covering a maximum of 3,495,000 shares of common stock.  Under
  the Plans,  options may be issued as incentive  stock options in the case of key
  employees  and/or as  non-qualified  stock  options in the case of persons  with
  managerial,  professional  or  supervisory  responsibilities,  including but not
  limited to,  directors,  officers and consultants to ATC, who, in the opinion of
  the  Committee  administering  the Plans,  have a capacity to make a substantial
  contribution  to ATC.  One of the Plans also  provides for the issuance of up to
  50,000 shares of the  Company's  common stock upon the exercise of stock options
  granted as formula awards pursuant to the plan.
  
  The   per share  exercise  price  may not be less  than 100% of the fair  market
  value of the common stock on the date of grant, or 1l0% of the fair market value
  in the case of incentive stock options issued to an employee owning, at the time
  the option is granted,  more than 10% of the  outstanding  common  stock of ATC.
  Options  cannot  be  exercised  more  than ten  years  after  the date of grant.
  Incentive  stock  options  held by  shareholders  owning  more  than  10% of the
  outstanding  common stock of ATC cannot be exercised  more than five years after
  the date of grant.
  
        Stock Options
  (The following table summarizes data relating to the stock options,  as restated
  for the stock split.)
  <TABLE>
  <CAPTION>
  
                                                      Number of Shares
                                           ------------------------------------
                                           1995             1994           1993
                                           ----             ----           ----
  <S>                                   <C>               <C>           <C>   
  Outstanding at beginning of year       1,234,788        1,390,788     1,341,774
  Granted                                  564,375          142,500       276,000
  Exercised                                (90,837)        (298,500)     (226,266)
  Canceled                                      -                -           (720)
                                         ---------        ---------     ---------
  Outstanding at end of year             1,708,326        1,234,788     1,390,788
                                         =========        =========     =========
  </TABLE>
                                         24
  <PAGE>
  
  At December 31, 1995, the number of shares exercisable and options available for
  additional granting for all plans was 1,444,503 and 259,698,  respectively.  The
  exercise price of options outstanding at December 31, 1995, ranged from $1.46 to
  $15.75 per share.  The average exercise price at December 31, 1995, is $8.44 per
  share. During 1995, options for 90,837 shares were exercised at a range of $1.58
  to $8.66 per share.
  
  (7) Shareholders' rights agreement:
  
  On April 25, 1990, the Company declared a dividend distribution in   the form of
  preferred stock purchase rights (the "rights"). The rights become exercisable if
  a person or group acquires or announces a tender offer to acquire 20% or more of
  the Company's common stock.  The rights also become  exercisable if the Board of
  Directors  declares  a person to be an  "adverse  person"  and that  person  has
  obtained more than 10% of the outstanding shares of the Company's common stock.
  
  Each   right, when  exercisable,  entitles the registered holder to purchase one
  one-hundredth of a share of Series A preferred stock at an exercise price of $50
  subject to certain adjustments.  In addition,  if a person or group acquires 20%
  or more of the  outstanding  shares of the Company's  common  stock,  subject to
  certain  exceptions,  or a person is declared an adverse person, each right will
  then  entitle its holder  (other than such persons or members of any such group)
  to purchase,  at the right's then current  exercise price, a number of shares of
  the  Company's  common  stock  having a total  market value of twice the right's
  exercise price.
  
  In   the event that the  Company  merges  with or  transfers  50% or more of its
  assets or earnings to any entity after the rights become exercisable, holders of
  rights may purchase, at the right's then current exercise price, common stock of
  the acquiring entity having a value equal to twice the right's exercise price.
  
  In   addition, at any time after a person acquires 20% of the outstanding shares
  of common  stock and prior to the  acquisition  by such person of 50% or more of
  the outstanding shares of common stock, the Company may change the rights (other
  than the rights  which have  become null and void),  in whole or in part,  at an
  exchange  ratio of one share of common  stock or  equivalent  share of preferred
  stock, per right.
  
  The   Board of  Directors  can  redeem the rights for $.01 per right at any time
  prior to the acquisition by a person or group of beneficial  ownership of 20% or
  more of the Company's common stock or a person being declared an adverse person.
  Until a right  is  exercised,  the  holder  thereof  will  have no  rights  as a
  shareholder of the Company,  including without limitation,  the right to vote or
  to receive  dividends.  Unless  earlier  redeemed or exchanged,  the rights will
  expire on May 14, 2000.
  
  (8) Claim Reserves:
  
  Activity in the   liability  for policy claim  reserves is summarized as follows
  for the years ended December 31:
  <TABLE>
  <CAPTION>
  
                                                        1995     1994     1993
                                                        ----     ----     ----
  <S>                                                 <C>      <C>      <C>
  Claim reserves-beginning of year:                   $ 85,290 $ 55,958 $ 43,315
  
  Add claims incurred during the year related to-
  Current year:                                        133,221   91,831   73,398
  Prior years:                                           6,327    3,131    5,213
                                                      --------  -------  -------
  Total incurred:                                      139,548   94,962   78,611
                                                      --------  -------  -------
  Less claims paid during the year related to-
  Current year:                                         49,794   35,200   30,049
  Prior years:                                          57,141   42,703   35,919
                                                      --------  -------  -------
  Total paid:                                          106,935   77,903   65,968
                                                      --------  -------  -------
  Plus-reinsurance assumed (See Note 15):               92,170   12,273        0
                                                      --------  -------  -------
  Claim reserves-end of year:                         $210,073 $ 85,290 $ 55,958
                                                      ======== ======== ========
  </TABLE>
  
                                         25
  <PAGE>
  
  The  development  of prior year claims  reserves  reflects  normal  changes   in
  actuarial  estimates.  The Company  utilizes case  reserves that are  considered
  fixed and  determinable  and discounts  such reserves  using an interest rate of
  6.25%  for  financial  statements  prepared  in  accordance  with  GAAP and 5.0%
  discount rate for statutory purposes.
  
  (9) Employee benefits:
  
  Effective  January 1, 1984, ATC initiated a defined  benefit pension   plan (the
  "Plan") for all employees over the age of 2l years who have worked for ATC for a
  period of one year.  ATC  makes  annual  contributions  to the Plan  based  upon
  amounts  required  to fund  such plan as  determined  by a  consulting  actuary.
  Pension  expense was $203, $181 and $154, for the years ended December 31, 1995,
  1994 and 1993,  respectively.  The following  table sets forth the plan's funded
  status at December 31, 1995 and 1994.
  <TABLE>
  <CAPTION>
  
                                                               1995    1994
                                                               ----    ----
  <S>                                                        <C>      <C>
  Actuarial present value of benefit obligations:
  Vested benefits                                            $  733   $  593
  Non-vested benefits                                           124       99
                                                             ------   ------
                                                             $  857   $  692
                                                             ======   ======
  
  Projected benefit obligation                               $1,270   $1,052
  Plan assets at fair value                                    (750)    (614)
                                                             ------   ------
  Projected benefit obligation in excess of plan assets         520      438
  Unrecognized net loss                                        (276)    (292)
  Unrecognized transition obligation                            (89)     (92)
  Unrecognized prior service cost                               (64)     (70)
                                                             ------    -----
  Accrued (prepaid) pension expense                            $ 91    $ (16)
                                                             ======    =====
  
  Net pension cost includes the following components:
  Service cost                                                $ 162    $ 137
  Interest cost on projected benefit obligation                  72       60
  Actual return on plan assets                                  (47)     (16)
  Net amortization                                               16        0
                                                              -----    -----
  Net periodic pension cost                                   $ 203    $ 181
                                                              =====    =====
  </TABLE>
  
  The assumed rate of increase in future compensation levels used   in determining
  the actuarial  present value of the projected  benefit  obligation is 5% in 1995
  and 1994.  The  expected  rate of  return on assets is 8% in 1995 and 1994.  The
  discount rate used is 7% in 1995 and 1994.
  
  The Company  does   not have any other  obligations  to provide  post-retirement
  benefits to employees.
  
  (10) Commitments and contingencies:
  
  The Company   is a defendant in various legal proceedings and litigation arising
  in  the  ordinary  course  of  business.  In  management's  opinion,   based  on
  discussions  with counsel,  the resolution of such  proceedings  will not have a
  material adverse effect on the Company's  consolidated  financial  condition and
  results of operations.
  
  A civil  shareholders' class action suit filed against the Company   and certain
  of its  officers  in March 1992 was settled  during the second  quarter of 1993.
  Under the terms of the  settlement,  class  members were paid  $1,500,  of which
  $1,000 was paid by the Company's  liability carrier.  While the Company believed
  the  suit was  without  merit,  a  settlement  was  reached  to  avoid  internal
  distraction,   ongoing   professional   fees  and  other   potential  costs  and
  uncertainties of continued litigation.
  
                                         26
  <PAGE>
  
  
  (11) Transactions with related parties:
  
  Commissions paid to agencies  controlled   by certain directors amounted to $136
  in 1995, $140 in 1994 and $104 in 1993.
  
  The  Company   has  employment  contracts  with  certain  key  employees.  These
  contracts  provide for, among other things,  certain  severance  payments in the
  case of termination.
  
  (12) 6.5% convertible subordinated debentures due 2005
  
  In   September 1995 the Company issued $103,500 of 6.5% Convertible Subordinated
  Debentures  (the  "Debentures")  due October 1, 2005.  The proceeds were used to
  finance  an  additional  surplus  contribution  to ATL,  prepay  $20  million in
  outstanding  borrowings  under the Company's  Revolving  Credit Facility and for
  general corporate purposes.
  
  Interest on   the debentures is payable  semi-annually on April 1 and October 1,
  commencing  on April 1, 1996.  The  Debentures  are  redeemable at the Company's
  option at a price equal to 103.25%  after  October  1998,  declining  to 100% if
  redeemed after October 2001.
  
  The Debentures are convertible into ATC common stock anytime  prior  to maturity
  at a conversion price equal to $15.17 per share (equivalent to a conversion rate
  of 65.94 shares per $1,000 principal amount of debentures). The conversion price
  has been  adjusted to reflect the 3- for-2 stock split  discussed in Note 1, and
  is  subject to further  adjustment  under  certain  events  including  dividends
  distributions and common stock issuances, among others.
  
  Debt issue   costs incurred in connection  with the Debentures  totaling  $3,796
  are  included  in other  assets  and are  being  amortized  over the term of the
  Debentures. Accumulated amortization is $74 at December 31, 1995.
  
  (13)  Bank borrowings
  
    ATC  currently  is  party  to  a  $20,000   Revolving  Credit  Agreement  (the
  "Agreement").  The revolving credit  availability will be reduced by $1,667 each
  quarter beginning no later than March 31, 2002. No borrowings are outstanding at
  December 31, 1995.
  
    At December 31, 1994,  $20,000 in borrowings were  outstanding.  Proceeds from
  these borrowings were used to fund surplus  contributions to ATL during 1994 and
  1993.  Such  borrowings  were  repaid  with the  proceeds  from  the  Debentures
  discussed in Note 12.
  
  Borrowings  are  secured  by the  common  stock of ATL and ATIS.  Interest  is
  payable at 0.25% over the bank's base rate, at 1.625% over the London  interbank
  Eurodollar  rate or 1.75% over the bank's  certificate  of deposit  rate, at the
  Company's  option.  The average interest rate for amounts borrowed was 8.35% and
  8.44% for 1995 and 1994,  respectively.  A commitment fee is payable to the bank
  based on the average daily unused portion of the credit.
  
  The Agreement contains   restricted  covenants.  The more significant  covenants
  require  the  company  maintain a  specified  amount of net worth and  statutory
  surplus  and  meet  certain   financial   ratios,   and  restricts  mergers  and
  acquisitions, future indebtedness and commitments, and types of investments. The
  Company was in  compliance  with all of the  covenants as amended as of December
  31, 1995.
  
  (14) Leases:
  
  Future minimum lease rentals on  operating leases which consist  principally of
  the Company's Home Office facility and computers are as follows:
  
  1996            $1,935
  1997             1,796
  1998             1,411
  1999             1,185
  Thereafter         938
                  ------
  Total           $7,265
                  ======
  Operating lease expenses for the years ended December 31, 1995, 1994, and 1993
  were $1,670, $1,607 and $1,734, respectively.
  
                                         27
  <PAGE>
  
  (15) Acquisitions:
  
  In December 1995,  the Company  closed on an reinsurance  agreement   to acquire
  the long term care insurance  business of an unrelated  insurance  company which
  consisted of approximately  $96,000 of annualized  premium.  The transaction was
  effective as of October 1, 1995.  Under the terms of the reinsurance  agreement,
  the Company assumed all existing liabilities  associated with the long term care
  insurance  business on a coinsurance  basis.  Cash and marketable  securities of
  approximately  $249,969 were  transferred  to the Company.  In October 1994, the
  Company  acquired the long term  insurance  business of an  unrelated  insurance
  company  which  consisted  of  approximately  $25,000  of  annualized  premiums.
  Approximately $29,400 in cash was transferred to the Company. These acquisitions
  have been  accounted for using the purchase  accounting  method.  Total cash and
  marketable   securities   received  in   connection   with  these   acquisitions
  approximates reserve liabilities assumed.
  
  Value of business  acquired  consists of the excess of the   purchase price over
  the estimated fair value of net assets  acquired in connection with the purchase
  of common stock and the present value of expected future profits associated with
  blocks of business  purchased prior to 1992. Value of business  acquired related
  to the purchased blocks of business is being amortized over the respective lives
  of the blocks, which are estimated at approximately 5 to 7 years.
  
  (16)  Consolidated quarterly financial data (unaudited).
  
  Quarterly  financial  data for the years ended December 31, 1995 and 1994 are as
  follows:
  <TABLE>
  <CAPTION>
  
                                  First     Second      Third      Fourth
                                  -----     ------      -----      ------
  <S>                           <C>       <C>        <C>         <C> 
  1995
  ----
  Total Revenues                $ 65,314  $  65,476  $  68,278   $  98,264
  
  Total Benefits and Expenses     57,740     57,424     59,962      87,512
                                --------  ---------   --------   ---------
  Income before Provision
  for Income Tax                   7,574      8,052      8,316      10,752
  Provision for Income Taxes       2,350      2,544      2,589       3,526
                                --------  ---------   --------    --------
  Net Income                    $  5,224  $   5,508   $  5,727    $  7,226
                                ========  =========   ========    ========
  Net Income Per Share
  Primary                       $    .32  $     .34   $    .35    $    .44
                                ========  =========   ========    ========
  Fully Diluted                 $    .32  $     .34   $    .34    $    .36
                                ========  =========   ========    ========
  </TABLE>
  <TABLE>
  <CAPTION>
  
                                 First     Second      Third      Fourth
                                 -----     ------      -----      ------
  <S>                           <C>        <C>       <C>         <C>
  1994
  ----
  Total Revenues                $ 49,610   $ 50,605  $  52,043   $  60,643
  Total Benefits and Expenses     43,439     44,205     45,149      53,126
                                --------   --------   --------   ---------
  Income before provision for
  income tax                       6,171      6,400      6,894       7,517
  Provision for Income Taxes       1,929      2,010      2,178       2,437
                                --------   --------  ---------   ---------
  Net Income                    $  4,242   $  4,390  $   4,716   $   5,080
                                ========   ========  =========   =========
  Net Income Per Share
  Primary                       $   .27    $    .27  $     .29   $     .31
                                =======    ========  =========   =========
  Fully Diluted                 $   .27    $    .27  $     .29   $     .31
                                =======    ========  =========   =========
  
  Per share  amounts have been adjusted to reflect the  three-for-two  stock split
  payable on April 10, 1996.
  </TABLE>
                                         28
  <PAGE>
                        CONSECO, INC. AND SUBSIDIARIES
                                _________________
  
  ITEM 7(b).     Financial Statements and Exhibits, continued
  
                 (b)  Pro forma financial statements of Conseco, Inc. and
                      subsidiaries.
  
  
                                         29
  <PAGE>
     CONSECO, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
    
       The  unaudited pro forma  consolidated  statement of operations of Conseco,
  Inc.  ("Conseco") for the nine months ended September 30, 1996, and for the year
  ended December 31, 1995, presents the consolidated operating results for Conseco
  as if the following  transactions,  which have already occurred, had occurred on
  January  1,  1995:  (1) the  issuance  of  $275.0  million  of Trust  Originated
  Preferred  Securities  ("TOPrS") having a distribution rate of 9.16 percent (the
  "TOPrS  Offering");  (2)  the  issuance  of  $325.0  million  of  Capital  Trust
  Pass-through  Securities  ("TruPS")  having a distribution  rate of 8.70 percent
  (the  "TruPS  Offering");  and (3) the merger  (the "ATC  Merger")  of  American
  Travellers Corporation ("ATC") with and into Conseco.
  
       The pro forma consolidated statement of operations data for Conseco for the
  year ended December 31, 1995, set forth in the unaudited pro forma  consolidated
  statement of operations  under the column "Pro forma Conseco  before the Merger"
  reflect the prior application of certain pro forma adjustments for the following
  transactions,  all of which have already  occurred,  as if such transactions had
  occurred on January 1, 1995: (i) the call for  redemption of Conseco's  Series D
  Convertible  Preferred  Stock (the "Series D Call")  completed on September  26,
  1996; (ii) the  acquisition of all of the  outstanding  common stock of American
  Life  Holdings,  Inc.  ("ALH"),  not  previously  owned by Conseco,  and related
  transactions (the "ALH Transaction")  completed on September 30, 1996; (iii) the
  acquisition  of  Life  Partners  Group,  Inc.  (the  "LPG  Merger");   (iv)  the
  acquisition of all of the outstanding  common stock of CCP not previously  owned
  by Conseco and related  transactions  (including the repayment of the borrowings
  under Conseco's  existing $250.0 million  revolving credit  agreement);  (v) the
  increase of Conseco's  ownership in Bankers Life Holding  Corporation ("BLH") to
  90.4  percent,  as a result of purchases of common  shares of BLH by Conseco and
  BLH during 1995 and the first three  months of 1996;  (vi) the  issuance of 4.37
  million shares of Preferred  Redeemable  Increased  Dividend  Equity  Securities
  Convertible Preferred Stock ("PRIDES") of Conseco in January 1996; (vii) the BLH
  tender offer for and repurchase of its 13 percent senior  subordinated notes due
  2002 and related financing transactions completed in March 1996 (the "BLH Tender
  Offer"); and (viii) the debt restructuring of ALH in the fourth quarter of 1995.
  Such pro forma  adjustments  are set forth in:  (i)  Exhibit  99.2  included  in
  Conseco's  Current Report on Form 8-K dated  September 25, 1996;  (ii) Conseco's
  Current Report on Form 8-K dated August 2, 1996; and (iii) Exhibit 99.1 included
  in Conseco's Current Report on Form 8-K dated April 10, 1996.
  
       The pro forma consolidated statement of operations data for Conseco for the
  nine months ended  September  30,  1996,  set forth in the  unaudited  pro forma
  consolidated  statement of operations under the column "Pro forma Conseco before
  the  TOPrS  Offering"  reflect  the  prior  application  of  certain  pro  forma
  adjustments for the following transactions,  all of which have already occurred,
  as if such  transactions had occurred on January 1, 1995: (1) the Series D Call;
  (2) the ALH  Transaction;  (3) the LPG Merger;  (4) the issuance of 4.37 million
  shares of Conseco PRIDES in January 1996; and (5) the BLH Tender Offer. Such pro
  forma  adjustments are set forth in Exhibit 99.1 included in Conseco's Form 10-Q
  for the quarterly period ended September 30, 1996.
  
       The  unaudited  pro  forma  consolidated  balance  sheet of  Conseco  as of
  September  30, 1996,  gives  effect to the  following  transactions,  which have
  already  occurred,  as if each had occurred on September 30, 1996: (1) the TOPrS
  Offering; (2) the TruPS Offering; and (3) the ATC Merger.
  
       The pro forma consolidated financial statements are based on the historical
  financial  statements  of  Conseco,  LPG  and ATC  and  are  qualified  in their
  entirety by, and should be read in conjunction with, these financial  statements
  and the notes thereto. The pro forma data are not necessarily  indicative of the
  results of operations or financial  condition of Conseco had these  transactions
  occurred  on January  1, 1995,  nor the  results of future  operations.  Conseco
  anticipates  cost savings and additional  benefits as a result of certain of the
  transactions  contemplated in the pro forma financial statements.  Such benefits
  and any other changes that might have  resulted from  management of the combined
  companies have not been included as  adjustments  to the pro forma  consolidated
  financial  statements.   Certain  amounts  from  the  prior  periods  have  been
  reclassified to conform to the current presentation.
  
