LIFE RE CORP, S-3, 1998-02-12

LIFE RE CORP
S-3, 1998-02-12
LIFE INSURANCE

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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 12, 1998
REGISTRATION NO. 333-
================================================================================

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

LIFE RE CORPORATION DELAWARE 01-0437851
(Exact name of the (State or other jurisdiction of (I.R.S. employer
registrant as specified incorporation or organization) identification
in its charter) number)

969 HIGH RIDGE ROAD
STAMFORD, CONNECTICUT 06905
(203) 321-3000
(Address, including zip code, and telephone number, including area code, of the
registrant's principal executive offices)

W. WELDON WILSON
VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
LIFE RE CORPORATION
969 HIGH RIDGE ROAD
STAMFORD, CONNECTICUT 06905
(203) 321-3000
(Name, address, including zip code, and telephone number, including area code,
of agent for service for the registrant)

COPIES TO:
THOMAS A. ROBERTS ALAN J. SINSHEIMER
DAVID P. STONE WILLIAM D. TORCHIANA
WEIL, GOTSHAL & MANGES LLP SULLIVAN & CROMWELL
767 FIFTH AVENUE 125 BROAD STREET
NEW YORK, NEW YORK 10153 NEW YORK, NEW YORK 10004
(212) 310-8000 (212) 558-4000

APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: AS
SOON AS PRACTICABLE AFTER THE EFFECTIVE DATE OF THIS REGISTRATION STATEMENT.

If the only securities being registered on this form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. [ ]

If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [ ]

If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, please check the following box
and list the Securities Act registration statement number of the earlier
effective registration statement for the same offering. [ ] ____________

If this form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ] ____________

If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]

CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>

============================================================================================================
AMOUNT PROPOSED MAXIMUM PROPOSED MAXIMUM
TITLE OF EACH CLASS OF TO BE OFFERING PRICE AGGREGATE AMOUNT OF
SECURITIES TO BE REGISTERED(1) REGISTERED(2) PER UNIT(3) OFFERING PRICE(3) REGISTRATION FEE
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, $.001 par
value, of Life Re Corporation.. 4,025,000 $66.50 $267,662,500 $78,961
============================================================================================================

</TABLE>

(1) The shares of Common Stock are not being registered for the purpose of
offers or sales outside the United States in circumstances under which
registration is not required under the Securities Act of 1933, as amended.

(2) Includes 525,000 shares of Common Stock that the Underwriters may purchase
from certain stockholders of the Company to cover over-allotments, if any.

(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(c) under the Securities Act of 1933, as amended, based
on the average of the high and low sales prices of Common Stock of Life Re
Corporation as reported on the New York Stock Exchange on February 10,
1998.

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

THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.

================================================================================

NYFS07...:\51\59451\0014\1922\REG1308K.31C
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.

SUBJECT TO COMPLETION, DATED FEBRUARY 12, 1998

[LIFE RE LOGO] 3,500,000 Shares
Life Re Corporation
Common Stock
(par value $.001 per share)

Of the 3,500,000 shares of Common Stock offered, 2,800,000 shares are being
offered hereby in the United States and 700,000 shares are being offered in a
concurrent international offering outside the United States. The initial public
offering price and aggregate underwriting discount per share will be identical
for both offerings. See "Underwriting".

Of the 3,500,000 shares of Common Stock offered, 3,300,000 shares are being
sold by the Company and 200,000 shares are being sold by the Selling
Stockholders. See "Selling Stockholders". The Company will not receive any of
the proceeds from the sale of the shares being sold by the Selling Stockholders.

The last reported sale price of the Common Stock, which is listed under the
symbol "LRE", on the New York Stock Exchange on February 10, 1998 was $66.375
per share. See "Price Range of Common Stock and Dividends".

Concurrently with the offering made hereby, the Company is also offering
1,500,000 Adjustable Conversion-rate Equity Security Units, which in the
aggregate consist of contracts to purchase between and 1,500,000 shares ( and
1,725,000 shares if the underwriters' over-allotment option is exercised in
full) of Common Stock on , 2001 and $ million of % Quarterly Income Preferred
Securities of Life Re Capital Trust II maturing on , 2003. The Units Offering is
being made by a separate prospectus. Neither the Units Offering nor the offering
made hereby is conditioned on the consummation of the other offering.

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

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.

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

<TABLE>
<CAPTION>
INITIAL PUBLIC UNDERWRITING PROCEEDS TO PROCEEDS TO SELLING
OFFERING PRICE DISCOUNT(1) COMPANY(2) STOCKHOLDERS
-------------- ----------- ---------- ------------
<S> <C> <C> <C> <C>
Per Share..................... $ $ $ $
Total(3)...................... $ $ $ $

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

</TABLE>

(1) The Company and the Selling Stockholders have agreed to indemnify the
Underwriters against certain liabilities, including liabilities under the
Securities Act of 1933.

(2) Before deducting estimated expenses of $_____ payable by the Company.

(3) The Selling Stockholders have granted the U.S. Underwriters an option for
30 days to purchase up to an additional 420,000 shares at the initial
public offering price per share, less the underwriting discount, solely to
cover over-allotments. Additionally, the Selling Stockholders have granted
the International Underwriters a similar option with respect to an
additional 105,000 shares as part of the concurrent international
offering. If such options are exercised in full, the total initial public
offering price, underwriting discount and proceeds to Selling Stockholders
will be $______ , $_____ and $______ , respectively. See "Underwriting".

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

The shares offered hereby are offered severally by the Underwriters, as
specified herein, subject to receipt and acceptance by them and subject to their
rights to reject any order in whole or in part. It is expected that certificates
for the shares will be ready for delivery in New York, New York, on or about ,
1998, against payment therefor in immediately available funds.

GOLDMAN, SACHS & CO.
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
MERRILL LYNCH & CO.

CIBC OPPENHEIMER CONNING & COMPANY

The date of this Prospectus is , 1998.

<PAGE>
FORWARD-LOOKING STATEMENTS

The statements included or incorporated in this Prospectus regarding
future financial performance and results and the other statements that are not
historical facts are "forward-looking statements" within the meaning of Section
27A of the Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"). Such statements may include, but are not limited to, projections of
earnings, revenues, income or loss, capital expenditures, plans for future
operations and financing needs or plans, as well as assumptions relating to the
foregoing. The words "expect," "project," "estimate," "predict," "anticipate,"
"believes" and similar expressions are also intended to identify forward-looking
statements. Forward-looking statements are inherently subject to risks and
uncertainties, some of which cannot be predicted or quantified. Future events
and actual results, performance and achievements could differ materially from
those set forth in, contemplated by or underlying the forward-looking
statements. Such factors include, but are not limited to, the uncertainties
relating to general economic and business conditions which may impact the need
and/or financial ability to obtain reinsurance, insurance or retrocessional
reinsurance; changes in laws and government regulations applicable to the
Company; the ability of the Company to implement its operating strategies
successfully; the ability of the Company to execute Administrative ReinsuranceSM
transactions and the amount, timing and returns therefrom; material fluctuations
in interest rate levels; material changes in mortality and morbidity experience;
material changes in persistency; material changes in the level of operating
expenses; and the success or failure of certain of the Company's clients in
premium writing, and other risks and uncertainties described in this Prospectus
and in the Company's other filings with the Securities and Exchange Commission
(the "Commission"). Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual outcomes
may vary materially from those indicated.

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

CERTAIN PERSONS PARTICIPATING IN THE OFFERINGS MAY ENGAGE IN TRANSACTIONS
THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE MARKET PRICE OF THE COMMON
STOCK, INCLUDING OVER-ALLOTMENT, STABILIZING AND SHORT-COVERING TRANSACTIONS IN
SUCH SECURITIES AND THE IMPOSITION OF A PENALTY BID, IN CONNECTION WITH THE
OFFERINGS. FOR A DESCRIPTION OF THESE ACTIVITIES, SEE "UNDERWRITING".

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

The Commissioner of Insurance of the State of North Carolina has not
approved or disapproved the Offerings of Common Stock made hereby nor has the
Commissioner passed upon the accuracy or adequacy of this Prospectus.

The Company owns, directly or indirectly, all the outstanding voting
securities of its insurance subsidiaries, TexasRe Life Insurance Company
("TexasRe"), Life Reassurance Corporation of America ("Life Reassurance"),
Reassure America Life Insurance Company ("REALIC") and American Merchants Life
Insurance Company ("AML"), domiciled or deemed to be commercially domiciled in
Texas, Connecticut, Illinois and Illinois, respectively. Under the Connecticut,
Illinois and Texas insurance laws, unless (i) certain filings are made with the
Connecticut Insurance Department, the Illinois Department of Insurance or the
Texas Department of Insurance, as the case may be, (ii) certain requirements are
met, including, in the case of Texas, a public hearing and/or (iii) approval or
exemption is granted by the applicable insurance commissioner, no person may
acquire any voting security or security convertible into a voting security of an
insurance holding company, such as the Company, which controls a Connecticut
insurance company or an Illinois insurance company or a Texas insurance company,
or merge with such a holding company, if as a result of such transaction such
person would "control" the insurance holding company. "Control" is presumed to
exist in Connecticut, Illinois and Texas if a person directly or indirectly owns
or controls 10% or more of the voting securities of another person. Any purchase
of shares of the Company's Common Stock, par value $.001 per share (the "Common
Stock"), that would result in the purchaser's owning 10% or more of the voting
power of the Company will be presumed to result in the acquisition of control of

i
<PAGE>
the Company's insurance subsidiaries. Such an acquisition of Common Stock would
require prior regulatory approval unless the insurance commissioner in each
state in which the Company's insurance subsidiaries are domiciled or deemed to
be commercially domiciled determines otherwise. In addition, many state
insurance regulatory laws contain provisions that required prenotification to
state agencies of a change of control of a non-domestic insurance company
licensed in that state in the event specified market concentration thresholds
are triggered by an acquisition. See "Business-Regulation-Insurance Holding
Company Regulations".

ii
<PAGE>
AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Exchange
Act and in accordance therewith files reports, proxy statements and other
information with the Commission. Such reports, proxy statements and other
information can be inspected and copied at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Room 1024, Washington,
D.C. 20549, and at the Commission's regional offices at Seven World Trade
Center, Suite 1300, New York, New York 10048 and Citicorp Center, 500 West
Madison Street, Suite 1400, Chicago, Illinois 60661, and copies may be obtained
at prescribed rates from the Public Reference Section of the Commission at its
principal office in Washington, D.C. In addition, such reports, proxy statements
and other information may be accessed electronically at the Commission's site on
the World Wide Web at http://www.sec.gov. The Company's reports, proxy
statements and other information are also on file at the offices of the NYSE, 20
Broad Street, New York, New York 10005.

This Prospectus constitutes a part of a Registration Statement on Form S-3
(together with all amendments and exhibits, referred to herein as the
"Registration Statement") filed by the Company with the Commission under the
Securities Act with respect to the Common Stock being offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits and schedules thereto, certain parts of which are
omitted as permitted by the rules and regulations of the Commission. For further
information with respect to the Company and the Common Stock being offered
hereby, reference is made to the Registration Statement which can be inspected
at the public reference facilities at the offices of the Commission set forth
above. Any statements contained herein concerning the provision of any document
filed as an exhibit to the Registration Statement or otherwise filed with the
Commission or incorporated by reference herein are not necessarily complete,
and, in each instance, reference is made to the copy of such document so filed
for a more complete description of the matter involved. Each such reference is
qualified in its entirety by such reference.

iii
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents filed by the Company (File No. 1-11340) with the
Commission pursuant to the Exchange Act are incorporated by reference herein and
made a part hereof:

(1) Annual Report on Form 10-K for the fiscal year ended December 31,
1996;

(2) Quarterly Reports on Form 10-Q for the quarterly periods ended March
31, 1997, June 30, 1997 and September 30, 1997;

(3) Current Report on Form 8-K filed with the Commission on June 10,
1997; and

(4) The description of the Company's Common Stock contained in the
Company's Registration Statement on Form 8-A filed with the
Commission on August 13, 1992, including any amendments or reports
filed for the purpose of updating such description.

All documents filed by the Company with the Commission pursuant to Section
13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of this
Prospectus and prior to the termination of the offering of the Common Stock
shall be deemed to be incorporated by reference in this Prospectus and to be a
part hereof from the date of filing of such documents, unless any such document
shall expressly state that it is not to be incorporated by reference.

Any statement contained in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified or superseded
for purposes of this Prospectus 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 or superseded, to constitute a part of this Prospectus or any amendment
or supplement hereto.

The Company undertakes to provide without charge to each person to whom a
copy of this Prospectus is delivered, upon the written or oral request of such
person, a copy of any or all of the documents incorporated herein by reference,
other than exhibits to such documents unless such exhibits are specifically
incorporated by reference into such documents. Requests for such documents
should be directed to: Life Re Corporation, 969 High Ridge Road, Stamford,
Connecticut 06905, Attention: W. Weldon Wilson, Esq., Legal Department,
telephone number: (203) 321-3000.

iv
<PAGE>
PROSPECTUS SUMMARY

The following summary should be read in conjunction with, and is qualified
in its entirety by, the more detailed information, including the Company's
consolidated financial statements and notes thereto, appearing elsewhere in this
Prospectus or incorporated herein by reference. Life Re Corporation ("Life Re"
or the "Company") was organized as a Delaware corporation in 1988 to serve as a
holding company for all of the common stock of TexasRe, a Texas insurance
company, which in turn owns all of the common stock of Life Reassurance, a
Connecticut insurance company, which in turn owns all of the common stock of
REALIC, an Illinois insurance company. Unless the context otherwise requires,
references in this Prospectus to the "Company" or "Life Re" shall mean Life Re,
TexasRe, Life Reassurance, REALIC and AML, collectively, and the term
"Subsidiaries" shall mean TexasRe, Life Reassurance, REALIC and AML,
collectively.

THE COMPANY

Life Re, through its principal wholly-owned subsidiary, Life Reassurance,
is a leading provider of life reinsurance in the United States, with over $145
billion of life reinsurance in force and assets of $3.7 billion at December 31,
1997. Management believes the Company is the largest independent publicly traded
life reinsurer in the United States, and that it ranks fifth overall among U.S.
life reinsurers as measured by life reinsurance in force. The Company's
operating strategy has been to focus on two core lines of business: (i)
TRADITIONAL LIFE REINSURANCE, which involves the transfer of mortality risks on
new sales from primary (or ceding) insurers of ordinary and group life insurance
policies to the Company and (ii) ADMINISTRATIVE REINSURANCESM, which involves
the acquisition of blocks of life insurance in force and, frequently, the
assumption of administrative responsibility by the Company. During the five year
period ending December 31, 1997, the Company's operating earnings per share and
book value per share (excluding realized and unrealized investment gains and
losses) have grown at 19% and 16% compound annual growth rates, respectively,
and return on average equity (excluding unrealized investment gains and losses)
has averaged 15%.

Management estimates that between 1993 and 1996, new ordinary insurance in
force ceded to the life reinsurance market grew from $165 billion to $335
billion, representing a 27% compound annual growth rate. In addition, over the
same period, management believes there has been an expansion in the number of
opportunities to acquire blocks of life insurance in force. The Company believes
that certain dynamics in the life insurance industry have contributed to the
Company's growth over time in Traditional Life Reinsurance and Administrative
Reinsurance. These dynamics include: (i) an increasing use of life reinsurance
by primary companies as a means of managing risk- based capital pressures by
shifting mortality risk and distribution costs to reinsurers and (ii) an
increasing focus by primary companies on asset accumulation products and a
desire to eliminate or minimize mortality risk taking. Moreover, primary
companies increasingly are seeking to sell blocks of life insurance in force in
order to realize value and release capital embedded in non-core businesses or to
ease administrative burdens and costs associated with maintaining outdated or
inefficient systems.

The Company derived approximately 62% of its revenues for the year ended
December 31, 1997, and the majority of its pre-tax operating income for the same
period, from Traditional Life Reinsurance. The Company provides life reinsurance
primarily for mortality risk with respect to both ordinary and group life
insurance products on an automatic treaty basis. Substantially all of the
Company's Traditional Life Reinsurance business is marketed directly by the
Company without the use of intermediaries. Between 1993 and 1996, the Company's
new sales of ordinary life reinsurance, as measured by insurance in force
assumed, grew at a compound annual growth rate of 29%. The Company's first year
premium growth, another measure of new life insurance sales, has grown
consistently over the past several years, from $13 million in 1993 to $61
million in 1997.

1
<PAGE>
The Company derived approximately 18% of its revenues for the year ended
December 31, 1997 from Administrative Reinsurance. Management expects the
Administrative Reinsurance line of business to be an important source of
additional growth in the Company's pre-tax operating income. Through
Administrative Reinsurance, the Company is able to benefit from the increasing
consolidation in the life insurance industry by focusing on acquiring non-core
or smaller blocks of life insurance in force. In July 1995, the Company acquired
REALIC, which served as its initial platform for Administrative Reinsurance.
With the acquisition of REALIC, the Company obtained primary insurance licenses
and began outsourcing administrative services for acquired blocks of insurance
in force on a variable cost basis. Since 1995, the Company has acquired or is
under contract to acquire a total of 10 blocks of insurance in force,
representing in excess of $2.0 billion in assets.

In 1997, the Company made a strategic decision to withdraw from the group
accident and health and special risk reinsurance business. This line of business
provided approximately 20% of revenues for the year ended December 31, 1997. The
decision to exit this line of business primarily was motivated by the need for
additional capital in its Traditional Life Reinsurance and Administrative
Reinsurance lines of business and the deterioration in accident and health
morbidity experience. The Company does not expect this line of business to
affect materially future results.

Life Re was founded in 1988 by Rodney A. Hawes, Jr., Douglas M. Schair and
Jacques E. Dubois, each of whom has over 25 years of insurance industry
experience, for the purpose of acquiring Life Reassurance from General
Reinsurance Corporation. Life Re currently has a rating of A+ (Superior) by A.M.
Best Company, Inc. ("A.M. Best"). A.M. Best ratings are based upon an insurance
company's financial strength regarding its ability to pay obligations to
policyholders and are not directed toward the protection of investors.

Life Re maintains its principal executive offices at 969 High Ridge Road,
Stamford, Connecticut 06905, and its telephone number is (203) 321-3000.

