<PAGE>  1
                                  FORM 10-KSB
                   U. S. SECURITIES AND EXCHANGE COMMISSION
                           WASHINGTON, D. C.  20549

            [X]   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                  THE SECURITIES EXCHANGE ACT OF 1934
                  For the fiscal year ended December 31, 1997

                                      OR

            [ ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                 OF THE SECURITIES EXCHANGE ACT OF 1934

                          Commission File No.  1-8069

                        INVESTORS INSURANCE GROUP, INC.
                        (Name of small business issuer)

            Florida                                         13-2574130
 (State or other jurisdiction of                         (I.R.S. Employer
  incorporation or organization)                        Identification no.)

       7200 W. Camino Real
       Boca Raton, Florida                                   33433
(Address of principal executive offices)                   (Zip Code)

                   Issuer's telephone number: (561) 391-5043

          Securities registered pursuant to Section 12(b) of the Act:

 Common Stock $.50 par value              Over-the-Counter Bulletin Board
     (Title of each class)                    (Name of each exchange
                                               on which registered)

Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days.  YES [ ] NO [X]

Check if there is no disclosure of delinquent filers in response to Item 405
of Regulation S-B is not contained in this form, and no disclosure will be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
KSB or any amendment to this Form 10-KSB.  [X]

State the issuer's revenues for its most recent fiscal year: $9,319,000

State the aggregate market value of the voting stock held by non-affiliates
computed by reference to the price at which the stock was sold, or the average
bid and ask price of such stock of the issuer as of February 23, 1998: $72,077

The number of shares of Registrant's Common Stock, par value $.50, outstanding
on February 23, 1998 was 2,840,582 shares.

Documents incorporated by reference: None

Transitional small business disclosure format:  YES [ ] NO [X]


<PAGE>  2

PART I

Item 1. Description of Business

                             Business Development

Investors Insurance Group, Inc. ("IIG") is a holding company which manages its
subsidiaries' operations and recruits agents for its life insurance
subsidiary.  IIG was incorporated under the laws of the State of Florida on
May 11, 1993 and is the successor corporation of the former Gemco National,
Inc. ("Gemco"), a New York corporation founded in 1966.  The change in
corporate identity was made to increase investor awareness of IIG's current
market focus and was approved by Gemco's shareholders at the Annual Meeting of
Shareholders on June 11, 1993.  The actual change was accomplished by the
merger of Gemco National, Inc. into a new Florida corporation, IIG, on
September 1, 1993.

IIG has one subsidiary, (IIC, Inc.) an insurance holding company, which serves
as the intermediate parent of Investors Insurance Corporation ("Investors"), a
life insurance company founded in 1956.  Investors has one subsidiary
Investors Marketing Group, Inc. ("IMG") which recruits agents and acts as
a third party administrator ("TPA") for a select group of unaffiliated life
insurance companies.

In late 1996, Investors suspended new sales in California (see discussion
below under Regulation and Licensing) and the Company began using IMG as a TPA
to market and service new business in California for its primary reinsurer,
Republic-Vanguard Life Insurance Company ("RVL").  Under this agreement, IMG
will receive override commission and servicing fees for the business IMG
generates through its agent network.  The Company plans to expand its TPA
business with other insurance companies and into other states and in 1997, it
began acting as a TPA for the business included in New Era Life Insurance
Company ("NEL") novation discussed below.  IIG was unable to adequately
capitalize IMG for this new venture, therefore, on January 1, 1997 all of the
outstanding shares of IMG were contributed to Investors.  This reorganization
enabled IMG to obtain the required operating capital from Investors.

The Company has been actively trying to raise additional capital to provide
liquidity for IIG and to enable Investors to continue to reduce its level of
reinsurance.  As an alternative, IIG has also been trying to sell Investors.
These efforts have yet to be successful and have created substantial doubt
about the ability of IIG to continue to pay its bills as they become due
(see discussion under IIG's Liquidity and Capital Resources in Item 6.
Management's Discussion and Analysis of Financial Condition and Results of
Operations.)


                            Business of the Issuer

The Company specializes in the sale of flexible premium deferred annuity
products.

The Company seeks to make sales of retirement savings products by offering
annuity products that meet the demands of agents and the pre- and post-
retirement population.  The Company markets its products through independent
agents licensed in 21 states.  Investors' agents are recruited by IIG, as well
as through other national marketing agencies ("NMAs").  As of December 31,
1997, the Company had approximately 949 active independent agents licensed to
<PAGE>  3

sell the Company's products.  Since 1990, approximately 90% of annuity
premiums received by Investors have been produced by agents recruited by IIG
or its predecessor.

The IIG's Corporate Headquarters is located at 7200 West Camino Real, Suite
203, Boca Raton, Florida 33433.  The Corporate Headquarters' telephone number
is (561) 391-5043.  The Company's Administrative and Financial operations are
located at 3030 Hartley Road, Jacksonville, Florida 32257.  The telephone
number at this location is (904) 260-6990.


Products

The Company specializes in the sale of flexible premium deferred annuity
("FPDA") products to individuals.  During each of the past three years, sales
of FPDAs have accounted for over 95% of the Company's premiums received.

FPDAs begin with a specific initial premium deposit by the policyowner at the
time of issuance and allow additional contributions to the policy whenever the
policyowner wants to make them.  Following an accumulation period, the
policyowner is entitled to receive the accumulated value of the policy as a
lump-sum payment or through annuity payments over a certain period, or for
life.  Interest credited during the accumulation period generally is not
subject to federal or state income tax.

Investors currently sells several variations of FPDA products with different
benefits, interest rates and commission structures.  These products offer tax-
deferred accumulation of interest, one year interest rate guarantees,
guaranteed cash values, and a choice of guaranteed income options on the
selected maturity date.  The products are continuously reviewed and
modifications made to remain competitive within the target market.

The Company's operating earnings are derived from its coinsurance ceding
commission and the excess of its actual investment income, including realized
gains (losses), over interest credited to annuity contracts and expenses.  In
determining credited rates, Investors takes into account the profitability of
its annuity business and the relative competitive position of its products.
Credited rates during the initial and any renewal period are based on
assumptions and estimates relating principally to persistency, investment
yield and expenses as well as management's judgment with respect to market and
competitive conditions.

Investors' FPDAs have an initial credited interest rate that is guaranteed for
one year.  Following the initial guarantee period, Investors may adjust the
credited interest rate annually, subject to the guaranteed minimum interest
rates specified in the contracts of 3.0% or 4.0% (minimum rates of 6.0% to
7.0% during the surrender charge period apply to a portion of the business).
At December 31, 1997, initial crediting rates ranged from 6.75% to 13.05%,
based on contract provisions; renewal crediting interest rates ranged from
4.0% to 7.0%.

The Company incorporates a number of features in its annuity products designed
to reduce the occurrence and adverse effect of premature termination of the
policy.  Premature termination of an annuity contract results in the loss of
the Company's anticipated future investment earnings related to the annuity
deposit and in the accelerated recognition of expenses related to policy
acquisition, principally commissions, which are otherwise recoverable over the
life of the policy.  However, if the policy were coinsured, premature
<PAGE>  4

termination will accelerate recognition of the coinsurance ceding commission
(see Note 1 to the Financial Statements in Item 8).

The primary feature incorporated by the Company into its products to minimize
premature terminations is a surrender charge.  While the policyowner is
permitted to withdraw all, or a portion, of the accumulated value, such
withdrawals are generally subject to a declining surrender charge during the
first nine years of the policy's life.  The Company permits free annual
withdrawals following the first policy anniversary, but such withdrawals are
limited to 10% of the eligible accumulated value.  In addition, one of the
Company's annuity products has a mandatory five year payout feature which
requires that all policy withdrawals, except 10% free withdrawals, be paid out
over a period of no less than five years.  While the actual payout amount is
often commuted by the Company, this product feature provides the Company
protection from large withdrawal activity in rising interest rate scenarios as
policyholders move funds in search of higher interest rates.


                                  Investments

The Company's long term profitability is largely determined by its ability to
maintain a spread between its investment earnings and the interest credited on
its annuity products.  At December 31, 1997, the Company had $62 million of
cash and invested assets, of which $54 million or approximately 87.1%
represented cash or investments in fixed income securities.

The Company's fixed income investments are 99% comprised of securities issued
by the U.S. Government, or U.S. Government agencies and sponsored enterprises.
All investments are made in accordance with guidelines established by the
Board of Directors as to type, liquidity, maturity and duration of investment.
These guidelines were developed in order to match the cash flows of the
investments with the expected cash requirements of policy liabilities.  The
management of the Company's fixed income investments, in accordance with these
guidelines, is handled by Asset Allocation and Management Companies ("AAM") of
Chicago, Illinois.

Approximately 51% of the Company's fixed income investments are collateralized
mortgage obligations ("CMOs").  Like all mortgage-backed investments, CMO
securities are subject to prepayment risk, especially in periods of declining
interest rates when the mortgages which collateralize the security are repaid
more rapidly than scheduled, as individuals refinance higher rate mortgages to
take advantage of the lower prevailing rates.  As a result, holders of CMOs
could receive prepayments on their investments which the holder may not be
able to reinvest at interest rates comparable to the rate on the prepaying
security.

The Company has reduced this risk of prepayment by investing its mortgage-
backed investment portfolio in planned amortization class ("PAC") and targeted
amortization class ("TAC") instruments.  These investments are designed to
amortize in a more predictable manner by shifting the primary risk of
prepayment of the underlying collateral to investors in other tranches
("support classes") of the CMO.  In the first quarter of 1996, the Company
began to redirect its investments away from CMOs and toward other types of
securities backed by the U. S. Government or its agencies.

The Company uses expected prepayment assumptions to account for its mortgage-
backed securities.  Accordingly, as prepayment rates on mortgage-backed
securities change, the Company adjusts its income realization on mortgage-
<PAGE>  5

backed securities to reflect the best estimate of future cash flows and the
corresponding income resulting from the accretion of discounts and the
amortization of premiums.

The Company attempts to manage its assets and liabilities so that income and
principal payments received from investments are adequate to meet the cash
flow requirements of its policyholder liabilities.  The estimated weighted
average duration of the Company's fixed income investment portfolio was 4.92
years as of December 31, 1997.  The relatively short nature of the
investment portfolio reflects the characteristics of the Company's
liabilities.  The majority of the Company's policy and deposit liabilities
represent reserves for FPDAs that may be partially or totally surrendered at
the policyholders' option, subject to surrender charges, when applicable.  The
cash flows of the Company's liabilities are affected by actual maturities,
surrender experience and credited interest rates.  The Company periodically
performs cash flow studies under various interest rate scenarios to evaluate
the adequacy of expected cash flows from its assets to meet the expected cash
requirements of its liabilities.  The Company utilizes these studies to
determine if it is necessary to lengthen or shorten the average life and
duration of its investment portfolio.


                                  Reinsurance

Under generally accepted accounting principles, amounts recoverable from the
reinsurer for future contract benefits are reflected as assets ("investment
contract benefits recoverable") and the related policy liability is presented
separately.  Under statutory accounting, the recoverable amounts are offset
against the related policy liabilities.

In 1991, the Delaware Department of Insurance ("Delaware") expressed concern
over Investors' ratio of statutory policy liabilities to its capital and
surplus.  To address this concern, on October 1, 1991 Investors entered into a
coinsurance agreement with RVL.  Under the terms of this agreement 80% of all
new annuity contracts written by Investors were coinsured with RVL.  This
agreement enabled the Company to slow the growth of its policy liabilities
while at the same time adding additional capital and surplus from the profits
on the coinsured portion of the business.

By 1994, however, the growth of the unreinsured portion of the business had
raised the ratio of statutory policy liabilities to capital and surplus to a
level that brought renewed concern from Delaware.  To address this concern,
Investors increased the coinsurance rates for new business from 80% to 90% on
October 1, 1994 and to 100% on May 1, 1995 while at the same time it developed
plans to raise additional capital.  Raising the coinsurance rates stopped the
ratio from significantly increasing, but by late 1995 the ratio was still in
excess of twenty to one, well in excess of Delaware's target of fifteen to
one, and it became clear that additional capital could not be raised prior to
the end of 1995.  Therefore, in early 1996, Investors entered into an
agreement to cede a block of annuity policies with statutory policy reserves
of $76,306,929 to NEL.  This reinsurance agreement provides for an initial
coinsurance period (up to five years) followed by full assumption of the
specified policies (In early 1997, NEL began to fully assume these policies.).
Investors will continue to service these policies through December 31, 2000.
Under its terms, this agreement became effective on December 31, 1995 and,
with Delaware's approval, was reflected in Investors' 1995 statutory
statement.   (However, since the agreement did not actually close until 1996,
it was reflected as a 1996 transaction under generally accepted accounting
<PAGE>  6

principles.)  This agreement was amended effective December 31, 1996 to cede
an additional statutory reserve of $6,986,644.  This reinsurance reduced the
ratio below Delaware's target.

Based on its improved financial position resulting from the reinsurance
agreements with NEL,  Investors' ceding ratio to RVL was reduced to 60% on
January 1, 1997.  However, as a result of its on-going discussion with the
Arizona Insurance Department ("Arizona Department") (see Regulatory Issues
below), Investors amended its quota share reinsurance contract with RVL to
cede all its current and future Arizona business to RVL on a 100% quota share
basis.

During 1998, the Company plans to continue its efforts to raise additional
capital (see discussion below under Regulations and Licensing) to enable
Investors to continue to reduce its level of reinsurance.  As an alternative,
IIG has also been trying to sell Investors.  However, there can be no
assurance these plans will be successful.


                     Employees and Independent Contractors

As of December 31, 1997, the Company had 25 full-time employees and 3 part-
time employees.  As of the same date, Investors had approximately 949
independent insurance agents licensed directly to it.  All of these agents are
independent contractors who also represent other insurance companies and are
not employees of Investors.


                                  Competition

The life insurance industry is highly competitive with many life insurance
companies offering diverse products with many alternative marketing or
distribution systems.  Many of these life insurance companies have been in
business for a longer time, are more widely known by reason of such factors a
age and size and have greater financial resources than the Company.  However,
due to the specialized nature of Investors' products, the Company competes
directly with a relatively small number of other insurance companies
nationwide and in regional and state markets.  Management believes that
Investors has been able to attract and will continue to be able to attract,
motivate and retain productive independent agents by providing quality
products and service.

Currently, banks and bank holding companies are entering the insurance and
securities businesses resulting in increased competition for the Company's
products.  The banking industry can be expected to continue to seek expanded
powers to sell insurance and annuities through both changes in the law or
interpretation of current laws. The ultimate outcome and timing of such
changes are not easily anticipated, but the Company will continue to monitor
developments in order to respond quickly to new opportunities or increased
competition.


                           Regulation and Licensing

As an insurance company, Investors is subject to regulation and supervision in
the states in which it is authorized to do business.  This regulation is
designed primarily to protect policyholders.  Although the extent of
regulation varies from state to state, in general the insurance laws of the
<PAGE>  7

states establish supervisory agencies with broad administrative powers.  These
powers include the granting and revocation of licenses to transact business,
licensing of agents, approval of products and policy forms, determination of
permissible investments, and establishment of minimum reserve requirements an
capital and surplus levels.

The state regulations require Investors to file detailed periodic financial
reports with the supervisory authorities in each of the states in which it
does business.  These reports are prepared based on what is known as the
statutory accounting principles, which differs from the generally accepted
accounting principles ("GAAP").  The primary differences between these two
sets of accounting principles are:



        -Investment Market Value Adjustment.  All fixed maturity
         securities are reported at amortized cost for statutory
         purposes, while GAAP requires the fixed maturities classified as
         "available for sale" to be reported at market value;

        -Prepaid Coinsurance Allowances.  On a GAAP basis, if the present
         value of coinsurance allowances is an asset, any amounts paid are
         treated as deposits until realization of any profit is assured.
         Under statutory accounting, the present value of prospective payouts
         are recognized as a liability while the present value of any
         recoveries is ignored.

        -Deferred Acquisition Costs.  These costs are treated as a period
         expense on a statutory basis, but are amortized over the expected
         gross profits under GAAP;

        -Goodwill.  The excess of the purchase price of Investors over its
         identifiable assets and liabilities is deferred and amortized for
         GAAP.  These costs are not recognized under statutory accounting.

        -Non-Admitted Assets.  Certain designated assets are not recognized
         under statutory accounting;

        -Policy Liabilities.  The calculation of the liability for future
         policy benefits is based on different assumptions for statutory
         purposes than for GAAP and is reported net of reinsurance;

        -Unearned Ceding Commission.  The reinsurance ceding commission is
         treated as a period revenue on a statutory basis, but is deferred and
         amortized based on the expected gross profit of the related annuity
         contracts under GAAP.

        -Interest Maintenance and Asset Valuation Reserves.  These reserves
         are treated as liabilities for statutory purposes, but are restored
         to capital and surplus for GAAP;

        -Deferred Income Taxes.  Under certain conditions, the impact of
         certain variances from taxable income is recognized as an adjustment
         to income tax expense for GAAP, but not for statutory accounting
         purposes; and

        -Premium Revenue.  Under GAAP, premiums related to certain interest
         sensitive products are excluded from revenue.
<PAGE>  8

In addition to these differences, from time to time, insurance companies may
record transactions in different periods for regulatory purposes than under
generally accepted accounting principles.  The NEL reinsurance agreement was
recorded in 1995 for statutory accounting but in 1996 under generally accepted
accounting principles.

Since Investors is incorporated in the state of  Delaware, Delaware is the
primary regulatory body which supervises Investors' operations.  However,
other states' insurance regulatory agencies (such as Florida and Arizona)
exercise regulatory authority over Investors where the majority of its
products are sold.  Under the rules of the National Association of Insurance
Commissioners ("NAIC"), one or more of the supervisory agencies will examine
Investors periodically (usually at three year intervals) on behalf of all the
states in which it is licensed to conduct business.  Delaware finished its
last examination as of December 31, 1995.  This examination did not result in
any issues or recommendations that would be material individually or in the
aggregate.