       The  unaudited pro forma  consolidated  financial  statements  reflect cost
  allocations  for the LPG Merger,  the ALH  Transaction  and the ATC Merger using
  estimated  values of the assets and  liabilities  of LPG,  ALH and ATC as of the
  assumed merger dates based on appraisals  and other  studies,  which are not yet
  complete.  Accordingly, the final allocations will be different than the amounts
  included  in the  accompanying  pro  forma  consolidated  financial  statements.
  Although the final allocations will differ, the pro forma consolidated financial
  statements  reflect  management's  best  estimate  based on currently  available
  information  as if the LPG Merger,  the ALH  Transaction  and the ATC Merger had
  occurred on the assumed merger dates.
                                    30
  <PAGE>
  
  <TABLE>
  <CAPTION>
  
                           CONSECO, INC. AND SUBSIDIARIES
                   PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                       for the nine months ended September 30, 1996
                   (Amounts in millions, except per share amounts)
                                     (unaudited)
                                                                                                                       
                                                                       Pro forma                                                   
                                                         Pro forma    adjustments                  Pro forma      
                                                          Conseco      relating      Pro forma     adjustments  
                                                         before the     to the        for the      relating to  Pro forma     
                                                           TOPrS        TOPrS          TOPrS        the TruPS    Conseco     
                                                          Offering     Offering      Offering       Offering     subtotal(a)
                                                          --------     --------       --------     ---------    ---------  
  <S>                                                    <C>            <C>           <C>           <C>         <C>         
  Revenues:
       Insurance policy income                           $1,349.0       $   -         $1,349.0     $    -       $1,349.0     
       Investment activity:
           Net investment income                          1,084.4                      1,084.4                   1,084.4    
  
           Net trading losses                                (6.5)                        (6.5)                     (6.5)    
           Net realized gains                                23.0                         23.0                      23.0    
       Fee revenue                                           29.7                         29.7                      29.7         
       Restructuring income                                  30.4                         30.4                      30.4         
       Other income                                          11.4                         11.4                      11.4         
                                                         --------      -------        --------     --------     --------   
              Total revenues                              2,521.4                      2,521.4                   2,521.4    
                                                         --------      -------        --------     --------     --------     
  
  Benefits and expenses:
       Insurance policy benefits and change in future
         policy benefits                                    957.2                        957.2                     957.2     
       Interest expense on annuities and financial
         products                                           549.5                        549.5                     549.5      
       Interest expense on notes payable                    100.7        (12.9)(1)        87.8        (15.6)(6)     72.2         
                                                                                                
  
       Interest expense on investment borrowings             17.2                         17.2                      17.2         
       Amortization related to operations                   242.9                        242.9                     242.9      
                                                                                                
       Amortization related to realized gains                22.3                         22.3                      22.3        
       Other operating costs and expenses                   243.5                        243.5                     243.5      
                                                         --------      -------        --------     --------     --------    
              Total benefits and expenses                 2,133.3        (12.9)        2,120.4        (15.6)     2,104.8     
                                                         --------      -------        --------     --------     --------     
  
              Income before income taxes, minority
                  interest and extraordinary charge         388.1         12.9           401.0         15.6        416.6       
  Income tax expense                                        147.9          4.5 (2)       152.4          5.4 (7)    157.8       
                                                         --------      -------        --------      -------     --------    
              Income before  minority interest
                  and extraordinary charge                  240.2          8.4           248.6         10.2        258.8      
  
  Minority interest in consolidated subsidiaries:
       Dividends on Company - obligated mandatorily
         redeemable preferred securities of subsidiary
         trusts                                                -          12.3 (3)        12.3         13.8 (8)     26.1    
       Dividends on preferred  stock                          6.4                          6.4                       6.4
       Equity in earnings                                    13.9                         13.9                      13.9
                                                         --------      -------        --------     --------     --------    
  
              Income before extraordinary charge         $  219.9      $  (3.9)       $  216.0     $   (3.6)    $  212.4    
                                                         ========      =======        ========     ========     ========    
  
  Earnings per common share and common equivalent share:
       Primary:
           Weighted average shares outstanding               77.2                         77.2                      77.2     
                                                         ========                     ========                     =====       
           Income before extraordinary  charge              $2.85                        $2.80                     $2.75       
                                                         ========                     ========                     =====
  
       Fully diluted:
           Weighted average shares outstanding               78.7                         78.7                      78.7
                                                         ========                      =======                     =====
           Income before extraordinary  charge              $2.79                        $2.74                     $2.70
                                                         ========                      =======                     =====
  <FN>
  (a)  Amounts are carried forward to page 32.
  </FN>
   The accompanying notes are an integral part of the pro forma consolidated financial statements.
  
                                         31
  </TABLE>
  <PAGE>
  <TABLE>
  <CAPTION>
                            CONSECO, INC AND SUBSIDIARIES
                   PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                       for the nine months ended September 30, 1996
                   (Amounts in millions, except per share amounts)
                                     (unaudited)
  
                                                                                                                                      
                                                              Pro forma                                    
                                                             adjustments                                    
                                    Pro forma                  relating       Pro forma             
                                     Conseco        ATC        to the          Conseco           
                                   subtotal(a)   historical   ATC Merger       totals   
                                    ---------   ------------  ----------     ---------   
  <S>                              <C>           <C>           <C>            <C>               
  Revenues:
   Insurance policy income         $1,349.0       $ 283.3       $     -       $1,632.3     
  
      Net investment income         1,084.4          33.2            1.1 (11)  1,118.7                         
                                             
         
             
      Net trading losses               (6.5)                                      (6.5)                         
      Net realized gains               23.0           1.3            2.3 (11)     26.6          
    Fee revenue                        29.7                                       29.7                     
    Restructuring income               30.4                                       30.4                      
    Other income                       11.4                                       11.4                                 
                                  ---------      --------       --------      --------      
           Total revenues           2,521.4         317.8            3.4       2,842.6            
                                  ---------      --------       --------      --------      
  
  Benefits and expenses:
   Insurance policy benefits
     and change in future
     policy benefits                  957.2         192.2                      1,149.4            
   Interest expense 
     on annuities and
     financial products               549.5                                      549.5                       
   Interest expense on
     notes payable                     72.2           5.8            1.5 (12)     75.8                              
                                                                    (3.7)(13)                               
                                                              
    Interest expense on
     investment borrowings             17.2                                       17.2                   
    Amortization related
      to operations                   242.9          16.4          (16.4)(14)    273.6                 
                                                                    19.9 (14)                               
                                                                    10.8 (15)                                 
    Amortization related
      to realized gains                22.3                                      22.3               
    Other operating 
     costs and expenses               243.5          64.4                       307.9                 
                                  ---------      --------       --------      -------      
          Total benefits
           and expenses             2,104.8         278.8           12.1      2,395.7            
                                  ---------      --------       --------      -------     
  
          Income before income
              taxes, minority interest
              and extraordinary
              charge                  416.6          39.0           (8.7)       446.9                 
  Income tax expense                  157.8          13.0             .7 (16)   171.5               
                                  ---------     ---------       --------      -------      
          Income before 
              minority interest 
              and extraordinary
              charge                  258.8          26.0           (9.4)       275.4                 
  
  Minority interest in consolidated
     subsidiaries:                                                                                                                
     Dividends on Company - obligated
       mandatorily redeemable
       preferred securities of  
       subsidiary trusts               26.1                                      26.1                                 
     Dividends on preferred stock       6.4                                       6.4                            
     Equity in earnings                13.9                                      13.9       
                                   --------     ---------       --------      -------      
          Income before 
              extraordinary
              charge               $  212.4      $   26.0       $   (9.4)     $ 229.0           
                                   ========      ========       ========      =======      
  
  
  
  
  
  
  
  Earnings per common share and 
   common equivalent share:
   Primary:
       Weighted average 
         shares outstanding            77.2                         10.4 (17)    87.6                 
                                       ====                       ======         ====       
       Income before 
         extraordinary  charge        $2.75                                     $2.61                                   
                                      =====                                     =====                                          
  
   Fully diluted:
       Weighted average shares
         outstanding                   78.7                         14.4 (17)    93.1                
                                       ====                       ======         ====                
       Income before  
         extraordinary charge         $2.70                                     $2.47
                                      =====                                     =====
  <FN>
  (a) Amounts have been carried forward from page 31.
  </FN>
   The accompanying notes are an integral part of the pro forma consolidated financial statements.
  
                                         32
  </TABLE>
  <PAGE>
  
  <TABLE>
  <CAPTION>
  
  
                           CONSECO, INC. AND SUBSIDIARIES
                   PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                       for the year ended December 31, 1995
                   (Amounts in millions, except per share amounts)
                                     (unaudited)
                                                                                                                       
                                                                       Pro forma                   
                                                         Pro forma    adjustments                  Pro forma      
                                                          Conseco      relating      Pro forma     adjustments
                                                         before the     to the        for the      relating to  Pro forma    
                                                           TOPrS         TOPrS         TOPrS        the TruPS    Conseco
                                                          Offering     Offering      Offering       Offering     subtotal(a)
                                                          --------     --------       --------     ---------    ---------  
  <S>                                                    <C>            <C>           <C>           <C>         <C>         
  Revenues:
       Insurance policy income                           $1,752.8       $   -         $1,752.8     $    -       $1,752.8     
       Investment activity:
           Net investment income                          1,461.1                      1,461.1                   1,461.1    
  
           Net trading income                                 2.5                          2.5                       2.5     
           Net realized gains                               220.3                        220.3                     220.3
       Fee revenue                                           33.9                         33.9                      33.9         
       Restructuring income                                  15.2                         15.2                      15.2         
       Other income                                          12.6                         12.6                      12.6         
                                                         --------      -------        --------     --------     --------   
              Total revenues                              3,498.4                      3,498.4                   3,498.4    
                                                         --------      -------        --------     --------     --------     
  
  Benefits and expenses:
       Insurance policy benefits and change in future
         policy benefits                                  1,261.4                      1,261.4                   1,261.4     
       Interest expense on annuities and financial
         products                                           758.5                        758.5                     758.5      
       Interest expense on notes payable                    143.5        (17.3)(1)       126.2        (20.9)(6)    105.3         
                                                                                                
  
       Interest expense on investment borrowings             30.2                         30.2                      30.2         
       Amortization related to operations                   307.3                        307.3                     307.3      
                                                                                                
       Amortization related to realized gains               144.4                        144.4                     144.4       
       Other operating costs and expenses                   356.4                        356.4                     356.4      
                                                         --------      -------        --------     --------     --------    
              Total benefits and expenses                 3,001.7        (17.3)        2,984.4        (20.9)     2,963.5     
                                                         --------      -------        --------     --------     --------     
  
              Income before income taxes, minority
                  interest and extraordinary charge         496.7         17.3           514.0         20.9        534.9       
  Income tax expense                                        192.3          6.1 (2)       198.4          7.3 (7)    205.7       
                                                         --------      -------        --------      -------     --------    
              Income before  minority interest
                  and extraordinary charge                  304.4         11.2           315.6         13.6        329.2      
  
  Minority interest in consolidated subsidiaries:
       Dividends on Company - obligated mandatorily
         redeemable preferred securities of subsidiary
         trusts                                                -          16.4 (3)        16.4         18.4 (8)     34.8    
       Dividends on preferred  stock                          8.7                          8.7                       8.7
       Equity in earnings                                    12.6                         12.6                      12.6
                                                         --------      -------        --------     --------     --------    
  
              Income before extraordinary charge         $  283.1      $  (5.2)       $  277.9     $   (4.8)    $  273.1    
                                                         ========      =======        ========     ========     ========    
  
  Earnings per common share and common equivalent share:
       Primary:
           Weighted average shares outstanding               75.7                         75.7                      75.7     
                                                         ========                     ========                     =====       
           Income before extraordinary  charge              $3.74                        $3.67                     $3.61       
                                                         ========                     ========                     =====
  
       Fully diluted:
           Weighted average shares outstanding               76.0                         76.0                      76.0
                                                         ========                      =======                     =====
           Income before extraordinary  charge              $3.72                        $3.66                     $3.59
                                                         ========                      =======                     =====
  <FN>
  (a)  Amounts are carried forward to page 34.
  </FN>
   The accompanying notes are an integral part of the pro forma consolidated financial statements.
  
                                         33
  </TABLE>
  
  <PAGE>
  <TABLE>
  <CAPTION>
                            CONSECO, INC AND SUBSIDIARIES
                   PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                       for the year ended December 31, 1995
                   (Amounts in millions, except per share amounts)
                                     (unaudited)
  
                                                                                                                                      
                                                              Pro forma                                    
                                                             adjustments                                    
                                    Pro forma                  relating       Pro forma             
                                     Conseco        ATC        to the          Conseco           
                                   subtotal(a)   historical   ATC Merger       totals   
                                    ---------   ------------  ----------     ---------   
  <S>                              <C>           <C>           <C>            <C>               
  Revenues:
   Insurance policy income         $1,752.8       $ 273.9       $     -       $2,026.7     
  
      Net investment income         1,461.1          23.2            1.8 (11)  1,486.1                         
                                             
         
             
      Net trading income                2.5                                        2.5                         
      Net realized gains              220.3            .2            2.0 (11)    222.5          
    Fee revenue                        33.9                                       33.9                     
    Restructuring income               15.2                                       15.2                      
    Other income                       12.6                                       12.6                                 
                                  ---------      --------       --------      --------      
           Total revenues           3,498.4         297.3            3.8       3,799.5            
                                  ---------      --------       --------      --------      
  
  Benefits and expenses:
   Insurance policy benefits
     and change in future
     policy benefits                1,261.4         172.9                      1,434.3            
   Interest expense 
     on annuities and
     financial products               758.5                                      758.5                       
   Interest expense on
     notes payable                    105.3           3.3            1.9 (12)    107.3                              
                                                                    (3.2)(13)                               
                                                              
    Interest expense on
     investment borrowings             30.2                                       30.2                   
    Amortization related
      to operations                   307.3          22.7          (22.7)(14)    345.2                 
                                                                    23.5 (14)                               
                                                                    14.4 (15)                                 
    Amortization related
      to realized gains               144.4                                      144.4               
    Other operating 
     costs and expenses               356.4          63.7                        420.1                 
                                  ---------      --------       --------       -------      
          Total benefits
           and expenses             2,963.5         262.6           13.9       3,240.0            
                                  ---------      --------       --------       -------     
  
          Income before income
              taxes, minority interest
              and extraordinary
              charge                  534.9          34.7          (10.1)        559.5                 
  Income tax expense                  205.7          11.0            1.5 (16)    218.2               
                                  ---------     ---------       --------       -------      
          Income before 
              minority interest 
              and extraordinary
              charge                  329.2          23.7          (11.6)        341.3                 
  
  Minority interest in consolidated
     subsidiaries:                                                                                                                
     Dividends on Company - obligated
       mandatorily redeemable
       preferred securities of  
       subsidiary trusts               34.8                                       34.8                                 
     Dividends on preferred stock       8.7                                        8.7                            
     Equity in earnings                12.6                                       12.6       
                                   --------     ---------       --------       -------      
          Income before 
              extraordinary
              charge               $  273.1      $   23.7       $  (11.6)      $ 285.2           
                                   ========      ========       ========       =======      
  
  
  
  
  
  
  
  Earnings per common share and 
   common equivalent share:
   Primary:
       Weighted average 
         shares outstanding            75.7                         10.4 (17)    86.1
                                       ====                       ======         ====
       Income before 
         extraordinary  charge        $3.61                                     $3.31
                                      =====                                     =====
  
   Fully diluted:
       Weighted average shares
         outstanding                   76.0                         14.4 (17)    90.4
                                       ====                       ======         ====                
       Income before  
         extraordinary charge         $3.59                                     $3.15           
                                      =====                                     =====           
  <FN>
  (a) Amounts have been carried forward from page 33.
  </FN>
   The accompanying notes are an integral part of the pro forma consolidated financial statements.
  
                                         34
  </TABLE>
  
  <PAGE>
  <TABLE>
  <CAPTION>
  
  
                           CONSECO, INC. AND SUBSIDIARIES
                        PRO FORMA CONSOLIDATED BALANCE SHEET
                                 September 30, 1996
                                (Dollars in millions)
                                     (unaudited)
                                                                                                                        
                                                                                                   
                                                                      Pro forma                    Pro forma          
                                                                     adjustments    Pro forma     adjustments
                                                                     relating to     for the      relating to  Pro forma
                                                         Conseco      the TOPrS        TOPrS       the TruPS    Conseco
                                                       as reported    Offering       Offering      Offering    subtotal(a)
                                                       ------------  -----------    ----------    ---------    --------   
  <S>                                                <C>              <C>          <C>           <C>         <C>          
  
  
  Assets
       Investments:
           Actively managed fixed maturity          
             securities at fair value                  $15,959.8        $   -       $15,959.8   $     -       $15,959.8    
                                                                                       
  
           Held-to-maturity fixed maturity 
             securities                                       -                            -                         -          
           Equity securities at fair value                 104.2                        104.2                     104.2          
           Mortgage loans                                  372.5                        372.5                     372.5          
           Credit-tenant loans                             393.8                        393.8                     393.8          
           Policy loans                                    526.0                        526.0                     526.0          
           Other invested assets                           211.0                        211.0                     211.0          
           Short-term investments                          212.3         265.5 (4)      212.3        321.3 (9)    212.3         
                                                                        (265.5)(4)                  (321.3)(9)
           Assets held in separate accounts                300.4                        300.4                     300.4          
                                                       ---------        ------      ---------    ---------    ---------     
  
                  Total investments                     18,080.0            -        18,080.0           -      18,080.0        
                                                       
       Accrued investment income                           276.7                        276.7                     276.7         
       Cost of policies purchased                        1,847.1                      1,847.1                   1,847.1         
                                                                                                 
       Cost of policies produced                           541.0                        541.0                     541.0        
       Reinsurance receivables                             400.6                        400.6                     400.6            
       Income taxes                                        138.9                        138.9                     138.9            
                                                                                                
       Goodwill                                          1,524.7                      1,524.7                   1,524.7           
  
       Property and equipment                              105.9                        105.9                     105.9           
       Securities segregated for future redemption      
           of redeemable preferred stock of a
           subsidiary                                       45.0                         45.0                      45.0           
       Other assets                                        216.1                        216.1                     216.1        
                                                       ---------        ------      ---------    ---------    ---------     
  
                  Total assets                         $23,176.0        $   -       $23,176.0    $      -     $23,176.0    
                                                       =========        ======      =========    =========    =========    
  
  
  <FN>
  (a) Amounts are carried forward to page 36.
  </FN>
   The accompanying notes are an integral part of the pro forma consolidated financial statements.
  
                                         35
  </TABLE>
                                     
  <PAGE>
  <TABLE>
  <CAPTION>
  
                           CONSECO, INC. AND SUBSIDIARIES
                        PRO FORMA CONSOLIDATED BALANCE SHEET
                                 September 30, 1996
                                (Dollars in millions)
                                     (unaudited)
  
                                                                                                                                      
                                                               Pro forma                                       
                                                             adjustments                                   
                                    Pro forma                   relating    Pro forma           
                                     Conseco        ATC         to the       Conseco          
                                    subtotal(a)  historical   ATC Merger      totals  
                                    ---------   ------------  ----------- -----------   
  <S>                              <C>           <C>         <C>         <C>                  
       
  
  Assets
   Investments:
       Actively managed fixed    
        maturity securities
        at fair value               $15,959.8     $  689.7     $    -       $16,649.5   
                                                                                                         
  
       Held-to-maturity 
        fixed maturity 
        securities                         -                                                                 
       Equity securities at 
        fair value                      104.2                                   104.2                      
       Mortgage loans                   372.5           .4                      372.9                      
       Credit-tenant loans              393.8                                   393.8                     
       Policy loans                     526.0                                   526.0                     
       Other invested assets            211.0                                   211.0                     
       Short-term investments           212.3         12.2         (30.4)(18)   224.5                     
                                                                    30.4 (19)                    
                                                                                                      
       Assets held in separate
         accounts                       300.4                                   300.4                      
                                     --------     --------     ---------    ---------  
  
              Total investments      18,080.0        702.3            -      18,782.3          
                                                              
   Accrued investment income            276.7          7.7                      284.4                     
   Cost of policies purchased         1,847.1         10.9         268.8 (20) 2,115.9        
                                                                   (10.9)(20)                                          
   Cost of policies produced            541.0        168.7        (168.7)(21)   541.0       
   Reinsurance receivables              400.6                                   400.6                     
   Income taxes                         138.9                      (27.1)(22)    85.6       
                                                                   (26.2)(22)                      
   Goodwill                           1,524.7                      562.8 (23) 2,087.5       
  
   Property and equipment               105.9          3.9                      109.8        
   Securities segregated for 
       future redemption of                    
       redeemable preferred
       stock of a
       subsidiary                        45.0                                    45.0                     
   Other assets                         216.1         14.1                      230.2           
                                    ---------     --------     ---------    ---------   
  
              Total assets          $23,176.0     $  907.6     $   598.7    $24,682.3   
                                    =========     ========     =========    =========  
  
  
  <FN>
  (a)  Amounts have been carried forward from page 35.
  </FN>
  
   The accompanying notes are an integral part of the pro forma consolidated financial statements.
                                        
                                          36
  </TABLE>
        
  <PAGE>
  <TABLE>
  <CAPTION>
  
                           CONSECO, INC. AND SUBSIDIARIES
                        PRO FORMA CONSOLIDATED BALANCE SHEET
                                 September 30, 1996
                                (Dollars in millions)
                                     (unaudited)
  
                                                                                                                                      
                                                  Pro forma                
                                                 adjustments               Pro forma                           Pro forma  
                                                  relating    Pro forma   adjustments                         adjustments
                                                   to the      for the    relating to  Pro forma               relating    Pro forma 
                                    Conseco        TOPrS        TOPrS      the TruPS    Conseco      ATC        to the      Conseco
                                   as reported    Offering     Offering     Offering    subtotal  Historical  ATC Merger     totals
                                    ---------    ----------    --------    ---------   ---------  ---------- ------------  ---------
  <S>                              <C>           <C>         <C>         <C>          <C>         <C>         <C>          <C>  
       
  
  Liabilities:
       Insurance liabilities        $18,150.7   $   -          $18,150.7   $  -        $18,150.7   $ 586.3   $     -       $18,737.0
       Income tax liabilities              -                          -                       -       26.2      (26.2)(22)        -  
       Investment borrowings            539.4                      539.4                   539.4                               539.4
       Other liabilities                482.0                      482.0                   482.0      10.9       11.3 (24)     504.2 
       Liabilities related 
         to separate accounts           300.1                      300.1                   300.1                               300.1
       Notes payable of Conseco       1,169.0    (265.5)(4)        903.5    (321.3)(9)     582.2     102.9       30.4 (19)     851.2
                                                                                                                135.7 (24)
  
       Notes payable of 
         Bankers Life Holding
         Corporation, not 
         direct obligations 
         of Conseco                     418.1                      418.1                   418.1                               418.1
  
       Notes payable of American
         Life Holdings, Inc., not
         direct obligations of 
         Conseco                         13.0                       13.0                    13.0                                13.0 
                                     --------    ------        ---------   -------     ---------    ------    -------       --------
  
              Total liabilities      21,072.3    (265.5)        20,806.8    (321.3)     20,485.5     726.3      151.2       21,363.0
                                     --------    ------        ---------   -------     ---------    ------    -------       --------
  
  Minority interest in consolidated
     subsidiaries:                                                                          
     Company - obligated mandatorily
       redeemable preferred securities
       of subsidiary trusts                -      275.0 (5)        275.0     325.0 (10)    600.0                               600.0
     Preferred stock                     92.5                       92.5                    92.5                                92.5
     Common stock                        55.3                       55.3                    55.3                                55.3
  
                                     --------    ------        ---------   -------     ---------    ------    -------      --------- 
  
  Shareholders' equity:
       Preferred stock                  267.1                      267.1                   267.1                               267.1
  
       Common stock and additional
         paid-in capital              1,054.5      (9.5)(5)      1,045.0      (3.7)(10)  1,041.3      64.4      (64.4)(25)   1,670.1
                                                                                                                628.8 (25)
       Unrealized appreciation 
         (depreciation) of securities   (47.0)                     (47.0)                  (47.0)    (10.3)      10.3 (25)     (47.0)
  
       Retained earnings                681.3                      681.3                   681.3     127.2     (127.2)(25)     681.3
  
                                      -------    ------        ---------   -------     ---------    ------    -------      --------- 
  
          Total shareholders' equity  1,955.9      (9.5)         1,946.4      (3.7)      1,942.7     181.3      447.5        2,571.5
                                      -------    ------        ---------   -------     ---------    ------    -------      ---------
  
             Total liabilities and
               shareholders' equity $23,176.0    $   -         $23,176.0    $   -      $23,176.0    $907.6    $ 598.7      $24,682.3
                                    =========    ======        =========    ======     =========    ======    =======      =========
  
   The accompanying notes are an integral part of the pro forma consolidated financial statements.
  