BUSINESS STRATEGY

The Company has established the following strategic priorities which the
Company believes will allow it to maximize stockholder value:

CAPITALIZE ON CONTINUED GROWTH IN TRADITIONAL LIFE REINSURANCE. The
Company believes that aggregate life reinsurance assumed, as a percentage of new
ordinary life insurance face amount written in the United States, grew from
approximately 15% in 1993 to approximately 30% in 1996. The Company expects that
the life reinsurance market will continue to grow as primary insurers seek to
manage risk-based capital levels and redeploy capital away from
mortality-related businesses and into their core lines of business, which
increasingly include asset accumulation businesses such as annuities and
universal life insurance.

INCREASE PENETRATION IN TRADITIONAL LIFE REINSURANCE. The Company has
experienced strong growth in first year life premiums, which have increased from
$13 million in 1993 to $61 million in 1997. The Company believes it has been
able to achieve this growth through its increased focus on marketing for new
treaties. Toward this end, in January 1996 the Company created its Office of
Life Marketing, a coordinated team of actuarial, legal, marketing and
underwriting professionals, in order to increase its focus on life reinsurance
growth. The Company intends to leverage its relationships within the life
insurance industry to further penetrate existing accounts and to expand its
customer base. Of the aggregate of $61 million of first year policy revenues
assumed by the Company in 1997, approximately 50% was assumed pursuant to
treaties with seven of the largest 25 life insurance companies, as measured by
total premiums written for the year ended December 31, 1996. The Company
continues to focus on enhancing existing relationships as well as pursuing new
clients for sources of first year premium growth.

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<PAGE>
PARTICIPATE IN CONSOLIDATION OF LIFE INSURANCE INDUSTRY. The Company
expects to capitalize upon the consolidation of the life insurance industry
through the acquisition of insurance companies and/or reinsurance of life
insurance business in force as insurers seek to dispose of non-core businesses.
Through Administrative Reinsurance, since 1995 the Company has acquired or is
under contract to acquire a total of 10 blocks of life insurance, including
three since December 1997. The Company believes that its success in this line of
business is due to its experience in identifying and executing transactions as
well as its market knowledge and contacts. Further, the Company believes that
its strategy of outsourcing administrative services for direct insurance in
force allows it to efficiently integrate acquisitions and to retain the capacity
to pursue multiple acquisition opportunities simultaneously.

RECENT DEVELOPMENTS

RESULTS OF OPERATIONS

On February 12, 1998, the Company announced its unaudited financial
results for the fourth quarter of 1997 and the year ended December 31, 1997. The
Company's unaudited financial results indicate that for the year ended December
31, 1997, operating earnings (net income excluding after-tax realized investment
gains) totaled $46.6 million, or $3.28 per share, compared to $38.3 million, or
$2.75 per share in 1996, representing a 19% increase on a per share basis. Net
income for the yearly periods totaled $49.5 million and $54.2 million,
respectively. After-tax realized investment gains were $2.9 million in 1997 and
$15.9 million in 1996, with 1996 gains including a $13.5 million gain resulting
from the sale of a strategic investment.

Fourth quarter operating earnings totaled $13.5 million, or $.94 per
share, compared to $12.2 million, or $.88 per share in last year's fourth
quarter, representing a 7% increase on a per share basis. For the same periods,
net income totaled $14.6 million, or $1.01 per share, and $13.2 million, or $.95
per share. After-tax realized investment gains were $1.1 million and $1.0
million in each of the respective quarterly periods.

ADMINISTRATIVE REINSURANCE TRANSACTIONS

Since December 1997, the Company has entered into three Administrative
Reinsurance transactions in which the Company has acquired or expects to acquire
approximately $1.1 billion in assets and approximately 400,000 policies for
administration. In December 1997, the Company (a) entered a coinsurance
transaction whereby the Company and Employers Reassurance Corporation ("ERAC")
will coinsure a block of life insurance and annuity business from Allianz Life
Insurance Company of North America ("Allianz"), with the Company's portion of
business reinsured increasing from 20% to 60% over the term of the agreement,
and (b) entered into an agreement to acquire Mission Life Insurance Company
("Mission Life") for a purchase price of approximately $60 million. Mission
Life's business is concentrated in life insurance policies designed to meet
final expenses. In February 1998, the Company entered into an agreement to
acquire Lincoln Liberty Life Insurance Company ("Lincoln Liberty") and First
Delaware Life Insurance Company ("First Delaware"), for an aggregate purchase
price of approximately $50 million. These companies' businesses primarily
consist of traditional and universal life insurance policies. These transactions
had no impact on the Company's 1997 results of operations, but are anticipated
to contribute to 1998 results of operations.

For additional information with respect to the above recent developments,
See "Recent Developments".

3
<PAGE>
THE OFFERINGS

Common Stock offered hereby:
U.S. Offering............................. 2,800,000 shares
International Offering.................... 700,000 shares
---------
Total................................... 3,500,000 shares
=========

Common Stock offered by:
The Company............................... 3,300,000 shares
The Selling Stockholders (1).............. 200,000 shares
---------
Total................................... 3,500,000 shares
=========

Common Stock to be outstanding
after the Offerings (2)................ 17,130,562 shares

New York Stock Exchange symbol............ LRE

Use of Proceeds........................... The Company intends to use the net
proceeds of the Common Stock
Offerings and the Units Offering
(each as defined herein) to provide
additional capital to its
Subsidiaries to support recently
announced and recently completed
transactions and the continued
growth of its businesses, as well as
for general corporate purposes.

- ------------------
(1) Does not include up to 525,000 shares of Common Stock subject to the
Underwriters' over-allotment option.

(2) Based upon the number of shares of Common Stock outstanding as of February
10, 1998. Does not include (i) shares of Common Stock issuable upon exercise
of outstanding stock options having an average exercise price of $ per share
or (ii) up to 1,500,000 shares (1,725,000 shares if the underwriters'
over-allotment option in the Units Offering is exercised in full) of Common
Stock issuable on , 2001 upon settlement of the purchase contracts contained
in the Units (as defined herein) being offered in the Units Offering.

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

The offering of 2,800,000 shares of Common Stock in the United States (the
"U.S. Offering") and the offering of 700,000 shares of Common Stock outside the
United States (the "International Offering") are collectively referred to as the
"Common Stock Offerings". The closing of the International Offering is a
condition to the closing of the U.S. Offering, and vice versa. See
"Underwriting".
UNITS OFFERING

Concurrently with the offering made hereby, the Company is also offering
(the "Units Offering") 1,500,000 Adjustable Conversion-rate Equity Security
Units (the "Units"), which in the aggregate consist of contracts to purchase up
to 1,500,000 shares (1,725,000 shares if the underwriters' over-allotment option
is exercised in full) of Common Stock on ______ , 2001 and $_______ million of
___% Quarterly Income Preferred Securities of Life Re Capital Trust II maturing
on _______ , 2003. The Units Offering is being made by means of a separate
prospectus. The Common Stock Offerings and the Units Offering are independent
offerings and consummation of either of the offerings is not conditioned upon
consummation of the other offering. There can be no assurance that the Units
Offering will be consummated. This Prospectus does not constitute an offer to
buy or the solicitation of an offer to sell the Units being offered in the Units
Offering.

4
<PAGE>
SUMMARY CONSOLIDATED FINANCIAL DATA

The summary consolidated financial data below should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996 and Quarterly Report on Form 10-Q for the quarter ended September 30,
1997 incorporated by reference herein. See "Incorporation of Certain Documents
by Reference". The summary consolidated financial data at and for the years
ended December 31, 1996, 1995, 1994, 1993 and 1992 are derived from the
consolidated financial statements of the Company. The summary consolidated
financial data at September 30, 1997 and for the nine months ended September 30,
1997 and 1996 are derived from the unaudited condensed consolidated financial
statements of the Company, which have been prepared on the same basis as the
Company's audited consolidated financial statements and, in the opinion of
management, contain all adjustments consisting of only normal recurring
adjustments necessary for a fair presentation of the financial position and
results of operations for these periods. The results of operations for the nine
months ended September 30, 1997 may not be indicative of results for the full
year.

<TABLE>
<CAPTION>
NINE MONTHS
ENDED
SEPTEMBER 30, YEAR ENDED DECEMBER 31,
1997 1996 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ ------ -----
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues:
Policy revenues................ $ 360.9 $ 328.9 $ 451.0 $ 383.2 $ 350.9 $ 289.0 $ 250.9
Investment income.............. 110.0 89.9 124.3 98.6 82.4 73.5 72.6
Realized investment gains...... 2.9 15.7 17.2 3.7 .1 21.0 27.1
Equity in earnings of investee. -- -- -- -- -- -- 4.3
-------- ---------- --------- -------- -------- -------- --------
Total revenues.............. $ 473.8 $ 434.5 $ 592.5 $ 485.5 $ 433.4 $ 383.5 $ 354.9
Benefits and Expenses:
Policy benefits................ 252.5 245.6 332.5 281.5 245.8 208.7 171.5
Policy acquisition costs....... 105.1 81.6 111.9 95.7 88.7 71.1 65.5
Interest credited to
policyholder accounts....... 28.6 24.1 34.6 21.2 15.0 15.0 15.0
Interest expense............... 6.0 6.5 8.4 10.7 9.1 9.9 18.9
Distributions on capital
securities.................. 2.8 -- -- -- -- -- --
Other operating expenses....... 25.0 21.0 29.0 21.6 22.0 18.1 15.4
-------- ---------- --------- -------- -------- -------- --------
Total benefits and
expenses.................. $ 420.0 $ 378.8 $ 516.5 $ 430.8 $ 380.6 $ 322.8 $ 286.3
-------- ---------- --------- -------- -------- -------- --------
Income before federal
income taxes and
extraordinary charge........... $ 53.8 $ 55.8 $ 76.1 $ 54.8 $ 52.8 $ 60.6 $ 68.6
Provision for federal
income taxes................... 18.8 14.8 21.9 19.2 18.5 21.4 23.5
-------- ---------- --------- -------- -------- -------- --------
Income before
extraordinary charge........... $ 34.9 $ 41.0 $ 54.2 $ 35.6 $ 34.3 $ 39.2 $ 45.0
Extraordinary charge, net
of federal income
tax benefit.................... -- -- -- 1.0 -- -- 8.6
-------- ---------- --------- -------- -------- -------- --------
Net income....................... $ 34.9 $ 41.0 $ 54.2 $ 34.6 $ 34.3 $ 39.2 $ 36.4
======== ========== ========= ======== ======== ======== ========
Net income (excluding realized
investment gains and extra-
ordinary charge)............... $ 33.1 $ 26.0 $ 38.3 $ 33.2 $ 34.3 $ 25.8 $ 27.0
======== ========== ========= ======== ======== ======== ========
Diluted earnings per share(1):
Income before extraordinary
charge....................... $ 2.47 $ 2.94 $ 3.89 $ 2.39 $ 2.21 $ 2.50 $ 3.45
Extraordinary charge,
net of federal income
tax benefit.................. -- -- -- (.07) -- -- (.76)
-------- ---------- --------- -------- -------- -------- --------
Net income .................... $ 2.47 $ 2.94 $ 3.89 $ 2.32 $ 2.21 $ 2.50 $ 2.69
Net income (excluding realized
investment gains and extra-
ordinary charge)(2)............ 2.34 1.87 2.75 2.22 2.21 1.63 2.11
Common dividends per share....... 0.39 0.30 0.40 0.28 0.24 0.20 --
Preferred stock dividends........ -- -- -- -- -- -- 5.7
Weighted average common and
common equivalent shares...... 14.2 13.9 13.9 14.9 15.5 15.7 11.4

</TABLE>

5
<PAGE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ -----
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT PERIOD END):
Invested assets.................. $2,156.5 $1,833.2 $1,504.2 $ 998.5 $ 944.6 $ 845.2
Total assets..................... 2,908.4 2,519.3 2,024.1 1,442.3 1,339.7 1,167.2
Loans payable.................... 125.0 125.0 140.0 140.0 150.0 165.0
Capital securities............... 100.0 -- -- -- -- --
Common shareholders'
equity........................ 344.0 290.1 279.3 194.9 230.7 170.8
Common shareholders'
equity (excluding unrealized
investment gains and losses).. 296.7 265.3 229.9 228.8 198.2 162.1

OTHER FINANCIAL DATA (AS OF THE PERIOD ENDED):
Return on average shareholders'
equity(3)...................... 16% 15% 14% 16% 14% *
Book value per common
share(4)....................... $ 21.8 $ 19.6 $ 16.5 $ 14.8 $ 12.8 $ 10.4
First year premiums.............. 45.4 38.2 22.6 19.3 13.6 14.8
Capital invested in Administrative
Reinsurance transactions(5)..... 34.4 32.0 35.9 -- -- --
Life insurance in force (6)...... ** 116,012.0 91,283.0 81,213.0 79,652.0 74,408.0
Statutory capital and
surplus (6).................... 266.0 209.3 208.2 193.8 187.4 214.1

</TABLE>

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

* Not meaningful.
** Not available.

(1) Diluted earnings per share have been calculated in accordance with Financial
Accounting Standards Board Statement No. 128, Earnings Per Share, ("SFAS
128"). Basic earnings per share in accordance with SFAS 128 for the nine
months ended September 30, 1997 and 1996 were $2.98 and $2.57, respectively,
and for the years ended 1996, 1995, 1994, 1993 and 1992 were $3.97, $2.32,
$2.21, $2.53 and $3.82, respectively. The adoption of SFAS 128 did not
result in the restatement of previously reported earnings per share, as
diluted earnings per share calculated in accordance with SFAS 128 results in
the same per share amounts as previously reported by the Company.

(2) Net income per share (excluding realized investment gain and extraordinary
charge) for the year ended December 31, 1992 has been adjusted to reflect
the refinancings of debt and preferred stock and the initial public
offering.

(3) Return on shareholders' equity is calculated by dividing net income
(excluding realized investment gains and extraordinary charge) by average
shareholders' equity for the period (which is the simple average of
beginning and end of period shareholders' equity excluding unrealized
investment gains or losses). Return on shareholders' equity for the nine
months ended September 30, 1997 has been annualized.

(4) Book value per share is calculated by dividing end of period shareholders'
equity (excluding realized investment gains and losses) by end of period
common shares outstanding.

(5) Capital invested in Administrative Reinsurance transactions represents the
sum of the consideration paid for life insurance in force acquired and the
related support capital.

(6) Amounts have been derived from the Annual Statements of Life Reassurance,
REALIC and TexasRe, as filed with insurance regulatory authorities and
prepared in accordance with statutory accounting practices. For purposes of
this presentation, capital and surplus are defined as statutory capital and
surplus of Life Reassurance only, as its capital and surplus materially
reflect that of Life Reassurance, REALIC and TexasRe, plus the Asset
Valuation Reserve ("AVR") and the Interest Maintenance Reserve ("IMR") of
Life Reassurance and REALIC.

6
<PAGE>
USE OF PROCEEDS

The net proceeds to be received by the Company from the sale of the Common
Stock in the Common Stock Offerings, after deducting estimated underwriting
discounts and expenses of the Common Stock Offerings payable by the Company, are
expected to be $ ____ million. The net proceeds from the Units Offering
(assuming it is consummated and the over-allotment option granted by the Company
with respect to the Units Offering is not exercised) are expected to be $ ____
million. The Company intends to use such net proceeds from the Common Stock
Offerings and the Units Offering to provide additional capital to its
Subsidiaries to support recently announced and recently completed transactions
and the continued growth of its businesses, as well as for general corporate
purposes. Funds not required immediately for such purposes may be invested in
short-term obligations or used to reduce the future level of the Company's
indebtedness. The Company will not receive any of the proceeds from the sale of
shares of Common Stock by the Selling Stockholders.

The Common Stock Offerings and the Units Offering are independent
offerings and consummation of either of the offerings is not conditioned upon
consummation of the other offering. There can be no assurance that the Units
Offering will be consummated.

7
<PAGE>
PRICE RANGE OF COMMON STOCK AND DIVIDENDS

The Common Stock of the Company has been listed for trading on the NYSE
since October 28, 1992, the date of the Company's initial public offering, under
the symbol LRE. Based upon information reported in the Bloomberg consolidated
transaction reporting system, the high and low sales prices for each quarterly
period from January 1, 1996 to the date hereof were:
PRICE RANGE
-----------
HIGH LOW
---- ---
YEAR ENDED DECEMBER 31, 1996
First quarter ............................................. $ 27.375 $22.500
Second quarter............................................. 31.000 27.500
Third quarter.............................................. 36.000 26.625
Fourth quarter............................................. 38.625 33.750

YEAR ENDED DECEMBER 31, 1997
First quarter.............................................. 45.375 38.625
Second quarter............................................. 48.125 37.375
Third quarter.............................................. 56.000 46.625
Fourth quarter............................................. 65.375 52.063

YEAR ENDED DECEMBER 31, 1998
First quarter (through February 10, 1998).................. 67.000 57.500

As of February 10, 1998, there were approximately 3,200 holders of the
outstanding shares of Common Stock, including individual participants in
securities position listings. The last reported sales price of the Common Stock
on the NYSE on February 10, 1998 was $66.375 per share.

Dividends of $0.07 per share, $0.10 per share and $0.13 per share were
declared in each calendar quarter of 1995, 1996 and 1997, respectively. On
February 12, 1998, the Company's Board of Directors declared a dividend of $0.15
per share to be paid on March 25, 1998 to shareholders of record as of March 4,
1998. Purchasers of the shares of Common Stock offered hereby will not receive
this dividend.

The declaration and payment of future dividends to holders of its Common
Stock by the Company will be at the discretion of the Board of Directors and
will depend upon the Company's earnings and financial condition, capital
requirements of its Subsidiaries, regulatory considerations and other factors
the Board of Directors deems relevant. The Company's general policy is to retain
most of its earnings to finance the growth of its business.

Because the Company is a holding company, it is dependent upon its
Subsidiaries to provide funding for the Company's operating expenses and for the
payment by the Company of debt service and dividends. State insurance laws
applicable to the Company's Subsidiaries limit the payment of dividends and
other distributions by such Subsidiaries to the Company and may therefore limit
the ability of the Company to make dividend payments. See
"Business-Regulation-Restrictions on Dividends and Distributions".

