PIONEER FINANCIAL SERVICES INC /DE, SC 13E4, 1995-07-07

PIONEER FINANCIAL SERVICES INC /DE
SC 13E4, 1995-07-07
ACCIDENT & HEALTH INSURANCE

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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 13E-4
ISSUER TENDER OFFER STATEMENT
(Pursuant to Section 13(e)(1) of the
Securities Exchange Act of 1934)

PIONEER FINANCIAL SERVICES, INC.
(Name of the Issuer and Person Filing Statement)

8% Convertible Subordinated Debenture due 2000
(Title of Class of Securities)

723672 AB 7
(CUSIP Number of Class of Securities)

Peter W. Nauert
Chairman and Chief Executive Officer
Pioneer Financial Services, Inc.
1750 East Golf Road
Schaumburg, Illinois 60173
(708) 995-0400
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications
on Behalf of Person Filing Statement)

Copies to:

Stanley H. Meadows
McDermott, Will & Emery
227 W. Monroe Street
Chicago, Illinois 60606
(312) 372-2000

July 7, 1995
(Date Tender Offer First Published,
Sent or given to Security Holders)

CALCULATION OF FILING FEE

Transaction Valuation* Amount of Filing Fee
---------------------- --------------------
$67,500,000 $13,500

- ---------------------
* Calculated as of July 7, 1995, pursuant to Rule 0-11(a)(4) under the
Securities Act of 1933) as amended, based on the average of the high and low
prices of the 8% Convertible Subordinated Debentures due 2000 on the New
York Stock Exchange on June 30, 1995. Assumes that $54 million in principal
amount of 8% Convertible Subordinated Debentures due 2000 will be accepted
for conversion pursuant to the Conversion Offer.

( ) Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the Form
or Schedule and the date of its filing.

Amount Previously Paid: Not Applicable
Form or Registration No.: Not Applicable
Filing Party: Not Applicable
Date Filed: Not Applicable

Item 1. SECURITY AND ISSUER.

(a) The name of the issuer is Pioneer Financial Services, Inc., a
Delaware corporation (the "Company"). The Company's principal
executive office is located at 1750 East Golf Road, Schaumburg,
Illinois 60173 (telephone number (708) 995-0400).

(b) This schedule relates to the offer by the Company to pay a cash
premium equal to $110 plus accrued interest (the "Conversion
Premium") for each $1,000 in principal amount of the Company's 8%
Convertible Subordinated Debentures due 2000 (the "Debentures")
that are converted into common stock, $1.00 par value (the
"Common Stock") of the Company, upon the terms and subject to the
conditions set forth in the Offer of Premium Upon Conversion
dated July 7, 1995 (the "Offer of Premium") and the related
Notice of Special Conversion (the "Notice of Special Conversion")
(copies of which are attached hereto as Exhibits (a)(1) and
(a)(2), respectively, and which together constitute the
"Conversion Offer"). The information set forth under the
captions "The Conversion Offer--Terms of Conversion Offer" and
"The Conversion Offer--Security Ownership of Debentures" in the
Offer of Premium is incorporated herein by reference.

(c) The information set forth under the caption "Price Range of
Common Stock and Debentures and Dividend Policy" in the Offer of
Premium is incorporated herein by reference.

(d) Inapplicable.

Item 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.

(a)-(b) The information set forth under the caption "Source and Amount of
Funds" in the Offer of Premium is incorporated herein by
reference.

Item 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.

The information set forth under the captions "The Conversion Offer--
Purpose of the Conversion Offer" and "The Conversion Offer--
Capitalization" in the Offer of Premium is incorporated herein by
reference.

(a) The information set forth under the caption "The Conversion
Offer--Purpose of the Conversion Offer" in the Offer of Premium
is incorporated herein by reference.

(b)-(d) None

(e) The information set forth under the captions "Capitalization" and
"Unaudited Pro Forma Consolidated Financial Information" in the
Offer of Premium is incorporated herein by reference.

(f)-(j) None

Item 4. INTEREST IN SECURITIES OF THE ISSUER.

The information set forth under the caption "Miscellaneous" in the Offer of
Premium is incorporated herein by reference.

Item 5. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.

Except as stated under the caption "The Conversion Offer--Fees and
Expenses" in the Offer of Premium, which is incorporated herein by reference,
there are no contracts, arrangements, understandings or relationships relating,
directly or indirectly, to the Conversion Offer (whether or not legally
enforceable) between the Company, any of its executive officers or directors and
any person with respect to any securities of the Company.

Item 6. PERSON RETAINED, EMPLOYED OR TO BE COMPENSATED.

Not applicable.

Item 7. FINANCIAL INFORMATION.

(a) The information set forth under the captions "Selected Historical
Consolidated Financial," "Capitalization" and "Incorporation of
Certain Documents by Reference" in the Offer of Premium is
incorporated herein by reference.

(b) The information set forth under the caption "Unaudited Pro Forma
Consolidated Financial Information" in the Offer of Premium is
incorporated herein by reference.

Item 8. ADDITIONAL INFORMATION.

(a) None.

(b) There are no applicable regulatory requirements which must be
complied with or approvals which must be obtained in connection
with the Conversion Offer other than compliance with the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder, the Securities Exchange Act of 1934, as
amended, and the rules and regulations promulgated thereunder
including, without limitation, Rule 13e-4 promulgated thereunder,
and with the requirements of state securities or "blue sky" laws.

(d) None.

(e) None.

Item 9. MATERIAL TO BE FILED AS EXHIBITS.

(a)1 Offer of Premium dated July 7, 1995

(a)2 Form of Notice of Special Conversion, together with Guidelines
for Certification of Taxpayer Identification Number on Substitute
Form W-9

(a)3 Press Release issued by the Company on July 7, 1995

(a)4 Form of Letter to Clients

(a)5 Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees

(a)6 Form of Notice of Guaranteed Delivery

(a)7 The Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1994 is incorporated herein by reference.

(a)8 The Company's Quarterly Report on Form 10-Q for the fiscal
quarter ended March 31, 1994 is incorporated herein by reference.

(a)9 Form of Letter to Debentureholders from Peter W. Nauert, Chairman
and Chief Executive Officer of the Company, dated July 7, 1995

(b)1 The Company's Amended and Restated Credit Agreement dated as of
March 22, 1995 by and among the Company and American National
Bank and Trust Company of Chicago, Firstar Bank Milwaukee, N.A.
and Bank One, Rockford, N.A. as Bankers, is incorporated herein
by reference to Exhibit 10(b) to the Company's Quarterly Report
on Form 10-Q for the fiscal quarter ended March 31, 1995

(f)1 Question and Answer, For Use by Pioneer Financial Services, Inc.
Employees Only

SIGNATURE

After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.

Dated: July 7, 1995

PIONEER FINANCIAL SERVICES, INC.

By /s/ Peter W. Nauert
Peter W. Nauert
Chairman and Chief Executive Officer<PAGE>

Exhibit (a)1
Offer of Premium

PIONEER FINANCIAL SERVICES, INC.

OFFER OF PREMIUM UPON CONVERSION
OF UP TO $54 MILLION IN PRINCIPAL AMOUNT OF ITS
8% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2000
($57.427 MILLION IN PRINCIPAL AMOUNT OUTSTANDING)

THE CONVERSION OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, AUGUST 4, 1995, UNLESS EXTENDED.

Pioneer Financial Services, Inc., a Delaware corporation (the
"Company"), hereby offers, upon the terms and subject to the conditions set
forth in this Offer of Premium Upon Conversion (the "Offer of Premium") and
the accompanying Notice of Special Conversion (the "Notice of Special
Conversion" which, together with the Offer of Premium, constitute the
"Conversion Offer") to pay a cash premium equal to $110 plus accrued interest
(the "Conversion Premium") for each $1,000 in principal amount of its 8%
Convertible Subordinated Debentures due 2000 (the "Debentures", the holder of
such a Debenture being referred to herein as a "Debentureholder" or "Holder")
that is converted into common stock, $1.00 par value (the "Common Stock") of
the Company prior to the Expiration Date (as defined). A Debentureholder
whose Debentures are accepted for conversion pursuant to the Conversion Offer
will receive 85.11 shares of Common Stock (which is equivalent to the
Debentures' original conversion price of $11.75 per share of Common Stock)
and the Conversion Premium equal to $110 in cash plus accrued interest for
each $1,000 in principal amount of Debentures which are accepted by the
Company for conversion.

The Conversion Offer, proration period and withdrawal rights will expire
at 5:00 p.m., New York City time, on Friday, August 4, 1995, or if the
Conversion Offer is extended by the Company, in its sole discretion, the
latest date and time to which the Conversion Offer is extended (the
"Expiration Date"). Tenders of Debentures for conversion may be withdrawn at
any time prior to the Expiration Date and, unless accepted for conversion by
the Company, may be withdrawn at any time after forty business days after the
date of this Offer of Premium. If more than $54 million in principal amount
of Debentures are properly tendered for conversion and not withdrawn prior to
the Expiration Date, the Company will accept Debentures for conversion
pursuant to the Conversion Offer on a substantially pro rata basis (with
adjustments to avoid conversions of Debentures not in $1,000 increments).
Any Debentures which are tendered but not accepted for conversion pursuant to
the Conversion Offer will be returned to the tendering Debentureholder.
Holders of Debentures which are not converted into Common Stock pursuant to
the Conversion Offer will not be entitled to receive the Conversion Premium
upon conversion of such Debentures. The Company expressly reserves the right
to (i) extend, amend or modify the terms of the Conversion Offer in any
manner and (ii) withdraw or terminate the Conversion Offer at any time for
any reason. See "The Conversion Offer--Expiration Date; Extensions;
Amendments; Termination."

The Common Stock and the Debentures are traded on the New York Stock
Exchange ("NYSE") under the symbols "PFS" and "PFS OO", respectively. On
July 5, 1995, the last reported sale price of the Common Stock on the NYSE
was $15 per share and the last reported sale price of the Debentures on the
NYSE was $123 per $100 in principal amount of Debentures.

SEE "RISK FACTORS" FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE
CONSIDERED IN CONNECTION WITH THE CONVERSION OFFER AND AN INVESTMENT IN THE
COMMON STOCK. ______________________<PAGE>
NEITHER THIS TRANSACTION NOR THE SECURITIES TO BE ISSUED UPON CONVERSION OF
THE DEBENTURES HAVE BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS
THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
OFFER OF PREMIUM. ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
______________________
The date of this Offer of Premium is July 7, 1995.

Each Holder should decide for himself or herself whether to tender
Debentures pursuant to the Conversion Offer. Neither the Company nor its
Board of Directors makes any recommendation that Holders tender or refrain
from tendering their Debentures pursuant to the Conversion Offer and no one
has been authorized to make any such recommendation on behalf of the Company.
This is a matter for each Holder to determine after consultation with his or
her advisers, including tax counsel, on the basis of his or her own financial
position and requirements.

The Conversion Offer is being made by the Company in reliance on the
exemption from the registration requirements of the Securities Act of 1933,
as amended (the "Securities Act"), afforded by Section 3(a)(9) thereof. The
Company, therefore, will not pay any commission or other remuneration to any
broker, dealer, salesman or other person for soliciting conversions of
Debentures. Regular employees of the Company will answer inquiries
concerning the Conversion Offer but they will not receive additional
compensation therefor. In addition, Kissel-Blake Inc., the Information
Agent, and First Chicago Trust Company of New York, the Conversion Agent,
will assist holders of Debentures in obtaining copies of the materials
relating to the Conversion Offer.

The Company has made no arrangements for and has no understanding with
any broker, dealer, salesman or other person regarding the solicitation of
conversions hereunder, and no person has been authorized to give any
information or to make any representation not contained or incorporated by
reference in this Offer of Premium in connection with the Conversion Offer.
If given or made, such information or representation must not be relied upon
as having been authorized by the Company or any other person. Neither the
delivery of this Offer of Premium nor any conversion pursuant to the
Conversion Offer shall, under any circumstances, create any implication that
there has been no change in the affairs of the Company and its subsidiaries
since the respective dates as of which information is given herein.

This Offer of Premium does not constitute an offer or solicitation to
any person in any jurisdiction in which such offer or solicitation would be
unlawful. The Conversion Offer is not being made to, and tenders will not be
accepted from, Debentureholders in any jurisdiction in which the Conversion
Offer or the acceptance thereof would not be in compliance with the laws of
such jurisdiction.

CONVERSION AGENT, INFORMATION AGENT AND ASSISTANCE

First Chicago Trust Company of New York is the Conversion Agent in
connection with the Conversion Offer. All documents necessary to effect a
conversion of Debentures pursuant to the Conversion Offer, including the
Notice of Special Conversion, should be addressed to the Conversion Agent at
its address set forth on the back cover of this Offer of Premium. Kissel-
Blake Inc. is the Information Agent in connection with the Conversion Offer.
Any questions or request for assistance may also be directed to the
Information Agent at 25 Broadway, 6th Floor, New York, New York, 10004,
telephone: (800) 554-7733; Banks and Brokers please call (212) 344-6733.
Holders of Debentures requiring additional information or assistance may<PAGE>
contact Philip J. Fiskow, Senior Vice President and Chief Investment Officer
of the Company, at 1750 East Golf Road, Schaumburg, Illinois 60173,
telephone: (708) 995-0400.

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and in
accordance therewith files reports, proxy statements and other information
with the Securities and Exchange Commission (the "Commission"). Pursuant to
Rule 13e-4 of the General Rules and Regulations under the Exchange Act, the
Company has filed with the Commission an Issuer Tender Offer Statement on
Schedule 13E-4 (together with all exhibits, the "Schedule 13E-4"), furnishing
certain additional information with respect to the Conversion Offer. The
Schedule 13E-4 and the reports, proxy statements and other information filed
by the Company with the Commission can be inspected and copied at the public
reference facilities maintained by the Commission at Judiciary Plaza, 450
Fifth Street, N.,W., Washington, D.C. 20549, Room 1024; and at its regional
offices located at Citicorp Center, 500 West Madison Street, Suite 1400,
Chicago, Illinois 60661-2511; and 7 World Trade Center, Suite 1300, New York,
New York 10048. Copies of such material can be obtained from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington,
D.C. 20549, at prescribed rates. Such material can also be inspected and
copied at the offices of the New York Stock Exchange ("NYSE"), 20 Broad
Street, New York, New York 10005 and the Chicago Stock Exchange, 440 South
LaSalle Street, Chicago, Illinois 60605.

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents have been filed by the Company with the
Commission and are incorporated herein by reference: (i) The Company's
Annual Report on Form 10-K for the year ended December 31, 1994; (ii) The
Company's Quarterly Report on Form 10-Q for the period ended March 31, 1995;
(iii) The Company's Current Report on Form 8-K dated January 31, 1995, as
amended by Amendment No. 1 to Current Report on Form 8-K/A; (iv) the
description of the Debentures contained in the Company's prospectus filed
July 12, 1993 pursuant to Rule 424(b) of the Securities Act; and (v) the
description of the Company's Common Stock contained in the Company's
Registration Statement on Form 10 for such securities, including any
amendments for the purpose of updating such descriptions.

All documents filed by the Company pursuant to Section 13(a), 13(c), 14
or 15(d) of the Exchange Act subsequent to the date of this Offer of Premium
and prior to the termination of the Conversion Offer made hereunder shall be
deemed to be incorporated by reference in this Offer of Premium and to be a
part hereof from the date of filing of such documents. Any statement
contained herein or in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes
of this Offer of Premium to the extent that a statement contained herein or
in any other subsequently filed document which also is or is deemed to be
incorporated by reference herein modifies or supersedes such statement. Any
such statement so modified or superseded shall not be deemed, except as so
modified and superseded, to constitute a part of this Offer of Premium.

THIS OFFER OF PREMIUM INCORPORATES DOCUMENTS BY REFERENCE WHICH ARE NOT
PRESENTED HEREIN OR DELIVERED HEREWITH. THE COMPANY WILL PROVIDE WITHOUT
CHARGE TO EACH PERSON, INCLUDING ANY BENEFICIAL OWNER OF DEBENTURES TO WHOM
THIS OFFER OF PREMIUM IS DELIVERED, UPON THE WRITTEN OR ORAL REQUEST OF SUCH
PERSON, A COPY OF ANY OR ALL OF THE FOREGOING DOCUMENTS INCORPORATED HEREIN
BY REFERENCE, OTHER THAN EXHIBITS TO SUCH DOCUMENTS (UNLESS SUCH EXHIBITS ARE<PAGE>
SPECIFICALLY INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS SHOULD
BE DIRECTED TO PIONEER FINANCIAL SERVICES, INC., 1750 EAST GOLF ROAD,
SCHAUMBURG, ILLINOIS 60173, ATTENTION: PHILIP J. FISKOW, SENIOR VICE
PRESIDENT AND CHIEF INVESTMENT OFFICER OF THE COMPANY, TELEPHONE NUMBER (708)
995-0400. IN ORDER TO ENSURE TIMELY DELIVERY OF THE DOCUMENTS, ANY REQUEST
SHOULD BE MADE NOT LATER THAN FIVE BUSINESS DAYS PRIOR TO THE EXPIRATION
DATE.

TABLE OF CONTENTS

PAGE

Conversion Agent, Information Agent and Assistance . . . .
Available Information . . . . . . . . . . . . . . . . . . .
Incorporation of Certain Documents by Reference . . . . . .
Summary . . . . . . . . . . . . . . . . . . . . . . . . . .
Risk Factors . . . . . . . . . . . . . . . . . . . . . . .
The Company . . . . . . . . . . . . . . . . . . . . . . . .
Price Range of Common Stock and Debentures and Dividend Policy
Capitalization . . . . . . . . . . . . . . . . . . . . . .
Selected Historical Consolidated
Financial and Operating Information . . . . . . . . . . .
Unaudited Pro Forma Consolidated Financial Information . .
The Conversion Offer . . . . . . . . . . . . . . . . . . .
General . . . . . . . . . . . . . . . . . . . . . . . . .
Purpose of the Conversion Offer . . . . . . . . . . . . .
Terms of the Conversion Offer . . . . . . . . . . . . . .
Proration . . . . . . . . . . . . . . . . . . . . . . . .
Expiration Date; Extensions; Amendments; Termination . .
Procedure for Tender . . . . . . . . . . . . . . . . . .
Withdrawal of Tendered Debentures . . . . . . . . . . . .
Notice of Special Conversion . . . . . . . . . . . . . .
Conversion Agent and Information Agent . . . . . . . . .
Financial Advisor . . . . . . . . . . . . . . . . . . . .
Accrued Interest on Debentures . . . . . . . . . . . . .
Security Ownership of Debentures . . . . . . . . . . . .
Fees and Expenses . . . . . . . . . . . . . . . . . . . .
Description of Capital Stock . . . . . . . . . . . . . . .
Source and Amount of Funds . . . . . . . . . . . . . . . .
Certain Federal Income Tax Considerations . . . . . . . . .
Legal Matters . . . . . . . . . . . . . . . . . . . . . . .
Experts . . . . . . . . . . . . . . . . . . . . . . . . . .
Miscellaneous . . . . . . . . . . . . . . . . . . . . . . .

SUMMARY

The following summary does not purport to be complete and is qualified
in its entirety by the detailed information and financial statements,
including the notes thereto, contained elsewhere in this Offer of Premium or
incorporated herein by reference.

THE COMPANY

The Company markets and underwrites health insurance and life insurance
in selected niche markets throughout the United States. The Company
concentrates on three core insurance businesses: Senior Health Insurance,
Life Insurance and Group Medical. The Company also has a Medical Utilization
Management unit which in part supports the Group Medical Division.

The Senior Health Insurance Division concentrates on underwriting and
administering a full range of specialty health insurance for Americans age 65
and older. The products include traditional Medicare supplement, Medicare
Select, group Medicare supplement, long term care and home health care. A<PAGE>
nationwide brokerage network of 15,000 individual agents sells the Company's
senior health products. These agents also distribute the Company's life
insurance and annuity products, with this revenue being reflected in the Life
Insurance Division. The Senior Health Insurance Division accounted for 34%
of the Company's health insurance premiums in 1994.

On May 11, 1995, the Company, through a subsidiary, entered into a
strategic marketing alliance with Markman Company, one of the nation's
leading independent marketers of individual long term care and home health
care insurance. The alliance establishes a new company, Markman
International, as the North American distributor of Pioneer Life's new line
of long term care, home health care and Medicare Select products. This
arrangement is expected to add 10,000 agents to the Pioneer Life sales force
by the end of 1995.

The Life Insurance Division underwrites mid-sized term insurance,
interest sensitive and universal life insurance for the middle income and
Senior markets. In January 1995, the Company acquired Connecticut National
Life Insurance Company ("Connecticut National Life"), which the Company
anticipates will increase the Life Insurance Division's gross annual revenue
by approximately $35 million and total assets by over $350 million.

The Life Insurance Division is organized to sell its products through a
national network of brokerage general agents ("BGAs"). Manhattan National
Life Insurance Company ("Manhattan National Life") has developed a network of
50 BGAs who in the aggregate contract with approximately 10,000 brokers
across the nation to sell the Company's product line to fit their niche
needs. With the addition of Connecticut National Life, 50 BGAs and
approximately 10,000 brokers were added to this national distribution system.
Since the distribution systems of Connecticut National Life and Manhattan
National Life are nearly mirror images, the blending of the two companies
enhances the product portfolios of each company.

The Group Medical Division markets, underwrites and administers small
group and individual major medical policies and markets managed care products
(such as health maintenance organization ("HMOs")) for self-employed
individuals and small business owners. The Division also provides insurance
and non-insurance marketing services for unaffiliated insurance companies and
associations. The Company's marketing subsidiaries in this Division receive
commission overrides and other fee income from these client companies, which
increase revenues without adding to the insurance underwriting risk
liability. The Division markets through two sales units: a nationwide force
of approximately 1,800 trained career agents, and a network of over 50
professional telemarketing representatives who access approximately 9,500
independent insurance brokers nationwide through the Company's computer
database. The Company also has an established telemarketing subsidiary with
facilities in Phoenix, Arizona, and Arlington, Texas. The Group Medical
Division accounted for 66% of the Company's health insurance premiums in
1994.

The Company's Medical Utilization Management unit provides healthcare
coordination to control medical expense costs for insurance companies,
government agencies, self-insured businesses, unions, HMOs and third party
administrators. Services include precertification of care, provider networks
and case management. This unit's services provide significant claims cost
savings for the Company's Group Medical Division. In addition, the unit
markets its services to many unaffiliated companies and organizations. In
1994, approximately 68% of the unit's revenue was derived from services
provided to unaffiliated organizations.

The Company's strategy for future growth includes the potential
acquisition of health insurance and life insurance companies. Although the
Company is continuously evaluating acquisition opportunities, the Company<PAGE>
does not currently have any material agreements or commitments to acquire any
specific company or block of business which would be material to the Company.

THE CONVERSION OFFER

PURPOSE OF CONVERSION OFFER

The principal purpose of the Conversion Offer is to improve the
Company's balance sheet by reducing the Company's debt. The Company believes
that its improved financial position will provide the Company with additional
financial flexibility and will enable it to consider future potential growth
and financing opportunities. In addition, the Company believes that its
lower financial leverage ratios will help the Company to achieve and maintain
favorable ratings from the insurance rating agencies. See "The Conversion
Offer--Purpose of the Conversion Offer".

THE CONVERSION OFFER

Upon the terms and subject to the conditions set forth herein and in the
accompanying Notice of Special Conversion, the Company is offering to pay a
cash premium equal to $110 plus accrued interest (the "Conversion Premium")
for each $1,000 in principal amount of 8% Convertible Subordinated Debentures
due 2000 (the "Debentures") that is converted into common stock, $1.00 par
value (the "Common Stock") of the Company pursuant to the Conversion Offer
prior to the Expiration Date; provided, however, that the Company will only
pay the Conversion Premium in connection with the conversion of up to $54
million in principal amount of Debentures. A Debentureholder whose
Debentures are tendered and accepted for conversion pursuant to the
Conversion Offer will receive 85.11 shares of Common Stock (which is
equivalent to the Debentures' original conversion price of $11.75 per share
of Common Stock) and the Conversion Premium equal to $110 in cash plus
accrued interest for each $1,000 in principal amount of Debentures which are
accepted by the Company for conversion. See "The Conversion Offer--Terms of
the Conversion Offer."