                                         37
  
  </TABLE>
  
     
  <PAGE>
  
                              CONSECO AND SUBSIDIARIES
                NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
                                     (unaudited)
  
  PRO FORMA ADJUSTMENTS
  
       TRANSACTIONS RELATING TO THE TOPrS OFFERING
  
       On November 19, 1996, a subsidiary  trust of Conseco issued TOPrS having an
  aggregate  liquidation  amount of $275 million and a  distribution  rate of 9.16
  percent.  The subsidiary  used the proceeds from the sale of such  securities to
  purchase subordinated  deferrable interest debentures of Conseco in an aggregate
  principal  amount  equivalent to the aggregate  liquidation  amount of the TOPrS
  that were issued. The subordinated  deferrable interest debentures bear interest
  at a rate of 9.16  percent.  Conseco  used  the  proceeds  from  the sale of the
  subordinated deferrable interest debentures to reduce its notes payable.
   
      (1)   Interest expense is reduced to reflect the repayment of $265.5 million
            aggregate principal amount of Conseco's notes payable.
  
       (2)   The  pro  forma  adjustment  is  tax  affected,  based  on  Conseco's
             effective tax rate of 35 percent.
   
       (3)   Minority interest  is adjusted to  reflect the  distribution (net  of
             the related tax benefit) on the TOPrS.
  
       (4)   Notes payable are reduced to reflect the repayment of $265.5  million
             aggregate  principal amount of Conseco's notes payable using  the net
             proceeds from the TOPrS Offering.
  
       (5)  The  Company's  minority  interest  in  consolidated  subsidiaries  is
            increased by the aggregate  liquidation amount of the TOPrS.  Issuance
            and other  transaction costs related to the TOPrS Offering are charged
            to paid-in capital.
  
       TRANSACTIONS RELATING TO THE TruPS OFFERING
  
       On November  27, 1996,  another  subsidiary  trust of Conseco  issued TruPS
  having an aggregate  liquidation  amount of $325 million and a distribution rate
  of 8.70  percent.  The  subsidiary  used  the  proceeds  from  the  sale of such
  securities to purchase Conseco subordinated  deferrable interest debentures with
  an aggregate principal amount equivalent to the aggregate  liquidation amount of
  the TruPS that were issued. The subordinated  deferrable  interest debentures of
  Conseco bear interest at a rate of 8.70 percent.  Conseco used the proceeds from
  the sale of the subordinated  deferrable interest debentures to reduce its notes
  payable.
  
       (6)   Interest  expense  is  reduced  to  reflect  the  repayment of $321.3
             million aggregate principal amount of Conseco's notes payable.
  
       (7)   The  pro  forma  adjustment  is  tax  affected,  based  on  Conseco's
             effective tax rate of 35 percent.
  
       (8)   Minority interest is adjusted to reflect the distribution (net of the
             related tax benefit) on the TruPS.
  
       (9)   Notes payable are reduced to reflect the repayment of $321.3  million
             aggregate  principal  amount  of  Conseco's  notes  payable using the
             net proceeds from the TruPS Offering.
  
       (10) The  Company's  minority  interest  in  consolidated  subsidiaries  is
            increased by the aggregate  liquidation amount of the TruPS.  Issuance
            and other  transaction costs related to the TruPS Offering are charged
            to paid-in capital.
  
                                        38
  <PAGE>
  
  
                              CONSECO AND SUBSIDIARIES
                NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
                                     (unaudited)
  
       Transactions relating to the ATC Merger
  
       The ATC Merger,  completed on December 17, 1996, is accounted for under the
  purchase method of accounting.  Under this method, the total cost to acquire ATC
  is allocated to the assets and  liabilities  acquired based on their fair values
  as of the date of the ATC  Merger,  with any excess of the total  purchase  cost
  over  the  fair  value  of the  assets  acquired  less  the  fair  value  of the
  liabilities  assumed recorded as goodwill.  The ATC Merger did not qualify to be
  accounted for under the pooling of interests  method in accordance  with APB No.
  16 because an  affiliate  of ATC sold a portion of the Conseco  common  stock it
  received in the ATC Merger shortly after the consummation of the ATC Merger.  In
  the ATC Merger,  each  outstanding  share of ATC common stock was  exchanged for
   .5836 of a share of Conseco's common stock.  Conseco issued  approximately  10.4
  million shares of Conseco common stock or common stock  equivalents with a value
  of $628.8 million to acquire ATC's common stock.  In addition,  Conseco  assumed
  the  ATC  convertible  subordinated  debentures,   which  are  convertible  into
  approximately  4.0 million shares of Conseco common stock with a value of $238.6
  million. In addition,  Conseco accrued estimated costs related to the ATC Merger
  (including contract termination,  relocation, legal, accounting and other costs)
  of approximately $30.4 million.
  
  The cost to acquire ATC is allocated as follows (dollars in millions):
  <TABLE>
  <CAPTION>
  
  <S>                                                                                        <C>
  Book value of assets acquired based on the assumed date of the
       ATC Merger (September 30, 1996) ...................................................    $181.3
  Convertible subordinated debentures assumed by Conseco at the
       assumed date of the ATC Merger.....................................................     102.9
  
  Increase (decrease) in ATC's net asset value to reflect estimated fair value and
       asset reclassifications at the assumed date of the ATC Merger:
          Cost of policies purchased (related to the ATC Merger)..........................     268.8
          Cost of policies produced and cost of policies purchased (historical)...........    (179.6)
          Goodwill (related to the ATC Merger)............................................     562.8
          Income taxes....................................................................     (27.1)
          Other liabilities...............................................................     (11.3)
                                                                                              ------
  
               Total estimated fair value adjustments.....................................     613.6
                                                                                             -------
  
       Total cost to acquire ATC..........................................................    $897.8
                                                                                              ======
  </TABLE>
  
       Adjustments to the pro forma  consolidated  statement of operations to give
  effect to the ATC Merger as of January 1, 1995, are summarized below.
  
       (11)  Net  investment  income and net realized gains of ATC are adjusted to
             include the effect of adjustments to restate the amortized cost basis
             of fixed maturity securities to their estimated fair value.
  
       (12)  Interest expense is increased to reflect the increase in borrowings 
             under Conseco's bank credit facilities used to complete the ATC
             Merger.
  
            A change in interest rates of .5 percent on the additional  borrowings
            under Conseco's bank credit facilities used to complete the ATC Merger
            would result in: (1) an increase (or  decrease) in pro forma  interest
            expense of $.2 million and $.1 million for the year ended December 31,
            1995, and the nine months ended September 30, 1996, respectively;  and
            (2) a decrease  (or  increase)  in pro forma net income of $.1 million
            and $.1 million for the same respective periods.
  
       (13) Interest  expense  is  reduced  to  reflect  the  amortization  of the
            liability  established at the date of the ATC Merger  representing the
            present   value  of  the   interest   payable  on  ATC's   convertible
            subordinated  debentures  to October 1, 1998 (the earliest call date),
            less  the  present  value  of the  dividends  that  would  be  paid on
            Conseco's  common stock that such debentures would be convertible into
            during the same period.
                                         39
  
  <PAGE>
  
  
                              CONSECO AND SUBSIDIARIES
                NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
                                     (unaudited)
  
       (14)  Amortization  of the  cost  of  policies  produced  and  the  cost of
             policies  purchased  prior to the ATC  Merger  is  replaced  with the
             amortization of the cost of policies purchased (amortized in relation
             to estimated  premiums on the policies  purchased with interest equal
             to the liability rate which averages 5.5 percent).
  
       (15) Amortization of goodwill acquired in the ATC Merger is recognized over
            a 40-year period on a straight-line basis.
  
  
       (16) Reflects  the tax  adjustment  for the pro  forma  adjustments  at the
            appropriate rate for the specific item.
  
       (17)  Common shares outstanding are increased to reflect the Conseco shares
             issued in the ATC Merger.  Fully diluted shares also include  Conseco
             shares  which  will be issued  when  ATC's  convertible  subordinated
             debentures are converted.
  
       Adjustments to the pro forma  consolidated  balance sheet to give effect to
  the ATC Merger as of September 30, 1996, are summarized below.
  
       (18)  Cash is reduced for payments made to complete the ATC Merger.
  
       (19)  Short-term investments and notes payable of Conseco are increased for
             additional borrowings by Conseco to complete the ATC Merger.
  
       (20)  ATC's  historical  cost  of  policies  purchased  is  eliminated  and
             replaced  with the cost of policies  purchased  recognized in the ATC
             Merger.  Cost of policies purchased reflects the estimated fair value
             of ATC's  business in force and represents the portion of the cost to
             acquire  ATC that is  allocated  to the value of the right to receive
             future cash flows from the acquired policies.
  
             The 18 percent discount rate used to determine such value is the rate
             of  return  required  by  Conseco  to invest  in the  business  being
             acquired.  In determining such rate of return,  the following factors
             are considered:
  
             -    The magnitude of the risks associated with each of the actuarial
                  assumptions used in determining the expected cash flows.
  
             -    Cost of capital available to fund the acquisition.
  
             -    The perceived likelihood of changes in insurance regulations and
                  tax laws.
  
             -    Complexity of the acquired company.
  
             -    Prices paid (i.e., discount rates used in determining
                  valuations) on similar blocks of business sold recently.
  
             The value  allocated to the cost of policies  purchased is based on a
             preliminary valuation;  accordingly,  this allocation may be adjusted
             upon final  determination of such value.  Expected gross amortization
             of such value using  current  assumptions  and  accretion of interest
             based on an  interest  rate  equal to the  liability  rate (such rate
             averages 5.5 percent) for each of the years in the  five-year  period
             ending September 30, 2001, are as follows (dollars in millions):
  <TABLE>
  <CAPTION>
  
                   Year ending                 Beginning          Gross           Accretion           Net             Ending
                  September 30,                 balance       amortization       of interest     amortization         balance
                  -------------                 -------       ------------       -----------     -------------        -------
                      <S>                       <C>               <C>               <C>             <C>               <C>    
                      1997                      $268.8            $35.4             $14.2           $21.2             $247.6
                      1998                       247.6             32.3              12.9            19.4              228.2
                      1999                       228.2             29.6              12.0            17.6              210.6
                      2000                       210.6             27.3              10.9            16.4              194.2
                      2001                       194.2             25.2              10.1            15.1              179.1
  </TABLE>
  
       (21)  ATC's cost of policies produced is eliminated since such  amounts are
             reflected in the determination of the cost of policies purchased.
  
  
                                         40
  <PAGE>
  
  
                              CONSECO AND SUBSIDIARIES
                NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
                                     (unaudited)
  
       (22)  All of the  applicable  pro forma balance sheet  adjustments  are tax
             affected at the appropriate rate. Deferred tax liabilities of ATC are
             netted against deferred tax assets of Conseco.
  
       (23)  Goodwill acquired in the ATC Merger is recognized.
  
       (24)  Notes  payable  are  increased  to  reflect  the fair  value of ATC's
             convertible  subordinated  debentures  at the date of the ATC Merger.
             Such fair value  represents  the value of the  Conseco  common  stock
             which ATC's convertible  subordinated  debentures will be convertible
             into after the ATC  Merger.  It is assumed  that the  holders of such
             debentures  do not convert into  Conseco  common stock at the time of
             the ATC Merger.
  
             In addition,  a liability  is  established  representing  the present
             value of the interest  payable on such  debentures to October 1, 1998
             (the  earliest  call date),  less the present  value of the dividends
             that would be paid on the Conseco  common stock that such  debentures
             would be convertible into during the same period.
  
       (25)  The prior  shareholders'  equity of ATC is eliminated in  conjunction
             with the ATC Merger.  Common stock and additional  paid-in capital is
             increased by the value of the Conseco  common stock issued in the ATC
             Merger.
  
  
                                         41
  
  <PAGE>
  
                           CONSECO, INC. AND SUBSIDIARIES
                                _________________
  
  
  
  ITEM 7(c).     EXHIBITS.
  
                 (c) Exhibits
  
                     2.6     Agreement and  Plan  of Merger dated as of August 25,
                             1996,  by  and between  Conseco,  Inc.  and  American
                             Travellers Corporation*
  
                    4.17     Credit  Agreement  dated   November 22,   1996  among
                             Conseco, Inc. as  Borrower;  the several banks listed
                             on the signature pages thereto; the  managing  agents
                             listed on  the   signature   page  thereto;  Bank  of
                             America National  Trust and Savings  Association,  as
                             Syndication   Agent   for  the  Banks;  First   Union
                             National  Bank of  North  Carolina, as  Documentation
                             Agent  for  the Banks; and NationsBank, N.A. (South),
                             as Administrative Agent for the Banks.
  
  
                     *       Previously filed with Form 8-K dated August 25, 1996.
  
  
                                         42
  
                    
  <PAGE>
  
  
  
  
  
                                      SIGNATURE
  
           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.
  
  
  
  Date: December 19, 1996
  
  
                                    CONSECO, INC.
  
  
  
                                           By:     /s/ ROLLIN M. DICK
                                                   -----------------------------
  
                                                    Rollin M. Dick
                                                    Executive Vice President
                                                      and Chief Financial Officer
  
  
  
  
  
  
                                         43
metadata_documents: [{"type": "8-K", "sequence": "1", "description": "FORM 8-K OF CONSECO, INC.", "secsgml_size_bytes": 164460}]
metadata_filer: {"company-data": {"conformed-name": "CONSECO INC ET AL", "cik": "0000719241", "assigned-sic": "6321", "irs-number": "351468632", "state-of-incorporation": "IN", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-09250", "film-number": "96683806"}, "business-address": {"street1": "11825 N PENNSYLVANIA ST", "city": "CARMEL", "state": "IN", "zip": "46032", "phone": "3175736100"}, "mail-address": {"street1": "11825 N PENNSYLVANIA ST", "city": "CARMEL", "state": "IN", "zip": "46032"}, "former-company": {"former-conformed-name": "SECURITY NATIONAL OF INDIANA CORP", "date-changed": "19840207"}}
text: SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C. 20549
  
                                      FORM 8-K
  
                Current Report Pursuant to Section 13 or 15(d) of the
                           Securities Exchange Act of 1934
  
                           Date of Report: December 17, 1996
  
                                    CONSECO, INC.
  
                               State of Incorporation:
                                       Indiana
  
        Commission File Number                           IRS Employer Id. Number
              No. 1-9250                                      No. 35-1468632
  
                       Address of Principal Executive Offices:
                           11825 North Pennsylvania Street
                                Carmel, Indiana 46032
  
                                    Telephone No.
                                   (317) 817-6100
  CONSECO, INC. AND SUBSIDIARIES
  
                                                         INDEX
  Page
  Item 2.   Acquisition or Disposition of Assets.........................................................   3
  
  Item 7.   Financial Statements and Exhibits
            (a)  American Travelers Corporation and Subsidiaries Unaudited
                 Consolidated Financial Statements as of September 30, 1996,
                 and for the nine months ended September 30, 1996 and 1995
                    Consolidated Balance Sheets...........................................................   5
                    Consolidated Statements of Income.....................................................   6
                    Consolidated Statements of Cash Flows.................................................   8
                    Consolidated Statements of Shareholders' Equity.......................................   9   
                    Notes to Consolidated Financial Statements............................................   10
  
                 American Travelers Corporation and Subsidiaries Audited
                 Consolidated Financial Statements as of December 31,
                 1995 and 1994, and for each of the three years ended
                 December 31, 1995
                    Report of Independent Public Accountants ............................................   13
                    Consolidated Balance Sheets..........................................................   14
                    Consolidated Statements of Income....................................................   15
                    Consolidated Statements of Shareholders' Equity......................................   16
                    Consolidated Statements of Cash Flows................................................   17
                    Notes to Consolidated Financial Statements...........................................   18
  
            (b)  Pro Forma Consolidated Financial Information of Conseco, Inc. and Subsidiaries..........   30
                    Pro forma Consolidated Statement of Operations for the nine months
                       ended September 30, 1996 .........................................................   31
                    Pro forma Consolidated Statement of Operations for the year ended
                       December 31, 1995 ................................................................   33
                    Pro Forma Consolidated Balance Sheet as of September 30, 1996........................   35
                    Notes to Pro Forma Consolidated Financial Statements.................................   38
  
            
            (c)  Exhibits
  
                     2.6    Agreement and Plan of Merger dated as of August 25, 1996, by and between Conseco, Inc.
                            and American Travellers Corporation*
  
                    4.17    Credit Agreement dated November 22, 1996
  
                            * Previously filed with Form 8-K dated August 25, 1996.
  2
  CONSECO, INC. AND SUBSIDIARIES
  
  ITEM 2.  ACQUISITION OR DISPOSITION OF ASSETS.
  
       On December 17, 1996, Conseco,  Inc. ("Conseco")  completed its merger with
  American Travellers  Corporation ("ATC"), in a transaction pursuant to which ATC
  was merged with and into Conseco,  with Conseco being the surviving  corporation
  (the "ATC Merger").  The ATC Merger was consummated pursuant to an Agreement and
  Plan of Merger dated as of August 25, 1996. In the ATC Merger,  each outstanding
  share of ATC common stock was exchanged for .5836 of a share of Conseco's common
  stock  determined  based on the average of the closing  price of Conseco  common
  stock on the NYSE  Composite  Transactions  Reporting  System for the 10 trading
  days  immediately  preceding  the second  trading  day prior to the ATC  Merger.
  Conseco  issued  approximately  10.4 million  shares of Conseco  common stock or
  common  stock   equivalents with a value of $629 million to acquire ATC's common
  stock. In addition,  Conseco assumed ATC's convertible  subordinated debentures,
  which are convertible  into  approximately  4.0 million shares of Conseco common
  stock with a value of $239 million.
  
         The acquisition of ATC will be accounted for under the purchase method of
  accounting in the fourth quarter of 1996. Under this method, the cost to acquire
  ATC will be  allocated  to the assets  and  liabilities  acquired  based on fair
  values as of the date of the ATC Merger,  with the excess of the total  purchase
  cost over the fair  value of the  assets  acquired  less the fair  values of the
  liabilities assumed recorded as goodwill.
  
                                          3
  CONSECO, INC. AND SUBSIDIARIES
  
  ITEM 7(a).     Financial Statements and Exhibits
  
                 (a)  American Travellers Corporation and  Subsidiaries   
                      Unaudited Consolidated  Financial Statements as of September
                      30, 1996, and for the nine months ended September 30, 1996 
                      and 1995.
  
