1995 ANNUAL REPORT
HOME BENEFICIAL CORPORATION
FINANCIAL HIGHLIGHTS

1995 1994

Life insurance in force (In 000's) $ 10,725,949 $ 10,223,828

Total assets 1,403,354,824 1,288,826,060

Stockholders' equity 542,087,578 466,769,934

Total revenues 202,086,781 200,930,852

Net income 37,899,262 36,195,976

Per share
Net income $ 2.16 $ 2.04
Dividends paid .83 .795
Book value 31.08 26.58

CONTENTS

Financial Highlights........................................................ 1

The Business of Home Beneficial Corporation................................. 3

A Message to Our Stockholders............................................... 4

Consolidated Financial Statements........................................... 6

Notes to Consolidated Financial Statements.................................. 11

Report of Ernst & Young LLP, Independent Auditors........................... 19

Management's Discussion and Analysis of
Financial Condition and Results of Operations............................ 20

Quarterly Financial Information and Market and
Dividend Information..................................................... 22

Record of Growth of Insurance and Selected Consolidated Financial Data...... 23

Directors and Officers...................................................... 24

THE BUSINESS OF HOME BENEFICIAL CORPORATION

Home Beneficial Corporation is a holding company domiciled in the state of
Virginia with one principal operating subsidiary, Home Beneficial Life Insurance
Company (the Life Company), which is engaged in the life and accident and health
insurance business. The Life Company sells group life insurance and
substantially all the forms of ordinary insurance, including universal life,
whole life, term, and annuities, together with accidental death and disability
riders. The Life Company's business is concentrated in six Mid-Atlantic states
and the District of Columbia and its policies are marketed through its own sales
force of approximately 1150 full time personnel.

ANNUAL MEETING

The Annual Meeting of the stockholders of Home Beneficial Corporation will be
held on Tuesday, April 2, 1996 at 10:00 a.m. at the Corporation's Home Office,
3901 West Broad Street, Richmond, Virginia 23230.

[HOME BENEFICIAL LOGO] HOME BENEFICIAL CORPORATION

HOME OFFICE TRANSFER AGENT AND REGISTRAR
3901 West Broad Street First Union National Bank of North Carolina
P.O. Box 27572 Shareholders Services Group -- 1154
Richmond, Virginia 23261 230 S. Tryon Street -- 10th Floor
Charlotte, North Carolina 28288-1154

A MESSAGE TO OUR STOCKHOLDERS

The year 1995 was the most exciting year the Company has experienced during this
decade. Many of the men and women from different departments in our Home Office
began to see the fruits of their labor pay huge dividends when the sales force
enthusiastically accepted the new accounting system on which they had worked so
hard for so long. The fear expressed by our agents, due to the heavy reliance on
a handheld computer for their livelihood, soon vanished after their initial
training and within a few weeks of use on the job. Since the year began, many of
our sales personnel have visited us in the Home Office and to our knowledge, no
one has expressed a willingness to return to our old systems.

This technology developed within the Company helped make us more productive
during 1995, but it was the efforts of our Managers, Staff Managers and Agents
that produced the outstanding results we had for the year. Our Agents' bulletin,
the scorecard used to measure controllable premium increase for each agent, set
an all time record for the Company. Individual sales for the year increased by
18% to $938.2 million and first year individual premiums advanced by 16%. As we
have stated many times in previous reports, it is our sales personnel that gives
us the competitive advantage in the market in which we operate and their
dedication to each prospect and policyholder served during the year created this
fine record.

Because of the desire within our industry to diversify or consolidate, regional
companies such as Home Beneficial have become more unique. By operating in only
six states of the country and maintaining one distribution system, management
has been able to concentrate its efforts on serving a broad market of customers
in an income range that represents 60% of American households. That strategy has
served us well both operationally and financially. By delivering our products in
a concentrated territory through one distribution system we have been relieved
of many layers of bureaucracy and have had better control of general insurance
expenses, which has resulted in delivering adequate profit margins.

The achievements that have been accomplished by the use of this strategy are
evident as you read this report. They also have not gone unnoticed by others. A.
M. Best Company acknowledged during the year the Life Company's excellent
earnings performance, its strong capitalization and the good performance of its
investment portfolio by assigning the Life Company to its highest rating
category at A+ Superior. Moody's Investors Service included the Corporation in
its "Dividend Achiever" status for increasing per share dividends to
shareholders each year for the past 32 years; a dividend record which placed the
Corporation in the top 3% of over 10,000 United States companies publicly
traded. Ward Financial Group, an investment banking firm specializing in the
insurance industry, named the Life Company to its 1995 Ward's 50 benchmark group
for achieving outstanding financial results in the areas of safety, consistency
and performance over a five year period. The 50 companies selected by Ward were
picked from a universe which included some 2,000 life/health insurers. In an
environment of constant change, investors, policyholders and regulators become
concerned about a company's solvency and ability to perform. It is reassuring to
everyone when outside authorities of this stature award Home Beneficial with
such high marks.

Net income for the Corporation was $37,899,262 or $2.16 per share compared to
1994 results of $36,195,976 or $2.04 per share. On a per share basis, earnings
advanced for 1995 by 5.9%. Realized investment gains during 1995 versus losses
the previous year had no effect on per share amounts for either period,
resulting in earnings from operations being identical to net income per share.

Total assets ended the year at $1.4 billion, an increase of 8.9% over the
previous year. Stockholders' equity rose in 1995 to $542.1 million

from $466.8 million, an increase of $75.3 million. On a per share basis,
stockholders' equity at the end of 1995 was $31.08 versus $26.58 at year-end
1994, a gain of 16.9%. Much of the gain in stockholders' equity and total assets
was due to the strong bond markets during 1995 which lowered interest rates
considerably, thus increasing the value of the Company's bond portfolio. While
market value accounting does not effect the income statement of the Corporation,
it does create more volatility within the categories of Invested Assets and
Stockholders' Equity on the Consolidated Balance Sheet.