The NAIC has established risk-based capital standards to determine the capital
adequacy of a life insurance company based on the type and mixture of risks
inherent in its operations.  These standards require the computation of a
risk-based capital amount which is then compared to a company's actual total
adjusted capital.  The computation involves applying factors to various
statutory financial data to address four primary risks: asset default, adverse
insurance experience, interest rate risk and external events.  These standard
provide for regulatory attention when the percentage of total adjusted capital
to authorized control level risk-based capital is below certain levels.  At
December 31, 1997, Investors' percentage of total adjusted capital is well in
excess of ratios which would require regulatory action.

The NAIC has formulated twelve ratios which are referred to as the Insurance
Regulatory Information System ("IRIS") ratios.  The IRIS ratios are used to
help evaluate each life insurance company's financial performance.  Companies
which have four or more ratios falling outside of the "expected" ranges may be
subject to additional regulatory review.  In 1997, Investors had three IRIS
ratios falling outside the expected ranges.  Investors will furnish an
explanation of the exceptions to the Delaware Department of Insurance, which
may then disseminate the information to other insurance departments.
Investors may experience future IRIS ratios outside of industry standards due
to continued growth and extensive use of reinsurance, but management does not
anticipate any substantial regulatory issues to result.

During 1995, Delaware expressed increased concern over Investors' high ratio
of statutory policy liabilities to capital and surplus.  In December 1995, the
IIG signed a definitive agreement to sell Investors to Standard Management
Corporation ("SMC") in exchange for stock of SMC and relief from IIG's $8
million note.  However, in the first quarter of 1996, the agreement was
terminated and a controversy ensued between IIG and SMC regarding the basis of
this termination.  In April 1996, IIG agreed to settle all the disputes
arising from this agreement and its termination by paying SMC $8,000 in cash
and 72,000 restricted shares of IIG stock.

Simultaneously with IIG's search for additional capital, Investors responded
directly to Delaware's concern by structuring a reinsurance agreement for a
significant block of its business.  As described above and in Note 5 of the
Company's financial statements, in the first quarter of 1996, Investors closed
a reinsurance agreement with NEL.  This agreement was effective December 31,
1995 and, based on Delaware's approval, was recorded in Investors' statutory
<PAGE>  9

financial statements for 1995 (under generally accepted accounting principles
this transaction was recorded in 1996).  As a result, Investors' ratio of
statutory liabilities to capital and surplus was reduced below Delaware's
target.  However, Delaware continues to monitor Investors closely, including
reviewing and approving certain expenditures.

In early 1996, Investors agreed to arrange a capital infusion that would raise
its statutory capital and surplus to $11 million in order to continue to write
new business in California.  In the second quarter of 1996, IIG announced an
agreement to sell preferred stock valued at $7 million to AAM Capital Partner
("AAMC").  However, AAMC was unable to arrange the necessary financing, and
the agreement has been canceled.

Since Investors was not been successful in attracting this capital, it
suspended writing new business in California on November 15, 1996.  During
1996, 30% of Investors' new business was written in California.  In order to
protect the value of its California agent network, IMG is acting as a third-
party administrator for RVL marketing its Vanguard Annuity.  Under this
arrangement, IMG will receive override commissions and servicing fees for the
business it generates through its agent network.

Representing 42% of its new business in 1997, Arizona is a very important
market for Investors.  The Arizona Department has expressed its concern about
Investors financial position and has engaged the Company in an on-going
dialogue over the past few years.  To address this concern, in addition to the
reinsurance agreement (see Note 5 to the financial statements), Investors
agreed to reinsure either (a) all its current and prospective business on a
100% quota share basis or (b) all its current and prospective Arizona business
on a full assumption basis upon the earliest of the following events:

               1. Investors' statutory capital and surplus falls
                  below $4.5 million, or

               2. Investors' Risk Based Capital falls to less
                  than 225% of its Authorized Control Level, or

               3. Investors' ratio of policyholder liabilities
                  to statutory capital and surplus exceeds 16:1, or

               4. Investors' statutory capital and surplus is
                  less than $10 million on December 15, 1997.

While Investors continues to meet the first three provisions, it has not been
able to raise the capital required to meet the fourth provision.  Although
there can be no assurance that the Arizona Department will continue to defer
enforcement of the fourth provision, the Arizona Department has not yet
attempted to force compliance.

To meet the conditions imposed by this agreement, IIG is currently seeking a
buyer for Investors.


Item 2.  Description of Property

The Company leases approximately 1,300 square feet of office space on the
second floor of a building at 7200 West Camino Real, Boca Raton, Florida
33433.  This lease expires on September 30, 1998.

<PAGE> 10

Investors leases approximately 6,700 square feet of office space on the third
floor of a building at 3030 Hartley Road, Jacksonville, Florida 32257.  This
lease expires on October 31, 1999.

Neither the Company or its subsidiaries own any commercial real estate.


Item 3.  Legal Proceedings

Federal Insurance Company V. Gemco National, Inc. (No.00988/88, S.Ct., N.Y.)
In this matter, Federal Insurance Company was pursuing a claim against Gemco
National, Inc. for unpaid premiums for general liability and workmen's
compensation insurance for the Ampat Group, former operating subsidiaries of
Gemco.  Federal Insurance sought compensatory damages in excess of $550,000.
Based on conversation with former employees of Gemco, the Company believes it
has valid defenses to this claim.  Furthermore, there has been no activity
regarding this case since early 1990, even though the lawsuit is still
pending.  Under New York law, lawsuits remain pending indefinitely.  The
Company has retained counsel in New York to file a Motion to Dismiss the
action.  Should this case again become active, the likely outcome could not be
predicted with any degree of certainty.  However, the Company believes the
likelihood of having to pay a claim is remote and that the case would be
dismissed as a result of the long delay in pursuing this action.

Pending in the United States District Court for the Middle District of Florida
is the Honorable Donna Lee Williams, Insurance Commissioner of the State of
Delaware as Receiver of National Heritage Life Insurance Company v. Investors
Insurance Group, Inc., U.S.D.C., M.D. Fla 97-773-CV-ORI-19. The Plaintiff
filed the lawsuit seeking to foreclose on an eight million dollar secured
subordinated debenture payable on March 31, 1997 with interest at eight (8)
percent payable quarterly ("IIG Note").  Plaintiff claims that she is the
owner of the IIG Note and that the note is in default.  Defendant has dispute
Plaintiff's claim of ownership, has plead its claims of set-off based upon
misrepresentation made by Plaintiff's purposed predecessor and for conduct of
Plaintiff as the purported creditor.  Plaintiff has filed Motions to Dismiss
many of the Company's defenses and counterclaims for various jurisdictional
reasons.  Management believes that the defenses and counterclaims are properly
before the Court and that the motions will be denied.  However, if the matter
goes forward, the ultimate outcome of this case cannot be determined at this
time.

Mr. Roger Kling, a former officer of Ampat Eastern, a former subsidiary of
Gemco National, Inc., filed suit against the Company in Florida captioned
Kling v. Investors Insurance Group, Inc.  No.96-07764CA Div. CV-6) to collect
the amount of $49,008.84 for legal fees and out of pocket expenses incurred be
him as a responsible officer in the successful defense against claims brought
by New York State for New York sales and use taxes for the years 1980 through
1985 for Ampat Eastern, plus his legal fees incident to this lawsuit.  On
February 6, 1997, the court entered a judgment against the Company and in
favor of Mr. Kling.  Both parties have stipulated that Mr. Kling's loss is
$61,000.  However, the Company does not believe it is liable for this loss.
The Company has appealed this decision.


Item 4.  Submission of Matters to a Vote of Security Holders

There were no matters submitted to the vote of security holders during the
fourth quarter of 1997.
<PAGE> 11

PART II

Item 5.  Market for Common Equity and Related Shareholder Matters.

(A) Market Information

IIG's common stock is traded on the Over-the-Counter Bulletin Board.  The
following table sets forth the high and low sale prices for the stock by
calendar quarter for 1997 and 1996.

                                          1997             1996
                                      -------------   ---------------
                                       HIGH    LOW     HIGH       LOW

First Quarter....................     $0.22   $0.13   $1 1/8     $ 7/8
Second Quarter...................      0.09    0.03      15/16*    7/8*
Third Quarter....................      0.05    0.03      *         *
Fourth Quarter...................      0.05    0.03     0.13       0.13

        * IIG's stock was traded on the American Stock Exchange until trading
          was halted on April 12, 1996 and subsequently delisted on November
          5, 1996.  In November 1996, the Company's stock began trading on the
          Over-the-counter Bulletin Board under the symbol "IIGI".  Over-the-
          counter market quotations may reflect inter-dealer prices, without
          retail mark-up, mark-down or commission, and may not represent
          actual transactions.


(B) Holders.

As of March 24, 1998, there were 719 shareholders of record of common stock of
IIG.  IIG has no precise knowledge as to the number of beneficial holders of
IIG's common stock.


(C) Dividends

IIG has not paid any dividends during the past two years and at the present
time it is not expected that dividends will be paid in 1998.



















<PAGE> 12

Item 6.  Management's Discussion and Analysis of Financial Condition and
         Results of Operations


                     Caution on Forward-Looking Statements

Statements other than historical information contained in this Report are
considered forward-looking and involve a number of risks and uncertainties due
to the following important factors, among other risks and uncertainties
inherent in the Company's business:

      Changes resulting from the current legal actions and negotiations
      related to the Investors Insurance Group, Inc. Note Payable ("IIG
      Note").

      The parent company's access to sufficient funds to pay its obligations
      as they become due.

      The Company's ability to retain its agent network and key personnel.

      Regulatory requirements from any of the states in which Investors is
      authorized to sell insurance.

      Prevailing interest rate levels, which may affect the ability of the
      Company to sell its products, the market value of the Company's
      investments or the lapse rate of the Company's policies, notwithstanding
      product design features intentioned to enhance persistency of the
      Company's products.

      Changes in the federal income tax laws and regulations which may affect
      the relative tax advantage of the Company's products.

      Changes in the regulation of financial services, including bank sales of
      insurance products, which may affect the competitive environment for the
      Company's products.


                                    General

The following analysis discusses the results of operations and financial
condition of Investors Insurance Group, Inc. ("IIG") and its wholly-owned
subsidiaries ("the Company"), primarily Investors Insurance Corporation
("Investors") and Investors Marketing Group, Inc. ("IMG"), and should be read
in conjunction with the Company's consolidated financial statements and notes
thereto included elsewhere in this report.

The Company has been actively trying to raise additional capital to provide
liquidity for IIG and to enable Investors to reduce its level of reinsurance.
As an alternative, IIG has also been trying to sell Investors.  These efforts
have yet to be successful and, as discussed below,  the resulting uncertainty
has had a detrimental effect on the Company's marketing efforts.







<PAGE> 13

Primary Product

The Company, through its subsidiary Investors, specializes in the sale of
flexible premium deferred annuity products ("FPDA") as a retirement savings
vehicle for individuals.  During the past two years, sales of FPDAs have
accounted for over 95% of the Company's total premiums received.

Under generally accepted accounting principles ("GAAP"), premiums received on
FPDAs are not recognized as revenue at the time of sale but rather are
reflected as future policy liabilities.  Similarly, policy acquisition costs
(primarily commissions) related to such sales are not recognized as expenses
but rather are capitalized as deferred acquisition costs ("DAC").  As a result
of this process, no profit or loss is realized at the time of sale.

The Company's operating earnings from this product are derived from the excess
of investment income (including interest and investment gains (losses)) and
surrender fees over the sum of interest credited to annuity contracts and
acquisition and maintenance expenses.  Over the life of an annuity, net
investment income, net investment gains (losses) and policy fees are
recognized as revenue and DAC is amortized as an expense.  The timing of the
DAC amortization is based on the estimated gross profits which is adjusted
based on actual experience.  The Company's earnings depend, in large part,
upon persistency of its annuities to enable it to recover the unamortized
portion of its DAC.  The Company uses surrender charges in annuity policies
both to discourage, and to mitigate, the effect of premature withdrawals.


Third-Party Administration

In late 1996, Investors suspended new direct sales in California (see
discussion below under Regulatory Issues) and the Company began using IMG as a
third-party administrator ("TPA") to market and service new business in
California for its primary reinsurer, Republic-Vanguard Life Insurance Company
("RVL") and to service the business included in New Era Life Insurance Company
("NEL") novation.  Under this TPA agreement, IMG receives an override
commission and servicing fees for the business IMG generates through its agent
network.


Reinsurance

Under GAAP, amounts recoverable from the reinsurer for future contract
benefits are reflected as assets ("investment contract benefits recoverable")
and the related policy liability is presented on a gross basis.  Under
statutory accounting, the amounts are off-set against the related policy
liabilities.  While reinsurance ceding commission income is recognized
immediately under statutory accounting, it is recognized over the life of the
related insurance policy under GAAP.










<PAGE> 14

In 1991, the Delaware Department of Insurance ("Delaware") expressed concern
over Investors' ratio of statutory policy liabilities to its capital and
surplus.  To address this concern, on October 1, 1991 Investors entered into a
coinsurance agreement with RVL, a member of Winterthur Swiss Insurance Group,
one of the largest Swiss insurance companies.  Under the terms of this
agreement 80% of all new annuity contracts written by Investors was coinsured
with RVL.  This agreement enabled the Company to slow the growth of its
statutory policy liabilities while at the same time adding additional
statutory capital and surplus from the profits on the coinsured portion of the
business.

By 1994, however, the growth of the unreinsured portion of the business had
raised the ratio of statutory policy liabilities to capital and surplus to a
level that brought renewed interest from Delaware.  To address this concern,
Investors increased the coinsurance rates for new business from 80% to 90% on
October 1, 1994 and to 100% on May 1, 1995 while at the same time it developed
plans to raise additional capital.  Raising the coinsurance rates stopped the
ratio from significantly increasing, but by late 1995 the ratio was still in
excess of twenty to one, well in excess of Delaware's target of fifteen to
one, and it became clear that additional capital could not be raised prior to
the end of 1995.  Therefore, Investors began working on an additional
reinsurance arrangement.

In early 1996, Investors entered into an agreement to cede a block of annuity
policies with statutory policy reserves of $76.3 million to NEL.  This
reinsurance agreement provides for an initial coinsurance period (up to five
years) followed by full assumption of the specified policies.  Investors will
continue to service these policies through December 31, 2000.  Since under its
terms, this agreement became effective on December 31, 1995 and, based on
Delaware's approval, was reflected in Investors' 1995 statutory statement,
Investors' ratio of statutory policy liabilities to capital and surplus the
ratio was reduced below Delaware's target.  (Since this transaction was closed
on March 1, 1996, it is treated as a 1996 event under generally accepted
accounting principles.)  This agreement was amended effective December 31,
1996 to cede an additional statutory reserve of $7.0 million.

In 1997, NEL began to assume sole liability for the policies that were ceded
to it in 1996.  As this occurs, the Company removes its liability for
Investment contracts, its related assets (Investment contract benefits
recoverable and Deferred acquisition costs) and its Unearned ceding
commissions from its balance sheet and recognizes the related profit portion
of the Unearned ceding commission as Commission income and other income.  See
Consolidated Operating Results below.

Based on its improved financial position resulting from the reinsurance
agreements with NEL,  Investors' ceding ratio to RVL was reduced to 60% on
January 1, 1997.  However, as a result of its on-going discussion with the
Arizona Insurance Department ("Arizona Department") (see Regulatory Issues
below), Investors amended its quota share reinsurance contract with RVL to
cede all its current and future Arizona business to RVL on a 100% quota share
basis.







<PAGE> 15

Regulatory Issues

In early 1996, Investors agreed to arrange a capital infusion that would raise
its statutory capital and surplus to $11 million in order to continue to write
new business in California.  Investors was not successful in attracting this
capital and, as a result, it suspended writing new business in California on
November 15, 1996.  In 1996, 30% of Investors' new business was written in
California.  In order to protect the value of the Company's California agent
network, IMG began acting as a third-party administrator for RVL in California
as of January 1, 1997.

Representing 42% of its new business in 1997, Arizona is a very important
market for Investors.  The Arizona Department has expressed its concern about
Investors financial position and has engaged the Company in an on-going
dialogue over the past few years.  To address this concern, in addition to the
reinsurance agreement (see Note 5 to the Company's financial statements),
Investors agreed to reinsure either (a) all its current and prospective
business on a 100% quota share basis or (b) all its current and prospective
Arizona business on a full assumption basis upon the earliest of the following
events:

               1. Investors' statutory capital and surplus falls below $4.5
                  million, or

               2. Investors' Risk Based Capital falls to less than 225% of its
                  Authorized Control Level, or

               3. Investors' ratio of policyholder liabilities to statutory
                  capital and surplus exceeds 16:1, or

               4. Investors' statutory capital and surplus is less than $10
                  million on December 15, 1997.

While Investors continues to meet the first three provisions, it has not been
able to raise the capital required to meet the fourth provision.  Although
there can be no assurance that the Arizona Department will continue to defer
enforcement of the fourth provision, the Arizona Department has not yet
attempted to force compliance.

To meet the conditions imposed by this agreement, IIG is currently seeking a
buyer for Investors.

The insurance laws of the various states require life insurance companies to
file detailed periodic reports with the state's regulatory agencies and these
agencies may examine the life insurance companies' business and accounts at
any time.  Under NAIC rules, one or more of the regulatory agencies will
periodically examine Investors, normally at three-year intervals, on behalf of
the states in which Investors is licensed.  Delaware finished its last
examination as of December 31, 1995.  This examination did not result in any
issues or recommendations that would be material individually or in the
aggregate.







<PAGE> 16

Year 2000 Issue

Many existing computer programs use only two digits to identify a year in a
date field.  These programs were designed and developed without considering
the impact of the upcoming change in the century.   If not corrected, many
computer applications could fail or create erroneous results by a or at the
year 2000.  This is referred to as the "Year 2000 Issue."

The Company has performed a risk analysis of its exposure to potential
problems resulting from the change to the new millennium.  Based on its
analysis, the Management believes the tasks required to address these issues
can and will be handled by its existing staff with no material additional
costs.


                             Results of Operations

In order to clarify the liquidity issues, IIG's results will be discussed
separately from the consolidated results.


IIG's Results of Operations

IIG's basic financial statements are presented in Note 10 of the Company's
financial statements.