8
<PAGE>
CAPITALIZATION

The following table sets forth the consolidated capitalization of the
Company at September 30, 1997 and as adjusted to reflect the sale by the Company
of the 3,300,000 shares of Common Stock offered by the Company in the Common
Stock Offerings (at an assumed initial public offering price of $66.375) and the
sale by the Company of 1,500,000 Units in the Units Offering (at an assumed
initial public offering price of $66.375 and assuming the underwriters'
over-allotment option with respect to the Units Offering is not exercised), and
the application of the net proceeds therefrom, after deducting estimated
underwriting discount and commissions and expenses of the Common Stock Offerings
and the Units Offering . The capitalization information set forth in the table
below is qualified by, and should be read in conjunction with, the more detailed
consolidated financial statements and notes thereto incorporated by reference
herein. See "Use of Proceeds".

AT SEPTEMBER 30, 1997
---------------------
ACTUAL AS ADJUSTED
------ -----------
(UNAUDITED)
(IN THOUSANDS, EXCEPT
PER SHARE DATA)

Loans payable...........................................$125,000 $125,000

Company-obligated, mandatorily redeemable
capital securities of Life Re Capital Trust I......... 100,000 100,000

Company-obligated, mandatorily redeemable
capital securities of Life Re Capital Trust II........ --- 99,563

Shareholders' equity:
Common Stock, par value $.001 per share;
authorized 40,000,000 shares; 15,830,785 shares
issued, actual; and 19,130,785 issued, as adjusted (1) 16 19
Paid-in capital....................................... 107,974 314,961
Net unrealized appreciation of securities............. 47,278 47,278
Retained earnings..................................... 236,460 236,460
Treasury stock, at cost (2,196,469 shares)............ (47,762) (47,762)
Total shareholders' equity.......................... 343,966 550,956
-------- -------

Total capitalization..............................$568,966 $875,519
======== ========

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

(1) Does not include _____ shares of Common Stock issuable upon exercise of
outstanding stock options or (ii) up to 1,500,000 shares (1,725,000 shares
if the underwriters' over-allotment option in the Units Offering is
exercised in full) of Common Stock issuable on , 2001 upon settlement of the
purchase contracts contained in the Units being offered in the Units
Offering.

9
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA

The selected consolidated financial data below should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 1996 and Quarterly Report on Form 10-Q for the quarter ended September 30,
1997 incorporated herein by reference. See "Incorporation of Certain Documents
by Reference". The selected historical financial data at and for the years ended
December 31, 1996, 1995, 1994, 1993 and 1992 are derived from the consolidated
financial statements of the Company. The selected historical financial data at
September 30, 1997 and for the nine months ended September 30, 1997 and 1996 are
derived from the unaudited condensed consolidated financial statements of the
Company, which have been prepared on the same basis as the Company's audited
consolidated financial statements and, in the opinion of management, contain all
adjustments consisting of only normal recurring adjustments necessary for a fair
presentation of the financial position and results of operations for these
periods. The results of operations for the nine months ended September 30, 1997
may not be indicative of results for the full year.

</TABLE>

10
<PAGE>
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1997 1996 1995 1994 1993 1992
------ ------ ------ ------ ------ -----
(UNAUDITED)
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C>
BALANCE SHEET DATA (AT PERIOD END):
Invested assets.................. $2,156.5 $1,833.2 $1,504.2 $ 998.5 $ 944.6 $ 845.2
Total assets..................... 2,908.4 2,519.3 2,024.1 1,442.3 1,339.7 1,167.2
Loans payable.................... 125.0 125.0 140.0 140.0 150.0 165.0
Capital securities............... 100.0 -- -- -- -- --
Common shareholders'
equity........................ 344.0 290.1 279.3 194.9 230.7 170.8
Common shareholders'
equity (excluding unrealized
investment gains and losses).. 296.7 265.3 229.9 228.8 198.2 162.1

</TABLE>

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

* Not meaningful.
** Not available.

(4) Book value per share is calculated by dividing end of period shareholders'
equity (excluding realized investment gains and losses) by end of period
common shares outstanding.

(5) Capital invested in Administrative Reinsurance transactions represents the
sum of the consideration paid for life insurance in force acquired and the
related support capital.

11
<PAGE>
RECENT DEVELOPMENTS

RESULTS OF OPERATIONS (UNAUDITED)

On February 12, 1998, the Company announced that for the year ended
December 31, 1997, operating earnings (net income excluding after-tax realized
investment gains) totaled $46.6 million, or $3.28 per share, compared to $38.3
million, or $2.75 per share in 1996, representing a 19% increase on a per share
basis. Net income for the yearly periods totaled $49.5 million and $54.2
million, respectively. After-tax realized investment gains were $2.9 million in
1997 and $15.9 million in 1996, with 1996 gains including a $13.5 million gain
resulting from the sale of a strategic investment.

Total revenues for the year were $645.8 million, an increase of 9% over
last year's total of $592.5 million. Total revenues in 1997 include realized
investment gains of $4.5 million compared to $17.2 million in 1996. Policy
revenues increased by 9% for the same period to $490.3 million from $451.0
million last year. Ordinary life policy revenues increased by 17% to $336.6
million from $286.9 million and group policy revenues decreased by 6% to $153.6
million from $164.1 million. Investment income increased by 21% to $151.0
million from $124.3 million last year.

Revenues totaled $172.0 million in the fourth quarter compared to $158.0
million last year, an increase of 9%. This increase is mainly attributable to
investment earnings which increased by 19% to $40.9 million from $34.5 million.
Policy revenues increased by 6% to $129.4 million from $122.0 million and
realized investment gains were basically level. Ordinary life policy revenues
increased by 17% to $90.1 million from $77.2 million, and group policy revenues
decreased by 12% to $39.3 million from $44.9 million.

In 1997, the Company made the strategic decision to withdraw from the
group accident and health and special risk reinsurance business. Group accident
and health and special risk revenues for 1997 were $121.2 million, compared to
$139.7 million for 1996, representing a 13% decrease. The Company anticipates
further decreases of 50% in 1998 and 80% in 1999. The Company expects no adverse
financial impact from its withdrawal from this business.

12
<PAGE>
<TABLE>
<CAPTION>
UNAUDITED CONSOLIDATED FINANCIAL DATA
YEAR ENDED
DECEMBER 31,
------------
INCOME STATEMENT DATA: 1997 1996
- ---------------------- ---- ----
(in millions, except per share data)
<S> <C> <C>
Revenues:
Policy revenues........................................ $ 490.3 $ 451.0
Investment income...................................... 151.0 124.3
Realized investment gains.............................. 4.5 17.2
--------- ---------
Total revenues........................................ 645.8 592.5
Benefits and expenses:
Policy claims and benefits............................. 341.0 332.5
Policy acquisition costs............................... 142.1 111.9
Interest credited to policyholder accounts............. 40.7 34.6
Interest expense....................................... 8.0 8.4
Distributions on capital securities.................... 5.0 --
Other operating expenses............................... 32.7 29.0
---------- ---------
Total benefits and expenses........................... 569.5 516.5
--------- --------
Income before federal income taxes....................... 76.2 76.1
Provision for federal income taxes....................... 26.7 21.9
---------- ---------
Net income............................................... 49.5 54.2
========= ========
Earnings per share:
Basic earnings per share............................... 3.64 3.97
Diluted earnings per share............................. 3.48 3.89
Diluted earnings per common share,
Excluding realized investment gains................... 3.28 2.75
Dividends per share...................................... 0.52 0.40
Weighted average shares outstanding (diluted)............ 14.2 13.9

POLICY REVENUES:
Ordinary life reinsurance
First year............................................ $ 61.3 $ 36.2
Renewal............................................... 242.9 232.7
Group life reinsurance................................... 15.2 26.2

Administrative Reinsurance............................... 32.4 18.0
Automobile credit life and disability.................... 17.3 1.2

Group accident and health and special risk
reinsurance........................................... 121.2 139.7
--------- ---------
Total policy revenues.................................. $490.3 $451.0
========= ========

DECEMBER 31,
BALANCE SHEET AND OTHER FINANCIAL DATA: 1997
--------
Invested assets $2,784.6
At fair value.............................................. 2,683.2
At book value..............................................
Total assets.................................................. 3,700.2
Loans payable................................................. 125.0
Capital securities............................................ 100.0
Common shareholders' equity:
Including the effect of FAS 115........................... 373.8
Excluding the effect of FAS 115........................... 312.4
Return on average shareholders' equity (excluding
investment gains and losses)................................ 16%

</TABLE>
13
<PAGE>
ADMINISTRATIVE REINSURANCE TRANSACTIONS

Through its acquisition of REALIC in 1995, the Company put into place a
platform for acquiring and administering blocks of insurance in force. This
platform, known as Administrative Reinsurance, provides a mechanism for an
insurer to transfer to the Company administrative responsibilities to facilitate
the insurer's exit from a line of business by means of reinsurance or sale.

Since December 1997, the Company entered into three Administrative
Reinsurance transactions in which the Company has acquired or expects to acquire
approximately $1.1 billion in assets and approximately 400,000 policies for
administration.

In December 1997, the Company entered a coinsurance transaction whereby the
Company and ERAC will coinsure a block of life insurance and annuity business
from Allianz. Under the transaction, the Company, in conjunction with ERAC, will
coinsure certain universal life and traditional life insurance policies and
annuity contracts. The Company's agreement with ERAC provides that the Company
initially will reinsure 20% of the total block of business. Based on the terms
of its agreement, the Company expects that its share of the total block of
business being reinsured will increase to 60% over a period of several years.
The total block of business being coinsured entails $1.1 billion of life
insurance and annuity reserves, $90 million of annualized premiums and
approximately 250,000 policies. Under its agreement with ERAC, the Company will
have the primary responsibility for management oversight and administration of
the block of business.
The transaction closed in December 1997.

Also in December 1997, the Company entered into an agreement to acquire
Mission Life for a purchase price of approximately $60 million. Mission Life's
business is concentrated in life insurance policies designed to meet final
expenses. As of September 30, 1997, Mission Life had statutory assets of $225
million, and statutory capital and surplus including AVR of $27 million. Mission
Life's estimated 1997 premium income is $38 million, with over 130,000 policies
in force.

In February 1998, the Company entered into an agreement to acquire Lincoln
Liberty and First Delaware for an estimated purchase price of $50 million,
including adjusted capital and surplus and AVR of approximately $29 million.
Lincoln Liberty's and First Delaware's businesses primarily consist of
traditional and universal life insurance policies. For the year ended December
31, 1997, on a combined basis, Lincoln Liberty and First Delaware had estimated
premiums of $7 million and, at year end, estimated total assets, including
adjusted capital and surplus, of $219 million. The agreement, which is subject
to certain conditions including insurance regulatory approvals, targets a
closing date in the first quarter of 1998. These transactions had no impact on
the Company's 1997 results of operations, but are anticipated to have an impact
in 1998.

OTHER

On February 12, 1998, the Company's Board of Directors authorized and
declared an increase in the Company's annualized cash dividend to $0.60 per
share from $0.52 per share, or to $0.15 per share per quarter from $0.13. The
increase is effective with the first quarter 1998 dividend payment. The first
quarter dividend for 1998 is payable on March 25, 1998 to stockholders of record
at the close of business on March 4, 1998. Furthermore, the Board of Directors
of the Company has elected to discontinue the Company's stock repurchase
program. In addition, the Board of Directors approved an amendment to the
Company's stock option plan, to be effective as of the date it is approved by
stockholders, whereby 1,500,000 additional shares will be allocated to the plan.

The Company traditionally awards options pursuant to its stock option plan
to members of senior management in January of each year. The next such grant
will be in January 1999. These grants are intended to reinforce the executives'
common interests with stockholders, provide additional incentive to increase
stockholder value and to help retain key executive talent.

14
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

GENERAL

The preparation of financial statements in conformity with generally
accepted accounting principles requires the use of estimates and assumptions
developed by management. Any adjustments to reported bases of assets or
liabilities resulting from changes in estimates are reflected in earnings in the
period the estimates are revised. Certain management estimates are based, in
part, on information provided by ceding companies. As is usual in the
reinsurance business, the Company's ceding companies periodically update, refine
and revise reinsurance information provided to the Company. The financial
effects resulting from the incorporation of revised data are reflected in
earnings as changes in estimates.

Mortality and morbidity experience, both significant factors in the
determination of the results of operations of the Company, generally are
predictable over time but are subject to fluctuations from year to year and
quarter to quarter. Significant fluctuations from period to period could
adversely affect the Company's results of operations.

The Company's reinsurance agreements frequently provide for rights of
recapture, which permit the ceding company to increase the amount of liability
it retains on the reinsured policies after the policies have remained in force
for a designated period of time (generally ten to twenty years). Accordingly, an
increase in the amount of liability retained by the ceding company will decrease
both the Company's insurance in force and premiums to be received from the
reinsured policies. To date, recaptures have not had a material impact on the
Company's results of operations.

The Company retrocedes portions of certain risks in excess of a
predetermined retention amount for which it has accepted liability. From time to
time, the Company also has entered into quota share retrocessional agreements,
and maintained catastrophe reinsurance to protect against catastrophic event
risks. Failure of a retrocessionaire to honor its obligations could result in
material losses to the Company; to date, no such losses have occurred. No
amounts due the Company from its retrocessionaires were deemed uncollectible at
December 31, 1996.

The Company is party to several reinsurance agreements for which
transactions are denominated in Canadian currency. The assets and liabilities
related to such reinsurance agreements are remeasured in U.S. dollars, the
functional currency, at current exchange rates as of the end of each reporting
period. Deterioration in the exchange rate of Canadian currency could have an
adverse effect on results of operations. At December 31, 1996, the Company had
$37.2 million of net assets denominated in Canadian currency. The Company has
not engaged in hedging or any other activities to mitigate the effect on
earnings of a deterioration in the exchange rate of Canadian currency.

The Company's total policy revenues have increased in each year since 1992.
However, should the Company be unable to generate sufficient new business to
offset the expected future decline in policy revenues associated with the
current business in force due to lapsation and mortality, the Company's results
of operations could be adversely affected.

In 1996, the Company derived approximately 60% of its policy revenues from
the reinsurance of ordinary life insurance policies under agreements with ceding
companies which cover new business to be written by the client and/or existing
blocks of in force business. This business generally is written on a direct
basis and is written under agreements with approximately 450 ceding companies.
In 1996, forty-five ceding companies each accounted for at least $1.0 million of
ordinary life reinsurance policy revenues and in the aggregate represented
approximately 89% of the Company's ordinary life reinsurance policy revenues.

15
<PAGE>
The Company's group life reinsurance business, which accounted for
approximately 5% of policy revenues in 1996, is written on a direct basis and
generally is excess of loss and often includes experience rating provisions.

Approximately 30% of the Company's policy revenues were generated from
group accident and health and special risk reinsurance in 1996. This business
generally is written on an annual basis through reinsurance facilities which are
managed by managing general underwriters. Generally the risks are shared by
several reinsurers on a quota share basis.

The remainder of 1996 policy revenues was derived from Administrative
Reinsurance. This business represents the acquisition of closed blocks of
primary insurance policies (both interest sensitive and traditional) and annuity
contracts and is expected to become a more significant component of policy
revenues in the future.

YEAR ENDED DECEMBER 31, 1996

Through its acquisition of REALIC in 1995, The Company put into place a
platform for acquiring and administering blocks of insurance in force. This
platform, known as Administrative Reinsurance, provides a mechanism for an
insurer to transfer to REALIC administrative responsibilities to facilitate the
insurer's exit from a line of business by means of reinsurance or sale.

During 1996, the Company, through REALIC, completed several such
transactions (collectively, "Transactions"). The Transactions increased total
assets and liabilities by approximately $400 million. The assets received
consisted primarily of cash and high quality investments and the liabilities
assumed consisted primarily of future policy benefits on traditional life
insurance policies and account values on annuities and interest sensitive life
insurance policies. For 1996, the Transactions contributed policy revenues
totaling $10.9 million and approximately $10.8 million of investment income.

RESULTS OF OPERATIONS

Net income. Net income increased by $19.6 million in 1996 to $54.2 million,
or $3.89 per share, compared with $34.6 million, or $2.32 per share, in 1995 and
$34.3 million, or $2.21 per share, in 1994. Included in these results were
after-tax realized investment gains of $15.9 million and $2.4 million in 1996
and 1995, respectively. In March 1996, the Company realized a gain of $13.5
million from the sale of its equity investment in Nacolah Holding Corporation
("Nacolah"), parent of The North American Company for Life and Health Insurance.
The Company utilized existing tax net operating loss carryforwards to offset the
taxes otherwise payable in connection with the gain, and reversed an existing
deferred tax valuation allowance, resulting in a tax benefit of $4.8 million.
Net income in 1995 also included an extraordinary charge amounting to $1.0
million, which resulted from the write-off of unamortized loan costs associated
with amending and restating the 1992 Credit Agreement.

Earnings before realized investment gains and federal income taxes
increased by $7.8 million to $58.9 million in 1996 compared with $51.1 million
in 1995 and $52.7 million in 1994. The increase in 1996 was primarily due to
earnings from the Transactions and increased business in force within ordinary
reinsurance.

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<PAGE>
Policy revenues. Policy revenues by major source for the three year period
are as follows:

1996 1995 1994
------ ------ -----

(in millions)

Ordinary reinsurance........ $268.9 $243.7 $225.0

Group reinsurance........... 164.1 136.8 125.9

Administrative Reinsurance.. 18.0 2.7 --
-------- ------ -----

Total....................... $451.0 $383.2 $350.9
====== ====== ======

The growth in ordinary reinsurance revenues was largely due to new
reinsurance agreements entered into during the last two years, as first year
premiums totaled $36.2 million in 1996 and increased by 68% and 17% during 1996
and 1995, respectively. The ordinary reinsurance lapse rate has ranged from
9-11% during the last three years.

Group reinsurance policy revenues consist of life, accident and health,
special risk and credit coverages. During the last three years, the Company's
group accident and health and special risk reinsurance business increased
substantially over previous levels. Group accident and health and special risk
reinsurance policy revenues increased from $102.0 million in 1994 to $112.4
million in 1995 and $139.7 million in 1996. This growth resulted principally
from increased participation in major medical and accident reinsurance pools and
quota share arrangements, which are organized and managed by professional
managing general underwriters. The rate of growth experienced in accident and
health and special risk policy revenues is not expected to continue due to
management's decision to selectively reduce or eliminate participation in
certain pool arrangements to better balance the mix of risks reinsured.

