COINSURANCE AGREEMENT


     This Coinsurance Agreement ("Agreement") is made and entered into by
Universal Life Insurance Company ("Universal" or the "Company") and American
Capitol Insurance Company ("Reinsurer").

                                   Recitals

A.   Universal is a Tennessee domiciled stock life insurance company.

B.   As of the Effective Date of this Agreement, Universal has in effect
     "Policies" as hereinafter defined.

C.   Reinsurer is a Texas domiciled stock life insurance company.

D.   In accordance with the terms and conditions as set forth in this
     Agreement, Universal desires that Reinsurer reinsure the future
     liabilities arising under the Policies and Reinsurer desires to
     reinsure such future liabilities arising under the Policies as more
     specifically set forth in this Agreement, and that Reinsurer perform
     policy and data processing administrative services in respect to the
     Policies as herein provided.

                             Terms and Conditions

     In consideration of the mutual benefits to be received by the parties
hereto and the mutual covenants, agreements, representations and warranties
contained herein, the parties agree that the recitals set forth above and
elsewhere in this Agreement are correct in all material respects, and
further agree to the following terms and conditions:

                                   Article I
                                  Definitions

     Section 1.1.  The following terms used in this Agreement with initial
capitalization shall have the meanings set forth below unless the rules of
grammar or form would require otherwise:

(a)  The term "Actuarial Appraisal" means the revised version of the
     actuarial appraisal prepared by FMSI Actuarial Concepts & Systems
     ("FMSI") of the Polices in force in Universal as of December 31, 1996,
     prepared as of September 30, 1997, and delivered to Reinsurer on
     December 16, 1997, such revision having been performed by FMSI and such
     revised version delivered to Reinsurer via facsimile on February 5,
     1998.

(b)  The term "Adjusting Transfer Amount" has the meaning set forth in
     Section 4.3.

(c)  The term "Administrative Services Agreement" has the meaning set forth
     in Section 2.2.

(d)  The term "Assumption Reinsurance Event" means the mailing of assumption
     certificates following the election by Universal or Reinsurer to
     convert the Policies to Assumption Reinsurance, or following the
     dissolution of Universal, which would cause an automatic conversion of
     the Policies to Assumption Reinsurance.

(e)  The term "Closing" has the meaning set forth in Section 13.1.

(f)  The term "Ceding Fee" has the meaning set forth in Section 4.2.

(g)  The term "Closing Date" has the meaning set forth in Section 13.2.

(h)  The term "Closing Net Transfer Amount" has the meaning set forth in
     Section 4.1.

(i)  The term "Commission Allowance" has the meaning set forth in Section
     3.4.

(j)  The terms "Defense" or "Defenses" means any (i) known or unknown,
     actual or contingent, rights, defenses, offsets, counterclaims, and
     cross-actions, and (ii) any and all rights, limitations, terms,
     conditions, and provisions provided for in this Agreement relative to
     the Policies.

(k)  The term "Documents and Records" means all of the files, books and
     records, in paper and/or electronic data format, required for, and
     customarily used by, Universal in maintaining, recording and reporting
     the information and transactions pertaining to the Policies such that
     the Policies can be reasonably and accurately administered and
     serviced; and also includes all of Universal's data processing
     equipment, hardware and related implements, as well as all related
     operating and processing software, within Universal's possession or
     control, used for the purpose of administering and servicing the
     Policies, as more fully set forth (as to the data processing hardware
     and software) in Section 12.4.

(l)  The term "Effective Date" means January 1, 1998.

(m)  The terms "Net Transfer Amount" means the amount of assets to be
     transferred to Reinsurer from Universal as set forth in Section 4.1.

(n)  The terms "Policies," "Policy" and "Home Service Policies" shall have
     the following meanings.  "Policies" shall mean all of Universal's
     individual life insurance policies in force with issue dates on or
     before December 31, 1997, which shall be included in the list of such
     policies provided to Reinsurer pursuant to Section 13.2 (a) below, and
     which individually shall be referred to as "Policy."  Such policies
     include life insurance policies of the type often referred to as
     "ordinary" policies as well as the type often referred to as
     "industrial" policies.  In addition to the above, the terms "Policies"
     or "Policy" include policies that are not currently paying premiums but
     which have not lapsed because they have non-forfeiture values (known as
     "paid-up" polices).  The Company also has other types of insurance in
     force not included in this definition of "Policies" or "Policy" (for
     instance, life insurance policies issued on a "group" basis and
     accident and health type policies) and are therefore not a part of the
     subject coinsurance.  Premium notices are mailed to all policyholders
     (to provide to them the opportunity to pay their premiums by mail),
     such that the ones who do not respond by mail are called on by Company
     agents for the purpose of premium collection.  Such policies are
     referred to herein as "Home Service Policies.")  The Company has been
     engaged in converting the Home Service Polices to the mode of paying
     premiums by mail instead of having the premiums collected by Company
     agents, and intends to finalize this conversion in 1998.

(o)  The term "Policy Assets" has the meaning set forth in Section 10.5.

(p)  The term "Policy Obligations" means benefits under and by virtue of the
     terms of the Policies that arise and become payable on account of a
     death or other event covered by the terms of the Policies occurring on
     or after the Effective Date, and as further defined in Section 2.2.

(q)  The terms "Reserves" and "IBNR Claims Reserves" have the meaning set
     forth in Section 10.5.

                                  Article II
                       Reinsurance of Policy Obligations

     Section 2.1.  Ceding.  Subject to the terms and conditions of this
Agreement, the Company hereby cedes to Reinsurer and Reinsurer hereby
reinsures one hundred percent (100%) of the Policy Obligations.  Except for
the Policy Obligations, the Company shall continue to have all liabilities
not specifically reinsured by the Reinsurer hereunder, including any
liabilities relating to any agreements or commitments issued in connection
with the Policies which are not recognized or reserved for on the books of
the Company, or arising out of the marketing, servicing or other
relationships between the Company and any person, agent or entity, and the
Company shall indemnify the Reinsurer and hold the Reinsurer harmless from
all liabilities and costs incurred by the Reinsurer in respect to claims or
litigation involving any such liabilities not specifically reinsured by the
Reinsurer hereunder, as more fully set forth in Article XIV below.

     Section 2.2.  Standard of Performance; Liability.  Concurrently with
the Effective Date of this Agreement, Reinsurer and Universal have entered
into an "Administrative Services Agreement," a copy of which is incorporated
herein by reference thereto ("Administrative Services Agreement").  As,
when, and to the extent set forth in the Administrative Services Agreement,
Reinsurer shall be liable for and shall defend at its own expense, actions
on account of any actions, inactions, errors, or omissions of Reinsurer. 
Reinsurer shall not be liable for any claims or Policy benefits that arise
or become payable by virtue of a death or other event occurring before the
Effective Date.  Reinsurer shall not be liable for any actions, inactions,
errors, or omissions made by Universal and/or any of its respective
employees, agents, and representatives in the solicitation, sale, servicing,
renewal, or processing of any claim under the Policies or in communications
with insureds, beneficiaries, or any other third party with respect to the
Policies or on account of any event or fact occurring prior to the Effective
Date.  In addition, as, when, and to the extent set forth in the
Administrative Services Agreement, Reinsurer shall handle and pay the claims
in its ordinary course of business that were incurred prior to the Effective
Date but reported to Reinsurer or Company on or after the Effective Date,
such payments to be made out of and to the extent of the IBNR Claim Reserve
Fund transferred to Reinsurer pursuant to Section 10.5 below.

     Section 2.3.  Duration of Risk.  Except as otherwise provided herein,
this Agreement shall be unlimited in duration.

     Section 2.4.  Reinsurer's Liability.  The Reinsurer's liability in
respect to the Policy Obligations will begin simultaneously with the
Company's liability, but not prior to the Effective Date of this Agreement. 
The Reinsurer's liability in respect to the Policy Obligations will
terminate simultaneously with the Company's liability, except as otherwise
provided herein.

                                  Article III
                                ADMINISTRATION

     Section 3.1.   Administration.  The Reinsurer shall perform the policy
administration and data processing services for the Policies in accordance
with the Administrative Services Agreement completed, executed and delivered
by the Parties prior to Closing, which agreement is incorporated herein by
reference thereto for all purposes.

     Section 3.2.  Policy Loans.  The Reinsurer shall be entitled to all
interest earned, on an incurred basis, on any of the outstanding policy
loans on the Policies.