Management Fees declined to $139,000 in 1997 from $580,000 in 1996.  These
fees principally consist of override commissions on Investor's new business.
Based on the reduced productivity of its National Marketing Agency ("NMA")
operation in 1997 and the poor prospects for near term profitability, the NMA
contract was terminated at the end of 1997.  Therefore, this will not be a
source of future revenue.

Investment Gains of $12,000 were created in 1997 when IIG liquidated its
remaining investments to generate operating funds.  There were no investment
gains or losses in 1996.

As a result of its funds shortage, IIG was unable to supply the working
capital required by IMG in 1996.  To address this problem, IIG forgave all its
intercompany debt due from IMG on December 31, 1996 (as requested by Delaware)
then contributed all of its IMG stock to Investors on January 1, 1997.
Thereafter, Investors advanced the required working capital to IMG.  This
resulted in the $176,000 Forgiveness of Debt from IMG in 1996.

General and Administrative Expenses dropped significantly in 1997.  This
reduction reflects both a substantial reduction in personnel and consulting
expenses and the termination of the NMA agreement with Investors.  Under the
provisions of the termination agreement, IIG gave up its rights to certain
unpaid and future override commissions and Investors gave up its rights to
uncollected service fees.  As a result, the NMA service fee expense dropped to
$90,000 in 1997 from $360,000 in 1996.

The IIG Note (see Note 6 to the Company's financial statements), was due on
March 31, 1997 and is currently in default.  Since there is no provision in
the IIG Note agreement for interest subsequent to maturity, IIG has not
accrued interest after March 31, 1997.  The accrued interest at the end of
1997 was $960,000 compared to $800,000 as of the end of 1996.  See discussion
of IIG liquidity below.
<PAGE> 17

As a result of IIG's decision during 1997 to include Investors in its
consolidated tax return for 1996, IIG was able to use a portion of its tax
losses to reduce the amount of consolidated tax below the amount Investors
would have paid under a separate return.  The 1997 cash flow from the benefit
of the 1996 tax loss ($64,000) was used to fund IIG's 1997 operations.  The
1997 tax return is expected to result in an additional tax refund.  However,
on a separate return basis, the refund due Investors is expected to exceed the
consolidated refund by approximately $41,000 and it is not clear how this
shortage will be paid to Investors.


Consolidated Results of Operations

Investors' new business production declined to $24.3 million in 1997 from
$63.2 million in 1996.  Management believes the decline in written premium is a
reflection of the current low interest rate environment and the marketing
difficulties resulting from the issues surrounding its agreement with the
Arizona Department (see Note 9 to the Company's financial statements and
discussion below) and the IIG Note (see Note 6 to the Company's financial
statements and discussion below under Liquidity and Capital Resources).
Despite these marketing problems, the Company's operating results continue to
be positive primarily due to the increase in reinsurance ceding commission
income and realized investment gains.  The major transactions effecting the
financial statements impact several different line items.  These transactions
will be discussed below together with their impacts; thereafter, the remaining
significant changes in the financial statements are discussed by line item.

As a result of its on-going discussion with the Arizona Department, Investors
amended its quota share reinsurance contract with RVL to cede all its current
and future Arizona business to RVL on a quota share basis.  Under the terms of
this amendment, which was effective August 1, 1997, Investors transferred
statutory reserves of approximately $8.5 million.  The impact of this
transaction was to increase Investors' statutory capital and surplus by
approximately $254,000 and to increase the Company's GAAP basis pre-tax income
by approximately $214,000 (the Realized investment gains, approximately
$513,000, result from the disposal of the investments supporting the ceded
policies.  Realization of investment gains and losses changes the pattern of
expected future profits which forms the basis for the amortization of deferred
acquisition costs.  As a result of this gain, the amortization of deferred
acquisition costs increased by approximately $299,000 and this increase is
reflected in Underwriting, acquisition and insurance expenses).  This
transaction also increased Investment contract benefits recoverable
approximately $9.7 million and Unearned ceding commissions approximately $0.7
million.

As described in the Company's prior year financial statements, Investors
closed a large reinsurance agreement with NEL in 1996.  This transaction
substantially accounts for many of the changes in the Company's Consolidated
Statements of Operations.  Specifically, the 1996 Realized investment gains is
substantially due to the disposal of the investments supporting the ceded
policies.  As a result of this gain, the amortization of deferred acquisition
costs increased approximately $2.3 million which is included in Underwriting,
acquisition and insurance expenses.  Since the assets related to the
reinsurance agreement were transferred to NEL on March 1, 1996, both the
related income (Net investment income) and expense (Interest on investment
contracts) have declined from the levels reflected in 1996.


<PAGE> 18

During 1997 NEL assumed sole liability for investment contract liabilities of
approximately $78.8 million.  This assumption reduced both the Company's
liability for Investment contracts and its Investment contract benefits
recoverable by $78.8 million.  Further, it reduced the Company's Deferred
acquisition costs and Unearned ceding commissions by $2.7 million and $3.2
million and increased its Commission and other income by $0.6 million.  There
was no impact on either investment income or interest credited since the
supporting investments were transferred previously and interest credited is
presented net of reinsurance.

In addition to the impact of the 1997 novation discussed above, the 1997
balance of Commission and other income increased approximately $173,000 as a
result of IMG's new TPA operation and approximately $729,000 as a result of an
acceleration in the amortization of deferred ceding commissions.  This
acceleration reflects the combined impact of higher levels of current and
expected surrender rates.

The year-to-year reduction in Underwriting, acquisition and insurance expenses
is primarily the result of the high level of 1996 expenses related to the NEL
reinsurance transaction (see discussion  on DAC amortization above).  In
Addition, management has also attempted to reduce its current operating
expenses and defer certain promotional expenses until the issues surrounding
the IIG Note are resolved.

The IIG Note was due on March 31,1997, but is still outstanding.  Since the
IIG Note does not provide for interest after maturity, no further interest has
been recognized (see Note 6 to the Company's financial statements).  The
reduction in Other expenses reflects this change.

The 1996 NEL reinsurance agreement significantly reduced Investors' ratio of
statutory liabilities to statutory capital and surplus.  In recognition of its
improved statutory financial position, effective January 1, 1997, Investors
reduced its ceding rate under its quota share agreement from 100% to 60%
(however, see discussion above on Arizona reinsurance).  As a result of the
lower ceding rate and the lower volume of new business, Investors now receives
more from its reinsurer for reimbursement of benefits than it pays on new
premium.  The new asset line Reinsurance benefits receivable accompanies the
reduction in the liability Amounts due to reinsurer.

The calculation of Income tax benefit results in a deferred tax asset that is
fully reserved.  As a result, the income tax benefit reflected in the
Company's financial statements represents the Company's estimate of the amount
it expects to recover  in the current period.  The Company included Investors
in its consolidated tax return for the first time in 1996 and, as a result, it
received partial tax benefits related to the 1996 tax losses of the non-life
companies.  This benefit (approximately $23,000) is reflected in 1997.  For
1996, The Company expected to pay approximately $248,000 related to its 1996
tax return and has recovered approximately $423,000 related to prior years
returns in excess of its 1995 estimate.









<PAGE> 19

In addition to the reinsurance transactions discussed above, the value of the
Company's investments changed significantly due to changes in the market
interest rates.  The carrying value of investments in affiliates and
available-for-sale includes a net unrealized investment gain of $1,785,000 in
1997 and a net unrealized investment loss of $577,000 in 1996.  This change in
the unrealized gains and losses caused a decrease of $573,000 in Deferred
acquisitions costs and $618,000 in Unearned ceding commissions and an increase
of $2,407,000 in the Net unrealized investment gains and (losses) component of
shareholders' equity.


                        Liquidity and Capital Resources

IIG's Liquidity and Capital Resources

IIG is an insurance holding company whose principal asset is the common stock
of IIC, Inc. which owns all the outstanding shares of Investors.  IIG's
primary cash requirements are to meet debt service and to pay operating
expenses.  To meet the cash requirements, IIG has relied primarily on the
funds it received under the NMA agreement with Investors.  However, the NMA
agreement was terminated on December 31, 1997.  The insurance laws of the
State of Delaware generally limit the ability of Investors to pay cash
dividends in excess of certain amounts without prior regulatory approval and
also require that certain agreements relating to the payment of fees and
charges to the Company by Investors be approved by the Delaware Insurance
Department.  As reflected in the parent only statement of cash flows in Note
10 to the Company's financial statements, IIG's cash flow from operations has
been insufficient to meet its operating needs for several years.  In the past
IIG met this cash drain by liquidating its other investments.  Beginning in
1996, the cash drain was partially met by withholding interest payments on the
IIG Note (see Note 6 to the Company's financial statements).  In 1997, IIG
partially funded its operations with a $64,000 tax benefit from its 1996 tax
return.

In addition to its normal operating expenses, the IIG Note is in default and,
as described in Note 6 to the Company's financial statements, resolution of
the related legal issues and IIG's ultimate liability under the IIG Notes is
uncertain at this time.  However, IIG will probably be required to fund the
on-going legal expenses related to resolution of this issue.  IIG is pursuing
several alternatives designed to re-establish the Company's liquidity.  These
alternatives include negotiation to sell Investors, renegotiating the terms
and ultimate liability on the Note and seeking funding from other parties.
There can be no assurance these efforts will be successful and there is
substantial doubt that IIG can continue to meet its on-going obligations on a
timely basis.

The Company's independent auditors have included an explanatory paragraph in
their report on the Company's financial statements stating that the Company's
significant operating losses, accumulated deficit and liquidity problems raise
substantial doubt about the Company's ability to continue as a going concern.
There is substantial doubt that IIG can continue to meet its obligations on a
timely basis without an additional source of funds.






<PAGE> 20

Investors' Liquidity and Capital Resources

The liquidity needs of Investors are met by premiums received from annuity
sales, net investment income received, the proceeds from investments upon
maturity, sale or redemption, and commissions received from its coinsurer on
annuity contracts transferred.  The primary uses of funds by Investors are the
payment of surrenders, policy benefits, operating expenses and commissions,
and the purchase of assets for investment purposes.  No material capital
expenditures are planned.

Investors tests the ability of its investment portfolio to fund its liability
to its policyholders under several possible future interest rate environments.
The results of these tests are used by the state regulatory authorities to
assess the adequacy of Investors' stated liabilities.  Based on the results of
these tests, in 1997, for the first time, Investors increased its statutory
reserves ($215,000).

The NAIC has established risk-based capital standards to determine the capital
requirements of a life insurance company based on the type and mixture of
risks inherent in its operations.  These standards require the computation of
a risk-based capital amount which is then compared to a company's actual total
adjusted capital.  The computation involves applying factors to various
statutory financial data to address four primary risks: asset default, adverse
insurance experience, interest rate risk and external events.  These standards
provide for regulatory attention when the percentage of total adjusted capital
to authorized control level risk-based capital is below certain levels.  At
December 31, 1997, Investors percentage of total adjusted capital is well in
excess of the ratios which would require regulatory action.

The Insurance Departments of both California and Arizona have expressed
concern over Investors' level of statutory capital.  Investors has suspended
writing new business in California and may suspend writing in Arizona to
address theses concerns.


                           New Accounting Standards

Effective December 31, 1997, the Company adopted Statement of Financial
Accounting Standards No 128, Earnings per Share.  Under this Statement, the
weighted average number of common shares outstanding during the year is used
to calculate the "Basic Earnings per Share".  The "Diluted Earnings per Share"
adjusts the Basic Earnings per Share calculation to include dilutive common
stock equivalents.  Since IIG's common stock equivalents are anti-dilutive as
of the end of 1997 and 1996, only the Basic Earnings per Share calculation is
presented and no prior period restatement is required.

The Company will adopt Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income ("SFAS 130"), effective January 1, 1998.  SFAS
130 provides standards for presenting the components and accumulated balances
of "Comprehensive Income" in a full set of general-purpose financial
statements.  Under SFAS 130, a new primary financial statement ("Comprehensive
Income") will present all changes in shareholder's equity (except for
transactions with the company's shareholders).   Since this information is
presently included in the Company's Consolidated Statements of Capital Deficit,
the Company does not believe SFAS 130 will be significant to its financial
statements.


<PAGE> 21

The Company will adopt Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS
131"), effective January 1, 1998.  SFAS 131 provides new standards for the way
public enterprises report information about operating segments in their annual
and interim financial statements.  SFAS 131 defines operating segments as
components of an enterprise that are regularly evaluated by the chief
operating decision maker in deciding the on-going allocation of corporate
resources and assessing personnel performance.  Since SFAS 131 was only
recently issued, the Company has not been able to fully evaluate the impact,
if any, it may have on future financial disclosures.


                         Inflation and Changing Prices

The Company does not believe that inflation has had a material effect on its
consolidated results of operations.

Interest rate changes may have temporary effects on the sales levels and
profitability of the annuity products offered by the Company.  For example,
regardless of whether interest rates rise or fall, competing investment
products (such as annuities offered by the Company's competitors, bank
certificates of deposit and mutual funds) may temporarily become more
attractive to potential customers.  The Company constantly monitors interest
rates with respect to a spectrum of durations and sells annuities that permit
flexible responses to interest rate changes as part of its management of
interest spreads.  As required, the Company adjusts the rate credited to its
policyholders to maintain its competitive position and to achieve its required
interest spread.

The Company manages its investment portfolio in part to reduce its exposure to
interest rate fluctuations.  In general, the market value of the Company's
fixed maturity portfolio increases or decreases in inverse relationship with
fluctuations in interest rates, and the Company's net investment income
increases or decreases in direct relationship to interest rate changes.  For
example, if interest rates decline, the Company's fixed maturity investments
generally will increase in market value, while net investment income will
decrease as fixed income investments mature or are sold and proceeds are
reinvested at the declining rates, and vice versa.

Interest rate changes significantly effect the market value of the Company's
investment portfolio.  Since the Company carries most of its investments at
market value, these changes, net of the related effects on the amortization of
deferred acquisition cost and unearned commission, and the related deferred
tax accounts, directly effect total shareholders' equity.














<PAGE> 22

Item 7.  Financial Statements and Supplementary Data

               INVESTORS INSURANCE GROUP, INC. AND SUBSIDIARIES
                               TABLE OF CONTENTS

                                                               Page
        REPORT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS      23

        FINANCIAL STATEMENTS FOR THE YEARS ENDED
            DECEMBER 31, 1997 AND 1996:

                Consolidated Balance Sheets                   24-25
                Consolidated Statements of Income               26
                Consolidated Statements of Capital Deficit      27
                Consolidated Statements of Cash Flows         28-29
                Notes to Consolidated Financial Statements    30-53










































<PAGE> 23
              Report of Independent Certified Public Accountants


The Board of Directors
Investors Insurance Group, Inc. and Subsidiaries
Jacksonville, Florida

We have audited the accompanying consolidated balance sheets of Investors
Insurance Group, Inc. and Subsidiaries as of December 31, 1997 and 1996 and
the related consolidated statements of income, capital deficit and cash flows
for the years then end ed. These financial statements are the responsibility
of the Company'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 audits 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 the overa ll financial
statement presentation. We believe that our audits provide a reasonable basis
for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Investors Insurance Group,
Inc. and Subsidiaries at December 31, 1997 and 1996 and the results of their
operations and thei r cash flows for the years then ended in conformity with
generally accepted accounting principles.

The accompanying financial statements have been prepared assuming that the
Company will continue as a going concern. As described in Note 1 to the
financial statements, Investors Insurance Group, Inc. has experienced
significant operating losses, has a capital deficit and is experiencing
liquidity problems at December 31, 1997. These conditions raise substantial
doubt about the Company's ability to continue as a going concern.
Management's plans in regard to these matters are also described in N ote 1.
The financial statements do not include any adjustments that might result
from the outcome of this uncertainty.