The Corporation's dividend to stockholders was raised to a quarterly rate of
$.21 per share, increasing the amount paid during 1995 to $.83. Each year since
becoming a public company, stockholders have participated in the long term
growth achieved by Home Beneficial Corporation or its predecessor, Home
Beneficial Life, whose history of paying dividends without interruption dates
back 89 years.

Considerable progress was made during 1995 in our efforts to better serve both
present and future policyholders; however, as we begin the second half of this
decade, our biggest challenge is to use technology in an economical way that
will continue to increase our efficiency in the delivery of our products while
at the same time improve customer service. The 1990's will continue to be a time
for all of us to save and invest for our families' future, and the companies
that provide competitive financial products, backed by superior service, should
prosper. Our goal is to be one of those companies.

Home Beneficial remains one of the strongest insurance companies in the United
States. For many years it has provided products and services with virtually no
risk of loss to policyholders. At the same time, we have been mindful of our
ultimate responsibility to our stockholders. As we plan for the future, it is
with the realization that policyholders, employees and stockholders alike, must
be the beneficiaries of the Company's success.

[PHOTO]

R. W. Wiltshire, Jr.

Only by satisfying the needs of each of these groups will the Company be
assured of a bright future. We hope, as you read our report, the successes
highlighted throughout these pages will be credited to the many men and women at
Home Beneficial that dedicate themselves to their job each day.

Thank you for your interest and investment in Home Beneficial Corporation.

/s/ R. W. WILTSHIRE
R. W. Wiltshire
Chairman of the Board

/s/ R. W. WILTSHIRE, JR.
R. W. Wiltshire, Jr.
President and
Chief Executive Officer

HOME BENEFICIAL CORPORATION

CONSOLIDATED BALANCE SHEET

DECEMBER 31, 1995 AND 1994

ASSETS

1995 1994

INVESTMENTS -- Note 2

Securities available-for-sale at fair value
Fixed maturities (amortized cost: 1995, $744,043,172;
1994, $718,305,895) $ 795,741,956 $ 691,976,855
Equities (cost: 1995, $8,637,928; 1994, $9,728,145)..................... 29,475,901 24,229,849
Mortgage loans on real estate.............................................. 339,773,729 338,458,261
Policy loans............................................................... 54,480,175 53,425,676
Short-term investments..................................................... 41,072,441 32,459,616
Other...................................................................... 6,242,886 6,167,002
Total investments....................................................... 1,266,787,088 1,146,717,259

CASH......................................................................... 3,086,602 1,726,812

ACCRUED INVESTMENT INCOME.................................................... 17,412,378 16,958,594

RECEIVABLES -- uncollected premiums.......................................... 5,593,862 5,232,370

DEFERRED POLICY ACQUISITION COSTS............................................ 99,246,423 96,246,153

PROPERTY AND EQUIPMENT, AT COST
(less accumulated depreciation: 1995, $7,413,136;
1994, $6,598,531)......................................................... 6,904,462 7,627,921

DEFERRED CHARGES AND OTHER ASSETS............................................ 4,324,009 14,316,951
$1,403,354,824 $1,288,826,060

See accompanying notes.

HOME BENEFICIAL CORPORATION

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

DECEMBER 31, 1995, 1994 and 1993
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Consolidation -- The consolidated financial statements include the accounts
of the Corporation, its principal subsidiary, Home Beneficial Life Insurance
Company (the Life Company), and its other subsidiaries. All significant
intercompany accounts and transactions are eliminated. The Corporation is
engaged predominantly in the life and accident and health insurance business.

Basis of Presentation -- The accompanying consolidated financial statements
have been prepared on the basis of generally accepted accounting principles
(GAAP), which reflect certain major adjustments to the Life Company's
financial statements as filed with insurance regulatory authorities
(statutory basis). The preparation of financial statements of the Life
Company requires management to make estimates and assumptions that affect
amounts reported herein. Such estimates and assumptions could change in the
future as more information becomes known. See Note 7.

Investments -- The Corporation adopted Statement of Financial Accounting
Standards (SFAS) No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" as of January 1, 1994. As a result of the implementation
of SFAS No. 115, the Corporation's entire fixed maturity (bonds and
redeemable preferred stocks) and equity (non-redeemable preferred and common
stocks) securities were classified as available-for-sale. Accordingly, these
securities are reported at estimated fair value with related unrealized gains
and losses (net of deferred taxes) reported as a separate component of
stockholders' equity. Prior to adoption of SFAS No. 115, fixed maturities
were carried at amortized cost and equities were reported at estimated fair
values. Mortgage loans on real estate are reported at cost, adjusted where
appropriate for amortization of premium or discount. Short-term investments
are reported at cost and policy loans are reported at unpaid balances.
Realized investment gains and losses are included as a component of net
investment income. The cost of investments sold is generally determined under
the specific identification method.

Fair Value Disclosures -- The following methods and assumptions were used by
the Corporation in estimating its fair value disclosure for financial
investments: The carrying amounts of cash and short-term investments reported
in the balance sheet approximate their fair values. Fair values for fixed
maturity securities (including redeemable preferred stocks) are based on
quoted market prices, where available. For fixed maturity securities not
actively traded, fair values are estimated using values obtained from
independent pricing services or, in the case of private placements, are
estimated by discounting expected future cash flows using a current market
rate applicable to the yield, credit quality, and maturity of the
investments. Fair values for available-for-sale fixed maturities are
recognized in the balance sheet in accordance with SFAS No. 115. The fair
values for equity securities are based on quoted market prices and are
recognized in the balance sheet. The fair values for mortgage loans and
policy loans are estimated using discounted cash flow analyses, using
interest rates currently being offered for similar loans to borrowers with
similar credit ratings. Loans with similar characteristics are aggregated for
purposes of the calculations. Fair values for the Corporation's liabilities
under investment-type insurance contracts (included with policy liabilities
and accruals in the balance sheet) approximate recorded values.