     Section 3.3.  Premiums.  The Reinsurer shall be entitled to all
premiums collected on the Policies with a due date on and following the
Effective Date of this Agreement, including any premiums paid in advance to
the Company, which shall be delivered by the Company to Reinsurer at
Closing.  The Company, in its capacity as administrator of the Policies
during the "Transition Period" as provided in the Administrative Services
Agreement, shall receive and administer premiums and other payments with
respect to the Polices received by the Company, shall pay all Policy
Obligations, and shall account for any and all such collected premiums and
other payments as of the end of each calendar month.  Universal shall
promptly deliver to Reinsurer all premiums and other payments related to the
Policies received by Universal which become due on or after the Effective
Date, whether received before or after Closing.

      Section 3.4.  Commission Allowance.  Reinsurer shall pay Universal a
commission allowance equal to the following:  a commission allowance on
first year premiums at the rate of 35% on Plan OG2 (5 Pay Life), 40% on Plan
OG3 (10 Pay Life), 45% on Plan OG4 (15 Pay Life), 50% on Plans 801 (Whole
Life), 810 (Whole Life), 821 (10 Year Term) and OG5 (20 Pay Life), 55% on
Plan OG1 (Whole Life), and 60% on Plan 820 (Whole Life); a commission
allowance on renewal premiums for new ordinary business (1997 issues) at the
rate of 7% of premiums for policy years 2 through 10 and 3% of premiums
thereafter; and a commission allowance on renewal premiums for ordinary and
industrial (pre-1997 issues) at the rate of 10% of premiums for policy years
2 and 3, 4% of premiums for policy year 4, 3% of premiums for policy years 5
through 15 inclusive, 2% of premiums for policy years 16 through 20
inclusive and 0% thereafter ("Commission Allowance").  Except for the
Commission Allowance payable to the Company as aforesaid, Reinsurer shall
not be liable for any liabilities, losses, or expenses arising from claims
of agents, brokers or other parties for commissions, service fees, or
producer compensation, and Universal shall indemnify and hold Reinsurer
harmless from any liabilities, losses, or expenses from claims of agents,
brokers or other parties for such commissions, service fees, or producer
compensation, and for any other claims of a similar or related nature, as
more fully set forth in Article XIV below.

      Section 3.5.  Premium Taxes and Premium Assessments.  Reinsurer shall
be liable for any and all  assessments and premium taxes based upon and
measured by the amount of premium income attributable to the Policies in
respect to such premiums due on and following the Effective Date and
received by Reinsurer that become payable on account of such Policies by any
state, county, parish, or municipal authority.

     Section 3.6.  Income Tax.  The Company and the Reinsurer shall each be
separately and solely liable for its respective Federal Income Tax
liabilities, including any "DAC" taxable income that may be incurred by the
reinsurance of the Policies by the Reinsurer.
                                      
     Section 3.7.  Payment of Benefits.  Reinsurer shall be liable for any
and all claims and other Policy benefits falling within the scope of the
Policy Obligations that become due and payable on and following the
Effective Date, and for any and all claims based on Reinsurer's role as
administrator pursuant to the Administrative Service Agreement.  Except as
otherwise provided in this Agreement, the Reinsurer, as administrator
governed by the provisions of the Administrative Services Agreement, shall
service and pay, on behalf of the Company, all such claims and other Policy
benefits falling within the scope of the Policy Obligations directly to the
policyholders or other designated beneficiaries of the Policies in the
ordinary course of business in accordance with the terms and conditions of
such Policies, other applicable documentation (if any) and applicable law. 
In the event of any claim that falls outside of the scope of the Policy
Obligations, or exceeds the benefits provided by such Policies, and/or if
such claim is attributable to the Company in any way, the Reinsurer shall
seek instructions from the Company and shall respond to and pay or refuse to
pay, as the case may be, such claim in compliance with such instructions, in
which case the Reinsurer's liability in respect to such claim shall be
limited to the amount payable that falls within (a) the scope of the Policy
Obligations, if any, and/or (b) is attributable to Reinsurer as
administrator as aforesaid (apart from its obligations in respect to the
Policy Obligations), if any.  The failure on the part of the Company to
issue instructions, or a delay by the Company in issuing instructions which
are requested, shall be deemed to be instructions to refuse to pay such
claim unless and until the receipt by the Reinsurer of instructions to the
contrary.  Instructions shall be deemed not to be issued unless and until
the same are received by the Reinsurer in writing.  The Reinsurer shall
maintain records of the servicing of claims such that the Company will be
able to conduct an audit of such servicing as herein provided.

     Section 3.8.  Payment of Policy Claims.  Except as provided in Section
3.7 of this Agreement, Reinsurer shall pay claims or other benefits on the
Policies reinsured hereunder without seeking instructions from the Company.

     Section 3.9.  Dividends to Policyholders.  All of the Policies are
non-participating Policies, meaning that dividends are not payable thereon. 
If there is any exception, the Company shall have sole discretion and
control regarding the declaration and payment of dividends to the holders of
the Policies during any and all calendar months for which this Agreement is
in effect.  The Company shall be solely responsible for funding the payment
of any such dividends.  The Reinsurer shall not be liable in respect to any
claim against the Reinsurer relating to the declaration or payment of any
dividend (whether declared and/or paid before, on or after the Effective
Date), or the failure to declare or pay any dividend, and the Company shall
indemnify and hold the Reinsurer harmless in respect to any such claim, as
more fully set forth in Article XIV.

     Section 3.10.  Contested Claims.  In the event of a claim involving
any matter other than (a) a Policy Obligation and/or (b) Reinsurer's role as
administrator pursuant to the Administrative Services Agreement resulting in
a dispute, compromise, or litigation ("contest"), the Reinsurer and the
Company will share, in proportion to the ultimately determined respective
liabilities, the costs of the contest in addition to the amount of the claim
itself, or the Reinsurer may elect (as herein provided) not to participate. 
The management of such contest shall be the sole responsibility of
Reinsurer; provided, however, that the Company, at its election and expense,
shall have the right to be present and/or represented in any all proceedings
related thereto.  Notwithstanding the foregoing, if Reinsurer elects not to
participate in such contest, and if the subject claim is not based on
Reinsurer's role as administrator pursuant to the Administrative Services
Agreement, Reinsurer may discharge its liability by agreeing to pay to the
Company the full amount of the Policy Obligation liability on the subject
Policy, in which case all aspects (including costs, assessments, judgments,
etc.) of the contest incurred after such payment is made by the Reinsurer
shall be the sole responsibility of the Company.

                                  Article IV
                       Transfer of Assets and Ceding Fee

      Section 4.1.  Transfer of Assets.  The Company shall transfer to
Reinsurer an amount of assets equal to the Reserves as of December 31, 1997,
as defined in Section 10.5, less the "Ceding Fee" (defined below), as
determined in Section 4.3 (the "Net Transfer Amount").  The composition of
the assets so transferred shall include the Policy Assets as of December 31,
1997.  However, since the Reserves and Policy Assets as of December 31,
1997, will not be determined prior to the Closing Date, the parties agree
that, to effect the Closing, the Company shall transfer to Reinsurer at
Closing an amount equal to the "Closing Net Transfer Amount" (defined in the
next sentence).  The "Closing Net Transfer Amount" shall be the amount shown
on Schedule 4.1 attached hereto, using estimated Reserves and Policy Assets. 
There shall be a "Post-Closing Adjustment" as set forth in Section 4.3, such
that the Closing Net Transfer Amount shall be adjusted to equal the Net
Transfer Amount.
              
      Section 4.2.  Ceding Fee.  The "Ceding Fee" shall be the amount set
forth as the Ceding Fee in Schedule 4.1, which Ceding Fee is subject to the
return of the amount of $250,000 to Reinsurer if the Company does not
transfer the data processing equipment and hardware  by the Company to
Reinsurer as set forth in Section 12.4.  The assets comprising the Closing
Net Transfer Amount to be delivered by the Company to Reinsurer are set
forth in Schedule 4.1.