BDO Seidman, LLP
Orlando, Florida















<PAGE> 24

                INVESTORS INSURANCE GROUP, INC. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                           DECEMBER 31, 1997 AND 1996
                             (Dollars in thousands)



        ASSETS                                       1997            1996
                                                   --------        --------
Investments:
 Fixed maturities held to maturity, at
   amortized cost (market $9,229 in 1997
   and $8,731 in 1996)                            $   8,198        $ 8,200
 Securities available for sale:
   Fixed maturities, at market (amortized
     cost $47,835 in 1997 and $57,309 in 1996)       48,616         57,075
   Equity securities, at market (cost $11 in 1996)      -               22
 Short-term investments                                 265            305
 Mortgage loans on real estate                          288            365
 Policy loans                                           544            522
                                                    -------        -------

                      Total                          57,911         66,489

Cash and cash equivalents                             4,728          6,801
Investment in common stock of affiliate,
  at market (cost $992 in both 1997 and 1996)         1,996            638
Accrued investment income                               421            451
Deferred acquisition costs                           37,447         46,765
Reinsurance benefits receivable                       1,792            -
Investment contract benefits recoverable            395,858        483,378
Reinsurance benefits recoverable                      5,722          4,740
Income tax recoverable                                  146            760
Cost in excess of net assets of businesses
  acquired (less accumulated amortization
  of $1,568 in 1997 and $1,291 in 1996)               3,112          3,389
Other assets                                            706            303
                                                    -------        -------

                      Total Assets                $ 509,839      $ 613,714
                                                    =======        =======















See accompanying notes to consolidated financial statements

<PAGE> 25
                INVESTORS INSURANCE GROUP, INC. AND SUBSIDIARIES
                    CONSOLIDATED BALANCE SHEETS (Continued)
                           DECEMBER 31, 1997 AND 1996
                             (Dollars in thousands)





LIABILITIES AND SHAREHOLDERS' EQUITY (CAPITAL DEFICIT)
                                                     1997            1996
                                                   --------        --------
Liabilities:
 Future policy benefits and claims:
   Investment contracts                           $ 450,649       $ 547,184
   Life insurance reserves                           10,602           9,666
   Accident & health claim reserves                       7              29
 Unearned ceding commission (including
   deferred gross profits of $7,422 in 1997
   and $9,154 in 1996)                               40,385          50,210
 Note payable                                         8,000           8,000
 Amounts due to reinsurer                                50           1,173
 Accrued expenses                                     1,147             875
 Other liabilities                                    1,450           2,411
                                                    -------         -------

                          Total Liabilities         512,290         619,548
                                                    -------         -------

Commitments & Contingencies

Capital Deficit:
   Preferred Stock, no par,
     authorized 20,000,000 shares, none issued         -              -
   Common Stock, $.50 par value; authorized
     30,000,000 shares; issued 2,840,582 in
     1997 and 2,840,082 in 1996; outstanding
     2,836,582 in 1997 and 2,836,082 in 1996          1,420           1,420
   Additional paid-in capital                         3,656           3,656
   Net unrealized investment gains (losses)           1,821            (586)
   Accumulated deficit                               (9,340)        (10,316)
   Treasury stock, at cost (4,000 shares in
     1997 and 1996)                                      (8)             (8)
                                                    -------         -------

                                  Total              (2,451)         (5,834)
                                                    -------         -------

     Total Liabilities and Capital Deficit        $ 509,839       $ 613,714
                                                    =======         =======







See accompanying notes to consolidated financial statements

<PAGE> 26
                INVESTORS INSURANCE GROUP, INC. AND SUBSIDIARIES
                       CONSOLIDATED STATEMENTS OF INCOME
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                 (Dollars in thousands, except per share data)




                                                     1997            1996
                                                   --------        --------
Revenue:
  Premium and policy fees                           $ 1,030         $ 1,278
  Net investment income                               4,730           6,427
  Realized investment gains                             533           4,521
  Commission and other income                         3,026           1,457
                                                    -------         -------

       Total revenue                                  9,319          13,683
                                                    -------         -------

Benefits and Expenses:
  Current and future insurance benefits                 401             558
  Interest on investment contracts                    3,060           4,672
  Underwriting, acquisition and insurance expenses    4,644           7,340
  Other expenses                                        442             922
                                                    -------         -------

       Total benefits and expenses                    8,547          13,492
                                                    -------         -------

Income before income taxes                              772             191
Income tax benefit                                      204             175
                                                    -------         -------

Net income                                          $   976         $   366
                                                    =======         =======

Basic Earnings per Share of Common Stock            $  0.34         $  0.13
                                                    =======         =======

Weighted Average Number of Shares Outstanding     2,836,451       2,822,714
                                                  =========       =========















See accompanying notes to consolidated financial statements

<PAGE> 27
<TABLE>
                INVESTORS INSURANCE GROUP, INC. AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CAPITAL DEFICIT
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                             (Dollars in thousands)
<CAPTION>
                                Common Stock                  Net
                              ----------------- Additional  unrealized
                              Number of          paid-in    investment   Accumulated Treasury
                               shares    Amount  capital   gains(losses)   deficit     stock
                              ---------  ------ ---------- ------------- ----------- --------
<S>                           <C>        <C>    <C>        <C>           <C> 
Balance at December 31, 1995  2,767,782  $1,384     $3,651       $7,083    $(10,682)     $(8)
Common shares issued             72,300      36          5           -          -          -
Change in unrealized losses         -       -          -         (7,669)        -          -
Net Income                          -       -          -             -          366        -
                              ---------  ------ ---------- ------------- ----------- --------

Balance at December 31, 1996  2,840,082   1,420      3,656         (586)    (10,316)      (8)
Common shares issued                500     -          -            -           -          -
Change in unrealized losses         -       -          -          2,407         -          -
Net Income                          -       -          -            -           976        -
                              ---------  ------ ---------- ------------- ----------- --------

Balance at December 31, 1997  2,840,582  $1,420     $3,656       $1,821    $ (9,340)     $(8)
                              =========  ====== ========== ============= =========== ========
</TABLE>






























See accompanying notes to consolidated financial statements

<PAGE> 28
                INVESTORS INSURANCE GROUP, INC. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                             (Dollars in thousands)



                                                     1997            1996
                                                   --------        --------
Cash flows from operating activities:
 Net income                                         $   976         $   366
 Adjustments to reconcile net income 
   to net cash provided by (used in)
   operating activities:
  Net accretion of fixed maturities                    (219)           (296)
  Realized investment gains                            (533)         (4,323)
  Amortization of costs in excess of net assets
    of businesses acquired                              282             295
  Amortization of deferred acquisition costs          1,487           3,017
  Amortization of unearned ceding commissions        (1,939)           (723)
  Unearned ceding commission realized 
    upon full assumption                               (595)            -
  Deferral of unearned ceding commission              2,849          12,367
  Deferral of acquisition costs                      (2,270)         (6,303)
  Change in assets and liabilities:
     Increase in investment contract
        benefits recoverable                        (25,193)       (117,089)
     Increase in insurance reserves and
        interest on investment contracts             28,602          33,068
     Increase in other assets, net                   (2,528)         (2,208)
     Decrease in other liabilities, net              (1,812)         (4,029)
                                                    -------         -------
              Net cash used in
                  operating activities                 (893)        (85,858)
                                                    -------         -------
 Cash flows from investing activities:
  Investment repayments:
   Fixed maturities, held to maturity                   -             1,300
   Mortgage loans                                        77             199
   Policy loans, net                                    (22)             76
  Investments sold:
   Fixed maturities, available for sale              13,599          97,821
   Equity securities, available for sale                 22             151
  Investments in:
   Fixed maturities, available for sale              (3,385)         (8,855)
   Short-term investments, net                           40              51
                                                    -------         -------

   Net cash provided by investing activities         10,331          90,743
                                                    -------         -------







See accompanying notes to consolidated financial statements

<PAGE> 29
                INVESTORS INSURANCE GROUP, INC. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
                     YEARS ENDED DECEMBER 31, 1997 AND 1996
                            (Dollars in thousands)



                                                     1997            1996
                                                   --------        --------
 Cash flows from financing activities:
  Investment contract deposits                    $  25,385       $  64,146
  Investment contract withdrawals                   (70,764)        (58,843)
  Investment contract funds transferred             (27,294)        (63,093)
  Investment contract funds recovered                61,162          48,293
  Common stock issued                                   -                41
                                                    -------         -------

   Net cash used in
       financing activities                         (11,511)         (9,456)
                                                    -------         -------
 Net increase (decrease) in cash
     and cash equivalents                            (2,073)         (4,571)
 Cash and cash equivalents, beginning of year         6,801          11,372
                                                    -------         -------

 Cash and cash equivalents, end of year            $  4,728        $  6,801
                                                    =======         =======


Supplemental disclosure of cash flow information:
     Cash paid (received) during the year for:
              Income taxes, net                    $   (750)       $   351
              Interest                                  -               -
























See accompanying notes to consolidated financial statements

<PAGE> 30

                INVESTORS INSURANCE GROUP, INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               DECEMBER 31, 1997

(1) SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation:

The accompanying consolidated financial statements of Investors Insurance
Group, Inc. ("IIG") and subsidiaries ("the Company") are prepared in accordance
with generally accepted accounting principles ("GAAP").  All significant
intercompany items have been eliminated in consolidation.  IIG was incorporated
under the laws of the State of Florida on May 11, 1993, and is the successor
corporation of the former Gemco National, Inc.  ("Gemco"), a New York
corporation founded in 1966.  The change in corporate identity was approved by
Gemco's shareholders at the Annual Meeting of Shareholders on June 11, 1993.
The actual change was accomplished by the merger of Gemco into a new Florida
corporation, Investors Insurance Group, Inc., on September 1, 1993.

The Company operates predominantly in the life insurance industry, with its
primary product emphasis on the sale of flexible premium deferred annuities.
All of the Company's insurance operations are conducted through Investors
Insurance Corporation ("Investors"), which was organized in 1957 and is
licensed to sell life, annuity and health insurance in 21 states.  Another
subsidiary, IIC, Inc., is an insurance holding company and the direct parent of
Investors.   Investors Marketing Group, Inc. ("IMG") was formed in June of 1994
to market annuities for a select group of unaffiliated life insurance
companies.  In November 1996, IMG began operation as a third party
administrator ("TPA") providing both marketing and servicing for unaffiliated
life insurance companies (see discussion in Note 9).  On January 1, 1997, IIG
contributed all the outstanding shares of IMG to Investors at its carrying
value (see Note 10).

The IIG files under Regulation S-B of the Securities and Exchange Commission.


Going Concern Consideration:

The Company's financial statements are presented on the going concern basis,
which contemplates the realization of assets and the satisfaction of
liabilities in the normal course of business.  Historically, IIG has operated
as a national marketing agency ("NMA") recruiting agents for Investors.  The
resulting override commission related to Investors' new business was IIG's
primary source of funds.  However, Investors' new business declined
substantially in 1997; during  the last few months of 1997, the override
commissions were less than the related NMA expenses.  Therefore, IIG terminated
the NMA operation as of December 31, 1997.  As a result, IIG no longer has this
potential source of income.

IIG's operating funds have been depleted (Note 10) and its Note is past due
(Note 6).  Investors is adequately capitalized, however, insurance laws and
regulations restrict IIG's access to these funds through dividends or other
arrangements.  IIG is pursuing several alternatives designed to re-establish
the Company's liquidity.  These alternatives include negotiation to sell
Investors, renegotiating the terms and ultimate liability on the Note and
seeking funding from other parties.  There can be no assurance these efforts
will be successful and there is substantial doubt that IIG can continue to meet
its on-going obligations on a timely basis.
<PAGE> 31

(1) SIGNIFICANT ACCOUNTING POLICIES (continued)

Going Concern Consideration (continued):

The Company's independent auditors have included an explanatory paragraph in
their report on the Company's financial statements stating that the Company's
significant operating losses, accumulated deficit and liquidity problems raise
substantial doubt about the Company's ability to continue as a going concern.
The accompanying financial statements do not include any adjustment to reflect
the possible future effects that may result from the inability of the Company
to continue as a going concern.


Investments:

Fixed-maturity investments are securities that mature at a specified future
date more than one year after being issued.  Fixed-maturity securities that the
Company intends to hold until maturity are classified as "held to maturity" and
are carried at amortized cost.  Amortized cost is based on the purchase price
and is adjusted periodically in order that the carrying value will equal the
face or par value at maturity.

Fixed-maturity securities which may be sold prior to maturity due to changes in
interest rates, prepayment risks, liquidity needs, tax planning purposes or
other similar factors, are classified as "available for sale."  The difference
between the aggregate carrying value for fixed maturities available for sale
and the aggregate amortized cost of such securities, is reported, net of the
related impacts on the amortization of deferred acquisition costs, unearned
ceding commission and deferred income taxes, as a separate component of
shareholders' equity.

Premiums and discounts related to mortgage-backed investments are amortized
based on expected prepayments.  As differences arise between actual and
expected prepayments, the effective yield is recalculated to reflect the actual
prepayments to date and anticipated future prepayments.  The net investment is
then adjusted to the amount that would have existed had the new effective yield
been applied since its acquisition.

Equity securities (common stocks) are carried at current market value.  If the
current market value of equity securities is higher than the purchase cost, the
excess is an unrealized gain, and if lower than cost and the decline is
temporary, the difference is an unrealized loss.  The net unrealized gains or
losses on equity securities, net of the related impacts on the amortization of
deferred acquisition costs and deferred income taxes, are reported in a
separate component of shareholders' equity, along with the net unrealized gains
or losses on fixed-maturity securities available for sale.

Short-term investments are carried at cost, which approximates market value.
These investments consist of highly liquid investments with maturities of one
year or less from date of purchase.

Mortgage loans on real estate and policy loans are carried at their unpaid
balances.  The mortgage loans are secured by the underlying real estate.
Policy loans are fully collateralized by the related policy's cash value.




<PAGE> 32

(1) SIGNIFICANT ACCOUNTING POLICIES (continued)

Investments (continued:

Net realized investment gains and losses are included in the determination of
net earnings.  If a decline in the market value of an individual investment is
considered to be other than temporary, the difference between amortized book
value and net realizable value is recorded as a realized investment loss.  The
cost of investments sold is determined using the specific identification
basis.


Cash Equivalents:

Cash equivalents consist of highly liquid investments with maturities of three
months or less at the date of purchase.


Deferred Acquisition Costs:

Costs which vary with and are primarily related to the acquisition of new
business have been deferred to the extent that such costs are deemed
recoverable through future earnings.  These costs include commissions and
certain expenses related to policy issuance, underwriting and marketing.  For
traditional life products, deferred acquisition costs ("DAC") are amortized
with interest over the premium paying period in proportion to the ratio of
anticipated annual premium revenue to the anticipated total premium revenue.
DAC for universal life and annuity contracts is amortized in relation to the
present value of expected gross profits on the products.  Retrospective
adjustments of these amounts are made when the Company revises its estimates of
current or future gross profits to be realized from a group of policies,
including both realized and unrealized investment gains and losses related to
changes in market interest rates for those investments segmented against
interest sensitive liabilities.  Anticipated investment income and unearned
ceding commissions are considered in the determination of recoverability of
deferred acquisition costs.


Cost in Excess of Net Assets of Businesses Acquired:

Cost in excess of net assets of businesses acquired relates to IIG's
acquisition of IIC and Investors in 1989.  Prior to December 1, 1994, this
balance was being amortized over 40 years on the straightline method.  As of
December 1, 1994, management changed its amortization estimate for this asset
to a total of 20 years and revised the amortization schedule accordingly.  The
Company assesses the recoverability of cost in excess of net assets of
businesses acquired using the undiscounted projected future cash flow from the
related businesses.


Future Policy Benefits and Claims:

The liability for future policy benefits for traditional life insurance
products has been computed based upon mortality, lapse and interest assumptions
applicable to these coverages, including provision for adverse deviations.
Interest rates range from 3.00% to 9.25%.  Mortality, morbidity and withdrawal
rate assumptions are based on the experience of the Company and are
periodically reviewed against industry standards and experience.
<PAGE> 33

(1) SIGNIFICANT ACCOUNTING POLICIES (continued)

Future Policy Benefits and Claims (continued):

With respect to investment contracts, the Company uses the retrospective
deposit accounting method.  Future policy benefits represent the premium
deposits received plus accumulated interest, less mortality and administration
charges.  Interest credited to these contracts ranged from 4.0% to 13.05%
during 1997 and 1996.

Accident & health reserves and claims represent amounts recorded to pay claims
received on various accident & health policies in force and an allowance for
premiums received but not yet earned on such policies.


Participating Policies:

A portion of the life insurance business in force is participating policies.
The provision for the policyholders' dividend liability, based on dividend
scales contemplated when the policies were issued, is included in the liability
for policy reserves.  Dividends are determined annually and are payable only
upon declaration by the Board of Directors.


Coinsurance Accounting:

The Company coinsures portions of its life insurance and annuity contract
exposure under traditional coinsurance arrangements.  Generally, the Company
enters into these arrangements to assist in diversifying its insurance and
investment risks and to manage its statutory capital and surplus.

The Company's liability for Future Policy Benefits and Claims includes amounts
that are recoverable   under these coinsurance agreements.  Recoverable amounts
related to the transfer of insurance risks are presented as Reinsurance
Benefits Recoverable; Recoverable amounts related to the transfer of investment
risks are represented as Investment Contract Benefits Recoverable.

Amounts received from, or paid to, the coinsurer for Interest on Investment
Contracts and surrender fees are offset against the related expense and revenue
accounts in the Consolidated Statements of Income.

Under the provisions of the agreement with New Era Life Insurance Company
("NEL"), Investors will pay allowances of 1% of average statutory reserves for
the first five years and receive 2% of the average statutory reserves over the
following five years.  The Company accounts for these costs as deposits in the
first five years and a recovery of the deposits in the next five years.  To
assure that the deposit amount is fully recoverable, the Company's actuary
periodically projects the future cash flows and calculates their present value.
A valuation allowance will reduce the deposit amount if indicated by the
projections.


Recognition of Insurance Revenues:

Traditional life insurance premiums are recognized as revenue over the premium-
paying period, adjusted for premiums due and advance premiums.  Policy fee
revenue includes surrender, mortality and administrative charges earned on
annuity, universal life and other contracts.
<PAGE> 34

(1) SIGNIFICANT ACCOUNTING POLICIES (continued)

Recognition of Insurance Revenues (continued):

The Company receives a commission on the transfer of investment contracts risk
to the coinsurer.  This commission is compensation for the Company's annuity
sales and distribution system that originated the contracts.  While the Company
has no future obligation with respect to this commission these commissions are
deferred and recognized in earnings in proportion to the earnings generated
directly from the related annuity contracts (without consideration of the
impact of the coinsurance agreement).


Federal Income Taxes:

The Company files a consolidated tax return.  Any differences between the
consolidated tax and the total amounts that would be due under separate tax
filings is paid or retained by IIG.

Life insurance companies with total assets less than $500 million are allowed a
deduction which is not available to larger life companies.  As a "small" life
insurance company, 60% of the first $3 million of "life insurance company
taxable income" is deductible.  This deduction phases out on a pro-rata basis
as income  increases from $3 million to $15 million.

The Company uses the asset and liability method of accounting for income tax
expense prescribed by SFAS No. 109, "Accounting for Income Taxes."  Under this
method of accounting, deferred tax assets and liabilities are recognized for
the estimated future tax consequences attributable to differences between the
financial statement carrying amounts of existing assets and liabilities and
their respective tax bases.  Deferred tax assets and liabilities are measured
using enacted tax rates in effect for the year in which those temporary
differences are expected to be recovered or settled.  Deferred tax assets are
recorded net of the applicable valuation allowance.  The effect on deferred tax
assets and liabilities of a change in tax rates is recognized in income during
the period that includes the enactment date.

The valuation allowance related to the deferred tax asset accounts is
calculated on both an aggregate basis and for those items effecting income.
The difference between these calculations is combined with the impacts of the
net unrealized investment gains (losses) which effect shareholders' equity
directly.  Therefore, while the aggregate valuation allowance is a contra-
asset, the residual allowance assigned to the unrealized investment gains
(losses) may be either positive or negative.


Earnings per Share of Common Stock:

Effective December 31, 1997, IIG adopted Statement of Financial Accounting
Standards No 128, Earnings per Share.  Under this Statement, the weighted
average number of common shares outstanding during the year is used to
calculate the Basic Earnings per Share.  The Diluted Earnings per Share adjusts
the Basic Earnings per Share calculation to include dilutive common stock
equivalents.  Since IIG's common stock equivalents are anti-dilutive as of the
end of 1997 (524,409 common stock equivalent shares) and 1996 (1,758,976 common
stock equivalent shares), only the Basic Earnings per Share calculation is
presented and no prior period restatement is required.