                                          4
  AMERICAN TRAVELLERS COPRORATION AND SUBSIDIARIES                            
  
              CONSOLIDATED BALANCE SHEETS                                       
  
                     (In thousands)                    (Unaudited)
                                                       September 30, December 31,
                                                           1996        1995       
                                                           ----        ----
  ASSETS                                                                        
  Investments-                                                                  
    Bonds, available for sale, at fair value (cost      $689,646      $582,621 
       $705,541 and $566,859)                                                
    Mortgage loan                                            435           447       
                                                         -------       -------       
         Total investments                               690,081       583,068       
  
                                                                                
  Cash and cash equivalents                               12,205        70,214       
  Accrued investment income                                7,732         6,781       
  Premiums due and unpaid                                  7,431         7,027       
  Deferred acquisition costs                             168,691       144,767       
  Value of business acquired (accumulated
    amortization $14,759 and $12,619)                     10,861        12,846       
  Property and equipment, at cost ( accumulated
    depreciation $4,289 and $3,682)                        3,850         4,176       
  Other assets                                             6,761         7,262       
                                                        --------      --------       
         Total assets                                   $907,612      $836,141
                                                        ========      ========
                                                                               
  LIABILITIES AND SHAREHOLDERS' EQUITY                                          
  Policy liabilities-                                                           
    Future policy benefit reserves                      $283,145     $247,562
    Claim reserves                                       240,582       210,073       
    Unearned premium reserves                             62,613        60,477       
                                                        --------      --------       
  
         Total policy liabilities                        586,340       518,112       
                                                                               
  Other liabilities                                       10,892         7,785       
  Current and deferred income taxes                       26,148        35,939       
  6.5% convertible subordinated debentures               102,900       103,500       
  ---                                                    -------       -------       
  
         Total liabilities                               726,280       665,336       
  
                                                                                
  Shareholders' equity-                                                         
    Preferred stock, $.01 par value; 5,000,000 shares
      authorized; no shares issued                            --            --       
    Common stock, $.01 par value; 50,000,000 shares                              
      authorized; 16,322,986 and
      16,053,105 shares issued, respectively                 163           161       
    Capital in excess of par value                        64,282        59,961       
    Net unrealized (loss)/gain on investments            (10,332)       10,245       
    Retained earnings                                    127,219       101,187       
    Less: Shares of common stock held in treasury           
        cost $200)                                            --          (749)
                                                         -------       -------
         Total shareholders' equity                      181,332       170,805       
                                                         -------       ------- 
  
         Total liabilities and shareholders' equity     $907,612      $836,141
                                                        ========      ========
  
                                                                                
  
  All share amounts have been adjusted to reflect a three-for-two
               stock split paid on April 10, 1996.
  5
  AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
  
                          CONSOLIDATED STATEMENT OF INCOME
  
                 (In thousands, except per share data)(Unaudited)
  
                
  
                                For the three months ended   
                                       September 30,
                                        1996       1995      
                                        ----       ----
  Revenues-                                                  
    Accident and health premiums     $94,394    $61,435      
    Life premiums                      2,057      2,101      
    Net investment income             11,834      4,587      
    Realized investment                  (30)       155      
      (losses)/gains                  ------     ------  
  
         Total revenues              108,255     68,278       
  
                                                             
  Benefits and expenses-                                     
    Benefits to policyholders                                
      Paid claims                     41,809     25,939      
      Change in claim reserves        11,374      7,765      
      Change in future policy
         benefit reserves             11,713      5,230      
                                      ------     ------      
  
        Total benefits to     
          policyholders               64,896     38,934      
  
                                                             
    Commissions                       24,351     17,531      
    General and administrative         8,409      5,653      
    Premium taxes                      2,224      1,610      
    Amortization of value of          
      business acquired                  375        676      
    Amortization of deferred          
     acquisition costs                 5,053      5,440      
    Less:  policy acquisition costs  
           deferred                  (12,984)   (10,496)      
  
    Interest expense                   1,787        614      
                                      ------     ------      
  
        Total expenses                29,215     21,028      
                                      ------     ------      
  
         Total benefits and expenses  94,111     59,962      
                                                            
  Income before provision for income 
    taxes                             14,144      8,316      
  Provision for income taxes           4,936      2,589      
                                      ------      -----      
  
  Net income                          $9,208     $5,727      
                                      ======     ======      
                                                      
  Primary number of  shares
  outstanding                         17,040     16,266       
                                      ======     ======       
                                                           
  Primary earnings per common share    $0.54      $0.35
                                       =====      =====
  
                                                             
  
  Net income                          $9,208     $5,727      
  Add: interest on convertible         
       debentures (net of tax)         1,144        109      
                                      ------     ------      
  Net income for fully diluted 
   earnings per  common share        $10,352     $5,836      
                                     =======     ======      
  
  Primary number of  shares                            
  outstanding                         17,040     16,266
  Add: incremental shares                                    
       representing-
    Stock option plans                   147         --      
    Shares issuable on convertible   
     debentures                        6,822        683      
                                      ------     ------
  Fully diluted number of shares                             
    outstanding                       24,009     16,949
                                      ======     ======
                                      
                                                           
  Fully diluted earnings per common                          
  share                                $0.43      $0.34
                                       =====      =====
  
                                
  
     All share and per share amounts have been adjusted to reflect a
           three-for-two stock split paid on April 10, 1996.
  6
  AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
  
                      CONSOLIDATED STATEMENT OF INCOME
                            
              (In thousands, except per share data)(Unaudited)
           
  
                               For the nine months ended
                                      September 30,
                                     1996       1995      
                                     ----       ----
  Revenues-                                                  
    Accident and health premiums     $277,187   $179,898      
    Life premiums                       6,138      6,294      
    Net investment income              33,134     12,697      
    Realized investment gains           1,329        179      
                                      -------     ------      
  
         Total revenues               317,788    199,068       
  
                                                             
  Benefits and expenses-                                     
    Benefits to policyholders                                
      Paid claims                     126,028     74,184      
      Change in claim reserves         30,515     20,150      
      Change in future policy
       benefit reserves                35,657     17,390      
                                      -------    -------      
        Total benefits to
         policyholders                192,200    111,724      
                                                            
    Commissions                        71,909     54,011      
    General and administrative         23,887     17,532      
    Premium taxes                       6,772      4,700      
    Amortization of value of
     business acquired                  2,139      1,557      
    Amortization of deferred           
      acquisition costs                14,240     16,394      
    Less:  policy acquisition costs 
           deferred                   (38,163)   (32,269)      
    Interest expense                    5,762      1,477      
                                      -------    -------      
  
        Total expenses                 86,546     63,402      
                                      -------    -------      
         Total benefits and expenses  278,746    175,126      
                                      -------    -------      
  
                                                             
  Income before provision for income
   taxes                               39,042     23,942      
  
  Provision for income taxes           13,010      7,483      
                                      -------    -------      
  Net income                          $26,032    $16,459      
                                      =======    =======      
                                                       
  Primary number of  shares
   outstanding                         16,820     16,254 
                                       ======     ====== 
                                                            
  Primary earnings per common share     $1.55      $1.01
                                        =====      =====
                                                            
  Net income                          $26,032    $16,459      
  Add: interest on convertible
       debentures (net of tax)          3,415        109      
                                      -------    -------      
  Net income for fully diluted
    earnings per  common share        $29,447    $16,568      
                                      =======    =======      
  Primary number of  shares
    outstanding                        16,820     16,254      
  Add: incremental shares                                    
  representing-
    Stock option plans                    189         --      
    Shares issuable on convertible
    debentures                          6,824        226      
                                       ------     ------      
  Fully diluted number of shares                             
    outstanding                        23,833     16,480
                                       ======     ======
                                                           
  Fully diluted earnings per common                          
  share                                 $1.24      $1.01
                                        =====      =====
  
  All share and per share amounts have been adjusted to reflect a three-for-two
                       stock split paid on April 10, 1996.
  7
  AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
  
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
                                   (Unaudited)
  
                                      For the nine months ended September 30,
                                                    1996     1995       
                                                    ----     ----
  Cash flows-operating activities
  Net income                                       $26,032  $16,459
                                                   -------  -------
  Adjustments to reconcile net income to cash                      
  provided by operating activities-
    Amortization of deferred policy acquisition 
       costs                                        14,240   16,394
    Amortization of discount and premium            (1,146)     550
    Depreciation and amortization                      967    1,619
    Realized securities (gains)                     (1,329)    (153)
    Increase/(Decrease) in current and deferred      
     income taxes                                    3,474   (5,317)              
    Increase in reserves                            68,228   40,980
    Increase in other liabilities                    3,107    1,488
    Deferred policy acquisition costs              (38,163) (32,269)
    Decrease in  other assets and value of
       business acquired                               750      424
                                                    ------   ------
  Total adjustments                                 50,128   23,716
                                                                   
  Net cash provided by operating activities         76,160   40,175
                                                    ------   ------
                                                                   
  Cash flows-investing activities                                  
    Proceeds from sales of investments             156,657       --
    Proceeds from calls and maturities on          260,911   29,045
     investments                                           
    Purchase of investments                       (553,763)(105,396)
    Purchase of fixed assets                          (282)    (439)
                                                   -------  ------- 
                                                                  
  Net cash used in investing activities           (136,477) (76,790)
                                                  --------  ------- 
                                                                   
  Cash flows-financing activities                                  
  Proceeds from issuance of Subordinated              
     Debentures                                         --  103,500       
  Debentures issue costs                                --   (3,905)
  Repayments on notes payable                           --  (20,000)
    Exercise of stock options                        2,308      404
                                                  --------  -------
                                                                  
  Net cash provided by financing activities          2,308   79,999
                                                  --------  -------
                                                                  
  Net (decrease)/ increase in cash and cash        
     equivalents                                   (58,009)  43,384
  Cash and cash equivalents, beginning of period    70,214    9,133
                                                    ------    -----
                                                                   
  Cash and cash equivalents, end of period         $12,205  $52,517
                                                   =======  =======
                                                                  
  Supplemental disclosure of cash flow                             
  information:
                                                                  
  Cash paid during the period for:                                 
    Interest                                       $ 3,583  $ 1,262
    Income Taxes                                   $ 9,962  $12,800
  8
  AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
         CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                         (In thousands)
                           (Unaudited)
                                
  
                                                Net                               
                           Common Capital in Unrealized   Re-    Treas- Share-    
                    Common Stock  Excess of  gain/(loss)  tained ury    holders'
                    Shares Amount Par Value  on Invest.   Earn.  Stock  Equity
                    ------ ------ ---------  ----------   -----  -----  ------
  Balance,
    12/31/95        16,053   $161   $59,961    $10,245  $101,187 ($749) $170,805
  
  Net income            --     --        --         --    26,032    --  $ 26,032
  Exercise of  
    stock options      430      4     2,306         --        --    --  $  2,310                                                     
  Tax benefit from                                                        
   exercise of
   stock options        --     --     2,184          --       --    --  $  2,184
  Conversion of
   debentures           40     --       578          --       --    --  $    578                                                    
  Change in                                                               
    unrealized gain/
    (loss) on  
    investments         --     --        --     (20,577)      --    -- ($20,577)                                                     
  Retirement of
    treasury stock    (200)    (2)     (747)         --            749  $     0   
                    ------    ---    ------    --------   -------- ---  -------             
                                                                          
  Balance, 9/30/96  16,323   $163    $64,282   ($10,332)  $127,219  $0  $181,332
                    ======   ====    =======   ========   ========  ==  ========
  
     
  
                                
  
                                
  
            All share amounts have been adjusted to reflect a three-for-two
                         stock split paid on April 10, 1996.
  9
  AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                       SEPTEMBER 30, 1996
                (In thousands, except share data)
                           (Unaudited)
  
  (1)  Basis of Presentation:
  
  The accompanying unaudited consolidated financial statements have
  been  prepared  in accordance with generally accepted  accounting
  principles  ("GAAP")  for interim financial information  and  the
  instructions  to  Form  10-Q and Article 10  of  Regulation  S-X.
  Accordingly,  they  do  not include all of  the  information  and
  footnotes  required  by generally accepted accounting  principles
  for  annual  financial statements.  In the opinion of management,
  all adjustments considered necessary for a fair presentation have
  been  included.   All  adjustments were  of  a  normal  recurring
  nature, unless otherwise noted in the Management's Discussion and
  Analysis of Financial Condition and Results of Operations and the
  Notes  to  Consolidated Financial Statements.  Operating  results
  for  the quarter or the nine months ended September 30, 1996, are
  not  necessarily indicative of the results that may  be  expected
  for  the year ending December 31, 1996.  For further information,
  refer  to  the  Consolidated Financial Statements and  the  Notes
  thereto included in the Company's Annual Report on Form 10-K  for
  the year then ended December 31, 1995.
  
  Certain  amounts  in  the  1995 financial  statements  have  been
  reclassified   to   conform  to  the  1996  financial   statement
  presentation.
  
  (2)  Summary of significant accounting policies:
  
  Principles of consolidation-
  
  The  accompanying consolidated financial statements  include  the
  accounts  of  American  Travellers Corporation  ("ATC")  and  its
  wholly  owned  subsidiaries, American Travellers  Life  Insurance
  Company  ("ATL"), United General Life Insurance Company  ("UGL"),
  American Travellers Insurance Company of New York ("ATICNY")  and
  American  Travellers Insurance Services Company,  Inc.  ("ATIS").
  ATC,  ATL, UGL, ATICNY and ATIS are collectively referred  to  as
  the   "Company."    All   material  intercompany   accounts   and
  transactions have been eliminated in consolidation.
  
  General-
  
  The Company's operations consist of the underwriting and sale  of
  life   and  accident  and  health  insurance.   The  Company   is
  principally  a  marketer  and  underwriter  of  long  term   care
  insurance.  The Company's long term care products consist of both
  nursing  home and home health care policies which provide limited
  benefit payments primarily to senior citizens.  The Company  also
  markets  and underwrites other supplemental accident  and  health
  insurance policies, as well as life insurance.
  
  The  preparation of financial statements in conformity with  GAAP
  requires the use of estimates which requires management  to  make
  estimates  and  assumptions that affect the reported  amounts  of
  assets  and liabilities, the disclosure of contingent assets  and
  liabilities  at  the  date of the financial  statements  and  the
  reported  amounts of revenues and expenses during  the  reporting
  period.  Actual results could differ from those estimates.
  
  Investments-
  
  The  Company  adopted  the provisions of Statement  of  Financial
  Accounting  Standards No. 115, Accounting for Certain investments
  in  Debt  and  Equity Securities ("SFAS 115"), as of  January  1,
  1994.   Under SFAS 115, investments in equity and debt securities
  are  classified in three categories and accounted for based  upon
  the  classification.   In December 1995, the Company  transferred
  its investments from the "held to maturity" classification to the
  "available for sale" classification pursuant to SFAS 115 and  has
  recorded such investments at fair value with unrealized gains and
  losses  reported as a component of shareholders' equity,  net  of
  tax.
  
                                         10
  
  Earnings per share-
  
  Primary  earnings  per  common share are based  on  the  weighted
  average  number of shares outstanding during the period  and  the
  dilutive   effect  of  stock  options  and  other  common   stock
  equivalents.  Fully diluted earnings per common share  are  based
  on  the  weighted  average  number  of  shares  outstanding,  the
  dilutive  effect  of common stock equivalents,  and  the  assumed
  conversion  of the 6.5% convertible subordinated debentures  (the
  "Debentures").   Net income is increased by the interest  on  the
  Debentures, net of related income taxes.
  
  Stock split-
  
  On March 4, 1996, the board of directors declared a three-for-two
  stock  split  for security holders of record on March  20,  1996,
  which  was  paid on April 10, 1996.  Share and per share  amounts
  have  been retroactively adjusted to reflect this split  for  all
  periods presented.
  
  Accounting Pronouncements-
  
  SFAS No. 121, "Accounting for the Impairment of Long-Lived Assets
  and for Long-Lived Assets to be Disposed of," was adopted in 1996
  with  no  impact  on  the  Company's financial  condition.   This
  accounting pronouncement establishes accounting standards for the
  impairment of long lived assets, certain identifiable intangibles
  and  goodwill related to (i) those assets to be held and used  in
  the business, and (ii) assets to be disposed of.
  
  SFAS No. 123, "Accounting for Stock-Based Compensation," will  be
  adopted   by  the  Company  in  1996.   This  statement  provides
  alternative   methods   for   accounting   for   employee   stock
  compensation  plans.  A company can elect to use  the  new  fair-
  value  based method of accounting for employee stock compensation
  plans,  under which compensation cost is measured and  recognized
  in  results of operations, or continue to account for these plans
  under  the  current accounting standards.  Entities  electing  to
  remain  with  the present accounting method must make disclosures
  of  what net income and earnings per share would have been if the
  fair-value-based  method of accounting  had  been  applied.   The
  Company  plans to continue to account for employee stock  options
  using  the  present  accounting method and include  the  required
  disclosures in its financial statements.
  
  (3)  Investments:
  
  As  of  December  31,  1994 the Company  classified  all  of  its
  investments  as "held to maturity" pursuant to the provisions  of
  SFAS 115.  As a result of changes in the investment portfolio and
  strategy and as a result of the acquisition discussed in Note  15
  to   the  Consolidated  Financial  Statements  included  in   the
  Company's Annual Report on Form 10-K for the years ended December
  31,   1995   and   other   factors,  the  Company   changed   the
  classification  of  its  investments  to  "available  for  sale,"
  effective December 1995.
  
  (4)  Pending Merger:
  
  On  August  25,  1996, the Company and Conseco, Inc.  ("Conseco")
  jointly  entered  into a definitive agreement providing  for  all
  shareholders  of  the  Company to receive an  amount  of  Conseco
  Common  Stock  for each of their shares through a share  exchange
  based  upon  the  following exchange ratio: (I)  if  the  average
  closing  prices of Conseco Common Stock for the ten trading  days
  immediately  preceding  the  second  trading  day  prior  to  the
  consummation of the Merger ("the Conseco Share Price") is greater
  than  or  equal  to $42.25 per share and less than  or  equal  to
  $46.25 per share, 0.7574 of a share of Conseco Common Stock, (II)
  if  the  Conseco Share Price is less than $42.25 per  share,  the
  fraction  of  a  share  of  Conseco Common  Stock  determined  by
  dividing  $32.00  by the Conseco Share Price,  or  (III)  if  the
  Conseco  Share  Price  is  greater than  $46.25  per  share,  the
  fraction  of  a  share  of  Conseco Common  Stock  determined  by
  dividing  $35.03  by the Conseco Share Price.   Accordingly,  the
  Company's shareholders will receive Conseco Common Stock  with  a
  value  of  not less than $32.00 and up to $35.03 per share.   The
  Company's  Debentures  will  become convertible  into  shares  of
  Conseco Common Stock on an equivalent basis.
  
                                         11
  CONSECO, INC. AND SUBSIDIARIES
  
  ITEM 7(a).     Financial Statements and Exhibits, continued
  
                 (a), continued
  
                      American Travellers Corporation and   Subsidiaries   Audited
                      Consolidated  Financial  Statements  as of December 31, 1995
                      and 1994, and for each of the three years ended December 31,
                      1995.
  
                                         12
  REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
  
  To The Board of Directors of American Travellers Corporation:
  
  We have  audited  the  accompanying   consolidated  balance  sheets  of American
  Travellers  Corporation (a  Pennsylvania  corporation)  and  subsidiaries  as of
  December 31, 1995 and 1994, and the related  consolidated  statements of income,
  shareholders'  equity and cash  flows for each of the three  years in the period
  ended December 31, 1995. These financial  statements are the  responsibility  of
  the Company's  management.  Our responsibility is to express an opinion on these
  financial statements and schedules based on our audits.
  
  We  conducted  our  audits   in  accordance  with  generally  accepted  auditing
  standards.  Those standards require that we plan and perform the audit to obtain
  reasonable assurance about whether the financial statements are free of material
  misstatement.  An audit includes examining, on a test basis, evidence supporting
  the amounts and disclosures in the financial statements.  An audit also includes
  assessing the  accounting  principles  used and  significant  estimates  made by
  management,  as well as evaluating the overall financial statement presentation.
  We believe that our audits provide a reasonable basis for our opinion.
  
  In our opinion,  the   financial statements referred to above present fairly, in
  all material respects, the financial position of American Travellers Corporation
  and  subsidiaries  as of December  31,  1995 and 1994,  and the results of their
  operations  and their cash flows for each of the three years in the period ended
  December 31, 1995 in conformity with generally accepted accounting principles.
  
