FEDERATED INSURANCE SERIES, N-30D, 2000-02-14

FEDERATED INSURANCE SERIES
N-30D, 2000-02-14

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ANNUAL REPORT

President's Message

Dear Shareholder:

I am pleased to present the Annual Report to Shareholders for Federated Fund for
U.S. Government Securities II, a portfolio of Federated Insurance Series.

This report covers the 12-month fiscal year period from January 1, 1999 through
December 31, 1999. It begins with a commentary by the fund's portfolio manager,
which is followed by a complete listing of the fund's government bond holdings
and the financial statements.

To help your money pursue an attractive level of income, Federated Fund for U.S.
Government Securities II invests primarily in short- to intermediate- term U.S.
government mortgage-backed securities and U.S. Treasury notes and bonds.

During the 12-month reporting period, the fund produced an income stream that
totaled $0.44 per share in addition to a capital gain of $0.09 per share. In the
rising interest rate environment that caused bond prices to fall, a decrease in
the fund's net asset value resulted in a total return of (0.60%) for the
reporting period. 1 On December 31, 1999, net assets reached $133 million.

Thank you for choosing Federated Fund for U.S. Government Securities II as a
diversified, professionally managed way to pursue income opportunities through
government bonds. We will continue to keep you up-to-date on your progress. As
always, we welcome your comments and suggestions.

Sincerely,

[Graphic]

J. Christopher Donahue

President

January 15, 2000

1 Performance quoted represents past performance and is no guarantee of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Performance information does not reflect the charges and expenses of a
variable annuity or variable life insurance contract.

Investment Review

Federated Fund for U.S. Government Securities II ("the Fund"), a portfolio of
Federated Insurance Series, invests in U.S. government securities which include
agency mortgage (Federal Home Loan Mortgage Corporation (FHLMC), Federal
National Mortgage Association (FNMA), and Government National Mortgage
Association (GNMA)), U.S. Treasury and agency debenture securities. The "base"
portfolio is a two-thirds/ one-third blend of mortgage-backed securities (MBS)
and Treasury/agency securities, respectively.

In 1999, financial markets and worldwide economies recovered from the crisis of
1998. Investor demand for U.S. Treasury securities declined as stability and
liquidity returned to various fixed income markets. Evidence of rebounding
foreign economies and stronger than expected domestic growth led to concerns
over inflationary pressures. As domestic unemployment declined and consumer
demand remained robust, the Federal Reserve Board acted on three separate
occasions to raise the Federal Funds rate a total of 75 basis points.
Consequently, fixed income yields increased and prices, which move inversely to
yields, declined. Two- and ten-year Treasurys yielded 6.24% and 6.44% at
reporting period end, with increases of 1.70% and 1.79%, respectively.

Consumer spending continued to grow as record breaking equity market performance
and employment gains fueled consumer confidence and wealth. Strong job growth
caused the unemployment rate to decline to 4.1%, the lowest rate since 1970.
Despite historically low unemployment, wage gains and inflationary pressures
remained subdued, due in part to advances in productivity. While energy prices
increased drastically during the reporting period, the core Consumer Price Index
1 (which excludes the volatile food and energy sectors) rose 1.9%
year-over-year, the smallest annual increase since 1965. In short, the domestic
economy displayed a phenomenal blend of robust growth and low inflation.

MBS outperformed Treasurys for the year although intra-period spread volatility
was notable. Mortgage spreads contracted significantly in the first half of
1999, reversed course and expanded to historically wide levels in August and,
again, did a turnabout and narrowed through year end. Par-priced conventional
mortgage spreads ended the year at 131 basis points, 35 basis points tighter for
the period. Similar to MBS, agency debt spreads reached the widest levels of the
year early in the second half of the reporting period, however, these spreads
closed the year with little change.

1 The Consumer Price Index is a measure of the average change over time in the
prices paid by urban consumers for goods and services.

While mortgages performed well relative to other fixed income assets,
disparities within the sector were not insignificant. Lower coupon MBS
underperformed relative to higher coupon cohorts due to greater duration
extension. Throughout the year, lower coupon exposure was reduced via up-
in-coupon trades designed to take advantage of greater income and relative value
opportunities. As of year end, the MBS allocation favored 7% to 8% coupons.

We continue to prefer MBS due to favorable prepayment, issuance and
supply/demand characteristics. Prepayment risk declined precipitously over the
reporting period, as indicated by the Mortgage Bankers Association's Refinance
Index, 2 which declined over 75%. Monthly mortgage issuance declined along with
refinance opportunities. From January to December, monthly mortgage issuance
dropped over 60%. Given wide spreads with low prepayments and issuance, the Fund
moved to a mortgage overweight beginning in the second half of the year,
reflecting our positive sector view.

The government allocation (Treasury/agency debt) continued to favor agency debt
versus Treasury securities. While significant issuance from government-sponsored
entities such as FNMA and FHLMC may keep spreads on the wider side of their
historical range, we believe government agency securities offer long-term value
relative to Treasurys.

The MBS and Treasury/agency debt allocation closed the period at 69% and 31%,
respectively. The Fund's duration ended the reporting period at 4.67 years
versus the blended benchmark's 4.55 years (67% Lehman Brothers MBS Index and 33%
Lehman Brothers Government Index). 3 The net total return for the 12-month
reporting period ended December 31, 1999 was (0.60%)4 versus 0.50% for the
unmanaged benchmark.

2 The Mortgage Bankers Association's Refinance Index is a weekly applications
survey of the Mortgage Bankers Association which covers approximately 40% of all
U.S. retail residential mortgage originations and has been conducted since 1990.
Respondents include mortgage bankers, commercial banks and thrifts.

3 The Lehman Brothers Mortgage-Backed Securities Index is composed of all fixed
rate, securitized mortgage pools by GNMA (Government National Mortgage
Association), FNMA (Federal National Mortgage Association), and FLHMC (Federal
Home Loan Mortgage Corporation). The Lehman Brothers Government Index includes
the Treasury and Agency Indexes. The Treasury component includes public
obligations of the U.S. Treasury that have remaining maturities of more than one
year. The Agency component includes both callable and noncallable agency
securities. This includes publicly issued debt of U.S. government agencies,
quasi-federal corporations, and corporate or foreign debt guaranteed by the U.S.
government. These three indexes are unmanaged, and investments cannot be made in
an index.

4 Performance quoted represents past performance and is no guarantee of future
results. Investment return and principal value will fluctuate, so that an
investor's shares, when redeemed, may be worth more or less than their original
cost. Performance information does not reflect the charges and expenses of a
variable annuity or variable life insurance contract.

Last Meeting of Shareholders

A Special Meeting of Shareholders of the Fund was held on November 15, 1999. On
September 16, 1999, the record date for shareholders voting at the meeting,
there were 12,202,596 total outstanding shares. The following items were
considered by shareholders of the Fund and the results of their voting were as
follows:

AGENDA ITEM 1

To elect six Trustees 1-all portfolios of Federated Insurance Series voting
together.

<TABLE>

WITHHELD
AUTHORITY
FOR TO VOTE
<S> <C> <C>
Thomas G. Bigley 240,211,548 7,152,692
Nicholas P. Constantakis 239,928,312 7,435,928
John F. Cunningham 240,226,307 7,137,933
Charles F. Mansfield 240,298,855 7,065,386
John E. Murray, Jr., J.D., S.J.D. 240,016,672 7,347,569
John S. Walsh 240,224,615 7,139,625

</TABLE>

1 The following Trustees continued their terms as Trustees: John F.
Donahue, John T. Conroy, Jr., J. Christopher Donahue, Lawrence D. Ellis,
M.D., Peter E. Madden and Marjorie P. Smuts.

AGENDA ITEM 2

To make changes to the Fund's fundamental investment policies:

(a) To approve amending the Fund's fundamental investment policy regarding
diversification.

<TABLE>

FOR AGAINST ABSTENTIONS
<S> <C> <C>
8,476,534 435,015 721,129

</TABLE>

(b) To approve amending the Fund's fundamental investment policy regarding
borrowing money and issuing senior securities.

<TABLE>

FOR AGAINST ABSTENTIONS
<S> <C> <C>
8,469,335 469,981 693,362

</TABLE>

<TABLE>

FOR AGAINST ABSTENTIONS
<S> <C> <C>
8,453,004 458,545 721,129

</TABLE>

(d) To approve amending the Fund's fundamental investment policy regarding
investments in commodities.