Revenues, Benefits, Claims, and Expenses

Traditional Life Insurance Products -- Traditional life insurance products
include those products with fixed and guaranteed premiums and benefits and
consist principally of whole life and limited-payment life insurance
policies. Premiums are recognized as revenues when due. Liabilities for
policy benefits and expenses for traditional life insurance policies are
computed using a net level premium method including assumptions as to
investment yields, mortality, withdrawals, and other assumptions which were
appropriate at the time the policies were issued based on the Company's
experience

modified as necessary to reflect anticipated trends and to include provisions
for possible unfavorable deviations. Investment yield assumptions are graded
and range from 9% to 3% and the weighted average assumed investment yield was
approximately 4 1/2% for 1995. Unearned premiums include certain deferred
profits on limited-payment policies which are being recognized in income over
the estimated lives of the policies.

Interest-Sensitive Insurance Products -- Premiums for interest-sensitive
policies are recorded in a policyholder account as a liability. Premium
revenue is recognized as amounts are assessed against the policyholder
account for mortality coverage and policy administration. Surrender benefits
reduce the account value. Policy benefits and claims that are charged to
expense include interest credited to policyholder accounts and benefit claims
incurred in excess of the account balances. Interest credit rates for
interest-sensitive insurance products range from 6 1/2% to 5 3/4%. A
liability equal to the current value of the policyholder accounts is included
in other policyholder funds in the balance sheet.

Deferred Policy Acquisition Costs -- The costs of acquiring new business,
principally commissions and certain policy underwriting and issue costs,
which generally vary with and are primarily related to the production of new
business have been deferred to the extent such costs are deemed recoverable
from future premiums. Costs deferred related to traditional life insurance
are being amortized over the premium paying period of the related policies
using assumptions consistent with those used in computing future policy
benefits. Costs deferred related to interest-sensitive policies are being
amortized over the lives of the policies, in relation to the present value of
estimated gross profits from mortality, investment and expense margins.

Income Taxes -- Income taxes have been provided using the liability method in
accordance with SFAS No. 109, "Accounting for Income Taxes". Under that
method, deferred tax assets and liabilities are determined based on the
difference between their financial reporting and their tax bases and are
measured using the enacted tax rates.

Accounting Change -- The Corporation adopted the provisions of Statement of
Financial Accounting Standards No. 115, "Accounting for Certain Investments
in Debt and Equity Securities" as of January 1, 1994. SFAS No. 115 requires
that investments in all debt securities and equity securities with readily
determinable fair values be classified into one of three categories:
held-to-maturity, trading or available-for-sale. Debt securities that a
corporation does not have the positive intent or ability to hold to maturity
and all marketable equity securities are classified as available-for-sale or
trading and are carried at fair value. Unrealized gains and losses on
securities classified as available-for-sale are carried as a separate
component of stockholders' equity. Unrealized gains and losses on securities
classified as trading are reported in earnings. On adoption of SFAS No. 115,
the Corporation classified its entire fixed maturity and equity securities
portfolio as available-for-sale. The Corporation believes that it has the
ability to hold all fixed income investments until maturity; however,
securities may be sold to take advantage of investment opportunities
generated by changing interest rates, prepayments, or income tax
considerations, as part of the Corporation's asset/liability strategy, or for
other similar factors. In accordance with SFAS No. 115, prior-period
financial statements have not been restated to reflect the change in
accounting principle. The cumulative effect as of January 1, 1994 of adopting
SFAS No. 115 increased stockholders' equity by $21 million (net of deferred
income taxes) to reflect the net unrealized gains on securities previously
carried at amortized cost. Due to rising interest rates during 1994, a $17
million net unrealized loss (net of deferred income tax benefit) was charged
against stockholders' equity at December 31, 1994. As a result of declining
interest rates during 1995, a $33.6 million net unrealized gain (net of
deferred income taxes) was credited to stockholders' equity at December 31,
1995. There was no effect on net income as a result of the adoption of SFAS
No. 115.

2. INVESTMENT OPERATIONS

The following is a summary of available-for-sale securities at December 31,
1995:

COST OR GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR
1995 COST GAINS LOSSES VALUE

US Treasury securities and obligations of US government
corporations and agencies $ 31,224,017 $ 4,936,711 $ 37,338 $ 36,123,390
Obligations of states and political
subdivisions 350,176,819 20,058,784 645,394 369,590,209
Debt securities issued by foreign
governments 22,223,930 1,758,642 28,404 23,954,168
Corporate securities 340,418,406 26,572,230 916,447 366,074,189
Total fixed maturities 744,043,172 53,326,367 1,627,583 795,741,956
Equity securities 8,637,928 20,837,973 -- 29,475,901
Total $752,681,100 $74,164,340 $1,627,583 $825,217,857

The following is a summary of available-for-sale securities at December 31,
1994:

Cost or Gross Gross Estimated
Amortized Unrealized Unrealized Fair
1994 Cost Gains Losses Value

US Treasury securities and obligations of US
government corporations and agencies $ 28,659,884 $ 1,543,642 $ 524,719 $ 29,678,807
Obligations of states and political
subdivisions 302,051,360 1,407,623 19,022,256 284,436,727
Debt securities issued by foreign
governments 26,343,642 46,220 1,072,524 25,317,338
Corporate securities 361,251,009 4,172,933 12,879,959 352,543,983
Total fixed maturities 718,305,895 7,170,418 33,499,458 691,976,855
Equity securities 9,728,145 14,546,906 45,202 24,229,849
Total $728,034,040 $21,717,324 $33,544,660 $716,206,704

The amortized cost and estimated fair value of fixed maturities, by
contractual maturity, and equities available-for-sale at December 31, 1995,
are shown below. Expected maturities will differ from contractual maturities
because borrowers may have the right to call or prepay obligations with or
without call or prepayment penalties.