      Section 4.3.  Post-Closing Adjustment.  Immediately following the
completion and filing by the Company of its regular Annual Statement with
the Tennessee Insurance Division as set forth below, there shall be a "Post-
Closing Adjustment" whereby the amounts of the Reserves and Policy Assets
that were estimated and used to effect the Closing will be replaced by the
actual amounts of the Reserves and Policy Assets as of December 31, 1997,
such that the Net Transfer Amount shall be recalculated, using the format of
Schedule 4.3 attached hereto.  The December 31, 1997, Reserves and Policy
Assets shall be determined as set forth in Section 10.5.  Using the format
of Schedule 4.3, the parties shall calculate the amount that should have
been transferred at Closing if the amount of the Reserves and Policy Assets
as of December 31, 1997, had been known at Closing.  If the Net Transfer
Amount is more than the Closing Net Transfer Amount, the Company shall
transfer additional assets to Reinsurer equal in amount to such differential
("Adjusting Transfer Amount"), together with interest on the Adjusting
Transfer Amount (at the rate of the 6.2% per annum) from the Effective Date
to the "Post-Closing Adjustment Date" (as hereinafter defined).  If the Net
Transfer Amount is less than the Closing Net Transfer Amount, Reinsurer
shall transfer assets  to the Company equal in amount to such differential
("Adjusting Transfer Amount"), together with interest on the Adjusting
Transfer Amount (at the rate of the 6.2% per annum) from the Effective Date
to the "Post-Closing Adjustment Date" (as hereinafter defined).  The assets
comprising such Adjusting Transfer Amount shall consist of (i) bonds having
an NAIC designation of 1, (ii) accrued investment income attributable to
said bonds, (iii) Policy Assets attributable to the Policies (that is, an
adjustment, up or down, of such Policy Assets to bring the Policy Assets
component of the Closing Transfer Amount in line with the actual Policy
Assets attributable to the Policies at December 31, 1997,) and/or cash.  The
purpose of this Section 4.3 is that the Post-Closing Adjustment shall put
the parties in the respective positions they would have been in if the
Closing had used the Reserves and Policy Assets determined as of December
31, 1997, instead of the amounts that were used to accommodate an earlier
Closing.  The Post-Closing Adjustment shall take place on the first business
day falling next after the expiration of ten (10) days following the date on
which the Company files its 1997 Annual Statement with the Tennessee
Insurance Division, referred to herein as the "Post-Closing Adjustment
Closing Date."  The Adjusting Transfer Amount shall bear interest at the
rate of 10% per annum, compounded annually, beginning on the Post-Closing
Adjustment Closing Date until paid.

      Section 4.4.  Conversion of Coinsurance of the Policies to 
Assumption Reinsurance.  By this Agreement the type of reinsurance in place 
means that the Policies remain in the name of the Company and the Policy 
Obligations are transferred to Reinsurer (typically referred to as 
"coinsurance").  Upon the occurrence of an Assumption Reinsurance Event, 
Reinsurer shall assume the Policies in effect on the effective date thereof 
(the "Assumption Effective Date") by mailing to holders of such Policies an 
assumption certificate as set forth in this Section 4.4 whereby the affected 
Policies will be transferred to, and assumed directly by, the Reinsurer 
(referred to herein as the "assumption" of the Policies in force on the 
Assumption Effective Date, or "assumption reinsurance").  Whether the 
reinsurance is of the coinsurance type or the assumption reinsurance type, the 
administration of the Policies in the case of the subject transaction is to be 
performed by Reinsurer as set forth in the Administrative Services Agreement.  
The election by the Company, at its sole discretion, or the election by
Reinsurer, at its sole discretion, to convert the coinsurance to assumption
reinsurance shall be subject to the fulfillment of the following conditions: 
(a)  such assumption of the Policies shall comprise all of the Policies in
force as of the Assumption Effective Date;  (b) the party electing to have
the conversion effected shall give written notice to to the other party not
less thirty (30) days in advance of the Assumption Effective Date; (c) such
notice shall designate the Assumption Effective Date (which date shall be
the end of a month following the date of such notice, which month shall be
not more than 12 months from the date of such notice); (d) Reinsurer shall
be obligated to effect the assumption of the Policies only to the extent set
forth in this Section 4.4; (e) there shall be no litigation or threat of
litigation by a third party or regulatory opposition seeking or threatening
to prevent such assumption reinsurance or making claims or threats against
the Company or Reinsurer based on market misconduct on the part of the
Company; and (f) the Company shall be obligated to establish the escrow fund
in the event the Company is dissolved as provided hereinbelow.  The Company
shall reimburse Reinsurer for reasonable costs of printing and postage
incurred by Reinsurer in sending the assumption certificates to the affected
policyholders.  To the extent that such assumption certificate is subject to
regulatory approval prior to the mailing of same, Reinsurer shall use
commercially reasonable efforts to obtain such approvals at its own expense. 
Reinsurer shall make commercially reasonable efforts to obtain such
approvals and to mail such assumption certificates to the affected
policyholders within six months following the Assumption Effective Date
(except that Reinsurer shall not be obligated to obtain a license to do
business in any state in which it is not licensed at such time as a
condition of sending assumption certificates to affected policyholders in
such state).  In the event that regulatory approval is not obtained in
respect to any state in which regulatory approval is required as a condition
to sending assumption certificates to affected policyholders in such state,
Reinsurer shall not be obligated to send assumption certificates to affected
policyholders in such state, and the affected Policies shall continue to be
governed by this Agreement as coinsurance (except, see below regarding
dissolution of the Company).  To the extent that affected policyholders in
any state have the right to elect to reject the subject assumption and in
fact exercise such election, the affected Policies shall continue to be
governed by this Agreement as coinsurance.  In the event of the assumption
of the Policies as aforesaid, Reinsurer shall continue to perform all
administration and data processing responsibilities relating thereto. 
Following the assumption of the Policies, the Reinsurer's liabilities in
respect to such assumed Policies shall continue to be limited to the Policy
Obligations and shall not be enlarged by virtue of the conversion of the
form of reinsurance from coinsurance (as set forth in this Agreement) to
assumption reinsurance, and the Company shall continue to have all
liabilities in respect to the assumed Policies except (a) the Policy
Obligations and any of Reinsurer's liabilities resulting from Reinsurer's
role as administrator pursuant to the Administrative Services Agreement, and
(b) the Company's obligation to indemnify the Reinsurer and hold the
Reinsurer harmless from all liabilities not specifically transferred to and
assumed by Reinsurer hereunder shall continue as set forth in this
Agreement.  In the event the Company is dissolved, voluntarily or
involuntarily, or placed in receivership, the Company shall establish an
escrow fund pursuant to Section 8.2 prior to dissolution.  In the event the
Company is dissolved, voluntarily or involuntarily, or placed in
receivership, and if the conversion from coinsurance to assumption
reinsurance has not theretofore occurred, the conversion from coinsurance to
assumption reinsurance shall take place automatically, provided the
following conditions are fulfilled:  (a) the Assumption Effective Date shall
be not later than the effective date of the dissolution of the Company or
the date on which receivership commences, as the case may be;  (b) the
Company shall establish an escrow fund pursuant to Section 8.2 prior to
dissolution; and (c) Reinsurer shall obtain required approvals in the
affected states (and the aforementioned escrow fund shall include a
provision for the printing and postage of the assumption certificates).  It
is the understanding of the parties that assumption reinsurance occurring in
connection with the dissolution of the ceding company does not involve the
acceptance of the affected policyholders and, therefore, to that extent, the
condition that affected policyholders have the option to elect not to be
assumed by the Reinsurer will not apply.  In the event of the assumption of
the Policies in connection with the Company's dissolution or receivership as
aforesaid, Reinsurer shall continue to perform all administration and data
processing responsibilities relating thereto.  Following such assumption of
the Policies, the Reinsurer's liabilities in respect to the Policies shall
continue to be limited to the Policy Obligations and liabilities resulting
from its role as administrator of the Policies, and shall not be enlarged by
virtue of the conversion of the form of reinsurance from coinsurance (as set
forth in this Agreement) to assumption reinsurance; the Company shall
continue to have all liabilities not specifically included within the Policy
Obligations or resulting from Reinsurer's role as administrator of the
Policies; the Company's obligation to indemnify the Reinsurer and hold the
Reinsurer harmless from all liabilities not specifically reinsured by the
Reinsurer hereunder shall continue as set forth in this Agreement; and the
escrow fund shall be sufficient to cover foreseeable liabilities of the
Company, as provided in Section 8.2.