The growth in Administrative Reinsurance policy revenues has been due to
the Transactions. Future revenue growth from Administrative Reinsurance depends
on the Company's ability to identify and complete similar transactions.

Investment income. Investment income increased by 26% in 1996 to $124.3
million and by 20% in 1995 to $98.6 million. These increases were largely due to
the growth in invested assets from the REALIC acquisition in 1995 and the
Transactions completed in 1996. This rate of growth is dependent on new
Administrative Reinsurance transactions and, to a lesser extent, new ordinary
reinsurance business. The weighted average portfolio yield rate (amortized cost
basis) was 7.8% in 1996 and 8.2% in 1995 and 1994.

Policy benefits. Policy benefits increased by 18% in 1996 and 15% in 1995.
These increases resulted from higher volumes of group business and increased
life insurance in force, which was significantly impacted by the acquisition of
REALIC and the completion of the Transactions. As a percentage of policy
revenues, policy benefits were 74% in each of 1996 and 1995 and 70% in 1994. The
increase experienced in the last two years was primarily due to an increase in
revenues generated under reinsurance treaties with no acquisition costs,
coinsurance involving paid-up insurance and Administrative Reinsurance, which
produces no new business and, therefore, generally has a higher ratio of
benefits to policy revenues.

Policy acquisition costs. Policy acquisition costs increased by 17% in 1996
and 8% in 1995. These increases reflect the higher volumes of ordinary and group
accident and health reinsurance business and the Transactions. As a percentage
of policy revenues, policy acquisition costs were 25% in each of 1996, 1995 and
1994.

17
<PAGE>
Interest credited to policyholder accounts. Interest credited to
policyholder accounts increased by 63% to $34.6 million in 1996 and by 42% to
$21.2 million in 1995. These increases are attributable to the acquisition of
REALIC and the Transactions as the majority of the policy benefit liabilities
acquired in these transactions are interest sensitive.

Interest expense. Interest expense, including facility fees and agency
fees, decreased to $8.4 million in 1996 from $10.7 million in 1995 and $9.1
million in 1994. This decrease was due to (i) a decrease in the weighted average
variable rate charged on outstanding debt, which decreased to 6.2% in 1996 from
7.1% in 1995 and (ii) a decrease in the outstanding principal balance to $125.0
million resulting from the first quarter of 1996 repayment of $15.0 million. The
effective interest rate as of December 31, 1996 was 6.0%.

Other operating expenses. Other operating expenses increased significantly
in 1996 mainly due to (i) third party administration fees incurred by REALIC,
(ii) higher compensation costs related to the Transactions and (iii) higher
staffing levels. REALIC utilizes the services of a third party administrator to
administer all of its business; accordingly, to the extent the Company is
successful in expanding Administrative Reinsurance, its operating expenses will
continue to increase. Other operating expenses were essentially level in 1995
and 1994 as Canadian currency remeasurement losses incurred in 1994 totaling
$4.2 million were partially offset by third party administrator fees incurred in
connection with Administrative Reinsurance and by higher employee-related and
consulting costs in 1995.

The effective federal income tax rate was 29% in 1996 compared with the
statutory rate of 35%. The federal income tax expense is net of a $4.8 million
tax benefit resulting from the reversal of a deferred tax valuation allowance in
connection with the realized investment gain on the Nacolah transaction. In 1995
and 1994, the effective federal income tax rate was 35%.

FINANCIAL CONDITION AND LIQUIDITY

INVESTMENTS

Invested assets at fair value amounted to $1,833.2 million and $1,504.2
million at December 31, 1996 and 1995, respectively. The increase in invested
assets in 1996 resulted from the Transactions partially offset by a decrease in
unrealized investment gains. Net unrealized gains on invested assets totaled
$39.7 million and $82.5 million at year end 1996 and 1995, respectively, and
generally reflect the increase in interest rates from period to period.

The Company's investment policy is designed to maintain a high quality
portfolio, maximize current income, maintain a high degree of liquidity, and
match the cash flows of the portfolio to the required cash flows of the
Company's liabilities.

The Company does not engage in trading activities to generate realized
investment gains and, thus, does not have a trading portfolio. However, the
Company evaluates the desirability of continuing to hold a security when market
conditions, creditworthiness or other measurement factors change. These changes
may relate to a change in the credit risk of an issuer and a decision to sell
may be made to avoid further declines in realizable value. Securities also may
be sold prior to maturity to provide liquidity should the need arise.

The Company's fixed maturity securities, which constituted 94%, or $1,720.6
million, of the total fair value of its invested assets as of December 31, 1996,
are predominantly investment grade, liquid securities with varying maturity
dates. The fair value of such investments may vary depending on economic and
market conditions, the level of interest rates and the perceived
creditworthiness of the issuer.

18
<PAGE>
At December 31, 1996, approximately $75.8 million (at fair value), or 4%,
of the Company's invested assets consisted of below investment grade securities.
The Company generally limits its investments in fixed maturities that are rated
below investment grade, as these investments are subject to a higher degree of
credit risk than investment grade securities. The Company closely monitors its
below investment grade securities as well as the creditworthiness of the
portfolio as a whole. When fair values decline for reasons other than changes in
interest rates or other perceived temporary conditions, the security is written
down to its net realizable value. In 1996, 1995 and 1994, the Company wrote down
the value of certain securities by $0.5 million, $0.9 million, and $1.3 million,
respectively. The Company had no fixed maturities in default at December 31,
1996.

The results of operations and the financial condition of the Company are
significantly affected by the performance of its investments and by changes in
interest rates. During a period of declining interest rates, if the Company's
investments are prematurely sold, called, prepaid or redeemed, the Company would
be unable to reinvest the proceeds in securities with comparable rates of
return. During a period of rising interest rates, the fair value of the
Company's invested assets could decline. In addition, rising interest rates
could also cause disintermediation which in turn could cause the Company to be
required to sell investments at prices and times when the fair values of such
investments are less than their amortized cost. The Company believes that its
traditional life insurance liabilities are not highly interest sensitive and,
therefore, the effects of fluctuating interest rates on these liability cash
flows are not significant. For interest sensitive liabilities, the Company
utilizes asset/liability management to minimize the impact of changes in
interest rates. The Company has not engaged in hedging activities to mitigate
the effects of interest rate changes on its invested assets.

At December 31, 1996, collateralized mortgage obligations and
mortgage-backed pass-through securities represented approximately 21% of the
Company's invested assets. Certain of such investments may be subject to
significant prepayment risk and, therefore, are susceptible to fluctuations in
the level of interest rates.

During 1996, 1995 and 1994, proceeds from sales of fixed maturities
amounted to $253.4 million, $370.8 million and $134.8 million, respectively. The
net gains realized from such sales were $1.8 million, $4.5 million and $0.4
million for the respective periods. The majority of the 1996 and 1995 sales was
attributable to the restructuring of portfolios acquired in connection with the
acquisition of REALIC and the completion of the Transactions.

Real estate and mortgages (at cost) totaled $7.0 million at December 31,
1996 and were acquired as part of the Transactions. Mortgage loans comprise the
majority of this amount.

POLICY BENEFIT LIABILITIES

The Company's obligations for policy benefit liabilities increased by 33%
and 42% during 1996 and 1995, respectively. These increases resulted from the
acquisition of REALIC and the Transactions and increased reinsurance of new and
in force life insurance business. Policy benefits consist of the present value
of net future benefits under traditional ordinary and group life insurance
policies, account values under interest sensitive life and annuity contracts,
group accident and health claim reserves, life claims payable and other
miscellaneous liabilities. Through REALIC and the Transactions, the relative
proportion of interest sensitive and annuity policy benefit liabilities to the
total has increased significantly and, at December 31, 1996, totaled
approximately half of the policy benefits under life insurance contracts.

Asset/liability management techniques are utilized by the Company to
minimize the risks associated with interest rate fluctuations. For interest
sensitive policy benefits, the Company seeks to invest in assets with equal
durations while attaining a targeted rate of return. The Company currently does
not engage in hedging transactions to mitigate the effects of interest rate
fluctuations.

19
<PAGE>
DEBT AND SHAREHOLDERS' EQUITY

In 1995, the Company amended and restated the 1992 Credit Agreement to
convert the facility to a senior secured revolving and term loan with a stated
maturity of January 5, 2002. The two year revolving loan has a commitment amount
of $160.0 million and may be extended for up to two one-year periods with bank
consent. During 1996, the Company received bank consent to extend the maturity
date by one year. At December 31, 1996, loans totaling $125.0 million were
outstanding.

Interest rates on the loans are variable and, subject to certain
restrictions, the Company may select the applicable interest rate index and the
period of applicability.

The 1995 Credit Agreement contains certain covenants which, among other
things, restrict under certain circumstances the payment of dividends and
repurchase of treasury stock. Further, certain actions of the Company are
limited, including those related to mergers, acquisitions, indebtedness and
investments. The Company and its subsidiaries are required to meet certain
financial ratios and maintain a minimum level of statutory surplus.

Shareholders' equity increased by $10.8 million to $290.1 million at
December 31, 1996 from $279.3 million at December 31, 1995, primarily as a
result of net income of $54.2 million, partially offset by a decrease in net
unrealized appreciation of securities of $24.5 million, treasury stock purchases
of $17.0 million and common shareholder dividends of $5.5 million.

Under the stock repurchase program initially approved by the Company's
Board of Directors during 1995, approximately 2.1 million shares have been
purchased under a total authorization of 3.0 million shares. The Company may use
internally generated funds or borrowings under the 1995 Credit Agreement to
finance additional purchases of shares, if any, under the repurchase program.

Dividends paid to common shareholders reflect an annual rate of $.40 per
share in 1996 and $.28 per share in 1995; effective in the first quarter of
1997, the Company increased its annual dividend rate to $.52 per share.

Debt to total capitalization (outstanding debt divided by outstanding debt
plus shareholders' equity) decreased significantly during the last two years. As
a percentage, these amounts were 30%, 33% and 42% at year-end 1996, 1995 and
1994, respectively. Management believes that, to best balance leverage and
regulatory targets, a debt to total capitalization ratio in the range of 25- 35%
is appropriate.

LIQUIDITY

Sources of liquidity are available to the Company in the form of cash and
short-term investments and, if necessary, the sale of invested assets. The
Company also may borrow an additional $35.0 million under the 1995 Credit
Agreement and may enter into reverse repurchase agreements to fund short-term
cash needs. In addition to its debt servicing and dividend obligations, the
Company's financial obligations consist of policy benefit and acquisition costs,
taxes and general operating expenses. During the next twelve months, management
believes these obligations will be adequately provided for by policy revenues
and investment income.

The primary sources of funds for Life Re Corporation (the "Parent") consist
of dividends and surplus debenture principal and interest payments from TexasRe,
which are further funded by dividends from Life Reassurance to TexasRe. The
ability of the Parent to make payments of principal and interest as well as to
continue to pay common stock dividends is ultimately dependent on the statutory
earnings and surplus of its subsidiaries. The following table shows surplus
debenture principal and interest payments received and dividends received by the
Parent for the last three years

20
<PAGE>
as well as dividends available for payment in that year without prior approval
of state regulatory authorities:

YEARS ENDED DECEMBER 31,

1996 1995 1994
---- ---- ----

(in millions)

Surplus debenture amounts received from TexasRe:

Interest................................. $10.0 $19.4 $ 2.3

Principal................................ -- 10.0 5.0
---- ---- ----

10.0 29.4 7.3

Dividends received from TexasRe............. 12.1 15.0 --
---- ---- ----

$22.1 $44.4 $ 7.3
==== ==== ====

Dividends available for payment by
TexasRe.................................... $27.1 $28.2 $15.4

The unpaid principal amount of the surplus debentures at December 31, 1996
was $160.5 million. The interest rate payable under the terms of the surplus
debentures is the same as the interest rate under the 1995 Credit Agreement. In
1995, the principal amortization terms of the surplus debentures were changed to
conform to the terms of the 1995 Credit Agreement.

Currently, no prior approval of the Texas Insurance Commissioner is
required to prepay or pay scheduled interest or principal on the surplus
debentures provided that, after giving effect to any such payment, the statutory
surplus of TexasRe exceeds $125.0 million.

TexasRe relies primarily on dividends from Life Reassurance to meet its
obligations under the surplus debentures as well as to pay dividends to the
Company. TexasRe received dividends from Life Reassurance during 1996, 1995 and
1994 of $14.9 million, $30.9 million, and $13.5 million, respectively.

The payments of dividends by TexasRe and Life Reassurance are subject to
restrictions set forth in Texas and Connecticut insurance laws and regulations.
Under Connecticut law, no dividend in an amount exceeding Life Reassurance's
earned surplus may be paid without prior regulatory approval. Approval has been
received from the Connecticut Department of Insurance to define earned surplus
for this purpose to include amounts of paid in surplus in excess of $125.0
million.

Purchases and sales of fixed maturities increased substantially in 1996 and
1995 due primarily to restructuring of portfolios related to REALIC and the
Transactions. The completion of these types of transactions generally produces a
cash outlay for acquisitions and a net cash inflow upon reinsurance of insurance
in force. During 1996, net cash of $59.7 million was generated by the receipt of
cash as consideration for the assumption of insurance liabilities partially
offset by the purchase price paid in acquiring companies. Financing cash flows
include debt prepayments of $15.0 million in 1996 and $10.0 million in 1994.
Withdrawals from annuity and interest sensitive life insurance contracts totaled
$74.7 million in 1996 compared to $30.7 million in 1995 due to increased volumes
of business resulting from the Transactions and an increase in the related rate
of lapsation.

NINE MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO NINE MONTHS ENDED SEPTEMBER
30, 1996

During 1997 and 1996, the Company completed several transactions through
which it acquired blocks of insurance in force. The 1997 Transactions, which
were the purchase of AML Acquisition

21
<PAGE>
Company and a coinsurance agreement with UNUM Life Insurance Company of America
and First UNUM Life Insurance Company, increased total assets by approximately
$240 million. The 1996 Transactions increased total assets by approximately $400
million.

RESULTS OF OPERATIONS

Net Income. Net income totaled $34.9 million for the nine months ended
September 30, 1997 compared to $41.0 million for the same period last year.
Included in the 1996 results was an after-tax realized gain of $13.5 million
from the sale of a strategic investment. In conjunction therewith, the Company
utilized existing tax net operating loss carryforwards to offset the taxes
otherwise payable in connection with the gain and reversed an existing deferred
tax valuation allowance, resulting in a tax benefit of $4.8 million. Income
before federal income taxes and excluding realized investment gains was $50.9
million in the current nine month period compared to $40.0 million in the same
period last year. The increase in earnings is largely attributable to higher in
force volumes in ordinary life reinsurance and comparatively favorable
mortality, contributions from Administrative Reinsurance as a result of the 1996
Transactions and income from an automobile credit reinsurance agreement
effective July 1996. These favorable results were partially offset by higher
morbidity in the group accident and health and special risk pool business.
Morbidity experience within the group accident and health and special risk pool
business is not expected to improve materially in the near term.

Policy revenues. Policy Revenues increased by $32.0 million, or 10%, to
$360.9 million in 1997 from $328.9 million in 1996. Ordinary life reinsurance
policy revenues increased by $25.5 million, or 13%, to $224.8 million due to an
increase in first year premiums of $17.5 million and higher renewal premiums
resulting from higher in force amounts. An increase in Administrative
Reinsurance policy revenues of $11.4 million is attributable to the
Transactions. Future revenue growth from Administrative Reinsurance is dependent
on the completion of similar transactions.

Group policy revenues decreased by $4.9 million, or 4%. Of the group policy
revenues, premiums of $13.3 million in the 1997 period were generated from
automobile credit reinsurance. Group life premiums declined by $7.2 million
period to period due to treaty terminations. Group accident and health and
special risk premiums decreased by $11.0 million, or 11%, primarily as a result
of an agreement, effective January 1, 1997, to retrocede 50% of 1997 group
accident and health and special risk reinsurance risks. Also contributing to the
decline were reductions in certain pool participations which were offset by
higher premium from remaining business. In October 1997, the Company announced
its withdrawal from the group accident and health and special risk pool
reinsurance marketplace. The Company will not renew or accept new participations
in group accident and health and special risk pools. The Company anticipates a
decline in policy revenues in these lines of approximately 20% for the full year
1997 from 1996 policy revenues, 50% in 1998 from 1997 policy revenues and 80% in
1999 from 1998 policy revenues, as the existing business runs off. The Company
expects no adverse financial impact from its withdrawal from this business.

Investment income. Investment Income increased by 22% to $110.0 million as
a result of assets received in conjunction with the Transactions, the automobile
credit reinsurance agreement and proceeds from the Company's issuance in June
1997 of capital securities, offset by a decrease in the weighted average
portfolio yield rate, which was 7.49% and 7.61% at September 30, 1997 and 1996,
respectively. Future investment income growth is dependent on, among other
factors, the completion of additional Administrative Reinsurance transactions
and continued growth in ordinary life reinsurance and automobile credit
reinsurance business.

Policy benefits. Policy benefits increased by $6.9 million from the prior
period due to higher volumes of business in force; however, as a percentage of
policy revenues, policy benefits improved to 70% in 1997 from 75% in 1996.
Contributing to the lower percentage is a shift in the mix of business from
excess reinsurance to first dollar quota share reinsurance; under first dollar
quota share reinsurance, typically a higher proportion of the reinsurance
premium funds acquisition costs and a

22
<PAGE>
lesser proportion funds mortality costs. Also, improved mortality in ordinary
life reinsurance was partially offset by a deterioration in group accident and
health and special risk morbidity experience.

Policy acquisition costs. Policy acquisition costs as a percentage of
policy revenues were 29% for the nine months ended September 30, 1997 compared
to 25% for the same period of 1996. The increase is largely due to higher
ultimate commission rates on ordinary life reinsurance resulting from the shift
of the mix of business.

Interest credited to policyholder accounts. Interest credited to
policyholder accounts increased to $28.6 million in 1997 from $24.1 million in
1996 corresponding to the growth in interest sensitive business resulting from
the Transactions. These results were partially offset by a revised estimate of
certain bonus interest provisions and the lapsation of business in force.

Interest expense. Interest expense declined by $.5 million as a result of a
$15.0 million principal repayment in March 1996 and a decline in the weighted
average variable rate to 6.0% from 6.2%.