1995
COST OR ESTIMATED
AMORTIZED FAIR
COST VALUE

Due in one year or less $ 26,792,311 $ 27,168,864
Due after one year through five years 184,165,499 193,628,720
Due after five years through ten years 482,852,735 517,996,841
Due after ten years 39,173,185 42,901,191
732,983,730 781,695,616
US government mortgage backed securities 11,059,442 14,046,340
Equities 8,637,928 29,475,901
Total $752,681,100 $825,217,857

The carrying amounts and fair values of the Corporation's investments in
mortgage loans on real estate and policy loans were as follows at December
31, 1995 and 1994:

1995 1994
ESTIMATED Estimated
CARRYING FAIR Carrying Fair
AMOUNT VALUE Amount Value

Commercial mortgages $172,022,003 $186,619,325 $169,981,656 $170,169,251
Residential mortgages 167,751,726 176,661,907 168,476,605 156,615,617
$339,773,729 $363,281,232 $338,458,261 $326,784,868
Policy loans $ 54,480,175 $ 55,019,313 $ 53,425,676 $ 48,546,135

Details of net investment income for the three years ended December 31, 1995
are as follows:

1995 1994 1993

Fixed maturities $55,384,820 $54,057,136 $ 48,541,194
Equity securities 875,463 1,037,639 975,218
Mortgage loans on real estate 28,648,021 28,277,362 33,667,861
Short-term investments 3,065,480 1,672,379 3,596,291
Realized investment gains (losses) 71,434 (42,592) 10,802,968
Other 4,441,141 4,169,001 3,305,772
Total investment income 92,486,359 89,170,925 100,889,304
Investment expenses (4,446,286) (4,311,495) (4,014,980)
Net investment income $88,040,073 $84,859,430 $ 96,874,324

Realized investment gains (losses) and unrealized investment gains (losses)
representing the change in difference between fair value and cost
(principally amortized cost for fixed maturities) on fixed maturities, equity
securities and other investments for the three years ended December 31, 1995
are summarized below:

Investment Gains (Losses)
Change in
Realized Unrealized Net

1995
Fixed maturities available-for-sale $(1,639,864) $ 50,677,824(2) $ 49,037,960
Equity securities available-for-sale 1,611,925 4,136,269(1) 5,748,194
Other 99,373 -- 99,373
$ 71,434 $ 54,814,093 $ 54,885,527
(1)Net of $2,200,000 deferred income taxes.
(2)Net of $27,350,000 deferred income taxes
on available-for-sale fixed maturities at
December 31, 1995.
1994
Fixed maturities available-for-sale $(5,894,439) $(49,386,850)(2) $(55,281,289)
Equity securities available-for-sale 5,865,050 (3,806,638)(1) 2,058,412
Other (13,203) -- (13,203)
$ (42,592) $(53,193,488) $(53,236,080)
(1)Net of $2,050,000 deferred income tax
benefit.
(2)Net of $9,225,000 deferred income tax
benefit on available-for-sale fixed
maturities at December 31, 1994.
1993
Fixed maturities $ 7,898,182 $ 2,048,149 $ 9,946,331
Equity securities 2,904,686 (1,636,487)(1) 1,268,199
Other 100 -- 100
$10,802,968 $ 411,662 $ 11,214,630
(1)Net of $725,000 deferred income tax
benefit.

Proceeds from the sales of available-for-sale securities during 1995 were
$80,736,518 and gross investment gains and gross investment losses of $91,822
and $1,925,911 were realized on those sales, respectively. 1994 proceeds from
the sales of available-for-sale securities were $214,588,898 and gross
investment gains and gross investment losses of $9,186,184 and $10,199,263
were realized on those sales, respectively. There were no sales of fixed
maturities in 1993. All proceeds were from calls and maturities.

As of December 31, 1995 approximately 49% of the mortgage loans on real
estate were on single family homes and 51% were on commercial properties such
as apartments, shopping centers, office buildings and warehouses.
Approximately 75% and 12%, respectively, of the mortgage loans are on
properties geographically dispersed throughout Virginia and North Carolina.
The Corporation manages the credit risk on its mortgage loan portfolio by,
among other items, generally restricting loan to collateral value ratios to a
maximum of 75% at the time the loan is made, limiting the total amount of
loans outstanding by individual borrower and monitoring the type of loans and
extent of geographic concentration within the region in which the Life
Company operates.

No investment in any person or affiliates of the Corporation exceeded ten
percent of stockholders' equity at December 31, 1995.

3. REINSURANCE

Future policy benefits and claims are stated after deducting benefits
applicable to life insurance reinsured by other companies. The contingent
liability for such deducted benefits was less than 1% of future policy
benefits at December 31, 1995. Premiums related to such reinsurance are
insignificant.

The Life Company participates in several group life insurance programs as a
reinsurer and also assumes reinsurance on a facultative (individual risk)
basis from two other life insurance companies. Life insurance assumed relates
principally to group life and represented approximately 17% of premium income
for 1995, 1994 and 1993. Claims incurred under these group life insurance
programs approximate the related premium income, and no significant assets or
liabilities are required in the balance sheet.

4. PENSION PLAN AND HEALTH AND LIFE INSURANCE BENEFITS

A noncontributory defined benefit pension plan covers substantially all
employees. The benefits are based on years of service and the employee's
compensation. As of December 31, 1995 and 1994, annuity contracts issued by
Home Beneficial Life Insurance Company covered benefit obligations of
$60,043,866 and $59,490,779, respectively, for employees for service prior to
1989 and for all retirees. The following table sets forth the plan's status
for employees for service subsequent to 1988 as of the indicated actuarial
valuation dates:

December 31
1995 1994

Actuarial present value of benefit obligations:
Vested $15,803,378 $13,939,163
Nonvested 1,234,045 839,064
Total accumulated benefit obligations $17,037,423 $14,778,227
Plan assets at fair value (held in a Deposit Administration
Contract issued by Home Beneficial Life Insurance Company to
the Plan) $15,456,682 $12,607,732
Projected benefit obligation $24,326,621 $19,810,835
Unrecognized net transition asset $ 1,253,989 $ 1,462,888

The pension liabilities and reserves are included in future policy benefits
which are held by the Life Company and are supported by the general
investments of the Life Company.