EXPIRATION DATE; WITHDRAWALS

Subject to the conditions of the Conversion Offer, the Company will pay
the Conversion Premium in connection with Debentures validly tendered (and
not withdrawn) prior to 5:00 p.m., New York City time, on Friday, August 4,
1995, or if the Conversion Offer is extended by the Company, in its sole
discretion, the latest date and time to which the Conversion Offer is
extended (the "Expiration Date"). The Conversion Offer will expire on the
Expiration Date. Tenders of Debentures pursuant to the Conversion Offer may
be withdrawn at any time prior to the Expiration Date and, unless accepted
for conversion by the Company pursuant to the Conversion Offer, may be
withdrawn at any time after forty business days after the date of this Offer
of Premium. See "The Conversion Offer--Withdrawal of Tendered Debentures"
and "--Expiration Date; Extensions; Amendments; Termination."

PRORATION

If more than $54 million in principal amount of Debentures are properly
tendered for conversion and not withdrawn prior to the Expiration Date, then
the Company will, upon the terms and subject to the conditions of the
Conversion Offer, accept Debentures for conversion pursuant to the Conversion
Offer, on a pro-rata basis (with adjustments to avoid conversions of
Debentures not in $1,000 increments). Any Debentures which are tendered but
not accepted for conversion pursuant to the Conversion Offer will be returned
to the tendering Debentureholder. Holders of Debentures which are not
converted into Common Stock pursuant to the Conversion Offer will not be
entitled to receive the Conversion Premium upon conversion of such
Debentures. See "The Conversion Offer--Proration."<PAGE>
EXTENSIONS, AMENDMENTS AND TERMINATION

The Company expressly reserves the right to (i) extend, amend or modify
the terms of the Conversion Offer in any manner and (ii) withdraw or
terminate the Conversion Offer at any time for any reason. See "The
Conversion Offer--Expiration Date; Extensions; Amendments; Termination."

PROCEDURES FOR TENDERING

Each Holder of a Debenture wishing to accept the Conversion Offer and
receive the Conversion Premium must either (i) properly complete and sign the
Notice of Special Conversion, or a facsimile thereof (all references in this
Offer of Premium to the Notice of Special Conversion shall be deemed to
include a facsimile thereof), in accordance with the instructions contained
herein and therein, together with any required signature guarantees, and
deliver the same to First Chicago Trust Company of New York, as Conversion
Agent, at either of its addresses set forth on the back cover of this Offer
of Premium and either (a) certificates for the Debentures must be received by
the Conversion Agent at one of such addresses or (b) such Debentures must be
transferred pursuant to the procedures for book-entry transfer described
herein and a confirmation of such book-entry transfer must be received by the
Conversion Agent, in each case prior to the Expiration Date or (ii) comply
with the guaranteed delivery procedures described herein. See "The
Conversion Offer--Procedures for Tender."

SPECIAL PROCEDURES FOR BENEFICIAL OWNERS

Any beneficial owner whose Debentures are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who
wishes to tender should contact such registered holder promptly and instruct
such registered holder to tender on such beneficial owner's behalf. If such
beneficial owner wishes to tender on its own behalf, such owner must, prior
to completing and executing a Notice of Special Conversion and delivering its
Debentures, either make appropriate arrangements to register ownership of the
Debentures in such owner's name or obtain a properly completed assignment
from the registered holder. The transfer of registered ownership may take
considerable time and may not be able to be completed prior to the Expiration
Date. See "The Conversion Offer--Procedures for Tender."

GUARANTEED DELIVERY PROCEDURES

If a Holder desires to accept the Conversion Offer and time will not
permit a Notice of Special Conversion or certificates representing Debentures
to reach the Conversion Agent before the Expiration Date or the procedure for
book-entry transfer cannot be completed on a timely basis, a tender may be
effected in accordance with the guaranteed delivery procedures set forth in
"The Conversion Offer--Procedures for Tender."

ACCEPTANCE OF DEBENTURES AND DELIVERY OF CONSIDERATION

Upon the terms and subject to the conditions of the Conversion Offer,
including the reservation by the Company of the right to withdraw or
terminate the Conversion Offer and certain other rights, the Company will
accept for conversion pursuant to the Conversion Offer up to $54 million in
principal amount of Debentures that are properly tendered in the Conversion
Offer and not withdrawn prior to the Expiration Date. Subject to such terms
and conditions, the Common Stock and the Conversion Premium will be delivered
as promptly as practicable following the Expiration Date. See "The
Conversion Offer--Terms of the Conversion Offer" and "--Expiration Date;
Extensions; Amendments; Termination."

ACCRUED INTEREST ON DEBENTURES<PAGE>
Holders of record of the Debentures on July 1, 1995, will receive a cash
payment of interest on July 15, 1995. Although the Company is not required,
pursuant to the terms of Debentures, to pay accrued interest to Holders of
Debentures that are converted pursuant to the Conversion Offer, interest
accrued on the Debentures from July 15, 1995 to August 4, 1995 (or such other
date to which the Conversion Offer may be extended) will be paid in cash to
tendering holders of Debentures upon acceptance of such Debentures for
conversion by the Company. No interest will accrue or be paid on the
Conversion Premium. Debentures which are not tendered or which are not
accepted for conversion pursuant to the Conversion Offer will continue to
receive interest in accordance with the Debentures.

COMMON STOCK

As of June 30, 1995, there were 20,000,000 authorized shares of Common
Stock, of which 5,939,373 were issued and outstanding (excluding shares held
in treasury) and 7,403,702 were reserved for issuance upon conversion of
outstanding securities (including the Debentures) or exercise of outstanding
options. If $54 million in principal amount of Debentures are converted
pursuant to the Conversion Offer, approximately 4,596,000 of the shares
previously reserved for issuance upon conversion of the Debentures will be
issued and outstanding. See "Description of Capital Stock."

MARKET PRICES

The Common Stock is listed on the New York Stock Exchange ("NYSE")
(symbol: PFS). The Common Stock issuable upon conversion of the Debentures
will be listed for trading on the NYSE upon official notice of issuance. The
Debentures are also listed on the NYSE (symbol: PFS OO). On July 5, 1995,
the last reported sale price of the Common Stock on the NYSE was $15 per
share and the last reported sale price of the Debentures on the NYSE was $123
per $100 in principal amount of Debentures.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

For a discussion of certain federal income tax consequences. See
"Certain Federal Income Tax Considerations."

UNTENDERED DEBENTURES

Holders of Debentures who do not tender their Debentures in the
Conversion Offer or whose Debentures are not accepted for conversion will
continue to hold such Debentures and will be entitled to all the rights and
preferences, and will be subject to all of the limitations, applicable
thereto. To the extent that Debentures are converted in the Conversion
Offer, the trading market for the remaining Debentures will become more
limited. See "Risk Factors--Certain Consequences to Non-Tendering Holders."

CONVERSION AGENT AND INFORMATION AGENT

First Chicago Trust Company of New York has been appointed as Conversion
Agent in connection with the Conversion Offer. Questions and requests for
assistance, requests for additional copies of this Offer of Premium or of the
Notice of Special Conversion and requests for Notices of Guaranteed Delivery
should be directed to Kissel-Blake Inc., which has been retained by the
Company to act as Information Agent for the Conversion Offer. The addresses
and telephone numbers of the Conversion Agent and Information Agent are set
forth on the back cover of this Offer of Premium.

RISK FACTORS<PAGE>
In deciding whether to tender Debentures, Debentureholders should
carefully consider, in addition to the other information set forth elsewhere
in, or incorporated by reference into, this Offer of Premium, the following:

COMPETITION AND OTHER FACTORS AFFECTING BUSINESS

The Company operates in a highly regulated and competitive industry.
Many of its competitors have substantially greater financial resources. The
Company's profitability is affected by numerous factors, including
competition, lapse rates, loss experience, interest rates, government
regulation and general business conditions, many of which are outside of the
Company's control. In addition, the Company's health insurance policies are
susceptible to changing utilization patterns and medical cost inflation,
which may cause premium rate adjustments. Premium rate increases can have
the tendency to increase policy lapses and reduce new policy generation.
Moreover, regulatory changes standardizing policy provisions, as have
occurred from time to time in the past and may occur at any time in the
future, generally have the effect of intensifying competition with regard to
pricing and the level of service. See "Risk Factors--Insurance Regulation".

INSURANCE REGULATION

The Company and its insurance subsidiaries are subject to extensive
governmental regulation and supervision in each of the jurisdictions in which
it or its subsidiaries conduct business. Such regulation vests in
governmental agencies broad regulatory, supervisory and administrative power
with respect to the Company's business, including rates, policy forms,
dividend payments, licensing of insurers and their agents, capital adequacy
and the amount and type of investments the Company may have. Such
regulations are primarily intended to protect policyholders and not
investors. The Company's profitability depends in part upon its continued
ability to obtain regulatory approval for premium increases on its Medicare
supplement and comprehensive major medical products.

Numerous proposals have been introduced in Congress and the state
legislatures to reform the current health care system. Most of these
proposals are specifically directed at the small group healthcare market
which represents a significant portion of the Company's health business. At
the state level, a number of states have passed or are considering
legislation that would limit the differentials in rates that carriers could
charge between new business and renewal business with respect to similar
demographic groups. Legislation also has been adopted or is being considered
that would make health insurance available to all small groups by requiring
coverage of all employees and their dependents, by limiting the applicability
of pre-existing conditions exclusions, by requiring carriers to offer a basic
plan exempt from certain mandated benefits as well as a standard plan and by
establishing a mechanism to spread the risk of high risk employees to all
small group carriers. It is likely that healthcare reform at the federal and
state levels will require the Company to make significant changes to the way
it conducts its health insurance business, but it is not possible at this
time to predict the nature or effects of healthcare reform or how soon it
will be adopted and implemented, if at all. If state small group reform
continues to add restrictions to insurance business and the federal
government assumes responsibility for regulation and payment of much of the
healthcare that is now handled by the private sector, this would
significantly reduce or eliminate the Company's group medical insurance
business. The Company is unable to accurately predict what effects these
reforms may have on its future operations and is unable to evaluate what
impact the expectations of such reforms may have had on past consumer
behavior.

Federal and state insurance regulators are continuously re-examining
existing laws and regulations in order to determine the appropriate level and<PAGE>
types of regulation. There can be no assurance that existing insurance-
related laws will not become more restrictive in the future, and it is not
possible to predict the potential effects thereof on the Company.

IMPORTANCE OF RATINGS

Insurers compete on the basis of a number of factors, including the
ratings assigned by various agencies including A.M. Best ("A.M. Best") and
Duff & Phelps Credit Rating Company ("Duff & Phelps"). A.M. Best ratings for
the industry currently range from "A++ (Superior)" to "C- (Fair)" and some
companies are not rated. Four of the Company's insurance subsidiaries are
currently rated by A.M. Best: Pioneer Life Insurance Company of Illinois
("Pioneer Life") is rated "B+ (Very Good)" by A.M. Best; Manhattan National
Life is rated "A- (Excellent)"; National Group Life Insurance Company
("National Group Life") is rated "B (Good)"; and Connecticut National Life is
rated "A- (Excellent)." Duff & Phelps ratings currently range from "AAA" to
"DD." Pioneer Life is rated "A-" by Duff & Phelps; Manhattan National Life
is rated "A" by Duff & Phelps; and Connecticut National Life is rated "A" by
Duff & Phelps. In evaluating a company's financial and operating
performance, the rating agencies review the company's profitability, leverage
and liquidity as well as the company's book of business, the adequacy and
soundness of its reinsurance, the quality and estimated market value of its
assets, the adequacy of its reserves and the experience and competency of its
management. Such ratings are based upon factors primarily relevant to
policyholders, agents, insurance brokers and intermediaries and are not
directed to the protection of investors. If the ratings of the Company's
insurance subsidiaries were downgraded from their current levels, sales of
their products could be adversely affected.

DEFERRED POLICY ACQUISITION COSTS

Under generally accepted accounting principles, a deferred policy
acquisition cost asset ("DAC") is established to properly spread the
acquisition costs for a block of policies against the expected future
revenues or profits from the policies. The acquisition costs generally
include agent sales commissions and the administrative costs to underwrite
and issue the new policies. In the third quarter of 1994, the Company wrote
off approximately $16.7 million of deferred policy acquisition costs. The
adjustment was primarily the result of certain policies issued in the self-
employed and small business owner market. These were policies issued without
managed care and cost containment features (including scheduled benefits)
which are part of all of the policies the Company now issues. The adjustment
was made primarily as a result of individual policy contracts issued in
certain states where strict regulatory approval requirements have delayed
implementation of necessary premium adjustments. In making the adjustment,
the Company reviewed its analysis with its independent actuarial consultants.
The Company continues to monitor the profitability and turnover of its
policies on a regular basis. Increased lapses or unprofitability could
result in an increase in the amortization rate of deferred policy acquisition
costs, which would adversely impact future earnings.

DEPENDENCE UPON MANAGEMENT

The success of the Company is dependent to a significant degree upon its
senior management, including Peter W. Nauert, Chairman and Chief Executive
Officer of the Company; Charles R. Scheper, President of the Company's Life
Division; Thomas J. Brophy, President of the Company's Health Division; and
Ernest T. Giambra, Jr., the Chief Marketing Officer for all of the Company's
Divisions. Mr. Nauert has been the Chief Executive Officer of the Company
since its incorporation in 1982 and has served one or more of the Company's
insurance subsidiaries in an executive capacity since 1968. Mr. Nauert is
also the beneficial owner of 27.86% of the outstanding Common Stock.
Although the Company believes it has established its own reputation in the<PAGE>
industry, the loss of members of its senior management could cause a
temporary adverse effect on the Company's business.

CONTROLLING STOCKHOLDERS; FUTURE SALES OF COMMON STOCK

The executive officers and directors of the Company as a group
beneficially own approximately 34.81% of the outstanding Common Stock. As a
consequence, the Company's management and Board of Directors have the ability
as stockholders to influence the affairs and policies of the Company. All of
the shares of Common Stock owned by the executive officers and directors of
the Company are eligible for sale in the public market, subject to the
limitations imposed by Rule 144 under the Securities Act. In addition, the
shares of Common Stock issuable upon conversion of the Debentures will be
freely tradeable. The sale of substantial amounts of Common Stock, or the
anticipation of the sale of substantial amounts of Common Stock, could
adversely effect the prevailing market price of the Common Stock.

EFFECT OF CONVERSION OFFER ON EARNINGS OF THE COMPANY

The payment of the Conversion Premium will be treated as a current
expense for financial reporting purposes. Therefore, if $54 million in
principal amount of Debentures are converted pursuant to the Conversion
Offer, net income applicable to common stockholders will be reduced by
approximately $3.9 million in the period in which the Conversion Offer is
completed, which will be in the third quarter of fiscal 1995 unless the
Conversion Offer is extended or withdrawn by the Company. See "Unaudited Pro
Forma Consolidated Financial Information."

CERTAIN CONSEQUENCES TO NON-TENDERING HOLDERS

To the extent that Debentures are tendered and accepted for conversion
in the Conversion Offer, the trading market for the remaining Debentures will
become more limited. A security with a smaller outstanding principal amount
available for trading (a smaller "float") may command a lower price than
would a comparable security with a greater float. Therefore, the market
price for the remaining Debentures may be affected adversely to the extent
that the number of Debentures converted pursuant to the Conversion Offer
reduces the float. The reduced float may also tend to make the trading price
more volatile. The Company anticipates that there will be a sufficient
amount of Debentures outstanding and publicly traded following the
consummation of the Conversion Offer to ensure a continued trading market in
the Debentures. Based on the published guidelines of the NYSE, the Company
does not believe that the conversion of up to $54 million aggregate principal
amount of the Debentures pursuant to the Conversion Offer will cause the
remaining Debentures to be delisted from the NYSE. Debentureholders are not
entitled to appraisal rights in connection with the Conversion Offer.

DILUTION

As of June 30, 1995, there were 20,000,000 authorized shares of the
Common Stock, of which 5,939,373 were issued and outstanding (excluding
shares held in treasury) and 7,403,702 were reserved for issuance upon
conversion of outstanding securities (including the Debentures) or exercise
of outstanding options. If $54 million in principal amount of Debentures are
converted pursuant to the Conversion Offer, approximately 4,596,000 of the
shares previously reserved for issuance upon conversion of the Debentures
will be issued and outstanding. These additional shares have historically
been included in the Company's calculation of fully-diluted earnings per
share of Common Stock. See "Description of Capital Stock." The issuance of
the additional shares of Common Stock pursuant to the Conversion Offer
represents a conversion ratio of $11.75 per share. The last reported sale
price of the Common Stock on the NYSE on July 5, 1995 was $15 per share.<PAGE>
NO FAIRNESS DETERMINATION

Participation in the Conversion Offer is voluntary and Debentureholders
should carefully consider whether to accept. Neither the Board nor the
Company makes any recommendation to Debentureholders as to whether to tender
or refrain from tendering in the Conversion Offer. Debentureholders are
urged to consult their financial and tax advisers in making their own
decisions on what action to take in light of their own particular
circumstances.

THE COMPANY

The Senior Health Insurance Division concentrates on underwriting and
administering a full range of specialty health insurance for Americans age 65
and older. The products include traditional Medicare supplement, Medicare
Select, group Medicare supplement, long term care and home health care. A
nationwide brokerage network of 15,000 individual agents sells the Company's
senior health products. These agents also distribute the Company's life
insurance and annuity products, with this revenue being reflected in the Life
Insurance Division. The Senior Health Insurance Division accounted for 34%
of the Company's health insurance premiums in 1994.

The Life Insurance Division underwrites mid-sized term insurance,
interest sensitive and universal life insurance for the middle income and
Senior markets. In January 1995, the Company acquired Connecticut National
Life, which the Company anticipates will increase the Life Insurance
Division's gross annual revenue by approximately $35 million and total assets
by over $350 million.

The Life Insurance Division is organized to sell its products through a
national network of brokerage general agents ("BGAs"). Manhattan National
Life has developed a network of 50 BGAs who in the aggregate contract with
approximately 10,000 brokers across the nation to sell the Company's product
line to fit their niche needs. With the addition of Connecticut National
Life, 50 BGAs and approximately 10,000 brokers were added to this national
distribution system. Since the distribution systems of Connecticut National
Life and Manhattan National Life are nearly mirror images, the blending of
the two companies enhances the product portfolios of each company.

The Group Medical Division markets, underwrites and administers small
group and individual major medical policies and markets managed care products
(such as health maintenance organization) for self-employed individuals and
small business owners. The Division also provides insurance and non-
insurance marketing services for unaffiliated insurance companies and
associations. The Company's marketing subsidiaries in this Division receive
commission overrides and other fee income from these client companies, which<PAGE>
increase revenues without adding to the insurance underwriting risk
liability. The Division markets through two sales units: a nationwide force
of approximately 1,800 trained career agents, and a network of over 50
professional telemarketing representatives who access approximately 9,500
independent insurance brokers nationwide through the Company's computer
database. The Company also has an established telemarketing subsidiary with
facilities in Phoenix, Arizona, and Arlington, Texas. The Group Medical
Division accounted for 66% of the Company's health insurance premiums in
1994.

The Company was organized in Delaware in 1982 as a successor to an
Illinois holding company formed in 1957. The Company's largest operating
insurance subsidiary is Pioneer Life, a successor to a company organized in
1926. Health and Life Insurance Company of America, National Group Life,
Manhattan National Life, Continental Life & Accident Company and Connecticut
National Life were acquired in 1985, 1986, 1990, 1993 and 1995, respectively,
primarily for specialized marketing purposes.

The Company's strategy for future growth includes the potential
acquisition of health insurance and life insurance companies. Although the
Company is continuously evaluating acquisition opportunities, the Company
does not currently have any material agreements or commitments to acquire any
specific company or block of business which would be material to the Company.

The executive offices of the Company are located at 1750 East Golf Road,
Schaumburg, Illinois 60173, and its telephone number is (708) 995-0400. The
term "Company" refers to Pioneer Financial Services, Inc. and, unless the
context otherwise requires, its subsidiaries.

PRICE RANGE OF COMMON STOCK AND DEBENTURES AND DIVIDEND POLICY

The Common Stock is traded on the NYSE and The Chicago Stock Exchange.
The Debentures have been traded on the NYSE since they were issued in 1993.
The following table sets forth for the fiscal periods indicated the high and
low last reported sale prices per share of the Common Stock, the high and low
last reported sale price of the Debentures, both as reported by the NYSE
(consolidated reporting system), and the quarterly cash dividends declared
and paid on the Common Stock.

COMMON
STOCK
COMMON STOCK PRICE CASH DEBENTURES
HIGH LOW DIVIDEND HIGH LOW
FISCAL YEAR ENDED
DECEMBER 31, 1993:
First Quarter $ 5-1/2 $ 4-3/4 $ 0 $ -- $ --
Second Quarter 9-1/8 5-1/4 0 -- --
Third Quarter 10-7/8 8-3/8 0 108-3/4 101-1/4
Fourth Quarter 14 10-1/2 0 122 108

FISCAL YEAR ENDED
DECEMBER 31, 1994:
First Quarter $14-3/4 $ 11-1/8 $ .0375 $ 125 $ 105
Second Quarter 12 10 .0375 110-1/2 102-1/4
Third Quarter 10-1/2 8-3/4 .0375 103 96-1/2
Fourth Quarter 10 8-3/4 .0375 98-1/2 93-5/8

FISCAL YEAR ENDED
DECEMBER 31, 1995:
First Quarter $11-1/4 $ 8-7/8 $ .045 $ 104 $ 94
Second Quarter 15-1/2 10-3/4 .045 130 103-1/4
Third Quarter
(through
July 5, 1995) 15 15 - 125 123

On July 5, 1995, the last reported sale price of the Common Stock on the
NYSE was $15 per share and the last reported sale price of the Debentures on
the NYSE was $123 per $100 principal amount of Debentures. As of June 19,
1995, there were approximately 615 holders of record of the Common Stock and
as of July 5, 1995 there were approximately 41 holders of record of the
Debentures.

All cumulative dividends on the Company's $2.125 Cumulative Convertible
Exchangeable Preferred Stock (the "$2.125 Preferred Stock") have been paid by
the Company when due. The ability of the Company to continue to pay
dividends will depend primarily on the receipt of dividends from its
subsidiaries. The Company's insurance subsidiaries are subject to state laws
and regulations which limit their ability to pay dividends. See Note 11 to
the Company's Consolidated Financial Statements. Furthermore, the Company's
Certificate of Incorporation prohibits the Company from paying dividends on
the Common Stock if the Company is not current in its dividend payments to
the $2.125 Preferred Stock.

CAPITALIZATION

The following table sets forth the unaudited historical consolidated
capitalization of the Company at March 31, 1995 and as adjusted to give
effect to the Conversion Offer (assuming that 47% and 94% of the outstanding
Debentures are converted). This table should be read in conjunction with the
Consolidated Financial Statements of the Company, the Pro Forma Consolidated
Financial Information, and the related notes, included or incorporated by
reference into this Offer of Premium.

MARCH 31, 1995
As Adjusted
ASSUMING
ASSUMING 94%
HISTORICAL 47% CONVERSION
CONVERSION
(DOLLARS IN THOUSANDS)
Short-term notes payable . . . . . . . . $ 4,324 $ 6,824 $ 9,324
Long-term notes payable . . . . . . . . . 17,857 17,857 17,857
Debentures . . . . . . . . . . . . . . . 57,427 30,427 3,427
Preferred Stock, without par value:
Authorized: 5,000,000 shares
Issued and outstanding: 851,400 shares 21,285 21,285 21,285

Stockholders' equity:<PAGE>
Common stock, $1 par value:
Authorized: 20,000,000 shares
Issued and outstanding: 7,035,000,
9,333,000 and 11,631,000 shares,
respectively<F1> . . . . . . . . . 7,035 9,333 11,631
Additional paid-in capital . . . . . . 29,607 52,917 76,681
Unrealized depreciation
of available-for-sale
securities . . . . . . . . . . . . . (1,576) (1,576) (1,576)
Retained earnings . . . . . . . . . . . . 53,185 51,255 49,324
Treasury stock at cost (10,220) (10,220) (10,220)
(1,132,300 shares) . . . . . . . . . . ---------- --------- ---------
Total stockholders' equity . . . . . 78,031 101,709 125,840
---------- ---------- ---------
Total capitalization . . . . . $ 178,924 $ 178,102 $ 177,733
========== ========== =========

----------------------
[FN]
<F1> Outstanding Common Stock does not include (a) 1,362,000 shares which are
issuable upon conversion of the Company's $2.125 Preferred Stock
(excluding conversion of 108,000 shares of $2.125 Preferred Stock held
by a subsidiary), (b) 1,095,000 shares issuable pursuant to outstanding
options and (c) shares of Common Stock issuable pursuant to future
grants of options under the Company's Omnibus Stock Incentive Program.<PAGE>
SELECTED HISTORICAL CONSOLIDATED FINANCIAL AND OPERATING INFORMATION
(in thousands, except per share amounts and ratios)

The following table presents selected historical consolidated financial
data of the Company as of December 31, 1994 and for the five fiscal years
then ended, and as of March 31, 1995 and March 31, 1994 and for the three
month periods then ended. The selected consolidated financial data for the
full year periods has been derived from audited Consolidated Financial
Statements of the Company. The selected consolidated financial data for the
interim periods has been derived from unaudited interim consolidated
financial statements of the Company. Such selected financial data should be
read in conjunction with "Management's Discussion and Analysis of Results of
Operations and Financial Condition" and the Company's Consolidated Financial
Statements and the notes thereto incorporated herein by reference to the
Company's Annual Report on Form 10-K. Results of operations for interim
periods should not be regarded as necessarily indicative of the results of
operations for the full year. In the opinion of management, the unaudited
interim statements include all adjustments, consisting only of normal
recurring adjustments, necessary for a fair statement for the results for
such interim periods. The comparability of the results for the periods
presented is significantly affected by certain events, as described in
Notes 3, 8 and 10 to the Company's Consolidated Financial Statements.