Distributions on capital securities. Distributions on capital securities of
$2.8 million were incurred from the issuance in June 1997 of $100 million of
8.72% capital securities by a subsidiary trust as further described in "--
Financial Condition and Liquidity" below.

Other operating expenses. Other operating expenses increased by $4.0
million to $25.0 million partly as a result of increased fees for third party
administration of Administrative Reinsurance, which fees increased as a result
of greater in force volumes resulting from the Transactions. The Company's
higher compensation costs also contributed to the increase in operating
expenses.

Federal income taxes. Federal income taxes were provided at the federal
statutory rate of 35% for 1997. The 1996 rate was 27% due to the previously
mentioned tax benefit from utilization of operating loss carryforwards.

FINANCIAL CONDITION AND LIQUIDITY

INVESTMENTS

Invested assets grew to $2,156.4 million at September 30, 1997 from
$1,833.2 million at December 31, 1996 as a result of the issuance of $100
million of capital securities, net assets of approximately $200.0 million
received from the Transactions in 1997, the reinvestment of operating cash flows
of $40.6 million and a $38.8 million interest rate related fair value increase,
partially offset by net withdrawals from policyholder accounts of $47.7 million.

The Company's fixed maturity portfolio (including the fixed maturity
securities which are included in assets held by ceding company under reinsurance
treaty) constituted 94% of invested assets at September 30, 1997, of which $69.0
million, or 3.2% of invested assets, consisted of below investment grade
securities. At September 30, 1997, the weighted average quality rating of the
fixed maturities portfolio was "A" and no fixed maturities were in default.

LIQUIDITY

Sources of liquidity are available to the Company in the form of cash and
short-term investments and, if necessary, the sale of invested assets. The
Company may enter into reverse repurchase agreements to fund short-term cash
needs and can also borrow an additional $35.0 million under its revolving credit
agreement. Effective May 1, 1997, the credit agreement was amended to reduce the
margin over an index rate that determines the amount of interest paid by the
Company. In addition, the Company may defer the commencement of principal
amortization until

23
<PAGE>
January 2001. As of September 30, 1997 and December 31, 1996, the weighted
average interest rate on long-term debt was 6.0%. In addition to debt servicing
and dividend obligations, the Company's financial obligations consist of policy
benefit and acquisition costs, taxes and general operating expenses. Management
believes that these obligations will be adequately provided for by policy
revenues and investment income for the next twelve months.

The ability of the Company to make principal and interest payments under
its credit agreement and fund capital security distributions as well as to
continue to pay common stock dividends ultimately is dependent on the statutory
earnings and surplus of the insurance subsidiaries. The transfer of funds from
the subsidiaries to Life Re Corporation is subject to applicable insurance laws
and regulations. Pursuant to a stock repurchase program approved by the
Company's Board of Directors under which a total 3.0 million shares have been
authorized for purchase, the Company has repurchased approximately 2.2 million
shares for an aggregate purchase price of $46.6 million.

NEW ACCOUNTING PRONOUNCEMENTS

In 1997, the Financial Accounting Standards Board issued Statements No.
128, 130 and 131. These statements concern the calculation of earnings per share
and the presentation of comprehensive income and segment reporting,
respectively. These statements will not affect the Company's financial condition
or results of operations.

24
<PAGE>
BUSINESS

Life Re, through its principal wholly-owned subsidiary, Life Reassurance,
is a leading provider of life reinsurance in the United States, with over $145
billion of life reinsurance in force and assets of $3.7 billion at December 31,
1997. Management believes the Company is the largest independent publicly traded
life reinsurer in the United States, and that it ranks fifth overall among U.S.
life reinsurers as measured by life reinsurance in force. The Company's
operating strategy has been to focus on two core lines of business: (i)
TRADITIONAL LIFE REINSURANCE, which involves the transfer of mortality risks on
new sales from primary (or ceding) insurers of ordinary and group life insurance
policies to the Company and (ii) ADMINISTRATIVE REINSURANCESM, which involves
the acquisition of blocks of life insurance in force and, frequently, the
assumption of administrative responsibility by the Company. During the five year
period ending December 31, 1997, the Company's operating earnings per share and
book value per share (excluding unrealized capital gains and losses) have grown
at 19% and 16% compound annual growth rates, respectively, and return on
[average] equity (excluding unrealized capital gains and losses) has averaged
15%.

The Company derived approximately 18% of its revenues for the year ended
December 31, 1997 from Administrative Reinsurance. Management expects the
Administrative Reinsurance line of business to be an important source of
additional growth in the Company's pre-tax operating income. Through
Administrative Reinsurance, the Company is able to benefit from the increasing
consolidation in the life insurance industry by focusing on acquiring non-core
or smaller blocks of life insurance in force. In July 1995, the Company acquired
REALIC, which served as its initial platform for Administrative Reinsurance.
With the acquisition of REALIC, the Company obtained primary insurance licenses
and began outsourcing administrative services for acquired blocks of insurance
in force on a variable cost basis. Since 1995, the Company has acquired or is
under contract to acquire a total of 10 blocks of insurance in force,
representing in excess of $2.0 billion in assets.

25
<PAGE>
Reinsurance lines of business and the deterioration in accident and health
morbidity experience. The Company does not expect this line of business to
affect materially future results.

Life Re was founded in 1988 by Rodney A. Hawes, Jr., Douglas M. Schair and
Jacques E. Dubois, each of whom has over 25 years of insurance industry
experience, for the purpose of acquiring Life Reassurance from General
Reinsurance Corporation. Life Re currently has a rating of A+ (Superior) by A.M.
Best. A.M. Best ratings are based upon an insurance company's financial strength
regarding its ability to pay obligations to policyholders and are not directed
toward the protection of investors.

In 1995, the Company formed a Bermuda subsidiary, Life Re International,
Ltd., for the reinsurance of domestic and internationally generated life and
health insurance risks. Currently, Life Re International, Ltd. has minimal
business in force.

BUSINESS WRITTEN

GENERAL

The business of reinsurance generally consists of reinsurers, such as the
Company, who enter into contractual arrangements (treaties) with primary
insurers (ceding companies) whereby the reinsurer agrees to indemnify the ceding
company for all or a portion of the risk associated with the underlying
insurance policy in exchange for a reinsurance premium payable to the reinsurer.
Reinsurers also may enter into retrocessional reinsurance arrangements with
other reinsurers, which operate in a manner similar to the underlying
reinsurance arrangement described above. Under retrocessional reinsurance
arrangements, the reinsurer shifts a portion of the risk associated with the
underlying insurance policy to the retrocessionaires.

Reinsurance agreements may be written on an automatic treaty basis or
facultative basis, and reinsurance may be marketed directly by the reinsurer or
through reinsurance intermediaries or brokers. An automatic treaty provides for
a ceding company to cede contractually agreed-upon risks on specific blocks of
business to a reinsurer and binds that reinsurer without obtaining further
approval from that reinsurer. Facultative reinsurance is the reinsurance of
individual risks whereby a reinsurer has the opportunity to analyze and
separately underwrite a risk prior to agreeing to accept the risk. In addition,
both automatic treaty and facultative reinsurance may be written on either a
quota share basis (a percentage of each risk in the reinsured class of risk is
assumed by the reinsurer from the ceding company with premiums proportional to
such assumed risk being paid to reinsurers) or an excess of loss basis
(reinsurers indemnify the ceding company up to a contractually-specified amount
for a portion of loss exceeding a specified loss retention amount in
consideration of nonproportional premiums being paid).

The Company's operating strategy has been to focus on two core lines of
business: (i) Traditional Life Reinsurance and (ii) Administrative Reinsurance.
Traditional Life Reinsurance includes ordinary life reinsurance and group life
reinsurance. Administrative Reinsurance includes automobile credit life and
disability. These two core lines of business cover the following risks: (i)
mortality and morbidity, (ii) investment, (iii) lapsation, and (iv) medical
expense, disability and accident. The Company writes reinsurance predominantly
on a direct basis with primary life insurance companies. Life Reassurance has a
closed block of primary insurance in force consisting of single premium
annuities issued prior to 1986. In addition, the Administrative Reinsurance line
of business, which focuses on administering primary life insurance in force,
includes closed blocks of directly written life insurance. In 1997, the Company
made a strategic decision to withdraw from the group accident and health and
special risk reinsurance business.

The following table sets forth selected information for the indicated
periods concerning the Company's insurance operations:

26
<PAGE>
DISTRIBUTION OF POLICY REVENUES AND INSURANCE IN FORCE

YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
------------------ --------------------- ----------------------
AMOUNT % AMOUNT % AMOUNT %
------ --- ------ --- ------ ---
(DOLLARS IN THOUSANDS, EXCEPT IN FORCE DATA)
<S> <C> <C> <C> <C> <C> <C>
Policy revenues:
Ordinary life reinsurance $268,902 59.6% $243,672 63.6% $224,998 64.1%
Group life reinsurance 23,213 5.2 24,442 6.4 23,913 6.8

Administrative Reinsurance 18,013 4.0 2,714 .7
Automobile credit life
and disability 1,211 .2 -- 0.0 -- 0.0

Group accident and health
and special risk reinsurance 139,653 31.0 112,403 29.3 101,964 29.1
------- ---- ------- ---- ------- ----

Total policy revenues $450,992 100.0% $383,231 100.0% $350,875 100.0%
======= ===== ======= ===== ======= =====

Insurance in force at end of year
(in millions and before reinsurance ceded):
Ordinary life reinsurance $103,560 $ 83,668 $ 74,167
Group life reinsurance 7,933 6,430 7,046
Administrative Reinsurance 4,519 1,185 --
------- ------- -------

Total insurance in force $116,012 $ 91,283 $ 81,213
======= ======= =======

Ordinary life lapse ratio 9.4% 10.8% 9.9%

</TABLE>

ORDINARY LIFE REINSURANCE

Ordinary life reinsurance is generally the reinsurance of individual term
life insurance policies, whole life insurance policies, universal life insurance
policies, and joint and survivor insurance policies. The Company's ordinary life
line of business includes all of these products.

Substantially all of the Company's policy revenues with respect to
ordinary life reinsurance are written on an automatic treaty basis. Ordinary
life reinsurance is written on a facultative basis only in limited
circumstances, generally for primary insurers with which the Company has
automatic treaty reinsurance business. Facultative reinsurance is individually
underwritten by the Company for each policy to be reinsured, with the pricing
and other terms established at the time the policy is underwritten based upon
rates negotiated in advance. Most of the Company's ordinary life reinsurance
business is written on a quota share basis. The Company generally requires
ceding companies to retain at least 10% of every risk, whether the business is
written on an excess or quota share basis. The Company generally limits its own
net liability on any one ordinary life risk to $1.0 million. The Company's
reinsurance agreements frequently provide for rights of recapture, which permit
the ceding company to increase the amount of liability it retains on the
reinsured policies after the policies have remained in force for a designated
period of time (generally between ten and twenty years). Accordingly, an
increase in the amount of liability retained by the ceding company will decrease
both the Company's insurance in force and premiums to be received from the
reinsured policies.

27
<PAGE>
The Company's ordinary life reinsurance agreements typically remain in
force for the life of the underlying policies reinsured. The Company is entitled
to renewal policy revenues absent the death of the insured, voluntary surrender
or lapse of the policy due to nonpayment of premium or the recapture by the
ceding company of the risks reinsured.

The following table sets forth the Company's policy revenues on ordinary
life reinsurance first year business and renewal business for the periods
indicated:

DISTRIBUTION OF FIRST YEAR AND RENEWAL POLICY REVENUES
FOR ORDINARY LIFE REINSURANCE
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-----------------------
1996 1995 1994
---------------- ------------------ -----------------
AMOUNT % AMOUNT % AMOUNT %
------ --- ------ --- ------ ---
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Ordinary life reinsurance policy
revenues:
First year (1)................. $ 36,217 13.5% $ 17,736 7.3% $ 13,248 5.9%
Renewal ...................... 232,685 86.5 225,936 92.7 211,750 94.1
------- ---- ------- ----- ------- ----
Total ordinary life reinsurance
policy revenues................ $268,902 100.0% $243,672 100.0% $224,998 100.0%
======= ===== ======= ===== ======= =====

</TABLE>

- ----------------------
(1) First year policy revenues are premiums received within one year of the
date of issuance of the underlying policy, whether reinsured by treaties
entered into prior to or during the indicated period.

As of December 31, 1996, the Company reinsured ordinary life insurance
business under treaties with approximately 450 ceding companies. In 1996, 45
ceding companies each accounted for at least $1.0 million of ordinary life
reinsurance policy revenues and in the aggregate represented approximately 89%
of the Company's ordinary life reinsurance policy revenues. The Company markets
its ordinary life reinsurance to a broad cross section of companies, which vary
in size, corporate structure and geographic location. No ordinary life ceding
company accounted for more than 10% of the Company's policy revenues in 1996.

The Company occasionally reinsures ordinary life insurance business on an
experience rated basis, whereby the ceding company receives a refund of a
portion of the profits resulting from favorable claims experience with respect
to the underlying policies. Experience rating refunds amounted to $5.1 million,
$4.4 million and $2.8 million for 1996, 1995 and 1994, respectively.

The Company reinsures, or retrocedes, portions of certain risks for which
it has accepted liability. The Company's policy is to retain up to $1.0 million
of liability on any one life for ordinary life insurance. The next $10.0 million
of liability in excess of $1.0 million is retroceded to a pool of ten
retrocessionaires. In certain limited circumstances the Company reinsures
policies where the underlying risk exceeds $11.0 million. In such cases, the
Company retrocedes any such risk in excess of $11.0 million on a facultative
basis.

Each retrocessionaire in the Company's current ordinary life pool
reinsures a percentage of each risk that is retroceded to the pool. Each of the
domestic participants in the pool is rated "A-" or better by A.M. Best. Although
the foreign retrocessionaires, which constitute 20% of the pool, are not rated
by A.M. Best, each of the foreign retrocessionaires provides the Company with an
irrevocable letter of credit drawn on a U.S. bank or a U.S. branch of a foreign
bank in the amount of the reserves held by such retrocessionaire for the benefit
of the Company. If a foreign retrocessionaire were to default on its payments,
the Company could collect such funds by exercising its rights under the
applicable letter of credit. To date, the Company has not experienced a material
default in connection with its

28
<PAGE>
retrocessional arrangements nor any material difficulty in collecting claims
recoverable from its retrocessionaires.

GROUP LIFE REINSURANCE

Group life reinsurance is the reinsurance of various types of group life
policies. These policies generally include employee-employer group term life
(representing the majority of such business), voluntary and supplemental term
life, association or affinity term life, group universal life and voluntary
group universal life. Group life reinsurance generally is written on an annual
basis resulting in the terms of such contracts being subject to renegotiation or
cancellation each year. The Company typically reinsures group life clients on an
experience rated basis, whereby the ceding company receives a refund of a
portion of the profits resulting from favorable claims experience with respect
to the underlying policies. Group life reinsurance policy revenues were $23.2
million, $24.4 million and $23.9 million in 1996, 1995 and 1994, respectively.
Experience rating refunds amounted to $3.1 million, $3.8 million and $2.4
million for 1996, 1995, and 1994, respectively.

The Company markets its group life reinsurance to a broad cross section of
client entities, which vary in size, corporate structure and geographic
location. No group life client accounted for more than 5% of the Company's
policy revenues in 1996.

The Company's group life retrocessionaire is rated "A" by A.M. Best and
the Company has not experienced any material difficulties in its recovery of
group life claims. The Company's retention limit for group life insurance
business generally may be in an amount up to $350,000, with amounts in excess
thereof being retroceded.

ADMINISTRATIVE REINSURANCE

In furtherance of REALIC's strategy of providing its clients with a
financial benefit through block reinsurance of existing insurance in force and
assisting those clients who wish to discontinue the administration of older
non-core blocks of business, the Company established its Administrative
Reinsurance line of business. By combining an administrative transfer with block
reinsurance of insurance in force, the Company's clients may benefit financially
in two ways: by realizing the embedded value of the in force and freeing target
surplus, and by reducing overhead and variable expenses associated with these
older blocks.

Administrative Reinsurance takes at least two forms: the reinsurance of
non-core existing insurance in force from life insurers, and the acquisition of
life insurance companies that lack critical mass to effectively market products
and efficiently administer blocks of insurance. In either case, the Company,
through REALIC, organizes the conversion of the client's block of business to
the systems of its third party administrator, Cybertek Corporation ("Cybertek"),
and ceases new marketing of the products reinsured. Before entering into
agreements for the acquisition of either blocks of business or insurance
companies, management of the Company conducts a review of each company's
underwriting standards and procedures and assesses each company's claims
history.

REALIC utilizes the services of an outside administrator, Cybertek, to
provide most of the administrative services needed for the primary business. The
administrative services provided by Cybertek are set forth in a seven-year
agreement between Cybertek and REALIC, and include premium processing, billing,
policyholder service and claims administration. The balance of REALIC's
administrative services and the supervision of Cybertek are performed by
employees of REALIC and Life Reassurance.

29
<PAGE>
AUTOMOBILE CREDIT LIFE AND DISABILITY REINSURANCE

During 1996, the Company entered into the automobile credit life and
disability reinsurance line of business. In July 1996, the Company entered into
certain transactions with Resource Financial Corporation ("Resource"), which was
formerly Ryan Dealer Group and a subsidiary of Aon Corporation ("Aon"). Ryan
Dealer Group had over thirty years experience in marketing and issuing, through
its affiliates, credit life and disability insurance products in connection with
the sale of automobiles. Ryan Dealer Group was purchased from Aon by its
management employees and renamed Resource. Resource also purchased from Aon a
life insurance carrier, American Combined Life Insurance Company, which was
renamed Resource Life Insurance Company ("Resource Life").

The Company's transactions with Resource included (i) the purchase of 5.9%
of the voting and 32.7% of the non-voting stock of Resource, (ii) the investment
of $15.0 million in the preferred stock of, and a $5.0 million loan to, an
intermediate holding company of Resource Life, and (iii) reinsurance
arrangements between Resource Life and Life Reassurance. The funds invested and
loaned to the intermediate holding company have been contributed to and are now
retained by Resource Life as capital and surplus.