The weighted-average discount rate used in determining the actuarial present
value of the above projected benefit obligations was 7% for both 1995 and
1994. The rate of increase used for future compensation was 4 1/2% for both
1995 and 1994.

The components of net pension expense for 1995, 1994 and 1993 are as follows:

1995 1994 1993

Service cost -- benefits earned $1,914,743 $2,091,022 $2,051,748
Interest cost on projected benefit obligation 1,370,692 1,264,171 1,261,051
Net amortization and deferral (208,899) (184,114) (177,033)
Net pension expense $3,076,536 $3,171,079 $3,135,766

In addition to the Corporation's defined benefit pension plan, the
Corporation has two postretirement plans -- a medical plan (consisting of
defined benefit medical coverage for pre-1993 retirees and defined
contribution medical coverage for post-1992 retirees who were active
employees on December 31, 1992) and a life insurance plan. The pre-1993
retiree medical benefits program covers all employees who had retired under
the Corporation's pension plan as of December 31, 1992. The post-1992 retiree
medical benefits program covers all employees who were full time active at
December 31, 1992 and who retire under the Corporation's pension plan after
December 31, 1992. Employees who joined the Corporation after December 31,
1992 are not eligible for participation in either program under the
postretirement medical benefits plan. The postretirement life insurance
benefits plan covers all employees who retire under the Corporation's pension
plan.

The pre-1993 retiree medical benefits program reimburses its participants for
actual covered costs subject to specified deductibles and coinsurance. The
pre-1993 retiree program is contributory and participant contribution
requirements may be increased from time to time and benefits may be modified
or terminated by the Corporation. The post-1992 retiree medical benefits
program is noncontributory and reimburses its participants for the cost of
health insurance and other health care coverage premiums up to a maximum
benefit amount determined in accordance with the plan based on years of
service as of December 31, 1992. A participant's unused maximum benefit
amount for post-1992 retirees determined as of December 31, 1992, is
increased for interest only from January 1, 1993 until it is fully expended.
The Corporation is self insured with respect to benefits under both the
medical and life insurance benefit plans.

Effective January 1, 1992 the Corporation adopted SFAS No. 106, "Employers
Accounting for Postretirement Benefits Other Than Pensions." The cumulative
effect of this accounting change for years prior to 1992, was a charge
against income in 1992 of $29,444,884 (after related income taxes of
$15,200,000).

The following is an analysis of the Corporation's accrued postretirement
benefit obligation for postretirement medical and life insurance benefit
plans which is included in other liabilities in the consolidated balance
sheet at December 31, 1995 and 1994:

1995 1994

Retirees $36,226,923 $37,274,485
Fully eligible active plan participants 11,591,077 10,549,421
Other active plan participants 6,481,518 5,367,253
Accumulated postretirement benefit obligation 54,299,518 53,191,159
Unrecognized net gain 1,624,916 3,615,624
Accrued postretirement benefit obligation $55,924,434 $56,806,783

The weighted-average annual assumed rate of increase in the per capita cost
of covered benefits (i.e., health care cost trend rate) at January 1, 1995
for the medical plan is 15% for participants under age 65, and 10.4% for
participants over age 65. The trend rate for both groups is assumed to
decrease gradually to 5 1/2% over approximately 14 years and remain at that
level thereafter. The health care cost trend rate assumption has a
significant effect on the amounts reported. For example, increasing the
assumed health care cost trend rate by one percentage point in each year
would increase the accumulated postretirement benefit obligation as of
December 31, 1995 by $2,481,077, and the net periodic postretirement benefit
cost for 1995 by $200,000.

The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 7% for both 1995 and 1994.
Postretirement benefits expense was $1.6 million and $3.5 million for 1995
and 1994, respectively. This expense primarily represents interest expense on
the accumulated postretirement benefit obligation and claims cost.

5. FEDERAL INCOME TAXES

Under the tax law in effect prior to 1984, $78,000,000 has been accumulated
in a "Policyholders' Surplus Account" which has not been subject to taxation.
Amounts, if any, distributed to stockholders from the account or exceeding
prescribed balance limitations will become taxable at the then current
federal income tax rates. Under the present circumstances, the Corporation
does not anticipate such account becoming taxable and no provision has been
made for the related deferred income taxes of $27,300,000.

Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. Significant
components of the Corporation's deferred tax liabilities and assets as of
December 31, 1995 and 1994 are as follows:

1995 1994

Deferred tax assets:
Postretirement benefit obligation $ 16,866,585 $17,272,194
Policy liabilities 16,614,264 16,214,063
Unrealized investment losses on available-for-sale
securities -- 4,168,788
Other -- net 2,295,855 2,015,859
35,776,704 39,670,904
Deferred tax liabilities:
Deferred policy acquisition expenses 27,194,092 26,659,281
Discount on fixed maturities 2,939,646 2,706,629
Unrealized investment gain on available-for-sale
securities 25,373,255 --
Other -- net 1,057,211 1,242,494
56,564,204 30,608,404
Net deferred tax (liability) asset $(20,787,500) $ 9,062,500

The Corporation is required to establish a valuation allowance for any
portion of the deferred tax asset that management believes will not be
realized. In the opinion of management, it is more likely than not that the
Corporation will realize the benefit of the net deferred tax asset, and
therefore, no such valuation allowance has been established.