<TABLE>
<CAPTION>
THREE MONTHS
YEAR ENDED DECEMBER 31, ENDED MARCH 31,
1990 1991 1992 1993 1994 1994 1995
(unaudited)
<S> <C> <C> <C> <C> <C> <C> <C>

OPERATING DATA:
Premiums and policy charges:
Accident and health . . . . . . $ 508,957 $593,236 $ 559,894 $ 601,684 $ 659,180 $ 162,813 $ 154,653
Life and annuity . . . . . . . 30,693 33,321 35,219 39,282 44,929 10,085 14,922
Net investment income . . . . . . 48,416 47,974 43,555 40,242 42,786 11,104 17,497
Other income and realized
investment gains and losses . . 22,951 34,207 17,305 17,920 27,260 7,263 6,947
------- ------- ------- ------- ------- ------- -------
Total revenues . . . . . . 611,017 708,738 655,973 699,128 774,155 191,265 194,019
Benefits:
Accident and health . . . . . . 367,790 376,820 368,046 397,963 407,249 110,551 97,932
Life and annuity . . . . . . . 46,889 46,128 47,622 39,419 42,947 10,518 19,029
------- ------- ------- ------- ------- ------- -------
Total benefits . . . . . . 414,679 422,948 415,668 437,382 450,196 121,069 116,961
Insurance and general expense . . 141,687 173,806 162,837 162,831 192,810 42,146 50,665
Interest expense . . . . . . . . 4,365 2,916 2,189 3,276 5,054 1,147 1,710
Amortization of deferred
policy acquisition costs . . . 64,447 95,748 100,715 76,875 100,073 19,980 17,174
------- ------- ------- ------- ------- ------- -------
Total benefits and expenses . . 625,178 695,418 681,409 680,364 748,133 184,342 186,510

Income (loss) before income (14,161) 13,320 (25,436) 18,764 26,022 6,923 7,509
taxes . . . . . . . . . . . . .
Income taxes (benefit) . . . . . (4,815) 4,448 (8,477) 6,619 8,873 2,423 2,554
------- ------- ------- ------- ------- ------- -------
Net income (loss) . . . . . . . . (9,346) 8,872 (16,959) 12,145 17,149 4,500 4,955
Preferred stock dividends . . . . 2,164 2,039 2,039 2,021 1,904 493 498
------- ------- ------- ------- ------- ------- -------

Income (loss) applicable to $(11,510) $ 6,833 $ (18,998) $ 10,124 $ 15,245 $ 4,007 $ 4,457
common stockholders . . . . . . ======= ======= ======= ======= ======= ======= =======<PAGE>
PER SHARE DATA:
Net income (loss) per common
share:
Primary . . . . . . . . . $ (1.72) $ 1.02 $ (2.85) $ 1.51 $ 2.36 $ 0.60 $ 0.73
Fully diluted . . . . . . (1.72) 1.02 (2.85) 1.26 1.58 0.40 0.47
Average common and common
equivalent shares
outstanding (in thousands):
Primary . . . . . . . . . 6,690 6,699 6,660 6,724 6,459 6,731 6,111
Fully diluted . . . . . . 8,226 8,234 8,195 10,731 12,734 13,107 12,408
Ratio of earnings to fixed
charges<F1> . . . . . . . . . . <F1> 4.99x <F1> 5.85x 5.38x 6.06x 4.86x

<F1> Fixed charges consist of interest expense on indebtedness, amortization of debt issuance costs and the portion
of operating leases that are representative of the interest factor. Fixed charges do not include interest on
annuities and financial products. Earnings are computed by adding interest expense on indebtedness and the
interest portion of rent expense to pretax earnings from continuing operations. The earnings were inadequate to
cover fixed charges by $25.4 million in 1992 and $14.2 million in 1990.<PAGE>

At December 31, At March 31,
1990 1991 1992 1993 1994 1994 1995
(unaudited)

BALANCE SHEET DATA:
Total investments . . . . . . . . $ 563,807 $528,725 $ 568,349 $ 674,206 $ 723,837 $ 685,857 $ 993,859
Deferred policy acquisition costs 309,016 313,453 269,674 260,432 225,618 256,832 225,056
Total assets . . . . . . . . . . 990,560 969,190 978,689 1,108,271 1,075,700 1,109,316 1,472,696
Policy liabilities . . . . . . . 739,845 776,571 805,696 903,105 868,608 893,518 1,216,752
Short-term notes payable . . . . 16,218 6,371 12,931 5,575 20,093 4,609 4,324
Long-term notes payable . . . . . 27,000 21,600 25,170 1,125 2,520 1,050 17,857
8% Subordinated Debentures Due
2000 . . . . . . . . . . . . . -- -- -- 57,477 57,427 57,477 57,427
Preferred stock . . . . . . . . . 23,990 23,990 23,990 23,675 21,682 23,182 21,285
Stockholders' equity . . . . . . 64,738 75,470 62,732 68,872 68,328 70,686 78,031
Book value per share . . . . . . $ 9.77 $ 11.39 $ 9.21 $ 10.86 $ 11.55 $ 11.15 $ 13.22
Ratio of debt and preferred
stock to stockholders' 1.04 0.69 0.99 1.28 1.49 1.22 1.29
equity<F1> . . . . . . . . . .
Debt and preferred stock as a
percentage of total
capitalization<F2> . . . . . . 51% 41% 50% 56% 60% 55% 56%

<F1> Debt represents the aggregate of short-term notes payable, long-term notes payable and the Debentures.

<F2> Debt represents the aggregate of short-term notes payable, long-term notes payable and the Debentures. Total
capitalization represents debt, preferred stock and stockholders' equity.
</TABLE>
UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL INFORMATION
(in thousands, except per share amounts and ratios)

The following pro forma consolidated financial data of the Company consists
of unaudited Pro Forma Condensed Consolidated Balance Sheet Data as of
December 31, 1994 and March 31, 1995 (the "Pro Forma Balance Sheet Data") and
unaudited Pro Forma Condensed Consolidated Statements of Income Date for the
year ended December 31, 1994 and the three months ended March 31, 1995 (the
"Pro Forma Statements of Income Data" and, collectively with the Pro Forma
Balance Sheet Data, the "Pro Forma Information"). The Pro Forma Information
gives effect to the Conversion Offer assuming that $54 million in principal
amount of Debentures are converted into Common Stock and that the Conversion
Premium is paid. The Pro Forma Balance Sheet Data are presented as if the
Conversion Offer had been consummated on December 31, 1994 and March 31,
1995, respectively. The Pro Forma Statements of Income Data are presented as
if the Conversion Offer had been consummated as of the beginning of the
periods shown.

The Pro Forma Information should be read in conjunction with the separate
historical financial statements of the Company, the related notes and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" incorporated by reference into this Offer of Premium. The Pro
Forma Information does not purport to represent what the Company's financial
position or results of operations would actually have been if the
aforementioned transactions in fact had occurred on such date or at the
beginning of the period indicated or to project the Company's financial
position or results of operations at any future date or for any future
period.

<TABLE>
<CAPTION>
Year Ended December 31, 1994 Three Months Ended March 31 1995
Adjust- Pro Adjust- Pro Forma
Historical ments Forma Historical ments

<S> <C> <C> <C> <C> <C> <C>
OPERATING DATA:<F1>
Total revenues . . . . . . . . . . . $ 774,155 $ (42)<F2> $774,113 $ 194,019 $ (11)<F2> $194,008
Total benefits . . . . . . . . . . . 450,196 - 450,196 116,961 - 116,961
Insurance and general expense . . . . 192,810 (549)<F3> 192,261 50,665 (137)<F3> 50,528
Interest expense . . . . . . . . . . 5,054 (3,870)<F4> 1,184 1,710 (967)<F4> 743
Amortization of deferred policy
acquisition costs . . . . . . . . . 100,073 - 100,073 17,174 - 17,174
------- ------- ------- ------- ------- -------
Income before income taxes . . . . . 26,022 4,377 30,399 7,509 1,093 8,602
Income taxes . . . . . . . . . . . . 8,873 1,531 10,404 2,554 382 2,936
------- ------- ------- ------- ------- -------
Net income . . . . . . . . . . . . . 17,149 2,846 19,995 4,955 711 5,666
Preferred stock dividends . . . . . . 1,904 - 1,904 498 - 498
------- ------- ------- ------- ------- -------

Income applicable to common $ 15,245 $ 2,846 $ 18,091 $ 4,457 $ 711 $ 5,168
stockholders . . . . . . . . . . . ======= ======= ======= ======= ======= =======
PER SHARE DATA:
Net Income per common
share:
Primary . . . . . . . . . . . . . $ 2.36 $ 1.64 $ 0.73 $ 0.48
Fully diluted . . . . . . . . . . 1.58 1.57 0.47 0.46
Average common and common
equivalent shares outstanding (in
thousands):
Primary . . . . . . . . . . . . . 6,459 11,054 6,111 10,706
Fully diluted . . . . . . . . . . 12,734 12,734 12,408 12,408<PAGE>
Ratio of earnings to fixed
charges<F5> . . . . . . . . . . . . 5.38x 20.92x 4.86x 11.22x

See footnotes on next page

At December 31, 1994 At March 31, 1995
Adjust- Pro Adjust- Pro Forma
Historical ments Forma Historical ments

BALANCE SHEET DATA:
Total investments . . . . . . . . . . $ 723,837 $ - $723,837 $ 993,859 $ - $ 993,859
Cash . . . . . . . . . . . . . . . . 8,611 (3,619)<F6> 4,992 21,148 (2,540)<F6> 18,608
Other assets . . . . . . . . . . . . 19,656 360<F7> 20,016 21,394 449<F7> 21,843
General expense and other 37,042 (1,979)<F8> 35,063 77,020 (900)<F8> 76,120
liabilities . . . . . . . . . . . .
Short-term notes payable . . . . . . 20,093 5,000<F9> 25,093 4,324 5,000<F9> 9,324
8% Subordinated Debentures Due
2000 . . . . . . . . . . . . . . . 57,427 (54,000)<F9> 3,427 57,427 (54,000)<F9> 3,427
Total indebtedness . . . . . . . . . 80,040 (49,000)<F9> 31,040 79,608 (49,000)<F9> 30,608
Preferred stock . . . . . . . . . . . 21,682 - 21,682 21,285 - 21,285
Stockholders' equity . . . . . . . . 68,328 47,720<F10> 116,048 78,031 47,809<F10> 125,840
Book value per share . . . . . . . . $ 11.55 - $ 11.04 $ 13.22 - $ 11.99
Ratio of debt and preferred stock
to stockholders' equity<F11> . . . 1.49 - 0.45 1.29 - 0.41
Debt and preferred stock as a
percentage of total
capitalization<F12> . . . . . . . . 60% - 31% 56% - 29%
</TABLE>

----------------------
[FN]
<F1> The pro-forma income statement information does not include the
nonrecurring after-tax charge of approximately $3,861,000 (assuming
$54,000,000 in principal amount of Debentures are converted) related
to the payment of the cash inducement to convert the Debentures.
Net income applicable to common stockholders will be reduced by this
amount in the period in which the Conversion Offer is completed,
which will be the third quarter of fiscal 1995 unless the Conversion
Offer is extended or withdrawn by the Company.

<F2> Represents the reduction in investment income resulting from the
reduction in the Company's cash balances. The Company has assumed
that it would earn 4.5% On such balances.

<F3> Represents the elimination of amortization of deferred issuance
costs associated with the original issuance of the Debentures.

<F4> Represents the elimination of interest expense on the Debentures
which are converted, net of the increase in interest expense on the
additional short term debt which will be incurred by the Company to
pay a portion of the Conversion Premium. The Company has assumed
that the additional short-term debt bears interest at the current
prime rate of 9%.

<F5> Fixed charges consist of interest expense on indebtedness,
amortization of debt issuance costs and the portion of operating
leases that are representative of the interest factor. Fixed
charges do not include interest on annuities and financial products.

<F6> Represents the reduction in cash resulting from the payment of (a) a
portion of the Conversion Premium, (b) estimated offering costs and
(c) accrued interest on the Debentures which are converted.

<F7> Represents the elimination of unamortized deferred issuance costs
associated with the original issuance of the Debentures which is<PAGE>
offset by federal income tax benefits related to expenses and costs
associated with the Conversion Offer.

<F8> Represents the elimination of accrued interest on Debentures which
are converted pursuant to the Conversion Offer.

<F9> Reflects conversion of $54,000,000 in principal amount of Debentures
pursuant to the Conversion Offer. The Company intends to borrow
$5,000,000 under its existing credit facilities to fund a portion of
the Conversion Premium.

<F10> Represents the net effect of the balance sheet adjustments.

<F11> Debt represents the aggregate of short-term notes payable, long-term
notes payable and the Debentures.

<F12> Debt represents the aggregate of short-term notes payable, long-term
notes payable and the Debentures. Total capitalization represents
debt, preferred stock and stockholders' equity.

THE CONVERSION OFFER

GENERAL

PARTICIPATION IN THE CONVERSION OFFER IS VOLUNTARY AND HOLDERS OF
DEBENTURES SHOULD CAREFULLY CONSIDER WHETHER TO ACCEPT. NEITHER THE BOARD
NOR THE COMPANY MAKES ANY RECOMMENDATION TO HOLDERS AS TO WHETHER TO TENDER
OR REFRAIN FROM TENDERING IN THE CONVERSION OFFER. HOLDERS OF DEBENTURES ARE
URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISERS IN MAKING THEIR OWN
DECISIONS ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.

Unless the context requires otherwise, the term "Holder" with respect to
the Conversion Offer means any person in whose name any Debentures are
registered on the books of the Company.

PURPOSE OF THE CONVERSION OFFER

The principal purpose of the Conversion Offer is to improve the
Company's balance sheet by reducing the Company's debt. The Company believes
that its improved financial position will provide the Company with additional
financial flexibility and will enable it to consider future potential growth
and financing opportunities. In addition, the Company believes that its
lower financial leverage ratios will help the Company to achieve and
maintain favorable ratings from the insurance rating agencies.

The Company has no present plans or intention to make acquisitions of or
offers for the Debentures. However, the Company will continue to monitor the
market for the Debentures and reserves the right, in its sole discretion, to
acquire and to make offers for Debentures subsequent to the Expiration Date
for cash or in exchange for other securities, by optional redemption or
otherwise. The terms of any such acquisitions or offers may differ from the
terms of the Conversion Offer. Such acquisitions or offers, if any, may
depend upon, among other things, the price and availability of the Debentures
and the Company's tax position. The Debentures are not redeemable prior to
August 15, 1996. After August 15, 1996 the Debentures are redeemable by the
Company at 100% of the principal amount thereof, plus accrued interest, if
the closing sale price of the Common Stock on the NYSE shall have equaled or
exceeded 135% of the then effective conversion price for the 30 consecutive
days immediately preceding the date of notice of redemption. After July 15,
1998 the Debentures may be redeemed by the Company at 104% of the principal
amount, plus accrued interest, and after July 15, 1999 at 103% of the<PAGE>
principal amount, plus accrued interest. The Conversion Premium principally
compensates Debentureholders for interest that would be otherwise payable had
the Debentures not been converted.

TERMS OF THE CONVERSION OFFER

Upon the terms and subject to the conditions set forth herein and in the
accompanying Notice of Special Conversion, the Company is offering to pay a
Conversion Premium equal to $110 in cash plus accrued interest for each
$1,000 in principal amount of Debentures that is converted into Common Stock
pursuant to the Conversion Offer prior to the Expiration Date; provided,
however, that the Company will only pay the Conversion Premium in connection
with the conversion of up to $54 million in principal amount of Debentures.
A Debentureholder whose Debentures are tendered and accepted for conversion
pursuant to the Conversion Offer will receive 85.11 shares of Common Stock
(which is equivalent to the Debentures' original conversion price of $11.75
per share of Common Stock) and the Conversion Premium equal to $110 in cash
plus accrued interest for each $1,000 in principal amount of Debentures which
are accepted by the Company for conversion. Fractional shares of Common
Stock will not be issued in the Conversion Offer. A person otherwise
entitled to a fractional share of Common Stock pursuant to the terms of the
Conversion Offer shall receive cash equal to the closing sale price of such
fractional share on the New York Stock Exchange on the Expiration Date.

Upon the terms and subject to the conditions set forth herein and in the
Notice of Special Conversion, the Company will accept Debentures validly
tendered and not withdrawn as promptly as practicable after the Expiration
Date unless the Conversion Offer has been withdrawn or terminated. The
Company will not accept Debentures for conversion pursuant to the Conversion
Offer prior to the Expiration Date. The Company expressly reserves the
right, in its sole discretion, to delay acceptance of Debentures tendered
under the Conversion Offer, or the payment of the Conversion Premium (subject
to Rules 13e-4 and 14e-1 under the Exchange Act, which require that the
Company consummate the Conversion Offer or return the Debentures deposited by
or on behalf of the Holders thereof promptly after the termination or
withdrawal of the Conversion Offer), or to withdraw or terminate the
Conversion Offer and not accept any Debentures at any time for any reason.
In all cases, except to the extent waived by the Company, delivery of Common
Stock and the Conversion Premium upon conversion of Debentures pursuant to
the Conversion Offer will be made only after timely receipt by the Conversion
Agent of Debentures (or confirmation of book-entry transfer thereof), a
properly completed and duly executed Notice of Special Conversion and any
other documents required thereby.

As of June 30, 1995, there was $57.427 million in principal amount of
Debentures outstanding. This Offer of Premium, together with the Notice of
Special Conversion, is being sent to all registered Holders as of July 5,
1995.

The Company shall be deemed to have accepted for conversion pursuant to
the Conversion Offer, subject to the proration provisions, validly tendered
Debentures (or defectively tendered Debentures with respect to which the
Company has waived such defect) when, as and if the Company has given oral or
written notice thereof to the Conversion Agent. The Conversion Agent will
act as agent for the tendering Holders for the purpose of receiving the
Common Stock and the Conversion Premium from the Company and remitting such
Common Stock and Conversion Premium to tendering Holders. Upon the terms and
subject to the conditions of the Conversion Offer, delivery of Common Stock
and the Conversion Premium upon conversion of the Debentures accepted
pursuant to the Conversion Offer will be made as promptly as practicable
after the Expiration Date.<PAGE>
If any tendered Debentures are not accepted for conversion pursuant to
the Conversion Offer because of an invalid tender, proration, the occurrence
of certain other events set forth herein or otherwise, unless otherwise
requested by the Holder under "Special Delivery Instructions" in the Notice
of Special Conversion, such Debentures will be returned, without expense, to
the tendering Holder thereof (or in the case of Debentures tendered by book
entry transfer into the Conversion Agent's account at one of the Book-Entry
Transfer Facilities (as defined below), such Debentures will be credited to
an account maintained at the Book-Entry Transfer Facility designated by the
participant therein who so delivered such Debentures), as promptly as
practicable after the Expiration Date or the withdrawal or termination of the
Conversion Offer.

Holders who tender Debentures in the Conversion Offer will not be
required to pay brokerage commissions or fees or, subject to the instructions
in the Notice of Special Conversion, transfer taxes with respect to the
conversion of Debentures pursuant to the Conversion Offer. See "--Fees and
Expenses."

PRORATION

If more than $54 million in principal amount of Debentures are properly
tendered and not withdrawn prior to the Expiration Date, then the Company
will, upon the terms and subject to the conditions of the Conversion Offer,
accept Debentures for conversion pursuant to the Conversion Offer on a pro-
rata basis based on the amount of Debentures validly tendered (with
adjustments to avoid conversions of Debentures not in $1,000 increments).
Any Debentures which are tendered but not accepted for conversion pursuant to
the Conversion Offer will be returned to the tendering Debentureholders.
Holders of Debentures which are not converted into Common Stock pursuant to
the Conversion Offer will not be entitled to receive the Conversion Premium
upon conversion of such Debentures.

The Company does not expect that it would be able to announce the final
proration factor or to commence delivery of Common Stock and the Conversion
Premium for any Debentures converted pursuant to the Conversion Offer until
approximately seven NYSE trading days after the Expiration Date if proration
is required, because of the difficulty in determining the number of
Debentures validly tendered (including Debentures tendered pursuant to the
guaranteed delivery procedure described below) and not withdrawn prior to the
Expiration Date. Preliminary results of proration will be announced by press
release as promptly as practicable after the Expiration Date. Holders of
Debentures may obtain such preliminary information from the Information Agent
and may also be able to obtain such information from their brokers.

EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION

The Conversion Offer will expire on the Expiration Date. The term
"Expiration Date" shall mean 5:00 p.m., New York time, on Friday, August 4,
1995, unless the Company, in its sole discretion, extends the Conversion
Offer, in which case the term "Expiration Date" shall mean the latest date
and time to which the Conversion Offer is extended.

The Company reserves the right to extend the period of time during which
the Conversion Offer is open, in its sole discretion at any time and from
time to time, by giving oral or written notice to the Conversion Agent and by
timely public announcement communicated, unless otherwise required by
applicable law or regulation, by making a release to the Dow Jones News
Service. During any extension of the Conversion Offer, all Debentures
previously tendered pursuant to the Conversion Offer and not withdrawn will
remain subject to the Conversion Offer.<PAGE>
The Company expressly reserves the right to (i) amend or modify the
terms of the Conversion Offer in any manner and (ii) withdraw or terminate
the Conversion Offer, at any time for any reason. If the Company makes a
material change in the terms of the Conversion Offer, the Company will extend
the Conversion Offer. The minimum period for which the Conversion Offer will
be extended following a material change, other than a change in the amount of
Debentures sought for conversion, will depend upon the facts and
circumstances, including the relative materiality of the change. With
respect to a change in the amount of Debentures sought (except for any
increase not in excess of 2% of the outstanding Debentures) or a change in
the consideration offered to holders of Debentures, the Conversion Offer will
be extended for a minimum of ten business days following public announcement
of such change. Any withdrawal or termination of the Conversion Offer will
be followed as promptly as practicable by public announcement thereof. In
the event the Company withdraws or terminates the Conversion Offer, it will
give immediate notice to the Conversion Agent, and all Debentures theretofore
tendered pursuant to the Conversion Offer will be returned promptly to the
tendering Holders thereof. See "--Withdrawal of Tendered Debentures."

PROCEDURE FOR TENDER

To tender Debentures pursuant to the Conversion Offer, either: (a) a
properly completed and duly executed Notice of Special Conversion (or
facsimile thereof) and any other documents required by the Notice of Special
Conversion must be received by the Conversion Agent at one of its addresses
set forth on the back cover of this Offer of Premium and either (i)
certificates for the Debentures to be tendered must be received by the
Conversion Agent at one of such addresses or (ii) such Debentures must be
delivered pursuant to the procedures for book-entry transfer described below
(and a confirmation of such delivery received by the Conversion Agent), in
each case by the Expiration Date, or (b) the guaranteed delivery procedure
described below must be complied with.