<PAGE> 35

(1) SIGNIFICANT ACCOUNTING POLICIES (continued)

Fair Value of Financial Instruments:

Statement of Financial Accounting Standards No. 107, "Disclosures about Fair
Value of Financial Instruments," requires disclosure of fair value information
about financial instruments.  Fair value estimates discussed herein are based
upon certain market assumptions and pertinent information available to
management as of December 31, 1997 and 1996.

The respective carrying value of certain on-balance-sheet financial instruments
approximated their fair values.  These financial instruments include cash and
cash equivalents, accrued investment income and accrued expenses.  Fair values
were assumed to approximate carrying values for these financial instruments
since they are short term in nature and their carrying amounts approximate fair
values or they are receivable or payable on demand.  The fair value of the
Company's investment securities were based on quoted market values, if
available.  If quoted market prices were not available, fair values were
estimated using quoted market prices for similar securities.  Since the
ultimate cash flow related to the note payable is not determinable, calculation
of its theoretical market value is not practicable.


Stock-Based Compensation:

In accordance with Statement of Financial Accounting Standards No. 123,
"Accounting for Stock Based Compensation", the value of stock options is
recognized as compensation expense on the date of grant.  For Agents and other
non-employees, the value of the stock options is based on the Black-Scholes
option-pricing model.  The Company has elected to report employee stock options
under Accounting Principal Board Opinion No. 25, "Accounting for Stock Issued
to Employees."  Therefore, for employees, the value of the stock options is
based on the excess, if any, of the market value of the Company's stock over
the option price.  If there is any difference between this value and the value
calculated by the Black-Scholes option-pricing model, the notes to the
financial statements will reflect the pro forma impact of this difference on
net income and earnings per share.


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 reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expense during the reporting period.
Actual results could differ from those estimates.











<PAGE> 36

(1) SIGNIFICANT ACCOUNTING POLICIES (continued)

New Accounting Standards:

The Company will adopt Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income ("SFAS 130"), effective January 1, 1998.  SFAS
130 provides standards for presenting the components and accumulated balances
of "Comprehensive Income" in a full set of general-purpose financial
statements.  Under SFAS 130, a new primary financial statement ("Comprehensive
Income") will present changes in shareholder's equity (except for transactions
with the company's shareholders).  Since this information is presently included
in the Company's Consolidated Statements of Capital Deficit, the Company does
not believe SFAS 130 will be significant to its financial statements.

The Company will adopt Statement of Financial Accounting Standards No. 131,
Disclosures about Segments of an Enterprise and Related Information ("SFAS
131"), effective January 1, 1998.  SFAS 131 provides new standards for the way
public enterprises report information about operating segments in their annual
and interim financial statements.  SFAS 131 defines operating segments as
components of an enterprise that are regularly evaluated by the chief operating
decision maker in deciding the on-going allocation of corporate resources and
assessing personnel performance.  Since SFAS 131 was only recently issued, the
Company has not been able to fully evaluate the impact, if any, it may have on
future financial disclosures.


Reclassification:

Certain amounts in the 1996 financial statements have been reclassified to
conform with the 1997 presentation.


(2) INVESTMENTS

The amortized cost and fair values of fixed maturities and equity securities as
of December 31 are summarized as follows (in thousands):

                                              Gross        Gross
                                Amortized   Unrealized   Unrealized     Fair
                                  Cost         Gain         Loss        Value
                               ----------   ----------   ----------    -------
1997:
Held to maturity
  U.S. Treasury obligations     $  7,698      $ 1,044       $  13      $ 8,729
  Corporate Bonds                    500          -           -            500

Available for sale
  Securities issued by U.S.
    Government agencies
    and authorities               47,835       11,110         329       48,616
                                --------      -------       -----     --------

                                $ 56,033      $ 2,154       $ 342     $ 57,845
                                ========      =======       =====     ========




<PAGE> 37

(2) INVESTMENTS (continued)
                                              Gross        Gross
                                Amortized   Unrealized   Unrealized     Fair
                                  Cost         Gain         Loss        Value
                               ----------   ----------   ----------    -------
1996:
Held to maturity
  U.S. Treasury obligations     $  7,700      $   548       $  17      $ 8,231
  Corporate Bonds                    500          -           -            500

Available for sale
  Securities issued by U.S.
    Government agencies
    and authorities               57,309          734         968       57,075
  Equity securities                   11           11         -             22
                                --------      -------       -----     --------

                                $ 65,520      $ 1,293       $ 985     $ 65,828
                                ========      =======       =====     ========

As described below, the Company's equity securities of affiliates consist of
warrants and common stock of two companies with whom it shares a common
director.  These securities are presented at market in the accompanying
financial statements.

         In a 1994 private placement, the Company purchased a $500,000
         redeemable, subordinated debenture paying 8.25% interest on a
         quarterly basis and maturing on June 30, 2004.  This bond was
         accompanied by warrants to purchase shares of the issuer's common
         stock (currently 52,500 shares for $5.71 per share).  Since the
         exercise price exceeded the market value on the date of acquisition,
         no cost was allocated to these warrants. The market value of the stock
         exceeds the exercise price by $566,475 in 1997 but was less than the
         exercise price in 1996.

         The Company also owns 188,971 shares, or 3.7%, of the capital stock of
         an affiliate.  The table below summarizes the cost and market value of
         these equity securities in unconsolidated affiliates as of December
         31:



                                       1997                  1996
                                   -----------            ----------
              Market Value         $ 1,429,188             $ 637,777
                  Cost             $   992,098             $ 992,098

Cash equivalents and other investments totaling $10,001,248 and $9,971,134 at
December 31, 1997 and 1996, respectively, were on deposit with state agencies
to meet regulatory requirements.








<PAGE> 38

(2) INVESTMENTS (continued)

The expected maturities of the Company's fixed maturity investments at
December 31, 1997 were as follows (in thousands):

                                        Amortized Cost            Fair Value
                                        --------------            ----------
Due in one year or less                     $ 2,741                 $ 2,764
Due after one year through five years        10,361                  10,648
Due after five years through ten years       29,204                  30,566
Due after ten years                          13,727                  13,867
                                            -------                 -------

                                            $56,033                 $57,845
                                            =======                 =======


This table includes mortgage-backed securities whose expected maturities are
based on the forecasted cash flows from the underlying mortgages.

Realized investment gains and changes in the unrealized investment gains for
the years ended December 31 were as follows (in thousands):


                                    Realized Investment Gains
                                          1997       1996
                                          -----     ------
            Fixed maturity securities     $ 520     $4,405
            Equity securities                13        116
                                          -----     ------

                                          $ 533     $4,521
                                          =====     ======

























<PAGE> 39

(2) INVESTMENTS (continued)

                                     Unrealized Investment Gains (Losses)
                                   ----------------------------------------
                                         As of          Change During the
                                      December 31,          Year Ended
                                   -----------------    -------------------
                                     1997      1996       1997       1996
                                   -------   -------    -------   ---------
Securities available for sale      $  781    $ (223)    $1,004    $ (8,007)
Investment in affiliates            1,003      (354)     1,357        (165)
Deferred acquisition costs           (455)      117       (572)      4,550
Deferred tax asset                    114       170        (56)       (978)
Deferred tax valuation allowance      432      (139)       571      (1,917)
                                   -------   -------    -------   ---------

Impact of assets                    1,875      (429)     2,304      (6,517)
                                   -------   -------    -------   ---------

Unearned ceding commission           (491)      126       (617)      4,047
Deferred tax liability                545        31        514      (2,895)
                                   -------   -------    -------   ---------

Impact of liabilities                  54       157       (103)      1,152
                                   -------   -------    -------   ---------
Impact on shareholders' equity     $1,821    $ (586)    $2,407    $ (7,669)
                                   =======   =======    =======   =========


The components of net investment income for the years ended December 31 are as
follows (in thousands):

                                                1997                    1996
                                              -------                 -------
Fixed maturities                              $ 4,469                 $ 5,742
Mortgage and policy loans                          65                      42
Short-term investments                            249                     726
Gross investment income                         4,783                   6,510
Less investment expenses                           53                      83
                                              -------                 -------

 Net investment income                        $ 4,730                 $ 6,427
                                              =======                 =======


(3) OTHER EMPLOYEE COMPENSATION

The Company has adopted a Simplified Employee Pension Plan ("SEP").  Under the
terms of its SEP, the Company may contribute each year for each employee the
lesser of fifteen percent (15%) of each employee's salary (not to exceed
$150,000) or thirty thousand dollars ($30,000).  A ten percent (10%) of salary
contribution was made for the 1997 and 1996 fiscal years.  Contributions under
the Plan are not mandatory.





<PAGE> 40

(3) OTHER EMPLOYEE COMPENSATION (continued)

IIG also has a Deferred Compensation Plan which provides for the annual
payments of $8,500 into a Trust for the benefit of its president.  If IIG
becomes insolvent, the Trust is subject to the claims of its general creditors;
otherwise, the monies deposited into the Trust cannot revert back to IIG.  Upon
the president's retirement, disability or death, the balance in the Trust will
be paid to him or his beneficiary.

In 1997, the balance of funds in the trust account was paid out in partial
settlement of a claim against IIG.  As of December 31, 1997, there are no funds
in the trust account, however, IIG has recognized a liability to pay deferred
compensation of $34,000.


(4) INCOME TAXES

Income tax benefit consists of the following (in thousands):

                                              Year ended December 31,
                                           -------------------------------
                                             1997                   1996
                                           -------                 -------
Current income tax benefit                 $ (204)                 $ (175)
Deferred income taxes:
   Change in net deferred tax asset          (516)                   (222)
   Change in valuation allowance              516                     272
                                           -------                 -------

  Total income tax benefit                 $ (204)                 $ (175)
                                           =======                 =======

Actual income tax benefit for 1997 and 1996 differed from the "expected" tax
expense for those years as computed by applying the U.S. Federal corporate
income tax rate of 34% to income before income taxes by the following:

                                                         1997           1996
                                                        ------         ------
Computed "expected" tax expense                           34 %           34 %
Increase (reduction) in income taxes resulting from:
  Changes in the valuation allowance for
   deferred tax assets, allocated to income tax expense  (76)%          391 %
  Non-deductible expenses including amortization
   of intangibles                                          7 %           50 %
  Small life insurance company deduction                   - %         (313)%
  State income taxes, net of federal income tax benefit    - %           (9)%
  Impact of tax loss carryback (carryforward)             26 %         (250)%
  Other, net                                              (5)%            5 %
                                                        ------         ------

    Actual income tax benefit                            (14)%           (92)%
                                                        ======         =======


IIG began including Investors in its consolidated tax return for 1996.  As a
result, IIG used a portion of its operating losses to reduce the tax Investors
would have otherwise paid by approximately $62,000.  Since the consolidation
decision was made in late 1997, the resulting tax benefit is reflected in 1997.
<PAGE> 41

(4) INCOME TAXES (continued)

The components of the deferred tax assets and liabilities at December 31 are
as follows (in thousands):

                                                              1997       1996
                                                            --------   --------
Deferred tax assets:
  Life insurance company:
    Policyholder reserves and liabilities                   $ 1,265    $ 1,682
    Net unrealized losses on investments                        -           58
    Investment in affiliates                                    -          407
    Unearned ceding commission                               10,096     12,552
    Alternative minimum tax carryforward                        -           22
    Other                                                        13          2
  Non-life company:
    Operating loss carryforward                               1,622      1,693
    Investment in affiliates                                    165        -
    Other                                                        15         25
                                                            --------   --------

  Total deferred tax assets                                  13,176     16,441
  Valuation allowance                                        (3,877)    (4,965)
                                                            --------   --------

  Net deferred tax assets                                     9,299     11,476
                                                            --------   --------

Deferred tax liabilities:
  Life insurance company:
    Deferred acquisition costs                               (8,947)   (11,475)
    Net unrealized gains on investments                         (195)      -
    Investment in affiliates                                    (142)      -
    Other                                                        (14)      -
  Non-life company - other                                        (1)       (1)
                                                            --------   --------

Total deferred tax liabilities                                 9,299    11,476
                                                            --------   --------

Net deferred tax assets and liabilities                     $    -     $   -
                                                            ========   ========


The net decrease in the total valuation allowance for the years ended December
31, 1997 and 1996 was $1,088,000 and $1,646,000, respectively.  Based on its
history of losses and IIG's current liquidity problem, the Company cannot be
assured of realizing its deferred tax assets as required by the "more likely
than not" standard of SFAS #109.  Therefore, a 100% valuation allowance will be
assigned to the net deferred tax asset until realization of this asset is
considered more likely than not.







<PAGE> 42

(4) INCOME TAXES (continued)

At December 31, 1997, IIG had the following tax carryforward items (in
thousands):



                    Year of              Operating
                   expiration        Loss Carryforward
                   ----------        -----------------
                       2001              $3,424
                       2002                 744
                       2003                 248
                       2004                 742
                       2005                 869
                       2007                 136
                       2008                 397
                       2009                 323
                       2010                 430
                       2011                 728
                       2012                 293
                                         ------

                                         $8,334
                                         ======

Beginning in 1996, IIG included Investors in its consolidated tax return.  At
this time, only future income of the previously consolidated non-life companies
may be offset by the tax loss carryforward items presented above.

If the Preferred Shares discussed in Notes 10 and 11 are issued, the resulting
"change in control" could substantially reduce the Company's ability to utilize
its non-life loss carryforwards.  Further, based on its history of losses and
IIG's current liquidity problem, the Company cannot be assured that it will
have the ability to utilized its loss carryforwards.

Investors' "policyholders' surplus account," which arose under prior tax law,
is generally that portion of the gain from operations that has not been
subjected to tax, plus certain deductions.  The balance of this account is
approximately $1.7 million.  This amount has not been subjected to current
income taxes but, under certain conditions that management considers to be
remote, may become subject to income taxes in future years and an appropriate
tax provision would be recorded at that time.  At current tax rates, the
maximum amount of such tax (for which no provision has been made in the
financial statements) is approximately $595,000.













<PAGE> 43

(5) COINSURANCE

Investors reduces its overall risk on whole life, and annuity policies through
an uncollateralized program of quota share coinsurance.  As the direct insurer,
Investors retains primary liability to the policyholder on all risks
transferred.  The premium income and benefit expenses presented in the
Statements of Income for the years ended December 31 are reflected net of the
reinsurance transactions outlined below (in thousands):

                                                   1997            1996
                                                  ------          ------
Quota Share Contracts
     Premium ceded                                $1,605          $2,602
     Surrender fees                                3,912           2,541
     Benefits recovered                              671             528
     Interest on investment contracts recovered   22,870          25,797
     Amortization of deferred acquisition cost     7,168           2,956

Republic-Vanguard Life Insurance Company ("RVL"), is the Company's primary
reinsurer and a member of the Winterthur Swiss Insurance Group (one of the
largest Swiss insurance companies).  The substantial portion of the Company's
reinsurance is coinsurance related to investment risks transferred to RVL
totaling approximately $383.2 million at December 31, 1997 and recorded as
investment contract benefits recoverable on the accompanying balance sheet.
From October 1, 1991 through September 30, 1994, 80% of Investors' annuity
production was transferred to RVL. For contracts issued subsequent to October
1, 1994 and May 1, 1995, this percentage was revised to 90% and 100%,
respectively, due to concerns over Investors' ratio of statutory policy
liabilities to capital and surplus (See Notes 8 and 9).  As a result of
Investors' improved financial position resulting from the reinsurance
agreements with NEL discussed below, the ceding ratio to RVL was reduced to 60%
on January 1, 1997.

As a result of its on-going discussion with the Arizona Insurance Department
("Arizona") (see Note 9), Investors amended its quota share reinsurance
contract with RVL to cede all its current and future Arizona business to RVL on
a 100% quota share basis.  Under the terms of this amendment, which was
effective August 1, 1997, Investors transferred statutory reserves of
approximately $8.5 million.  The impact of this transaction was to increase
Investors' statutory capital and surplus by approximately $254,000 and to
increase the Company's GAAP basis, pre tax income by approximately $214,000
(Realized investment gains, approximately $513,000, result from the disposal of
the investments supporting the ceded policies.  Realization of investment gains
and losses changes the pattern of expected future profits which forms the basis
for the amortization of deferred acquisition costs.  As a result of this gain,
the amortization of deferred acquisition costs increased by approximately
$299,000 and this increase is reflected in Underwriting, acquisition and
insurance expenses).  This transaction also increased Investment contract
benefits recoverable approximately $9,700,000 and Unearned ceding commissions
approximately $701,000.

Prior to 1996, the Delaware Insurance Department ("Delaware") expressed concern
over Investors' ratio of statutory basis policy liabilities to capital and
surplus.  To address this concern, Investors entered into an agreement to cede
a block of annuity policies with statutory policy reserves of $76,306,929 to
NEL in March 1, 1996.  This reinsurance agreement provided for an initial
coinsurance period (up to five years) followed by full assumption of the
specified policies (see discussion below).  Investors will continue to
<PAGE> 44

(5) COINSURANCE (continued)

service these policies through December 31, 2000.  This agreement reduced
Investors' ratio of statutory policy liabilities to capital and surplus below
Delaware's target (see Note 8).

This agreement was amended effective December 31, 1996 to cede an additional
statutory reserve of $6,986,644.  The table below summarizes the impact of
these transactions on the Company's 1996 Financial Statements (in thousands).