      Section 4.5  Adjustment of Ceding Fee Retrospectively Due to 
Lapses, Withdrawals and Mortality.  The parties agree that the lapse, 
withdrawal and mortality assumptions used in the Actuarial Appraisal are 
predicated on the stability of the environment, which may not be the case in 
the event of the sending of assumption certificates in the event coinsurance is
converted to assumption reinsurance as set forth in Section 4.4 ("Assumption 
Reinsurance" as defined above).  As used in this Section 4.5, "lapses" means 
the cessation of premium payment in respect to the Policies, even though some 
of the "lapsed" Policies remain in force as a result of a non-forfeiture
benefit provision in such Policy or Policies.  Upon the occurrence of an
Assumption Reinsurance Event, a calculation shall be made to determine if a
retrospective adjustment of the Ceding Fee shall be required.  The Ceding
Fee is based partially on the present value of projected statutory profits
from the Policies over a thirty (30) year period discounted at a rate of
14%.  The parties agree to use a discount rate of 15.08% for purposes of
such recalculation instead of the 14% rate used in the Actuarial Appraisal
because the Ceding Fee shown in the Actuarial Appraisal in the amount of
$13.243 million was compromised to the amount of $12.750 million, and the
higher discount rate for purposes of the recalculation is to adjust for this
difference.  In determining the annual premium income the parties agree that
certain assumptions are made for each year in the number of policies that
may lapse, the amount of cash surrenders, the number of lapsed policies not
surrendered but converted to Extended Term Insurance ("ETI"), and the amount
of administration expense allowed to administer each policy.  The Company
shall refund to Reinsurer the decrease in the Ceding Fee, if any, determined
by recalculating the Ceding Fee under the Actuarial Appraisal by
substituting in lieu of projected statistics in the Actuarial Appraisal the
following actual statistics occurring within the twelve (12) month period
next following an Assumption Reinsurance Event ("Substitution Period"),
namely:

(a)   the actual number of Policies that lapse during the Substitution
      Period;

(b)   the increase in the actual amount of the cash withdrawals for the
      Policies that lapse during the Substitution Period;

(c)   the increase in the amount of Policies that lapse but are not
      surrendered during the Substitution Period;

(d)   the decrease in administration expense attributable to Policies that
      lapse, whether surrendered, converted to extended term insurance, or
              otherwise; and

(e)   the increase in death claims attributable to ETI Policies during the
      Substitution Period that are received more than six (6) months after
      the date of death of the insured.

The Company shall cause FMSI to perform the recalculations as set forth in
this Section 4.5 at the Company's sole expense, and shall use its best
efforts to have the recalculation performed within thirty (30) days from the
date on which Reinsurer provides the data reflecting the actual lapse and
withdrawal experience for the 12 month period following the Assumption
Reinsurance Event, as aforesaid.  All other assumptions used in the
Actuarial Appraisal shall remain the same.  In the event the Ceding Fee, as
recalculated, is reduced below Twelve Million Seven Hundred Fifty Thousand
Dollars ($12,750,000) then Universal will pay Reinsurer the difference.  The
Retrospective Ceding Fee Adjustment shall be made at the election of
Reinsurer upon Reinsurer's giving written notice to the Company that the
Assumption Reinsurance Event has occurred, and that the lapse and/or the
mortality experience of the Policies following such event has exceeded the
lapses and/or mortality projected to occur pursuant to the lapse and/or
mortality assumption used in the Actuarial Appraisal.  It is assumed that
the amount payable under this Section 4.5 occurred evenly throughout the
period in question, and, therefore, the amount payable hereunder shall bear
interest at the rate of six and two-tenths percent (6.2%) per annum,
compounded annually, commencing one hundred eighty three days after the
mailing of Assumption Certificates; provided, however, that if the amount
owed to Reinsurer is not paid within thirty (30) days following the
determination of the amount due and written notice thereof is provided to
the Company (the "Due Date"), the amount in default shall bear interest at
the rate of ten percent (10%) per annum, compounded annually, beginning on
such Due Date.

                                   ARTICLE V
                           ACCOUNTING AND SETTLEMENT

     Section 5.1.  Agreement Accounting Period.  The accounting period for
this Agreement shall be on a calendar month basis unless otherwise specified
herein.  The first report shall be for the month beginning January 1, 1998.

     Section 5.2.  Monthly Report.  During the Transition Period as defined
in the Administrative Services Agreement, within twenty (20) calendar days
after the end of the each calendar month beginning January 1, 1998, Company
will submit to Reinsurer a Monthly Cash Settlement (as defined in Section
5.3 below) report in accordance with the Administrative Services Agreement
which shall contain the amount of premiums, commission allowance,
administration expense allowances, benefits, dividends to policyholders,
reserves, outstanding policy loans and interest incurred thereon, due and
unpaid premiums, due and deferred premiums, any and all claim reserves as
calculated in accordance with NAIC Convention Blank Exhibit 11, and number
of Policies in force for such calendar month (except that the first such
report [for January] will not be due until February 28, 1998).

      Section 5.3.  Monthly Cash Settlements.  Within five (5) working days
after the receipt by the Company (or, during the Transition Period, by
Reinsurer) of each Monthly Cash Settlement report as specified in Sections
5.1 and 5.2 (the "Monthly Cash Settlement Date"), the Company shall pay to
the Reinsurer (for such accounting period):

(a)   the premiums as defined in Section 3.3; and

(b)   the interest on outstanding policy loans as defined in Section 3.2;
      and

(c)   the decrease, if any, in outstanding policy loans as defined in           
      Section 3.2.

Simultaneously, the Reinsurer shall pay to the Company:

(d)   the Commission Allowance as defined in Section 3.4; and

(e)   the Policy benefit payments as defined in Section 3.7; and

(f)   the increase, if any, in outstanding policy loans as defined in
      Section 3.2; and

(g)   the premium assessment as defined in Section 3.5.

The settlement as above described is sometimes referred to in this Agreement
as the "Monthly Cash Settlement."

      Section 5.4.  Amounts Due Monthly.  Except as otherwise specifically
provided in this Agreement, all amounts due to be paid to either the Company
or the Reinsurer under this Agreement on a monthly basis shall be determined
on a net basis as of the last day of each calendar month and shall be due
and payable on or before the Monthly Cash Settlement Date.  If the amounts,
as defined in Section 5.3 above, cannot be determined at such date on an
exact basis as set forth herein, such payments will be paid in accordance
with an approximate amount determined by the Reinsurer, which amount shall
be adjusted to the actual amount determined as soon as practicable
thereafter.

      Section 5.5.  Delayed Payments.   For purposes of Section 5.4 above,
if there is a delayed settlement of a payment due, interest will be added,
in an amount calculated as:  the amount of the payment which is delinquent,
multiplied by ten percent (10%), multiplied by the number of days such
amount has been delinquent, regardless of holidays or weekends, and divided
by the whole number 365.  For purposes of this paragraph, a payment shall be
deemed to be delinquent after the Monthly Cash Settlement Date.

      Section 5.6.  Offset of Payments.  All monies due either to the
Company or to the Reinsurer under this Agreement shall be offset against
each other, dollar for dollar, regardless of any insolvency of either party.

                                  Article VI
                               MUTUAL COVENANTS

       Section 6.1.  Covenants.  The Reinsurer and the Company mutually agree
as follows:

(a)    to indemnify, defend and hold harmless the other, its directors,
       officers, employees and agents from any and all claims, actions,
       suits, judgments, damages (including punitive or exemplary damages),
       fines and other proceedings, whether civil, criminal (only to the
       extent permitted by law or public policy), administrative,
       investigative or otherwise, together with all costs, expenses and
       other amounts, including attorney's fees, arising out of any failure
       of the indemnifying party to perform its duties, obligations or
       responsibilities to the other party, its directors, officers,
       employees and agents, under this Agreement, as more fully set forth in
       Article XIV; and

(b)    the Company shall be solely liable for claims arising out of any
       breach of any duty on the part of the Company to any holder, insured,
       assignee, beneficiary or other claimant under any Policy, and
       Reinsurer's liabilities shall arise solely from its obligation to pay
       amounts coming due under the terms of the Policies within the scope of
       the Policy Obligations, and any liability on the part of the Reinsurer
       to the Company resulting solely from Reinsurer's role as administrator
       pursuant to the Administrative Services Agreement.  Except for
       Reinsurer's role as administrator as aforesaid, the Company shall
       remain solely liable for all fines, penalties or other assessments
       imposed against the Company by any Insurance Department or other
       governmental entity for any conduct of the Company, its employees or
       authorized representatives, which was not expressly authorized, in
       writing, by the Reinsurer; and

(c)    any and all materials, information, proposals, studies or other
       documents relative to this Agreement are confidential and proprietary. 
       Neither party shall disclose, directly or indirectly, any information
       obtained from the other party, relative to this Agreement, to any
       third party without the express written consent of the other unless
       applicable statute, law or regulation requires such disclosure, except
       as may be required pursuant to the Arbitration Agreement.

       Section 6.2.  Policy Conservation.  The Company covenants and warrants
that it will take no action that would encourage the holders of the Policies
to surrender, reduce or otherwise terminate their existing coverages either
through direct or indirect acts, including but not limited to, a plan of
internal replacement.  Also, the Company will not permit its employees,
agents or other representatives to re-write any of the Policies or to
encourage the holders of the Policies to surrender, reduce or otherwise
terminate their existing coverages either through direct or indirect acts,
and shall have an express Company policy of prohibiting its employees,
agents or other representatives from re-writing any of the Policies and an
express Company policy of directing its employees, agents and other
representatives to encourage the retention and conservation of the Policies. 
"Re-writing" as used in the immediately preceding sentence means the
soliciting and accepting of applications for life insurance policies which
relate to or cause the termination of an existing Policy (such as, for
example, a transaction involving, contemplating or resulting in the
replacement of a Policy by another life insurance policy).