The provision for income taxes differs from amounts computed by applying the
statutory tax rate to income before income taxes, and these differences arise
from the following:

1995 1994 1993
PERCENT OF Percent of Percent of
PRE-TAX Pre-Tax Pre-Tax
AMOUNT INCOME Amount Income Amount Income

Tax computed at the
prevailing statutory rate $20,320,000 35.0% $19,450,000 35.0% $22,400,000 35.0%
Deduct tax effect of:
Investment income
not taxable (450,000) (.8) (500,000) (.9) (775,000) (1.2)
Other 280,000 .5 450,000 .8 (325,000) (.5)
(170,000) (.3) (50,000) (.1) (1,100,000) (1.7)
Provision for income taxes $20,150,000 34.7% $19,400,000 34.9% $21,300,000 33.3%

6. CAPITAL STOCK

The Corporation purchased 30,376 shares of its Class A and 94,624 shares of
its Class B Common Stock in 1995 at a cost of $2,843,750. The cost was
allocated to reduce Class A and Class B Common Stock par value by $9,492 and
$29,570, respectively, and retained earnings by $2,804,688.

In 1994 the Corporation purchased 374,948 shares of its Class B Common Stock
at a cost of $7,675,184. The cost was allocated to reduce Class B Common
Stock par value and retained earnings by $117,171 and $7,558,013,
respectively.

During 1993 the Corporation purchased 587,838 shares of its Class B Common
Stock at a cost of $14,142,511. The cost was allocated to reduce Class B
Common Stock par value and retained earnings by $183,700 and $13,958,811,
respectively.

7. STOCKHOLDERS' EQUITY AND RESTRICTIONS

Consolidated stockholders' equity at December 31, 1995 includes $145,000,000
representing GAAP adjustments and minimum statutory capital and surplus
requirements of the Life Company that cannot be transferred in the form of
dividends, loans or advances to the Corporation.

In addition, the Corporation and the Life Company are subject to the
provisions of the Insurance Holding Company Act of the State of Virginia,
which governs transactions between the Corporation and the Life Company. The
Act, among other things, (1) requires that transactions among affiliates be
fair and reasonable, and (2) assures maintenance of reasonable statutory
capital and surplus in relation to the insurer's outstanding liabilities and
its other financial needs. Also the Act requires the prior approval of the
State Corporation Commission for transactions among affiliates that exceed
three percent of the insurer's admitted assets or twenty-five percent of the
insurer's statutory capital and surplus, whichever is the lesser, and, at
December 31, 1995 the maximum amount available under this provision without
prior approval approximated $38,000,000. The payment of dividends in any one
year by the Life Company without approval by the State Corporation Commission
is limited to the lesser of (1) ten percent of the insurer's prior year end
statutory capital and surplus, or (2) prior year statutory net gain from
operations before realized capital gains or losses.

On a statutory basis, the net gain from operations before realized capital
gains or losses of the Life Company was $29,356,705, $27,048,483 and
$28,769,694 for the years ended 1995, 1994 and 1993, respectively; and
stockholder's equity (capital and surplus) as of December 31, 1995, 1994 and
1993 was $343,196,949, $328,342,208 and $325,866,987, respectively.

REPORT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS

The Board of Directors and Stockholders
Home Beneficial Corporation

We have audited the accompanying consolidated balance sheets of Home Beneficial
Corporation as of December 31, 1995 and 1994, and the related consolidated
statements of income, retained earnings, and cash flows for each of the three
years in the period ended December 31, 1995. These financial statements are the
responsibility of the Corporation's management. Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Home Beneficial
Corporation at December 31, 1995 and 1994, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended
December 31, 1995, in conformity with generally accepted accounting principles.

As discussed in Note 1 to the consolidated financial statements, the Corporation
changed its method of accounting for investments in debt and equity securities
in 1994.

/s/ ERNST & YOUNG LLP
Richmond, Virginia
February 9, 1996

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

FINANCIAL CONDITION

The Corporation is primarily engaged in the life insurance business which
historically has provided a positive cash flow. By statute, the Life Company is
required to invest in quality securities which provide ample protection for its
policyholders. Policy liabilities of the Life Company are predominately
long-term in nature and are supported primarily by long-term fixed maturity
investments and mortgage loans on real estate.

In May 1993 the Financial Accounting Standards Board (FASB) issued Statement of
Financial Accounting Standards (SFAS) No. 115, "Accounting for Certain
Investments in Debt and Equity Securities," effective for fiscal years beginning
after December 15, 1993. Under the new rules, debt securities that the
Corporation has both the positive intent and ability to hold-to-maturity are
carried at amortized cost. Debt securities that the Corporation does not have
the positive intent or ability to hold-to-maturity and all marketable equity
securities are classified as available-for-sale or trading and carried at fair
value. Unrealized holding gains and losses on securities classified as
available-for-sale are carried as a separate component of stockholders' equity.
Unrealized holding gains and losses on securities classified as trading are
reported in earnings. The Corporation adopted the provisions of SFAS No. 115 as
of January 1, 1994 and placed its entire fixed maturity and equity securities
portfolio in the available-for-sale classification. The Corporation believes it
has the ability to hold all fixed income investments until maturity; however,
securities may be sold to take advantage of investment opportunities generated
by changing interest rates, prepayments, income tax considerations, as a part of
the Corporation's asset/liability strategy, or for similar factors. In
accordance with SFAS No. 115, prior period financial statements have not been
restated to reflect the change in accounting principle. The cumulative effect as
of January 1, 1994 of adopting SFAS No. 115 increased stockholders' equity by
$21 million (net of deferred income taxes) to reflect the net unrealized gains
on securities previously carried at amortized cost. Due to rising interest rates
during 1994, a $17 million net unrealized loss (net of deferred income tax
benefit) was charged against stockholders' equity at December 31, 1994. As a
result of declining interest rates during 1995, a $33.6 million net unrealized
gain (net of deferred income taxes) was credited to stockholders' equity at
December 31, 1995.