The Conversion Agent will establish accounts with respect to the
Debentures at The Depository Trust Company ("DTC"), the Midwest Securities
Trust Company ("MSTC"), and the Philadelphia Depository Trust Company
("PDTC"), and, together with DTC and MSTC, collectively referred to as the
"Book-Entry Transfer Facilities") for purposes of the Conversion Offer within
two business days after the date of this Offer of Premium, and any financial
institution that is a participant in the system of any Book-Entry Transfer
Facility may make delivery of Debentures by causing such Book-Entry Transfer
Facility to transfer such Debentures into the Conversion Agent's account in
accordance with the procedures of such Book-Entry Transfer Facility.
Although delivery of Debentures may be effected through book-entry transfer,
the Notice of Special Conversion (or facsimile thereof) and any other
required documents must, in any case, be received by the Conversion Agent at
one of its addresses set forth on the back cover of this Offer of Premium by
the Expiration Date, or the guaranteed delivery procedure described below
must be complied with. Delivery of the Notice of Special Conversion and any
other required documents to a Book-Entry Transfer Facility does not
constitute delivery to the Conversion Agent.

Except as otherwise provided below, all signatures on a Notice of
Special Conversion must be guaranteed by a firm that is a member of a
registered national securities exchange or the National Association of
Securities Dealers, Inc., or by a commercial bank or trust company having an
office, branch or agency in the United States each of which participates in a
Medallion Program approved by the Securities Transfer Association, Inc. (each
being an "Eligible Institution"). Signatures on a Notice of Special
Conversion need not be guaranteed if (a) the Notice of Special Conversion is
signed by the registered Holder of the Debentures tendered therewith and such
Holder has not completed the boxes entitled "Special Payment Instructions" or
"Special Delivery Instructions" on the Notice of Special Conversion or (b)<PAGE>
such Debentures are tendered for the account of an Eligible Institution. See
Instructions 1 and 4 of the Notice of Special Conversion.

If a Holder desires to tender Debentures pursuant to the Conversion
Offer and cannot deliver such Debentures and all other required documents to
the Conversion Agent by the Expiration Date, such Debentures may nevertheless
be tendered if all of the following conditions are met:

(i) such tender is made by or through an Eligible
Institution;

(ii) a properly completed and duly executed Notice of
Guaranteed Delivery substantially in the form provided by the
Company is received by the Conversion Agent (as provided below) by
the Expiration Date; and

(iii) the certificates for such Debentures (or a confirmation
of a book-entry transfer of such Debentures into the Conversion
Agent's account at one of the Book-Entry Transfer Facilities),
together with a properly completed and duly executed Notice of
Special Conversion (or facsimile thereof) and any other documents
required by the Notice of Special Conversion, are received by the
Conversion Agent within five NYSE trading days after the date of
execution of the Notice of Guaranteed Delivery.

The Notice of Guaranteed Delivery may be delivered by hand or
transmitted by telegram, telex, facsimile transmission or mail to the
Depositary and must include a guarantee by an Eligible Institution in the
form set forth in such Notice.

Under federal income tax laws with respect to backup withholding, the
Depositary may be required to withhold 31% of the amount of any payments made
to certain shareholders pursuant to the Conversion Offer. In order to avoid
such backup withholding, each tendering Holder and, if applicable, each other
payee, should complete and sign the Substitute Form W-9 included as part of
the Notice of Special Conversion so as to provide the information and
certification necessary to avoid backup withholding. Certain Holders
(including, among others, all corporations and certain foreign individuals)
are exempt from this backup withholding requirement. In order for a foreign
individual to qualify for an exemption from backup withholding, that Holder
must submit a statement, signed under penalties of perjury, attesting to his
exempt status. Such statements can be obtained from the Depositary. See
Instructions 9 of the Notice of Special Conversion.

Cash payments made pursuant to the Conversion Offer to a foreign
Debentureholder or his agent will be subject to withholding of federal income
tax unless such foreign Holder provides the Conversion Agent with a
certification, in form and substance satisfactory to the Company, in which
such holder certifies that such holder's conversion of Debentures into Common
Stock and cash (including any cash received in lieu of a fractional share of
Common Stock) qualifies as a sale or exchange, rather than as a dividend for
federal income tax purposes. The withholding rate is ordinarily 30% unless
the foreign holder is eligible for a reduced tax treaty rate with respect to
dividend income, in which case withholding will be made at the reduced treaty
rate, or the foreign holder otherwise establishes to the satisfaction of the
Conversion Agent that such holder is exempt from tax on such conversion. See
Instruction 10 of the Notice of Special Conversion. Foreign Debentureholders
are urged to consult their own tax advisers regarding the application of
federal income tax withholding, including eligibility for a withholding tax
reduction or exemption or for a refund of all or a portion of the tax
withheld. See "Certain Federal Income Tax Considerations."<PAGE>
The tender of Debentures pursuant to the Conversion Offer in accordance
with the procedures described above will constitute an agreement between the
tendering Holder and the Company upon the terms and subject to the conditions
of the Conversion Offer, including the tendering Holder's representation and
warranty that (i) such Holder owns the Debentures being tendered within the
meaning of Rule 14e-4 under the Exchange Act and (ii) the tender of such
Debentures complies with Rule 14e-4.

It is a violation of Rule 14e-4 under the Exchange Act for a person,
directly or indirectly, to tender Debentures for his own account unless the
person so tendering (i) has a net long position equal to or greater than the
number of (x) Debentures tendered or (y) other securities immediately
convertible into, or exercisable or exchangeable for, the number of
Debentures tendered and will acquire such Debentures for tender by
conversion, exercise or exchange of such other securities and (ii) will cause
such Debentures to be delivered in accordance with the terms of the
Conversion Offers. Rule 14e-4 provides a similar restriction applicable to
the tender or guarantee of a tender on behalf of another person. The tender
of Debentures pursuant to any one of the procedures described above will
constitute the tendering Holder's representation and warranty that (i) such
Holder has a net long position in the Debentures being tendered within the
meaning of Rule 14e-4 under the Exchange Act and (ii) the tender of such
Debentures complies with Rule 14e-4.

All questions as to the form of documents and the validity, eligibility
(including time of receipt) and acceptance for payment or conversion of any
tender of Debentures be determined by the Company, in its sole discretion,
which determination shall be final and binding. The Company reserves the
absolute right to reject any or all tenders of Debentures determined by it
not to be in proper form or the acceptance for payment or conversion of or
payment for or conversion of, Debentures that may, in the opinion of the
Company's counsel, be unlawful. The Company also reserves the absolute right
to waive any defect or irregularity in any tender of Debentures. None of the
Company, the Conversion Agent, the Information Agent or any other person will
be under any duty to give notification of any defect or irregularity in
tenders or incur any liability for failure to give any such notification.

THE METHOD OF DELIVERY OF ALL DOCUMENTS, INCLUDING CERTIFICATES FOR
DEBENTURES, IN CONNECTION WITH TENDERING PURSUANT TO THE CONVERSION OFFER IS
AT THE ELECTION AND RISK OF THE TENDERING HOLDER AND, EXCEPT AS OTHERWISE
PROVIDED IN THE NOTICE OF SPECIAL CONVERSION, DELIVERY WILL BE DEEMED MADE
ONLY WHEN ACTUALLY RECEIVED BY THE CONVERSION AGENT. IF DELIVERY IS BY MAIL,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED, PROPERLY INSURED, IS
RECOMMENDED AND SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.

Tenders of Debentures involving any irregularities will not be deemed to
have been made until such irregularities have been cured or waived.
Debentures received by the Conversion Agent that are not validly tendered and
as to which the irregularities have not been cured or waived will be returned
by the Conversion Agent to the tendering Holder (or in the case of Debentures
tendered by book-entry transfer into the Conversion Agent's account at one of
the Book-Entry Transfer Facilities, such Debentures will be credited to an
account maintained at the Book-Entry Transfer Facility designated by the
participant therein who so delivered such Debentures), unless otherwise
requested by the Holder in the Notice of Special Conversion, as promptly as
practicable after the Expiration Date, or the withdrawal or termination of
the Conversion Offer.

WITHDRAWAL OF TENDERED DEBENTURES

Tenders of Debentures made pursuant to the Conversion Offer may be
withdrawn at any time prior to the Expiration Date. Thereafter, such tenders
are irrevocable, except that they may be withdrawn at any time after 40<PAGE>
business days after the date of this Offer of Premium unless theretofore
accepted for conversion as provided in this Offer of Premium.

To be effective, a written, telegraphic, telex or facsimile transmission
notice of withdrawal must be timely received by the Conversion Agent at one
of its addresses set forth on the back cover of this Offer of Premium and
must specify the name of the Person who tendered the Debentures to be
withdrawn and the amount of Debentures to be withdrawn. If the Debentures to
be withdrawn have been delivered to the Conversion Agent, a signed notice of
withdrawal with signatures guaranteed by an Eligible Institution (except in
the case of Debentures tendered by an Eligible Institution) must be submitted
prior to the release of such Debentures. In addition, such notice must
specify, in the case of Debentures tendered by delivery of certificates, the
name of the registered holder (if different from that of the tendering
Holder) and the serial numbers shown on the particular certificates
evidencing the Debentures to be withdrawn or, in the case of Debentures
tendered by book-entry transfer, the name and number of the account at one of
the Book-Entry Transfer Facilities to be credited with the withdrawn
Debentures. Withdrawals may not be rescinded and Debentures withdrawn will
thereafter be deemed not validly tendered for purposes of the Conversion
Offer. However, withdrawn Debentures may be retendered by again following
one of the procedures described in "--Procedure for Tender" at any time prior
to the Expiration Date.

All questions as to the form and validity (including time of receipt) of
any notice of withdrawal will be determined by the Company, in its sole
discretion, which determination shall be final and binding. None of the
Company, the Conversion Agent, the Information Agent or any other person will
be under any duty to give notification of any defect or irregularity in any
notice of withdrawal or incur any liability for failure to give any such
notification.

NOTICE OF SPECIAL CONVERSION

The Notice of Special Conversion contains, among other things, the
following terms and conditions, which are part of the Conversion Offer.

The party tendering Debentures for conversion (the "Transferor")
exchanges, assigns and transfers the Debentures, as applicable, to the
Company and irrevocably constitutes and appoints the Conversion Agent as the
Transferor's agent and attorney-in-fact to cause the Debentures to be
assigned, transferred and converted. The Transferor represents and warrants
that it has full power and authority to tender, exchange, convert, assign and
transfer the Debentures and to acquire Common Stock issuable upon the
conversion of such tendered Debentures, and that, when the same are accepted
for conversion, the Company will acquire good and unencumbered title to the
tendered Debentures, free and clear of all liens, restrictions, charges and
encumbrances and not subject to any adverse claim. The Transferor also
warrants that it will, upon request, execute and deliver any additional
documents deemed by the Company to be necessary or desirable to complete the
conversion, assignment and transfer of tendered Debentures or transfer
ownership of such Debentures on the account books maintained by any Book-
Entry Transfer Facility. All authority conferred by the Transferor will
survive the death, bankruptcy or incapacity of the Transferor and every
obligation of the Transferor shall be binding upon the heirs, legal
representatives, successors, assigns, executors and administrators of such
Transferor.

CONVERSION AGENT AND INFORMATION AGENT

First Chicago Trust Company of New York has been appointed as Conversion
Agent for the Conversion Offer. Deliveries to the Conversion Agent should be
as follows:<PAGE>
By Hand or Overnight Courier: By Mail:

First Chicago Trust Company of First Chicago Trust Company of
New York New York
Tenders & Exchanges Tenders & Exchanges
Suite 4680-PFS Suite 4660-PFS
14 Wall Street P.O. Box 2559-PFS
8th Floor Jersey City, New Jersey 07303-2559
New York, New York 10005

By Facsimile:

(for Eligible Institutions only):
Fax (201) 222-4720
or
(201) 222-4721
Confirm Receipt by Telephone:
(201) 222-4707

Kissel-Blake Inc. has been retained as Information Agent. Questions and
requests for assistance regarding the Conversion Offer, requests for
additional copies of this Offer of Premium or of the Notice of Special
Conversion and requests for Notice of Guaranteed Delivery may be directed to
the Information Agent at 25 Broadway, 6th Floor, New York, New York, 10004,
telephone (800) 554-7733; Brokers and Bankers please call (212) 344-6733.

The Company will pay the Conversion Agent and Information Agent
reasonable and customary fees for their services and will reimburse them for
all their reasonable out-of-pocket expenses in connection therewith.

FINANCIAL ADVISOR

The Company has retained Bear Stearns & Co. Inc. ("Bear Stearns") to
render certain financial advisory and investment banking services, including
certain services in connection with the Conversion Offer. Bear Stearns has
not been retained to render, and has not rendered, an opinion as to the
fairness of the Conversion Offer. For its services as financial advisor
relating to the Conversion Offer, Bear Stearns has received a fee of
$500,000. In addition, the Company has agreed to pay Bear Stearns an
advisory fee related to general strategic and advisory services to be
provided by Bear Stearns over the next twelve months. Bear Stearns also will
be reimbursed by the Company for its reasonable out-of-pocket expenses and is
entitled to be indemnified by the Company against certain liabilities,
including certain liabilities under the federal securities laws.

ACCRUED INTEREST ON DEBENTURES

Holders of record of the Debentures on July 1, 1995 will receive a cash
payment for accrued interest on July 15, 1995. Although the Company is not
required, pursuant to the terms of Debentures, to pay accrued interest to
holders of Debentures that are converted pursuant to the Conversion Offer,
interest accrued on the Debentures from July 15, 1995 to August 4, 1995 (or
such other date to which the Conversion Offer may be extended) will be paid
in cash to tendering holders of Debentures upon acceptance of such Debentures
by the Company. No interest will accrue or be paid on the Conversion
Premium. Debentures which are not tendered or which are not accepted for
conversion will continue to receive interest in accordance with the
Debentures.

SECURITY OWNERSHIP OF DEBENTURES

As of the date of this Offer of Premium, officers and directors of the
Company in the aggregate own approximately $750,000 in principal amount of<PAGE>
Debentures. A director owning approximately $200,000 in principal amount of
the Debentures has advised the Company that he intends to tender his
Debentures to the Company in the Conversion Offer. However, the other
officers and directors that own Debentures do not anticipate tendering their
Debentures in the Conversion Offer due to legal restrictions.

FEES AND EXPENSES

Tendering Debentureholders will not be obligated to pay brokerage
commissions, solicitation fees, or, subject to Instruction 5 of the Notice of
Special Conversion, transfer taxes on the acquisition of the Debentures by
the Company in the Conversion Offer. The total cash expenditures to be
incurred by the Company in connection with the Conversion Offer, including
printing, accounting and legal fees, the fees and expenses of the Conversion
Agent and the Information Agent and the fees and expenses of Bear Stearns
described above, are estimated to be approximately $700,000. The Company
will not pay any commission or other remuneration to any broker, dealer,
salesman or other person for soliciting tenders of Debentures in connection
with the Conversion Offer.

DESCRIPTION OF CAPITAL STOCK

The Company's authorized capital stock consists of 20,000,000 shares of
Common Stock, par value $1 per share, and 5,000,000 shares of Preferred
Stock, no par value. The Board of Directors is authorized to determine the
number and designation of one or more series of Preferred Stock and the
voting powers, rights, preferences, qualifications, limitations or
restrictions and the shares of any such series. The Board has designated a
series of $2.125 Cumulative Convertible Exchangeable Preferred Stock,
consisting of 1,000,000 shares.

COMMON STOCK

The holders of Common Stock are entitled to one vote for each share held
of record on each matter submitted to a vote of stockholders and to vote on
all matters on which a vote of stockholders is taken, except as otherwise
provided by statute. The shares of Common Stock do not have cumulative
voting rights. Therefore, the holders of a majority of shares voting for the
election of directors can elect all of the directors then standing for
election, if they choose to do so, and in such event the holders of the
remaining shares voting for the election of directors will not be able to
elect any directors. Holders of Common Stock are entitled to receive such
dividends as may be declared by the Board of Directors out of funds legally
available therefor and, in the event of liquidation, dissolution or winding
up of the Company, are entitled to share ratably in all assets remaining
after payment of liabilities. The $2.125 Preferred Stock will rank prior to
the Common Stock as to the payment of dividends and distributions upon
liquidation, dissolution or winding up. See "Preferred Stock and Related
Subordinated Debentures." The shares of Common Stock are not subject to
liability for calls or assessments and have no conversion rights, sinking
fund privileges or preemptive rights.

PREFERRED STOCK AND RELATED SUBORDINATED DEBENTURES

Holders of the $2.125 Preferred Stock are entitled to cumulative
dividends at the rate of $2.125 per annum per share. The $2.125 Preferred
Stock is convertible into Common Stock at the option of the holder at any
time, unless previously redeemed, at the rate of 1.6 shares of Common Stock
for each share of $2.125 Preferred Stock, subject to adjustment under certain
circumstances. The $2.125 Preferred Stock is also exchangeable in whole at
the sole option of the Company on any quarterly dividend payment date for the
Company's 8-1/2% Convertible Subordinated Debentures due 2014 (the "8-1/2%<PAGE>
Subordinated Debentures") at the rate of $25 principal amount of 8-1/2%
Subordinated Debentures for each share of $2.125 Preferred Stock (or, as of
June 30, 1995, an aggregate principal amount of $21,223,000 (excluding shares
held by a subsidiary)). The $2.125 Preferred Stock is redeemable for cash at
any time, in whole or in part, at the option of the Company, at redemption
prices declining from $26.0625 on the date of this Offer of Premium (and
$25.85 as of July 15, 1995) to $25 on July 15, 1999, plus accrued and unpaid
dividends to the redemption date. In addition, the $2.125 Preferred Stock is
redeemable at the option of the holder upon certain stock acquisitions
(reflecting a change in control of the Company) or business combinations at a
redemption price of $25 per share, plus accrued and unpaid dividends to the
redemption date. This provision could have the effect of delaying, deferring
or preventing a change in control of the Company or such transactions.

Upon any liquidation, dissolution or winding up of the Company, the
holders of the $2.125 Preferred Stock will be entitled to receive $25 per
share, plus cumulative accrued dividends. The holders of the $2.125
Preferred Stock are not entitled to vote on any matters unless the Company
shall be in arrears in an amount equal to at least six quarterly dividends,
in which case the holders of the $2.125 Preferred Stock will be entitled to
vote for the election of two additional directors.

If the Company elects to exchange the $2.125 Preferred Stock for 8-1/2%
Subordinated Debentures, the Company will issue 8-1/2% Subordinated
Debentures under an Indenture which has previously been filed with the
Commission. The 8-1/2% Subordinated Debentures would be unsecured,
subordinated obligations of the Company which would mature on July 15, 2014,
would be subordinated in right of payment to all Senior Indebtedness of the
Company and would rank equally with the Debentures. The holders of the 8-
1/2% Subordinated Debentures would be entitled at any time to convert the 8-
1/2% Subordinated Debentures into shares of Common Stock and, upon the
occurrence of certain events, would have the option to require the Company to
redeem the 8-1/2% Subordinated Debentures at a redemption price equal to 100%
of the principal amount thereof, plus accrued interest. In addition, the 8-
1/2% Subordinated Debentures would be redeemable, at the option of the
Company, at prices beginning at 105.95% and declining to 100% on July 15,
1999. The 8-1/2% Subordinated Debentures would also require the Company to
establish a sinking fund.

In addition, the Board of Directors may, without further action by the
Company's stockholders, from time to time, direct the issuance of authorized
shares of preferred stock in series and may, at the time of issuance,
determine the powers, rights, preferences and limitations of each series.
The issuance of preferred stock could be used, under certain circumstances,
as a method of delaying or preventing a change of control of the Company and
could permit the Board of Directors, without any action by holders of Common
Stock, to issue preferred stock which could have a detrimental effect on the
rights of holders of common Stock, including loss of voting control. In
certain circumstances, this could have the effect of decreasing the market
price of the Common Stock. The Company has no present plans to issue any
additional shares of preferred stock.

RIGHTS TO PURCHASE SERIES A JUNIOR PREFERRED STOCK

In 1990, the Company distributed one Right to Acquire Series A Junior
Preferred Stock (a "Right") with respect to each shares of its Common Stock.
In addition, each share of Common Stock which is subsequently issued
automatically carries with it a Right. Subject to certain exceptions, the
Rights generally become exercisable and separately tradeable if a person or
group (an "Acquiring Person") acquires beneficial ownership of 20% or more of
the Common Stock then outstanding. An Acquiring Person is not deemed to
include any stockholder who, on December 14, 1990, already owned 20% of the
outstanding Common Stock. Upon such an event, each holder of a Right will be<PAGE>
entitled to purchase one-tenth of a share of Series A Junior Preferred Stock
at a purchase price of $4.50, subject to certain adjustments. Such preferred
shares, of which 2,000,000 are designated, would be voting and would be
entitled to distributions that are ten times the distributions on the Common
Stock. Subject to exercise of the Rights, in the event of certain business
combinations involving the Company, a holder of a Right would have the right
to receive Common Stock or common stock of the acquiring company with a value
of two times the exercise price of the Right. The Rights will expire on
December 14, 2000, and until they become exercisable, may be redeemed by the
Company for $.01 per Right.

The terms and conditions of the Rights are set forth in full in the
Rights Agreement dated as of December 12, 1990 between the Company and First
Chicago Trust Company of New York, as Rights Agent. The summary description
of the Rights set forth herein does not purport to be a complete description
of the terms and conditions of the Rights and is qualified in its entirety by
reference to the Rights Agreement, a copy of which was filed as an exhibit to
the Company's Registration Statement on Form 8-A filed with the Commission on
December 14, 1990, which is incorporated herein by reference.

CERTAIN CHARTER AND STATUTORY PROVISIONS

The Company's Certificate of Incorporation provides for a maximum of 15
directors and the division of the directors into three classes, each of which
serves for a three year term. The classification of directors has the effect
of making it more difficult for stockholders to change the composition of the
Board of Directors in a short period of time. At least two annual meetings
of stockholders, instead of one, will generally be required to effect a
change in a majority of the Board of Directors. Therefore, these provisions
could help to effect perpetuation of current management.

Since the Company has not amended its Certificate of Incorporation or
Bylaws to prohibit the application of Section 203 of the Delaware General
Corporation Law, such Section may inhibit an interested stockholder's ability
to acquire additional shares of Common Stock or otherwise engage in a
business combination with the Company. Section 203 prohibits certain
"business combination" transactions with any "interested stockholder" for a
period of three years after the date on which the latter became an interested
stockholder, unless (1) prior to such date either the proposed business
combination or the transaction which resulted in the stockholder becoming an
interested stockholder is approved by the corporation's board of directors,
(2) upon consummation of the transaction which resulted in the stockholder
becoming an interested stockholder, the interested stockholder owned at least
85% of the shares of the outstanding voting stock of the corporation which
are not held by directors who also are officers or by certain employee stock
plans, or (3) the business combination with the interested stockholder is
approved by the corporation's board of directors and authorized at a
stockholders' meeting, and not by written consent, by the affirmative vote of
the holders of at least two-thirds of the outstanding shares of the
corporation's outstanding voting stock other than shares held by the
interested stockholder. The term "business combination" is defined generally
to include mergers or consolidations between a Delaware corporation and an
interested stockholder, transactions with an interested stockholder involving
the assets of stock of the corporation or its majority-owned subsidiaries and
transactions that increase an interested stockholders' percentage ownership
of stock. An "interested stockholder" is defined generally for this purpose
to be a stockholder who becomes a beneficial owner of 15% or more of a
corporation's outstanding voting stock.

TRANSFER AGENT AND REGISTRAR

The transfer agent and registrar for the Common Stock is First Chicago
Trust Company of New York.<PAGE>

SOURCE AND AMOUNT OF FUNDS

Assuming that $54 million in principal amount of Debentures are
converted pursuant to the Conversion Offer, the Company estimates that the
total amount of cash required by the Company to pay the Conversion Premium
and the fees and expenses related to the Conversion Offer will be $6,640,000.
The Company expects to obtain such amounts from working capital and by
borrowing under its Amended and Restated Credit Agreement dated as of March
22, 1995 by and among the Company, American National Bank and Trust Company
of Chicago as Agent and American National Bank and Trust Company of Chicago,
Firstar Bank Milwaukee, N.A. and Bank One, Rockford, N.A. as banks (the
"Credit Agreement"). The Credit Agreement is unsecured, expires on April 30,
1996 and currently bears interest at the prime rate. All borrowings under
the Credit Agreement must be repaid on or before termination of the Credit
Agreement. The Company is currently negotiating to obtain alternative
financing for such borrowings.