Much of the business produced by Resource Life originates from automobile
dealerships that own reinsurance companies. These reinsurance companies are
referred to as Dealer Owned Reinsurance Companies (each, a "DRC"). Generally,
business sold at a dealership will be reinsured to that dealer's DRC on a
written basis for credit life insurance and on an earned basis for credit
disability insurance. Resource Life entered into reinsurance arrangements with
Life Reassurance under which a substantial majority of the credit life and
disability risks are reinsured to Life Reassurance which then retrocedes such
risks to the DRCs.

Life Reassurance also has entered into reinsurance agreements with
affiliates of Aon, and in connection with such reinsurance arrangements and the
arrangements with Resource Life, Life Reassurance agreed to pay contingent
consideration to a subsidiary of Aon based on premiums produced by Resource for
a period of five years subsequent to July 1, 1996.

GROUP ACCIDENT AND HEALTH AND SPECIAL RISK REINSURANCE

Group accident and health reinsurance consists of the reinsurance of
medical expense, disability and accident risks. Special risk reinsurance
consists principally of accidental death coverage and catastrophic excess of
loss coverage, as well as occupational accident coverage. In the substantial
majority of the Company's group accident and health reinsurance treaties, the
original client is a self insured corporate health plan. Reinsurance for such
self insured plans is secured in order to minimize the risk to the plan of
claims well in excess of those originally projected. The reinsurance is usually
in the form of specific and aggregate stop loss coverage. Specific stop loss
coverages provide for reimbursement of individual losses in excess of a
specified per person retention. Aggregate stop loss covers accumulations of
claims within the specified retention, once they exceed an agreed percentage
(usually 125%) of the total original estimated claims cost. The average
specified retention is generally at a level in excess of $25,000 to $100,000 per
person. Group accident and health and special risk reinsurance policy revenues
were $139.7 million, $112.4 million and $102.0 million in 1996, 1995 and 1994,
respectively.

30
<PAGE>
The Company generally participates in group accident and health
reinsurance through reinsurance facilities, and in the case of special risk
reinsurance, through pool arrangements. Such reinsurance facilities typically
are formed by managing general underwriters to accept given types of risk. The
managing general underwriters then market their facilities and invite reinsurers
to share the risks. Usually, reinsurance facilities consist of several
reinsurance companies. Other functions performed by managing general
underwriters typically include underwriting of the reinsurance risk, adjustment
and payment of claims, marketing and accounting.

Reinsurance of group accident and health and special risk business
generally is written on an annual basis resulting in the terms of such contracts
being subject to renegotiation or cancellation each year. Many of the specific
and aggregate medical facilities have a profit commission feature which is based
on the profitability of the treaty.

A substantial portion of the group accident and health and special risk
business was written on an excess basis as measured by policy revenues.

At December 31, 1996, the Company reinsured risks under treaties with
approximately 150 ceding client entities with respect to group accident and
health and special risk business. In 1996, twenty-nine ceding client entities
each accounted for at least $1.0 million of group accident and health or special
risk policy revenues and represented, in the aggregate, approximately 89% of the
Company's group accident and health and special risk policy revenues. The
Company markets its group accident and health and special risk reinsurance to a
broad cross section of client entities, which vary in size, corporate structure
and geographic location. No group accident and health or special risk ceding
client entity accounted for more than 5% of the Company's policy revenues in
1996.

On group health reinsurance, the Company generally retains up to $300,000
for any one insured person per year. The Company's net liability in excess of
its retention up to $1.0 million is retroceded to a pool of reinsurers and the
next $1.0 million of liability is retroceded to a single retrocessionaire. For
one group health client, the Company has a retrocessional arrangement with a
single retrocessionaire. The Company has not experienced any material difficulty
in collecting claims recoverable from its group health retrocessionaires.

On special risk reinsurance, the Company generally retains up to $1.0
million on any one risk. Amounts in excess of $1.0 million are retroceded to a
syndicate of reinsurers in Europe. the Company has not experienced any
difficulty in collecting claims recoverable from its special risk
retrocessionaires.

UNDERWRITING

Senior management has developed underwriting guidelines, policies and
procedures with the objective of controlling the quality and pricing of business
written. The Company's underwriting process emphasizes close collaboration among
its underwriting, actuarial, administration and claims departments.

The Company determines whether to write reinsurance business by
considering many factors, including the type of risks to be covered, ceding
company retention and binding authority, product and pricing assumptions and the
ceding company's underwriting standards, financial strength and distribution
systems. The Company generally does not assume 100% of a risk and requires the
ceding company to retain at least 10% of every reinsured risk. The Company will
assume a substantial portion of the risk in connection with Administrative
Reinsurance.

The Company regularly updates its underwriting policies, procedures and
standards to take into account changing industry conditions, market developments
and changes in medical technology. The Company endeavors to ensure that the
underwriting standards and procedures of its ceding client entities are
compatible with those of the Company. Toward this end, the Company conducts
periodic

31
<PAGE>
reviews of the ceding clients' underwriting and claims procedures. The Company
maintains its underwriting manual, which is distributed for use by its ceding
clients, to reflect current medical technology and the Company's underwriting
standards. In addition, with respect to a portion of the Company's group
reinsurance business, certain underwriting functions are performed on the
Company's behalf by managing general underwriters according to underwriting
guidelines reviewed by the Company.

MARKETING

The Company has developed its business on the basis of direct marketing
relationships established over many years through responsive service. The
Company's senior management is directly involved in all aspects of the Company's
marketing efforts, including the formulation, execution and evaluation of
marketing strategies, the identification of marketing opportunities and the
maintenance of relationships with senior executives at client companies. The
Company seeks to evaluate each client's specific reinsurance needs, tailor
reinsurance programs to meet those needs and be responsive in processing claims.
The Company believes this strategy will enable it to achieve its objective of
favorably competing on the basis of service as well as price.

In January 1996, the Company announced the creation of the Office of Life
Marketing. The Office of Life Marketing is responsible for direct marketing of
life reinsurance products and group reinsurance products. These group
reinsurance products include group life, major medical, and catastrophic excess
of loss business, all of which are marketed on a direct basis. The Office of
Life Marketing consists of executives having expertise in various disciplines
within the insurance industry. These disciplines include actuarial, legal,
marketing and underwriting. The Office of Life Marketing is designed to provide
excellent service to the Company's clients by working with clients to identify
and address their specific needs.

During 1996, substantially all policy revenues with respect to ordinary
life and group life reinsurance business were written directly while
approximately 11% of group accident and health and special risk reinsurance was
written directly. The remaining 89% of group accident and health and special
risk reinsurance was placed through reinsurance intermediaries, and of that
amount, 27% was placed by a single intermediary, D.W. Van Dyke and Company of
Connecticut, Inc. Intermediaries solicit, negotiate or place reinsurance
cessions or retrocessions on behalf of a ceding insurer, reinsurer or a
reinsurance facility. Intermediaries do not have the authority to bind the
Company with respect to reinsurance agreements, and the Company does not commit
in advance to accept any portion of the business that intermediaries submit.

CLAIMS ADMINISTRATION

The Company's claims department (i) reviews and verifies reinsurance
claims, (ii) obtains information necessary to evaluate claims, (iii) determines
the Company's liability with respect to claims and (iv) arranges for timely
claim payments. Claims are subjected to a thorough review process to ensure that
the risk was properly ceded, the claim complies with the contract provisions and
the ceding company is current in the payment of reinsurance policy premiums to
the Company. Ordinary life and group life claims generally are reported on an
individual basis by the ceding entity. The ceding entity will provide the
Company with proofs of loss, which the Company then reviews for compliance with
treaty terms.

Ordinary life claims under policies reinsured on a facultative basis and
underwritten within the five previous years and ordinary life claims under
policies reinsured under automatic treaties and underwritten within the two
previous years generally are reviewed by the underwriting department. The claims
department also investigates claims generally for evidence of misrepresentation
in the policy application and approval process. In addition to reviewing and
paying claims, the claims department monitors both specific claims and overall
claims handling procedures of ceding companies.

32
<PAGE>
Group accident and health claims generally are reported to the Company by
the ceding entity on an aggregate basis. The ceding entity will provide the
Company with a listing of the claims paid by the ceding entity, which the
Company then reviews for compliance with treaty terms.

Cybertek provides claims administration for the Company's Administrative
Reinsurance. Cybertek reviews and processes all claims information and provides
for the payment of claims. The Company reviews and must approve prior to payment
all claims received by Cybertek which involve a death benefit in excess of
$100,000 or in which the insured died within two years of policy issuance.

POLICY BENEFIT LIABILITIES

Policy benefit liabilities comprise the majority of the Company's
financial obligations. Policy benefit liabilities for other than annuities and
interest sensitive life insurance products reflected in the Company's
consolidated financial statements included herein are based upon the Company's
best estimates of mortality, persistency and investment income, with appropriate
provision for adverse deviation and the use of the net level premium method. The
liabilities for policy benefits established by the Company with respect to
individual risks or classes of business may be greater or less than those
established by ceding companies due to the use of different mortality and other
assumptions. Policy benefit liabilities for annuities and interest sensitive
life insurance products are reported at the accumulated fund balance of such
contracts. Policy benefit liabilities include both mortality and morbidity
claims in the process of settlement and claims that have been incurred but not
yet reported. Actual experience in a particular period may be worse than assumed
experience and, consequently, may adversely affect the Company's operating
results for such period. See Notes 2 and 6 of to the Company's consolidated
financial statements for certain additional information regarding reserve
assumptions under generally accepted accounting principles ("GAAP").

INVESTMENTS

All investments made by the Company are governed by the general
requirements and guidelines established and approved by the Boards of Directors
of the Company and the Subsidiaries and by qualitative and quantitative limits
prescribed by Connecticut, Illinois and Texas insurance laws and regulations.
The Company's investment policy is designed to maintain a high quality
portfolio, maximize current income, maintain a high degree of liquidity, and
attempt to match the cash flows of the portfolio to the required cash flows of
the Company's liabilities.

At December 31, 1996, the Company's invested assets had an aggregate fair
value of $1,833.2 million, of which 94% were fixed maturities with a weighted
average investment quality rating of "A". At December 31, 1996, the weighted
average duration of invested assets was 6.3 years. In the event the duration of
invested assets were to materially differ from the duration of liabilities and
if significant rapid increases or decreases in market interest rates were to
occur, the Company could be required to sell assets at a loss or incur
liabilities with respect to policies in excess of investment income. Such
consequences could have a material adverse effect on the Company's capital
resources and financial condition. Although no assurances as to future
performance can be given, the Company has not experienced any material
differences in cash flows relating to its assets and liabilities.

The Company's investment securities are managed by two professional
investment advisors, Conseco Capital Management, Inc. ("CCM") and Liberty
Capital Advisors, Inc. ("LCA"), each of which manages a segment of the
portfolio. Certain equity and short-term investments aggregating at December 31,
1996 approximately $44.4 million at fair value are managed directly by the
Company. CCM is the primary investment advisor for the Company, managing at
December 31, 1996 81% of its invested assets (approximately $1,480.0 million at
fair value as of December 31, 1996). LCA acts as an investment advisor for the
portion of the Company's invested assets relating to the reinsured universal
life insurance policies of an affiliate of LCA (approximately $244.0 million at
fair value as of December 31, 1996). The LCA-managed assets are held in separate
custody accounts and are

33
<PAGE>
managed to achieve a desired spread between investment earnings and interest
credited on the underlying universal life policies. The agreements with CCM and
LCA may be terminated by either party at the end of each calendar year upon
sixty days' notice. The performance of CCM and LCA and the fees associated with
the arrangements are periodically reviewed by the Boards of Directors of the
Company and the Subsidiaries.

The following table summarizes certain of the Company's investment results
for the years indicated:

INVESTMENT RESULTS
YEAR ENDED DECEMBER 31,
1996 1995 1994
--------- -------- ------
(DOLLARS IN THOUSANDS)

Total invested assets (1) $1,833,242 $1,504,175 $998,518
Investment income, net of related expenses $ 124,340 $ 98,616 $ 82,438
Effective yield rate (2) 7.77% 8.16% 8.15%
Realized investment gains $ 17,210 $ 3,702 $ 89

- ---------------
(1) Fair value at end of the indicated year.
(2) The effective yield rate equals (i) net pre-tax investment income divided
by (ii) the average of total adjusted invested assets (fixed maturities at
amortized cost) at the end of each calendar quarter included in the
indicated period.

The Company's invested assets consist primarily of fixed maturities and
equity securities, with the majority being fixed maturities. The Company's fixed
maturities are invested primarily in U.S. government obligations, foreign
government obligations, public utilities obligations, corporate fixed
maturities, and mortgage-backed securities. Equity securities are primarily
nonredeemable preferred stock.

Mortgage-backed securities represented approximately 21% of total invested
assets as of December 31, 1996. Investors in these securities are compensated
primarily for reinvestment risk rather than credit quality risk. Investments in
mortgage-backed securities include collateralized mortgage obligations ("CMOs")
and mortgage-backed pass-through securities. Mortgage-backed securities
generally are collateralized by mortgages issued by the Government National
Mortgage Association ("GNMA"), the Federal National Mortgage Association
("FNMA") and the Federal Home Loan Mortgage Corporation ("FHLMC"), all of which
are agencies of the U.S. government. Of these, only GNMA mortgages are backed by
the full faith and credit of the U.S. government. Credit risk generally is not a
consideration when investing in agency mortgage-backed securities. The Company's
mortgage-backed securities portfolio had a weighted average investment quality
rating of AAA at December 31, 1996.

At December 31, 1996 approximately 36% of the Company's mortgage-backed
investment portfolio consists of planned amortization class ("PAC") and target
amortization class ("TAC") instruments. These investments are designed to
amortize in a more predictable manner by shifting the primary risk of prepayment
of the underlying collateral to investors in other tranches ("support classes")
of the CMO.

In addition to the fixed maturities and equity securities, approximately
3% of the Company's invested assets consisted of policy loans at December 31,
1996. These policy loans present no credit risk because the amount of the loan
cannot exceed the obligation due the ceding company upon the death of the
insured or surrender of the underlying policy. The policy loan interest rates
charged are determined by the provisions of the treaties in force and the
underlying policies.

34
<PAGE>
COMPETITION

The Company operates in a highly competitive environment. Reinsurers
compete based upon many factors, including financial strength, A.M. Best rating,
pricing and other terms and conditions of reinsurance agreements, reputation,
service and experience in the lines of business underwritten. The Company
believes that there are over 30 companies with significant competitive positions
within the ordinary life, group life, group accident and health and special risk
reinsurance markets within the United States. The Company believes that within
this market it is among the five largest of those companies, based on
reinsurance in force.

In connection with Administrative Reinsurance, the nature of the
competition faced by the Company depends on the company targeted for acquisition
or the block of business to be reinsured. Based on results achieved thus far,
the Company believes that it is competitively positioned to achieve its
objectives for growth in this area.

A.M. BEST RATING

Life Reassurance has been rated "A+" (Superior) by A.M. Best every year
since 1981. A.M. Best's ratings for insurance companies currently range from
"A++" to "F", and some companies are not rated. Publications of A.M. Best
indicate that "A++" and "A+" ratings are assigned to those companies which in
A.M. Best's opinion have achieved superior overall performance when compared to
the norms of the life insurance industry and generally have demonstrated a
strong ability to meet their policyholder and other contractual obligations.
Life Reassurance's A.M. Best "Financial Size Category" is Class VIII, which
encompasses companies with adjusted policyholders' surplus of $100.0 million to
$250.0 million.

REALIC is currently rated "A" (Excellent) by A.M. Best, the rating that
was given to REALIC prior to its acquisition by Life Reassurance. Publications
of A.M. Best indicate that "A" and "A-" ratings are assigned to those companies
which in A.M. Best's opinion have a strong ability to meet their obligations to
policyholders over a long period of time. During 1996, REALIC's A.M. Best
"Financial Size Category" was Class VI, which encompasses companies with
adjusted policyholders' surplus of $25.0 million to $50.0 million. At December
31, 1996, REALIC's adjusted policyholder surplus was approximately $39.0
million.

In evaluating a company's financial and operating performance, A.M. Best
reviews such company's profitability, leverage and liquidity as well as its book
of business, the adequacy and soundness of its reinsurance, the quality and
estimated market value of its assets, the adequacy of its policy reserves and
the experience and competency of its management. A.M. Best's ratings are based
upon factors of concern to policyholders, agents and intermediaries and are not
directed toward the protection of investors.

EMPLOYEES

As of December 31, 1996, the Company had 123 employees. None of these
employees is represented by a labor union. The Company believes that its
relationship with its employees is generally satisfactory.

REGULATION

The Company and the Subsidiaries are subject to the insurance laws and
regulations of Connecticut, Illinois and Texas, the domiciliary states of the
Subsidiaries, and the laws and regulations of the other states in which the
Subsidiaries are licensed to do business. At present, Life Reassurance is
licensed to conduct business or is an authorized reinsurer in all 50 states, the
District of Columbia and Puerto Rico, and REALIC is licensed to conduct business
in all such locations except for New Hampshire, New York, the District of
Columbia and Puerto Rico. The

35
<PAGE>
insurance laws and regulations, as well as the level of supervisory authority
that may be exercised by the various state insurance departments vary by
jurisdiction, but generally grant broad powers to supervisory agencies or state
regulators to examine and supervise insurance companies and insurance holding
companies with respect to every significant aspect of the conduct of the
insurance business. These laws and regulations generally require insurance
companies to meet certain solvency standards and asset tests, to maintain
minimum standards of business conduct and to file certain reports with
regulatory authorities, including information concerning their capital
structure, ownership and financial condition. The Subsidiaries generally are
required to file annual and quarterly statutory financial statements in each
jurisdiction in which they are licensed. Additionally, the Subsidiaries are
subject to periodic examination by the insurance departments of the
jurisdictions in which each is licensed, authorized and accredited. The
Connecticut Insurance Department and the Texas Department of Insurance completed
their most recent respective examinations of Life Reassurance and TexasRe for
the years ended December 31, 1987 through December 31, 1992, and the Texas
Department of Insurance is in the process of completing its examination of
TexasRe for years through December 31, 1995. The Illinois Department of
Insurance completed its most recent examination of REALIC for years through
December 31, 1991 and is in the process of completing an examination of REALIC
for subsequent years through December 31, 1995. The results of each of the
completed examinations contained no findings which would have a material adverse
effect on the operations of any of the Subsidiaries. Although the rates and
policy terms of primary insurance agreements are regulated by state insurance
departments, the rates, policy terms and conditions of reinsurance agreements
generally are not subject to regulation by any regulatory authority.