                                                         March 1    December 31
                                                        --------    -----------
Addition to Investment Contract Benefits Recoverable    $ 82,974       $ 7,811
Funds Transferred                                         78,688         6,957
                                                        --------       -------

Addition to Unearned Ceding Commission                     4,286           854
Related Deferred Acquisition Cost                          3,446           658
                                                        --------       -------
Increase in deferred profit portion of the
   Unearned Ceding Commission                             $  840       $   196
                                                        ========       =======

Related Deferred Acquisition Cost:
  Prior to Capital Gains                                 $ 5,700       $   728
  Amortized due to Capital Gains                           2,254            70
                                                         -------       -------

            Remaining                                    $ 3,446       $   658
                                                         =======       =======


Related Capital Gains                                     $3,697         $ 140
Related amortization of Deferred Acquisition Cost          2,254            70
                                                          ------       -------

Impact on Income Before Income Taxes                      $1,443         $  70
                                                          ======       =======


With regard to the initial agreement, Investors will pay NEL coinsurance
allowances of 1% of the average statutory policy liability for the first 5
years.  Thereafter, NEL will pay Investors 2% of the average statutory policy
liability for the following 5 years.  Initially this arrangement was expected
to generate a small profit which would be recognized as its realization was
assured.  However, due to subsequent changes in the interest rate environment,
the actuarial projections as of December 31, 1997 indicate a projected decline
in the persistency of this business which will likely result in a net loss with
a present value of $196,742 ($248,729 in 1996).  This projected loss has been
recognized as a valuation allowance against the prepaid reinsurance allowance
of $1,359,142 ($626,603 in 1996) which is included in Investment Contract
Benefits Recoverable in the accompanying Consolidated Balance Sheet and as an
addition to Underwriting, Acquisition and Insurance Expenses in the
accompanying Consolidated Statements of Income.




<PAGE> 45

(5) COINSURANCE (continued)

Under the provisions of its reinsurance agreement, NEL began to assume sole
liability for the policies that were ceded to it in 1996.  As sole liability is
assumed by NEL, the Company removes its liability for Investment contracts, it
related assets (Investment contract benefits recoverable and Deferred
acquisition costs) and its Unearned ceding commissions from its balance sheet
and recognizes the related profit portion of the Unearned ceding commission as
Commission income and other income.  During 1997, NEL assumed sole liability
for investment contract liabilities of approximately $78,844,000.  This
assumption reduced both the Company's liability for Investment contracts and
Investment contracts benefits recoverable by $78,844,000.  Further, it reduced
the Company's Deferred acquisition costs and Unearned ceding commissions by
$2,651,767 and $3,247,060, respectively, and increased its Commission and other
income by $595,293.  There was no impact on either investment income or
interest credited since the supporting investments were transferred previously
and interest credited is presented net of reinsurance.


(6) NOTE PAYABLE

In connection with its acquisition of IIC Inc., which owns all the outstanding
shares of Investors, IIG issued an $8,000,000 secured subordinated note payable
due March 31, 1997, with interest at 8% payable quarterly ("IIG Note").
Payment of the IIG Note principal was due on March 31, 1997 and is currently in
default.

As a result of material misrepresentations by the seller, IIG has several
significant claims which, if sustained, should reduce the principal amount of
the IIG Note and result in a refund of previously paid interest.  However,
these claim issues have not been settled.  Until the spring of 1997, ownership
of the IIG Note had been in dispute.  The ownership issues have been resolved
and negotiations related to the claims are currently on-going.  The ultimate
settlement of IIG's claims against the IIG Note will not result in any
additional liability for IIG.  In recognition of its claims against the IIG
Note, IIG has withheld payment of interest since 1995, however, it continued to
recognized interest expense in accordance with the original provisions of the
IIG Note through March 31, 1997 (the IIG Note does not provide for interest
subsequent to maturity and none has been accrued).

The creditor has filed a lawsuit seeking a judgment on the IIG Note (The
Honorable Donna Lee Williams, Insurance Commissioner of the State of Delaware
as Receiver of National Heritage Life Insurance Company v. Investors Insurance
Group, Inc.; U.S.D.C., M.D. Fla 97-773-CV-ORI-19) and the Company is vigorously
defending this action and is asserting its counterclaims against the creditor.
The creditor has filed motions to dismiss many of the Company's defenses and
counterclaims for various jurisdictional reasons.  Management believes these
defenses and counterclaims are properly before the Court and the motions will
be denied.   However, if this matter goes forward, the ultimate outcome of this
case cannot be determined at this time.








<PAGE> 46

(7) STOCK OPTIONS AND WARRANTS

IIG has instituted three incentive stock option plans for the benefit of
employees or agents of the Company and its subsidiaries ("1982 Plan," "1992
Plan" and "Agents Plan").

Under the 1982 Plan, options for up to 67,409 shares of IIG's common stock are
authorized and outstanding.  These options may be exercised at a price of
$0.625 per share.  No options were granted under this plan in 1997 or 1996.

Under the 1992 Plan, options for up to 500,000 shares of IIG's common stock may
to be granted to employees of the Company and/or its subsidiaries.  During
1992, 340,000 options were granted under this plan of which 112,000 were vested
at issue.  The remaining 228,000 options vest over a four year period starting
January 1, 1993, in amounts totaling 72,000; 72,000; 72,000 and 12,000,
respectively.  During 1994 and 1993, respectively, 17,500 and 87,500,
additional options were granted, all of which vested at issue.  No options were
granted under this plan in 1997, 1996 or 1995, however, 45,000 options expired
due to employee resignations and have been be returned to the pool of options
available for grant under this plan.

Under the Agents Plan, purchase options for 57,300 and 96,400 shares of IIG's
common stock were granted in 1996 and 1995, respectively.  If unexercised,
these options expire two years after the date of grant.

Outstanding options to purchase common stock at December 31, 1997 were as
follows:
                                           Average
               Outstanding    Options       Option      Year of
                 Options    Exercisable     Price     Expiration
                 -------      -------      --------    -------
1982 Plan         67,409       67,409      $ 0.6250      2000
1992 Plan        400,000      400,000      $ 1.6082    2002-04
Agents Plan       57,000       57,000      $ 0.8432      1998

Under Accounting Principal Board Opinion No. 25, "Accounting for Stock Issued
to Employees," IIG makes no charges against income for the 1982 and 1992 plans
since the exercise price of all options is equal to or greater than the market
value of IIG's common stock at the date of each grant.  Upon exercise of any of
these stock options, the excess of the option price over the par value would be
credited to additional paid-in capital.

Since the Company's agents are not employees, the fair value of the 57,300
options granted in 1996 ($13,872) was treated as an expense under Statement of
Financial Accounting Standards No.  123, "Accounting for Stock Based
Compensation."  There were no options granted in 1997.  The Company estimates
the fair value of each stock option and warrant at the grant date by using the
Black-Scholes option-pricing model with the following weighted average
assumptions used for grants: no dividends, volatility of 32% to 82%, risk-free
interest rates of 8.5% (for grants from 1994 through 1996) and expected lives
of two years.

In 1989, IIG issued warrants to purchase 1,000,000 shares of its common stock.
These warrants expired on March 31, 1997.




<PAGE> 47

(8) STATUTORY CAPITAL AND SURPLUS AND DIVIDEND RESTRICTIONS

The statutory accounting practices prescribed or permitted by regulatory
authorities differ in certain respects from GAAP.  The principal differences
between GAAP and statutory accounting are as follows:

        -Investment Market Value Adjustment.  All fixed maturity securities are
         reported at amortized cost for statutory purposes, while GAAP requires
         the fixed maturities classified as "available for sale" to be reported
         at market value;

        -Prepaid Coinsurance Allowances.  On a GAAP basis, if the present value
         of coinsurance allowances is an asset, any amounts paid are treated as
         deposits until realization of any profit is assured.  Under statutory
         accounting, the present value of prospective payouts are recognized as
         a liability while the present value of any recoveries is ignored.

        -Deferred Acquisition Costs.  These costs are treated as a period
         expense on a statutory basis, but are amortized over the expected
         gross profits under GAAP;

        -Goodwill.  The excess of the purchase price of Investors over its
         identifiable assets and liabilities is deferred and amortized for
         GAAP.  These costs are not recognized under statutory accounting.

        -Non-Admitted Assets.  Certain designated assets are not recognized
         under statutory accounting;

        -Policy Liabilities.  The calculation of the liability for future
         policy benefits is based on different assumptions for statutory
         purposes than for GAAP and is reported net of reinsurance;

        -Unearned Ceding Commission.  The reinsurance ceding commission is
         treated as a period revenue on a statutory basis, but is deferred and
         amortized based on the expected gross profit of the related annuity
         contracts under GAAP.

        -Interest Maintenance and Asset Valuation Reserves.  These reserves are
         treated as liabilities for statutory purposes, but are restored to
         capital and surplus for GAAP;

        -Deferred Income Taxes.  Under certain conditions, the impact of
         certain variances from taxable income is recognized as an adjustment
         to income tax expense for GAAP, but not for statutory accounting
         purposes; and

        -Premium Revenue.  Under GAAP, premiums related to certain interest
         sensitive products are excluded from revenue.

In addition to these differences, from time-to-time, insurance companies may
record transactions in different periods for regulatory purposes than under
generally accepted accounting principles.  The NEL reinsurance agreement (see
Note 5) was recorded in 1995 for statutory accounting but in 1996 under
generally accepted accounting principles.




<PAGE> 48

(8) STATUTORY CAPITAL AND SURPLUS AND DIVIDEND RESTRICTIONS (continued)

As a result of these differences, the statutory net income (loss) was
($550,445) and $118,743 in 1997 and 1996, respectively.  The impact of these
differences on the reported net worth of the Company is summarized below (in
thousands):

                                                      1997            1996
                                                    --------        --------
Investors' statutory capital and surplus            $ 5,639         $ 5,382
Deferred acquisition costs                           37,447          46,760
Policy liability adjustment                          (3,236)         (4,396)
Unearned ceding commission                          (40,385)        (50,210)
Investment market value adjustment                      817            (242)
Cost in excess of net assets of businesses acquired   3,112           3,389
Interest maintenance and asset valuation reserves     1,261           1,621
Prepaid ceding allowances                             1,162             378
Non-admitted assets                                     137             178
Other, net                                               71             141
                                                    --------        --------

IIG's investment in Investors                         6,025           3,001
IIG's note payable and related accrued interest      (8,960)         (8,800)
Other assets and liabilities of IIG, net                484             (35)
                                                    --------        --------

IIG's GAAP basis shareholders' equity               $(2,451)        $(5,834)
                                                    ========        ========

At December 31, 1997, Investors' capital and surplus exceeded the $550,000
minimum required by the    insurance laws of its state of domicile, which is
Delaware.  Prior to 1996, Delaware had expressed concern over Investors' ratio
of statutory capital and surplus to policyholder liabilities.  The Company
stabilized this ratio by increasing the coinsurance percentage for new business
to 100%, and later reduced this ratio to the level that Delaware believes is
appropriate by consummating a coinsurance arrangement with NEL to reinsure a
significant block of business (see Note 5).

Investors tests the ability of its investment portfolio to fund its liability
to its policyholders under several possible future interest rate environments.
The results of these tests are used by the state regulatory authorities to
assess the adequacy of Investors' statutory liabilities.  Based on the results
of these tests, Investors increased its statutory liabilities by $215,000 as of
year end 1997 (There were no prior adjustments to its statutory liabilities
related to this issue.).

The NAIC has established risk-based capital standards to determine the capital
requirements of a life insurance company based on the type and mixture of risks
inherent in its operations.  These standards require the computation of a risk-
based capital amount which is then compared to a company's actual total
adjusted statutory capital.  The computation involves applying factors to
various statutory financial data to address four primary risks: asset default,
adverse insurance experience, interest rate risk and external events.  These
standards provide for regulatory attention when the percentage of total
adjusted statutory capital to authorized control level risk-based capital is
below certain levels.  At December 31, 1997, Investors percentage of total
adjusted statutory capital is in excess of ratios which would require
regulatory action.
<PAGE> 49

(8) STATUTORY CAPITAL AND SURPLUS AND DIVIDEND RESTRICTIONS (continued)

Interest rate changes significantly effect the market value of the Company's
investment portfolio.  Since the Company carries most of its investments at
market value, these changes, net of the related effects on the amortization of
deferred acquisition cost and unearned ceding commission, and the related
deferred tax accounts, directly effect total shareholders' equity.

Dividends and other distributions to IIG from Investors are restricted.
Investors is required to maintain minimum capital and surplus, determined in
accordance with regulatory practices.  Distributions are further limited by
insurance regulations and may require prior approval of the regulatory
insurance departments.


(9) REGULATORY ISSUES
Representing 42% of its new business in 1997, Arizona is a very important
market for Investors.  The Arizona Department has expressed its concern about
Investors financial position and has engaged the Company in an on-going
dialogue over the past few years.  To address this concern, in addition to the
reinsurance agreement (see Note 5), Investors agreed to reinsure either (a) all
its current and prospective business on a 100% quota share basis or (b) all its
current and prospective Arizona business on a full assumption basis upon the
earliest of the following events:

               1. Investors' statutory capital and surplus falls below $4.5
                  million, or

               2. Investors' Risk Based Capital falls to less than 225% of its
                  Authorized Control Level, or

               3. Investors' ratio of policyholder liabilities to statutory
                  capital and surplus exceeds 16:1, or

               4. Investors' statutory capital and surplus is less than $10
                  million on December 15, 1997.

While Investors continues to meet the first three provisions, it has not been
able to raise the capital required to meet fourth provision.  Although there
can be no assurance that the Arizona Department will continue to defer
enforcement of the fourth provision, the Arizona Department has not yet
attempted to force compliance.  To meet the conditions imposed by this
agreement, IIG is currently seeking a buyer for Investors.

In early 1996, Investors agreed to arrange a capital infusion that would raise
its statutory capital and surplus to $11 million in order to continue to write
new business in California.  Investors was not successful in attracting this
capital and, as a result, it suspended writing new business in California on
November 15, 1996.  During 1996, 30% of Investors' new business was written in
California.  In order to protect the value of its California agent network, IMG
acts as a third-party administrator for RVL.  Under this arrangement, IMG will
receive override commissions and servicing fees for the business it generates
through its agent network.





<PAGE> 50

(10) CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY

                           CONDENSED BALANCE SHEETS
                                PARENT COMPANY
                                (in thousands)

                                                           December 31,

        ASSETS                                          1997          1996
                                                       ------        ------
        Cash and cash equivalents                      $  -          $   72
        Equity securities, at market                      -              22
        Investments in affiliate and
           wholly-owned subsidiary                      6,644         3,000
        Income taxes recoverable                          123           -
        Other assets                                       23             3
                                                       ------        ------

                Total assets                           $6,790        $3,097
                                                       ======        ======



        LIABILITIES AND CAPITAL DEFICIT

        Liabilities:
                Note payable                           $8,000        $8,000
                Accrued interest on note payable          960           800
                Due to affiliates                         164           -
                Accrued expenses                          117           131
                                                       ------        ------

                        Total liabilities               9,241         8,931
                                                       ------        ------

        Commitments & Contingencies

        Capital Deficit:
                Common stock                            1,420         1,420
                Additional paid-in capital              3,656         3,656
                Net unrealized investment
                    gains (losses)                      1,821          (586)
                Accumulated deficit                    (9,340)      (10,316)
                Treasury stock                             (8)           (8)
                                                       ------        ------

                        Total Capital Deficit          (2,451)       (5,834)
                                                       ------        ------

               Total Liabilities and Capital Deficit   $6,790        $3,097
                                                       ======        ======







<PAGE> 51

(10) CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY (continued)

                        CONDENSED STATEMENTS OF INCOME
                                PARENT COMPANY
                            Year Ended December 31,
                                (in thousands)

                                                        1997          1996
                                                       ------        ------
        Revenue:
                Investment income                     $   -         $     2
                Realized investment gains                  12           -
                Management fees                           139           580
                                                       ------        ------

                        Total revenue                     151           582
                                                       ------        ------

        Expenses:
                General and administrative expenses       283           787
                Forgiveness of Debt from IMG              -             176
                Interest expense                          160           640
                                                       ------        ------

                        Total expenses                    443         1,603
                                                       ------        ------

        Loss before equity in net income
          of subsidiaries and income taxes               (292)       (1,021)
        Equity in net income of subsidiaries            1,245         1,365
                                                       ------        ------

        Income before income taxes                        953           344
        Income tax benefit                                 23           -
                                                       ------        ------

        Net Income                                     $  976        $  344
                                                       ======        ======




















<PAGE> 52

(10) CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY (continued)

                      CONDENSED STATEMENTS OF CASH FLOWS
                                PARENT COMPANY
                            Year Ended December 31,
                                (in thousands)

                                                              1997      1996
                                                            -------   -------
Cash flows used in operating activities:
      Net income                                            $   976   $   344
      Adjustments to reconcile net income to
        net cash used in operating activities:
          Equity in net income of subsidiaries               (1,245)   (1,365)
          Realized investment gains                             (11)      -
          Change in other assets and other
            liabilities, net                                    190       780
                                                             ------    ------

Net cash used in operating activities                           (95)     (241)

Cash flows from investing activities:
      Proceeds from the sale of investments                      22       -

Cash flows from financing activities:
      Common stock  issued                                      -          41
                                                             ------    ------

Net decrease in cash and cash equivalents                       (72)     (200)
Cash and cash equivalents, beginning of year                     72       272
                                                             ------    ------

Cash and cash equivalents, end of year                       $  -      $   72
                                                             ======    ======

Supplemental disclosures of cash flow information:
     Cash paid (received) during the year for:
           Income taxes, net                                 $  (64)   $  -
           Interest                                             -         -



















<PAGE> 53

(10) CONDENSED FINANCIAL INFORMATION OF PARENT COMPANY (continued)

As a result of its funds shortage, IIG was unable to supply the working capital
required by IMG.  To address this problem, as part of an agreement with
Delaware, IIG forgave all its intercompany debt from IMG on December 31, 1996
then contributed all of its IMG stock to Investors on January 1, 1997.
Thereafter, Investors advanced the required working capital to IMG.

Historically, IIG has operated as an NMA recruiting agents for Investors.  The
resulting override commission related to Investors' new business was IIG's
primary source of funds.  However, Investors' new business declined
substantially in 1997; during  the last few months of 1997, the override
commissions were less than the related NMA expenses. Therefore, IIG terminated
the NMA operation as of December 31, 1997.  As a result, IIG no longer has this
potential source of income.

Based on its intercompany tax sharing agreement, each subsidiary pays IIG the
income taxes due on a separate return basis and IIG retains, or makes up, the
difference between this sum and the consolidated result.  In 1997, IIG received
a tax benefit of approximately $64,000 in excess of the amounts to be returned
to its subsidiaries related to the 1996 tax return.  In 1998, IIG expects to
receive a tax benefit approximately $41,000 less than the amount to be returned
to its subsidiaries related to the 1997 tax return.  It is unclear how IIG will
raise the funds for this payment.