CERTAIN FEDERAL INCOME TAX CONSIDERATIONS

The following is a general summary of the material United States federal
income tax considerations relevant to a conversion of Debentures into Common
Stock and the payment of the Conversion Premium and the ownership and
disposition of Common Stock by persons acquiring Common Stock pursuant to the
Conversion Offer. This summary is based on the Internal Revenue Code of
1986, as amended (the "Code"), Treasury Regulations (including Proposed
Regulations and Temporary Regulations) promulgated thereunder, Internal
Revenue Service ("IRS") rulings, official pronouncements and judicial
decisions, all as in effect on the date hereof and all of which are subject
to change, possibly with retroactive effect, or different interpretations.
This summary is applicable only to Holders who are United States persons for
federal income tax purposes and who hold Debentures as a capital asset and
who will hold any Common Stock received in the Conversion Offer as a capital
asset.

This summary does not discuss all the tax consequences that may be
relevant to a particular Holder in light of the Holder's particular
circumstances and it is not intended to be applicable in all respects to all
categories of investors, some of whom -- such as insurance companies, tax-
exempt persons, financial institutions, regulated investment companies,
dealers in securities or currencies, persons that hold Debentures or the
Common Stock received in the conversion as a position in a "straddle," as
part of a "synthetic security," "hedge," "conversion transaction" or other
integrated investment or persons whose functional currency is other than
United States dollars -- may be subject to different rules not discussed
below. In addition, this summary does not address any state, local or
foreign tax considerations that may be relevant to a Holder's decision to
convert Debentures for Common Stock and the Conversion Premium pursuant to
the Conversion Offer.

ALL DEBENTUREHOLDERS ARE ADVISED TO CONSULT THEIR OWN TAX ADVISORS
REGARDING THE FEDERAL, STATE, LOCAL AND FOREIGN TAX CONSEQUENCES OF THE
CONVERSION OF DEBENTURES AND THE DISPOSITION OF COMMON STOCK RECEIVED IN THE
CONVERSION OFFER IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.

CONVERSION AND RECEIPT OF CONVERSION PREMIUM

Recognition of Gain or Loss on Conversion. The conversion of Debentures
into Common Stock and the Conversion Premium (the "Conversion") will not be a
taxable transaction to the Company, but may be a taxable transaction to the
Debentureholders to the extent of the cash received, with the consequences
described below.<PAGE>
A Debentureholder whose Debentures are converted into Common Stock and
the Conversion Premium will recognize gain to the extent of the lesser of (i)
the excess of the fair market value of the total amount received in the
Conversion (i.e., the sum of the value of the Common Stock and the Conversion
Premium) over such Debentureholder's tax basis in the Debentures converted,
or (ii) the amount of the Conversion Premium. Such gain would likely be
capital gain (subject to the market discount rules discussed below), provided
the Debentureholder held the Debentures as capital assets, and would be long-
term capital gain if the Debentures were held for more than one year. To the
extent the Conversion Premium exceeds the amount specified in clause (i)
above, such amount will not be currently taxable but will reduce a
Debentureholder's basis in the Common Stock received in the Conversion as
discussed below. A Debentureholder is not allowed to recognize a loss on the
Conversion.

Basis and Holding Period of Common Stock Received. A Holder's tax basis
in the Common Stock received in the Conversion will be equal to the Holder's
tax basis in the Debentures converted in the Conversion, increased by the
amount of any gain recognized by the Holder and decreased by the amount of
the Conversion Premium received. The holding period of the Common Stock will
include the holding period of the Debentures converted in the Conversion.

Cash in Lieu of Fractional Shares. Holders who receive cash in lieu of
fractional shares of Common Stock should be treated as having received the
cash in redemption of the fractional share interest. The character of the
cash received by a Holder will depend upon whether the redemption is
essentially equivalent to a dividend to such Holder or is treated as a sale
or exchange, determined under Section 302 of the Code. Holders should
consult their tax advisors regarding the appropriate treatment of any cash
that is received in exchange for fractional share interests.

Accrued Interest. Pursuant to the Conversion Offer, Debentureholders
will receive, in cash, the interest which has accrued on the Debentures since
July 15, 1995. This payment will be taxable to the Holders as ordinary
interest income.

Market Discount. The Code generally requires Holders of "market
discount bonds" to treat as interest income any gain realized on the
disposition of such bonds to the extent of the market discount accrued during
the Holder's period of ownership. A "market discount bond" generally is a
debt obligation purchased at a market discount, subject to a statutory de
minimis exception. For this purpose, a purchase at a market discount
includes a purchase at or after the original issue at a price below the
stated redemption price at maturity.

An exception to the market discount rules is made for certain
nonrecognition transactions, such as the Conversion Offer. According to this
exception, Holders of Debentures will be required to treat accrued market
discount as interest income at the time of the conversion only to the extent
gain is recognized by the Holder pursuant to the Conversion Offer. However,
on a subsequent disposition of the Common Stock received in the Conversion
Offer, gain realized on the disposition will be treated as ordinary income to
the extent of the market discount accrued by the Holder prior to the
Conversion Offer but not recognized at the time of the conversion.

A Holder's accrued market discount generally equals a percentage of the
bond's market discount, which is based on the number of days the Holder held
the bond at the time of its disposition, over the number of days from the
date the Holder acquired the bond to its date of maturity. Also, Holders of
market discount bonds are required, under certain circumstances, to defer the
deduction of all or a portion of the interest on indebtedness incurred or
maintained to acquire or carry market discount bonds. Neither the rule
treating accrued market discount as ordinary income on a disposition nor the<PAGE>
rule deferring interest deductions applies if the Holder of a "market
discount bond" elects to include the accrued market discount in income
currently. This election would apply to all market discount bonds acquired
on or after the first day of the first taxable year to which the election
applies, and may be revoked only with the consent of the IRS.

Sale or Exchange of Common Stock. In general, subject to the market
discount rules discussed above, the sale, exchange or redemption of the
Common Stock received in the Conversion Offer will result in capital gain or
loss equal to the difference between the amount realized and the Holder's
adjusted tax basis in the Common Stock immediately before such sale, exchange
or redemption. For a discussion of the determination of a Holder's initial
tax basis in the Common Stock, see "Conversion and Receipt of Conversion
Premium -- Basis and Holding Period of Common Stock Received."

Non-United States Debentureholders. If a "Non-United States
Debentureholder" converts a Debenture into Common Stock and cash (including
any cash received in lieu of a fractional share of Common Stock) and does not
prove, in a manner satisfactory to the Company or other withholding agent,
that the cash is not treated as a dividend for U.S. federal income tax
purposes, United States federal withholding tax will be withheld from the
proceeds at a rate of 30% of such proceeds unless such Holder is eligible for
a reduced tax treaty rate with respect to dividend income, in which case the
tax will be withheld at the reduced rate, or establishes that it is otherwise
exempt from such tax. Non-United States Debentureholders should consult
their tax advisors regarding these withholding rules and the procedures for
obtaining a refund if the amount withheld exceeds the Non-United States
Debentureholder's final tax liability.

For this purpose, a Non-United States Debentureholder is any person who,
for United States federal income tax purposes, is neither (i) a citizen or
resident of the United States, (ii) a corporation, partnership or other
entity created or organized in or under the laws of the United States or of
any State, or (iii) a domestic trust or estate.

BACKUP WITHHOLDING

In certain circumstances, United States Holders may be subject to backup
withholding at a rate of 31% with respect to the Conversion Premium, the cash
in lieu of fractional shares, and the accrued interest on the Debentures
since July 15, 1995 unless such Holder (i) is a corporation or is otherwise
exempt and, when required, demonstrates this fact, or (ii) provides a correct
taxpayer identification number, certifies as to no loss of exemption from
backup withholding and otherwise complies with applicable requirements of the
backup withholding rules. Any amount withheld from the Conversion Premium to
a Holder under the backup withholding rules is allowable as a credit against
such Holder's federal income tax liability, provided that the required
information is furnished to the IRS. United States Holders should consult
their own tax advisors regarding their qualification for exemption from
backup withholding and the procedure for obtaining any applicable exemption.

LEGAL MATTERS

The validity of the Common Stock will be passed upon for the Company by
Mr. A. Clark Waid III, Assistant General Counsel of the Company.

EXPERTS

The Consolidated Financial Statements of Pioneer Financial Services,
Inc. appearing in Pioneer Financial Services, Inc's Annual Report (Form 10-K)
for the year ended December 31, 1994, have been audited by Ernst & Young LLP,<PAGE>
independent auditors, as set forth in their report thereon included therein
and incorporated herein by reference. Such consolidated financial statements
are incorporated herein by reference in reliance upon such report given upon
the authority of such firm as experts in accounting and auditing.

MISCELLANEOUS

Except as set forth below, neither the Company nor, to its knowledge,
any of its subsidiaries, executive officers or directors or any associate of
any such executive officer or director has engaged in any transactions
involving the Debentures or Common Stock during the 40 business days
preceding the date hereof. Neither the Company nor, to its knowledge, any of
its executive officers or directors is a party to any contract, arrangement,
understanding or relationship relating directly or indirectly to the
Conversion Offer with any other person with respect to the Debentures or
Common Stock. On June 1, 1995, Anthony Pino purchased 2,700 shares of Common
Stock for $13 per share in an open market transaction.

Facsimile copies of the Notice of Special Conversion will be accepted.
The Notice of Special Conversion, certificates representing Debentures and
any other required documents should be sent by each Holder of Debentures or
his broker, dealer, commercial bank, trust company or other nominee to the
Conversion Agent at one of the addresses set forth below:

THE CONVERSION AGENT IS:

FIRST CHICAGO TRUST COMPANY OF NEW YORK

BY MAIL: BY HAND OR OVERNIGHT COURIER:

(registered or certified First Chicago Trust Company of
mail recommended) New York
First Chicago Trust Company of Tenders & Exchanges
New York Suite 4680-PFS
Tenders & Exchanges 14 Wall Street
Suite 4660-PFS 8th Floor
P.O. Box 2559-PFS New York, NY 10005
Jersey City, NJ 07303-2559

BY FACSIMILE TRANSMISSION
(for Eligible Institutions only):
Fax (201) 222-4720
or
(201) 222-4721

CONFIRM RECEIPT OF NOTICE OF GUARANTEED DELIVERY BY TELEPHONE:
(201) 222-4707

THE INFORMATION AGENT IS:<PAGE>
KISSEL-BLAKE INC.
25 Broadway, 6th Floor
New York, New York 10004
Call Toll-Free: (800) 554-7733
Brokers and Bankers, please call: (212) 344-6733

Any questions or requests for assistance or additional copies
of this Offer of Premium and the Notice of Special Conversion
may be directed to the Information Agent at its telephone
number and location set forth above. You may also contact your
broker, dealer, commercial bank or trust company or other
nominee for assistance concerning the Conversion Offer.<PAGE>

Exhibit (a)2
NOTICE OF SPECIAL CONVERSION

TO CONVERT
UP TO $54 MILLION IN PRINCIPAL AMOUNT OF THE
8% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2000
OF
PIONEER FINANCIAL SERVICES, INC.

FOR
85.11 SHARES OF COMMON STOCK AND $110 IN CASH PLUS ACCRUED INTEREST
FOR EACH $1,000 IN PRINCIPAL AMOUNT OF DEBENTURES
ON THE TERMS AND SUBJECT TO THE CONDITIONS SET FORTH
HEREIN AND IN ITS OFFER OF PREMIUM
DATED JULY 7, 1995

THE CONVERSION OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT
5:00 P.M., NEW YORK CITY TIME, ON FRIDAY, AUGUST 4, 1995, UNLESS EXTENDED.

CONVERSION AGENT:

FIRST CHICAGO TRUST COMPANY OF NEW YORK
BY HAND OR OVERNIGHT COURIER: BY MAIL:
(registered or certified
mail recommended)

Tenders & Exchanges Tenders & Exchanges
Suite 4680 - PFS Suite 4660 - PFS
14 Wall Street P.O. Box 2559 - PFS
8th Floor Jersey City, New Jersey
New York, New York 10005 07303-2559

DELIVERY OF THIS NOTICE OF SPECIAL CONVERSION TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMISSION OF THIS NOTICE OF SPECIAL CONVERSION VIA
FACSIMILE TRANSMISSION TO A NUMBER OTHER THAN AS SET FORTH ON THE BACK COVER
OF THE OFFER OF PREMIUM WILL NOT CONSTITUTE A VALID DELIVERY.

The undersigned acknowledges receipt of the Offer of Premium Upon
Conversion dated July 7, 1995 (the "Offer of Premium") of Pioneer Financial
Services, Inc. (the "Company") which, together with this Notice of Special
Conversion (the "Notice of Special Conversion"), describes the Company's
offer (the "Conversion Offer") to pay a cash premium equal to $110 plus
accrued interest (the "Conversion Premium") for each $1,000 in principal
amount of its 8% Convertible Subordinated Debentures due 2000 (the
"Debentures") which are converted to common stock, $1.00 par value (the
"Common Stock") of the Company prior to the Expiration Date (as defined in
the Offer of Premium). A Debentureholder whose Debentures are tendered and
accepted for conversion pursuant to the Conversion Offer will receive 85.11
shares of Common Stock (which is equivalent to the Debentures' original
conversion price of $11.75 per share of Common Stock) and the Conversion
Premium equal to $110 in cash plus accrued interest for each $1,000 principal
amount of Debentures. The Company will accept for conversion pursuant to the
Conversion Offer no more than $54 million in principal amount of Debentures.

The undersigned has checked the appropriate boxes below and signed this
Notice of Special Conversion to indicate the action the undersigned desires
to take with respect to the Conversion Offer.

PLEASE READ THE ENTIRE NOTICE OF SPECIAL CONVERSION AND
THE OFFER OF PREMIUM CAREFULLY BEFORE CHECKING ANY BOX BELOW.<PAGE>
THE INSTRUCTIONS INCLUDED WITH THIS NOTICE OF SPECIAL CONVERSION MUST BE
FOLLOWED. QUESTIONS AND REQUESTS FOR ASSISTANCE OR FOR ADDITIONAL COPIES OF
THE OFFER OF PREMIUM AND THIS NOTICE OF SPECIAL CONVERSION MAY BE DIRECTED TO
THE CONVERSION AGENT.

This Notice of Special Conversion is to be used either (a) if the
certificates for Debentures are to be forwarded herewith or (b) if delivery
of Debentures is to be made by book-entry transfer to an account maintained
by the Conversion Agent at the Depository Trust Company ("DTC"), Midwest
Securities Trust Company ("MSTC") or Philadelphia Depository Trust Company
("PDTC", which, together with DTC and MSTC, are hereinafter collectively
referred to as the "Book-Entry Transfer Facilities") pursuant to the
procedures set forth in "The Conversion Offer--Procedure for Tender" in the
Offer of Premium.

Holders whose Debentures are not immediately available or who cannot
deliver their Debentures and all other documents required hereby to the
Conversion Agent prior to the Expiration Date must tender their Debentures
according to the guaranteed delivery procedure set forth in the Offer of
Premium under the caption "The Conversion Offer--Procedure for Tender."

List below the Debentures to which this Notice of Special Conversion
relates. If the space provided below is inadequate, the Certificate Numbers
and the principal amount of Debentures should be listed on a separate signed
schedule affixed hereto.

DESCRIPTION OF A DEBENTURES TENDERED HEREWITH

Name(s) and Address(es) of Certificate Principal Principal
Registered Holder(s) (Please Number(s)<F1> Amount Amount
fill in) Represented by Tendered<F2>
Certificate(s)

Total

<F1> Need not be completed by book-entry holders.

<F2> Unless otherwise indicated, the holder will be deemed to have tendered
the full principal amount of Debentures represented by the tendered
certificates. See Instruction 3.

Unless the context requires otherwise, the term "Holder" for purposes of
this Notice of Special Conversion means any person in whose name Debentures
are registered on the books of the Company or any other person who has
obtained a properly completed assignment from the registered holder or any
person whose Debentures are held of record by a Book-Entry Transfer Facility
who desires to deliver such Debentures by book-entry transfer at such Book-
Entry Transfer Facility.

/ / CHECK HERE IF TENDERED DEBENTURES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO AN ACCOUNT MAINTAINED BY THE CONVERSION AGENT AT ONE OF
THE BOOK-ENTRY TRANSFER FACILITIES AND COMPLETE THE FOLLOWING:

Name of Tendering Institution:<PAGE>
-----------------------------------------

Account Number:
-------------------------------------------------------

Check Box of Book-Entry Transfer Facility:

/ / The Depository Trust Company

/ / Midwest Securities Trust Company

/ / Philadelphia Depository Trust Company

Transaction Code Number:
-----------------------------------------------

/ / CHECK HERE IF TENDERED DEBENTURES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY AND COMPLETE THE FOLLOWING:

Name(s) of Registered Holder(s):

----------------------------------------------------------------------

Date of Execution of Notice of Guaranteed Delivery:

----------------------------------------------------------------------

Name of Eligible Institution that Guaranteed Delivery:

----------------------------------------------------------------------

If delivered by book-entry transfer:

Name of Tendering Institution:
----------------------------------------

Account Number:
-------------------------------------------------------

Check Box of Book-Entry Transfer Facility:

/ / The Depository Trust Company

/ / Midwest Securities Trust Company

/ / Philadelphia Depository Trust Company

Transaction Code Number:
----------------------------------------------

NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY

Ladies and Gentlemen:<PAGE>
Upon the terms and subject to the conditions of the Conversion Offer,
the undersigned hereby tenders to Pioneer Financial Services, Inc., a
Delaware corporation (the "Company"), the above-described Debentures.

Subject to, and effective upon, the acceptance for conversion of the
Debentures tendered herewith, the undersigned hereby tenders, exchanges,
assigns and transfers to, or upon the order of, the Company all right, title
and interest in and to all such Debentures. The undersigned hereby
irrevocably constitutes and appoints the Conversion Agent as the true and
lawful agent and attorney-in-fact of the undersigned (with full knowledge
that said Conversion Agent also acts as the agent of the Company in
connection with the Conversion Offer) and with full power of substitution
(such power of attorney being deemed to be an irrevocable power coupled with
an interest), to (a) deliver certificates for such Debentures for conversion,
or transfer ownership of such Debentures on the account books maintained by
any of the Book-Entry Transfer Facilities, together, in any such case, with
all accompanying evidences of transfer and authenticity, to the Conversion
Agent for the account of the Company, (b) present such Debentures for
conversion on the books of the Company and (c) receive all benefits and
otherwise exercise all rights of beneficial ownership of such Debentures, all
in accordance with the terms of the Conversion Offer.

The undersigned represents and warrants that (a) it has full power and
authority to tender, exchange, convert, assign and transfer the Debentures
tendered hereby and to acquire the Common Stock and the Conversion Premium
issuable upon the conversion of such tendered Debentures, (b) that, when the
undersigned's Debentures are accepted for conversion, the Company will
acquire good and unencumbered title to such Debentures free and clear of all
liens, restrictions, charges and encumbrances and not subject to any adverse
claim, (c) the undersigned "owns" the Debentures tendered hereby within the
meaning of Rule 14e-4 promulgated under the Securities Exchange Act of 1934,
as amended, and (d) the tender of the Debentures by the undersigned complies
with Rule 14e-4. The undersigned also warrants that it will, upon request,
execute and delivery any additional documents deemed by the Conversion Agent
or the Company to be necessary or desirable to complete the exchange,
conversion, assignment and transfer of tendered Debentures or transfer
ownership of such Debentures on the account books maintained by any of the
Book-Entry Transfer Facilities. All authority herein conferred or agreed to
be conferred shall survive the death, bankruptcy or incapacity of the
undersigned and every obligation of the undersigned hereunder shall be
binding upon the heirs, personal representatives, successors and assigns of
the undersigned.

The Company has expressly reserved the right to amend or modify the
terms of the Conversion Offer in any manner, or to withdraw or terminate the
Conversion Offer, at any time for any reason. The undersigned recognizes
that as a result of the foregoing, the Company may not be required to convert
any of the Debentures tendered hereby pursuant to the Conversion Offer and,
in such an event, the Debentures not converted will be returned to the
undersigned at the address shown below the signature of the undersigned.
Tendered Debentures may be withdrawn at any time prior to the Expiration Date
(as defined in the Offer of Premium) and, unless accepted for conversion by
the Company, may be withdrawn at any time after 40 business days after the
date of the Offer of Premium.

Unless otherwise indicated under "Special Payment Instructions" below,
please cause the Common Stock and the Conversion Premium to be issued or
paid, and return any Debentures not tendered or not accepted for conversion
to be issued, in the name(s) of the undersigned (and, in the case of
Debentures tendered by book-entry transfer and Common Stock to be issued into
a Book-Entry Transfer Facility, by credit to the account at the Book-Entry
Transfer Facility designated above). Similarly, unless otherwise indicated
under "Special Delivery Instructions," please mail any certificates for<PAGE>
Debentures not tendered or not accepted for conversion (and accompanying
documents, as appropriate), and any Common Stock and the Conversion Premium
deliverable pursuant to the Conversion Offer, to the undersigned at the
address shown below the undersigned's signature(s). If both "Special Payment
Instructions" and "Special Delivery Instructions" are completed, please cause
Common Stock to be issued, and return any Debentures not tendered or not
accepted for conversion, in the name(s) of, and deliver any certificates for
such Debentures and such Common Stock to, the person(s) so indicated. The
undersigned recognizes that the Company has no obligation, pursuant to the
"Special Payment Instructions," to transfer any Debentures from the name of
the registered holder(s) thereof if the Company does not accept for
conversion any of the Debentures so tendered.

TENDERING HOLDER(S) SIGN HERE
(Complete Accompanying Substitute Form W-9)

----------------------------------------------------------------------------

----------------------------------------------------------------------------
Signature of Holder(s)

Dated: , 1995
----------------------

Name(s):
------------------------------------------------------------------

------------------------------------------------------------------
(Please Print)

Capacity (full title):
---------------------------------------------------

Address:
------------------------------------------------------------------

------------------------------------------------------------------
(Including Zip Code)

Area Code and Telephone No.:
----------------------------------------------

Taxpayer Identification No.:
----------------------------------------------

(Must be signed by registered holder(s) exactly as name(s) appear(s) on
certificate(s) for Debentures or on a security position listing or by
person(s) authorized to become registered holder(s) by endorsements and
documents transmitted herewith. If signature is by a trustee, executor,
administrator, guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, please set forth the
full title of such person.) See Instruction 4.

GUARANTEE OF SIGNATURE(S)
(If Required -- See Instructions 1 and 4)<PAGE>
Authorized Signature:
---------------------------------------------------

Name:
------------------------------------------------------------------

Title:
------------------------------------------------------------------

Address:
------------------------------------------------------------------

Name of Firm:
-------------------------------------------------------------

Area Code and Telephone No.:
----------------------------------------------

Date:
------------------------------------------------------------------

SPECIAL PAYMENT INSTRUCTIONS
(See Instructions 1, 2, 4, 5 and 11)

To be completed ONLY if (a) the certificates for the Common Stock or the
Conversion Premium to be received upon conversion of Debentures accepted for
conversion, or (b) the certificates for Debentures not tendered or not
accepted for conversion, are to be issued in the name of someone other than
the tendering holder.

Issue / / check for Conversion Premium, and/or
/ / certificate for Common Stock, and/or
/ / certificate for Debentures, to

Name(s):
------------------------------------------------------------------
(Please Print)

Address:
------------------------------------------------------------------

------------------------------------------------------------------

------------------------------------------------------------------
(Including Zip Code)

Taxpayer Identification No.:
------------------------------------------------

SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 2, 4, 5 and 11)

To be completed ONLY if (a) the certificates for the Common Stock or the
check for the Conversion Premium to be received upon conversion of Debentures
accepted for conversion, or (b) certificates for Debentures not tendered or<PAGE>
not accepted for conversion, are to be mailed to someone other than the
undersigned, or to the undersigned at an addressed other than that shown
below the undersigned's signature.

Mail / / check for the Conversion Premium, and/or
/ / certificates for Common Stock, and/or
/ / certificates for Debenture to:

Name(s):
------------------------------------------------------------------
(Please Print)

Address:
------------------------------------------------------------------

------------------------------------------------------------------

------------------------------------------------------------------
(Including Zip Code)

IMPORTANT TAX INFORMATION

Under federal income tax law, a holder whose tendered Debentures are
accepted for conversion is required to provide the Conversion Agent with such
holder's correct taxpayer identification number ("TIN") on Substitute Form W-
9. If a holder is an individual, the TIN is the holder's social security
number. If the Conversion Agent is not provided with the correct TIN, the
holder may be subject to a penalty imposed by the Internal Revenue Service.
In addition, payments that are made to such holder pursuant to the Conversion
Offer may be subject to backup withholding.

If backup withholding applies, the Company is required to withhold 31%
of all payments made to the holder. Backup withholding is not an additional
tax. Rather, the tax liability of persons subject to backup withholding will
be reduced by the amount of tax withheld. If withholding results in an
overpayment of taxes, a refund may be obtained.