Restrictions on Dividends and Distributions. The principal sources of cash
for the Company to make payments of principal, interest and dividends are
payments under two surplus notes issued by TexasRe to the Company in connection
with the purchase of Life Reassurance from General Reinsurance Corporation in
1988 (the "Surplus Debentures") and dividends paid by TexasRe. TexasRe's
principal sources of funds are dividends from Life Reassurance and distributions
by Life Reassurance under a tax allocation agreement among the Company, TexasRe
and Life Reassurance (the "Tax Allocation Agreement"), a portion of which
distributions are used to pay TexasRe's income taxes. Under current Connecticut,
Illinois and Texas laws, any proposed payment of a dividend or distribution
which, together with dividends or distributions paid during the preceding twelve
months, exceeds the greater of (i) 10% of statutory capital and surplus as of
the preceding December 31 or (ii) statutory net gain from operations for the
preceding calendar year, is designated an "extraordinary dividend" and may not
be paid until either it has been approved, or a 30-day waiting period shall have
passed during which it has not been disapproved, by the Insurance Commissioner
of the State of Connecticut (the "Connecticut Insurance Commissioner"), the
Director of Insurance of the State of Illinois (the "Illinois Director of
Insurance") or the Commissioner of Insurance of the State of Texas (the "Texas
Insurance Commissioner"), as the case may be. In addition, Connecticut law
provides that an insurance company may not pay dividends in an amount exceeding
its earned surplus without prior regulatory approval. Life Reassurance has
received approval from the Connecticut Department of Insurance to define its
earned surplus for this purpose to include amounts of paid in surplus in excess
of $125.0 million, and as of December 31, 1996, such earned surplus was $43.9
million. Currently, no prior approval of the Texas Department of Insurance is
required to pay scheduled principal or interest on the Surplus Debentures
provided that, after giving effect to any such payment, the statutory surplus of
TexasRe exceeds $125.0 million. Life Reassurance paid $14.9 million of dividends
in 1996, although the maximum amount of dividends Life Reassurance could have
paid in 1996 without the prior approval of the Connecticut Insurance
Commissioner was $34.8 million. Life Reassurance paid the maximum amount of
dividends permitted without the prior approval of the Connecticut Insurance
Commissioner of $30.9 million and $13.5 million in 1995 and 1994, respectively.
TexasRe had the capacity to pay dividends of $27.1 million, $28.2 million and
$15.4 million in 1996, 1995 and 1994, respectively, without the prior approval
of the Texas Insurance Commissioner. TexasRe paid dividends aggregating $12.1
million and $15.0 million in 1996 and 1995, respectively. No dividends were

36
<PAGE>
paid by TexasRe in 1994. REALIC has not paid any dividends subsequent to its
acquisition by Life Reassurance in July 1995.

The Connecticut, Illinois and Texas insurance laws require that the
statutory surplus of Life Reassurance, REALIC and TexasRe, as the case may be,
following any dividend or distribution, be reasonable in relation to its
outstanding liabilities and adequate to meet its financial needs. The Insurance
Commissioner of any such state may bring an action to enjoin or rescind the
payment of a dividend or distribution that would cause statutory surplus to be
unreasonable or inadequate under this standard.

In the event of a default on the Company's debt or the bankruptcy,
liquidation or other reorganization of the Company, the creditors and
stockholders of the Company will have no right to proceed against the assets of
the Life Reassurance, REALIC or TexasRe. If Life Reassurance, REALIC or TexasRe
were to be liquidated, such liquidation would be conducted by the Connecticut,
Illinois or Texas Insurance Commissioner, as the case may be, as the receiver
with respect to such insurance company's property and business. Under the
Connecticut, Illinois and Texas insurance laws, all creditors of such insurance
companies, including, without limitation, holders of its reinsurance agreements
and the various state guaranty associations, would be entitled to payment in
full from such assets before the Company, as a stockholder, would be entitled to
receive any distribution therefrom.

NAIC Regulatory Changes. The NAIC and insurance regulators are in the
process of reexamining existing laws and regulations and their application to
insurance companies. In particular, this reexamination has focused on insurance
company investment and solvency issues and, in some instances, has resulted in
new interpretations of existing law, the development of new laws and the
implementation of nonstatutory guidelines. The NAIC has formed committees and
appointed advisory groups to study and formulate regulatory proposals on diverse
issues. As part of this review, the NAIC recently adopted the Valuation of Life
Insurance Policies Model Regulation (the "Model Regulation").

If adopted in its current form, the Model Regulation will have the
greatest impact on level term life insurance products with current premiums
guaranteed for more than five years. Companies with these products generally
will have to increase reserves above the current levels or limit the period of
guaranteed premiums to five years. The Model Regulation also will impact the
reserve requirements for other increasing premium products, deficiency reserves
and certain benefit guarantees in universal life products. The Model Regulation
will not impact the financial statements of the Company prepared in accordance
with GAAP; however, as a statutory accounting principle, the Model Regulation
may impact the statutory financial statements of the Subsidiaries.

Codification. In addition to the above regulatory changes being reexamined
and considered by the NAIC, the NAIC is in the process of codifying statutory
accounting principles. The purpose of such codification is to establish a
uniform set of accounting rules and regulations for use by insurance companies
in financial report preparation in connection with financial reporting to
regulatory authorities. The Company is unable to determine what impact, if any,
this codification will have on its Subsidiaries' statutory surplus requirements.

Assessments Against Insurers. Under insolvency or guaranty laws in most
states in which the Company operates, insurers can be assessed for policyholder
losses incurred by insolvent insurance companies. At present, most insolvency or
guaranty laws provide for assessments based upon the amount of primary
insurance, rather than reinsurance, underwritten in a given jurisdiction.
Primary insurance written by REALIC is subject to such laws. REALIC incurred an
immaterial amount of guaranty fund assessments in 1996. To date, the Company has
paid only a de minimis amount of assessments with respect to insurer insolvency
proceedings.

37
<PAGE>
Insurance Holding Company Regulations. The Company and the Subsidiaries
are subject to regulation under the insurance and insurance holding company
statutes of Connecticut, Illinois and Texas. The insurance holding company laws
and regulations vary from jurisdiction to jurisdiction, but generally require
insurance and reinsurance subsidiaries of insurance holding companies to
register with the applicable state regulatory authorities and to file with those
authorities certain reports describing, among other information, their capital
structure, ownership, financial condition, certain intercompany transactions and
general business operations. The insurance holding company statutes also require
prior regulatory agency approval or, in certain circumstances, prior notice of
certain material intercompany transfers of assets as well as certain
transactions between insurance companies, their parent companies and affiliates.

Under the Connecticut, Illinois and Texas insurance laws, unless (i)
certain filings are made with the Connecticut Insurance Department, the Illinois
Department of Insurance or the Texas Department of Insurance, as the case may
be, (ii) certain requirements are met, including, in the case of Texas, a public
hearing and/or (iii) approval or exemption is granted by the applicable
insurance commissioner, no person may acquire any voting security or security
convertible into a voting security of an insurance holding company, such as the
Company, which controls a Connecticut insurance company or an Illinois insurance
company or a Texas insurance company, or merge with such a holding company, if
as a result of such transaction such person would "control" the insurance
holding company. "Control" is presumed to exist in Connecticut, Illinois and
Texas if a person directly or indirectly owns or controls 10% or more of the
voting securities of another person.

Federal Regulation. Although the federal government generally does not
directly regulate the insurance or reinsurance industries, federal legislation,
financial services regulation and federal taxation can significantly affect the
insurance business. In recent years, increased scrutiny has been placed upon the
insurance regulatory framework and legislation has been introduced in Congress
which could result in the federal government assuming some role in the
regulation of the insurance industry.

It is not possible to predict the future impact of changing state and
federal regulation on the operations of the Subsidiaries or the Company, and
there can be no assurance that existing insurance related laws and regulations
will not become more restrictive in the future or that laws and regulations
enacted in the future will not be more restrictive.

TAX MATTERS

Under applicable provisions of the Internal Revenue Code of 1986, as
amended (the "Code"), a life insurance company is not permitted to file a
consolidated federal income tax return with a company that is not a life
insurance company until such life insurance company has been a member of the
"affiliated group" (as such term is defined for federal income tax purposes) for
five taxable years. REALIC filed a separate company income tax return for 1996.
Although TexasRe and Life Reassurance (together, the "Life Tax Group") as life
insurance companies, could and did file a consolidated federal income tax
return, prior to 1994 they could not file a consolidated federal income tax
return with the Company. As a result, to the extent the Company generated
taxable losses, such losses could not be used to offset the taxable income
reported on the consolidated federal income tax return of the Life Tax Group.
The Company began filing consolidated federal income tax returns with the Life
Tax Group commencing with its 1994 federal income tax return. Only losses
generated by the Company during consolidated years can be used to offset taxable
income of the Life Tax Group reported on the consolidated federal income tax
return and those losses can only be so used to a limited extent (generally, the
lesser of 35% of such losses or 35% of the taxable income of the Life Tax
Group).

Pursuant to the Tax Allocation Agreement, the members of the Life Tax
Group are required to pay to the Company an amount of tax measured by the total
amount that would have been due

38
<PAGE>
and payable by the Life Tax Group to the taxing authorities had the Life Tax
Group filed a life insurance company consolidated federal income tax return.
That amount is required to be paid even if the Company is, due to its own tax
status apart from the Life Tax Group, in a net tax loss or nontaxable position.
In the event that the Life Tax Group incurs tax losses, credits or other
benefits (including tax loss or credit carryforwards) that reduce the tax
liability of the consolidated group consisting of the Life Tax Group and the
Company, the Company is required to pay to the Life Tax Group the amount of such
reduction.

PROPERTIES

The Company's principal operations are conducted from approximately 51,000
square feet of leased office space located at 969 High Ridge Road, Stamford,
Connecticut 06905. The lease with respect to such space expires on September 30,
2004. The rental expense paid by the Company under the lease during 1996 was $.9
million.

LEGAL PROCEEDINGS

The Company is not a party to any material pending litigation or
arbitration.

39
<PAGE>
MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS

The following table lists the current directors and executive officers of
the Company:

NAME AGE TITLE
- ---- --- -----

Rodney A. Hawes, Jr. 60 Chairman of the Board, Chief Executive Officer,
Office of the Chairman and Director

Douglas M. Schair 52 Vice Chairman of the Board, Chief Investment
Officer, Office of the Chairman and Director

Jacques E. Dubois 48 President, Chief Operating Officer, Office of
the Chairman and Director

Chris C. Stroup 37 Executive Vice President, Chief Financial
Officer and Director

Samuel V. Filoromo 53 Vice President-Operations and Director

Carolyn K. McCandless 52 Director

K. Fred Skousen 55 Director

T. Bowring Woodbury, II 60 Director

W. Weldon Wilson 37 Vice President, General Counsel and Secretary

Mr. Hawes has served as Chairman of the Board and Chief Executive Officer
of the Company since November 1988 and in the Office of the Chairman since May
1992. Mr. Hawes also has served as Chairman of the Executive Committees of Life
Reassurance since 1988 and REALIC since 1995, and Chairman of the Boards of Life
Reassurance since July 1993 and REALIC since August 1995. In addition, Mr. Hawes
is associated with Insurance Investment Associates ("IIA"), which provides
investment banking services to the insurance industry, which he founded in 1972.

Mr. Schair has served as Vice Chairman of the Board of the Company since
November 1988 and Chief Investment Officer and in the Office of the Chairman
since May 1992. Mr. Schair also has served as Vice Chairman of the Board and
Chief Investment Officer of Life Reassurance since July 1993 and of REALIC since
August 1995. In addition, Mr. Schair has been associated with IIA since 1975.

Mr. Dubois has served as President and Director of the Company since
November 1988 and Chief Operating Officer and in the Office of the Chairman
since May 1992. Mr. Dubois also serves as President and Chief Executive Officer
of Life Reassurance and as Chief Executive Officer of REALIC. In addition, Mr.
Dubois has been associated with IIA since 1979.

Mr. Stroup has served as Executive Vice President and Chief Financial
Officer and as a Director of the Company since June 1996. Mr. Stroup also has
served as Executive Vice President and Chief Financial Officer of Life
Reassurance and Vice President and Chief Financial Officer of REALIC since
August 1996. From 1983 to 1996, Mr. Stroup was associated with the firm of Ernst
& Young LLP, where he served as a partner from 1993, providing accounting and
consulting services to the insurance industry.

Mr. Filoromo has served as Vice President - Operations of the Company
since June 1996 and served as Vice President and Chief Financial Officer of the
Company from May 1992 to June 1996 and as a Director of the Company since May
1992. Mr. Filoromo has served as Executive Vice President - Operations of Life
Reassurance since August 1996, and as its Executive Vice President and Chief
Financial Officer from May 1992 to August 1996. He also has served as Vice
President - Operations of REALIC since August 1996 and served as its Chief
Financial Officer from August 1995 to August 1996. From January 1992 to May
1992, Mr. Filoromo was employed on a full-time basis as a consultant for the
Company. From May 1991 to January 1992, Mr. Filoromo

40
<PAGE>
was an independent consultant. From November 1990 to May 1991, Mr. Filoromo
served as a Senior Vice President of Conseco, Inc. From 1986 to February 1990,
Mr. Filoromo served as Vice President - Finance and Controller of Sun America
Corporation.

Ms. McCandless has served as a Director of the Company since November
1992. Since April 1990, Ms. McCandless has served as Vice President of Human
Resources and Administration for Time Warner Inc. From 1985 to 1990, Ms.
McCandless was Vice President and Director of Employee Benefits for Time Inc.

Dr. Skousen has served as a Director of the Company since November 1992.
Since 1989, Dr. Skousen has been the Dean of the Marriott School of Management
at Brigham Young University, Provo, Utah. From 1983 to 1989, Dr. Skousen held
the Peat Marwick Mitchell Professorship and from 1974 to 1983 served as Director
of the School of Accountancy at Brigham Young University. Dr. Skousen is a
certified public accountant. Dr. Skousen also serves on the board of Geneva
Steel Co.

Mr. Woodbury has served as a Director of the Company since November 1992.
Mr. Woodbury currently serves as a President of the Tacoma, Washington Mission
of The Church of Jesus Christ of Latter-day Saints. From June 1989 to April
1995, Mr. Woodbury served as Senior Vice President and General Counsel of
Consolidated Edison, where he also served as a member of the corporate policy
committee, and from May 1995 through June 1996 he served as a consultant to
Consolidated Edison. From 1987 to 1989, Mr. Woodbury served as Senior Vice
President, General Counsel and Corporate Secretary of Commercial Union Insurance
Company. From 1986 to 1987, Mr. Woodbury served as Executive Vice President,
General Counsel and Corporate Secretary of The Home Insurance Company.

Mr. Wilson has served as Vice President, General Counsel and Secretary of
the Company since May 1992. Mr. Wilson also has served as Executive Vice
President, General Counsel and Secretary of Life Reassurance since June 1995, as
its Senior Vice President, General Counsel and Secretary since January 1992 and
as its Vice President, General Counsel and Secretary since July 1991. Mr. Wilson
also has served as Vice President, General Counsel and Secretary of REALIC since
August 1995. Prior to joining Life Reassurance, from May 1989 to June 1991, Mr.
Wilson was associated with the law firm of Johnson & Gibbs in Dallas, Texas.
From September 1986 to May 1989, Mr. Wilson was associated with the law firm of
Moore & Peterson in Dallas, Texas.

41
<PAGE>
SELLING STOCKHOLDERS

The table below sets forth the beneficial ownership of Common Stock by
each Selling Stockholder at February 10, 1998 and following the sale of the
shares of Common Stock offered by such Selling Stockholder.

<TABLE>
<CAPTION>
Shares of Common Stock to
Shares of Common Stock be Beneficially Owned After
Beneficially Owned Before Sale Sale Under this
Under this Prospectus(1)(2) Prospectus(1)(2)(3)
--------------------------- -------------------
Name of Selling Shares to be
Stockholder Number Percentage sold(3) Number Percentage
- ----------- ------ ---------- ------- ------ ----------
<S> <C> <C> <C> <C> <C>
Rodney A. Hawes, Jr. 1,138,600 8.2% 60,000 1,078,600 6.4%
Life Re Corporation
969 High Ridge Road
Stamford, CT 06905
Douglas M. Schair 1,146,200 8.3 60,000 1,086,200 6.4
Life Re Corporation
969 High Ridge Road
Stamford, CT 06905
Jacques E. Dubois 1,167,500 8.4 60,000 1,107,500 6.9
Life Re Corporation
969 High Ridge Road
Stamford, CT 06905
Samuel V. Filoromo 127,451 * 20,000 107,451 *
Life Re Corporation
969 High Ridge Road
Stamford, CT 06905

</TABLE>

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

* Less than 1%.

(1) Based on the number of Common Shares outstanding on February 10, 1998.
Beneficial ownership is determined in accordance with rules of the
Commission and includes shares over which the indicated beneficial owner
exercises voting and/or investment power. Shares of Common Stock subject
to options currently exercisable or exercisable within sixty days of
February __, 1998 are deemed outstanding for purposes of computing the
percentage ownership of the person holding the options but not deemed
outstanding for purposes of computing the percentage ownership of any
other person.

(2) Each individual has the sole power to vote and dispose of the shares of
Common Stock, except, in the case of shares granted under the Life Re
Corporation Stock Option Plan, as provided in such plan.

(3) The Selling Stockholders have granted the Underwriters in the Common Stock
Offerings an option for 30 days from the date of this Prospectus to
purchase up to an additional 525,000 shares solely to cover
over-allotments, if any. If the Underwriters' over-allotment option is
exercised in full, Messrs. Hawes, Schair, Dubois and Filoromo, will
beneficially own 906,934 shares, 914,534 shares, 935,834 shares and 97,451
shares, respectively, representing 5.4%, 5.4%, 5.5% and 0.57%,
respectively, of the shares after the Common Stock Offerings. See
"Underwriting".