IIG's operating funds have been depleted.  Investors is adequately capitalized,
however, insurance laws and regulations restrict IIG's access to these funds
through dividends or other arrangements.  While IIG continues its search for
additional capital or a buyer for Investors, there can be no assurance these
efforts will be successful.


(11) PREFERRED STOCK

IIG is authorized to issue 20 million shares of no-par preferred stock.  IIG's
Board is authorized to establish the actual number of shares to be issued in a
series, fix the designations, powers, preferences and rights within a series of
shares and set the qualifications, limitations or restrictions thereof without
further shareholder approval.  The Board has taken no action relating to these
shares and none have been issued.


(12) RELATED PARTY TRANSACTIONS

Under a consulting agreement which was terminated in March 1996, Mr. Goebert
(one of the Company's directors) received $24,999 in 1996.  Mr. Palmarella (one
of the Company's directors prior to March 1997) is a principal shareholder in
the law firm of Palmarella & Sweeney, P. C., which received legal fees of
$39,529 and $177,945 in 1997 and 1996, respectively.


(13) COMMITMENTS & CONTINGENCIES

The Company is party to various legal proceedings arising in the normal conduct
of business.  Management believes that the final outcome of these proceedings
will not have a material adverse effect upon the Company's financial position.


<PAGE> 54

Item 8. Changes in and Disagreements with Accountants on Accounting and
        Financial Disclosure


        None



PART III

Item 9. Directors, Executive Officers, Promoters and Control Persons
        (Compliance with Section 16(a) of the Exchange Act)

Directors

The Board of Directors of the Company currently consists of three directors
whose terms expire at the next Annual Meeting.  The directors are Messrs.
Melvin C. Parker, Donald F.U. Goebert and Jesse H. Riebman.  Mr. Ronald W.
Hayes and Mr. Ernest D.  Palmarella resigned as directors on March 1, 1997 and
March 14, 1997, respectively.  The Board has not decided when, or if, it will
name a new director for the remainder of these terms.

The following table sets forth the age and address of each currently active
director, the principal occupation or employment of each director during the
previous five years, the year in which each  individual initially became a
director of the Company and other directorships in any company with a class of
securities registered pursuant to section 12 of the Exchange Act or subject to
the requirements of sections 15(d) of such Act or any company registered as and
investment company under the Investment Company Act of 1940.

Name                    Position with the Company and Principal Occupation or
                        Employment During Past Five Years

Melvin C. Parker (1)(3)
7200 W. Camino Real, suite 203
Boca Raton, FL 33433
Age 54
Director Since January 3, 1992

                       Chairman of the Board of Directors of the Company since
                       March 15, 1996; President, Chief Executive Officer and
                       a Director of the Company since January 1992; Treasure
                       of the Company since November 1995; President, Chief
                       Executive Officer and a Director of IIC, Inc. and
                       Investors Insurance Corporation since June 1990;
                       President, Treasurer and a Director of Investors
                       Marketing Group, Inc.  since June 1994;











<PAGE> 55

Donald F.U. Goebert (1)
342 Willowbrook Lane
West Chester, PA 19382
Age 61
Director Since June 11, 1987

                       Vice President and a Director of the Company from June
                       1987 to present; Secretary and Treasurer of the Company
                       from June 1987 to June 1992; until 1995, Director of
                       Jupiter Tequesta Bank; Director of Progress Financial
                       Corporation; Chairman of the Board of RELM Wireless
                       Corporation for more than the past five years.

Jesse H. Riebman (2)
1680 Huntingdon Pike, Unit #121
Huntingdon Valley, PA 19006
Age 69
Director Since September 25, 1996

                       Director of the Company since September 25, 1996; AEL
                       Industries, Inc. from October 1959 to February 1996:
                       Treasurer 1963, Vice President 1980; September 25, 1996


(1) Designates member of Executive Committee
(2) Designates member of Finance/Audit Committee
(3) Designates member of Compensation Committee



Directors Compensation

A director receives a fee in the amount of $500 for each meeting of the Board
of Directors and receives a fee in the amount of $300 for each meeting of any
standing committee of the Board of Directors.  The Company has no other
arrangements regarding compensation for services as a director and these fees
were suspended indefinitely in early 1997.

Executive Officers

The name and age of each executive officer of the Company, the office or
offices held by such person and the date on which such person initially held
such office or offices are set forth below.



Name                     Office                             Initial Date
                                                            of Office
------------------------ ---------------------------------- -------------
Melvin C. Parker, Age 54
                         Chairman of the Board of Directors March 1996
                         President                          January 1992
                         Treasurer                          November 1995

Donald F.U. Goebert, Age 61
                         Vice President                     July 1989


<PAGE> 56

Each officer is elected to serve until the next annual meeting of directors is
held and until a successor is elected and has qualified, or until the earlier
of his death, resignation or removal from office.

The business experience for the previous five (5) years of Melvin C. Parker
and Donald F.U. Goebert is set forth above under "Directors".

On February 28, 1997, Susan F. Powell resigned as Vice President and Secretary
of the Company but continues to serve as an officer of Investors Insurance
Corporation.  Ms. Powell had served as Secretary of the Company since November
1995, Vice President of the Company since June 11, 1993 and Assistant
Secretary of the Company from June 1992 to November 1995.  At various times
over the last five years, Ms. Powell has served as Executive Vice President,
Senior Vice President and  Secretary of Investors Insurance Corporation and

IIC, Inc., and Secretary of Investors Marketing Group, Inc., all subsidiaries
of the Company.

The employment agreements of both Melvin C. Parker and Susan F.  Powell may be
canceled with sixty days notice.  Mr. Goebert has no employment agreement.


Item 10. Executive Compensation

The following table shows the compensation paid or accrued by the Company or
its Subsidiaries for the fiscal years ended December 31, 1997, 1996 and 1995
to, or for the account of, the Chief Executive Officer and each of the four
highest paid executive officers whose cash compensation exceeded $100,000.

SUMMARY COMPENSATION TABLE

          Annual Compensation   Long Term (4)



Name and            ------Annual Compensation--------   Options/   All Other
Principle Position  Year  Salary($) Bonus($)  Other($) SARs(#)(4) ($)(2)(3)(5)
------------------  ----  --------- --------  --------  --------  ------------

Melvin C. Parker,
President and CEO   1997   237,914    3,932   6,000(1)      -           24,500
                    1996   230,038   21,447   6,000(1)      -           25,000
                    1995   230,038   67,056   6,000(1)      -           27,300

Susan F. Powell,
Executive Vice President
of Investors Insurance Corporation
                    1997   113,999    1,189     -           -           11,557
                    1996   114,400    6,434     -           -           12,083
                    1995   115,300   20,117     -           -           13.452

        (1) Represents car allowance.
        (2) Includes contributions to the deferred compensation plan described
            below.




<PAGE> 57

        (3) Includes contributions made by the Company or its subsidiaries, on
            behalf of the named officer, to the Investors Insurance Group,
            Inc. Simplified Employee Pension Plan.  Under the Plan, the
            Company or its subsidiaries may make annual contributions not in
            excess of the lesser of fifteen (15%) percent of an employee's
            salary or thirty thousand ($30,000) dollars.
        (4) There are no restricted stock awards or LTIP payments.
        (5) Includes directors fees.


Executive and Other Employee Benefit Plans

                       Incentive Stock Option Plan No. 1

The Company currently has in effect an Incentive Stock Option Plan adopted by
the Shareholders of the Company in 1982 which provides that (a) options for up
to 200,000 shares of common stock may be issued to employees of the Company
and/or its subsidiaries; (b) the exercise price shall not be less than fair
market value on the date of grant; (c) the term of an option may not exceed
ten (10) years and will end no later than three (3) months after termination
of employment, death or retirement or one (1) year after date of permanent
disability; and (d) such other terms as set forth in the Plan or as may be set
by the Company's Board of Directors. The Plan and each option is subject to
the provisions of section 422 of the Internal Revenue Code of 1986, as
amended. The Plan is applicable only to those options currently outstanding
(67,409 shares) and no additional options may be granted under the Plan.


                       Incentive Stock Option Plan No. 2

The Company currently has in effect an Incentive Stock Option Plan adopted by
the Shareholders of the Company on June 18, 1992 which provides that (a)
options for up to 500,000 shares of common stock, par value $.50 per share,
may be issued to employees of the Company and/or its subsidiaries; (b) the
exercise price shall not be less than the fair market value of the shares on
the date on which the option is granted; (c) the term of the option may not
exceed ten (10) years and will end no later than three (3) months after an
employee's death, retirement or termination from service for any reason other
than disability and shall expire no later than one (1) year after an
employee's termination from service due to disability; and (d) such other
terms set forth in the Plan or as may be approved by the Board of Directors of
the Company. The Plan and each option is subject to Section 422 of the
Internal Revenue Code of 1986, as amended.

The Plan is applicable only to those options currently outstanding (400,000
shares).  There have been no stock options issued to executive officers under
Stock Option Plan No. 2, since 1994.


                  Option Exercises and Fiscal Year End Values

The following table provides information as to the unexercised options to
purchase the Company's Common Stock granted in fiscal year 1996 and prior
fiscal years to the named officers and the value of said options held by them
as of the end of the year.



<PAGE> 58

                     OPTION VALUES AS OF DECEMBER 31, 1997

                Number of Unexercised Options    Value of Unexercised at
                   at December 31, 1997 (#)       In-the-Money Options
                                                at December 31, 1997($) *
                  -------------------------     -------------------------
Name              Exercisable Unexercisable     Exercisable Unexercisable
----------------  ----------- -------------     ----------- -------------
Melvin C. Parker      325,000       -                -           -
Susan F. Powell        40,000       -                -           -
Donald F.U. Goebert    67,409       -                -           -

   * Value determined from market price at the fiscal year end ($0.03) less
     exercise price. The actual value, if any, an executive may realize will
     depend on the stock price on date of exercise of option, so there is no
     assurance the value stated will be equal to the value realized by the
     executive.


                       Simplified Employee Pension Plan

On January 1, 1992, the Company's subsidiary, Investors Insurance Corporation,
adopted a Simplified Employee Pension Plan. This same plan was subsequently
adopted by the Company on June 11, 1993.  Under the Plan, the Company may
contribute each year for each employee the lesser of fifteen percent (15%) of
each employee's salary (not to exceed $150,000) or thirty thousand dollars
($30,000). A ten percent (10%) of salary contribution was made for the 1997
and 1996 fiscal years.  Contributions under the Plan are not mandatory.


                          Deferred Compensation Plan

The Company executed a Deferred Compensation Plan with Melvin C. Parker in
1994.  The terms of this Plan provide for the annual payment of $8,500 to a
Trust Account for the benefit of Mr. Parker.  Upon Mr. Parker's retirement,
disability or death, such amount which is existing in said Trust Account shall
be paid to him or his beneficiary.  The Trust Account is maintained pursuant
to a Trust Agreement, the sole trustee is Ronald W.  Hayes.  The Trust Account
is subject to the claims of the general creditors of the Company in the event
the Company becomes insolvent, but other than for insolvency, the monies
deposited into the Trust Account cannot revert back to the Company.  During
1997, the assets of the Trust were taken in partial settlement of the a
judgment (see Note 3 to the financial statements)  While the deferred
compensation Plan remains in effect, the are currently no assets in the Trust.














<PAGE> 59

Item 11. Security Ownership of Certain Beneficial Owners and Management

The following table sets forth information concerning the beneficial security
ownership of the Company's common stock by the Directors and Executive
Officers, individually and as a group. The table also sets forth the only
persons who, to the company's knowledge, are the beneficial owners of more
than five (5%) percent of the outstanding voting securities of the company.


                                            Shares Owned
Name and Address                         Beneficially as of       Percent of
 of Beneficial Owner                      February 23, 1998        Class (1)
-------------------------                ------------------       ----------
Melvin C. Parker                             399,075 (2)             12.6%
7200 W. Camino Real
Boca Raton, Florida 33433

Donald F.U. Goebert                          949,621 (3)             32.7%
342 Willowbrook Lane
West Chester, PA 19382

Susan F. Powell                               41,000 (4)              1.4%
3030 Hartley Road
Jacksonville, FL 32257

Jesse H. Riebman                             125,000 (5)              4.4%
1680 Huntingdon Pike, Unit #121
Huntingdon Valley, PA 19006

All Directors and Officers
        of the Company                     1,514,696 (2-5)           46.3%


(1) These percentages are computed by dividing the number of shares of common
    stock shown for each person by the sum of (i) the number of shares of
    common stock outstanding on February 23, 1998, and (ii) the number of
    shares which that particular person beneficially owns pursuant to stock
    options and stock warrants.

(2) The shares listed as being beneficially owned by Mr. Parker include
    325,000 options granted pursuant to Incentive Stock Option Plan 2.

(3) Mr. Goebert is the direct owner of 195,554 shares and has options to
    purchase 67,409 shares of the Company's Stock pursuant to Incentive Stock
    Option Plan 1.  In addition, Mr. Goebert has beneficial ownership through
    Chester County Fund, Inc. of 686,658 shares.

(4) The shares listed as beneficially owned by Ms. Powell include options
    granted to her to purchase 40,000 shares pursuant to Incentive Stock
    Option Plan 2.

(5) The shares listed as beneficially owned by Mr. Riebman include 8,000
    shares owned by his wife.





<PAGE> 60

The Securities and Exchange Commission requires filing of public reports by
directors, officers and beneficial owners of more than ten (10%) percent of
any class of Securities of a company registered pursuant to Section 12 of the
Securities Exchange Act.  The rules require proxy statement disclosure of
those directors, officers and more than ten (10%) percent beneficial owners
that fail to file required reports or that fail to timely file such reports.
The Company requests and has received confirmations of compliance from each of
its directors and officers.  The Company is not aware of any failure to file
the required documents.


Item 12. Certain Relationships and Related Transactions

Transactions Involving Directors and Officers

Mr. Palmarella, a director of the Company until March 1997, is a principal
shareholder in the law firms of Palmarella & Sweeney, P.C. and/or Mirarchi &
Palmarella, P.C.   During 1997, those firms received $39,529 for legal
services and related costs and expenses.  The aforesaid transactions were in
the ordinary course of business and at normal or lower than commercial prices
and terms.


Item 13.  Exhibits and Reports on Form 8-K

(a)     1.      Financial Statements
                (i)     Report of Independent Certified Public Accountants
                (ii)    Consolidated Balance Sheets
                (iii)   Consolidated Statements of Operations
                (iv)    Consolidated Statements of Shareholders' Equity
                (v)     Consolidated Statements of Cash Flows
                (vi)    Notes to Consolidated Financial Statements

                See Index to Financial Statements on page 22.

        2.      Exhibits
                See the Exhibit Index of this Annual Report on Form 10-KSB at
                page 62.

(b)     Reports on Form 8-K

The Company has filed no Forms 8-K during the last quarter of 1997 or the
first quarter of 1998.















<PAGE> 61

                                  SIGNATURES

Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.

                                              INVESTORS INSURANCE GROUP, INC.


March 30, 1998                                By:  /s/ Melvin C. Parker
                                              --------------------------------
                                              Melvin C. Parker, President and
                                              Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.  The duties and
responsibilities of the chief financial officer and controller have been
distributed among the officers and directors.


By:     /s/ Melvin C. Parker                              March 30, 1998
        ----------------------------
        Melvin C. Parker, President,
         Chief Executive Officer and Director

By:     /s/ Donald F. U. Goebert                          March 30, 1998
        ----------------------------
        Donald F. U. Goebert, Director


By:     /s/ Jesse H. Riebman                              March 30, 1998
        ----------------------------
        Jesse H. Riebman , Director
























<PAGE> 62

                        Investors Insurance Group, Inc.
                                  Exhibit Index
 Regulation S-K
 Exhibit Table
 Reference                 Description of Exhibit                    Document
 -------- ------------------------------------------------    -----------------
   3      Articles of Incorporation of Registrant             see 1995 Form 10K

   3      Amendment to the Articles of Incorporation of       see 1995 Form 10K
          Registrant to authorize preferred stock

   3      Bylaws of Registrant                                see 1995 Form 10K

   4      Stock Purchase Agreement, dated March 31, 1989,     see 1995 Form 10K
          among Gemco National, Inc., Corporate Life
          Insurance Company and IIC, Inc., relating to the
          capital stock of IIC, Inc., Investors Insurance
          Corporation and Westchester Reinsurance, Ltd.

  10      Incentive Stock Option Plan, effective              see 1995 Form 10K
          June 8, 1982.

  10      Incentive Stock Option Plan, effective              see 1995 Form 10K
          June 18, 1992.

  10      1995 Agent Stock Option Plan, effective             see 1995 Form 10K
          January 1, 1995.

  10      Reinsurance Agreement, INVE0001, between            see 1995 Form 10K
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life Insurance
          Company, effective October 1, 1991.

  10      Addendum No. 1, effective January 1, 1993, to       see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 2, effective December 1, 1993, to      see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 3, effective March 1, 1994, to         see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 4, effective April 1, 1994, to         see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.


<PAGE> 63

  10      Addendum No. 5, effective August 1, 1994, to        see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 6, effective October 1, 1994, to       see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 7, effective March 27, 1995 to         see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 8, effective May 1, 1995 to            see 1995 Form 10K
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 9, effective January 19, 1996 to     see 1996 Form 10KSB
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 10, effective September 1, 1996 to   see 1996 Form 10KSB
          Reinsurance Agreement INVE0001 between
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 11, effective January 1, 1997 to     see Form 10QSB
          Reinsurance Agreement INVE0001 between           dated March 31, 1997
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Addendum No. 12, effective September 30, 1997    see Form 10QSB
          to Reinsurance Agreement INVE0001 between    dated September 30, 1997
          Registrant's subsidiary, Investors Insurance
          Corporation and Republic-Vanguard Life
          Insurance Company.

  10      Reinsurance Agreement between the Registrant's      see 1995 Form 10K
          subsidiary, Investors Insurance Corporation and
          New Era Life Insurance Company, effective
          December 31, 1995.