                                  ARTICLE VII
                                  ARBITRATION

      Section 7.1.  Agreement.  All disputes and differences between the
Company and the Reinsurer pertaining to this Agreement and the related
agreements (that is, the agreements with the effective date of January 1,
1998, between Reinsurer and the Company, entitled "Administrative Services
Agreement," "Master Assignment of Notes and Liens," and "Mortgage Portfolio
Administrative Services Agreement") on which an agreement cannot be reached
will be decided by arbitration, regardless of the insolvency of either
party, unless the conservator, receiver, liquidator, or statutory successor
is specifically exempted from an arbitration proceeding by applicable state
law.  Such arbitration shall be conducted in accordance with the Arbitration
Agreement completed, executed and delivered by the Parties prior to Closing,
which agreement is incorporated herein by reference thereto for all
purposes.

                                 ARTICLE VIII
                           INSOLVENCY OR DISSOLUTION

      Section 8.1.  Insolvency.  In the event of the Company's insolvency,
the Reinsurer's contractual liability on the Policies shall continue to be
determined by all the terms, conditions and limitations under this
Agreement, but the Reinsurer will make settlement (1) directly to the
Company's liquidator, receiver or statutory successor, and (2) without
increase or diminution because of the Company's insolvency.  The liquidator,
receiver or statutory successor of the Company shall give the Reinsurer
written notice of the pendency of a claim against the Company on any Policy
within a reasonable time after such claim is filed in the insolvency
proceeding.  During the pendency of any such claim, the Reinsurer may
investigate such claim and interpose in the Company's name (or in the name
of the Company's liquidator, receiver or statutory successor), in the
proceeding where such claim is to be adjudicated, any Defense or Defenses
which the Reinsurer may deem available to the Company or its liquidator,
receiver or statutory successor.  The expense thus incurred by the Reinsurer
shall be chargeable, subject to court approval, against the Company as a
part of the expense of liquidation to the extent of a proportionate share of
the benefit which may accrue to the Company solely as a result of the
defense undertaken by the Reinsurer.

      Section 8.2  Dissolution.  In the event the Company is dissolved,
whether voluntarily or involuntarily, the Company shall be required to
establish an escrow fund in an amount, and pursuant to a governing escrow
agreement and trust document, that will be sufficient to fund any and all
foreseeable liabilities and obligations under this Agreement which have not
fully and finally terminated prior to the date of such dissolution. 
"Foreseeable liabilities" includes, but are not limited to, understatement
of Policy reserve liabilities, liabilities arising from market conduct
issues, and liabilities arising from re-writing of policies.  Such escrow
fund amount and escrow agreement and trust document shall be subject to
approval by Reinsurer, which approval shall not be unreasonably withheld. 
Such escrow fund shall be funded with cash and thereafter such cash shall be
in invested in investment grade corporate or government bonds pursuant to
Reinsurer's instructions.  The balance remaining in such escrow fund upon
the satisfaction of all liabilities and obligations under this Agreement
shall belong to the Company.  If the parties are unable to agree in a timely
manner on the amount of the escrow fund, or whether the escrow fund should
be released to the Company, such issues shall be determined by arbitration
pursuant to Article VII. 

                                  Article IX
                                  Termination

      Section 9.1.  Termination.  This Agreement may be terminated as
follows:

(a)   at any time prior to Closing by mutual written consent of the Company
      and Reinsurer;

(b)   by the Company on or before Closing if the conditions set forth in
      Section 12.2 have not been satisfied or waived in writing by the
      Company on or before the Closing Date;

(c)   by the Company if this Agreement has not been approved by its Board of
      Directors on or before February ___, 1998;

(d)   by Reinsurer if the conditions set forth in Section 12.3 have not been
      satisfied or waived in writing by Reinsurer on or before the Closing
      Date; or

(d)   by the Company or Reinsurer if the conditions set forth in Section
      12.1 have not been satisfied or waived in writing by the Company or
      Reinsurer, as the case may be, on or before the Closing Date.

      Section 9.2.  Effect of Termination.  In the event of any termination
of this Agreement, if one party is entitled to terminate this Agreement as
herein provided in Sections 9.1 (b), (c), (d) or (e), such party shall have
the option (in lieu of electing to terminate this Agreement) to enforce this
Agreement by filing suit for specific performance against the other party
for any breach of any of the provisions of this Agreement, and/or to recover
damages incurred by such party, including all reasonable costs of any nature
whatsoever incurred in the enforcement of its rights under this Agreement.

                                   Article X
                  Representations and Warranties of Universal

              Universal hereby represents and warrants to Reinsurer that:

      Section 10.1.  Organization and Existence.  Universal is a Tennessee-
domiciled stock insurance company duly incorporated, validly existing, and
in good standing under the corporation and insurance laws of the State of
Tennessee.  Universal has all requisite corporate power and authority to
carry on its business as it is now being conducted, and to own, lease, and
operate its properties.

      Section 10.2.  Qualification and Power.  Universal is duly qualified
and in good standing to do business in every jurisdiction in which such
qualification is necessary because of the nature of its business or of the
properties owned, leased, or operated by it.

      Section 10.3.  Validity: No Violation.  Subject to the Company's right
of termination as set forth in Article IX, this Agreement is a valid and
binding obligation of Universal, enforceable against it in accordance with
its terms and conditions.  Neither the execution and delivery of this
Agreement, nor Universal's compliance with any of the provisions of this
Agreement, will:

(a)   conflict with or result in a breach of any provision of the Articles
      of Incorporation or Bylaws of Universal, or result in a default (or
      give rise to any right of termination, cancellation, or acceleration)
      under any of the terms, conditions, or provisions of any note, lien,
      bond, mortgage, indenture, license, lease, agreement, consent order,
      or other instrument or obligation to which Universal is a party or by
      which it may be bound;

(b)   violate any judgment, order, writ, injunction, or decree of any court,
      administrative agency, or governmental body applicable to Universal or
      to any of its properties or assets; or

(c)   cause, or give any person grounds to cause (with or without notice,
      the passage of time or both), the maturity of any liability of
      Universal to be accelerated or increased.

      Section 10.4.  Except for approvals required as set forth in Article
IX, no authorization, consent or approval of, or filing with, any public
body or authority is necessary for Universal to obtain for the consummation
of this Agreement, and except as set forth in Section 12.1(b) hereof.  No
authorization, consent or approval of any other person or entity is
necessary for Universal to obtain for the consummation of the transactions
contemplated by this Agreement, and no person or entity has an option, right
of first refusal or preferential right to purchase all or any part of the
Policies or that is otherwise triggered as a result of the transactions
contemplated hereby.

     Section 10.5.  The reserves and other Policy-related liabilities with
respect to each of the Policies included in the Policies for the period
ended December 31, 1997, were, or will be, established on the books of
Universal as of December 31, 1997, (i) were, or will be, calculated and
determined in accordance with generally accepted actuarial and statutory
accounting standards consistently applied, (ii) were, or will be, based on
actuarial assumptions that are in accordance with those specified in the
related Policies, (iii) meet the requirements of the insurance laws of the
State of Texas, and (iv) in the aggregate are not less the amounts required
for lines 1, 3, 4, 9, and 19 of page 3 of Universal's December 31, 1997,
Annual Statement.  In addition, the reserves for the period ended December
31, 1997 were, or will be, established on the books of Universal with
respect to the incurred but unreported policy claims ("IBNR Claims
Reserves") and (i) were, or will be, calculated and determined in accordance 
with generally accepted actuarial and statutory accounting standards
consistently applied, (ii) are, or will be, sufficient to pay all of the
liabilities in respect to such claims incurred before January 1, 1998, but
not reported to Universal as of December 31, 1997 and (iii) meet, or will
meet, the requirements of the insurance laws of the State of Texas.  The
reserves as set forth in this Section 10.5 shall be referred to in this
Agreement as "Reserves."  While the IBNR Claims Reserves shall be
established as aforesaid, if the claims paid by the Reinsurer attributable
to the Policies which were incurred prior to the Effective Date but not
reported to Universal as clams payable as of the Effective Date are in the
aggregate more than the amount of the IBNR Claims Reserves, Universal shall
reimburse the Reinsurer for the amount of the excess within 30 days
following written notice from Reinsurer identifying the payment or payments
in excess, as aforesaid.  If, after twelve (12) months from the Effective
Date, the aggregate claims attributable to the IBNR Claims Reserves are less
than the IBNR Claims Reserves, then Reinsurer shall refund the amount by which
the IBNR Claims Reserves exceeds the aggregate amount of such claims.  The 
policy loan asset (including accrued interest and unearned interest thereon) 
and the due and deferred premium asset with respect to each of the Policies 
included in the Policies for the period ended December 31, 1997, were, or will 
be, established on the books of Universal (i) were, or will be, calculated and
determined in accordance with generally accepted actuarial and statutory
accounting standards consistently applied, (ii) were, or will be, based on
actuarial assumptions that are in accordance with those specified in the
related Policies  and (iii) meet, or will meet, the requirements of the
insurance laws of the State of Texas.  Such policy loan asset and the due
and deferred premium asset shall be referred to in this Agreement as "Policy
Assets."