To prevent backup withholding on payments that are made to a holder, the
holder is required to notify the Conversion Agent of his, her or its correct
TIN by completing the Form below, certifying that the TIN provided on the
Substitute Form W-9 is correct (or that such holder is awaiting a TIN) and
whether or not (i) the holder has not been notified by the Internal Revenue
Service that the holder is subject to backup withholding as a result of a
failure to report all interest or dividends or (ii) the Internal Revenue
Service has notified the holder that the holder is no longer subject to
backup withholding.

Certain holders (including, among others, all corporations and certain
foreign individuals) are not subject to these backup withholding
requirements. A corporation must, however, complete the Substitute Form W-9,
including providing its TIN (unless it is a foreign corporation that does not
have a TIN) and indicating that it is exempt from backup withholding, in
order to establish its exemption from backup withholding. A foreign
corporation or individual, or other foreign person, must submit a statement
(i.e., Form W-8 or substitute), signed under penalties of perjury, attesting
to such person's status as a non-United States person. Such statements can
be obtained from the Conversion Agent.

See the enclosed Guidelines for Certification of Taxpayer Identification
Number on Substitute Form W-9 for additional instructions.<PAGE>

PAYER'S NAME: Pioneer Financial Services, Inc.

PART 1 -- PLEASE PROVIDE SOCIAL SECURITY
YOUR TIN IN THE BOX AT NUMBER OR
RIGHT AND CERTIFY BY TAXPAYER
SIGNING AND DATING BELOW IDENTIFICATION NUMBER

--------------------

SUBSTITUTE FORM W-9 PART 2 -- I am not subject FOR PAYEES EXEMPT
DEPARTMENT OF THE to backup withholding FROM BACKUP
TREASURY because (i) I am exempt WITHHOLDING
INTERNAL REVENUE from backup withholding, or
SERVICE (ii) I have not been
notified by the IRS that I Write "EXEMPT" is you
am subject to backup are exempt from
withholding as a result of backup withholding.
a failure to report all
interest or dividends, or
(iii) the IRS has notified
me that I am no longer
subject to backup
withholding.

(YOU MUST CROSS OUT THIS
PART 2 IF YOU ARE CURRENTLY
SUBJECT TO BACKUP
WITHHOLDING BECAUSE OF
UNDERREPORTING OF INTEREST
OR DIVIDENDS ON YOUR TAX
RETURN.)

PAYER'S REQUEST FOR CERTIFICATION -- UNDER PART 3 --
TAXPAYER PENALTIES OF PERJURY, I
IDENTIFICATION NUMBER CERTIFY THAT THE / / Awaiting TIN
(TIN) INFORMATION PROVIDED ON
THIS FORM IS TRUE, CORRECT
AND COMPLETE.

SIGNATURE
----------------

DATE
----------------------

NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE CONVERSION
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR
ADDITIONAL DETAILS.

YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART 3
OF SUBSTITUTE FORM W-9.<PAGE>

CERTIFICATE OF TAXPAYER AWAITING TIN

I certify under penalties of perjury that a taxpayer
identification number has not been issued to me, and either (a)
I have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office, or (b)
I intend to mail or deliver an application in the near future.
I understand that if I do not provide a taxpayer identification
number within 60 days, 31% of all reportable payments made to
me thereafter will be withheld until I provide a number.

------------------------------ --------------------
Signature Date

INSTRUCTIONS

FORMING PART OF THE TERMS AND CONDITIONS OF THE CONVERSION OFFER

1. GUARANTEE OF SIGNATURES. Except as otherwise provided below, all
signatures on this Notice of Special Conversion must be guaranteed by a firm
that is a member of a registered national securities exchange or the National
Association of Securities Dealers, Inc., or by a commercial bank or trust
company having an office, branch or agency in the United States each of which
participates in a Medallion Program approved by the Securities Transfer
Association, Inc. (each being an "Eligible Institution"). Signatures on this
Notice of Special Conversion need not be guaranteed if (a) this Notice of
Special Conversion is signed by the registered holder(s) of the Debentures
(which term, for purposes of this document, shall include any participant in
one of the Book-Entry Transfer Facilities whose name appears on a security
position listing as the owner of Debentures) tendered herewith and such
holder(s) have not completed either of the boxes entitled "Special Payment
Instructions" or "Special Delivery Instructions" on this Notice of Special
Conversion or (b) such Debentures are tendered for the account of an Eligible
Institution. See Instruction 4.

2. DELIVERY OF NOTICE OF SPECIAL CONVERSION AND DEBENTURES. This
Notice of Special Conversion is to be completed by holders of Debentures if
(a) certificates for Debentures are to be forwarded herewith or (b) tenders
are to be made pursuant to the procedure for tender by book-entry transfer
set forth in the Offer of Premium. Certificates for Debentures, or timely
confirmation of a book-entry transfer of such Debentures into the
Depositary's account at one of the Book-Entry Transfer Facilities, as well as
this Notice of Special Conversion (or a facsimile hereof), properly completed
and duly executed, with any required signature guarantees, and any other
documents required by this Notice of Special Conversion, must be received by
the Conversion Agent at one of its addresses set forth on the front page
hereof prior to the Expiration Date.

THE METHOD OF DELIVERY OF THIS NOTICE OF SPECIAL CONVERSION, THE
DEBENTURES AND ANY OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF
THE HOLDER AND, EXCEPT AS OTHERWISE PROVIDED BELOW, THE DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE CONVERSION AGENT. IT IS<PAGE>
SUGGESTED THAT IF SUCH DELIVERY IS BY MAIL, REGISTERED MAIL WITH RETURN
RECEIPT REQUESTED, PROPERLY INSURED, BE USED.

Holders whose Debentures are not immediately available or who cannot
deliver their Debentures and all other required documents to the Conversion
Agent prior to the Expiration Date or comply with book-entry transfer
procedures on a timely basis may tender their Debentures pursuant to the
guaranteed delivery procedure set forth in the Offer of Premium under "The
Conversion Offer--Procedure for Tender." Pursuant to such procedure: (a)
such tender must be made by or through an Eligible Institution (as defined in
Instruction 1); (b) on or prior to the Expiration Date the Conversion Agent
must have received from such Eligible Institution a letter, telegram or
facsimile transmission setting forth the name and address of the tendering
holder, the names in which such Debentures are registered, and, if possible,
the certificate numbers of the Debentures to be tendered; and (c) all
tendered Debentures as well as this Notice of Special Conversion and all
other documents required by this Notice of Special Conversion, or a
confirmation of any book-entry transfer of such Debentures into the
Conversion Agent's account at one of the Book-Entry Transfer Facilities, must
be received by the Conversion Agent within five New York Stock Exchange
trading days after the date of execution of such letter, telegram or
facsimile transmission, all as provided in the Offer of Premium under the
caption "The Conversion Offer--Procedure for Tender."

No alternative, conditional, irregular or contingent tenders will be
accepted. All tendering holders, by execution of this Notice of Special
Conversion (or facsimile thereof), shall waive any right to receive notice of
the acceptance of the Debentures for conversion.

3. PARTIAL TENDERS; WITHDRAWALS. If less than the entire principal
amount of Debentures evidenced by a submitted certificate are to be tendered,
the tendering holder must fill in the principal amount of Debentures tendered
in the box entitled "Principal Amount Tendered." In such a case, a new
certificate representing the Debentures submitted but not tendered will be
sent to such holder as soon as practicable after the Expiration Date. All
Debentures represented by certificates delivered to the Conversion Agent will
be deemed to have been tendered unless otherwise indicated.

Tenders of Debentures pursuant to the Conversion Offer may be withdrawn
at any time prior to the Expiration Date and, unless accepted for conversion
by the Company, may be withdrawn at any time after 40 business days after the
date of the Offer of Premium. To be effective, a written notice of
withdrawal delivered by hand, mail delivery or facsimile transmission must be
timely received by the Conversion Agent. Any such notice of withdrawal must
specify the person named in the Notice of Special Conversion as having
tendered Debentures to be withdrawn, the certificate numbers of the
Debentures to be withdrawn, the principal amount of Debentures to be
delivered for conversion, a statement that such holder is withdrawing its
election to have such Debentures converted, and the name of the registered
holder of such Debentures, and must be signed by the holder in the same
manner as the original signature on this Notice of Special Conversion
(including any required signature guarantees) or be accompanied by evidence
satisfactory to the Company that the person withdrawing the tender has
succeeded to the beneficial ownership of the Debentures being withdrawn. The
Conversion Agent will return properly withdrawn Debentures promptly following
receipt of notice of withdrawal. All questions as to the validity of notice
of withdrawal, including time of receipt, will be determined by the Company,
and such determination will be final and binding on all parties. Withdrawals
of tenders of Debentures may not be rescinded and any Debentures withdrawn
will thereafter be deemed not validly tendered for purposes of the Conversion
Offer. Properly withdrawn Debentures, however, may be retendered by
following the procedures therefor at any time prior to the Expiration Date.<PAGE>
4. SIGNATURE ON THIS NOTICE OF SPECIAL CONVERSION; WRITTEN INSTRUMENTS
AND ENDORSEMENTS. If this Notice of Special Conversion is signed by the
registered holder(s) of the Debentures tendered hereby, the signature must
correspond with the name(s) as written on the face of the certificates or on
the security position listing of a Book-Entry Transfer Facility without
alteration, enlargement or any change whatsoever.

If any of the Debentures tendered hereby are owned of record by two or
more persons, all such persons must sign this Notice of Special Conversion.

If Debentures tendered hereby are registered in different names on
different certificates, it will be necessary to complete, sign and submit as
many separate copies of this Notice of Special Conversion as there are
different registrations of Debentures.

If this Notice of Special Conversion is signed by the registered holder
or holders of the Debentures tendered hereby, no endorsements of certificates
or separate written instruments of transfer or exchange are required unless
the Conversion Premium or the Common Stock, or Debentures not tendered or not
accepted for conversion, are to be issued or returned to, any person other
than the registered holder. Signatures on any such certificates and written
instruments must be guaranteed by an Eligible Institution.

If this Notice of Special Conversion is signed by a person other than
the registered holder or holders of the Debentures listed, the certificates
representing such Debentures must be endorsed or accompanied by separate
written instruments of transfer or exchange in form satisfactory to the
Company and duly executed by the registered holder, in either case signed
exactly as the name or names of the registered holder or holders appear(s) on
the Debentures. Signature on any such certificate or instruments must be
guaranteed by an Eligible Institution.

If this Notice of Special Conversion, any certificates or separate
written instruments of transfer or exchange are signed by trustees,
executors, administrators, guardians, attorneys-in-fact, officers of
corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority so to act must
be submitted.

5. TRANSFER TAXES. The Company will pay all transfer taxes, if any,
applicable to the conversion of Debentures pursuant to the Conversion Offer.
If, however, the Conversion Premium is to be delivered, or any Common Stock
to be issued pursuant to the Conversion Offer, or Debentures not tendered or
accepted for conversion are to be returned, in the name of, any person other
than the registered holder of the Debentures tendered, or if a transfer tax
is imposed for any reason other than the conversion of Debentures pursuant to
the Conversion Offer, then the amount of any such transfer taxes (whether
imposed on the registered holder or any other persons) will be payable by the
tendering holder. If satisfactory evidence of the payment of such taxes, or
exemption therefrom, is not submitted with this Notice of Special Conversion,
the amount of such transfer taxes will be billed directly to such tendering
holer.

6. EXTENSIONS, AMENDMENTS AND TERMINATION. The Company expressly
reserves the right to extend, amend or modify the terms of the Conversion
Offer in any manner and withdraw or terminate the Conversion Offer at any
time for any reason.

7. MUTILATED, LOST, STOLEN OR DESTROYED NOTES. Any holder whose
Debentures have been mutilated, lost, stolen or destroyed should contact the
Trustee for such Debentures, Harris Trust and Savings Bank of Chicago, 311<PAGE>
West Monroe, 12th Floor, Chicago, Illinois 60606, attention: Ferdinand
Daguinsin, telephone: (312) 461-6133.

8. IRREGULARITIES. All questions as to the validity, form, eligibility
(including time of receipt), and acceptance of Letters of Transmittal or
Debentures will be resolved by the Company, and such determination will be
final and binding on all parties. The Company reserves the absolute right to
reject any or all Letters of Transmittal or tenders that are not in proper
form or the acceptance of which would, in the opinion of the Company's
counsel, be unlawful. The Company also reserves the right to waive any
irregularities or conditions of tender as to the particular Debentures
covered by any Notice of Special Conversion ar tendered pursuant to such
letter. None of the Company, the Conversion Agent or any other person will
be under any duty to give notification of any defects or irregularities in
tenders or incur any liability for failure to give any such notification.
The Company's interpretation of the terms and conditions of the Conversion
Offer shall be final and binding on all parties.

9. SUBSTITUTE FORM W-9. Except as described below under "Important Tax
Information," Federal income tax laws require each tendering holder to
provide the Conversion Agent with a correct taxpayer identification number
("TIN") on the Substitute Form W-9 which is provided above, and to indicate
whether or not the holder is not subject to backup withholding by crossing
out Part 2 on the Substitute Form W-9 if the holder is currently subject to
backup withholding. Failure to provide the information on the Form or to
cross out Part 2 of the Form (if applicable) may subject the tendering holder
to 31% federal income tax withholding on payments made to the holder pursuant
to the Conversion Offer. The box in Part 3 of the Form may be checked if the
tendering holder has not been issued a TIN and has applied for a TIN or
intends to apply for a TIN in the near future. If the box in Part 3 is
checked and the holder is not provided with a TIN within sixty (60) days, the
Company will withhold 31% on all such payments thereafter until a TIN is
provided to the Conversion Agent.

10. WITHHOLDING OF FOREIGN HOLDERS IN CONNECTION WITH THE CONVERSION
OFFER. United States federal income tax generally will be withheld from the
gross proceeds payable to a holder that is a non-United States person (a
"foreign holder") unless such foreign holder provides the Conversion Agent
with a certification, in form and substance satisfactory to the Company, in
which such holder certifies that such holder's conversion of Debentures into
Common Stock and cash (including any cash received in lieu of a fractional
share of Common Stock) qualifies as a sale or exchange, rather than as a
dividend, for federal income tax purposes (see "Certain Federal Income Tax
Considerations" in the Offer of Premium) and such foreign holder agrees that
it will provide additional information to the Company if necessary to
demonstrate such qualification and that it will reimburse the Company if it
is determined that federal withholding tax was due. The withholding rate is
ordinarily 30% unless the foreign holder is eligible for a reduced tax treaty
rate with respect to dividend income, in which case withholding will be made
at the reduced treaty rate, or the foreign holder otherwise establishes to
the satisfaction of the Conversion Agent that such holder is exempt from tax
on such conversion. For this purpose, a non-United States person is any
person who, for United States federal income tax purposes, is neither (i) a
citizen or resident of the United States, (ii) a corporation, partnership or
other entity created or organized in or under the laws of the United States
or of any State or of any of its territories or possessions, or (iii) a
domestic trust or estate. A holder's status as a foreign holder and
eligibility for a reduced rate of withholding will be determined by reference
to the holder's address and to any outstanding certificates (e.g., Form W-8
or substitute) or statements concerning eligibility for a reduced rate of
withholding, unless facts and circumstances indicate that reliance is not
warranted. FOREIGN HOLDERS SHOULD CONSULT THEIR TAX ADVISORS REGARDING THESE<PAGE>
WITHHOLDING RULES AND THE PROCEDURES FOR OBTAINING A REFUND IF THE AMOUNT
WITHHELD EXCEEDS THE HOLDER'S FINAL TAX LIABILITY.

11. SPECIAL PAYMENT INSTRUCTIONS. If the Conversion Premium or Common
Stock to be received in the Conversion Offer, or any Debentures not tendered
or not accepted for conversion are to be returned in the name of someone
other than the tendering holder, the tendering holder must fill in the
information in the box entitled "Special Payment Instructions."

12. DEFINITIONS. Capitalized terms used in this Notice of Special
Conversion and not otherwise defined have the meanings given in the Offer of
Premium.

13. REQUESTS FOR ASSISTANCE OR ADDITIONAL COPIES. Questions relating
to the procedure for tendering, as well as requests for additional copies of
the Offer of Premium and this Notice of Special Conversion, may be directed
to the Information Agent at the address and telephone number set forth below.

THE INFORMATION AGENT FOR THE OFFER IS:

KISSEL-BLAKE INC.
25 Broadway, 6th Floor
New York, New York 10004
Call Toll-Free: (800) 554-7733
Brokers and Banks, please call: (212) 344-6733

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER OF SUBSTITUTION FORM W-9

Guidelines for Determining the Proper Identification Number to Give to the
Depository. Social Security numbers have nine digits separated by two
hyphens: i.e. 000-00-0000. Employer identification numbers have nine digits
separated by only one hyphen: i.e. 00-0000000. The table below will help
determine the number to give the Depositary.

<TABLE>
<CAPTION>
Give the SOCIAL Give the
For this type of SECURITY For this type of EMPLOYER
account number of:- account: IDENTIFICATION
number of:

<S> <C> <C> <C>
1. Individual The individual 7. A valid Legal entity (do
trust, not furnish the
estate, or identification
pension number of the
trust personal
representative
or trustee
unless the legal
entity itself is
not designated
in the account
title.)<F3>

2. Two or more The actual owner of 8. Corporation The corporation
individuals the account or, if
(joint account) combined funds, the
first individual on
the accountF1
<PAGE>

3. Custodian The minor<F2> 9. Association, The organization
account of a club,
minor (Uniform religious,
Gift to Minors charitable,
Act) educational
or other
tax-exempt
organization

4. a The usual The grantor- 10. Partnership The partnership
revocable trustee<F1>
savings trust
(grantor is
also trustee) The actual
owner<F1>
b The so-called
trust account
that is not a
legal or valid
trust under
State law

5. Sole The owner<F4> 11. A broker or The broker or
proprietorship registered nominee
nominee

6. Account in the The ward, minor or 12. Account The public
name of incompetent with the entity
guardian or person<F5> Department
committee for a of
designated Agriculture
ward, minor, or in the name
incompetent of a public
person entity
(such as a
State or
local
government,
school
district,
or prison)
that
receives
agricultural
program
payments

</TABLE>
[FN]
<F1> List first and circle the name of the person whose number you furnish.

<F2> Circle the minor's name and furnish the minor's social security number.

<F3> List first and circle the name of the legal trust, estate or pension
trust.

<F4> Show the name of the owner.

<F5> Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.

Note: If no name is circled when there is more than one name, the number
will be considered to be that of the first name listed.

GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
Page 2

OBTAINING A TIN - A foreign central bank of issue.

If you don't have a taxpayer Payment of dividends and patronage
identification number or you don't dividends not generally subject to
know your number, obtain Form SS-5, backup withholding include the
Application for a Social Security following:
Number Card, or Form SS-4,
Application for Employer - Payments to nonresident aliens
Identification Number, at the local subject to withholding under
office of the Social Security section 1441.
Administration or the Internal - Payments to partnerships not
Revenue Service and apply for a engaged in a trade or business in
number. the United States and which have
at least one nonresident partner.
SHAREHOLDERS EXEMPT FROM BACKUP - Payments of patronage dividends
WITHHOLDING where the amount received is not
paid in money.
Shareholders specifically exempted - Payments made by certain foreign
from backup withholding on ALL organizations.
payments include the following: - Payments made to a nominee.

- A corporation Exempt shareholders described above
- A financial institution. should file Form W-9 or, if ap-
- An organization exempt from tax plicable, Form W-8 (Certificate of
under section 501(a), or an Foreign Status) to avoid possible
individual retirement plan, or a erroneous backup withholding. FILE
custodial account under section THIS FORM WITH THE DEPOSITARY, FUR-
403(b)(7). NISH YOUR TAXPAYER IDENTIFICATION
- The United States or any agency or NUMBER, WRITE "EXEMPT" ON THE FACE
instrumentality thereof. OF THE FORM, SIGN AND DATE THE FORM
- A State, the District of Columbia, AND RETURN IT TO THE DEPOSITARY.
a possession of the United States CONTACT THE INFORMATION AGENT AT
or any subdivision or (800) 566-9058 (TOLL FREE) IF YOU
instrumentality thereof. NEED A COPY OF FORM W-8.
- A foreign government, a political
subdivision of a foreign - Payments that are not subject to
government or any agency or information reporting are also
instrumentality thereof. not subject to backup with-
- An international organization or holding. For details, see the
any agency or instrumentality regulations under sections 6041,
thereof. 6041(A)(a), 6042, 6044, 6045,
- A dealer in securities or 6049, 6050(A) and 6050(N).
commodities registered in the
United States or a possession of PRIVACY ACT NOTICE. - Section 6109
the United States. requires most recipients of
- A real estate investment trust. dividends, interest, or other
- A common trust fund operated by a payments to give taxpayer
bank under Section 584(a). identification numbers to the
- An exempt charitable reminder Depositary who must report the
trust, or a non-exempt trust payments to IRS. The IRS uses the
described in section 4947(a)(1). numbers for identification purposes
- An entity registered at all times and to help verify the accuracy of
under the Investment Company Act your tax return. The Depositary
of 1940. must be given the numbers whether

or not shareholders are required to file
tax returns. The Depositary must
generally withhold 31% of taxable
interest, dividends, and certain
other payments to a shareholder who
does not furnish a taxpayer
identification number to the
Depositary. Certain penalties may
also apply.

PENALTIES

(1) Penalty for Failure to Furnish
Taxpayer Identification Number. If
you fail to furnish your taxpayer
identification number to the
Depositary, you are subject to a
penalty of $50 for each such failure
unless your failure is due to
reasonable cause and not to willful
neglect.

(2) Civil Penalty for False
Information With Respect to
Withholding. If you make a false
statement with no reasonable basis
which results in no imposition of
backup withholding, you are subject
to a penalty of $500.

(3) Criminal Penalty for Falsifying
Information. Falsifying
certifications or affirmations may
subject you to criminal penalties
including fines and/or imprisonment.

FOR ADDITIONAL INFORMATION CONTACT
YOUR TAX CONSULTANT OR THE INTERNAL
REVENUE SERVICE.<PAGE>

Exhibit (a)3

FOR IMMEDIATE RELEASE

PIONEER FINANCIAL SERVICES ANNOUNCES
SPECIAL CONVERSION OFFER
FOR CONVERTIBLE SUBORDINATED DEBENTURES

SCHAUMBURG, IL., July 7, 1995---Pioneer Financial Services, Inc. (NYSE; PFS), a
national health and life insurer, announced today that it is offering to pay a
cash premium of $110 plus accrued interest for each $1,000 in principal amount
of its 8% Convertible Subordinated Debentures due 2000 that is converted into
common stock during the offer period.

The purpose of the offer is to induce the early conversion of the convertible
bonds into PFS common stock. The company believes the effects of the conversion
will include strengthening the company's balance sheet and increasing financial
flexibility.

Debentureholders participating in this conversion offer will receive 85.11
shares of common stock (which is equivalent to the Debentures' original
conversion price of $11.75 per share of common stock) and the conversion premium
of $110 plus accrued interest for each $1,000 in principal amount of Debentures.
PFS will accept for conversion under this offer no more than $54 million in
principal amount of Debentures. The offer and withdrawal rights will remain
open until 5:00 p.m., New York City time, on August 4, 1995, unless extended.

If $54 million of the company's bonds were converted, the company's outstanding
common stock would increase by 78% from approximately 5.9 million to 10.5
million shares. This should provide more liquidity and active trading volume.
These additional shares will not have a dilutive impact on the company's fully
diluted earnings per share, since they have historically been included in the
company's calculation of this item.

"We believe this is a very positive program for PFS and our bondholders," said
Peter W. Nauert, chairman and chief executive officer of PFS. "The increased
financial flexibility for the company should assist us in achieving our stated
overall long-term corporate goals."

This release does not constitute an offer or solicitation to any person in any
jurisdiction in which such offer or solicitation would be unlawful. The
conversion offer is not being made to, and tenders will not be accepted from,
holders or debentures in any jurisdiction in which the conversion offer or the
acceptance thereof would not be in compliance with the laws of such
jurisdiction.

PFS, through the operation of its subsidiaries, provides marketing, insurance
underwriting and medical utilization management services throughout the United
States.<PAGE>

Exhibit (a)4
NOTICE OF PREMIUM UPON CONVERSION

OF UP TO $54 MILLION IN PRINCIPAL AMOUNT OF THE
8% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2000
of
PIONEER FINANCIAL SERVICES, INC.