<TABLE>

FOR AGAINST ABSTENTIONS
<S> <C> <C>
8,470,091 441,458 721,129

</TABLE>

(e) To approve amending the Fund's fundamental investment policy regarding
underwriting securities.

<TABLE>

FOR AGAINST ABSTENTIONS
<S> <C> <C>
8,474,330 437,218 721,129

</TABLE>

(f) To approve amending the Fund's fundamental investment policy regarding
lending by the Fund.

<TABLE>

FOR AGAINST ABSTENTIONS
<S> <C> <C>
8,466,699 442,646 723,333

</TABLE>

(g) To approve amending the Fund's fundamental investment policy regarding
concentration of the Fund's investments in the securities of companies in the
same industry.

<TABLE>

FOR AGAINST ABSTENTIONS
<S> <C> <C>
8,468,946 442,602 721,129

</TABLE>

(h) To approve amending, and making nonfundamental, the Fund's fundamental
investment policy regarding buying securities on margin.

<TABLE>

FOR AGAINST ABSTENTIONS
<S> <C> <C>
8,466,826 444,722 721,129

</TABLE>

(i) To approve amending, and making non-fundamental, the Fund's fundamental
investment policy regarding pledging assets.

<TABLE>

FOR AGAINST ABSTENTIONS
<S> <C> <C>
8,465,655 443,690 723,333

</TABLE>

AGENDA ITEM 3

To approve eliminating the Fund's fundamental investment policy regarding
selling securities short.

<TABLE>

FOR AGAINST ABSTENTIONS
<S> <C> <C>
8,229,443 540,032 863,203

</TABLE>

GROWTH OF $10,000 INVESTED IN FEDERATED FUND FOR U.S. GOVERNMENT
SECURITIES II

[Graphic]

<TABLE>

AVERAGE ANNUAL TOTAL RETURN FOR THE PERIOD ENDED DECEMBER 31, 1999
<S> <C>
1 Year (0.60%)
Start of Performance (3/28/94) 5.36%

</TABLE>

"Graphic representation "A" omitted. See Appendix."

The graph above illustrates the hypothetical investment of $10,000 1 in the
Federated Fund for U.S. Government Securities II (the "Fund") from
March 28, 1994 (start of performance) to December 31, 1999, compared to the
Lehman Brothers 5 Year Treasury Bellwether Index (LB5TB),2 Lehman Brothers
Government/Mortgage-Backed Index (LBGM),2 and the Lipper U.S. Mortgage
Funds Average (LUSMFA).3

PAST PERFORMANCE IS NO GUARANTEE OF FUTURE PERFORMANCE. YOUR INVESTMENT RETURN
AND PRINCIPAL VALUE WILL FLUCTUATE SO WHEN SHARES ARE REDEEMED, THEY MAY BE
WORTH MORE OR LESS THAN THEIR ORIGINAL COST. MUTUAL FUNDS ARE NOT OBLIGATIONS OF
OR GUARANTEED BY ANY BANK AND ARE NOT FEDERALLY INSURED.

1 The Fund's performance assumes the reinvestment of all dividends and
distributions. The LB5TB, LBGM, and the LUSMFA have been adjusted to reflect
reinvestment of dividends on securities in the index and average.

2 The LB5TB and LBGM are not adjusted to reflect sales charges, expenses, or
other fees that the Securities and Exchange Commission requires to be reflected
in the Fund's performance. The indexes are unmanaged.

3 The LUSMFA represents the average of the total returns reported by all of the
mutual funds designated by Lipper, Inc. as falling into the category, and is not
adjusted to reflect any sales charges. However, these total returns are reported
net of expenses or other fees that the Securities and Exchange Commission
requires to be reflected in a fund's performance.

Portfolio of Investments

DECEMBER 31, 1999

<TABLE>

PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
INTERMEDIATE-TERM
U.S. GOVERNMENT
OBLIGATIONS-13.8%
$ 1,000,000 Federal Farm Credit Bank,
7.350%, 3/24/2005 $ 1,018,420
2,500,000 Federal Home Loan Bank
System, 4.875%, 1/22/2002 2,420,550
1,000,000 Federal Home Loan Bank
System, 5.125%, 2/26/2002 971,150
2,500,000 Federal Home Loan Bank
System, 5.500%, 1/21/2003 2,412,000
1,000,000 Federal Home Loan Bank
System, 5.530%, 1/15/2003 965,010
2,500,000 Federal Home Loan Bank
System, 5.905%, 3/27/2008 2,305,750
4,500,000 Federal Home Loan Bank
System, 5.935%, 7/6/2001 4,466,385
750,000 Federal Home Loan Bank
System, 6.185%, 5/6/2008 704,175
1,200,000 Federal Home Loan Bank
System, 6.500%, 8/14/2009 1,150,632
1,000,000 Federal Home Loan Bank
System, 6.830%, 7/17/2001 1,004,530
1,000,000 Federal Home Loan Bank
System, 7.660%, 7/20/2004 1,028,810
TOTAL INTERMEDIATE-TERM
U.S. GOVERNMENT OBLIGATIONS
(IDENTIFIED COST $18,992,579) 18,447,412
LONG-TERM U.S. GOVERNMENT
OBLIGATIONS-70.0%
FEDERAL HOME LOAN MORTGAGE
CORPORATION-22.8%
2,000,000 1 8.000%, 1/1/2029 2,019,380
2,000,000 5.700%, 1/25/2000 1,994,380
5,945,515 6.000%, 1/1/2014 -
11/1/2028 5,541,479
10,860,608 6.500%, 5/1/2024 -
7/1/2029 10,260,413
4,922,168 7.000%, 8/1/2028 -
5/1/2029 4,769,876
5,666,671 7.500%, 6/1/2029 -
11/1/2029 5,612,172
229,656 9.000%, 2/1/2025 -
5/1/2025 239,274
TOTAL 30,436,974
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
LONG-TERM U.S. GOVERNMENT
OBLIGATIONS-continued
FEDERAL NATIONAL MORTGAGE
ASSOCIATION-23.1%
$ 7,940,000 1 7.000%, 1/1/2014 $ 7,855,677
1,000,000 1 8.000%, 1/1/2029 1,008,120
5,619,512 6.000%, 5/1/2014 -
6/1/2014 5,336,794
10,006,187 1 6.500%, 12/1/2028 -
9/1/2029 9,443,326
2,126,932 7.000%, 2/1/2024 -
9/1/2029 2,059,526
3,905,197 7.500%, 12/1/2027 -
9/1/2028 3,866,559
1,245,595 8.000%, 10/1/2027 -
12/1/2027 1,255,709
TOTAL 30,825,711
GOVERNMENT NATIONAL
MORTGAGE ASSOCIATION-24.1%
6,000,000 1 8.000%, 1/1/2029 6,060,000
1,238,852 6.000%, 9/15/2028 -
4/15/2029 1,129,685
6,229,749 6.500%, 12/15/2023 -
7/15/2029 5,879,621
11,743,936 7.000%, 12/15/2027 -
12/15/2028 11,358,736
5,005,456 7.500%, 10/15/2026 -
10/15/2029 4,950,700
1,998,435 8.000%, 11/15/2029 2,018,420
318,555 8.500%, 6/15/2027 327,513
517,806 9.500%, 11/15/2016 554,213
TOTAL 32,278,888
TOTAL LONG-TERM
U.S. GOVERNMENT
OBLIGATIONS (IDENTIFIED
COST $97,065,325) 93,541,573
U.S. TREASURY OBLIGATIONS-
16.3%
2,850,000 United States Treasury
Bonds, 6.000%, 8/15/2009 -
2/15/2026 2,701,252
2,250,000 United States Treasury
Bonds, 6.125%, 11/15/2027 2,093,018
2,300,000 United States Treasury
Bonds, 8.000%, 11/15/2021 2,608,798
2,200,000 United States Treasury
Bonds, 9.250%, 2/15/2016 2,715,064
1,390,000 United States Treasury
Bonds, 11.250%, 2/15/2015 1,963,180
1,600,000 United States Treasury
Notes, 5.000%, 4/30/2001 1,577,056
3,100,000 United States Treasury
Notes, 5.375%, 6/30/2003 3,007,930
2,100,000 United States Treasury
Notes, 5.625%, 5/15/2008 1,975,659
1,700,000 United States Treasury
Notes, 5.875%, 11/30/2001 1,689,647
1,500,000 United States Treasury
Notes, 6.250%, 2/28/2002 1,500,270
TOTAL U.S. TREASURY
OBLIGATIONS (IDENTIFIED
COST $22,973,269) 21,831,874
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
REPURCHASE AGREEMENTS-8.8% 2
$ 865,000 Bank of America, 3.150%,
dated 12/31/1999, due
1/3/2000 $ 865,000
3,000,000 3 Goldman Sachs Group, LP,
5.740%, dated 12/8/1999,
due 1/19/2000 3,000,000
3,510,000 3 Goldman Sachs Group, LP,
5.740%, dated 12/8/1999,
due 1/24/2000 3,510,000
4,400,000 3 Morgan Stanley Group,
Inc., 5.650%, dated
11/26/1999, due 1/24/2000 4,400,000
TOTAL REPURCHASE
AGREEMENTS (AT AMORTIZED
COST) 11,775,000
TOTAL INVESTMENTS
(IDENTIFIED COST
$150,806,173) 4 $ 145,595,859