  /s/ARTHUR ANDERSEN LLP
  ----------------------
  ARTHUR ANDERSEN LLP
  
  Philadelphia, Pa.
  March 4, 1996
  
                                         13
  AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
                            CONSOLIDATED BALANCE SHEETS
                         (In thousands, except share data)
  
                                       ASSETS
  
                                                          December 31,
                                                         ---------------
                                                         1995       1994 
                                                         ----       ----
  Investments:
   Bonds, available for sale, at fair value
   (cost $566,859)                                    $ 582,621  $       -
   Bonds, held to maturity, at amortized cost
   (market $228,971)                                       -       238,198
   Mortgage loan                                            447          -
                                                       --------  ---------
    Total investments                                   583,068    238,198
  Cash and cash equivalents                              70,214      9,133
  Accrued investment income                               6,781      4,192
  Premiums due and deferred                               7,027      5,518
  Deferred policy acquisition costs                     144,767    122,070
  Value of business acquired (net of accumulated
  amortization $12,619 and $10,603)                      12,846     14,316
  Property and equipment, at cost (net of
  accumulated depreciation of $3,682 and $4,192)          4,176      5,168
  Other assets                                            7,262      2,209
                                                       --------   --------
     Total assets                                      $836,141   $400,804
                                                       ========   ========
  
                        LIABILITIES AND SHAREHOLDERS' EQUITY
  Policy liabilities:
   Future policy benefits                              $247,562    $83,995
   Claim reserves                                       210,073     85,290
   Unearned premium reserve                              60,477     35,133
                                                       --------   --------
     Total policy liabilities                           518,112    204,418
  Other liabilities                                       7,785      5,185
  Bank borrowings                                             -     20,000
  Current and deferred income taxes                      35,939     34,862
  6.5% convertible subordinated debentures              103,500        -
                                                       --------   --------
     Total liabilities                                  665,336    264,465
  
  Shareholders' equity:
   Preferred stock, $.0l par value; 5,000,000
   shares authorized; no shares issued                      -          -
   Common stock, $.01 par value; 37,500,000
   shares authorized; 16,053,105 and
   15,962,268 shares issued                                 107        106
   Capital in excess of par value                        60,015     59,480
   Net unrealized gain on investments                    10,245       -
   Retained earnings                                    101,187     77,502
   Less-Shares of common stock held in treasury,
   at cost (200,159 shares)                                (749)      (749)
                                                       --------   -------- 
    Total shareholders' equity                          170,805    136,339
                                                       --------   --------
     Total liabilities and shareholders' equity        $836,141   $400,804
                                                       ========   ========
  
  All share and per share  amounts have been  adjusted to reflect a 3-for-2  stock
  split payable on April 10, 1996.
  
          The accompanying notes are an integral part of these statements.
  14
  AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
                         CONSOLIDATED STATEMENTS OF INCOME
                       (In thousands, except per share data)
  
                                                 Year ended December 31,
                                                 -----------------------
                                                 1995      1994     1993
                                                 ----      ----     ----
  Revenues:
  Accident and health premiums                $265,732  $195,024 $162,322
  Life premiums                                  8,235     6,864    4,052
  Investment income                             23,190    11,023    9,395
  Securities gains (losses)                        175       (10)     227
                                              --------  -------- --------
  Total revenues                               297,332   212,901  175,996
                                              --------  -------- --------
  
  Benefits and expenses:
  Benefits to policyholders                    172,903   114,200   88,347
  Commissions                                   76,080    63,819   56,728
  General and administrative                    25,071    22,831   22,086
  Premium taxes                                  6,007     4,187    4,231
  Amortization of deferred policy
   acquisition costs                            20,687    19,815   18,298
  Amortization of value of business acquired     2,014     2,122    2,987
  Less-policy acquisition costs deferred       (43,384)  (42,045) (40,036)
  Interest expense                               3,260       990       32
                                              --------  -------- --------
  Total benefits and expenses                  262,638   185,919  152,673
                                              --------  -------- --------
  Income before provision for income taxes      34,694    26,982   23,323
  Provision for income taxes                    11,009     8,554    8,715
                                              --------  --------  -------
  Net income                                   $23,685   $18,428  $14,608
                                              ========  ========  =======
  Net income per share:
  Primary                                        $1.45     $1.14    $.92
                                                 =====     =====    ====
  Fully diluted                                  $1.36     $1.14    $.92
                                                 =====     =====    ====
  Weighted average common shares
   and common equivalents:
  Primary                                       16,316   16,133    15,804
                                                ======   ======    ======
  Fully diluted                                 18,362   16,133    15,804
                                                ======   ======    ======
  
  Share and  per-share  amounts  have been  adjusted to reflect the  three-for-two
  stock split payable on April 10, 1996.
  
          The accompanying notes are an integral part of these statements.
  15
  AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                                 (In thousands)
                                                                                        Net
                                                     Common  Stock       Capital in   Unrealized                             Total 
                                                   -------------------    excess of   gain on     Retained     Treasury  shareholders'
                                                   Shares      Amounts   par value   investment   earnings       stock     equity
                                                   ------      -------   ---------   ----------   --------       -----    -------
  Balance, 12/31/92                                 15,438      $103      $57,342     $  --       $ 44,466     $   (749)    $ 101,162
  Net income                                          --         --           --                    14,608           --        14,608
  Exercise of stock options                            226         1          404                      --            --           405
                                                   -------      ----      -------     ------      --------     --------     ---------
  
  Balance, 12/31/93                                 15,664       104       57,746        --         59,074         (749)      116,175
  Net income                                          --         --           --                    18,428           --        18,428
  Exercise of stock options                            299         2          939                      --            --           941
  Tax benefit from exercise of stock options          --         --           795                      --            --           795
                                                   -------      ----      -------     ------      --------     --------     ---------
  Balance, 12/31/94                                 15,963       106       59,480        --         77,502         (749)      136,339
  Net income                                                                                        23,685                     23,685
  Exercise of stock option                              90         1          400                                                 401
  Tax benefit from exercise of stock options                                  135                                                 135
  Unrealized gain investments                                                          10,245                                  10,245
                                                   -------      ----      -------     -------    ---------     --------      --------
  Balance 12/31/95                                  16,053      $107      $60,015     $10,245    $ 101,187        $(749)     $170,805
                                                   =======      ====      =======     =======    =========     ========      ========
  
  Share and  per-share  amounts  have been  adjusted to reflect the  three-for-two
  stock split payable on April 10, 1996.
  
          The accompanying notes are an integral part of these statements.
  16
  AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (In thousands)
  
                                                  Year ended December 31,
                                                ------------------------------
                                                1995          1994        1993
                                                ----          ----        ----
  Cash flows-operating activities
  Net income                                   $23,685       $18,428      $14,608
                                               -------       -------      -------
  Adjustments to reconcile net income to net
  cash provided by operating activities
    Amortization of deferred policy 
      acquisition costs                         20,687        19,815       18,298
    Depreciation and amortization                5,381         5,774        6,015
    Realized securities (gains) losses            (174)           10         (227)
    (Decrease) increase current and
      deferred income taxes                     (4,437)        5,207        8,316
    Increase in reserves                        61,981        39,519       23,982
    Increase (decrease) in other liabilities     2,600           533       (1,225)
    Deferred policy acquisition costs          (43,384)      (42,045)     (40,036)
    (Increase) decrease in all other assets     (4,651)       (1,793)         600
                                               -------       -------      -------
  Total adjustments                             38,003        27,020       15,723
                                               -------       -------      -------
  Net cash provided by operating
   activities                                   61,688        45,448       30,331
                                               -------       -------      -------
  Cash flows-investing activities
    Proceeds from sales of investments          16,615           156        3,910
    Proceeds from calls and maturities
      of investments                            33,037        15,295       24,275
    Purchase of investments                   (380,116)      (99,551)     (63,282)
    Purchase of fixed assets                      (352)         (626)        (693)
    Proceeds from acquisitions                 249,969        29,186          -
                                               -------       -------      -------
  Net cash used in investing activities        (80,847)      (55,540)     (35,790)
                                               -------       -------      -------
  Cash flows-financing activities
    Debenture issue costs                       (3,796)           -            -
    Proceeds from issuance
      of Subordinated Debentures               103,500            -            -
    Bank borrowings                                -           8,000       12,000
    Exercise of options                            536           939          405
    Repayment of Bank borrowings               (20,000)           -            -
                                               -------       -------      -------
  Net cash provided by financing
   activities                                   80,240         8,939       12,405
                                               -------       -------      -------
  Net increase (decrease) in
   cash and cash equivalents                    61,081        (1,153)       6,946
  Cash and cash equivalents,
   beginning of year                             9,133        10,286        3,340
                                               -------       -------      -------
  Cash and cash equivalents,
   end of year                                 $70,214        $9,133      $10,286
                                               =======       =======      =======
  Supplemental disclosure of cash
   flow information Cash paid during
   the year for:
  Interest                                     $ 1,319        $  990      $    -
                                               =======        ======      =======
  Income taxes                                 $15,300        $3,465      $   970
                                               =======        ======      =======
  
  The accompanying notes are an integral part of these statements.
  17
  AMERICAN TRAVELLERS CORPORATION AND SUBSIDIARIES
                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 DECEMBER 31, 1995
                         (In Thousands, except share data)
  
  (l) Summary of significant accounting policies:
  
   Principles of consolidation-
  
  The accompanying  consolidated  financial  statements  include the   accounts of
  American  Travellers  Corporation  ("ATC")  and its wholly  owned  subsidiaries,
  American  Travellers  Life  Insurance  Company  ("ATL"),   United  General  Life
  Insurance  Company ("UGL"),  American  Travellers  Insurance Company of New York
  ("ATICNY") and American  Travellers  Insurance Services Company,  Inc. ("ATIS").
  ATC, ATL, UGL,  ATICNY and ATIS are  collectively  referred to as the "Company."
  All material  intercompany  accounts and  transactions  have been  eliminated in
  consolidation.
  
   General-
  
  The  Company's  operations  consist of the  underwriting  and   sale of life and
  accident  and  health  insurance.   The  accompanying   consolidated   financial
  statements have been prepared in accordance with generally  accepted  accounting
  principles  (GAAP).  The Company is a marketer and underwriter of long term care
  insurance.  The Company's  long term care products  consist of both nursing home
  and home health care policies which provide limited benefit  payments  primarily
  to senior citizens.  The Company also markets and underwrites other supplemental
  accident and health insurance policies, as well as life insurance. The Company's
  long term care products accounted for 89.3%,  82.4%, and 74.5% of its annualized
  premiums in force at December 31, 1995, 1994, and 1993, respectively.
  
  The  preparation of financial  statements in conformity  with  GAAP requires the
  use of estimates and assumptions  that affect the reported amounts of assets and
  liabilities at the date of the financial  statements and the reported amounts of
  revenues  and  expenses  during  the  reporting  period.   Management  does  not
  anticipate that actual results will differ significantly from these estimates.
  
   Revenue recognition-
  
  Premiums  are  reflected  as  revenues  primarily  on a pro-rata  basis   as the
  premiums are earned. Expenses are associated with earned premiums,  resulting in
  a recognition  of profits over the lives of the contracts.  This  association is
  accomplished  by  providing  liabilities  for  future  policy  benefits  and  by
  deferring, and then amortizing, policy acquisition costs.
  
   Investments-
  
  The Company  adopted   the  provisions  of  Statement  of  Financial  Accounting
  Standards  ("SFAS"),  Accounting  for  Certain  investments  in Debt and  Equity
  Securities  (SFAS 115), as of January 1, 1994.  Under SFAS 115,  investments  in
  equity and debt securities are classified in three  categories and accounted for
  based upon the  classification.  In December 1995, the Company  transferred  its
  investments  from the "held to maturity"  classification  to the  "available for
  sale"  classification  pursuant to SFAS 115 and has recorded such investments at
  fair  value  with  unrealized  gains  and  losses  reported  as a  component  of
  shareholders' equity, net of tax. See Note 3.
  
   Deferred policy acquisition costs-
  
  Policy  acquisition  costs,  which vary with and   are  directly  related to the
  production  of new  business,  are  deferred.  The  costs  deferred,  consisting
  principally of commissions and policy  issuance costs,  are being amortized with
  interest in accordance with actuarial assumptions which consider the anticipated
  period the policy will be in force in relation  to the  premiums  expected to be
  earned.  These  assumptions are consistent with those used in developing  policy
  reserves.
  
                                         18
  Property and equipment-
  
  Property  and  equipment  are stated at cost.  Improvements    which  materially
  increase the estimated  useful life of the asset are  capitalized.  Expenditures
  for repairs and maintenance are charged to operations as incurred.  Depreciation
  is provided  principally on the straight-line  method over the related estimated
  lives of the assets which range from 3 to 40 years. Upon sale or retirement, the
  cost of the asset and the related accumulated  depreciation are removed from the
  accounts and the resulting gain or loss, if any, is included in income.
  
   Policy benefits-
  
  Future policy benefits and claim reserves are   determined  based upon generally
  accepted actuarial  methods.  Unpaid claim reserves are based upon the aggregate
  of claim  estimates for reported and  unreported  losses based upon  experience.
  While the  ultimate  amount of claims  incurred  and the  related  expenses  are
  dependent on future  developments,  in  management's  opinion,  the reserves for
  future policy benefits and claims are adequate to cover  anticipated  losses and
  expenses.
  
   Income taxes-
  
  Deferred  income  taxes are recorded for  temporary    differences  in reporting
  certain   transactions   for  financial   statement  and  income  tax  purposes,
  principally deferred policy acquisition costs and policy benefits.  Income taxes
  are accounted for using the asset and liability  method in accordance  with SFAS
  109. This method requires that deferred tax assets and liabilities at the end of
  the year be  determined  using the tax rates and  limitations  expected to be in
  effect  at such  time  as the  taxes  are  projected  to be  paid or  recovered.
  Consequently,  income tax  expense  will  increase  or decrease in the period in
  which a change in tax law or rates is enacted.
  
   Earnings per share-
  
  Primary  earnings per common share are based on the weighted   average number of
  shares  outstanding  during the period and the dilutive  effect of stock options
  and other common stock  equivalents.  Fully diluted earnings per share are based
  on the weighted average number of shares outstanding,  dilutive effect of common
  stock   equivalents,   and  the  assumed  conversion  of  the  6.5%  convertible
  subordinated  debenture.  Net  income  is  increased  by  the  interest  on  the
  debenture, net of related income taxes.
  
   Stock split-
  
  On March 4, 1996, the board of directors  declared a  three-for-two  stock split
  for  securityholders  of record as of March 20, 1996, payable on April 10, 1996.
  Share and per share  amounts  have been  retroactively  adjusted to reflect this
  split for all years presented.
  
  Statements of cash flows-
  
  For purposes of reporting cash flows,  cash   and cash  equivalents  include all
  cash and short-term deposits available on demand.
  
   Accounting Pronouncements
  
  The  Company  adopted  the  provisions  of  Statement  of  Financial  Accounting
  Standards  No.115,   "Accounting  for  Certain  Investments  in  Debt  &  Equity
  Securities"  (SFAS 115) as of at January 1, 1994.  Under SFAS 115 investments in
  debt and equity securities are accounted as follows:
  
  "Held  to maturity" securities are securities that the Company has  the positive
  intent and  ability to hold to maturity  and are  reported  at  amortized  cost.
  Securities  that are brought and held  principally for the purpose of selling in
  the near term are classified as "trading securities" and reported at fair value,
  with unrealized gains and losses included in earnings. Securities not classified
  in these two  categories  are classified as "available for sale" and reported at
  fair value,  with unrealized  gains and losses reported net of tax in a separate
  component of shareholders' equity.
  
  As further  discussed in Note 3 to the   financial  statements,  the Company has
  classified  all of its  investments as "available for sale" at December 31, 1995
  and as "Held to maturity" at December 31, 1994.
  
                                         19
  The  Company  holds   no  derivative  financial  instruments  subject  to   the
  provisions of SFAS No. 119, "Disclosure About Derivative  Financial  Instruments
  and Fair Value of Financial Instruments."
  
  In March 1995,  the  FASB issued SFAS 121,  Accounting  for   the  Impairment of
  Long-Lived  Assets and for Long Lived Assets to be Disposed of. This  statement,
  which must be adopted by March 31, 1996 establishes accounting standards for the
  impairment of long lived assets,  certain identifiable  intangibles and goodwill
  related  to (1) those  assets to be held and used in the  business,  and (2) for
  assets to be disposed of. The Company does not  anticipate a material  effect on
  the financial statements from this new accounting standard.
  
  SFAS   123,  Accounting  for  Stock-Based  Compensation,  will be adopted by the
  Company in 1996. This statement provides  alternative methods for accounting for
  employee  stock  compensation  plans.  A  company  can  elect  to  use  the  new
  fair-value-based  method of accounting  for employee stock  compensation  plans,
  under  which  compensation  cost  is  measured  and  recognized  in  results  of
  operations,  or continue to account for these plans under the current accounting
  standards.  Entities electing to remain with the present  accounting method must
  make  disclosures  of what net income and  earnings per share would have been if
  the fair-value-  based method of accounting had been applied.  The Company plans
  to continue to account for employee  stock options using the present  accounting
  method and include the required disclosures in the financial statements.
  
  Reclassifications-
  
  Financial  statements for 1993   and 1994 have been reclassified to conform with
  the 1995 presentation.
  
  (2) Basis of presentation:
  
  The  consolidated  financial  statements have   been prepared in accordance with
  GAAP;  these  principles  differ  from  practices  prescribed  or  permitted  by
  insurance  regulatory   authorities  (statutory  accounting  practices)  in  the
  following material respects-
  
  (a)   Costs  which  vary with and are  directly  related  to the  writing of new
  insurance  policies are deferred and then amortized over the anticipated  period
  the policies will be in force in relation to the premiums  expected to be earned
  on the policies.  Under statutory accounting practices such costs are charged to
  expense as incurred.
  
  (b)    The  accounts  of  wholly-owned  subsidiaries  are  consolidated.   Under
  statutory  accounting  practices such  subsidiaries are carried at cost adjusted
  for  subsequent  operating  results as  determined  under  statutory  accounting
  practices.
  
  (c)   The value of  business  acquired  resulting  from  purchases  of blocks of
  accident and health  business is being  amortized  over the life of the acquired
  policies.  Under statutory accounting practices,  any ceding allowances paid are
  expensed in the year incurred.
  
  (d)   Policy liabilities-
  
    (l) GAAP  basis-Future  policy  benefits are provided on the net level premium
  method which provides for anticipated  rates of morbidity,  mortality,  interest
  and the Company's termination  experience.  Accident and health insurance future
  policy benefits are primarily  calculated using morbidity based on the Company's
  experience. The future policy benefits on ordinary life insurance are calculated
  using the 1965-70 Intercompany male mortality rates. Unearned premium reserve is
  the gross unearned premium reserve less the portion of the premium for expenses,
  overhead and profit.  Investment  income is assumed at rates  between  6.25% and
  8.00%.  Termination  rates,  exclusive  of  mortality,  have been  assumed to be
  between  17.5% and 33.0% in the first year  decreasing to between 5.0% and 10.0%
  of the renewing  policies after the fifteenth year.  These  assumptions  vary by
  plan, year of issue and duration.
  
    (2) Statutory  basis-Future  policy benefits on accident and health  insurance
  consist  primarily  of unearned  premium  reserves.  Future  policy  benefits on
  ordinary  life   insurance   have  been   computed   using  the  l958  and  1980
  Commissioners'  Standard Ordinary Mortality Table with interest assumed at rates
  between 3% and 5% applied on the  Commissioners'  Reserve Valuation Method basis
  with grading to the net level premium method.
  
                                         20
  (3) Claim reserves (both on a GAAP and Statutory basis) include provisions for
  reported  claims in process of  settlement  as well as claims  incurred  but not
  reported based on prior experience of the Company.  Interest is assumed at rates
  between 5.0% and 7.5%.
  
    (e) Deferred  income taxes,  which for statutory  purposes are not recognized,
  are provided as appropriate for temporary differences.
  
  (3) Investments:
  
  As of   December 31, 1994 the Company classified all of its investments as "held
  to maturity"  pursuant to the provisions of SFAS 115. As a result of the changes
  in the  investment  portfolio  and strategy  and as a result of the  acquisition
  discussed in Note 15 and other factors,  the Company changed the  classification
  of its investments to "available for sale" effective December 1995.
  
  Pursuant to the requirements of SFAS 115,  "available for sale"   securities are
  reported at fair value with unrealized gains and losses reported net of tax as a
  separate  component  of  shareholders'  equity.  As a result of this  change the
  reported  value of the  investment  portfolio,  at December  31,1995,  increased
  $15,762  with  corresponding  increases in  shareholders'  equity of $10,245 and
  deferred income taxes of $5,517.
  
  The components of investment income are as follows-
  Year ended December 3l,
                                         ----------------------------
                                          1995       1994        1993
                                         -----       ----        ----
  Fixed maturity investments            $15,308    $10,185      $8,926
  Mortgage-backed securities              3,076        223          28
  Cash and short-term investments         1,613        437         342
  Mortgage loan and other                 3,193        178          99
                                        -------    -------      ------
  Investment Income                     $23,190    $11,023      $9,395
                                        =======    =======      ======
  The amortized cost and market values of  investments  in debt  securities are as
  follows:
  Gross       Gross
                                      Amortized   unrealized  unrealized  Market
                                        cost        gains       losses    value
                                        ----        -----       ------    -----
  December 31, 1995
  -----------------
  U.S. Government Obligations          $133,703    $ 2,836    $  (83)    $136,456
  Mortgage-backed Securities            180,926      2,995        (4)     183,917
  States and Political Subdivisions      78,915      1,497       (62)      80,350
  Corporate Securities                  173,315      8,695      (112)     181,898
                                       --------    -------     -----     --------
  Total                                $566,859    $16,023     $(261)    $582,621
                                       ========    =======     =====     ========
  
  December 31, 1994
  -----------------
  U.S. Government Obligations           $52,190       $134   $(2,582)     $49,742
  Mortgage-backed securities              9,975         16       (52)       9,939
  States and Political Subdivisions      95,194          6    (3,822)      91,378
  Corporate Securities                   80,839        135    (3,062)      77,912
                                       --------     ------   -------     --------
  Total                                $238,198     $  291   $(9,518)    $228,971
                                       ========     ======   =======     ========
  21
  The  amortized  cost and market value of debt  securities at   December 31, 1995
  and 1994, by contractual  maturity,  are shown below.  Expected  maturities will
  differ from contractual  maturities because borrowers may have the right to call
  or prepay obligations with or without call or prepayment penalties.
  Amortized Market
                                              ------------------
                                              Cost         Value
                                              ----         -----
  December 31, 1995
  -----------------
  Due in one year or less                   $ 46,383     $ 46,425
  Due after one year through five years      103,326      104,890
  Due after five years through ten years     138,634      145,181
  Due after ten years                         97,590      102,208
  Mortgage-backed securities                 180,926      183,917
                                            --------     --------
  Totals                                    $566,859     $582,621
                                            ========     ========
  Amortized Market
                                              ------------------
                                              Cost         Value
                                              ----         -----
  December 31, 1994
  ------------------
  
  Due in one year or less                   $ 26,840     $ 26,693
  Due after one year through five years      123,997      118,809
  Due after five years through ten years      70,134       66,378
  Due after ten years                          7,252        7,152
  Mortgage-backed securities                   9,975        9,939
                                            --------     --------
  Totals                                    $238,198     $228,971
                                            ========     ========
  Proceeds  from   sales of  investments  were  $16,615 in 1995,  $156 in 1994 and
  $3,910 in 1993.  Proceeds  from  maturities  and security  calls were $33,037 in
  1995, $15,295 in 1994 and $24,275 in 1993. Gross gains of $194, $10 and $266 and
  gross  losses of $19,  $20 and $39 in 1995,  1994 and 1993,  respectively,  were
  realized on sales and calls.
  