July 7, 1995

To Our Clients:

Enclosed for your consideration is an Offer of Premium Upon Conversion
("Offer of Premium") dated July 7, 1995 of Pioneer Financial Services, Inc.
(the "Company"), and a related Notice of Special Conversion (which together
constitute the "Conversion Offer") relating to the offer by the Company, upon
the terms and subject to the conditions of the Conversion Offer, to pay a
cash premium equal to $110 plus accrued interest (the "Conversion Premium")
for each $1,000 in principal amount of the Company's 8% Convertible
Subordinated Debentures due 2000 (the "Debentures") which are converted into
common stock, $1.00 par value (the "Common Stock"), of the Company prior to
the Expiration Date (as defined in the Offer of Premium). A Debentureholder
whose Debentures are tendered and accepted for conversion pursuant to the
Conversion Offer will receive 85.11 shares of Common Stock (which is
equivalent to the Debentures' original conversion price of $11.75 per share
of Common Stock) and the Conversion Premium equal to $110 in cash plus
accrued interest for each $1,000 principal amount of Debentures. The Company
will accept for conversion pursuant to the Conversion Offer no more than $54
million in principal amount of Debentures.

Your attention is directed to the following:

1. The Conversion Offer, proration period and withdrawal rights will
expire at 5:00 p.m., New York City time, on Friday, August 4, 1995, unless
extended.

2. The Company expressly reserves the right to (i) extend, amend or
modify the terms of the Conversion Offer in any manner and (ii) withdraw or
terminate the Conversion Offer at any time for any reason. The Conversion
Offer is not conditioned upon any minimum amount of Debentures being
tendered.

3. Any transfer taxes applicable to the conversion of Debentures
pursuant to the Conversion Offer will be paid by the Company, except as
otherwise provided in Instruction 5 of the Notice of Special Conversion.

4. Upon the terms and subject to the conditions of the Conversion
Offer, if no more than $54 million in principal amount of Debentures have
been validly tendered pursuant to the Conversion Offer and not withdrawn
prior to the Expiration Date, the Company will accept for conversion all such
Debentures, and if more than $54 million in principal amount of Debentures
have been validly tendered pursuant to the Conversion Offer and not withdrawn
prior to the Expiration Date, the Company will accept for conversion pursuant
to the Conversion Offer all Debentures validly tendered and not withdrawn
prior to the Expiration Date on a pro rata basis (with adjustments to avoid
conversions of Debentures not in $1,000 increments). Fractional shares of
Common Stock will not be issued in the Conversion Offer. A person otherwise
entitled to a fractional share of Common Stock pursuant to the terms of the
Conversion Offer shall receive cash equal to the closing sale price of such
fractional share on the New York Stock Exchange on the Expiration Date. Any
Debentures which are tendered but not accepted for conversion pursuant to the
Conversion Offer will be returned to the tendering Debentureholder. Holders
of Debentures which are not converted into Common Stock pursuant to the

Conversion Offer will not be entitled to receive the Conversion Premium upon
conversion of such Debentures.

The Conversion Offer is not being made to (nor will tenders be accepted
from or on behalf of) holders of Debentures residing in any jurisdiction in
which the making of the Conversion Offer or the acceptance thereof would not
be in compliance with the laws of such jurisdiction.

We are the holder of record of Debentures held for your account. A
tender of such Debentures can be made only by us as the record holder and
pursuant to your instructions. THE ENCLOSED NOTICE OF SPECIAL CONVERSION IS
FURNISHED TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO
TENDER DEBENTURES HELD BY US FOR YOUR ACCOUNT.

WE REQUEST YOUR INSTRUCTIONS ON THE INSTRUCTION FORM ON THE REVERSE SIDE
OF THIS LETTER AS TO WHETHER YOU WISH TO TENDER ANY OR ALL OF THE DEBENTURES
HELD BY US FOR YOUR ACCOUNT, PURSUANT TO THE TERMS AND CONDITIONS OF THE
CONVERSION OFFER. IF YOU WISH US TO CONVERT ANY OR ALL OF YOUR DEBENTURES,
PLEASE SO INSTRUCT US BY COMPLETING, EXECUTING AND RETURNING THE ATTACHED
INSTRUCTION FORM.

INSTRUCTIONS WITH RESPECT TO
CONVERSION OFFER BY
PIONEER FINANCIAL SERVICES, INC.

FOR UP TO $54 MILLION IN PRINCIPAL AMOUNT OF ITS
8% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2000

The undersigned acknowledges receipt of your letter enclosing the Offer
of Premium Upon Conversion ("Offer of Premium"), dated July 7, 1995, and the
related Notice of Special Conversion relating to the offer by Pioneer
Financial Services, Inc. (the "Company") to pay a cash premium equal to $110
plus accrued interest (the "Conversion Premium") for each $1,000 in principal
amount of the Company's 8% Convertible Subordinated Debentures due 2000 (the
"Debentures") which are converted into common stock, $1.00 par value (the
"Common Stock") of the Company prior to the Expiration Date (as defined in
the Offer of Premium). The undersigned understands that the Company will
accept for conversion pursuant to the Conversion Offer no more than $54
million in principal amount of Debentures.

This will instruct you to tender the principal amount of Debentures
indicated below which are held by you for the account of the undersigned,
pursuant to the terms and subject to the conditions of the Conversion Offer,
and confirm that you may make the representations contained in the Notice of
Special Conversion on behalf of the undersigned.

PRINCIPAL AMOUNT OF 8% $_____________________
CONVERTIBLE SUBORDINATED
DEBENTURES DUE 2000 TO BE
CONVERTED PURSUANT TO
CONVERSION OFFER<F1>

-----------------------------------------------------------------
Signature(s)

-----------------------------------------------------------------
Please print name(s)

-----------------------------------------------------------------
Date

-----------------------------------------------------------------
Address(es)

---------------------------------------------------
Telephone Number

---------------------------------------------------
Taxpayer Identification or Social Security Number(s)

--------------------------
[FN]
<F1>
Unless otherwise indicated, it will be assumed that all the undersigned's 8%
Convertible Subordinated Debentures due 2000 are to be tendered for
conversion pursuant to the Conversion Offer.

Exhibit (a)5
NOTICE OF PREMIUM UPON CONVERSION

OF UP TO $54 MILLION IN PRINCIPAL AMOUNT OF THE
8% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2000
OF
PIONEER FINANCIAL SERVICES, INC.

THE CONVERSION OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS
WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON FRIDAY,
AUGUST 4, 1995, UNLESS EXTENDED.

To Brokers, Dealers, Commercial Banks, July 7, 1995
Trust Companies and Other Nominees:

Pioneer Financial Services, Inc., a corporation organized under the laws
of the State of Delaware (the "Company"), is offering, upon the terms and
conditions set forth in the Offer of Premium Upon Conversion dated July 7,
1995 (the "Offer of Premium"), and in the related Notice of Special
Conversion enclosed herewith (which together constitute the "Conversion
Offer"), to pay a cash premium equal to $110 plus accrued interest (the
"Conversion Premium") for each $1,000 principal amount of the Company's 8%
Convertible Subordinated Debentures due 2000 (the "Debentures") which are
converted into common stock, $1.00 par value (the "Common Stock") of the
Company prior to the Expiration Date (as defined in the Offer of Premium). A
Debentureholder whose Debentures are tendered and accepted for conversion
pursuant to the Conversion Offer will receive 85.11 shares of Common Stock
(which is equivalent to the Debentures' original conversion price of $11.75
per share of Common Stock) and the Conversion Premium equal to $110 in cash
plus accrued interest for each $1,000 principal amount of Debentures. The
Company will accept for conversion pursuant to the Conversion Offer no more
than $54 million in principal amount of Debentures.

Upon the terms and subject to the conditions of the Conversion Offer, if
no more than $54 million in principal amount of Debentures have been validly
tendered pursuant to the Conversion Offer and not withdrawn prior to the
Expiration Date, the Company will accept for conversion pursuant to the
Conversion Offer all such Debentures, and if more than $54 million in
principal amount of Debentures have been validly tendered pursuant to the
Conversion Offer and not withdrawn prior to the Expiration Date, the Company
will accept for conversion pursuant to the Conversion Offer all Debentures
validly tendered and not withdrawn prior to the Expiration Date on a pro rata
basis (with adjustments to avoid conversions of Debentures not in $1,000
increments). Fractional shares of Common Stock will not be issued in the
Conversion Offer. A person otherwise entitled to a fractional share of
Common Stock pursuant to the terms of the Conversion Offer shall receive cash
equal to the closing price of such fractional share on the New York Stock
Exchange on the Expiration Date. Any Debentures which are tendered but not
accepted for conversion pursuant to the Conversion Offer will be returned to
the tendering Debentureholder. Holders of Debentures which are not converted
into Common Stock pursuant to the Conversion Offer will not receive the
Conversion Premium upon conversion of such Debentures.

For your information and for forwarding to your clients for whom you
hold Debentures registered in your name or in the name of your nominee, we
enclose the following documents:

1. The Offer of Premium dated July 7, 1995;

2. The Notice of Special Conversion for your use and for the
information of your clients. Facsimile copies of the Notice of Special

Conversion may be used to convert Debentures pursuant to the Conversion
Offer;

3. A form of letter which may be sent to your clients for whose
accounts you hold Debentures registered in your name or in the name of
your nominee, with space provided for obtaining such client's
instructions with regard to the Conversion Offer;

4. Notice of Guaranteed Delivery to be used to accept the
Conversion Offer if the Debentures cannot be delivered to the Conversion
Agent by the Expiration Date, or the book-entry transfer of the
Debentures cannot be completed by the Expiration Date, or all required
documents cannot be delivered to the Conversion Agent by the Expiration
Date;

5. Guidelines of the Internal Revenue Service for Certification
of Taxpayer Identification Number on Substitute Form W-9;

6. A return envelope addressed to First Chicago Trust Company of
New York, the Conversion Agent;

7. The Company's Annual Report on Form 10-K for the Fiscal Year
Ended December 31, 1994; and

8. The Company's Quarterly Report on Form 10-Q for the Quarterly
Period Ended March 31, 1995.

YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS AS
PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE CONVERSION OFFER, PRORATION
PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
FRIDAY, AUGUST 4, 1995, UNLESS EXTENDED.

In all cases, conversion of Debentures accepted for conversion pursuant
to the Conversion Offer will be made only after timely receipt by the
Conversion Agent of (a) certificates representing such Debentures, (b) the
Notice of Special Conversion (or facsimile thereof) properly completed and
duly executed with any required signature guarantees, and (c) any other
documents required by the Notice of Special Conversion.

The Company will not pay any fees or commissions to brokers, dealers or
other persons for soliciting tenders of Debentures pursuant to the Conversion
Offer. The Company will, however, upon request, reimburse brokers, dealers,
commercial banks and trust companies for reasonable costs and expenses
incurred by them in forwarding materials to their clients. The Company will
pay all transfer taxes applicable to the conversion of Debentures pursuant to
the Conversion Offer, except as otherwise provided in Instruction 5 of the
Notice of Special Conversion.

Questions and requests for assistance with respect to the Conversion
Offer should be directed to, and additional copies of the enclosed materials
may be obtained from, Kissel-Blake Inc. at its address and telephone numbers
set forth on the back cover of the Offer of Premium.

Very truly yours,

PIONEER FINANCIAL SERVICES, INC.

NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
YOU OR ANY OTHER PERSON THE AGENT OF THE COMPANY, OR ANY AFFILIATE THEREOF,
OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS OR USE ANY
DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE CONVERSION OFFER
OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS CONTAINED THEREIN.

Exhibit (a)6
NOTICE OF GUARANTEED DELIVERY

(NOT TO BE USED FOR SIGNATURE GUARANTEE)

TO CONVERT
8% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2000
OF
PIONEER FINANCIAL SERVICES, INC.
PURSUANT TO THE OFFER OF PREMIUM
DATED JULY 7, 1995
AND THE RELATED NOTICE OF SPECIAL CONVERSION

This form, or a form substantially equivalent to this form, must be used
to accept the Conversion Offer (as defined below) if (a) certificates for the
8% Convertible Subordinated Debentures due 2000 (the "Debentures") of Pioneer
Financial Services, Inc. (the "Company") cannot be delivered to First Chicago
Trust Company of New York, as Conversion Agent, by the Expiration Date (as
defined in the Company's Offer of Premium Upon Conversion dated July 7, 1995
(the "Offer of Premium")), (b) the procedure for book-entry transfer of
Debentures (as described in the Offer of Premium) cannot be completed by the
Expiration Date, or (c) the Notice of Special Conversion (or a facsimile
thereof) and all other required documents cannot be delivered to the
Conversion Agent prior to the Expiration Date. This Notice of Guaranteed
Delivery, properly completed and duly executed, may be delivered by hand or
sent by facsimile transmission (receipt confirmed by telephone and an
original delivered by guaranteed overnight delivery) or mailed to the
Conversion Agent. See "The Conversion Offer--Procedure for Tender" in the
Offer of Premium.

THE CONVERSION AGENT FOR THE CONVERSION OFFER IS:

FIRST CHICAGO TRUST COMPANY OF NEW YORK

BY MAIL: BY HAND OR OVERNIGHT COURIER:
(registered or certified mail
recommended) Tenders & Exchanges
Suite 4680 - PFS
Tenders & Exchanges 14 Wall Street
Suite 4660 - PFS 8th Floor
P.O. Box 2559 - PFS New York, New York 10005
Jersey City, New Jersey
07303-2559

BY FACSIMILE:
(for Eligible Institutions only)

(201) 222-4720
or
(201) 222-4721

CONFIRM RECEIPT OF NOTICE OF
GUARANTEED DELIVERY BY TELEPHONE:

(201) 222-4707

DELIVERY OF THIS NOTICE OF GUARANTEED DELIVERY TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE OR TRANSMISSION HEREOF VIA FACSIMILE TRANSMISSION TO A
NUMBER OTHER THAN AS SET FORTH ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.

THIS NOTICE OF GUARANTEED DELIVERY IS NOT TO BE USED TO
GUARANTEE SIGNATURES. IF A SIGNATURE ON A NOTICE OF SPECIAL

CONVERSION IS REQUIRED TO BE GUARANTEED BY AN ELIGIBLE INSTITUTION,
SUCH SIGNATURE GUARANTEE MUST APPEAR IN THE APPLICABLE SPACE
PROVIDED ON THE NOTICE OF SPECIAL CONVERSION FOR GUARANTEE OF
SIGNATURES.

LADIES AND GENTLEMEN:

The undersigned hereby tenders the principal amount of Debentures
indicated below, upon the terms and subject to the conditions contained in
the Offer of Premium Upon Conversion dated July 7, 1995, of Pioneer Financial
Services, Inc. (the "Offer of Premium") and the related Notice of Special
Conversion, receipt of which are hereby acknowledged.

Principal Amount of Debentures tendered for conversion pursuant to Conversion
Offer: $
---------------------------------------------------------------------

Certificate Number(s) of Debentures tendered (if available):
------------

If Debentures will be tendered pursuant to Conversion Offer by book entry
transfer:

Name of Tendering Institution:
-----------------------------------------------

Account No. at:
------------------------------------------------------------

/ / The Depository / / Midwest Securities / / Philadelphia Depository
Trust Company Trust Company Trust Company

------------------------------ ------------------------------------------
(Signature(s))
------------------------------------------
(Name(s)) (please print)

------------------------------ ------------------------------------------
(Address and Zip Code) (Area Code and Telephone Number)

THE FOLLOWING GUARANTEE MUST BE COMPLETED
GUARANTEE OF DELIVERY
(Not to be used for signature guarantee)

The undersigned, a firm that is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc.,
or a commercial bank or trust company having an office, branch or agency in
the United States, guarantees (a) that the above named person(s) "own(s)" the
Debentures tendered hereby within the meaning of Rule 14e-4 under the
Securities Exchange Act of 1934, as amended, (b) that such tender of

Debentures complies with Rule 14e-4 and (c) to deliver to the Conversion
Agent either the Debentures tendered hereby pursuant to the Conversion Offer,
in proper form for transfer, or confirmation of the book-entry transfer of
the Debentures tendered hereby into the account of the Conversion Agent at
The Depository Trust Company, the Midwest Securities Trust Company or the
Philadelphia Depositary Trust Company, in each case together with the
properly completed and duly executed Notice of Special Conversion (or
facsimile thereof), with any required signature guarantee and any other
required documents within five New York Stock Exchange trading days after the
date of execution of this Notice.

------------------------------ ------------------------------------------
(Name of Firm) (Authorized Signature)

------------------------------ ------------------------------------------
(Title) (Name) (Please Type or Print)

------------------------------ ------------------------------------------
(Address and Zip Code) (Area Code and Telephone Number)

------------------------------
(Date)

NOTE: DO NOT SEND CERTIFICATES FOR DEBENTURES WITH THIS NOTICE OF
GUARANTEED DELIVERY. CERTIFICATES FOR DEBENTURES SHOULD BE SENT
WITH YOUR NOTICE OF SPECIAL CONVERSION.

Exhibit (a)9

July 7, 1995

Re: PFS Bond Conversion Offer

Dear Bondholder:

Pioneer Financial Services (PFS) continues to make good financial progress,
improving our revenues and earnings, strengthening our position in attractive
specialty insurance markets and enhancing our capital base. We have clearly
established the foundation from which to pursue our growth plans to build
value for our shareholders.

We have devised a plan to improve our capital structure by offering a premium
to our bondholders for early conversion of our convertible bonds for PFS
common stock and a cash premium payment.

This program will improve our balance sheet by lowering our debt-to-equity
ratio. This, in turn, provides additional opportunities for PFS to achieve
more quickly and efficiently our profit and growth objectives:

* INCREASED FINANCIAL FLEXIBILITY. Reducing PFS' financial leverage
will enhance our ability to respond quickly to emerging growth opportunities.

* AGENCY RATINGS. A strong balance sheet and equity base are
important to achieving and maintaining high ratings by agencies such as A.M.
Best and Duff & Phelps. Attractive financial ratings can increase the sales
and revenues of our insurance subsidiaries, generating more growth for PFS.

In order to assure the success of this conversion offer, the PFS Board of
Directors has approved an inducement package which includes:

* CASH PREMIUM. You will receive $110 in cash per $1,000 bond.

* ATTRACTIVE EXCHANGE RATIO. This offering allows you to convert
your bonds for 85.11 shares of PFS common stock. This results in an
effective conversion price of $11.75, the current conversion price on the
bonds and a price well below current market value ($15 as of July 5, 1995).

* ACCRUED INTEREST. You will also receive accrued interest through
the conversion date, which is expected to be August 4, 1995.

* INCREASED LIQUIDITY. If $54 million of bonds were converted, our
outstanding common stock would increase by 78% from approximately 5.9 million
to 10.5 million shares. This would potentially provide more liquidity and
active trading volume.

The enclosed Offer of Premium Upon Conversion describes the offer to convert
up to $54 million in principal amount of PFS 8% Convertible Subordinated
Debentures due in the year 2000. All holders of the Debentures are eligible
to tender the Debentures. Debentureholders whose Debentures are converted
pursuant to the Offer will receive $110 in cash, plus accrued interest, and
85.11 shares of PFS common stock for each $1,000 in principal amount of
Debentures, subject to the terms and conditions in the enclosed Offer Of<PAGE>
Premium Upon Conversion. This offer will remain open until the close of
business on August 4, 1995, unless extended.

PFS senior management will be making presentations to bondholders and other
investors on July 25, 26 and 27 in New York, Boston and San Francisco,
respectively. These presentations will describe the conversion transaction
and provide an update on PFS' recent performance and longer-term strategy and
outlook. Enclosed with this letter is a listing of these meeting times and
locations. If you would like to attend one of these meetings, please call
the phone number at the bottom of the listing.

We are excited about the prospectus for PFS' continued growth and enhanced
profitability. If you have any questions regarding the conversion offer,
please contact Phillip Fiskow, PFS Chief Investment Officer; David Vickers,
PFS Chief Financial Officer, or me through a toll-free number we have
established for this purpose: (800) 366-1696. The information agent for the
offer, Kissel-Blake Inc., is available at 800-554-7733 to assist you in
accepting the Conversion Offer.

Cordially,

/s/ Peter W. Nauert
Peter W. Nauert
Chairman and CEO

Exhibit c(1)

Information Agent Agreement
(the "Agreement")

To: Kissel-Blake Inc.
25 Broadway, 6th Floor CONFIDENTIAL
New York, NY 10004

From: Pioneer Financial Services, Inc.

Date: June 22, 1995

Gentlemen:

Pioneer Financial Services, Inc., a Delaware Corporation, proposes to
purchase for cash and stock up to 95% of the outstanding 8% Convertible
Subordinated Debentures due 2000 on the terms and subject to the conditions
set forth in the Offering Circular and related Letter of Transmittal (which
together constitute the "Offer") substantially in the form of the documents
attached hereto as Exhibits A and B, respectively.

We hereby confirm your appointment as our Information Agent in
connection with the Offer, and by your signature below you hereby confirm
your acceptance of such appointment. You hereby further agree that your
authority and action as Information Agent shall be governed by the terms of
this Agreement, as follows.

1. Duties of Information Agent: It is understood and agreed that your
primary duties as our Information Agent will include (i) advice to and
confidential consultation with us and our authorized representative in
connection with the Offer and our related communications; (ii) disseminating
printed materials relating to the Offer (including all amendments and
supplements thereto) to brokers, securities dealers, banks, trust companies,
nominees and any securityholder of the Company who may request the same;
(iii) responding promptly and accurately to every party who contacts you as
our Information Agent requesting information pertaining to the Offer; (iv)
initiating calls to Pioneer Financial Services, Inc. securityholders
concerning the Offer (should we so elect); and (v) on our behalf you will
check, itemize and pay, on our behalf, the charges of brokers and banks for
forwarding the Offer material to beneficial owners. All such communications
with holders of Debentures shall be limited to the information contained in
the Offer materials provided to you by us. In no event will you make any
premature disclosure concerning the offer or any recommendation, either
directly or indirectly, regarding the advisability of tendering Debentures
pursuant to the Offer. If any such advice is requested of you, you shall
respond that you are not authorized to give such advice and shall recommend
that the person requesting such advice consult his or her own investment
advisor or broker.

2. Compensation: In consideration of the services to be performed by
you in connection with the Offer, we hereby agree to pay to you a fee of U.S.
$6,500 plus your ordinary and customary charges for reasonable disbursements
and expenses incurred by you in connection with the Offer. It is further
understood and agreed that one half of your fee is payable herewith and the
balance of your fee plus your compensation for disbursements and expenses
incurred by you on our behalf will be paid upon receipt by us of your final
statement, after completion, expiration or termination of the Offer, provided
however that should the Offer be extended for more than forty-five (45) days,
you reserve the right to charge an additional fee of not in excess of $3,500.
We understand that disbursements and expenses include, without limitation (i)<PAGE>
all postage, airfreight, trucking and other delivery costs relating to the
forwarding of our printed materials to brokerage firms, banks and any
securityholder of the Company who may request them; and (ii) $3.00 per
collect or toll free telephone call accepted (plus telephone line charges)
from securityholders seeking assistance or information. In the event we opt
to have you do so, we understand that the cost of initiating calls to
securityholders of record at their homes or places of business will be at the
rate of $4.50 per call inclusive of telephone look up and line charges.

We acknowledge that our obligations under this Section 2 are not
conditioned upon the successful consummation of the Offer or any amount of
Debentures being acquired pursuant to the Offer and that in the event of our
failure to make prompt payment of your invoices for any amounts which may
become due to you under this Agreement, you shall be entitled to recover
interest compounded at 1 1/2 percent per month and reasonable costs and
expenses of collection (including reasonable fees and expenses of counsel) on
any overdue amounts from ourselves or any affiliate which may guarantee our
payment and performance at your further request.

3. Indemnity and Failure: (a) We hereby covenant and agree to hold you
harmless and to indemnify you against any loss, claim, damage, liability or
expense (including reasonable fees and expenses of your legal counsel)
arising out of or resulting from the performance of your duties under this
Agreement, except any such loss, claim, damage, liability or expense arising
out of or resulting from your gross negligence or material breach of this
Agreement.