</TABLE>

1 These securities are subject to dollar roll transactions.

2 The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements is through participation in joint
accounts with other Federated funds.

3 Although final maturity falls beyond seven days, a liquidity feature is
included in each transaction to permit termination of the repurchase agreement
within seven days.

4 The cost of investments for federal tax purposes amounts to $150,806,173. The
net unrealized depreciation of investments on a federal tax basis amounts to
$5,210,314 which is comprised of $74,511 appreciation and $5,284,825
depreciation at December 31, 1999.

Note: The categories of investments are shown as a percentage of net assets
($133,737,650) at December 31, 1999.

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

DECEMBER 31, 1999

<TABLE>

<S> <C> <C>
ASSETS:
Total investments in
securities, at value
(identified and tax cost
$150,806,173) $ 145,595,859
Cash 4,351
Income receivable 1,264,907
Receivable for investments
sold 8,270,695
Receivable for shares sold 296,078
TOTAL ASSETS 155,431,890
LIABILITIES:
Payable for investments
purchased $ 8,515,705
Payable for shares
redeemed 225,686
Payable for dollar roll
transactions 12,924,331
Accrued expenses 28,518
TOTAL LIABILITIES 21,694,240
Net assets for 12,665,462
shares outstanding $ 133,737,650
NET ASSETS CONSIST OF:
Paid in capital $ 132,522,284
Net unrealized
depreciation of
investments (5,210,314)
Accumulated net realized
loss on investments (355,965)
Undistributed net
investment income 6,781,645
TOTAL NET ASSETS $ 133,737,650
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$133,737,650 / 12,665,462
shares outstanding $10.56

</TABLE>

See Notes which are an integral part of the Financial Statements

Statement of Operations

YEAR ENDED DECEMBER 31, 1999

<TABLE>

<S> <C> <C>
INVESTMENT INCOME:
Interest (net of dollar
roll expense of $335,303) $ 7,828,806
EXPENSES:
Investment adviser fee $ 744,490
Administrative personnel
and services fee 127,063
Custodian fees 13,805
Transfer and dividend
disbursing agent fees and
expenses 42,837
Directors'/Trustees' fees 2,932
Auditing fees 12,631
Legal fees 3,578
Portfolio accounting fees 46,260
Share registration costs 4,460
Printing and postage 47,010
Insurance premiums 290
Miscellaneous 2,443
TOTAL EXPENSES 1,047,799
WAIVER:
Waiver of investment
adviser fee (638)
Net expenses 1,047,161
Net investment income 6,781,645
REALIZED AND UNREALIZED
GAIN (LOSS) ON
INVESTMENTS:
Net realized loss on
investments (355,965)
Net change in unrealized
appreciation
(depreciation) of
investments (7,012,515)
Net realized and
unrealized loss on
investments (7,368,480)
Change in net assets
resulting from operations $ (586,835)

</TABLE>

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

<TABLE>

YEAR ENDED DECEMBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 6,781,645 $ 4,680,557
Net realized gain (loss) on
investments ($(355,965)
and $919,638,
respectively, as computed
for federal tax purposes) (355,965) 919,660
Net change in unrealized
appreciation/depreciation (7,012,515) 535,278
CHANGE IN NET ASSETS
RESULTING FROM OPERATIONS (586,835) 6,135,495
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (4,657,725) (1,184,475)
Distributions from net
realized gains (919,156) (52,421)
CHANGE IN NET ASSETS
RESULTING FROM
DISTRIBUTIONS
TO SHAREHOLDERS (5,576,881) (1,236,896)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 66,466,729 92,242,565
Net asset value of shares
issued to shareholders in
payment of
distributions declared 5,576,878 1,236,865
Cost of shares redeemed (43,492,695) (50,126,525)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 28,550,912 43,352,905
Change in net assets 22,387,196 48,251,504
NET ASSETS:
Beginning of period 111,350,454 63,098,950
End of period (including
undistributed net
investment income of
$6,781,645 and $4,672,616,
respectively) $ 133,737,650 $ 111,350,454

</TABLE>

See Notes which are an integral part of the Financial Statements

Financial Highlights

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>

YEAR ENDED DECEMBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING
OF PERIOD $11.15 $10.54 $10.09 $10.29 $ 9.99
INCOME FROM INVESTMENT
OPERATIONS:
Net investment income 0.51 0.44 0.58 0.59 0.54
Net realized and
unrealized gain (loss)
on investments (0.57) 0.36 0.26 (0.18) 0.30
TOTAL FROM INVESTMENT
OPERATIONS (0.06) 0.80 0.84 0.41 0.84
LESS DISTRIBUTIONS:
Distributions from net
investment income (0.44) (0.18) (0.39) (0.57) (0.54)
Distributions from net
realized gain on
investments (0.09) (0.01) - (0.04) -
TOTAL DISTRIBUTIONS (0.53) (0.19) (0.39) (0.61) (0.54)
NET ASSET VALUE, END OF
PERIOD $10.56 $11.15 $10.54 $10.09 $10.29
TOTAL RETURN 1 (0.60%) 7.66% 8.58% 4.20% 8.77%

RATIOS TO AVERAGE NET
ASSETS:
Expenses 0.84% 0.85% 0.80% 0.80% 0.80%
Net investment income 5.47% 5.44% 5.98% 6.00% 6.00%
Expense
waiver/reimbursement 2 0.00 3 0.08% 0.45% 1.01% 4.81%
SUPPLEMENTAL DATA:
Net assets, end of period
(000 omitted) $133,738 $111,350 $63,099 $34,965 $12,264
Portfolio turnover 84% 99% 73% 97% 65%

</TABLE>

1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

2 This voluntary expense decrease is reflected in both the expense and net
income ratios shown above.

3 Less than 0.01%.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

DECEMBER 31, 1999

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 11 portfolios. The financial
statements included herein are only those of Federated Fund for U.S. Government
Securities II (the "Fund"), a diversified portfolio. The financial statements of
the other portfolios are presented separately. The assets of each portfolio are
segregated and a shareholder's interest is limited to the portfolio in which
shares are held. The investment objective of the fund is to seek provide current
income.

SIGNIFICANT ACCOUNTING POLICIES

The following is a summary of significant accounting policies consistently
followed by the Fund in the preparation of its financial statements. These
policies are in conformity with generally accepted accounting principles.

INVESTMENT VALUATIONS

U.S. government securities are generally valued at the mean of the latest bid
and asked price as furnished by an independent pricing service. Short- term
securities are valued at the prices provided by an independent pricing service.
However, short-term securities with remaining maturities of 60 days or less at
the time of purchase may be valued at amortized cost, which approximates fair
market value.

REPURCHASE AGREEMENTS

It is the policy of the Trust to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Trust to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement
transaction.

The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Trust's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Trust could receive less
than the repurchase price on the sale of collateral securities. The Fund, along
with other affiliated investment companies, may utilize a joint trading account
for the purpose of entering into one or more repurchase agreements.

INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS

Interest income and expenses are accrued daily. Bond premium and discount, if
applicable, are amortized as required by the Internal Revenue Code, as amended
(the "Code"). Distributions to shareholders are recorded on the ex- dividend
date. Non-cash dividends included in dividend income, if any, are recorded, at
fair value.