  As of  December  31, 1995 and 1994,  the  company did   not have any  individual
  investments in corporate securities which exceeded 10% of shareholders'  equity.
  There were no non-income  producing  investments  during the year ended December
  31, 1995 and 1994.
  
  At December  31,  1995 and 1994,  bonds with   an  amortized  cost of $7,669 and
  $9,153,  respectively,  are  on  deposit  with  various  regulatory  departments
  pursuant to statutory requirements.
  
  (4) Restrictions on shareholders' equity:
  
  The statutory financial statements of ATL, the Company's  principal  subsidiary,
  as filed, reflect the following-
  
                                         Year ended December 3l,
                                      ------------------------------
                                      1995         1994         1993
                                      ----         ----         ----
  Statutory net income (loss)      $(43,287)     $ 2,232      $ 4,065
                                   --------      -------      -------
  Statutory capital and surplus    $ 72,137      $57,013      $46,143
                                   ========      =======      =======
  In 1995, ATL acquired the long term   care business of an unrelated insurer, for
  which  it paid a  $40,000  ceding  allowance.  See  Note  15.  The  cost of this
  acquisition, and its related tax consequences, are primarily responsible for the
  1995 statutory loss.
  
  ATL is   required by insurance laws and regulations to maintain  minimum capital
  and surplus,  determined in accordance  with statutory  accounting  regulations.
  Under  Pennsylvania  insurance  law,  dividends  may be  paid by ATL  only  from
  statutory  profits or surplus  and  require  Pennsylvania  Insurance  Department
  approval  if the  dividend  is in excess of the greater of l0% of surplus or net
  statutory  income of the prior  year.  The  Department  must be  notified of any
  dividend in excess of one-half of l% of admitted assets of ATL.
  
                                         22
  (5) Federal income taxes:
  
  ATC   and its direct subsidiaries file a consolidated Federal income tax return.
  UGL files a separate  Federal  income tax return.  ATL and UGL are taxed as life
  insurance companies under the Tax Reform Act of 1986 and Revenue  Reconciliation
  Act of 1990. The 1990 Act requires life insurance  companies to capitalize costs
  of  acquiring  certain  insurance  contracts  and to  amortize  such  costs over
  specified  periods.  The 1986 Act taxes  life  insurance  companies  at  general
  corporate rates.
  
  The  Company  adopted  the  accounting  and  disclosure  rules    of  SFAS  109,
  "Accounting for Income Taxes,"  effective  January 1, 1993,  under which the tax
  benefit of the small life insurance  company deduction cannot be anticipated for
  purposes  of  offsetting  a  deferred  tax   liability  for  taxable   temporary
  differences  at the end of the current year.  As a result,  the adoption of SFAS
  109  resulted in an increase in the  deferred  tax  liability of $5,500 based on
  taxable  temporary  differences and the net deferred tax liability at January 1,
  1993.  The  Company has  restated  as  permitted  under SFAS 109,  prior  years'
  financial statements to record the effect of the adoption of this pronouncement.
  
  The components of deferred tax   assets and liabilities, measured under SFAS 109
  as of December 31, 1995 and 1994 are as follows:
  1995      1994
                                                                 ----      ----
  Deferred tax liabilities
    Deferred policy acquisition cost and other intangibles     $34,934   $37,288
    Unrealized gain on investments available for sale            5,517       - 
    Other                                                        1,106     1,532  
                                                               -------   -------
      Deferred tax liabilities                                  41,557    38,820
                                                               -------   -------
  Deferred tax assets
    Policy liabilities                                           6,031     5,869
    Net operating loss carry forward                               575       670
    Capital loss carryforward                                       47       185
    Alternative minimum tax credit carry forward                     -         6
    Other                                                          503       551
                                                               -------   -------
      Deferred tax assets                                        7,156     7,281
                                                               -------   -------
        Net deferred tax liability                              34,401    31,539
        Current tax liability                                    1,538     3,323
                                                               -------   -------
        Current and deferred income taxes                      $35,939   $34,862
                                                               =======   =======
  The provision for Federal income taxes are comprised of the following:
  Year ended December 31,
                                                      -------------------------
                                                      1995       1994      1993
                                                      ----       ----      ----
  Current taxes                                     $12,061     $7,882    $1,090
                                                    -------     ------    ------
  Deferred taxes relating to: 
    Deferred policy acquisition costs                (2,597)     4,848     7,622
    Future policy benefits, claims and unearned
      premium reserves                                2,154     (1,619)     (323)
    Amortization of intangibles                        (705)      (643)     (884)
    Net operating loss for tax purposes                (518)       118       199
    Tax rate increase on prior year temporary
      differences                                        -          -        702
    Other, net                                          614     (2,032)      309
                                                    -------     ------    ------
  Total deferred taxes                               (1,052)       672     7,625
                                                    -------     ------    ------
  Total provision for income taxes                  $11,009     $8,554    $8,715
                                                    =======     ======    ======
  23
  A  reconciliation  between  the  Federal  statutory  tax rate and the  Company's
  effective tax rate is as follows:
  Year ended December 31,
                                                     -------------------------
                                                     1995      1994       1993 
                                                     ----      ----       -----
  Statutory tax rate                                35.0%      35.0%      35.0%
  Increase in taxes resulting from:
  Effect of tax rate increase on temporary
  differences as of January 1, 1993                   -            -       3.0%
  Decrease in taxes resulting from:
  Tax free investment income                        (3.3)%     (3.3)%     (0.6)%
                                                    ----       ----       ----
  Effective tax rate                                31.7%      31.7%      37.4%
                                                    ====       ====       ====
  Pursuant to   the  requirements of SFAS 109, the Company  recorded an additional
  deferred tax provision of $702 during 1993 to reflect the impact on deferred tax
  assets and  liabilities  resulting from the increase in U.S.  statutory  maximum
  corporate tax rates from 34% to 35%.
  
  ATC has $1,569 in non-life   net operating loss carryforwards  available for tax
  purposes,  and has capital loss  carryforwards of approximately $375 expiring in
  1997.
  
  Prior   to 1984, ATL had accumulated  $170 in a special  policyholders'  surplus
  account which has been excluded from taxation. These amounts will become taxable
  only when  distributed to  shareholders.  No provision for deferred income taxes
  has been made for  these  amounts  since the  Company  does not  anticipate  any
  transactions that would cause any part of the account to become taxable.
  
  The Internal  Revenue Service is conducting a   review of the Company's  federal
  income tax returns for the years ended December 31, 1993,  1992, 1991, and 1990.
  Management  believes  that the ultimate  outcome of the review will not have any
  material  adverse  effect on the financial  condition or results of operation of
  the Company.
  
  (6) Stock option plans:
  
  ATC has adopted  several  stock option plans (the  "Plans").  The   Plans permit
  grants of options covering a maximum of 3,495,000 shares of common stock.  Under
  the Plans,  options may be issued as incentive  stock options in the case of key
  employees  and/or as  non-qualified  stock  options in the case of persons  with
  managerial,  professional  or  supervisory  responsibilities,  including but not
  limited to,  directors,  officers and consultants to ATC, who, in the opinion of
  the  Committee  administering  the Plans,  have a capacity to make a substantial
  contribution  to ATC.  One of the Plans also  provides for the issuance of up to
  50,000 shares of the  Company's  common stock upon the exercise of stock options
  granted as formula awards pursuant to the plan.
  
  The   per share  exercise  price  may not be less  than 100% of the fair  market
  value of the common stock on the date of grant, or 1l0% of the fair market value
  in the case of incentive stock options issued to an employee owning, at the time
  the option is granted,  more than 10% of the  outstanding  common  stock of ATC.
  Options  cannot  be  exercised  more  than ten  years  after  the date of grant.
  Incentive  stock  options  held by  shareholders  owning  more  than  10% of the
  outstanding  common stock of ATC cannot be exercised  more than five years after
  the date of grant.
  
        Stock Options
  (The following table summarizes data relating to the stock options,  as restated
  for the stock split.)
  Number of Shares
                                           ------------------------------------
                                           1995             1994           1993
                                           ----             ----           ----
  Outstanding at beginning of year       1,234,788        1,390,788     1,341,774
  Granted                                  564,375          142,500       276,000
  Exercised                                (90,837)        (298,500)     (226,266)
  Canceled                                      -                -           (720)
                                         ---------        ---------     ---------
  Outstanding at end of year             1,708,326        1,234,788     1,390,788
                                         =========        =========     =========
  24
  At December 31, 1995, the number of shares exercisable and options available for
  additional granting for all plans was 1,444,503 and 259,698,  respectively.  The
  exercise price of options outstanding at December 31, 1995, ranged from $1.46 to
  $15.75 per share.  The average exercise price at December 31, 1995, is $8.44 per
  share. During 1995, options for 90,837 shares were exercised at a range of $1.58
  to $8.66 per share.
  
  (7) Shareholders' rights agreement:
  
  On April 25, 1990, the Company declared a dividend distribution in   the form of
  preferred stock purchase rights (the "rights"). The rights become exercisable if
  a person or group acquires or announces a tender offer to acquire 20% or more of
  the Company's common stock.  The rights also become  exercisable if the Board of
  Directors  declares  a person to be an  "adverse  person"  and that  person  has
  obtained more than 10% of the outstanding shares of the Company's common stock.
  
  Each   right, when  exercisable,  entitles the registered holder to purchase one
  one-hundredth of a share of Series A preferred stock at an exercise price of $50
  subject to certain adjustments.  In addition,  if a person or group acquires 20%
  or more of the  outstanding  shares of the Company's  common  stock,  subject to
  certain  exceptions,  or a person is declared an adverse person, each right will
  then  entitle its holder  (other than such persons or members of any such group)
  to purchase,  at the right's then current  exercise price, a number of shares of
  the  Company's  common  stock  having a total  market value of twice the right's
  exercise price.
  
  In   the event that the  Company  merges  with or  transfers  50% or more of its
  assets or earnings to any entity after the rights become exercisable, holders of
  rights may purchase, at the right's then current exercise price, common stock of
  the acquiring entity having a value equal to twice the right's exercise price.
  
  In   addition, at any time after a person acquires 20% of the outstanding shares
  of common  stock and prior to the  acquisition  by such person of 50% or more of
  the outstanding shares of common stock, the Company may change the rights (other
  than the rights  which have  become null and void),  in whole or in part,  at an
  exchange  ratio of one share of common  stock or  equivalent  share of preferred
  stock, per right.
  
  The   Board of  Directors  can  redeem the rights for $.01 per right at any time
  prior to the acquisition by a person or group of beneficial  ownership of 20% or
  more of the Company's common stock or a person being declared an adverse person.
  Until a right  is  exercised,  the  holder  thereof  will  have no  rights  as a
  shareholder of the Company,  including without limitation,  the right to vote or
  to receive  dividends.  Unless  earlier  redeemed or exchanged,  the rights will
  expire on May 14, 2000.
  
  (8) Claim Reserves:
  
  Activity in the   liability  for policy claim  reserves is summarized as follows
  for the years ended December 31:
  1995     1994     1993
                                                        ----     ----     ----
  Claim reserves-beginning of year:                   $ 85,290 $ 55,958 $ 43,315
  
  Add claims incurred during the year related to-
  Current year:                                        133,221   91,831   73,398
  Prior years:                                           6,327    3,131    5,213
                                                      --------  -------  -------
  Total incurred:                                      139,548   94,962   78,611
                                                      --------  -------  -------
  Less claims paid during the year related to-
  Current year:                                         49,794   35,200   30,049
  Prior years:                                          57,141   42,703   35,919
                                                      --------  -------  -------
  Total paid:                                          106,935   77,903   65,968
                                                      --------  -------  -------
  Plus-reinsurance assumed (See Note 15):               92,170   12,273        0
                                                      --------  -------  -------
  Claim reserves-end of year:                         $210,073 $ 85,290 $ 55,958
                                                      ======== ======== ========
  25
  The  development  of prior year claims  reserves  reflects  normal  changes   in
  actuarial  estimates.  The Company  utilizes case  reserves that are  considered
  fixed and  determinable  and discounts  such reserves  using an interest rate of
  6.25%  for  financial  statements  prepared  in  accordance  with  GAAP and 5.0%
  discount rate for statutory purposes.
  
  (9) Employee benefits:
  
  Effective  January 1, 1984, ATC initiated a defined  benefit pension   plan (the
  "Plan") for all employees over the age of 2l years who have worked for ATC for a
  period of one year.  ATC  makes  annual  contributions  to the Plan  based  upon
  amounts  required  to fund  such plan as  determined  by a  consulting  actuary.
  Pension  expense was $203, $181 and $154, for the years ended December 31, 1995,
  1994 and 1993,  respectively.  The following  table sets forth the plan's funded
  status at December 31, 1995 and 1994.
  1995    1994
                                                               ----    ----
  Actuarial present value of benefit obligations:
  Vested benefits                                            $  733   $  593
  Non-vested benefits                                           124       99
                                                             ------   ------
                                                             $  857   $  692
                                                             ======   ======
  
  Projected benefit obligation                               $1,270   $1,052
  Plan assets at fair value                                    (750)    (614)
                                                             ------   ------
  Projected benefit obligation in excess of plan assets         520      438
  Unrecognized net loss                                        (276)    (292)
  Unrecognized transition obligation                            (89)     (92)
  Unrecognized prior service cost                               (64)     (70)
                                                             ------    -----
  Accrued (prepaid) pension expense                            $ 91    $ (16)
                                                             ======    =====
  
  Net pension cost includes the following components:
  Service cost                                                $ 162    $ 137
  Interest cost on projected benefit obligation                  72       60
  Actual return on plan assets                                  (47)     (16)
  Net amortization                                               16        0
                                                              -----    -----
  Net periodic pension cost                                   $ 203    $ 181
                                                              =====    =====
  The assumed rate of increase in future compensation levels used   in determining
  the actuarial  present value of the projected  benefit  obligation is 5% in 1995
  and 1994.  The  expected  rate of  return on assets is 8% in 1995 and 1994.  The
  discount rate used is 7% in 1995 and 1994.
  
  The Company  does   not have any other  obligations  to provide  post-retirement
  benefits to employees.
  
  (10) Commitments and contingencies:
  
  The Company   is a defendant in various legal proceedings and litigation arising
  in  the  ordinary  course  of  business.  In  management's  opinion,   based  on
  discussions  with counsel,  the resolution of such  proceedings  will not have a
  material adverse effect on the Company's  consolidated  financial  condition and
  results of operations.
  
  A civil  shareholders' class action suit filed against the Company   and certain
  of its  officers  in March 1992 was settled  during the second  quarter of 1993.
  Under the terms of the  settlement,  class  members were paid  $1,500,  of which
  $1,000 was paid by the Company's  liability carrier.  While the Company believed
  the  suit was  without  merit,  a  settlement  was  reached  to  avoid  internal
  distraction,   ongoing   professional   fees  and  other   potential  costs  and
  uncertainties of continued litigation.
  
                                         26
  (11) Transactions with related parties:
  
  Commissions paid to agencies  controlled   by certain directors amounted to $136
  in 1995, $140 in 1994 and $104 in 1993.
  
  The  Company   has  employment  contracts  with  certain  key  employees.  These
  contracts  provide for, among other things,  certain  severance  payments in the
  case of termination.
  
  (12) 6.5% convertible subordinated debentures due 2005
  
  In   September 1995 the Company issued $103,500 of 6.5% Convertible Subordinated
  Debentures  (the  "Debentures")  due October 1, 2005.  The proceeds were used to
  finance  an  additional  surplus  contribution  to ATL,  prepay  $20  million in
  outstanding  borrowings  under the Company's  Revolving  Credit Facility and for
  general corporate purposes.
  
  Interest on   the debentures is payable  semi-annually on April 1 and October 1,
  commencing  on April 1, 1996.  The  Debentures  are  redeemable at the Company's
  option at a price equal to 103.25%  after  October  1998,  declining  to 100% if
  redeemed after October 2001.
  
  The Debentures are convertible into ATC common stock anytime  prior  to maturity
  at a conversion price equal to $15.17 per share (equivalent to a conversion rate
  of 65.94 shares per $1,000 principal amount of debentures). The conversion price
  has been  adjusted to reflect the 3- for-2 stock split  discussed in Note 1, and
  is  subject to further  adjustment  under  certain  events  including  dividends
  distributions and common stock issuances, among others.
  
  Debt issue   costs incurred in connection  with the Debentures  totaling  $3,796
  are  included  in other  assets  and are  being  amortized  over the term of the
  Debentures. Accumulated amortization is $74 at December 31, 1995.
  
  (13)  Bank borrowings
  
    ATC  currently  is  party  to  a  $20,000   Revolving  Credit  Agreement  (the
  "Agreement").  The revolving credit  availability will be reduced by $1,667 each
  quarter beginning no later than March 31, 2002. No borrowings are outstanding at
  December 31, 1995.
  
    At December 31, 1994,  $20,000 in borrowings were  outstanding.  Proceeds from
  these borrowings were used to fund surplus  contributions to ATL during 1994 and
  1993.  Such  borrowings  were  repaid  with the  proceeds  from  the  Debentures
  discussed in Note 12.
  
  Borrowings  are  secured  by the  common  stock of ATL and ATIS.  Interest  is
  payable at 0.25% over the bank's base rate, at 1.625% over the London  interbank
  Eurodollar  rate or 1.75% over the bank's  certificate  of deposit  rate, at the
  Company's  option.  The average interest rate for amounts borrowed was 8.35% and
  8.44% for 1995 and 1994,  respectively.  A commitment fee is payable to the bank
  based on the average daily unused portion of the credit.
  
  The Agreement contains   restricted  covenants.  The more significant  covenants
  require  the  company  maintain a  specified  amount of net worth and  statutory
  surplus  and  meet  certain   financial   ratios,   and  restricts  mergers  and
  acquisitions, future indebtedness and commitments, and types of investments. The
  Company was in  compliance  with all of the  covenants as amended as of December
  31, 1995.
  
  (14) Leases:
  
  Future minimum lease rentals on  operating leases which consist  principally of
  the Company's Home Office facility and computers are as follows:
  
  1996            $1,935
  1997             1,796
  1998             1,411
  1999             1,185
  Thereafter         938
                  ------
  Total           $7,265
                  ======
  Operating lease expenses for the years ended December 31, 1995, 1994, and 1993
  were $1,670, $1,607 and $1,734, respectively.
  
                                         27
  (15) Acquisitions:
  
  In December 1995,  the Company  closed on an reinsurance  agreement   to acquire
  the long term care insurance  business of an unrelated  insurance  company which
  consisted of approximately  $96,000 of annualized  premium.  The transaction was
  effective as of October 1, 1995.  Under the terms of the reinsurance  agreement,
  the Company assumed all existing liabilities  associated with the long term care
  insurance  business on a coinsurance  basis.  Cash and marketable  securities of
  approximately  $249,969 were  transferred  to the Company.  In October 1994, the
  Company  acquired the long term  insurance  business of an  unrelated  insurance
  company  which  consisted  of  approximately  $25,000  of  annualized  premiums.
  Approximately $29,400 in cash was transferred to the Company. These acquisitions
  have been  accounted for using the purchase  accounting  method.  Total cash and
  marketable   securities   received  in   connection   with  these   acquisitions
  approximates reserve liabilities assumed.
  
  Value of business  acquired  consists of the excess of the   purchase price over
  the estimated fair value of net assets  acquired in connection with the purchase
  of common stock and the present value of expected future profits associated with
  blocks of business  purchased prior to 1992. Value of business  acquired related
  to the purchased blocks of business is being amortized over the respective lives
  of the blocks, which are estimated at approximately 5 to 7 years.
  
  (16)  Consolidated quarterly financial data (unaudited).
  