(b) It is stipulated and agreed that the foregoing indemnification is
subject to the further condition that in no case shall we be liable with
respect to any claim against you unless we shall be notified by registered or
certified letter or by cable, telex, or telecopier message confirmed by
letter, of the written assertion of a claim against you or of your
involvement in any action or proceeding, promptly after you shall have been
served with a written notice of claim, summons or other first legal process
giving information as to the nature and basis of the claim. It is further
understood and agreed that upon receipt of such notice, we shall be entitled
to participate at our own expense in the defense of any suit brought to
enforce any such claim, and, if we so elect, we shall assume your defense of
any such suit. In the event that we assume the defense of any such suit, we
shall not be liable for the fees and expenses of any additional counsel
thereafter retained by you, so long as we shall retain counsel reasonably
satisfactory to you to defend such suit. In addition, you agree not to
settle any litigation in connection with any claim of liability with respect
to which you may seek indemnification from us without our prior written
consent.

4. Assignment: This Agreement and the appointment as Information Agent
hereunder shall inure to the benefit of, and the obligations created thereby
shall be binding upon the successors and assigns of the parties hereto,
except that if we assign this Agreement, we shall remain liable to you for
the prompt and full payment of your fees and expenses, and you may neither
assign your rights nor delegate your duties hereunder without our prior
written consent.

5. Interpretation:

(a) This Agreement shall be construed and enforced in accordance with
the laws of the State of New York.

(b) If any provision of this Agreement shall be held illegal, invalid
or unenforceable by any court, this Agreement shall be construed and enforced
as if such provision had not been contained herein and shall be deemed an
agreement between us to the full extent permitted by applicable law.<PAGE>
(c) Section headings have been inserted for convenience of reference
only, are not part of this Agreement and shall not be used in any way in the
interpretation of any of the provisions hereof.

Please acknowledge receipt of this Agreement and Exhibits hereto and
confirm the arrangements herein provided by signing and returning the
enclosed copy of the undersigned, whereupon this Agreement and the terms and
conditions herein provided shall constitute a binding agreement between us.

Sincerely,

________________________ _____________________________
(Witness) (Authorized Representative)

________________________ /s/ Val Rajic
(Name of Witness) Val Rajic - Vice President

Accepted as of this __________ day
of _________, 19______.

KISSEL-BLAKE INC.
By

__________________________ /s/ Joseph F. Spedale
(Witness) Joseph F. Spedale
Executive Vice President

__________________________
(Name of Witness)<PAGE>

Exhibit (c)2
FORM OF DEPOSITARY AGREEMENT

PURCHASE/CONVERSION OFFER

If by mail:

First Chicago Trust Company of New York
Tenders & Exchanges
P.O. Box 2507 - Suite 4660
Jersey City, NJ 07303-2507
Attn:

If by hand or overnight delivery:

First Chicago Trust Company of New York
Tenders & Exchanges
14 Wall Street - Suite 4680 - 8th Floor
New York, NY 10005
Attn:

Dear Sirs:

Pioneer Financial Services, Inc. (the "Offeror"), is offering to convert up to
$54 million of its 8% Convertible Subordinated Debentures (the "Debentures")
substantially as they may be amended from time to time upon the terms and
conditions set forth in the Offer of Premium and the Notice of Special
Conversion annexed as Exhibits A and B, respectively (collectively the "Offer").

The Offer hereby appoints you to act as Depositary in connection with the
captioned Offer.

The Offer is being made by the Offeror to all holders on or about July 3, 1995.
A copy of the Offer of Premium is attached herewith. The Notice of Special
Conversion that will accompany the Offer which is addressed to you, is to be
used by the debtholders of the Offeror to accept the Offer, and contains
instructions with respect to the delivery of certificates for Debentures
tendered.

In carrying out your duties as Depositary, you are to act in accordance with the
following:

1. The Offer shall expire at 5:00 p.m., New York Time on July 31, 1995 ("The
Initial Expiration Date"), or at any subsequent time to which the Offeror
may extend the Offer. The Offeror expressly reserves the right to extend
the Offer from time-to-time and may be extended by the Offeror giving
written notice to your before 5:00 p.m., on the business day following the
scheduled expiration date. The later of the Initial Expiration Date or the
latest time and date to which the Offer may be so extended is herein
referred to as the "Expiration Date".

2. You will establish a Book Entry Account with the various Depositories for
purposes of the Offer and any financial institution that is a participant
in any of the Depositories may make book entry delivery of the Debentures
by causing the Depository to transfer such Debentures into the account
maintained by you pursuant to this Paragraph in accordance with procedures
for such transfer. However, although delivery of Debentures may be
effected through book entry transfer, the Notice of Special Conversion (or
facsimile thereof) with any required signature guarantees and any other
documents must, in any case, be received by you in order for Debentures to
be properly tendered.

3. You are to examine the Letters of Transmittal, Certificates for Debentures,
and any other documents delivered or mailed to you to ascertain whether (i)
the Letters of Transmittal are filled out ad executed in accordance with
instructions set forth therein, (ii) the other documents required by the
Exchange Offer have been received and are duly executed and properly
completed, and (iii) the Debentures otherwise have been properly tendered.
In each case where the Notice of Special Conversion or any other document
has been improperly filled out or executed or, for any other reason, is not
in proper form, or some other irregularity in connection with the
acceptance of the Offer exists, you will endeavor to take such action as
may be necessary to cause such irregularity to be corrected.

All questions as to the validity, form, eligibility (including time or
receipt) and acceptance of any tender of Debentures will be determined by
the Company in its sole discretion, whose determination shall be final and
binding. With the written approval of an Officer of the Offeror, or any
party designated by the Offeror, you are authorized to waive irregularities
in connection with the acceptance of the Offer.

4. Tenders of Debentures may be made only as set forth in the Offer of
Premium. If a debtholder desires to tender Debentures pursuant to the
Offer and such debtholder's certificates for Debentures are not immediately
available or time will not permit all required documents to reach you on or
prior to the Expiration date or the procedure for book entry tender cannot
be completed on a timely basis, such Debentures may nevertheless be
tendered if all the following conditions are satisfied:

(i) the tender is made by or through an eligible institution (as defined
in the Offer);

(ii) a properly completed and duly executed Notice of Guaranteed Delivery
is received by you as provided below on or prior to the Expiration
Date; and

(iii) The certificates for all tendered Debentures, in proper form for
transfer (or a Book Entry Confirmation), together with a properly
completed and duly executed Notice of Special Conversion or facsimile
thereof and any other documents required by the Notice of Special
Conversion are received by you within five New York Stock Exchange
("NYSE") trading days after the date of execution of the Notice of
Guaranteed Delivery.

The Notice of Guaranteed Delivery may be delivered by hand or transmitted
by telegram, telex, facsimile transmission or mail to you and must include
a guarantee by an Eligible Institution in the form set forth in such Notice
or Guaranteed Delivery.

Notwithstanding any other provisions hereof, convert for Debentures
pursuant to the Offer will, in all cases, be made only after timely receipt
by you of certificates for such Debentures (or a Book Entry Confirmation),
a properly completed and duly executed Notice of Special Conversion or a
facsimile thereof and any other documents required by the Notice of Special
Conversion.

5. The Offeror will Exchange Debentures duly tendered on the terms and subject
to the conditions set forth in the Offer and the Notice of Special
Conversion.

Payment of the cash payment for Debentures duly tendered and accepted
pursuant to the Offer will be made by check on behalf of the Offeror by you
as soon as practicable after notice of acceptance of said Debentures by the
Offerer is received by you. Federal Funds will be deposited with you on
the day checks are mailed or delivered by you. We will wire funds to:
First National Bank of Chicago ABA #0710-0001-3 for the account of First
Chicago Trust Company of New York Cash Funding Account #93-00007. Upon
acceptance by the Company of Debentures, you shall determine the
appropriate proration factor, if any, and shall promptly notify the Company
of the number of certificates for Common Stock to be issued, and the names
in which those certificates are to be issued. Upon receipt of written
authority from the Company to issue such certificates you shall forward
certificates for Common Stock and you shall issue checks for the Cash
Payment on behalf of the Company as soon as practicable.

6. Debentures tendered pursuant to the Offer are irrevocable, except the
Debentures tendered pursuant to the Offer may be withdrawn at any time
prior to the Expiration Date, and unless theretofore purchased/converted by
the Offeror, may also be withdrawn at any time after forty business days
after the date of the Offer of Premium if not accepted for conversion, see
Offer of Premium for further details.

7. The Offeror shall not be required to purchase/convert any Debentures
tendered if there shall occur any of the events set forth in the Offer or
if any of the other conditions set forth in the Offer, are not met. Notice
of any decision by the Offeror not to purchase or pay for any Debentures
tendered shall be given in writing by the Offeror to you.

8. If a greater amount of Debentures are properly tendered pursuant to the
Offer than the Company is willing to convert, the Debentures shall be
accepted for conversion pro rata basis based on the amount of Debentures
tendered (with adjustments to avoid the conversion of Debentures in
principal amounts of less than $1,000). If, pursuant to the Offer, the
Offeror does not accept for purchase/convert all or part of the Debentures
tendered, you shall promptly return the deposited certificates for shares,
with any related required documents and the Notice of Special Conversion
relating thereto that are in your possession, to the persons who deposited
same, together with a notice explaining the reasons for their return.

9. Certificates for unconverted Debentures and Common Stock certificates and
checks issued in conversion for the Debentures shall be forwarded by (a)
first class mail under a blanket surety bond protecting you and the Offeror
from loss or liability arising out of the non-receipt or non-delivery of
such certificates for Debentures, or (b) by registered mail insured
separately for the replacement value of such certificates for Debentures.

10. As Depository hereunder, you:

(a) shall have no duties or obligations other than those specifically set
forth herein;

(b) will be regarded as making no representations and having no
responsibilities as to the validity, sufficiency, value or genuineness
of any stock certificates or the Debentures represented thereby
deposited with you hereunder, and will not be required to and will
make no representation as to the validity, value or genuineness of the
Offer;

(c) shall not be obligated to take any legal action hereunder which might,
in your judgment, involve any expense or liability, unless you shall
have been furnished with such indemnity as shall be reasonably
satisfactory to you;

(d) may reasonably rely on and shall be protected in acting in reliance
upon any certificate, instrument, opinion, notice, letter, telegram or
other document or security delivered to you and reasonably believed by
you to be genuine and to have been signed by the proper party or
parties;

(e) may rely on and shall be protected in acting upon written instructions
from Philip Fiskow, David Vickers or Val Rajic each of whom is an
Officer of the Offeror;

(f) my consult counsel satisfactory to you (including counsel for the
Offeror) and the opinion of each counsel shall be full and complete
authorization and protection in respect to any action taken, suffered
or omitted by you hereunder in good faith and in accordance with the
opinion of such counsel;

(g) shall not be called upon at any time to advise any person tendering
hereunder as to the wisdom of making such tender or as to the market
value or decline or appreciation in market value of any share; and

(h) shall not advise any person as to the wisdom of making a tender of
Debentures.

11. You will deliver for transfer the Debentures converted at the appropriate
time as follows:

Harris Bank & Trust Company
111 West Monroe Street, 4 East
Chicago, IL 60690
Mary Walters or Donna Malloy - (312) 461-2121

12. The Offeror covenants and agrees to indemnify and hold you harmless against
any loss, liability or expense incurred without negligence or bad faith on
your part arising out of or in connection with the administration of your
duties hereunder, including the cost and expenses of defending yourself
against any claim or liability in the premises.

In no case shall the Offeror be liable under this indemnity with respect to
any claim against you unless the Offeror shall be notified by you, by
letter or cable or by telex confirmed by letter, or the written assertion
of a claim against you or of any other action commenced against you,
promptly after you shall have received any such written assertion of a
claim or shall have been served with the summons or other first legal
process giving information as to the nature and basis of the claim. The
Offeror shall be entitled to participate at its own expense in the defense
of any such claim or other action and, if the Offeror so elects at any time
after receipt of such a notice, the Offeror shall assume the defense of any
suit brought to enforce any such claim. In the event that the Offeror
shall assume the defense of any such suit, the Offeror shall not be liable
for the fees and expenses of any additional counsel thereafter retained by
you.

You shall not enter into a settlement or other compromise with respect to
any indemnified loss, liability or expense without the prior written
consent of the Offeror. If you shall obtain a repayment of any loss,
liability or expense paid by the Offeror pursuant thereto, you shall
promptly pay to the Offeror the amount of such repayment, together with the
amount of any interest received by you on account of such repayment.

13. For services rendered as Exchange Agent hereunder you shall be entitled to
compensation of $4,500.00 plus reasonable expenses which shall be paid at
the same time funds are first made available to you pursuant to Section 5.

14. You shall advise by telecopier or telephone, and promptly thereafter
confirm in writing, to the persons listed on Schedule A attached hereto and
such other persons as they may request, daily (or more frequently if
requested) up to and including the Expiration Date, as to the amount of
Debentures which have been tendered pursuant to the Offer and the items
received by you pursuant to this Agreement, separately reporting and giving
cumulative totals as to items properly received, items improperly received
and items covered by Notices of Guaranteed Delivery.

In addition, you will also inform, and cooperate in making available to,
the aforementioned persons upon oral request made from time to time prior
to the Expiration Date of such other information as they may reasonably
request. Such cooperation shall include, without limitation, the granting
by you to the Offeror, the persons listed in the preceding sentence and
such other persons as they may request. Such cooperation shall include,
without limitation, the granting by you to the Offeror, the persons listed
in the preceding sentence and such other persons as they may request, of
access to those persons on your staff who are responsible for receiving
tenders, in order to ensure that immediately prior to the Initial
Expiration date and each other Expiration Date, if any, the Offeror shall
have received information in sufficient detail to enable it to decide
whether to extend the Offer. You shall prepare a final list of all persons
whose tenders were accepted, the principal amount of Debentures tendered
and the amount accepted and deliver said list to those persons listed on
Schedule A.

15. This agreement and appointment as Depositary shall be construed and
enforced in accordance with the laws of the State of New York applicable to
agreements made and to be performed entirely within such state, and shall
inure to the benefit of, and the obligations created hereby shall be
binding upon, the successors and assigns of the parties hereto. THIS
AGREEMENT MAY NOT BE MODIFIED ORALLY.

16. You will arrange to comply with IRS regulations with regard to due
diligence in obtaining a certified Tax Identification Number (TIN). We
understand that you are required to deduct 31% on payments (a) to holders
who have not supplied their correct TIN and the required certification and
(b) to holders who have been instructed by the IRS to deduct. You will
forward appropriate funds to the IRS.

You are further instructed as follows:

U.S. Citizens: A substitute Form W-9 must be properly completed and
delivered to you prior to payment, otherwise 31% of the gross payment must
be deducted as described above.

Foreign Shareholders: Form W-8 must be properly completed and delivered to
you prior to payment, otherwise 31% of the gross payment must be deducted
as described above.

NOTE: YOU MUST CONSULT WITH DAVID VICKERS (708) 995-0400, BEFORE
MAKING THE REQUIRED DEDUCTIONS, IF YOU DEEM IT NECESSARY, FOR ANY
CLARIFICATION, INTERPRETATION, ETC.

Please acknowledge receipt of this agreement and confirm the arrangements herein
provided by signing and returning the enclosed copy.

Sincerely,

ACCEPTED AS OF _________________

FIRST CHICAGO TRUST COMPANY OF NEW YORK

BY: __________________________<PAGE>

SCHEDULE A

Val Rajic
Pioneer Financial Services, Inc.
1750 East Golf Road
Schaumburg, IL 60173

Phone: (708) 413-7046
Fax: (708) 413-7195

Brooks B. Gruemmer
McDermott, Will & Emery
227 West Monroe Street
Suite 3100
Chicago, IL 60606

Phone: (312) 984-3245
Fax: (312) 984-7700<PAGE>

Exhibit (f)1

Q.1 WHY IS PIONEER MAKING THIS OFFER?

A.1 Pioneer is making this offer to provide an incentive for the immediate
conversion of up to $54 million of its 8% Convertible Subordinated
Debentures into Common Stock. We expect two benefits from this. It
will strengthen the Company's balance sheet by increasing its common
equity and reducing Subordinated Debentures. In addition, it will
reduce the future interest payments on the 8% Convertible Subordinated
Debentures, which may improve the Company's creditworthiness.

Q.2 WHY ISN'T PIONEER SIMPLY CALLING THE 8% CONVERTIBLE SUBORDINATED
DEBENTURES FOR REDEMPTION IN ORDER TO FORCE CONVERSION?

A.2 Pioneer is not permitted to call the 8% Convertible Subordinated
Debentures for redemption until August 15, 1996, which is only a
provisional call date. It is not until July 15, 1998, that Pioneer may
call the Debentures for redemption without condition.

Q.3 WILL HOLDERS OF THE 8% CONVERTIBLE SUBORDINATED DEBENTURES WHO CHOOSE TO
CONVERT IN THE OFFER RECEIVE UNPAID AND ACCRUED INTEREST?

A.3 Yes. Pioneer is obligated to pay any unpaid and accrued interest to
holders of the debentures.

Q.4 WHAT LIQUIDITY BENEFITS ARE PROVIDED BY THE OFFER?

A.4 Pursuant to the exchange offer the holders of the 8% Convertible
Subordinated Debentures will generally receive freely tradable shares of
common stock.

Q.5 HOW WILL THE PREMIUM AFFECT YOUR FINANCIAL STATEMENTS?

A.5 Our financial leverage (total debt and preferred equity to total
capitalization) will decline from 56% to 29%, which the Company believes
will help it to achieve and maintain favorable ratings from the
insurance rating agencies. The payment of the premium will be treated
for accounting purposes as a one time charge to earnings. Accordingly,
the aggregate amount of the conversion premium paid will be deducted
from net income as a one-time expense for the period in which the offer
is completed. The fully diluted EPS before this one-time expense will
be dilutive by a few cents because of the increase in short term debt to
fund the conversion premium. Weighted average primary shares
outstanding used to calculate earnings per share will include the 4.6
million new shares issued; however, fully diluted shares will remain
constant. Thus, our income statement will be marginally affected.

Q.6 WHAT IS THE TAX TREATMENT OF THE PREMIUM TO THE SUBORDINATED DEBENTURE
HOLDER?

A.6 You should consult your tax advisor. In most circumstances, the $110
per Debenture premium would likely constitute capital gain provided that
the Debentures were held as capital assets.

Q.7 HOW MUCH OF THE OUTSTANDING SUBORDINATED DEBENTURES DOES PIONEER EXPECT
TO CONVERT WITH THIS OFFER?

A.7 While we cannot know how many holders will accept, we hope that the
combination of the $110 per debenture premium and the option of holding
Common Stock is attractive to all holders. We will only convert $54
million of the 8% Convertible Subordinated Debentures outstanding
pursuant to this offer. Each holder will need to make an individual
decision.<PAGE>
Q.8 IS THERE A MINIMUM PARTICIPATION REQUIREMENT FOR THE OFFER?

A.8 No. We intend to pay the $110 per bond cash premium on all subordinated
debentures properly tendered for conversion, up to $54 million of all
subordinated debentures outstanding.

Q.9 WHEN WILL THE OFFER END?

A.9 The offer and withdrawal rights will end at 5:00 p.m., New York City
time, Friday, August 4, 1995, unless the Company extends the offer. The
Company also has the right to terminate the offer at any time before
closing without paying the premium; however, the offer must remain open
for 5 to 10 business days after any material amendments to the offer.

Q.10 CAN PIONEER CHANGE THE TERMS OF THE OFFER?

A.10 Yes, as stated above, any termination or amendments are allowed and we
would give notice of changes in accordance with the SEC's rules. The
offer must remain open for 5 to 10 business days after any material
amendments to the offer.

Q.11 WHAT WILL HAPPEN TO SUBORDINATED DEBENTURES THAT ARE NOT CONVERTED IN
THE OFFERING?

A.11 Subordinated Debentures that are not converted in the offering will not
get the $110 cash premium. Those debentures will remain outstanding,
will continue to receive interest payments, and will keep all the other
rights and preferences they currently have. Since there is only a
limited market for the debentures currently outstanding, the debentures
which would remain outstanding after the offer could have substantially
reduced liquidity.

Q.12 ARE THERE ANY LIMITATIONS ON TRADING THE COMMON STOCK FOR THE
SUBORDINATED DEBENTURE HOLDERS?

A.12 No. Once the 8% Convertible Subordinated Debentures are converted, the
Common Stock received is tradable in the public market. There are no
limitations on covering short positions, or selling the new shares for a
profit.

Q.13 CAN A SUBORDINATED DEBENTURE HOLDER WITH A SHORT POSITION IN PIONEER'S
COMMON STOCK USE THE COMMON SHARES RECEIVED UPON CONVERSION TO CLOSE OUT
THEIR SHORT POSITIONS?

A.13 Yes. Once the 8% Convertible Subordinated Debentures are converted, the
common shares received can be traded like all other outstanding Common
Stock of Pioneer.

Q.14 HAS PIONEER CONTACTED OTHERS WITH THIS OPPORTUNITY?

A.14 All holders of the 8% Convertible Subordinated Debentures are eligible;
however, the Company does not plan to purchase in excess of $54 million
of the debentures that are tendered.

Q.15 HOW DO I GET MATERIALS TO PARTICIPATE IN THE CONVERSION OFFER?

A.15 If a broker or other custodian holds your 8% Convertible Subordinated
Debentures registered in its name, the broker should forward materials
to you. You should then instruct your broker whether you want to
participate in the Conversion Offer. You may also obtain materials from
the Information Agent, Kissel-Blake Inc., by calling (800) 554-7733.<PAGE>
PIONEER FINANCIAL SERVICES, INC.
OFFER OF PREMIUM UPON CONVERSION OF
8% CONVERTIBLE SUBORDINATED DEBENTURES

SUMMARY OF TRANSACTION TERMS
<TABLE>
<CAPTION>
<S> <C>
COMMON STOCK

Recent Common Stock Price (07/05/95) . . . . . . . . . . . . . . . . . . . . . . . . . . . $15.000
52 Week High/Low Closing Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15.500/$8.750
NYSE Symbol . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . PFS
Annualized Dividend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $0.18, current yield 1.2%
Average Daily Trading Volume Latest Twelve Months . . . . . . . . . . . . . . . . . . . . . 24,151 shares

CONVERTIBLE SUBORDINATED DEBENTURES

Balance Outstanding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $57,427,000
Coupon (Payable Each January and July) . . . . . . . . . . . . . . . . . . . . . . . . . . 8.00%
Recent Price (07/05/95) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $123 per $100 in
principal amount
Conversion Price / Conversion Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . $11.75 / 85.11 shares
Provisional Call Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $15.86
Redeemable After (Based on Provisional Call) . . . . . . . . . . . . . . . . . . . . . . . July 15, 1996
Due July 15, 2000

OFFER OF PREMIUM

Exchange Each $1,000 Debenture for . . . . . . . . . . . . . . . . . . . . . . . . . . . . $110.00 cash plus
accrued interest and
85.11 shares of common stock
Market Value of Shares Received By Each $1,000 Debenture (07/05/95) . . . . . . . . . . . $1,276.65
Aggregate Cash Premium Offered . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $5,940,000
Shares of Common Stock Reserved for Conversion of $54 Million Debentures . . . . . . . . . 4,596,000 shares
Common Stock Outstanding at June 30, 1995 Historically . . . . . . . . . . . . . . . . . . 5,939,373 shares
Common Stock Outstanding Assuming Conversion of $54 Million Debentures . . . . . . . . . . 10,535,373 shares
Minimum Participation Conditions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . None
Maximum Amount of Subordinated Debentures to Convert . . . . . . . . . . . . . . . . . . . $54 million of outstanding
debentures
Length of Offer . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Expires 5 p.m. NY Time,
Fri., Aug. 4, 1995

CONVERSION AGENT

FIRST CHICAGO TRUST COMPANY OF NEW YORK
By Mail: By Hand or Overnight Courier:
(registered or certified mail recommended) First Chicago Trust Company of New York
First Chicago Trust Company of New York Tenders & Exchanges
Tenders & Exchanges Suite 4680-PFS
Suite 4660-PFS 14 Wall Street
P.O. Box 2559-PFS 8th Floor
Jersey City, NJ 07303-2559 New York, NY 10005

INFORMATION AGENT
KISSEL-BLAKE INC.
25 Broadway, 6th Floor
New York, NY 10004
Toll Free: (800) 554-7733
Brokers and Bankers: (212) 344-6733
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SUMMARY OF TRANSACTION BENEFITS
-Reduces ratio of debt and preferred stock to total capitalization from
56% to 29%
-Simplifies capital structure
-Enhances operating flexibility
-Provides opportunities for future financings
-Positions the company for potential claims paying rating upgrade
-Virtually no impact on fully-diluted EPS, except for one-time after tax
expense of about $3.9 million

[PRO FORMA FINANCIAL DATA FROM PAGES 16-17 OF OFFER OF PREMIUM UPON
CONVERSION TO BE ATTACHED]<PAGE>