FEDERAL TAXES

It is the Fund's policy to comply with the provisions of the Code applicable to
regulated investment companies and to distribute to shareholders each year
substantially all of its income. Accordingly, no provision for federal taxes is
necessary.

At December 31, 1999, the Fund, for federal tax purposes, had a capital loss
carryforward of $355,965, which will reduce the Fund's taxable income arising
from future net realized gain on investments, if any, to the extent permitted by
the Code, and this will reduce the amount of the distributions to shareholders
which would otherwise be necessary to relieve the Fund of any liability for
federal tax. Pursuant to the Code, such capital loss carryforward will expire in
2007.

Income and capital gain distributions are determined in accordance with income
tax regulations which may differ from generally accepted accounting principles.
These differences are primarily due to differing treatments for equalization.
The following reclassifications have been made to the financial statements:

<TABLE>

INCREASE (DECREASE)
UNDISTRIBUTED NET
PAID-IN CAPITAL INVESTMENT INCOME
<S> <C>
$14,891 $(14,891)

</TABLE>

Net investment income, net realized gains (losses), and net assets were not
affected by this reclassification.

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

The Fund may engage in when-issued or delayed delivery transactions. The Trust
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date. Losses may occur on these transactions due to changes in market
conditions or the failure of counterparties to perform under the contact.

DOLLAR ROLL TRANSACTIONS

The Fund enters into dollar roll transactions, with respect to mortgage
securities issued by GNMA, FNMA and FHLMC, in which the Fund sells mortgage
securities to financial institutions and simultaneously agrees to accept
substantially similar (same type, coupon and maturity) securities at a later
date at an agreed upon price. Dollar roll transactions involve "to be announced"
securities and are treated as short-term financing arrangements which will not
exceed twelve months. The Fund will use the proceeds generated from the
transactions to invest in short-term investments, which may enhance the Fund's
current yield and total return.

USE OF ESTIMATES

The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts of assets, liabilities, expenses and revenues reported in the
financial statements. Actual results could differ from those estimated.

OTHER

Investment transactions are accounted for a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

<TABLE>

YEAR ENDED DECEMBER 31 1999 1998
<S> <C> <C>
Shares sold 6,220,284 8,487,195
Shares issued to
shareholders in payment of
distributions declared 526,121 117,350
Shares redeemed (4,071,941) (4,597,436)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 2,674,464 4,007,109

</TABLE>

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISER FEE

Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment adviser fee equal to
0.60% of the Fund's average daily net assets.

The Adviser may voluntarily choose to waive any portion of its fee and/or
reimburse certain operating expenses of the Fund. The Adviser can modify or
terminate this voluntary waiver and/or reimbursement at any time at its sole
discretion.

ADMINISTRATIVE FEE

Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on a scale that ranges from 0.15% to 0.075% of the
average aggregate daily net assets of all funds advised by subsidiaries of
Federated Investors, Inc., subject to a $125,000 minimum per portfolio and
$30,000 per each additional class.

SHAREHOLDER SERVICES FEE

Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund for the period. The fee paid to FSSC is used to finance
certain services for shareholders and to maintain shareholder accounts. For the
year ended December 31, 1999, the Fund did not incur a shareholder services fee.

TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES

FServ, through its subsidiary, FSSC serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type, and number
of accounts and transactions made by shareholders.

PORTFOLIO ACCOUNTING FEES

FServ, maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the fund's average daily net assets for the period,
plus out-of-pocket expenses.

GENERAL

Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.

INVESTMENT TRANSACTIONS

Purchases and sales of investments, excluding short-term securities, for the
year ended December 31, 1999, were as follows:

<TABLE>

<S> <C>
Purchases $ 129,759,938
Sales $ 103,545,276

</TABLE>

Independent Auditors' Report

TO THE BOARD OF TRUSTEES OF THE FEDERATED INSURANCE SERIES

AND SHAREHOLDERS OF FEDERATED FUND FOR U.S. GOVERNMENT SECURITIES II:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments of Federated Fund for U.S. Government Securities II
(the "Fund") (a portfolio of Federated Insurance Series) (the "Trust"), as of
December 31, 1999, the related statement of operations for the year then ended,
the statement of changes in net assets for the year ended December 31, 1999 and
1998, and the financial highlights for the periods presented. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.

We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements and financial
highlights are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. Our procedures included confirmation of the securities owned at
December 31, 1999, by correspondence with the custodian and brokers; where
replies were not received, we performed other auditing procedures. An audit also
includes assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our
opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Federated Fund for
U.S. Government Securities II as of December 31, 1999, the results of its
operations, the changes in its net assets and its financial highlights for the
respective stated periods in conformity with generally accepted accounting
principles.

Deloitte & Touche LLP

Boston, Massachusetts

January 28, 2000

Trustees 1

JOHN F. DONAHUE

THOMAS G. BIGLEY

JOHN T. CONROY, JR.

NICHOLAS P. CONSTANTAKIS

JOHN F. CUNNINGHAM

J. CHRISTOPHER DONAHUE

LAWRENCE D. ELLIS, M.D.

PETER E. MADDEN

CHARLES F. MANSFIELD, JR.

JOHN E. MURRAY, JR., J.D., S.J.D.

MARJORIE P. SMUTS

JOHN S. WALSH

1 Trustees as of January 1, 2000.

Officers

JOHN F. DONAHUE

Chairman

J. CHRISTOPHER DONAHUE

President

EDWARD C. GONZALES

Executive Vice President

JOHN W. MCGONIGLE

Executive Vice President and Secretary

RICHARD B. FISHER

Vice President

RICHARD J. THOMAS

Treasurer

C. GRANT ANDERSON

Assistant Secretary

Variable funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal.

This report is authorized for distribution to prospective investors only when
preceded or accompanied by the fund's prospectus which contains facts concerning
its objective and policies, management fees, expenses, and other information.

[Graphic]
Federated
World-Class Investment Manager
ANNUAL REPORT

Federated Fund for U.S. Government Securities II

Federated Insurance Series

ANNUAL REPORT TO SHAREHOLDERS

DECEMBER 31, 1999

[Graphic]
Federated
Federated Fund for U.S. Government Securities II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor

Cusip 313916207

G00846-01 (2/00)

[Graphic]

ANNUAL REPORT

President's Message

Dear Shareholder:

I am pleased to present the Annual Report to shareholders for Federated Prime
Money Fund II, a portfolio of Federated Insurance Series.

This report covers the 12-month fiscal year period from January 1, 1999 through
December 31, 1999. It begins with a commentary by the fund's portfolio manager,
which is followed by a complete listing of the fund's money market holdings and
the financial statements.

Over the reporting period, the fund kept shareholders' cash working-and
accessible-every day while maintaining a stable per share price of $1.00. 1

To provide a competitive daily yield, the fund invests in a diversified
portfolio of high-quality money market securities. Over the 12-month reporting
period, the fund paid a total of $0.05 per share in dividends to shareholders.
On December 31, 1999, net assets reached $193.9 million.

Thank you for choosing Federated Prime Money Fund II as a convenient,
professionally managed way to keep your ready cash working. We'll continue to
keep you up-to-date on your investment, and welcome your comments and
suggestions.

Sincerely,

[Graphic]

J. Christopher Donahue
President
January 15, 2000

1 An investment in money market funds is neither insured nor guaranteed by the
Federal Deposit Insurance Corporation or any other government agency. Although
money market funds seek to preserve the value of your investment at $1.00 per
share, it is possible to lose money by investing in the fund.

Investment Review

Federated Prime Money Market Fund II (the "Fund") invests in a portfolio of
high-quality fixed income securities maturing in 397 days or less. The average
maturity of these securities, computed on a dollar weighted basis, is restricted
to 90 days or less. Portfolio securities must be rated in one of the two highest
short-term rating categories by one or more of the nationally recognized
statistical rating organizations or be of comparable quality to securities
having such ratings. Typical security types include, but are not limited to,
commercial paper, certificates of deposit, time deposits, variable rate
instruments and repurchase agreements.

The second half of 1999 brought low unemployment and a remarkable rise in
productivity in the United States. The Federal Reserve Board (the "Fed") raised
interest rates three times: on June 30th, August 24th and November 30th. The
Federal Funds target rate increased from 4.75% to 5.50%. The first two interest
rate increases were the Fed's attempt to partially undo the three rate cuts from
the prior year in the wake of the financial market crises overseas. The November
rate hike was viewed as an attempt to keep the strong U.S. economy from
overheating and to prevent inflationary imbalances.