      Section 10.6.  In respect to the Net Transfer Amount, Universal is the
equitable and legal owner of all such assets and the transfer of such assets
to Reinsurer pursuant to this Agreement will vest good and marketable title
to such assets in Reinsurer.

      Section 10.7.  Since December 31, 1996, there has not been any
material adverse change, or changes in the Policies or operations of
Universal taken as a whole which in the aggregate may be deemed materially
adverse to the Policies, or which could affect the validity or
enforceability of this Agreement, consummation of the transactions
contemplated hereby or compliance with the terms hereof by Universal.  For
purposes of this Section, "Historical Policy Data" means the Policy Assets,
Reserves, and Policy statistical information and results as reflected in the
Company's Annual Statements (as filed by the Company with insurance
regulators on the NAIC Convention Blank) for the years 1993-1996 and, in
respect to the year 1997, the inforce Policy data and other Policy year-end
information furnished to Reinsurer on electronic format or otherwise.  (In
respect to 1997, for convenience, the Policy Assets, Reserves, and Policy
statistical information and results as reflected in the Company's 1997
Annual Statement when filed by the Company with insurance regulators on the
NAIC Convention Blank shall replace the inforce Policy data and other Policy
year-end information furnished to Reinsurer on electronic format or
otherwise, except to the extent that Reinsurer objects to such replacement.) 
The Historical Policy Data were prepared and presented in conformity with
statutory accounting practices prescribed or permitted by applicable
insurance regulatory laws and regulations applied on a consistent basis and
presented completely and accurately such data at the respective dates and
for the respective periods indicated therein.  Notwithstanding the foregoing
sentence, the reserve amount ($1,859,705) reflected in Exhibit 8, Line
070004, of the 1996 Annual Statement was incorrectly recorded on said line
and the mistake should be corrected by recording said amount on the line
immediately above, namely, Line 070003, and the and Reinsurer hereby accepts
such correction in the 1996 Annual Statement.

      Section 10.8.  Universal has the right to use, free and clear of any
royalty or other payment obligations, claims of infringement or alleged
infringement or other lien or encumbrance, all systems software included in
or used to process the Policies and no third party will be entitled to any
payment or other benefit as a result of the transfer the data processing
system by Universal to Reinsurer in accordance with this Agreement.

      Section 10.9.  There are no claims, actions, suits, investigations and
administrative, arbitration or other proceedings (i) pending against
Universal with respect to the Policies or (ii) threatened against Universal
with respect to the Policies.  Universal is not subject to or in default
with respect to any order, writ, judgment, decree, injunction or similar
order of any court or any foreign, federal, state or other governmental
body.  There are no claims, actions, suits, investigations or
administrative, arbitration or other proceedings pending or threatened
against or affecting Universal which individually or in the aggregate could
have a material adverse effect on the Polices which could affect the
validity or enforceability of this Agreement, consummation by Universal of
the transactions contemplated hereby or compliance by Universal with the
terms of this Agreement, and (ii) Universal is not subject to or in default
with respect to any order, writ, judgment, decree, injunction or similar
order of any court or any foreign, federal, state or other governmental
body, the result of which being subject to or of which default individually
or in the aggregate could have a material adverse effect on the Polices or
which could affect the validity or enforceability of this Agreement,
consummation by Universal of the transactions contemplated hereby or
compliance by Universal with the terms of this Agreement.

      Section 10.10.  Universal is in compliance in all respects with all
laws, ordinances, regulations, orders, judgments, injunctions, or decrees of
any court, arbitrator or governmental authority where the failure to comply,
individually or in the aggregate, could reasonably be expected to have a
material adverse effect on the Policies.

      Section 10.11.  Universal is not in default under any of the terms,
provisions or conditions of any contract between Universal and any of its
agents, past or present.  The failure of any agent who wrote business for
Universal to have been duly licensed (for the type of business which such
agent wrote) as an agent in the particular jurisdiction in which such agent
wrote for Universal will not individually or in the aggregate have a
material adverse effect on the Policies of Universal.  To the knowledge of
Universal, there is no actual or threatened plan on the part of any
insurance agent or broker to rewrite any of the Policies.

       Section 10.12.
  
(a)    except for communications which are customary to communicate to
       policyholders through servicing agents in connection with collecting
       premiums in respect to the Home Service Policies, it has been the
       practice of Universal to send all communications involving holders of
       the Policies directly to the affected policyholders, and the Documents
       and Records of Universal to be delivered to Reinsurer contain adequate
       information to enable Reinsurer as administrator to send written
       notifications or other communications directly to each policyholder
       whose policy or contract is included in the Policies;

(b)    except for lists customarily provided to agents in connection with
       collecting premiums in respect to the Home Service Policies, and
       except for lists provided to the Company's reinsurers for the purpose
       of reinsurance transactions and accounting in the ordinary course of
       business, no lists or master list of all or any substantial number of
       the holders of the Policies has been provided by Universal to any of
       its agents, representatives or third party except to Universal's
       consulting actuary, and such lists or master list are not available in
       the public domain; and 

(c)    no policyholder or group of policyholders, which individually or in
       the aggregate account for five percent or more of the premium income
       included in the Policies has threatened to terminate its or their
       relationship with Universal.

       Section 10.13.  With respect to each of the Policies:

(a)    Universal is a party to each of such Policies and owns all of the
       rights and interests of an insuring, reinsuring or ceding party, as
       the case may be, in and to each of such Policies, free and clear of
       any Lien; 

(b)    each of such Policies is in full force and effect and constitutes a
       valid and legally binding obligation of each of the parties thereto in
       accordance with its terms; the transactions contemplated by this
       Agreement will not affect the validity or binding character of any
       such Policy; Universal is not in violation, breach or default of any
       such Policy and no event has occurred which (with or without notice or
       lapse of time or both) constitutes a breach or default by Universal
       under any such Policy and no such Policy contains any provision
       providing that the other party thereto may terminate the same by
       reason of the transactions contemplated by this Agreement or any other
       provision which would be altered or otherwise become applicable by
       reason of such transactions;

(c)    such Policies are, to the extent required under applicable law, on
       forms approved by the insurance regulatory authority of the
       jurisdiction where issued or have been filed with and not objected to
       by such authority within the period provided for objection;

(d)    all current benefits payable by Universal under any such Policy have
       been paid or will be paid in the ordinary course of business under the
       terms of the Policies under which they arose or to the satisfaction of
       the parties thereto;

(e)    no such Policy entitles the holder thereof or any other person or
       entity to receive dividends or similar benefits in which the right to
       receive such dividends or benefits is determined other than at the
       discretion of the board of directors of Universal;

(f)    the underwriting standards utilized and ratings applied by Universal
       with respect to Policies issued by Universal conform in all material
       respects to customary insurance industry practices as such practices
       apply to the markets in which Universal has sold its policies and,
       with respect to any such Policy reinsured in whole or in part, conform
       in all material respects to the standards and ratings required
       pursuant to the terms of the related reinsurance, coinsurance or other
       similar Policy;

(g)    each of such Policy was issued and has been serviced in the ordinary
       course of business;

(h)    there has been no discrimination in violation of applicable insurance
       laws among the policyholders whose policies and contracts of insurance
       are included in such Policies with respect to the rates charged such
       policyholders for the insurance in force afforded such policyholders
       by such Policies; and

(i)    the decisions and actions of the Company, either individually or
       collectively, in converting the method of premium collection from
       collection by Company agents to collection exclusively by premium
       billing and collection via mail do not and will not contravene or
       violate any obligation of the Company under or in respect to any of
       the subject Policies or applicable laws and regulations, whether such
       decisions or actions have been taken before the Effective Date or are
       taken after the Effective Date (in exercising its role as
       administrator under the Administrative Services Agreement during the
       Transition Period [as defined therein] or to instruct Reinsurer as
       administrator in carrying out the Company's premium collection policy
       or policies resulting from such decisions and actions), and the
       Company has had and retains the exclusive right to, and responsibility
       for, determining changes in the mode of collecting premiums as
       aforesaid.  Further, in the event the Policies are assumed by
       Reinsurer and Reinsurer converts the method of premium collection from
       collection by agents to collection exclusively by premium billing and
       collection via mail, such conversion by Reinsurer would not and will
       not contravene or violate any obligation under or in respect to any of
       the subject Policies or applicable laws and regulations.