  Quarterly  financial  data for the years ended December 31, 1995 and 1994 are as
  follows:
  First     Second      Third      Fourth
                                  -----     ------      -----      ------
  1995
  ----
  Total Revenues                $ 65,314  $  65,476  $  68,278   $  98,264
  
  Total Benefits and Expenses     57,740     57,424     59,962      87,512
                                --------  ---------   --------   ---------
  Income before Provision
  for Income Tax                   7,574      8,052      8,316      10,752
  Provision for Income Taxes       2,350      2,544      2,589       3,526
                                --------  ---------   --------    --------
  Net Income                    $  5,224  $   5,508   $  5,727    $  7,226
                                ========  =========   ========    ========
  Net Income Per Share
  Primary                       $    .32  $     .34   $    .35    $    .44
                                ========  =========   ========    ========
  Fully Diluted                 $    .32  $     .34   $    .34    $    .36
                                ========  =========   ========    ========
  First     Second      Third      Fourth
                                 -----     ------      -----      ------
  1994
  ----
  Total Revenues                $ 49,610   $ 50,605  $  52,043   $  60,643
  Total Benefits and Expenses     43,439     44,205     45,149      53,126
                                --------   --------   --------   ---------
  Income before provision for
  income tax                       6,171      6,400      6,894       7,517
  Provision for Income Taxes       1,929      2,010      2,178       2,437
                                --------   --------  ---------   ---------
  Net Income                    $  4,242   $  4,390  $   4,716   $   5,080
                                ========   ========  =========   =========
  Net Income Per Share
  Primary                       $   .27    $    .27  $     .29   $     .31
                                =======    ========  =========   =========
  Fully Diluted                 $   .27    $    .27  $     .29   $     .31
                                =======    ========  =========   =========
  
  Per share  amounts have been adjusted to reflect the  three-for-two  stock split
  payable on April 10, 1996.
  28
  CONSECO, INC. AND SUBSIDIARIES
                                _________________
  
  ITEM 7(b).     Financial Statements and Exhibits, continued
  
                 (b)  Pro forma financial statements of Conseco, Inc. and
                      subsidiaries.
  
                                         29
  CONSECO, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
    
       The  unaudited pro forma  consolidated  statement of operations of Conseco,
  Inc.  ("Conseco") for the nine months ended September 30, 1996, and for the year
  ended December 31, 1995, presents the consolidated operating results for Conseco
  as if the following  transactions,  which have already occurred, had occurred on
  January  1,  1995:  (1) the  issuance  of  $275.0  million  of Trust  Originated
  Preferred  Securities  ("TOPrS") having a distribution rate of 9.16 percent (the
  "TOPrS  Offering");  (2)  the  issuance  of  $325.0  million  of  Capital  Trust
  Pass-through  Securities  ("TruPS")  having a distribution  rate of 8.70 percent
  (the  "TruPS  Offering");  and (3) the merger  (the "ATC  Merger")  of  American
  Travellers Corporation ("ATC") with and into Conseco.
  
       The pro forma consolidated statement of operations data for Conseco for the
  year ended December 31, 1995, set forth in the unaudited pro forma  consolidated
  statement of operations  under the column "Pro forma Conseco  before the Merger"
  reflect the prior application of certain pro forma adjustments for the following
  transactions,  all of which have already  occurred,  as if such transactions had
  occurred on January 1, 1995: (i) the call for  redemption of Conseco's  Series D
  Convertible  Preferred  Stock (the "Series D Call")  completed on September  26,
  1996; (ii) the  acquisition of all of the  outstanding  common stock of American
  Life  Holdings,  Inc.  ("ALH"),  not  previously  owned by Conseco,  and related
  transactions (the "ALH Transaction")  completed on September 30, 1996; (iii) the
  acquisition  of  Life  Partners  Group,  Inc.  (the  "LPG  Merger");   (iv)  the
  acquisition of all of the outstanding  common stock of CCP not previously  owned
  by Conseco and related  transactions  (including the repayment of the borrowings
  under Conseco's  existing $250.0 million  revolving credit  agreement);  (v) the
  increase of Conseco's  ownership in Bankers Life Holding  Corporation ("BLH") to
  90.4  percent,  as a result of purchases of common  shares of BLH by Conseco and
  BLH during 1995 and the first three  months of 1996;  (vi) the  issuance of 4.37
  million shares of Preferred  Redeemable  Increased  Dividend  Equity  Securities
  Convertible Preferred Stock ("PRIDES") of Conseco in January 1996; (vii) the BLH
  tender offer for and repurchase of its 13 percent senior  subordinated notes due
  2002 and related financing transactions completed in March 1996 (the "BLH Tender
  Offer"); and (viii) the debt restructuring of ALH in the fourth quarter of 1995.
  Such pro forma  adjustments  are set forth in:  (i)  Exhibit  99.2  included  in
  Conseco's  Current Report on Form 8-K dated  September 25, 1996;  (ii) Conseco's
  Current Report on Form 8-K dated August 2, 1996; and (iii) Exhibit 99.1 included
  in Conseco's Current Report on Form 8-K dated April 10, 1996.
  
       The pro forma consolidated statement of operations data for Conseco for the
  nine months ended  September  30,  1996,  set forth in the  unaudited  pro forma
  consolidated  statement of operations under the column "Pro forma Conseco before
  the  TOPrS  Offering"  reflect  the  prior  application  of  certain  pro  forma
  adjustments for the following transactions,  all of which have already occurred,
  as if such  transactions had occurred on January 1, 1995: (1) the Series D Call;
  (2) the ALH  Transaction;  (3) the LPG Merger;  (4) the issuance of 4.37 million
  shares of Conseco PRIDES in January 1996; and (5) the BLH Tender Offer. Such pro
  forma  adjustments are set forth in Exhibit 99.1 included in Conseco's Form 10-Q
  for the quarterly period ended September 30, 1996.
  
       The  unaudited  pro  forma  consolidated  balance  sheet of  Conseco  as of
  September  30, 1996,  gives  effect to the  following  transactions,  which have
  already  occurred,  as if each had occurred on September 30, 1996: (1) the TOPrS
  Offering; (2) the TruPS Offering; and (3) the ATC Merger.
  
       The pro forma consolidated financial statements are based on the historical
  financial  statements  of  Conseco,  LPG  and ATC  and  are  qualified  in their
  entirety by, and should be read in conjunction with, these financial  statements
  and the notes thereto. The pro forma data are not necessarily  indicative of the
  results of operations or financial  condition of Conseco had these  transactions
  occurred  on January  1, 1995,  nor the  results of future  operations.  Conseco
  anticipates  cost savings and additional  benefits as a result of certain of the
  transactions  contemplated in the pro forma financial statements.  Such benefits
  and any other changes that might have  resulted from  management of the combined
  companies have not been included as  adjustments  to the pro forma  consolidated
  financial  statements.   Certain  amounts  from  the  prior  periods  have  been
  reclassified to conform to the current presentation.
  
       The  unaudited pro forma  consolidated  financial  statements  reflect cost
  allocations  for the LPG Merger,  the ALH  Transaction  and the ATC Merger using
  estimated  values of the assets and  liabilities  of LPG,  ALH and ATC as of the
  assumed merger dates based on appraisals  and other  studies,  which are not yet
  complete.  Accordingly, the final allocations will be different than the amounts
  included  in the  accompanying  pro  forma  consolidated  financial  statements.
  Although the final allocations will differ, the pro forma consolidated financial
  statements  reflect  management's  best  estimate  based on currently  available
  information  as if the LPG Merger,  the ALH  Transaction  and the ATC Merger had
  occurred on the assumed merger dates.
                                    30
  CONSECO, INC. AND SUBSIDIARIES
                   PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                       for the nine months ended September 30, 1996
                   (Amounts in millions, except per share amounts)
                                     (unaudited)
                                                                                                                       
                                                                       Pro forma                                                   
                                                         Pro forma    adjustments                  Pro forma      
                                                          Conseco      relating      Pro forma     adjustments  
                                                         before the     to the        for the      relating to  Pro forma     
                                                           TOPrS        TOPrS          TOPrS        the TruPS    Conseco     
                                                          Offering     Offering      Offering       Offering     subtotal(a)
                                                          --------     --------       --------     ---------    ---------
  Revenues:
       Insurance policy income                           $1,349.0       $   -         $1,349.0     $    -       $1,349.0     
       Investment activity:
           Net investment income                          1,084.4                      1,084.4                   1,084.4    
  
           Net trading losses                                (6.5)                        (6.5)                     (6.5)    
           Net realized gains                                23.0                         23.0                      23.0    
       Fee revenue                                           29.7                         29.7                      29.7         
       Restructuring income                                  30.4                         30.4                      30.4         
       Other income                                          11.4                         11.4                      11.4         
                                                         --------      -------        --------     --------     --------   
              Total revenues                              2,521.4                      2,521.4                   2,521.4    
                                                         --------      -------        --------     --------     --------     
  
  Benefits and expenses:
       Insurance policy benefits and change in future
         policy benefits                                    957.2                        957.2                     957.2     
       Interest expense on annuities and financial
         products                                           549.5                        549.5                     549.5      
       Interest expense on notes payable                    100.7        (12.9)(1)        87.8        (15.6)(6)     72.2         
                                                                                                
  
       Interest expense on investment borrowings             17.2                         17.2                      17.2         
       Amortization related to operations                   242.9                        242.9                     242.9      
                                                                                                
       Amortization related to realized gains                22.3                         22.3                      22.3        
       Other operating costs and expenses                   243.5                        243.5                     243.5      
                                                         --------      -------        --------     --------     --------    
              Total benefits and expenses                 2,133.3        (12.9)        2,120.4        (15.6)     2,104.8     
                                                         --------      -------        --------     --------     --------     
  
              Income before income taxes, minority
                  interest and extraordinary charge         388.1         12.9           401.0         15.6        416.6       
  Income tax expense                                        147.9          4.5 (2)       152.4          5.4 (7)    157.8       
                                                         --------      -------        --------      -------     --------    
              Income before  minority interest
                  and extraordinary charge                  240.2          8.4           248.6         10.2        258.8      
  
  Minority interest in consolidated subsidiaries:
       Dividends on Company - obligated mandatorily
         redeemable preferred securities of subsidiary
         trusts                                                -          12.3 (3)        12.3         13.8 (8)     26.1    
       Dividends on preferred  stock                          6.4                          6.4                       6.4
       Equity in earnings                                    13.9                         13.9                      13.9
                                                         --------      -------        --------     --------     --------    
  
              Income before extraordinary charge         $  219.9      $  (3.9)       $  216.0     $   (3.6)    $  212.4    
                                                         ========      =======        ========     ========     ========    
  
  Earnings per common share and common equivalent share:
       Primary:
           Weighted average shares outstanding               77.2                         77.2                      77.2     
                                                         ========                     ========                     =====       
           Income before extraordinary  charge              $2.85                        $2.80                     $2.75       
                                                         ========                     ========                     =====
  
       Fully diluted:
           Weighted average shares outstanding               78.7                         78.7                      78.7
                                                         ========                      =======                     =====
           Income before extraordinary  charge              $2.79                        $2.74                     $2.70
                                                         ========                      =======                     =====
  (a)  Amounts are carried forward to page 32.
  The accompanying notes are an integral part of the pro forma consolidated financial statements.
  
                                         31
  CONSECO, INC AND SUBSIDIARIES
                   PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                       for the nine months ended September 30, 1996
                   (Amounts in millions, except per share amounts)
                                     (unaudited)
  
                                                                                                                                      
                                                              Pro forma                                    
                                                             adjustments                                    
                                    Pro forma                  relating       Pro forma             
                                     Conseco        ATC        to the          Conseco           
                                   subtotal(a)   historical   ATC Merger       totals   
                                    ---------   ------------  ----------     ---------
  Revenues:
   Insurance policy income         $1,349.0       $ 283.3       $     -       $1,632.3     
  
      Net investment income         1,084.4          33.2            1.1 (11)  1,118.7                         
                                             
         
             
      Net trading losses               (6.5)                                      (6.5)                         
      Net realized gains               23.0           1.3            2.3 (11)     26.6          
    Fee revenue                        29.7                                       29.7                     
    Restructuring income               30.4                                       30.4                      
    Other income                       11.4                                       11.4                                 
                                  ---------      --------       --------      --------      
           Total revenues           2,521.4         317.8            3.4       2,842.6            
                                  ---------      --------       --------      --------      
  
  Benefits and expenses:
   Insurance policy benefits
     and change in future
     policy benefits                  957.2         192.2                      1,149.4            
   Interest expense 
     on annuities and
     financial products               549.5                                      549.5                       
   Interest expense on
     notes payable                     72.2           5.8            1.5 (12)     75.8                              
                                                                    (3.7)(13)                               
                                                              
    Interest expense on
     investment borrowings             17.2                                       17.2                   
    Amortization related
      to operations                   242.9          16.4          (16.4)(14)    273.6                 
                                                                    19.9 (14)                               
                                                                    10.8 (15)                                 
    Amortization related
      to realized gains                22.3                                      22.3               
    Other operating 
     costs and expenses               243.5          64.4                       307.9                 
                                  ---------      --------       --------      -------      
          Total benefits
           and expenses             2,104.8         278.8           12.1      2,395.7            
                                  ---------      --------       --------      -------     
  
          Income before income
              taxes, minority interest
              and extraordinary
              charge                  416.6          39.0           (8.7)       446.9                 
  Income tax expense                  157.8          13.0             .7 (16)   171.5               
                                  ---------     ---------       --------      -------      
          Income before 
              minority interest 
              and extraordinary
              charge                  258.8          26.0           (9.4)       275.4                 
  
  Minority interest in consolidated
     subsidiaries:                                                                                                                
     Dividends on Company - obligated
       mandatorily redeemable
       preferred securities of  
       subsidiary trusts               26.1                                      26.1                                 
     Dividends on preferred stock       6.4                                       6.4                            
     Equity in earnings                13.9                                      13.9       
                                   --------     ---------       --------      -------      
          Income before 
              extraordinary
              charge               $  212.4      $   26.0       $   (9.4)     $ 229.0           
                                   ========      ========       ========      =======      
  
  Earnings per common share and 
   common equivalent share:
   Primary:
       Weighted average 
         shares outstanding            77.2                         10.4 (17)    87.6                 
                                       ====                       ======         ====       
       Income before 
         extraordinary  charge        $2.75                                     $2.61                                   
                                      =====                                     =====                                          
  
   Fully diluted:
       Weighted average shares
         outstanding                   78.7                         14.4 (17)    93.1                
                                       ====                       ======         ====                
       Income before  
         extraordinary charge         $2.70                                     $2.47
                                      =====                                     =====
  (a) Amounts have been carried forward from page 31.
  The accompanying notes are an integral part of the pro forma consolidated financial statements.
  
                                         32
  CONSECO, INC. AND SUBSIDIARIES
                   PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                       for the year ended December 31, 1995
                   (Amounts in millions, except per share amounts)
                                     (unaudited)
                                                                                                                       
                                                                       Pro forma                   
                                                         Pro forma    adjustments                  Pro forma      
                                                          Conseco      relating      Pro forma     adjustments
                                                         before the     to the        for the      relating to  Pro forma    
                                                           TOPrS         TOPrS         TOPrS        the TruPS    Conseco
                                                          Offering     Offering      Offering       Offering     subtotal(a)
                                                          --------     --------       --------     ---------    ---------
  Revenues:
       Insurance policy income                           $1,752.8       $   -         $1,752.8     $    -       $1,752.8     
       Investment activity:
           Net investment income                          1,461.1                      1,461.1                   1,461.1    
  
           Net trading income                                 2.5                          2.5                       2.5     
           Net realized gains                               220.3                        220.3                     220.3
       Fee revenue                                           33.9                         33.9                      33.9         
       Restructuring income                                  15.2                         15.2                      15.2         
       Other income                                          12.6                         12.6                      12.6         
                                                         --------      -------        --------     --------     --------   
              Total revenues                              3,498.4                      3,498.4                   3,498.4    
                                                         --------      -------        --------     --------     --------     
  
  Benefits and expenses:
       Insurance policy benefits and change in future
         policy benefits                                  1,261.4                      1,261.4                   1,261.4     
       Interest expense on annuities and financial
         products                                           758.5                        758.5                     758.5      
       Interest expense on notes payable                    143.5        (17.3)(1)       126.2        (20.9)(6)    105.3         
                                                                                                
  
       Interest expense on investment borrowings             30.2                         30.2                      30.2         
       Amortization related to operations                   307.3                        307.3                     307.3      
                                                                                                
       Amortization related to realized gains               144.4                        144.4                     144.4       
       Other operating costs and expenses                   356.4                        356.4                     356.4      
                                                         --------      -------        --------     --------     --------    
              Total benefits and expenses                 3,001.7        (17.3)        2,984.4        (20.9)     2,963.5     
                                                         --------      -------        --------     --------     --------     
  
              Income before income taxes, minority
                  interest and extraordinary charge         496.7         17.3           514.0         20.9        534.9       
  Income tax expense                                        192.3          6.1 (2)       198.4          7.3 (7)    205.7       
                                                         --------      -------        --------      -------     --------    
              Income before  minority interest
                  and extraordinary charge                  304.4         11.2           315.6         13.6        329.2      
  
  Minority interest in consolidated subsidiaries:
       Dividends on Company - obligated mandatorily
         redeemable preferred securities of subsidiary
         trusts                                                -          16.4 (3)        16.4         18.4 (8)     34.8    
       Dividends on preferred  stock                          8.7                          8.7                       8.7
       Equity in earnings                                    12.6                         12.6                      12.6
                                                         --------      -------        --------     --------     --------    
  
              Income before extraordinary charge         $  283.1      $  (5.2)       $  277.9     $   (4.8)    $  273.1    
                                                         ========      =======        ========     ========     ========    
  
  Earnings per common share and common equivalent share:
       Primary:
           Weighted average shares outstanding               75.7                         75.7                      75.7     
                                                         ========                     ========                     =====       
           Income before extraordinary  charge              $3.74                        $3.67                     $3.61       
                                                         ========                     ========                     =====
  
       Fully diluted:
           Weighted average shares outstanding               76.0                         76.0                      76.0
                                                         ========                      =======                     =====
           Income before extraordinary  charge              $3.72                        $3.66                     $3.59
                                                         ========                      =======                     =====
  (a)  Amounts are carried forward to page 34.
  The accompanying notes are an integral part of the pro forma consolidated financial statements.
  
                                         33
  CONSECO, INC AND SUBSIDIARIES
                   PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
                       for the year ended December 31, 1995
                   (Amounts in millions, except per share amounts)
                                     (unaudited)
  
                                                                                                                                      
                                                              Pro forma                                    
                                                             adjustments                                    
                                    Pro forma                  relating       Pro forma             
                                     Conseco        ATC        to the          Conseco           
                                   subtotal(a)   historical   ATC Merger       totals   
                                    ---------   ------------  ----------     ---------
  Revenues:
   Insurance policy income         $1,752.8       $ 273.9       $     -       $2,026.7     
  
      Net investment income         1,461.1          23.2            1.8 (11)  1,486.1                         
                                             
         
             
      Net trading income                2.5                                        2.5                         
      Net realized gains              220.3            .2            2.0 (11)    222.5          
    Fee revenue                        33.9                                       33.9                     
    Restructuring income               15.2                                       15.2                      
    Other income                       12.6                                       12.6                                 
                                  ---------      --------       --------      --------      
           Total revenues           3,498.4         297.3            3.8       3,799.5            
                                  ---------      --------       --------      --------      
  
  Benefits and expenses:
   Insurance policy benefits
     and change in future
     policy benefits                1,261.4         172.9                      1,434.3            
   Interest expense 
     on annuities and
     financial products               758.5                                      758.5                       
   Interest expense on
     notes payable                    105.3           3.3            1.9 (12)    107.3                              
                                                                    (3.2)(13)                               
                                                              
    Interest expense on
     investment borrowings             30.2                                       30.2                   
    Amortization related
      to operations                   307.3          22.7          (22.7)(14)    345.2                 
                                                                    23.5 (14)                               
                                                                    14.4 (15)                                 
    Amortization related
      to realized gains               144.4                                      144.4               
    Other operating 
     costs and expenses               356.4          63.7                        420.1                 
                                  ---------      --------       --------       -------      
          Total benefits
           and expenses             2,963.5         262.6           13.9       3,240.0            
                                  ---------      --------       --------       -------     
  
          Income before income
              taxes, minority interest
              and extraordinary
              charge                  534.9          34.7          (10.1)        559.5                 
  Income tax expense                  205.7          11.0            1.5 (16)    218.2               
                                  ---------     ---------       --------       -------      
          Income before 
              minority interest 
              and extraordinary
              charge                  329.2          23.7          (11.6)        341.3                 
  
  Minority interest in consolidated
     subsidiaries:                                                                                                                
     Dividends on Company - obligated
       mandatorily redeemable
       preferred securities of  
       subsidiary trusts               34.8                                       34.8                                 
     Dividends on preferred stock       8.7                                        8.7                            
     Equity in earnings                12.6                                       12.6       
                                   --------     ---------       --------       -------      
          Income before 
              extraordinary
              charge               $  273.1      $   23.7       $  (11.6)      $ 285.2           
                                   ========      ========       ========       =======      
  
  Earnings per common share and 
   common equivalent share:
   Primary:
       Weighted average 
         shares outstanding            75.7                         10.4 (17)    86.1
                                       ====                       ======         ====
       Income before 
         extraordinary  charge        $3.61                                     $3.31
                                      =====                                     =====
  
   Fully diluted:
       Weighted average shares
         outstanding                   76.0                         14.4 (17)    90.4
                                       ====                       ======         ====                
       Income before  
         extraordinary charge         $3.59                                     $3.15           
                                      =====                                     =====
  (a) Amounts have been carried forward from page 33.
  The accompanying notes are an integral part of the pro forma consolidated financial statements.
  