Thirty day commercial paper was at 4.86% on June 1, 1999, and then rose in
anticipation of the three Federal Open Market Committee interest rate increases.
On December 31, 1999, the 30-day commercial paper rate stood at 5.40%.

The money market yield curve for the second half of 1999 contained large spikes
at various points in time. At the end of September, with three-month commercial
paper maturing over year-end and with potential Year 2000 concerns, the
three-month commercial paper rate jumped from 5.35% to 5.90% over two days. The
same phenomenon occurred in the two-month and one-month commercial paper rates
as these maturity dates carried into January 2000. We believe these spikes in
yields will dissipate in January 2000 and believe there will be a more normal
money market yield curve next year. We also anticipate that the Fed will
continue to raise interest rates in early 2000 if economic indicators show
demand exceeding potential supply.

The target average maturity range for the Fund remained in the 45-55 day range.
In structuring the Fund, there was continued emphasis placed on positioning
30-35% of the Fund's assets in variable rate demand notes and accomplishing a
modest barbell structure.

During the 12-month reporting period ended December 31, 1999, the net assets of
the Fund increased from $103.1 million to $193.9 million, while the 7-day net
yield increased from 4.52% to 4.95%. 1 The effective average maturity of the
Fund on December 31, 1999 was 37 days.

1 Performance quoted represents past performance and is no guarantee of future
results. Yield will vary. Yields quoted for money market funds most closely
reflect the fund's current earnings. Performance information does not reflect
the charges and expenses of a variable life insurance contract.

Last Meeting of Shareholders

A Special Meeting of Shareholders of the Fund was held on November 15, 1999. On
September 16, 1999, the record date for shareholders voting at the meeting,
there were 166,056,393 total outstanding shares. The following items were
considered by shareholders of the Fund and the results of their voting were as
follows:

AGENDA ITEM 1:

To elect six Trustees 1-all portfolios of Federated Insurance Series voting
together.

<TABLE>
<CAPTION>
WITHHELD
AUTHORITY
FOR TO VOTE
<S> <C> <C>
Thomas G. Bigley 240,211,548 7,152,692
Nicholas P. Constantakis 239,928,312 7,435,928
John F. Cunningham 240,226,307 7,137,933
Charles F. Mansfield, Jr. 240,298,855 7,065,386
John E. Murray, Jr., J.D., S.J.D. 240,016,672 7,347,569
John S. Walsh 240,224,615 7,139,625
</TABLE>

1 The following Trustees continued their terms as Trustees: John F.
Donahue, John T. Conroy, Jr., J. Christopher Donahue, Lawrence D. Ellis,
M.D., Peter E. Madden and Marjorie P. Smuts.

AGENDA ITEM 2:

To make changes to the Fund's fundamental investment policies:

(a) To approve amending the Fund's fundamental investment policy regarding
diversification.

<TABLE>
<CAPTION>
FOR AGAINST ABSTENTIONS
<S> <C> <C>
154,297,217 6,729,189 5,029,986
</TABLE>

(b) To approve amending the Fund's fundamental investment policy regarding
borrowing money and issuing senior securities.

<TABLE>
<CAPTION>
FOR AGAINST ABSTENTIONS
<S> <C> <C>
154,059,980 6,966,425 5,029,986
</TABLE>

<TABLE>
<CAPTION>
FOR AGAINST ABSTENTIONS
<S> <C> <C>
154,279,590 6,746,816 5,029,986
</TABLE>

(d) To approve amending the Fund's funda-mental investment policy regarding
investments in commodities.

<TABLE>
<CAPTION>
FOR AGAINST ABSTENTIONS
<S> <C> <C>
153,822,401 7,204,004 5,029,986
</TABLE>

(e) To approve amending the Fund's fundamental investment policy regarding
underwriting securities.

<TABLE>
<CAPTION>
FOR AGAINST ABSTENTIONS
<S> <C> <C>
154,297,217 6,729,189 5,029,986
</TABLE>

(f) To approve amending the Fund's fundamental investment policy regarding
lending by the Fund.

<TABLE>
<CAPTION>
FOR AGAINST ABSTENTIONS
<S> <C> <C>
154,193,187 6,833,218 5,029,986
</TABLE>

(g) To approve amending the Fund's fundamental investment policy regarding
concentration of the Fund's investments in the securities of companies in the
same industry.

<TABLE>
<CAPTION>
FOR AGAINST ABSTENTIONS
<S> <C> <C>
154,279,590 6,746,816 5,029,986
</TABLE>

(h) To approve amending, and making non-fundamental, the Fund's fundamental
investment policy regarding buying securities on margin.

<TABLE>
<CAPTION>
FOR AGAINST ABSTENTIONS
<S> <C> <C>
154,000,068 7,026,338 5,029,986
</TABLE>

(i) To approve amending, and making non-fundamental, the Fund's fundamental
investment policy regarding pledging assets.

<TABLE>
<CAPTION>
FOR AGAINST ABSTENTIONS
<S> <C> <C>
154,052,711 6,973,694 5,029,986
</TABLE>

AGENDA ITEM 3:

To approve eliminating the Fund's fundamental investment policy regarding
selling securities short.