  10      Amendment No. 1 to the Reinsurance Agreement      see 1996 Form 10KSB
          between the Registrant's subsidiary, Investors
          Insurance Corporation and New Era Life Insurance
          Company, effective December 31, 1996.

<PAGE> 64

  10      Third Party Administration Agreement dated       see From 10QSB dated
          October 18, 1996 between the Registrant's          September 30, 1996
          subsidiary, Investors Marketing Group, Inc.
          and Republic-Vanguard Life Insurance Company.

  10      Management and Service Agreement between            see 1995 Form 10K
          Registrant and Registrant's subsidiary, Investors
          Insurance Corporation, effective January 1, 1993.
          (Note: see termination agreement)

  10      Management Agreement between Registrant and         see 1995 Form 10K
          Registrant's subsidiary, Investors Marketing
          Group, Inc., effective June 10, 1994.
          (Note: see termination agreement)

  10      Termination of Management and Service Agreement           10.01
          between Registrant and Registrant's subsidiary,
          Investors Insurance Corporation, effective
          December 31, 1997

  10      Termination of Management Agreement between               10.02
          Registrant and Registrant's subsidiary,
          Investors Marketing Group, effective
          December 31, 1997

  10      Management Agreement between the Registrant's             10.03
          subsidiaries Investors Insurance Corporation and
          Investors Marketing Group, Inc. effective
          January 1, 1998

  10      Employment agreement between Registrant's           see 1995 Form 10K
          subsidiary, Investors Insurance Corporation, and
          Melvin C. Parker, dated July 1, 1993.

  10      Deferred compensation agreement between Registrant  see 1995 Form 10K
          and Melvin C. Parker, dated December 12, 1994.

  10      Employment agreement between Registrant and         see 1995 Form 10K
          Melvin C. Parker, dated April 19, 1996.

  10      Employment agreement between Registrant's           see 1995 Form 10K
          subsidiary, Investors Insurance Corporation, and
          Susan F. Powell, dated July 1, 1993.

  10      Indemnity agreement between Registrant and          see 1995 Form 10K
          Melvin C. Parker, re: service as an officer of
          Investors Marketing Group, Inc., dated
          June 10, 1994.

  10      Indemnity agreement between Registrant and          see 1995 Form 10K
          Susan F. Powell, re: service as an officer of
          Investors Marketing Group, Inc., dated
          June 10, 1994.

  10      Agreement with California to raise additional       see 1995 Form 10K
          capital for Investors Insurance Corporation
          dated February 20, 1996.

<PAGE> 65

  10      Agreement dated July 30, 1997 with Arizona          see Form 10QSB
          regarding reinsurance and certain operating       dated June 30, 1997
          issues.

  11      Statement of Computation of Earnings per Share. See Consolidated
                                                          Statement of
                                                          Operations and Note 1
                                                          to the Consolidated
                                                          Financial Statements.

  21      Subsidiaries of Registrant.                               21.01

  27      Financial Data Schedule                                   27.01













































<PAGE> 10.01.01
                             TERMINATION AGREEMENT

THIS TERMINATION AGREEMENT (hereinafter referred to as "Agreement") is
hereby made effective this 31st day of December, 1997 by and between INVESTORS
INSURANCE CORPORATION, a Corporation organized under the laws of Delaware
(hereinafter referred to as "IIC"), and INVESTORS INSURANCE GROUP, INC. a
Corporation organized under the laws of Florida (hereinafter referred to as
"IIG")

WHEREAS, IIC and IIG entered into a Management and Service Agreement (the
"Management Agreement") dated January 1, 1993; and

WHEREAS, The parties have determined that it is to their mutual benefit to
terminate the Management and Service Agreement under the terms and conditions
set forth below;

NOW THEREFORE, in consideration of mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby confessed and acknowledged, the parties hereto
mutually understand and agree as follows, to wit:

1. Termination.

    A. The Management Agreement is hereby terminated effective December 31st,
       1997.

    B. The sixty (60) day notice provision of Article 4.A. of the Management
       Agreement is hereby waived.

2. Compensation.

    A. The parties acknowledge that any and all debts and things owed by one
       party to the other pursuant to Article 4.D. or Article 5. of the
       Management Agreement or otherwise within the Management Agreement are
       waived in consideration of the parties' agreements and representations
       as set forth in Paragraph 2.B., 2.C. &  2.D. below.

    B. IIG waives any and all rights to unpaid commissions due from IIC
       through December 31, 1997 and subsequent vested commissions due under
       the Management Agreement under Article 5.B., 5.C. or otherwise.

    C. IIG permanently grants IIC the right to utilize IIG's agent list.

    D. IIC waives any and all rights to unpaid expense reimbursements due from
       IIG through December 31, 1997.

3. Employees.  Effective January 1, 1998, all current employees of IIG shall
   become employees of IIC.  The former IIG employees shall enjoy all the
   rights, duties and privileges of IIG employees.

4. Entire Agreement.  This Agreement represents the entire agreement of the
   Parties hereto with respect to the subject matter hereof superseding all
   prior commitments of any kind.  This Agreement may not be amended or
   supplemented, nor may any rights hereunder be waived except in writing
   signed by all of the Parties hereto.

5. Applicable Law.  This Agreement will be interpreted under the laws of the
   State of Florida in Duval County.

<PAGE> 10.01.02

6. Invalidity.  If any term or provision of this Agreement or any application
   thereof shall be invalid or unenforceable, the remainder of this Agreement
   and any other application of such provision shall not be affected thereby.

7. Waiver.  The failure of IIG or IIC to enforce any provision of this
   Agreement shall not constitute a waiver thereof.


IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of
the date first written above.

ATTEST:                                 INVESTORS INSURANCE CORPORATION

/s/ Susan F. Powell                     /s/ Melvin C. Parker
______________________________          ______________________________
Witness                                 Melvin C. Parker, President



ATTEST:                                 INVESTORS INSURANCE GROUP, INC.

/s/ Susan F. Powell                     /s/ Melvin C. Parker
______________________________          ______________________________
Witness                                 Melvin C. Parker, President


































<PAGE> 10.02.01

                             TERMINATION AGREEMENT

THIS TERMINATION AGREEMENT (hereinafter referred to as "Agreement") is hereby
made effective this 31st day of December, 1997 by and between INVESTORS
MARKETING GROUP, INC., a Florida Corporation (hereinafter referred to as
"IMG") and INVESTORS INSURANCE GROUP, INC., a Florida Corporation (hereinafter
referred to as "IIG")

WHEREAS, IMG and IIG entered into a Management and Service Agreement (the
"Management Agreement") dated June 10, 1994; and

WHEREAS, The parties have determined that it is to their mutual benefit to
terminate the Management and Service Agreement under the terms and conditions
set forth below;

NOW THEREFORE, in consideration of mutual covenants and agreements set forth
herein and for other good and valuable consideration, the receipt and
sufficiency of which is hereby confessed and acknowledged, the parties hereto
mutually understand and agree as follows, to wit:

1. Termination.

    A. The Management Agreement is hereby terminated effective December 31st,
       1997.

    B. The sixty (60) day notice provision of Article 3.A. of the Management
       Agreement is hereby waived.

2. Compensation.  Each party waives all rights to any and all debts,
   receivables, payables and things owed by the other party pursuant to the
   Management Agreement or otherwise in consideration of the other party's
   mutual waiver thereof.

3. Entire Agreement.  This Agreement represents the entire agreement of the
   Parties hereto  with  respect to the subject  matter  hereof superseding
   all prior commitments of any kind. This Agreement may not be amended or
   supplemented, nor may any rights hereunder be waived except in writing
   signed by all of the Parties hereto.

4. Applicable Law.  This Agreement will be interpreted under the laws of the
   State of Florida in Duval County.

5. Invalidity.  If any term or provision of this Agreement or any application
   thereof shall be invalid or unenforceable, the remainder of this Agreement
   and any other application of such provision shall not be affected thereby.

6. Waiver.  The failure of IIG or IMG to enforce any provision of this
   Agreement shall not constitute a waiver thereof .










<PAGE> 10.02.02

IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of
the date first written above.


ATTEST:                                 INVESTORS INSURANCE GROUP, INC.

/s/ Susan F. Powell                     /s/ Melvin C. Parker
______________________________          ______________________________
Witness                                 Melvin C. Parker, President


ATTEST:                                 INVESTORS MARKETING GROUP, INC.

/s/ Susan F. Powell                     /s/ Melvin C. Parker
______________________________          ______________________________
Witness                                 Melvin C. Parker, President










































<PAGE> 10.03.01


                             MANAGEMENT AGREEMENT

THIS AGREEMENT is hereby made effective the 1st day of January, 1998, by and
between INVESTORS INSURANCE CORPORATION, a Delaware Corporation (hereinafter
referred to as "IIC"), and INVESTORS MARKETING GROUP, INC., a Florida
Corporation (hereinafter referred to as "IMG").

WHEREAS,  IIC has the experience and personnel to render management and other
related services to IMG; and

WHEREAS, IMG, is the National Marketing Agency and Third Party Administrator
for various insurance companies; and

WHEREAS, the parties hereto are desirous of reaching an agreement with regard
to management and other related services;

NOW THEREFORE, in consideration of the mutual covenants and promises herein
contained and intending to be legally bound hereby, the parties hereto agree
as follows:

1. MANAGEMENT AND OTHER SERVICES.

    A. IIC shall provide the following services to IMG to assist IMG in the
       furtherance of its duties as a National Marketing Agency and Third
       Party Administrator.  IMG agrees that it will purchase the below
       services from IIC. IIC agrees that during the term of this Agreement
       that it will provide through its personnel facilities and network of
       independent service providers the services required by IMG. The
       services contemplated to be sold and purchased hereunder are as
       follows:

         (1). Senior Management Services

              (a). Coordinate policy and personnel decisions

              (b). Manage the business hierarchy and operations

              (c). Obtain operating capital

         (2). Accounting services

              (a). General Accounting

                   (i). Maintain general ledger

                   (ii). Maintain accounts receivable/payable

                   (iii). Handle all financial reporting

              (b). Investment Accounting

                   (i). Maintain investment reporting system

                   (ii). Handle all investment reporting

              (c). Customer activity summaries and accounting records

<PAGE> 10.03.02

              (d). Actuarial valuations and analysis

         (3). General Administrative services

              (a). Personnel and payroll services

              (b). Office equipment and supplies | inventory and supply

              (c). Miscellaneous office services

         (4). Insurance Administrative Services

              (a). New Business Services

                   (i).  Underwriting

                   (ii). Prepare and issue policies

              (b).  Policyholder Service

                   (i).   Maintain policy records

                   (ii).  Handle policyholder inquiries and complaints

                   (iii).  Process policy claims, changes, etc.

              (c). Marketing and Agency Services

                   (i). Recruit and develop new agents

                   (ii). Process new agent licensee

                   (iii). Maintain agent records

                   (iv). Monitor market conduct issues

              (d). Regulatory Compliance Services

         (5). Obtain and Coordinate External Professional Services

               (a). Legal services

               (b). Accounting and auditing services

               (c). Actuarial services

               (d). Investment advisor services

               (e). Reinsurance company services

    B. IIC agrees that all information obtained by it in the course of
       rendering the aforementioned services shall at all times remain
       confidential. IMG's written permission shall be required to release any
       information to non-affiliated persons or entities.  Notwithstanding the
       above, IIC shall be free to release information to any government
       agency, bureau or other office upon proper request and nothing herein
       shall prevent IIC from releasing any information in furtherance of its
       duties to provide the services hereunder.
<PAGE> 10.03.03

    C. Nothing herein shall prevent or prohibit IIC from providing management
       and other services to any other person or entity provided, however,
       such duties do not interfere with IIC's obligations under this
       Agreement.

2.  RELATIONSHIP.

    A. IMG and IIC shall have full and free access at the home office of the
       other reasonable notice during normal business hours to inspect all
       books, records, files and personnel directly related to the services
       provided hereunder.

    B. IIC hereby agrees to indemnify and hold harmless IMG for any losses,
       damages, fines, penalties or any other costs incurred by IMG as a
       result of any acts or omissions to act of IIC's officers, employees and
       independent service providers.

3. TERMINATION.

    A. Term: This Agreement shall be effective as of January 1, 1998. This
       Agreement shall remain in effect until December 31, 1998 and shall
       automatically be renewed for successive one (1) year periods unless
       either party gives the other party sixty (60) days written notice of
       termination prior to the end of each term or period.

    B. Other: This Agreement may be terminated prior to the time specified in
       Subsection A. above, under any of the following circumstances:

         (1). By any Party to this Agreement at any time with ten (10)
              business days written notice if there is a material breach of
              this Agreement, which written notice shall specify the reasons
              for the termination.  This Agreement shall not terminate but
              continue in effect if the material breach is cured prior to the
              expiration of the ten (10) day notice period.  If the material
              breach is not cured within the ten (10) day notice period, the
              non-breaching party can immediately terminate this Agreement by
              providing the breaching party notice of the immediate
              termination within seven (7) days of the expiration of the ten
              (10) day notice period.

         (2). By any Party to this Agreement without notice or delay in the
              event of bankruptcy insolvency or receivership of any Party to
              this Agreement or in the event of an assignment for the benefit
              of creditors by any Party to this Agreement.

         (3). Change in control of IIC.

         (4). The mutual agreement of the Parties.

    C. No termination shall affect the rights of IIC to any compensation due
       to it pursuant to this Agreement.







<PAGE> 10.03.04

    D. In the event of the expiration or termination of Agreement, IIC agrees
       to deliver all IMG property to IMG and to repay any existing
       indebtedness to IMG.  Conversely, IMG shall pay any indebtedness it may
       then owe to IIC including, without limitation, all payments due under
       Section 4.  This contract shall automatically terminate in the event
       IIC ceases to do business as a corporation, in which case all
       compensation due and thereafter becoming due to IIC shall be payable to
       its successor or duly appointed representative.

4. COMPENSATION.  For the management and other services provided hereunder IMG
   shall pay to IIC a monthly fee, to be determined annually based on budget
   projections of covered expenses, payable on the 15th day of each month.  If
   actual volume levels are substantially different from the projections, the
   monthly fees may be revised more frequently.  In addition, IMG agrees to
   remit to IIC charges for extraordinary services rendered hereunder.

5. EXPENSE REIMBURSEMENT.  While IMG plans to pay certain expenses directly
   (legal, accounting, actuarial, advertising, printing, taxes, etc.), IMG
   shall reimburse IIC for IIC's out-of-pocket costs and expenses it incurs to
   perform the services hereunder.

6. NOTICE.  All notices, requests, demands and other communications called for
   in this Agreement shall be in writing and shall be deemed to have been duly
   given when personally delivered or five (5) days after being mailed by
   United States certified or registered mail, postage prepaid, addressed to
   the Parties, their successors in interest or their assigns, at the
   following addresses or at such other addresses as the Parties may designate
   by written notice in the manner aforesaid:

    If to IMG:                             If to IIC :

       Susan F. Powell                        Susan F. Powell
       Senior Vice President                  Senior Vice President
       INVESTORS MARKETING GROUP, INC.        INVESTORS INSURANCE CORPORATION
       3030 Hartley Road                      3030 Hartley Road
       Suite 390                              Suite 390
       Jacksonville, Florida 32257            Jacksonville, Florida 32257

7. LEGAL PROCEEDINGS.  Each party shall promptly notify the other Party of any
   complaint, legal proceeding, process, suit, hearings, threats of suit,
   subpoena or any other form of legal process from any state insurance
   department or otherwise  in connection  with  any transaction covered by
   this Agreement.  Each Party to this Agreement agrees to indemnify and hold
   the other party harmless for any and all monetary damages, costs and
   expense, including reasonable attorney's fees, incurred by the other party
   for any legal action pending or threatened wherein the liability is solely
   the result of an act or failure to act of the other party.  Neither party
   shall have the authority to institute legal proceedings on behalf of the
   party without approval in advance by the other party in writing.

8. DELEGATION OF DUTIES:  IIC may delegate any function to be performed by it
   hereunder to any wholly owned subsidiary or affiliate, or to a third party
   service provider,provided it obtains the written consent of IMG to such
   delegation.  Any such delegation shall not, however, relieve IIC of it's
   obligations under this Agreement.



<PAGE> 10.03.05

9. ENTIRE AGREEMENT.  This Agreement and any documents required to be
   delivered pursuant to the terms hereof present the entire agreement of the
   Parties hereto with respect to the  subject matter hereof superseding all
   prior commitments of any kind.  This Agreement may not be amended or
   supplemented, nor may any rights hereunder be waived except in writing
   signed by all or the Parties hereto.  The failure of IIC or IMG to enforce
   any provision of this Agreement or any regulation they may promulgate shall
   not constitute a waiver thereof.

10. APPLICABLE LAW.  This Agreement will be interpreted under the laws of the
    state of Florida in Duval County. IMG and IIC shall abide by all the laws
    of any federal, state and city government, department or bureau having
    jurisdiction or supervision over the service to be provided hereunder, the
    Product to be sold hereunder and the conduct of such business.

11. INVALIDITY.  If any term or provision of this Agreement or any application
    thereof shall be invalid or unenforceable, the remainder of this Agreement
    and any other application or such provision shall not be affected thereby.

12. WAIVER.  The waiver by IMG hereto of any breach or default shall not
    constitute a waiver of any different or subsequent breach or default.


IN WITNESS WHEREOF, the Parties hereto have duly executed this Agreement as of
the date first written above.


ATTEST:                                 INVESTORS INSURANCE CORPORATION

/s/ Susan F. Powell                     /s/ Melvin C. Parker
______________________________          ______________________________
Witness                                 Melvin C. Parker, President



ATTEST:                                 INVESTORS MARKETING GROUP, INC.

/s/ Susan F. Powell                     /s/ Melvin C. Parker
______________________________          ______________________________
Witness                                 Melvin C. Parker, President


















<PAGE> 21.01

                         Subsidiaries of the Registrant

As of December 31, 1997, Investors Insurance Group, Inc. owned all the
outstanding shares of IIC, Inc. which in turn owned all the outstanding share of
Investors Insurance Corporation.  Investors Insurance Corporation owned all the
outstanding share of Investors Marketing Group, Inc.