Assets totaled $1.4 billion at December 31, 1995 with investment assets
totalling $1.3 billion or 90% of total assets. Both total assets and invested
assets increased over 1994; however, the growth in assets in 1995 benefited from
increases in the carrying value of fixed maturities in accordance with the
requirements of SFAS No. 115. At December 31, 1995 there were no principal and
interest payments past due on fixed maturities and over 99% of the mortgage
loans on real estate were current for both principal and interest. The
Corporation is not aware of any potential problem loans, and there are no
mortgage loans whose terms were restructured during 1995.

Cash and invested assets for 1995 exceeded total liabilities by 47%. The Life
Company continually matches the investment portfolio to the cash flow demands of
the types of insurance being written and maintains adequate cash and short-term
investments to meet cash requirements for policy loans and voluntary policy
terminations, as well as investment commitments. Policy loans increased $1
million for 1995 and account for less than 5% of total cash and invested assets.

As disclosed in the Notes to Consolidated Financial Statements at December 31,
1995, $145 million of consolidated stockholders' equity represents net assets of
the Life Company that cannot be transferred in the form of dividends, loans or
advances to the Corporation. However, this poses no liquidity concerns to the
Corporation as it has sufficient cash flow to meet its operational requirements.

In May 1993, the FASB issued SFAS No. 114, "Accounting for Creditors for
Impairment of a Loan." SFAS No. 114 requires that impaired loans be valued at
the present value of expected future cash flows discounted at the loan's
effective interest rate or, as a practical expedient, at the loan's observable
market price, or the fair market value of the collateral if the loan is
collateral dependent. The Corporation adopted the provisions of SFAS No. 114 as
of January 1, 1995. Adoption of this Standard did not have a significant effect
on the financial condition or results of operations of the Corporation.

Effective December 31, 1993, the National Association of Insurance Commissioners
adopted Risk-Based Capital (RBC) requirements for life/health insurance
companies to evaluate the adequacy of statutory capital and surplus in relation
to investment and insurance risks such as asset quality, mortality and
morbidity, asset and liability matching, and other business factors. The RBC
formula will be used by states as an early warning tool to identify companies
that potentially are inadequately capitalized for the purpose of initiating
regulatory action. The Life Company's statutory adjusted capital exceeds the
authorized control level of the RBC requirement.

RESULTS OF OPERATIONS

Individual life insurance sales for 1995 increased 18% over 1994 results, which
were down 1%. A significant part of the 1995 sales increase occurred during the
last half of 1995. Premiums decreased 2% compared to a decrease of approximately
1% for both 1994 and 1993. Premium growth for 1995 was affected by a decline in
premiums recognized from participation in a large group reinsurance contract.
Premium growth for 1994 and 1993 was affected by reduced individual life
insurance sales. Net investment income, excluding realized investment gains and
losses, increased 3.6% compared to decreases of 1.4% and 5.1% for 1994 and 1993,
respectively. The improvement for 1995 resulted from growth in invested assets.
Net investment income for 1994 and 1993 was affected by the downward trend
experienced in portfolio interest rates during 1993 and 1992. In addition, the
Corporation used $34 million of internally generated funds between April 1991
and July 1994 to repurchase 1.5 million shares of its common stock. Realized
investment gains and losses for 1995 and 1994 were insignificant. Realized
investment gains amounted to $10.8 million for 1993, and resulted from calls and
maturities of fixed maturities. Benefits and claims increased 2% compared to a
decrease of 4% for 1994 and an increase of 7% for 1993. Individual mortality
costs contributed to the changes in each of the years. General expenses declined
9% from 1994 results. The decline is attributable to increased expense deferral
related to increased individual sales and an improvement in employee health plan
costs.

See "A Message to Our Stockholders" for further discussion and analysis of
financial condition and results of operations.

QUARTERLY FINANCIAL INFORMATION

First Second Third Fourth
Quarter Quarter Quarter Quarter

1995
Premium income $ 28,806,763 $ 28,533,352 $ 28,413,634 $ 28,292,959
Net investment income 21,856,392 22,014,414 22,088,189 22,081,078
Income before income
taxes 13,664,730 14,651,493 13,849,292 15,883,747
Net income 9,464,730 9,001,493 9,399,292 10,033,747
Net income per share .54 .51 .54 .57

1994
Premium income $ 28,812,257 $ 28,360,063 $ 29,045,487 $ 29,853,615
Net investment income 21,044,266 21,165,271 21,098,994 21,550,899
Income before income
taxes 13,508,882 14,388,247 13,135,979 14,562,868
Net income 9,308,882 8,638,247 8,985,979 9,262,868
Net income per share .52 .48 .51 .53

MARKET AND DIVIDEND INFORMATION

The Corporation's Class B Non-Voting Common Stock trades on The Nasdaq Stock
Market under the Symbol HBENB. The Corporation's Class A Voting Stock is not
publicly traded, but is entitled to the same cash dividend as Class B Non-Voting
Common Stock. The approximate number of record holders of the Corporation's
common stock at December 31, 1995 was 2,000.

The following table gives the high and low prices of the Corporation's Class B
Non-Voting Common Stock and the cash dividends paid per share for each quarter
in the past two years.

High Low Dividend

1995
First Quarter $20 3/4 $19 $ .20
Second Quarter 21 3/4 19 .21
Third Quarter 24 20 1/4 .21
Fourth Quarter 25 1/2 22 3/4 .21

1994
First Quarter $23 $20 $ .195
Second Quarter 21 1/2 20 .20
Third Quarter 22 20 1/4 .20
Fourth Quarter 21 1/2 19 1/2 .20