<TABLE>
<CAPTION>
FOR AGAINST ABSTENTIONS
<S> <C> <C>
149,772,617 8,975,181 7,308,594
</TABLE>

Portfolio of Investments

DECEMBER 31, 1999

<TABLE>
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
SHORT-TERM NOTES-1.0%
FINANCE - AUTOMOTIVE-0.3%
$ 284,632 Honda Auto Lease Trust
1999-A, Class A1, 5.445%,
8/15/2000 $ 284,632
373,712 Toyota Auto Receivables
1999-A Owner Trust, Class
1, 5.365%, 8/11/2000 373,712
TOTAL 658,344
FINANCE - EQUIPMENT-0.7%
401,978 Caterpillar Financial
Asset Trust 1999-A, Class
1, 5.365%, 7/25/2000 401,978
747,792 Copelco Capital Funding
LLC 1999-B, Class A-1,
5.937%, 10/18/2000 747,792
140,455 Navistar Financial 1999-A
Owner Trust, Class A-1,
5.002%, 6/15/2000 140,455
TOTAL 1,290,225
TOTAL SHORT-TERM NOTES 1,948,569
CERTIFICATES OF DEPOSIT-
2.1%
BANKING-2.1%
1,000,000 Canadian Imperial Bank of
Commerce, 5.000%,
1/27/2000 999,979
1,000,000 Commerzbank AG, Frankfurt,
5.232%, 3/9/2000 999,969
2,000,000 UBS AG, 5.080% - 6.130%,
1/13/2000 - 11/29/2000 1,999,503
TOTAL CERTIFICATES OF
DEPOSIT 3,999,451
COMMERCIAL PAPER-39.1%
AEROSPACE/AUTO-1.0%
2,000,000 Johnson Controls, Inc.,
5.950%, 1/26/2000 1,991,736
BANKING-13.7%
3,000,000 Barclays U.S. Funding
Corp., (Guaranteed by
Barclays Bank PLC,
London), 10.000%, 1/3/2000 2,998,333
8,000,000 Cregem North America,
Inc., (Guaranteed by
Credit Communal de
Belgique, Brussels),
5.830% - 5.920%, 2/8/2000 -
4/17/2000 7,904,860
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
COMMERCIAL PAPER-continued
BANKING-CONTINUED
$ 5,700,000 Den Danske Corp., Inc.,
(Guaranteed by Den Danske
Bank A/S), 5.870% - 5.890%,
3/1/2000 - 5/2/2000 $ 5,636,992
6,023,000 Fountain Square Commercial
Funding Corp., (Fifth
Third Bank, Cincinnati
Support Agreement),
6.030%, 1/27/2000 5,996,770
3,000,000 Greenwich Funding Corp.,
4.930% -5.950%, 1/18/2000
- 2/1/2000 2,990,135
1,000,000 Westpac Capital Corp.,
(Guaranteed by Westpac
Banking Corp. Ltd.,
Sydney), 5.800%, 5/2/2000 980,344
TOTAL 26,507,434
CHEMICALS-1.6%
1,611,000 IMC Global, Inc., 6.300% -
6.350%, 2/15/2000 1,598,271
1,600,000 Rohm & Haas Co., 6.350%,
1/18/2000 1,595,164
TOTAL 3,193,435
CONSUMER PRODUCTS-1.5%
3,000,000 Diageo Capital PLC,
(Guaranteed by Diageo
PLC), 5.700% - 5.890%,
1/31/2000 - 3/1/2000 2,975,617
FINANCE - AUTOMOTIVE-0.8%
1,500,000 General Motors Acceptance
Corp., 5.330% - 5.360%,
1/26/2000 - 1/31/2000 1,493,683
FINANCE - COMMERCIAL-10.4%
9,000,000 Asset Securitization
Cooperative Corp., 5.900%,
1/31/2000 8,955,750
500,000 GE Capital International
Funding, Inc., (Guaranteed
by General Electric
Capital Corp.), 5.290%,
1/24/2000 498,310
2,000,000 General Electric Capital
Corp., 5.920%, 2/25/2000 1,981,911
4,000,000 Receivables Capital Corp.,
5.940%, 1/24/2000 -
1/28/2000 3,984,160
4,800,000 Sigma Finance, Inc.,
(Guaranteed by Sigma
Finance Corp.), 5.550% -
5.770%, 2/4/2000 -
3/15/2000 4,748,364
TOTAL 20,168,495
FINANCE - EQUIPMENT-0.4%
700,000 Comdisco, Inc., 6.550%,
1/11/2000 698,726
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
COMMERCIAL PAPER-continued
INDUSTRIAL PRODUCTS-0.9%
$ 1,835,000 Praxair, Inc., 6.260% -
6.320%, 2/1/2000 $ 1,825,027
INSURANCE-6.2%
1,000,000 Aspen Funding Corp., (MBIA
Insured), 6.030%, 2/2/2000 994,640
2,000,000 Marsh USA Inc., 5.520%,
1/28/2000 1,991,720
9,000,000 Sheffield Receivables
Corp., 5.950% - 6.150%,
1/21/2000 - 2/11/2000 8,942,543
TOTAL 11,928,903
MACHINERY, EQUIPMENT,
AUTO-2.1%
4,000,000 Eaton Corp., 5.550%,
1/27/2000 3,983,967
PHARMACEUTICALS AND HEALTH
CARE-0.5%
1,000,000 American Home Products
Corp., 5.700%, 2/9/2000 993,825
TOTAL COMMERCIAL PAPER 75,760,848
CORPORATE NOTES-9.0%
BANKING-2.6%
5,000,000 Bank One, Illinois, N.A.,
6.070% - 6.200%,
10/10/2000 - 10/23/2000 4,998,068
BROKERAGE-3.1%
6,000,000 Goldman Sachs Group, Inc.,
6.010% - 6.512%, 3/29/2000 6,000,000
FINANCE - COMMERCIAL-3.3%
6,500,000 Beta Finance, Inc.,
(Guaranteed by Beta
Finance Corp.), 5.010% -
6.020%,
1/25/2000 - 9/1/2000 6,499,971
TOTAL CORPORATE NOTES 17,498,039
LOAN PARTICIPATION-5.5%
ELECTRICAL EQUIPMENT-0.3%
600,000 Mt. Vernon Phenol Plant
Partnership, (Guaranteed
by General Electric Co.),
6.120%, 5/17/2000 600,000
FINANCE - AUTOMOTIVE-1.0%
2,000,000 General Motors Acceptance
Corp., Mortgage of PA,
(Guaranteed by General
Motors Acceptance Corp.),
6.210%, 2/1/2000 2,000,000
FINANCE - RETAIL-4.2%
8,000,000 Associates Financial
Services of America, Inc.,
(Guaranteed by Associates
Corp. of North America),
4.850%, 1/3/2000 8,000,000
TOTAL LOAN PARTICIPATION 10,600,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
MUNICIPALS-0.9%
MUNICIPAL-0.9%
$ 1,800,000 Bergen County, NJ
Improvement Authority,
Bergen Regional Medical
Center Project (Series
1999-A), (Guaranteed by
Bergen County, NJ
Improvement Authority),
5.330%, 3/16/2000 $ 1,800,000
NOTES-VARIABLE-13.3% 2
BANKING-7.0%
135,000 Alabama State IDA,
(Wellborn Cabinet, Inc.),
Tax Revenue Bonds, (Fleet
Bank N.A. LOC), 6.050%,
1/6/2000 135,000
1,335,000 Alder Creek Properties,
LLC, (KeyBank, N.A. LOC),
6.750%, 1/6/2000 1,335,000
1,000,000 Bond Holdings, L.P.,
(SouthTrust Bank of
Alabama, Birmingham LOC),
5.920%, 01/07/2000 1,000,000
5,000 Capital One Funding Corp.,
Series 1995-A, (Bank One,
Indiana, N.A. LOC),
6.600%, 1/6/2000 5,000
2,000,000 Chandler, AZ IDA, South Bay
Circuits IMR, Series
1999B, (Comerica Bank
LOC), 5.850%, 1/6/2000 2,000,000
2,000,000 Comerica Bank, 6.467%,
11/9/2000 1,998,991
165,000 Denver Urban Renewal
Authority, (Series 1992-
B), (Paribas, Paris LOC),
6.540%, 1/6/2000 165,000
245,000 Edgefield County, SC,
Series 1997 (Bondex Inc.
Project), (HSBC Bank USA
LOC), 6.003%, 1/6/2000 245,000
180,000 Franklin County, OH,
Edison Welding, Series
1995, (Huntington National
Bank, Columbus, OH LOC),
6.430%, 1/6/2000 180,000
1,000,000 James F. Taylor, Series
1999, (SouthTrust Bank of
Alabama, Birmingham LOC),
6.050%, 01/07/2000 1,000,000
380,000 La-Man Corp., (SouthTrust
Bank of Alabama,
Birmingham LOC), 6.050%,
01/07/2000 380,000
1,308,699 1 Liquid Asset Backed
Securities Trust, Series
1997-1, (Westdeutsche
Landesbank Girozentrale
Swap Agreement), 6.461%,
1/18/2000 1,308,699
475,000 Lynn Haven, FL, Taxable Revenue Bond (Series 1998- B), (Bank
One, Ohio, N.A.
LOC), 6.800%, 1/6/2000 475,000
550,000 Madison, WI Community
Development Authority,
Series 1997-B Hamilton
Point Apts., (Bank One,
Wisconsin, N.A. LOC),
6.530%, 1/6/2000 550,000
880,000 Maryland Economic
Development Corp.,
(Allfirst LOC), 5.930%,
01/07/2000 880,000
158,000 Maryland State IDFA, Human Genome, Series1994, (Allfirst LOC),
6.430%,
1/3/2000 158,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
NOTES-VARIABLE-continued 2
BANKING-CONTINUED
$ 184,092 1 Rabobank Optional
Redemption Trust, Series
1997-101, 6.186%,
1/20/2000 $ 184,092
350,000 Roby Company Ltd.
Partnership, (Huntington
National Bank, Columbus,
OH LOC), 6.430%, 1/6/2000 350,000
1,090,000 Trap Rock Industries,
Inc., Series 1997, (First
Union National Bank,
Charlotte, N.C. LOC),
6.800%, 1/5/2000 1,090,000
107,000 Vista Funding Corp.,
Series 1994-A, (Fifth
Third Bank of Northwestern
OH LOC), 6.430%, 1/6/2000 107,000
TOTAL 13,546,782
BROKERAGE-1.3%
2,500,000 Morgan Stanley, Dean
Witter & Co., 5.180%,
2/4/2000 2,500,000
FINANCE - COMMERCIAL-1.1%
2,200,000 Sigma Finance, Inc.,
(Guaranteed by Sigma
Finance Corp.), 5.130% -
6.262%, 1/3/2000 -
3/22/2000 2,200,000
HOMEBUILDING-0.7%
1,300,000 Centex Corp., 6.702%,
1/27/2000 1,300,000
INSURANCE-3.2%
1,000,000 Allstate Life Insurance
Co., 6.616%, 1/1/2000 1,000,000
1,000,000 First Allmerica Financial
Life Insurance Co.,
6.306%, 2/3/2000 1,000,000
1,000,000 GE Life and Annuity
Assurance Co., 6.200%,
3/1/2000 1,000,000
2,000,000 Jackson National Life Insurance Co., 6.315% - 6.550%, 1/24/2000
-
2/1/2000 2,000,000
299,611 1 Liquid Asset Backed
Securities Trust, Series
1997-3, Senior Notes,
(AMBAC Insured), 6.151%,
3/28/2000 299,611
1,000,000 Travelers Insurance Co.,
(GR-17200 to GR-17204),
6.168%, 1/3/2000 1,000,000
TOTAL 6,299,611
TOTAL NOTES - VARIABLE 25,846,393
REPURCHASE AGREEMENTS-
27.3% 3
13,600,000 Banc of America Securities
LLC, 3.150%, dated
12/31/1999, due 1/3/2000 13,600,000
8,000,000 Bear, Stearns and Co.,
3.400%, dated 12/31/1999,
due 1/3/2000 8,000,000
<CAPTION>
PRINCIPAL
AMOUNT VALUE
<C> <S> <C>
REPURCHASE AGREEMENTS-
continued 3
$ 7,300,000 Donaldson, Lufkin and
Jenrette Securities Corp.,
3.000%, dated 12/31/1999,
due 1/3/2000 $ 7,300,000
8,000,000 Paribas Corp., 3.400%,
dated 12/31/1999, due
1/3/2000 8,000,000
8,000,000 Warburg Dillon Reed LLC,
3.100%, dated 12/31/1999,
due 1/3/2000 8,000,000
8,000,000 Warburg Dillon Reed LLC,
3.500%, dated 12/31/1999,
due 1/3/2000 8,000,000
TOTAL REPURCHASE
AGREEMENTS 52,900,000
U.S. TREASURY OBLIGATIONS-
0.5%
U.S. TREASURY BILLS-0.5%
1,000,000 United States Treasury
Bills, 4.730%, 1/6/2000 999,343
TOTAL INVESTMENTS (AT
AMORTIZED COST) 4 $ 191,352,643
</TABLE>