       Section 10.14.  With respect to reinsurance between the Company and
any reinsurer or reinsurers in respect to the Policies, and/or any such
reinsurance reflected in the Company's 1997 Annual Statement:

(a)    all such reinsurance applicable to the Policies as indicated on the
       Company's books and records is fully supported and in accord with the
       reinsurance treaties covering the respective Policies;

(b)    the reinsurance reserve credit, or credits, as the case may be,  taken
       by the Company in respect to any such reinsurance is correct;

(c)    the reinsurance treaties are in full force and effect for the period
       or periods which they purport to cover and are enforceable by the
       parties thereto in accordance with the terms and provisions of such
       treaties;

(d)    all of the Policies issued while such treaty or treaties were in force
       are fully reinsured for the amount in excess of the Company's portion
       (or "retention" amount) as set forth in such treaty or treaties;

(e)    in respect to any Policy claim which is not reinsured in accordance
       with the records of the applicable reinsurer and would be reinsured
       but for an error or omission, such claim is nevertheless reinsured by
       virtue of an errors and commission provision contained in such
       reinsurance treaty or treaties;

(f)    such reinsurance treaties, together with their benefits and
       obligations, are assignable, and shall be assigned to Reinsurer as of
       the Effective Date, and

(g)    with respect to any Policy that is not covered by any such reinsurance
       treaty that is in excess of the applicable retention limit that would
       have been covered but for a failure of the treaty to apply to such
       Policy (for whatever reason), Reinsurer shall be liable for the
       portion of the Policy for which it would have been liable but for the
       failure of such coverage (that is, the retained portion), and the
       Company shall be liable for the portion that would have been covered
       by such reinsurance treaty but for the failure of such coverage, and
       Reinsurer shall pay to the Company that portion of the premiums and
       reserves to which the reinsurer would have been entitled under the
       reinsurance treaty but for the failure of such coverage.  In respect
       to this subsection (g), to be more specific, if the subject Policy is
       not recorded by the Company (as of the Effective Date) as reinsured in
       respect to the amount in excess of the Company's applicable retention
       limit (the "excess over retention"), then the Company presumably
       recorded a reserve liability in respect to the excess over retention,
       which amount would have been transferred to Reinsurer as of the
       Effective Date, and, beginning on the Effective Date, Reinsurer would
       have collected the premium relating to the entire Policy (for the
       retention amount and the excess over retention).  In such a case, upon
       discovery that the Policy is not reinsured in respect to the excess
       over retention, Reinsurer shall transfer to the Company in cash an
       amount equal to the reserve liability attributable to the excess over
       retention portion of the Policy, as well as an amount equal to the
       premium that would have been due to the reinsurer in respect to the
       excess over retention portion from the Effective Date to the date
       thereof, such that Reinsurer will be placed in the position it would
       have been in if the subject Policy had been covered by the subject
       reinsurance treaty, and, in effect, the Company will be the reinsurer
       in respect to the excess over retention amount.  On the other hand, if
       the subject Policy is recorded by the Company (as of the Effective
       Date) as reinsured in respect to the amount in excess of the Company's
       applicable retention limit, but the reinsurer thereof denies that it
       is the reinsurer in respect to the excess over retention portion of
       such Policy, then presumably the funds transferred to Reinsurer in
       respect to the Policies would not have included an amount attributable
       to the excess over retention portion of such Policy but, instead, the
       Company presumably would have held a reinsurance reserve credit, and
       would have transferred same to Reinsurer, as of the Effective Date. 
       Upon discovery of such a case, Reinsurer shall be required to
       eliminate the reinsurance reserve credit in respect to the excess over
       retention portion of such Policy (because the reinsurer is not showing
       a reserve liability in respect thereto), but no funds matching the
       reserve liability attributable to the excess over retention portion of
       such Policy would have been transferred to Reinsurer at Closing, so,
       in that case, Reinsurer will not transfer to the Company funds equal
       to the reserve liability attributable to the excess over retention
       portion of the Policy, but will pay to the Company the premium that
       would have been due to the reinsurer in respect to the excess over
       retention portion from the Effective Date to the date thereof, such
       that Reinsurer will be placed in the position it would have been in if
       the subject Policy had been covered by the subject reinsurance treaty,
       and, in effect, the Company will be the reinsurer in respect to the
       excess over retention amount.

       Section 10.15.  The Documents and Records are accurate and complete in
all material respects and, in all material respects, completely record and
reflect all of the Company's liabilities and obligations.  The Policy
records are sufficiently well labeled and organized to permit reasonable
access (by industry standards) and there are no deficiencies in the
Documents and Records which could reasonably be expected to have a material
adverse effect on either Reinsurer's satisfaction of its obligations in
respect of the Policies or the servicing by Reinsurer of the Policies in
accordance with customary insurance industry practices.  There are no facts
or other circumstances that would prevent the Reinsurer (or which raises a
material probability that the Reinsurer might be prevented) from servicing
the Policies in accordance with customary insurance industry practice and in
the manner in which the Policies have been serviced prior to the Effective
Date.  During the "Transition Period" under the Administrative Services
Agreement (during which the Company shall have the administrative
responsibilities as set forth therein), the Company shall continue to work
toward the completion of the migration of all of the processing from its IBM
mainframe to its Unisys system, and shall reasonably cooperate with
Reinsurer's efforts to assist in the progress of such migration, the
objective being to bring the electronic data processing environment on which
the Company is processing the Policies onto a single system (the Unisys
system) which is year 2000 compliance. If the migration onto the Unisys
system is completed on or before the end of the Transition Period, the
Company shall be entitled to retain the IBM mainframe hardware and shall not
be obligated to transfer it to Reinsurer, notwithstanding anything to the
contrary herein contained.

     Section 10.16.   Neither this Agreement nor any certificate or
document furnished by Universal to Reinsurer in connection with this
Agreement or the transactions contemplated hereby contains any untrue
statement of material fact or omits to state a material fact necessary to
make the statements herein or therein not misleading in light of the
circumstances in which they were made.

     Section 10.17.  Survival of Representations and Warranties.  The
representations and warranties of Universal contained in this Article X and
elsewhere in this Agreement shall survive the Closing until all of the
liabilities reinsured hereunder have been discharged or otherwise expire.

                                  Article XI
                  Representations and Warranties of Reinsurer

              Reinsurer hereby represents and warrants to Universal that:

     Section 11.1.  Organization and Existence.  Reinsurer is a Texas-
domiciled stock insurance company duly incorporated, validly existing, and
in good standing under the corporation and insurance laws of the State of
Texas.  Reinsurer has all requisite corporate power and authority to carry
on its business as it is now being conducted, and to own, lease, and operate
its properties.

     Section 11.2.  Qualification and Power.  Reinsurer is duly qualified
and in good standing to do business in every jurisdiction in which such
qualification is necessary because of the nature of its business or of the
properties owned, leased, or operated by it.

     Section 11.3.  Validity; No Violation.  Subject to Reinsurer's right
of termination as set forth in Article IX, this Agreement is a valid and
binding obligation of Reinsurer, enforceable against it in accordance with
its terms and conditions.  Neither the execution and delivery of this
Agreement, nor Reinsurer's compliance with any of the provisions of this
Agreement, will:

(a)  conflict with or result in a breach of any provision of the Articles
     of Incorporation or Bylaws of Reinsurer, or result in a default (or
     give rise to any right of termination, cancellation, or acceleration)
     under any of the terms, conditions, or provisions of any note, lien,
     bond, mortgage, indenture, license, lease, agreement, consent order,
     or other instrument or obligation to which Reinsurer is a party or by
     which it may be bound;

(b)  violate any judgment, order, writ, injunction, or decree of any court,
     administrative agency, or governmental body applicable to Reinsurer or
     to any of its properties or assets; or

(c)  cause, or give any person grounds to cause (with or without notice,
     the passage of time or both), the maturity of any liability of
     Reinsurer to be accelerated or increased.