                                         34
  CONSECO, INC. AND SUBSIDIARIES
                        PRO FORMA CONSOLIDATED BALANCE SHEET
                                 September 30, 1996
                                (Dollars in millions)
                                     (unaudited)
                                                                                                                        
                                                                                                   
                                                                      Pro forma                    Pro forma          
                                                                     adjustments    Pro forma     adjustments
                                                                     relating to     for the      relating to  Pro forma
                                                         Conseco      the TOPrS        TOPrS       the TruPS    Conseco
                                                       as reported    Offering       Offering      Offering    subtotal(a)
                                                       ------------  -----------    ----------    ---------    --------
  Assets
       Investments:
           Actively managed fixed maturity          
             securities at fair value                  $15,959.8        $   -       $15,959.8   $     -       $15,959.8    
                                                                                       
  
           Held-to-maturity fixed maturity 
             securities                                       -                            -                         -          
           Equity securities at fair value                 104.2                        104.2                     104.2          
           Mortgage loans                                  372.5                        372.5                     372.5          
           Credit-tenant loans                             393.8                        393.8                     393.8          
           Policy loans                                    526.0                        526.0                     526.0          
           Other invested assets                           211.0                        211.0                     211.0          
           Short-term investments                          212.3         265.5 (4)      212.3        321.3 (9)    212.3         
                                                                        (265.5)(4)                  (321.3)(9)
           Assets held in separate accounts                300.4                        300.4                     300.4          
                                                       ---------        ------      ---------    ---------    ---------     
  
                  Total investments                     18,080.0            -        18,080.0           -      18,080.0        
                                                       
       Accrued investment income                           276.7                        276.7                     276.7         
       Cost of policies purchased                        1,847.1                      1,847.1                   1,847.1         
                                                                                                 
       Cost of policies produced                           541.0                        541.0                     541.0        
       Reinsurance receivables                             400.6                        400.6                     400.6            
       Income taxes                                        138.9                        138.9                     138.9            
                                                                                                
       Goodwill                                          1,524.7                      1,524.7                   1,524.7           
  
       Property and equipment                              105.9                        105.9                     105.9           
       Securities segregated for future redemption      
           of redeemable preferred stock of a
           subsidiary                                       45.0                         45.0                      45.0           
       Other assets                                        216.1                        216.1                     216.1        
                                                       ---------        ------      ---------    ---------    ---------     
  
                  Total assets                         $23,176.0        $   -       $23,176.0    $      -     $23,176.0    
                                                       =========        ======      =========    =========    =========
  (a) Amounts are carried forward to page 36.
  The accompanying notes are an integral part of the pro forma consolidated financial statements.
  
                                         35
  CONSECO, INC. AND SUBSIDIARIES
                        PRO FORMA CONSOLIDATED BALANCE SHEET
                                 September 30, 1996
                                (Dollars in millions)
                                     (unaudited)
  
                                                                                                                                      
                                                               Pro forma                                       
                                                             adjustments                                   
                                    Pro forma                   relating    Pro forma           
                                     Conseco        ATC         to the       Conseco          
                                    subtotal(a)  historical   ATC Merger      totals  
                                    ---------   ------------  ----------- -----------
  Assets
   Investments:
       Actively managed fixed    
        maturity securities
        at fair value               $15,959.8     $  689.7     $    -       $16,649.5   
                                                                                                         
  
       Held-to-maturity 
        fixed maturity 
        securities                         -                                                                 
       Equity securities at 
        fair value                      104.2                                   104.2                      
       Mortgage loans                   372.5           .4                      372.9                      
       Credit-tenant loans              393.8                                   393.8                     
       Policy loans                     526.0                                   526.0                     
       Other invested assets            211.0                                   211.0                     
       Short-term investments           212.3         12.2         (30.4)(18)   224.5                     
                                                                    30.4 (19)                    
                                                                                                      
       Assets held in separate
         accounts                       300.4                                   300.4                      
                                     --------     --------     ---------    ---------  
  
              Total investments      18,080.0        702.3            -      18,782.3          
                                                              
   Accrued investment income            276.7          7.7                      284.4                     
   Cost of policies purchased         1,847.1         10.9         268.8 (20) 2,115.9        
                                                                   (10.9)(20)                                          
   Cost of policies produced            541.0        168.7        (168.7)(21)   541.0       
   Reinsurance receivables              400.6                                   400.6                     
   Income taxes                         138.9                      (27.1)(22)    85.6       
                                                                   (26.2)(22)                      
   Goodwill                           1,524.7                      562.8 (23) 2,087.5       
  
   Property and equipment               105.9          3.9                      109.8        
   Securities segregated for 
       future redemption of                    
       redeemable preferred
       stock of a
       subsidiary                        45.0                                    45.0                     
   Other assets                         216.1         14.1                      230.2           
                                    ---------     --------     ---------    ---------   
  
              Total assets          $23,176.0     $  907.6     $   598.7    $24,682.3   
                                    =========     ========     =========    =========
  (a)  Amounts have been carried forward from page 35.
  The accompanying notes are an integral part of the pro forma consolidated financial statements.
                                        
                                          36
  CONSECO, INC. AND SUBSIDIARIES
                        PRO FORMA CONSOLIDATED BALANCE SHEET
                                 September 30, 1996
                                (Dollars in millions)
                                     (unaudited)
  
                                                                                                                                      
                                                  Pro forma                
                                                 adjustments               Pro forma                           Pro forma  
                                                  relating    Pro forma   adjustments                         adjustments
                                                   to the      for the    relating to  Pro forma               relating    Pro forma 
                                    Conseco        TOPrS        TOPrS      the TruPS    Conseco      ATC        to the      Conseco
                                   as reported    Offering     Offering     Offering    subtotal  Historical  ATC Merger     totals
                                    ---------    ----------    --------    ---------   ---------  ---------- ------------  ---------
  Liabilities:
       Insurance liabilities        $18,150.7   $   -          $18,150.7   $  -        $18,150.7   $ 586.3   $     -       $18,737.0
       Income tax liabilities              -                          -                       -       26.2      (26.2)(22)        -  
       Investment borrowings            539.4                      539.4                   539.4                               539.4
       Other liabilities                482.0                      482.0                   482.0      10.9       11.3 (24)     504.2 
       Liabilities related 
         to separate accounts           300.1                      300.1                   300.1                               300.1
       Notes payable of Conseco       1,169.0    (265.5)(4)        903.5    (321.3)(9)     582.2     102.9       30.4 (19)     851.2
                                                                                                                135.7 (24)
  
       Notes payable of 
         Bankers Life Holding
         Corporation, not 
         direct obligations 
         of Conseco                     418.1                      418.1                   418.1                               418.1
  
       Notes payable of American
         Life Holdings, Inc., not
         direct obligations of 
         Conseco                         13.0                       13.0                    13.0                                13.0 
                                     --------    ------        ---------   -------     ---------    ------    -------       --------
  
              Total liabilities      21,072.3    (265.5)        20,806.8    (321.3)     20,485.5     726.3      151.2       21,363.0
                                     --------    ------        ---------   -------     ---------    ------    -------       --------
  
  Minority interest in consolidated
     subsidiaries:                                                                          
     Company - obligated mandatorily
       redeemable preferred securities
       of subsidiary trusts                -      275.0 (5)        275.0     325.0 (10)    600.0                               600.0
     Preferred stock                     92.5                       92.5                    92.5                                92.5
     Common stock                        55.3                       55.3                    55.3                                55.3
  
                                     --------    ------        ---------   -------     ---------    ------    -------      --------- 
  
  Shareholders' equity:
       Preferred stock                  267.1                      267.1                   267.1                               267.1
  
       Common stock and additional
         paid-in capital              1,054.5      (9.5)(5)      1,045.0      (3.7)(10)  1,041.3      64.4      (64.4)(25)   1,670.1
                                                                                                                628.8 (25)
       Unrealized appreciation 
         (depreciation) of securities   (47.0)                     (47.0)                  (47.0)    (10.3)      10.3 (25)     (47.0)
  
       Retained earnings                681.3                      681.3                   681.3     127.2     (127.2)(25)     681.3
  
                                      -------    ------        ---------   -------     ---------    ------    -------      --------- 
  
          Total shareholders' equity  1,955.9      (9.5)         1,946.4      (3.7)      1,942.7     181.3      447.5        2,571.5
                                      -------    ------        ---------   -------     ---------    ------    -------      ---------
  
             Total liabilities and
               shareholders' equity $23,176.0    $   -         $23,176.0    $   -      $23,176.0    $907.6    $ 598.7      $24,682.3
                                    =========    ======        =========    ======     =========    ======    =======      =========
  
   The accompanying notes are an integral part of the pro forma consolidated financial statements.
  
                                         37
  CONSECO AND SUBSIDIARIES
                NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
                                     (unaudited)
  
  PRO FORMA ADJUSTMENTS
  
       TRANSACTIONS RELATING TO THE TOPrS OFFERING
  
       On November 19, 1996, a subsidiary  trust of Conseco issued TOPrS having an
  aggregate  liquidation  amount of $275 million and a  distribution  rate of 9.16
  percent.  The subsidiary  used the proceeds from the sale of such  securities to
  purchase subordinated  deferrable interest debentures of Conseco in an aggregate
  principal  amount  equivalent to the aggregate  liquidation  amount of the TOPrS
  that were issued. The subordinated  deferrable interest debentures bear interest
  at a rate of 9.16  percent.  Conseco  used  the  proceeds  from  the sale of the
  subordinated deferrable interest debentures to reduce its notes payable.
   
      (1)   Interest expense is reduced to reflect the repayment of $265.5 million
            aggregate principal amount of Conseco's notes payable.
  
       (2)   The  pro  forma  adjustment  is  tax  affected,  based  on  Conseco's
             effective tax rate of 35 percent.
   
       (3)   Minority interest  is adjusted to  reflect the  distribution (net  of
             the related tax benefit) on the TOPrS.
  
       (4)   Notes payable are reduced to reflect the repayment of $265.5  million
             aggregate  principal amount of Conseco's notes payable using  the net
             proceeds from the TOPrS Offering.
  
       (5)  The  Company's  minority  interest  in  consolidated  subsidiaries  is
            increased by the aggregate  liquidation amount of the TOPrS.  Issuance
            and other  transaction costs related to the TOPrS Offering are charged
            to paid-in capital.
  
       TRANSACTIONS RELATING TO THE TruPS OFFERING
  
       On November  27, 1996,  another  subsidiary  trust of Conseco  issued TruPS
  having an aggregate  liquidation  amount of $325 million and a distribution rate
  of 8.70  percent.  The  subsidiary  used  the  proceeds  from  the  sale of such
  securities to purchase Conseco subordinated  deferrable interest debentures with
  an aggregate principal amount equivalent to the aggregate  liquidation amount of
  the TruPS that were issued. The subordinated  deferrable  interest debentures of
  Conseco bear interest at a rate of 8.70 percent.  Conseco used the proceeds from
  the sale of the subordinated  deferrable interest debentures to reduce its notes
  payable.
  
       (6)   Interest  expense  is  reduced  to  reflect  the  repayment of $321.3
             million aggregate principal amount of Conseco's notes payable.
  
       (7)   The  pro  forma  adjustment  is  tax  affected,  based  on  Conseco's
             effective tax rate of 35 percent.
  
       (8)   Minority interest is adjusted to reflect the distribution (net of the
             related tax benefit) on the TruPS.
  
       (9)   Notes payable are reduced to reflect the repayment of $321.3  million
             aggregate  principal  amount  of  Conseco's  notes  payable using the
             net proceeds from the TruPS Offering.
  
       (10) The  Company's  minority  interest  in  consolidated  subsidiaries  is
            increased by the aggregate  liquidation amount of the TruPS.  Issuance
            and other  transaction costs related to the TruPS Offering are charged
            to paid-in capital.
  
                                        38
  CONSECO AND SUBSIDIARIES
                NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
                                     (unaudited)
  
       Transactions relating to the ATC Merger
  
       The ATC Merger,  completed on December 17, 1996, is accounted for under the
  purchase method of accounting.  Under this method, the total cost to acquire ATC
  is allocated to the assets and  liabilities  acquired based on their fair values
  as of the date of the ATC  Merger,  with any excess of the total  purchase  cost
  over  the  fair  value  of the  assets  acquired  less  the  fair  value  of the
  liabilities  assumed recorded as goodwill.  The ATC Merger did not qualify to be
  accounted for under the pooling of interests  method in accordance  with APB No.
  16 because an  affiliate  of ATC sold a portion of the Conseco  common  stock it
  received in the ATC Merger shortly after the consummation of the ATC Merger.  In
  the ATC Merger,  each  outstanding  share of ATC common stock was  exchanged for
   .5836 of a share of Conseco's common stock.  Conseco issued  approximately  10.4
  million shares of Conseco common stock or common stock  equivalents with a value
  of $628.8 million to acquire ATC's common stock.  In addition,  Conseco  assumed
  the  ATC  convertible  subordinated  debentures,   which  are  convertible  into
  approximately  4.0 million shares of Conseco common stock with a value of $238.6
  million. In addition,  Conseco accrued estimated costs related to the ATC Merger
  (including contract termination,  relocation, legal, accounting and other costs)
  of approximately $30.4 million.
  
  The cost to acquire ATC is allocated as follows (dollars in millions):
  Book value of assets acquired based on the assumed date of the
       ATC Merger (September 30, 1996) ...................................................    $181.3
  Convertible subordinated debentures assumed by Conseco at the
       assumed date of the ATC Merger.....................................................     102.9
  
  Increase (decrease) in ATC's net asset value to reflect estimated fair value and
       asset reclassifications at the assumed date of the ATC Merger:
          Cost of policies purchased (related to the ATC Merger)..........................     268.8
          Cost of policies produced and cost of policies purchased (historical)...........    (179.6)
          Goodwill (related to the ATC Merger)............................................     562.8
          Income taxes....................................................................     (27.1)
          Other liabilities...............................................................     (11.3)
                                                                                              ------
  
               Total estimated fair value adjustments.....................................     613.6
                                                                                             -------
  
       Total cost to acquire ATC..........................................................    $897.8
                                                                                              ======
  Adjustments to the pro forma  consolidated  statement of operations to give
  effect to the ATC Merger as of January 1, 1995, are summarized below.
  
       (11)  Net  investment  income and net realized gains of ATC are adjusted to
             include the effect of adjustments to restate the amortized cost basis
             of fixed maturity securities to their estimated fair value.
  
       (12)  Interest expense is increased to reflect the increase in borrowings 
             under Conseco's bank credit facilities used to complete the ATC
             Merger.
  
            A change in interest rates of .5 percent on the additional  borrowings
            under Conseco's bank credit facilities used to complete the ATC Merger
            would result in: (1) an increase (or  decrease) in pro forma  interest
            expense of $.2 million and $.1 million for the year ended December 31,
            1995, and the nine months ended September 30, 1996, respectively;  and
            (2) a decrease  (or  increase)  in pro forma net income of $.1 million
            and $.1 million for the same respective periods.
  
       (13) Interest  expense  is  reduced  to  reflect  the  amortization  of the
            liability  established at the date of the ATC Merger  representing the
            present   value  of  the   interest   payable  on  ATC's   convertible
            subordinated  debentures  to October 1, 1998 (the earliest call date),
            less  the  present  value  of the  dividends  that  would  be  paid on
            Conseco's  common stock that such debentures would be convertible into
            during the same period.
                                         39
  CONSECO AND SUBSIDIARIES
                NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
                                     (unaudited)
  
       (14)  Amortization  of the  cost  of  policies  produced  and  the  cost of
             policies  purchased  prior to the ATC  Merger  is  replaced  with the
             amortization of the cost of policies purchased (amortized in relation
             to estimated  premiums on the policies  purchased with interest equal
             to the liability rate which averages 5.5 percent).
  
       (15) Amortization of goodwill acquired in the ATC Merger is recognized over
            a 40-year period on a straight-line basis.
  
       (16) Reflects  the tax  adjustment  for the pro  forma  adjustments  at the
            appropriate rate for the specific item.
  
       (17)  Common shares outstanding are increased to reflect the Conseco shares
             issued in the ATC Merger.  Fully diluted shares also include  Conseco
             shares  which  will be issued  when  ATC's  convertible  subordinated
             debentures are converted.
  
       Adjustments to the pro forma  consolidated  balance sheet to give effect to
  the ATC Merger as of September 30, 1996, are summarized below.
  
       (18)  Cash is reduced for payments made to complete the ATC Merger.
  
       (19)  Short-term investments and notes payable of Conseco are increased for
             additional borrowings by Conseco to complete the ATC Merger.
  
       (20)  ATC's  historical  cost  of  policies  purchased  is  eliminated  and
             replaced  with the cost of policies  purchased  recognized in the ATC
             Merger.  Cost of policies purchased reflects the estimated fair value
             of ATC's  business in force and represents the portion of the cost to
             acquire  ATC that is  allocated  to the value of the right to receive
             future cash flows from the acquired policies.
  
             The 18 percent discount rate used to determine such value is the rate
             of  return  required  by  Conseco  to invest  in the  business  being
             acquired.  In determining such rate of return,  the following factors
             are considered:
  
             -    The magnitude of the risks associated with each of the actuarial
                  assumptions used in determining the expected cash flows.
  
             -    Cost of capital available to fund the acquisition.
  
             -    The perceived likelihood of changes in insurance regulations and
                  tax laws.
  
             -    Complexity of the acquired company.
  
             -    Prices paid (i.e., discount rates used in determining
                  valuations) on similar blocks of business sold recently.
  
             The value  allocated to the cost of policies  purchased is based on a
             preliminary valuation;  accordingly,  this allocation may be adjusted
             upon final  determination of such value.  Expected gross amortization
             of such value using  current  assumptions  and  accretion of interest
             based on an  interest  rate  equal to the  liability  rate (such rate
             averages 5.5 percent) for each of the years in the  five-year  period
             ending September 30, 2001, are as follows (dollars in millions):
  Year ending                 Beginning          Gross           Accretion           Net             Ending
                  September 30,                 balance       amortization       of interest     amortization         balance
                  -------------                 -------       ------------       -----------     -------------        -------
  1997                      $268.8            $35.4             $14.2           $21.2             $247.6
                      1998                       247.6             32.3              12.9            19.4              228.2
                      1999                       228.2             29.6              12.0            17.6              210.6
                      2000                       210.6             27.3              10.9            16.4              194.2
                      2001                       194.2             25.2              10.1            15.1              179.1
  (21)  ATC's cost of policies produced is eliminated since such  amounts are
             reflected in the determination of the cost of policies purchased.
  
                                         40
  CONSECO AND SUBSIDIARIES
                NOTES TO PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS
                                     (unaudited)
  
       (22)  All of the  applicable  pro forma balance sheet  adjustments  are tax
             affected at the appropriate rate. Deferred tax liabilities of ATC are
             netted against deferred tax assets of Conseco.
  
       (23)  Goodwill acquired in the ATC Merger is recognized.
  
       (24)  Notes  payable  are  increased  to  reflect  the fair  value of ATC's
             convertible  subordinated  debentures  at the date of the ATC Merger.
             Such fair value  represents  the value of the  Conseco  common  stock
             which ATC's convertible  subordinated  debentures will be convertible
             into after the ATC  Merger.  It is assumed  that the  holders of such
             debentures  do not convert into  Conseco  common stock at the time of
             the ATC Merger.
  
             In addition,  a liability  is  established  representing  the present
             value of the interest  payable on such  debentures to October 1, 1998
             (the  earliest  call date),  less the present  value of the dividends
             that would be paid on the Conseco  common stock that such  debentures
             would be convertible into during the same period.
  
       (25)  The prior  shareholders'  equity of ATC is eliminated in  conjunction
             with the ATC Merger.  Common stock and additional  paid-in capital is
             increased by the value of the Conseco  common stock issued in the ATC
             Merger.
  
                                         41
  CONSECO, INC. AND SUBSIDIARIES
                                _________________
  
  ITEM 7(c).     EXHIBITS.
  
                 (c) Exhibits
  
                     2.6     Agreement and  Plan  of Merger dated as of August 25,
                             1996,  by  and between  Conseco,  Inc.  and  American
                             Travellers Corporation*
  
                    4.17     Credit  Agreement  dated   November 22,   1996  among
                             Conseco, Inc. as  Borrower;  the several banks listed
                             on the signature pages thereto; the  managing  agents
                             listed on  the   signature   page  thereto;  Bank  of
                             America National  Trust and Savings  Association,  as
                             Syndication   Agent   for  the  Banks;  First   Union
                             National  Bank of  North  Carolina, as  Documentation
                             Agent  for  the Banks; and NationsBank, N.A. (South),
                             as Administrative Agent for the Banks.
  
                     *       Previously filed with Form 8-K dated August 25, 1996.
  
                                         42
  SIGNATURE
  
           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.
  
  Date: December 19, 1996
  
                                    CONSECO, INC.
  
                                           By:     /s/ ROLLIN M. DICK
                                                   -----------------------------
  
                                                    Rollin M. Dick
                                                    Executive Vice President
                                                      and Chief Financial Officer
  
                                         43