1 Denotes a restricted security which is subject to restrictions on resale under
federal securities laws. These securities have been deemed liquid based upon
criteria approved by the fund's Board of Trustees. At December 31, 1999, these
securities amounted to $1,792,402 which represents 0.92% of net assets.

2 Floating rate note with current rate and next reset date shown.

3 The repurchase agreements are fully collateralized by U.S. government and/or
agency obligations based on market prices at the date of the portfolio. The
investments in the repurchase agreements are through participation in joint
account with other Federated funds.

4 Also represents cost for federal tax purposes.

Note: The categories of investments are shown as a percentage of net assets
($193,869,739) at December 31, 1999.

The following acronyms are used throughout this portfolio:

AMBAC -American Municipal Bond Assurance Corporation
IDA -Industrial Development Authority
IDFA -Industrial Development Finance Authority
LOC -Letter of Credit
MBIA -Municipal Bond Investors Assurance

See Notes which are an integral part of the Financial Statements

Statement of Assets and Liabilities

DECEMBER 31, 1999

<TABLE>
<CAPTION>
<S> <C> <C>
ASSETS:
Investments in repurchased
agreements $52,900,000
Investments in securities 138,452,643
Total investments in
securities, at amortized
cost and value $ 191,352,643
Cash 47,413
Income receivable 879,709
Receivable for shares sold 2,720,091
TOTAL ASSETS 194,999,856
LIABILITIES:
Payable for shares
redeemed 1,077,670
Income distribution
payable 5,440
Accrued expenses 47,007
TOTAL LIABILITIES 1,130,117
Net assets for 193,869,739
shares outstanding $ 193,869,739
NET ASSET VALUE, OFFERING
PRICE AND REDEMPTION
PROCEEDS PER SHARE:
$193,869,739 / 193,869,739
shares outstanding $1.00
</TABLE>

See Notes which are an integral part of the Financial Statements

Statement of Operations

YEAR ENDED DECEMBER 31, 1999

<TABLE>
<CAPTION>
<S> <C> <C>
INVESTMENT INCOME:
Interest $ 7,436,244
EXPENSES:
Investment adviser fee $ 699,793
Administrative personnel
and services fee 125,000
Custodian fees 17,277
Transfer and dividend
disbursing agent fees and
expenses 42,873
Directors'/Trustees' fees 6,119
Auditing fees 12,630
Legal fees 5,426
Portfolio accounting fees 44,149
Share registration costs 21,214
Printing and postage 28,294
Insurance premiums 7,349
Miscellaneous 4,662
TOTAL EXPENSES 1,014,786
Net investment income $ 6,421,458
</TABLE>

See Notes which are an integral part of the Financial Statements

Statement of Changes in Net Assets

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 1999 1998
<S> <C> <C>
INCREASE (DECREASE) IN NET
ASSETS
OPERATIONS:
Net investment income $ 6,421,458 $ 4,010,679
DISTRIBUTIONS TO
SHAREHOLDERS:
Distributions from net
investment income (6,421,458) (4,010,679)
SHARE TRANSACTIONS:
Proceeds from sale of
shares 594,965,372 316,636,277
Net asset value of shares
issued to shareholders in
payment of
distributions declared 6,413,607 4,013,066
Cost of shares redeemed (510,605,822) (277,212,104)
CHANGE IN NET ASSETS
RESULTING FROM SHARE
TRANSACTIONS 90,773,157 43,437,239
Change in net assets 90,773,157 43,437,239
NET ASSETS:
Beginning of period 103,096,582 59,659,343
End of period $ 193,869,739 $ 103,096,582
</TABLE>

See Notes which are an integral part of the Financial Statements

Financial Highlights

(FOR A SHARE OUTSTANDING THROUGHOUT EACH PERIOD)

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
INCOME FROM INVESTMENT OPERATIONS:
Net investment income 0.05 0.05 0.05 0.05 0.05
LESS DISTRIBUTIONS:
Distributions from net investment income (0.05) (0.05) (0.05) (0.05) (0.05)
NET ASSET VALUE, END OF PERIOD $ 1.00 $ 1.00 $ 1.00 $ 1.00 $ 1.00
TOTAL RETURN 1 4.63% 4.92% 4.93% 4.75% 5.20%

RATIOS TO AVERAGE NET ASSETS:
Expenses 0.73% 0.80% 0.80% 0.80% 0.80%
Net investment income 4.60% 4.80% 4.84% 4.68% 5.12%
Expense waiver/reimbursement 2 - 0.01% 0.20% 0.57% 2.69%
SUPPLEMENTAL DATA:
Net assets, end of period (000 omitted) $193,870 $103,097 $59,659 $45,655 $17,838
</TABLE>

1 Based on net asset value, which does not reflect the sales charge or
contingent deferred sales charge, if applicable.

2 This voluntary expense decrease is reflected in both the expense and net
investment income ratios shown above.

See Notes which are an integral part of the Financial Statements

Notes to Financial Statements

DECEMBER 31, 1999

ORGANIZATION

Federated Insurance Series (the "Trust") is registered under the Investment
Company Act of 1940, as amended (the "Act") as an open-end, management
investment company. The Trust consists of 11 portfolios. The financial
statements included herein are only those of Federated Prime Money Fund II (the
"Fund"), a diversified portfolio. The financial statements of the other
portfolios are presented separately. The assets of each portfolio are segregated
and a shareholder's interest is limited to the portfolio in which shares are
held. The investment objective of the Fund is to provide current income
consistent with stability of principal and liquidity.

SIGNIFICANT ACCOUNTING POLICIES

INVESTMENT VALUATIONS

The Fund uses the amortized cost method to value its portfolio securities in
accordance with Rule 2a-7 under the Act.

REPURCHASE AGREEMENTS

It is the policy of the Fund to require the custodian bank to take possession,
to have legally segregated in the Federal Reserve Book Entry System, or to have
segregated within the custodian bank's vault, all securities held as collateral
under repurchase agreement transactions. Additionally, procedures have been
established by the Fund to monitor, on a daily basis, the market value of each
repurchase agreement's collateral to ensure that the value of collateral at
least equals the repurchase price to be paid under the repurchase agreement.