RECORD OF GROWTH OF INSURANCE

FIVE YEARS ENDED DECEMBER 31 1995 1994 1993 1992 1991

(Dollars in thousands)
Insurance in force at end of period
Direct Sales
Permanent................................. $ 3,588,841 $ 3,487,732 $3,475,846 $3,493,455 $3,443,609
Term...................................... 1,107,583 1,061,649 1,046,115 1,048,076 775,688
Total................................... 4,696,424 4,549,381 4,521,961 4,541,531 4,219,297
Group........................................ 6,029,525 5,674,447 5,466,635 5,249,927 2,328,608
Total................................... $10,725,949 $10,223,828 $9,988,596 $9,791,458 $6,547,905
New insurance written
Direct Sales
Permanent................................. $ 707,779 $ 598,301 $ 600,158 $ 642,629 $ 659,425
Term...................................... 230,416 192,227 196,247 359,406 191,217
Total................................... 938,195 790,528 796,405 1,002,035 850,642
Group........................................ 372,247 225,565 258,174 3,215,242 1,015
Total..................................... $ 1,310,442 $ 1,016,093 $1,054,579 $4,217,277 $ 851,657
Premium income
Life and annuity............................. $ 105,428 $ 106,957 $ 107,091 $ 107,650 $ 93,720
Accident and health.......................... 8,619 9,114 9,278 10,296 9,773
Total................................. $ 114,047 $ 116,071 $ 116,369 $ 117,946 $ 103,493

SELECTED CONSOLIDATED FINANCIAL DATA

FIVE YEARS ENDED DECEMBER 31 1995 1994 1993 1992 1991

Premium income........................... $ 114,046,708 $ 116,071,422 $ 116,369,121 $ 117,946,267 $ 103,492,622
Net investment income(1)................. 88,040,073 84,859,430 96,874,324 93,583,108 93,913,440
Net income before accounting change...... 37,899,262 36,195,976 42,614,453 46,478,370 47,361,885
Accounting change(2)..................... -- -- -- (29,444,884) --
Net income(1)............................ 37,899,262 36,195,976 42,614,453 17,033,486 47,361,885
Net income per share(1)(2)
Before accounting change............... 2.16 2.04 2.35 2.50 2.51
Accounting change...................... -- -- -- (1.58) --
Net................................. 2.16 2.04 2.35 .92 2.51
Dividends paid per share................. .83 .795 .775 .76 .69
Investments(3)........................... 1,266,787,088 1,146,717,259 1,143,940,703 1,116,410,112 1,080,540,431
Total assets............................. 1,403,354,824 1,288,826,060 1,280,233,898 1,248,432,740 1,205,296,739
Total liabilities........................ 861,267,246 822,056,126 806,971,506 787,991,344 748,363,554
Stockholders' equity..................... 542,087,578 466,769,934 473,262,392 460,441,396 456,933,185
Book value per share..................... 31.08 26.58 26.38 24.85 24.41

(1) Realized investment gains and losses for 1991, 1994 and 1995 were
insignificant. Realized gains were $10,802,968 and $2,857,454 in 1993 and
1992, respectively.

(2) The Corporation adopted Statement of Financial Accounting Standards (SFAS)
No. 106, "Employers' Accounting for Postretirement Benefits Other Than
Pensions" in 1992. Adoption of this Standard was recognized as an accounting
change. See Note 4 of Notes to Consolidated Financial Statements.

(3) The Corporation adopted Statement of Financial Standards No. 115 "Accounting
for Certain Investments in Debt and Equity Securities" as of January 1,
1994. Adoption of SFAS No. 115 resulted in a $26.3 million decrease in the
carrying value of debt securities at December 31, 1994 and increased the
carrying value $51.7 million at December 31, 1995. In accordance with SFAS
No. 115, prior period financial statement balances were not restated. See
Note 1 of Notes to Consolidated Financial Statements.

DIRECTORS

R. W. WILTSHIRE H. D. GARNETT, CPA
Chairman of the Board Vice President and Controller

L. W. RICHARDSON G. T. RICHARDSON
Retired Vice President Vice President

R. W. WILTSHIRE, JR. W. G. HANCOCK
President and Counsel
Chief Executive Officer Partner, Mays & Valentine

J. M. WILTSHIRE, JR. DIANNE N. COLLINS
Secretary Community Volunteer

W. B. WILTSHIRE, CLU
Vice President

OFFICERS OF HOME BENEFICIAL CORPORATION AND/OR
HOME BENEFICIAL LIFE INSURANCE COMPANY

*R. W. WILTSHIRE W. C. HANCOCK, M.D.
Chairman of the Board Medical Director

*R. W. WILTSHIRE, JR. R. L. STILES
President and Asst. Vice President
Chief Executive Officer
R. I. KEMPTON
H. S. BOURNE Asst. Vice President
Vice President
R. G. GILLISPIE, FLMI
*J. M. WILTSHIRE, JR. Asst. Vice President
Secretary
A. N. FASTIGE
*W. B. WILTSHIRE, CLU Asst. Vice President
Vice President
W. A. SIMMONS
*H. D. GARNETT, CPA Asst. Vice President
Vice President and Controller
R. L. STEVENS
*G. T. RICHARDSON Asst. Vice President
Vice President
J. P. WINN
W. T. MACE Asst. Vice President
Vice President
C. L. MARSH, CFA, CPA, FLMI
C. P. PARRISH, FLMI Asst. Vice President
Vice President
J. B. SHEPPARD
E. L. JOHNSON, III, FSA Asst. Vice President
Vice President and
Chief Actuary R. R. POSA, FSA
Asst. Actuary
*B. P. BOYD
Vice President and H. C. HUTCHERSON, FSA
Asst. Secretary Asst. Actuary

A. O. BENNETT, FLMI G. T. NUCKOLLS, JR.
Vice President Asst. Secretary

K. H. BOGGS, Jr. H. J. SMITH
Vice President Asst. Secretary

*D. M. WESTERHOUSE, JR., CPA J.S. STEWART, FLMI
Treasurer Asst. Secretary

*W. F. COLLINS, FLMI C. J. JACKSON
Auditor Asst. Secretary

H. H. NASH, FSA *W. G. HANCOCK
Actuary Counsel

*Officers of both the Corporation and the Life Company. Others are officers of
the Life Company only.

MAYS & VALENTINE, General Counsel