42
<PAGE>
UNDERWRITING

Subject to the terms and conditions of the Underwriting Agreement, the
Company and the Selling Stockholders have agreed to sell to each of the U.S.
Underwriters named below, and each of such U.S. Underwriters, for whom Goldman,
Sachs & Co., Donaldson, Lufkin & Jenrette Securities Corporation and Merrill
Lynch, Pierce, Fenner & Smith Incorporated are acting as representatives, has
severally agreed to purchase from the Company and the Selling Stockholders, the
respective number of shares of Common Stock set forth opposite its name below:

Number of Shares
Underwriters of Common Stock
------------ ---------------

Goldman, Sachs & Co................................
Donaldson, Lufkin & Jenrette Securities Corporation.
Merrill Lynch, Pierce, Fenner & Smith Incorporated.
CIBC Oppenheimer Corp..............................
Conning & Company..................................

Total..................................... 2,800,000
=========

Under the terms and conditions of the Underwriting Agreement, the U.S.
Underwriters are committed to take and pay for all of the shares of Common Stock
offered hereby, if any are taken.

The U.S. Underwriters propose to offer the shares of Common Stock in part
directly to the public at the initial public offering price set forth on the
cover page of this Prospectus and in part to certain securities dealers at such
price less a concession of $ per share. The U.S. Underwriters may allow, and
such dealers may reallow, a concession not in excess of $ per share to certain
brokers and dealers. After the shares of Common Stock are released for sale to
the public, the offering price and the selling terms may from time to time be
varied by the representatives.

The Company and the Selling Stockholders have entered into an underwriting
agreement (the "International Underwriting Agreement") with the underwriters of
the international offering (the "International Underwriters") providing for the
concurrent offer and sale of 700,000 shares of Common Stock in an international
offering outside the United States. The offering price and aggregate
underwriting discounts and commissions per share for the two offerings are
identical. The closing of the offering made hereby is a condition to the closing
of the international offering, and vice versa. The representative of the
International Underwriters are Goldman Sachs International, Donaldson, Lufkin &
Jenrette Securities Corporation and Merrill Lynch International Limited.

Pursuant to an Agreement between the U.S. and International Underwriting
Syndicates (the "Agreement Between") relating to the two Common Stock Offerings,
each of the U.S. Underwriters named herein has agreed that, as a part of the
distribution of the shares offered hereby and subject to certain exceptions, it
will offer, sell or deliver the shares of Common Stock, directly or indirectly,
only in the United States of America (including the States and the District of
Columbia), its territories, its possessions and other areas subject to its
jurisdiction (the "United States") and to U.S. persons, which term shall mean,
for purposes of this paragraph: (a) any individual who is a resident of the
United States or (b) any corporation, partnership or other entity organized in
or under the laws of the United States or any political subdivision thereof and
whose office most directly involved with the purchase is located in the United
States. Each of the International Underwriters has agreed pursuant to the
Agreement Between that, as a part of the distribution of the shares offered as a
part of the international offering, and subject to certain exceptions, it will
(i) not, directly or indirectly, offer, sell or deliver shares of Common Stock
(a) in the United States or to any U.S. persons or (b) any person who it
believes intends to reoffer, resell or deliver the shares in the

43
<PAGE>
United States or to any U.S. persons, and (ii) cause any dealer to whom it may
sell such shares at any concession to agree to observe a similar restriction.

Pursuant to the Agreement Between, sales may be made between the U.S.
Underwriters and the International Underwriters of such number of shares of
Common Stock as may be mutually agreed. The price of any shares so sold shall be
the initial public offering price, less an amount not greater than the selling
concession.

The Selling Stockholders have granted the U.S. Underwriters an option
exercisable for 30 days after the date of this Prospectus to purchase up to an
aggregate of 420,000 additional shares of Common Stock solely to cover
over-allotments, if any. If the U.S. Underwriters exercise their over-allotment
option, the U.S. Underwriters have severally agreed, subject to certain
conditions, to purchase approximately the same percentage thereof that the
number of shares to be purchased by each of them, as shown in the foregoing
table, bears to the 2,800,000 shares of Common Stock offered. The Selling
Stockholders have granted the International Underwriters a similar option to
purchase up to an aggregate of 105,000 additional shares of Common Stock.

The Company and the Selling Stockholders have agreed that, during the
period beginning from the date of this Prospectus and continuing to and
including the date after the date of the Prospectus, they will not offer,
sell, contract to sell or otherwise dispose of any securities of the Company
(other than pursuant to employee stock option plans existing, or on the
conversion or exchange of convertible or exchangeable securities outstanding, on
the date of this Prospectus) which are substantially similar to the shares of
the Common Stock or which are convertible into or exchangeable for securities
which are substantially similar to the shares of the Common Stock without the
prior written consent of the representatives, except for the shares of Common
Stock offered in connection with the concurrent U.S. and international
offerings.

In connection with the Common Stock Offerings, the Underwriters may
purchase and sell the Common Stock in the open market. These transactions may
include over-allotment and stabilizing transactions and purchases to cover
syndicate short positions created in connection with the Common Stock Offerings.
Stabilizing transactions consist of certain bids or purchases for the purpose of
preventing or retarding a decline in the market price of the Common Stock; and
syndicate short positions involve the sale by the Underwriters of a greater
number of shares of Common Stock than they are required to purchase from the
Company in the Common Stock Offerings. The Underwriters also may impose a
penalty bid, whereby selling concessions allowed to syndicate members or other
broker-dealers in respect of the Common Stock sold in the Common Stock Offerings
for their account may be reclaimed by the syndicate if such Common Stock is
repurchased by the syndicate in stabilizing or covering transactions. These
activities may stabilize, maintain or otherwise affect the market price of the
Common Stock, which may be higher than the price that might otherwise prevail in
the open market, and these activities, if commenced, may be discontinued at any
time. These transactions may be effected on the NYSE, in the over-the-counter
market or otherwise.

The Company and the Selling Stockholders have agreed to indemnify the
several Underwriters against certain liabilities, including liabilities under
the Securities Act of 1933.

This Prospectus may be used by underwriters and dealers in connection with
offers and sales of the Common Stock, including shares initially sold in the
international offering, to persons located in the United States.

44
<PAGE>
VALIDITY OF THE COMMON STOCK

The validity of the Common Stock being offered hereby will be passed upon
for the Company by Weil, Gotshal & Manges LLP, New York, New York, and for the
Underwriters by Sullivan & Cromwell, New York, New York.

EXPERTS

The consolidated financial statements and schedule of the Company
appearing in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996 have been audited by Ernst & Young LLP, independent auditors,
as set forth in their report thereon included therein and incorporated herein by
reference. Such consolidated financial statements and schedule are incorporated
by reference in reliance upon such report given upon the authority of such firm
as experts in accounting and auditing.

With respect to the unaudited condensed consolidated interim financial
information for the three-month periods ended March 31, 1997 and March 31, 1996,
the three month and six-month periods ended June 30, 1997 and June 30, 1996 and
the three month and nine-month periods ended September 30, 1997 and September
30, 1996, incorporated by reference in this Prospectus, Ernst & Young LLP have
reported that they have applied limited procedures in accordance with
professional standards for a review of such information. However, their separate
reports, included in the Company's Quarterly Reports on Form 10-Q for the
quarters ended March 31, 1997, June 30, 1997 and September 30, 1997, and
incorporated herein by reference, state that they did not audit and they do not
express an opinion on that interim financial information. Accordingly, the
degree of reliance on their reports on such information should be restricted
considering the limited nature of the review procedures applied. The independent
auditors are not subject to the liability provisions of Section 11 of the
Securities Act for their report on the unaudited interim financial information
because that report is not a "report" or a "part" of the Registration Statement
prepared or certified by the auditors within the meanings of Sections 7 and 11
of the Securities Act.

45
<PAGE>
<TABLE>
=========================================== ====================================
<S> <C>
NO PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS, AND, IF
GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATION MUST NOT BE RELIED UPON
AS HAVING BEEN AUTHORIZED. THIS
PROSPECTUS DOES NOT CONSTITUTE AN OFFER 3,500,000 SHARES
TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY ANY SECURITIES OTHER THAN THE LIFE RE CORPORATION
SECURITIES TO WHICH IT RELATES OR AN
OFFER TO SELL OR THE SOLICITATION OF AN COMMON STOCK
OFFER TO BUY SUCH SECURITIES IN ANY
CIRCUMSTANCES IN WHICH SUCH OFFER OR
SOLICITATION IS UNLAWFUL. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE
MADE HEREUNDER SHALL, UNDER ANY
CIRCUMSTANCES, CREATE ANY IMPLICATION
THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE
HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME
SUBSEQUENT TO ITS DATE.
[LIFE RE LOGO]
--------------------

TABLE OF CONTENTS

PAGE GOLDMAN, SACHS & CO.
----
DONALDSON, LUFKIN & JENRETTE
Available Information ................. iii SECURITIES CORPORATION
Incorporation of Certain Documents
by Reference......................... iv MERRILL LYNCH & CO.
Prospectus Summary..................... 1
Use of Proceeds........................ 7 CIBC OPPENHEIMER
Price Range of Common Stock
and Dividends........................ 8 CONNING & COMPANY
Capitalization......................... 9
Selected Consolidated Financial
Data................................. 10
Recent Developments.................... 12
Management's Discussion and Analysis of
Financial Condition and Results of
Operations........................... 15
Business............................... 25
Management............................. 40
Selling Stockholders................... 42
Underwriting........................... 43
Validity of the Common Stock........... 45
Experts................................ 45

=========================================== ====================================
</TABLE>

<PAGE>
PART II

INFORMATION NOT REQUIRED IN THE PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.

The following table sets forth the costs and expenses, other than
underwriting discounts, payable by the Company in connection with the offering
of the Common Stock being registered hereby. All amounts shown are estimates,
except the Securities and Exchange Commission registration fee and the New York
Stock Exchange listing fee.

Securities and Exchange Commission registration fee ...................$78,961
New York Stock Exchange listing fee .................................... *
Legal fees and expenses ................................................ *
Accounting fees and expenses ........................................... *
Printing and engraving expenses ........................................ *
Rating agencies' fees .................................................. *
Miscellaneous .......................................................... *
------
Total ..........................................................$ *
========

- ------------------------------
* To be filed by amendment.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.

Life Re Corporation is a Delaware corporation. Reference is made to
Section 145 of the Delaware General Corporation Law ("DGCL"), which provides
that a corporation may indemnify any person, including an officer or director,
who is, or is threatened to be made, party to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person is or was an officer,
director, employee or agent of such corporation or is or was serving at the
request of such corporation as an officer, director, employee, or agent of
another corporation, partnership, joint venture, trust, or other enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding provided such officer, director,
employee, or agent acted in good faith and in a manner he or she reasonably
believed to be in or not opposed to the corporation's best interest and, with
respect to criminal proceedings, had no reasonable cause to believe that his or
her conduct was unlawful. Section 145 of the DGCL provides further that a
Delaware corporation may indemnify officers, directors, employees, or agents of
the corporation in an action by or in the right of the corporation under the
same conditions, except that no indemnification is permitted without judicial
approval if the officer, director, employee, or agent is adjudged to be liable
to the corporation. Where an officer, director, employee, or agent is successful
on the merits or otherwise in the defense of any action referred to above or any
claim therein, the corporation must indemnify him or her against the expenses
that such person actually and reasonably incurred.

Article Ten of the Company's Restated Certificate of Incorporation
provides that directors shall not be personally liable for monetary damages to
the Company or its stockholders for breach of fiduciary duty as directors,
except to the extent not permitted under the DGCL. Article Ten further
stipulates that if the DGCL is amended to authorize corporate action further
eliminating or limiting the personal liabilities of directors, then (without
further actions by the stockholders of the Company) the liability of the
directors of the Company shall be eliminated or limited to the fullest extent
permitted by the DGCL, as so amended from time to time. Article VIII of the
By-laws of the Company provides for the indemnification of any person (i) who is
a party to or is threatened to be made a party to or otherwise involved in any
proceeding (other than a proceeding by or in the right of the Company to

<PAGE>
procure a judgement for the Company), by reason of the fact that such person is
or was a director or officer of the Company, provided that such person acted in
good faith and in a manner that he reasonably believed to be or not opposed to
the best interests of the Company and, in the case of a criminal proceeding,
also had no cause to believe that his conduct was unlawful or (ii) who is a
party to or is threatened to be made a party to or otherwise involved in any
proceeding by or in the right of the Company to procure a judgement in favor of
the Company, by reason of the fact that such person is or was a director or
officer of the Company, if such person acted in good faith and in a manner that
he reasonably believed to be in the best interests of the Company; provided,
however, that no indemnification for expenses shall be made in respect to any
claim, issue or matter pursuant to clause (ii) which such person shall have been
adjudged to be liable to the Company unless the Delaware Court of Chancery or
any court in which such proceeding was brought or appealed shall determine upon
application that, despite the adjudication of liability but in view of the
circumstances of the case, such person is fairly and reasonably entitled to
indemnification for expenses as such court shall deem proper. Such indemnity
shall be to the fullest extent required or permitted under the laws of the State
of Delaware.

In addition, the Company has entered into certain employment and severance
agreements with certain members of its senior management which include
provisions for the indemnification by the Company of each of them to the full
extent permitted by the DGCL. In that connection, the Company also agreed to
maintain director and officer liability insurance policies (the "Insurance")
covering such management employees. Such Insurance also covers those directors
of the Company who are not also employees of the Company.

ITEM 16. EXHIBITS.

Exhibit Number Description of Exhibit
- -------------- ----------------------

1.1 Form of U.S. Underwriting Agreement.*

1.2 Form of International Underwriting Agreement.*

4.1 Restated Certificate of Incorporation of Life Re Corporation,
dated November 13, 1997.**

4.2 Bylaws of Life Re Corporation, dated August 5, 1992.**

5.1 Opinion of Weil, Gotshal & Manges LLP.*

15.1 Letter re unaudited interim financial information.

23.1 Consent of Weil, Gotshal & Manges LLP (included in Exhibit
5.1 hereto).

23.2 Consent of Ernst & Young LLP.

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

* To be filed by amendment.

** Incorporated herein by reference to Exhibits 3.1 and 3.2 to the
Quarterly Report on Form 10-Q for the quarterly period ended September
30, 1997 of Life Re Corporation (File No.
1-11340).

II-2
<PAGE>
ITEM 17. UNDERTAKINGS.

(a) The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
Registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in this
Registration Statement shall be deemed to be a new registration statement
relating to the securities offered herein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.

(b) Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors, officers and controlling
persons of the Registrant pursuant to the provisions under Item 15 above, or
otherwise, the Registrant has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities (other than the
payment by the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
issue.

(c) The undersigned Registrant hereby undertakes that (1) for purposes of
determining any liability under the Securities Act of 1933, the information
omitted from the form of prospectus filed as part of this Registration Statement
in reliance upon Rule 430A and contained in a form of prospectus filed by the
Registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act
of 1933 shall be deemed to be part of this Registration Statement as of the time
it was declared effective; and (2) for the purpose of determining any liability
under the Securities Act of 1933, each post-effective amendment that contains a
form of prospectus shall be deemed to be a new registration statement relating
to the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.

II-3
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Stamford, State of Connecticut, on February 12, 1998.

LIFE RE CORPORATION

By: /s/ Rodney A. Hawes, Jr.
-----------------------------------
Name: Rodney A. Hawes, Jr.
Title: Chairman of the Board and
Chief Executive Officer

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed below by the following persons in the
capacities and on the dates indicated.

SIGNATURE TITLE DATE
- --------- ----- ----

/s/ Rodney A. Hawes, Jr. Chairman of the Board, Chief February 12, 1998
- ----------------------------- Executive Officer, Office of
Rodney A. Hawes, Jr. the Chairman and Director
(principal executive officer)

/s/ Douglas M. Schair Vice Chairman of the Board, February 12, 1998
- ----------------------------- Chief Investment Officer,
Douglas M. Schair Office of the Chairman and
Director

/s/ Jacques E. Dubois President, Chief Operating February 12, 1998
- ----------------------------- Officer, Office of the
Jacques E. Dubois Chairman and Director

/s/ Chris C. Stroup Executive Vice President, February 12, 1998
- ----------------------------- Chief Financial Officer and
Chris C. Stroup Director (principal accounting
officer and principal financial
officer)

/s/ Samuel V. Filoromo Vice President - Operations February 12, 1998
- ---------------------------- and Director
Samuel V. Filoromo

<PAGE>

/s/ Carolyn K. McCandless Director February 12, 1998
- -----------------------------
Carolyn K. McCandless

/s/ K. Fred Skousen Director February 12, 1998
- -----------------------------
K. Fred Skousen

/s/ T. Bowring Woodbury, II Director February 12, 1998
- -----------------------------
T. Bowring Woodbury, II

<PAGE>
EXHIBIT INDEX

Exhibit No.
- -----------

1.1 Form of U.S. Underwriting Agreement.*

1.2 Form of International Underwriting Agreement.*

4.1 Restated Certificate of Incorporation of Life Re Corporation,
dated November 13, 1997.**

4.2 Bylaws of Life Re Corporation, dated August 5, 1992.**

5.1 Opinion of Weil, Gotshal & Manges LLP.*

15.1 Letter re unaudited interim financial information.

23.1 Consent of Weil, Gotshal & Manges LLP (included in Exhibit
5.1 hereto).

23.2 Consent of Ernst & Young LLP.

- --------------
* To be filed by amendment

** Incorporated herein by reference to Exhibits 3.1 and 3.2 to
the Quarterly Report on Form 10-Q for the quarterly period
ended September 30, 1997 of Life Re Corporation (File No.
1-11340).

Exhibit 15.1

The Board of Directors
Life Re Corporation

We are aware of the incorporation by reference in the Registration
Statement (Form S-3 No. 333- ) of Life Re Corporation for the registration of
4,025,000 shares of its common stock of our reports dated May 1, 1997; July 29,
1997; and October 30, 1997 relating to the unaudited condensed consolidated
interim financial statements of Life Re Corporation that are included in its
Forms 10-Q for the quarters ended March 31, 1997; June 30, 1997; and September
30, 1997.

/s/ Ernst & Young LLP

Stamford, Connecticut
February 12, 1998

Exhibit 23.2

Consent of Independent Auditors

We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3 No. 333- ) and related Prospectus of Life Re
Corporation for the registration of 4,025,000 shares of common stock and to the
incorporation by reference therein of our report dated February 4, 1997, with
respect to the consolidated financial statements and schedule of Life Re
Corporation included in its Annual Report (Form 10-K) for the year ended
December 31, 1996, filed with the Securities and Exchange Commission.

/s/ Ernst & Young LLP

Stamford, Connecticut
February 12, 1998