The Fund will only enter into repurchase agreements with banks and other
recognized financial institutions, such as broker/dealers, which are deemed by
the Fund's adviser to be creditworthy pursuant to the guidelines and/or
standards reviewed or established by the Board of Trustees (the "Trustees").
Risks may arise from the potential inability of counterparties to honor the
terms of the repurchase agreement. Accordingly, the Fund could receive less than
the repurchase price on the sale of collateral securities. The Fund, along with
other affiliated investment companies may utilize a joint trading account for
the purpose of entering into one or more repurchase agreements.

INVESTMENT INCOME, EXPENSES AND DISTRIBUTIONS

FEDERAL TAXES

WHEN-ISSUED AND DELAYED DELIVERY TRANSACTIONS

The Fund may engage in when-issued or delayed delivery transactions. The Fund
records when-issued securities on the trade date and maintains security
positions such that sufficient liquid assets will be available to make payment
for the securities purchased. Securities purchased on a when- issued or delayed
delivery basis are marked to market daily and begin earning interest on the
settlement date. Losses may occur on these transactions due to changes in market
conditions or the failure of counterparties to perform under the contract.

RESTRICTED SECURITIES

Restricted securities are securities that may only be resold upon registration
under federal securities laws or in transactions exempt from such registration.
Many restricted securities may be resold in the secondary market in transactions
exempt from registration. In some cases, the restricted securities may be resold
without registration upon exercise of a demand feature. Such restricted
securities may be determined to be liquid under criteria established by the
Trustees. The Fund will not incur any registration costs upon such resales.
Restricted securities are valued at amortized cost in accordance with Rule 2a-7
under the Act.

USE OF ESTIMATES

OTHER

Investment transactions are accounted for on a trade date basis.

SHARES OF BENEFICIAL INTEREST

The Declaration of Trust permits the Trustees to issue an unlimited number of
full and fractional shares of beneficial interest (without par value).

Transactions in shares were as follows:

<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31 1999 1998
<S> <C> <C>
Shares sold 594,965,372 316,636,277
Shares issued to
shareholders in payment of
distributions declared 6,413,607 4,013,066
Shares redeemed (510,605,822) (277,212,104)
NET CHANGE RESULTING FROM
SHARE TRANSACTIONS 90,773,157 43,437,239
</TABLE>

INVESTMENT ADVISER FEE AND OTHER TRANSACTIONS WITH AFFILIATES

INVESTMENT ADVISER FEE

Federated Investment Management Company, the Fund's investment adviser (the
"Adviser"), receives for its services an annual investment adviser fee equal to
0.50% of the Fund's average daily net assets. The Adviser may voluntarily choose
to waive any portion of its fee. The Adviser can modify or terminate this
voluntary waiver at any time at its sole discretion.

ADMINISTRATIVE FEE

Federated Services Company ("FServ"), under the Administrative Services
Agreement, provides the Fund with administrative personnel and services. The fee
paid to FServ is based on a scale that ranges from 0.15% to 0.075% of the
average daily net assets of all funds advised by subsidiaries of Federated
Investors, Inc. subject to a $125,000 minimum per portfolio and $30,000 per each
additional class.

SHAREHOLDER SERVICES FEE

Under the terms of a Shareholder Services Agreement with Federated Shareholder
Services Company ("FSSC"), the Fund will pay FSSC up to 0.25% of average daily
net assets of the Fund shares for the period. The fee paid to FSSC is used to
finance certain services for shareholders and to maintain shareholder accounts.
For the year ended December 31, 1999, the Fund did not incur a shareholder
services fee.

TRANSFER AND DIVIDEND DISBURSING AGENT FEES AND EXPENSES

FServ, through its subsidiary FSSC, serves as transfer and dividend disbursing
agent for the Fund. The fee paid to FSSC is based on the size, type, and number
of accounts and transactions made by shareholders.

PORTFOLIO ACCOUNTING FEES

FServ maintains the Fund's accounting records for which it receives a fee. The
fee is based on the level of the Fund's average daily net assets for the period,
plus out-of-pocket expenses.

GENERAL

Certain of the Officers and Trustees of the Trust are Officers and Directors or
Trustees of the above companies.

Independent Auditors' Report

TO THE BOARD OF TRUSTEES OF THE FEDERATED INSURANCE SERIES AND SHAREHOLDERS OF
FEDERATED PRIME MONEY FUND II:

We have audited the accompanying statement of assets and liabilities, including
the portfolio of investments of Federated Prime Money Fund II (the "Fund") (a
portfolio of the Federated Insurance Series) (the "Trust"), as of December 31,
1999, the related statement of operations for the year then ended, the statement
of changes in net assets for the years ended December 31, 1999 and 1998, and the
financial highlights for the periods presented. These financial statements and
financial highlights are the responsibility of the Trust's management. Our
responsibility is to express an opinion on these financial statements and
financial highlights based on our audits.

We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements and financial highlights are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements. Our
procedures included confirmation of the securities owned at December 31, 1999,
by correspondence with the custodian. An audit also includes assessing the
accounting principles used and significant estimates made by management, as well
as evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, such financial statements and financial highlights present
fairly, in all material respects, the financial position of Federated Prime
Money Fund II as of December 31, 1999, the results of its operations, the
changes in its net assets and its financial highlights for the respective stated
periods in conformity with generally accepted accounting principles.

Deloitte & Touche LLP

Boston, Massachusetts
January 28, 2000

Trustees 1

JOHN F. DONAHUE
THOMAS G. BIGLEY
JOHN T. CONROY, JR.
NICHOLAS P. CONSTANTAKIS
JOHN F. CUNNINGHAM
J. CHRISTOPHER DONAHUE
LAWRENCE D. ELLIS, M.D.
PETER E. MADDEN
CHARLES F. MANSFIELD, JR.
JOHN E. MURRAY, JR., J.D., S.J.D.
MARJORIE P. SMUTS
JOHN S. WALSH

1 Trustees as of January 1, 2000.

Officers

JOHN F. DONAHUE
Chairman

J. CHRISTOPHER DONAHUE
President

EDWARD C. GONZALES
Executive Vice President

JOHN W. MCGONIGLE
Executive Vice President and Secretary

RICHARD B. FISHER
Vice President

RICHARD J. THOMAS
Treasurer

C. GRANT ANDERSON
Assistant Secretary

Mutual funds are not bank deposits or obligations, are not guaranteed by any
bank, and are not insured or guaranteed by the U.S. government, the Federal
Deposit Insurance Corporation, the Federal Reserve Board, or any other
government agency. Investment in mutual funds involves investment risk,
including the possible loss of principal. Although money market funds seek to
maintain a stable net asset value of $1.00 per share, there is no assurance that
they will be able to do so.

[Graphic]
Federated
World-Class Investment Manager

Federated Prime Money Fund II

Federated Insurance Series

ANNUAL REPORT
TO SHAREHOLDERS

ANNUAL REPORT

DECEMBER 31, 1999

[Graphic]
Federated
Federated Prime Money Fund II
Federated Investors Funds
5800 Corporate Drive
Pittsburgh, PA 15237-7000
1-800-341-7400
WWW.FEDERATEDINVESTORS.COM
Federated Securities Corp., Distributor

Cusip 313916504

G00842-01 (2/00)

[Graphic]

A. The graphic presentation here displayed consists of a line graph. The
corresponding components of the line graph are listed in the upper left quadrant
of the graphic presentation. The Federated Fund for U.S. Government Securities
II is represented by a solid line. The Lehman Brothers 5 Year Treasury
Bellwether Index is represented by a dotted line, the Lipper U.S. Mortgage Funds
Average is represented by a broken line, and the Lehman Brothers
Government/Mortgage-Backed Index is represented by a broken dotted line. The
line graph is a visual representation of a comparison of change in value of a
$10,000 hypothetical investment in Federated Fund for U.S. Government Securities
II and the Lehman Brothers 5 Year Treasury Bellwether Index, the Lipper U.S.
Mortgage Funds Average, and the Lehman Brothers Government/Mortgage-Backed
Index. The "x" axis reflects computation periods from March 28, 1994 (start of
performance) to December 31, 1999. The "y" axis reflects the cost of the
investment. The right margin reflects the ending value of the hypothetical
investment in Federated Fund for U.S. Government Securities II, as compared to
the Lehman Brothers 5 year Treasury Bellwether Index, the Lipper U.S. Mortgage
Funds Average, and the Lehman Brothers Government/Mortgage-Backed Index; the
ending values were $13,514; $13,687; $13,803; and $14,616, respectively.