     Section 11.4.  Survival of Representations and Warranties.  The
representations and warranties of Reinsurer contained in this Article XI and
elsewhere in this Agreement shall survive the Closing until all of the
liabilities reinsured and assumed hereunder have been discharged or
otherwise expired.

                                  Article XII
                 Covenants and Conditions Precedent to Closing

     Section 12.1.  The obligations of each of the parties hereto to
proceed with the Closing were subject to the fulfillment (unless waived by
each party in writing), prior to or at the Closing, of each of the following
conditions:

(a)  No suit, action or other proceeding shall have been initiated and be
     pending or be threatened by any governmental agency in which it is
     sought to restrain, prohibit, invalidate, modify or condition, or set
     aside, the transactions contemplated by this Agreement, and no
     statute, rule or regulation having such effect shall have been
     promulgated or enacted, nor shall any such suit, action or proceeding
     have been initiated by any other third party not affiliated with the
     parties hereto in which such third party shall have obtained
     preliminary or permanent injunctive relief or which, in the opinion of
     counsel to either party, has a reasonable likelihood of success;
     provided, however, that each party shall use reasonable efforts in
     good faith to cause such suit, action or proceeding, or the threat
     thereof, to be dismissed or withdrawn, to cause such injunction to be
     dissolved or vacated or to cause such statute, rule or regulation to
     be repealed or rescinded.

(b)  The receipt of the required approval of this Agreement from regulatory
     authorities, if any.

(c)  The parties shall execute and deliver at Closing the Administrative
     Services Agreement and the Arbitration Agreement.

     Section 12.2.  The obligations of the Company to proceed with the
Closing are subject to the fulfillment (unless waived by the Company in
writing), prior to or at the Closing, of each of the following conditions:

(a)  The representations and warranties of Reinsurer contained in Article X
     of this Agreement shall be true and correct in all material respects
     at and as of the Closing, as if each such representation and warranty
     had been made as of the Closing.

(b)  Reinsurer shall have performed and complied in all material respects
     with all covenants, agreements, obligations, commitments and
     conditions required by this Agreement to be performed or complied with
     prior to or at the Closing.

(c)  Reinsurer shall have delivered to Universal a certificate dated the
     Closing Date and signed by the president or a vice president of
     Reinsurer certifying to the fulfillment of the conditions specified in
     this Section 12.2.

(d)  Compliance by Reinsurer with any and all requirements lawfully imposed
     by Tennessee's Insurance statutes or by the Commissioner of the
     Tennessee Department of Commerce and Insurance which will permit the
     Company to be allowed a credit for the Policy reserve liabilities
     attributable to the insurance ceded to Reinsurer hereunder.

(e)  Reinsurer shall have delivered to Universal at the Closing such other
     documents as Universal may reasonably request.

     Section 12.3.  The obligations of Reinsurer to proceed with the
Closing are subject to the fulfillment (unless waived by Reinsurer in
writing), prior to or at the Closing, of each of the following conditions:

(a)  The representations and warranties of Universal contained in Article X
     of this Agreement shall be true and correct in all material respects
     at and as of the Closing, as if each such representation and warranty
     had been made as of the Closing.

(b)  Universal shall have performed and complied in all material respects
     with all covenants, agreements, obligations, commitments and
     conditions required by this Agreement to be performed or complied with
     prior to or at the Closing.

(c)  Universal shall have delivered to Reinsurer a certificate dated the
     Closing Date and signed by the president or a vice president of
     Universal certifying to the fulfillment of the conditions specified in
     this Section 12.3.

(d)  Universal shall have delivered to Reinsurer at the Closing such other
     documents as Reinsurer may reasonably request, including evidence
     reasonably satisfactory to Reinsurer that this Agreement and the
     related agreements have been approved by the Company's Board of
     Directors.

(e)  Reinsurer, by and through its designated representatives, shall have
     completed to its satisfaction a legal, financial and business due
     diligence review and investigation of the Policies and related
     information, and in the course of such due diligence review and
     investigation Reinsurer shall not have discovered any facts,
     information, potential risks, or other problems which Reinsurer
     reasonably believes to have an actual or potential adverse impact or
     effect on the Policies, or upon the respective values of the Policies,
     as a result of the consummation of the subject transactions relative
     to the information heretofore furnished to Reinsurer by the Company;
     and that the Policy-related assumptions used in the Actuarial
     Appraisal are reasonably supported by the historical performance of
     the Policies, and the modeling and sampling decisions and related
     methodology are reasonable.

     Section 12.4.  Documents and Records.  Universal agrees to deliver to
Reinsurer at Closing (or later in accordance with the Administrative
Services Agreement if called for by the Administrative Services Agreement)
all of the Documents and Records without charge.  In exchange for a
consideration in the amount of Two Hundred Fifty Thousand Dollars ($250,000)
added to the Ceding Fee, Universal agrees to assign, convey, transfer and
deliver at the end of the Transition Period (as defined in the
Administrative Services Agreement) to Reinsurer, as-is, where-is, and
without warranty, all of its right, title, and interests in any and all of
the hardware and equipment within its possession or control used or useful
in operating or supporting the data processing systems and administering and
servicing the Policies, and its right, title and interests in any service
contracts, licenses, permits or agreements relating thereto, all of which
shall be described with particularity on Exhibit 12.4, which is represented
and warranted by Universal to be complete.  Universal agrees to license to
Reinsurer without charge or royalty any and all software within its
possession or control used or useful in operating or supporting the data
processing systems and administering and servicing the Policies.  Such
hardware and software systems include data processing programs, discs,
tapes, remittance processing and billing equipment, documentations, manuals,
specifications, applications, routines, formulas, and techniques relating
thereto. However, the Company may elect to exclude from the aforesaid the
hardware and equipment portion thereof and not to assign, convey, transfer
and deliver same to Reinsurer on the condition that the Company pay $250,000
to Reinsurer, such amount to be due and payable at the end of the Transition
Period and to bear interest at the rate of 10% per annum, compounded
annually, from such date until paid. 

      Section 12.5.  Cooperation.  The parties shall assist and cooperate
with each other by making all reasonable efforts to seek and obtain the
aforementioned approvals and any other approvals the parties agree are
necessary or advisable, and each party shall bear its own expenses related
thereto.

                                 Article XIII
                                    Closing

      Section 13.1.  Time and Location.  The closing of the transactions
contemplated by this Agreement ("Closing") shall take place on at 10 A. M.,
local time, on February 23, 1998, except that Closing may occur on a
different time and date by mutual written agreement of the parties (the
"Closing Date").

      Section 13.2.  Deliveries by Universal.  At Closing Universal shall
deliver to Reinsurer (a) an accounting as of December 31, 1997, in contract
level detail as to the Policies, including a detail listing of the Policies,
which are the subject of this Agreement, and (b) the assets comprising the
Closing Net Transfer Assets shown on Schedule 4.1.

                                  ARTICLE XIV
                                INDEMNIFICATION

      Section 14.1  Losses.  As used in this Agreement, "Loss" and/or
"Losses" shall mean all claims, lawsuits, proceedings by insurance
regulatory authorities or any other regulatory authority, investigations,
expenses, settlements, assessments, obligations, damages, losses,
deficiencies, interest, late charges, adjustments, costs, judgments,
payments, liabilities, refunds, taxes, fines and penalties, including,
without limitation, costs and expenses of litigation and reasonable
attorneys' fees, reasonable actuarial and accounting fees and reasonable
costs of investigations.

      Section 14.2  Indemnity by Universal.  Universal shall indemnify,
defend and hold harmless Reinsurer and Reinsurer's subsidiaries and
affiliates including, without limitation, its officers, directors, employees
and shareholders and those of its subsidiaries and affiliates from and
against Losses that arise out of:

      (a)  the non-performance of any covenants, warranties, agreements,
      obligations or commitments contained in this Agreement or in any
      exhibit, schedule, certificate or other document delivered pursuant
      hereto required to be performed by Universal; or

      (b)  the fact that any representation or warranty made by 
      Universal contained in this Agreement or in any exhibit, schedule,
      certificate or other document delivered pursuant hereto was untrue as
      of the Closing Date (determined as if such representation or warranty
      had been made as of the Closing Date).

      Section 14.3  Indemnity by Reinsurer.  Reinsurer shall indemnify,
defend and hold harmless Universal from and against Losses that arise out
of:

      (a)  the non-performance of any covenants, warranties, agreements,
      obligations or commitments contained in this Agreement or in any
      exhibit, schedule, certificate or other document delivered pursuant
      hereto required to be performed by Reinsurer; or

      (b)  the fact that any representation or warranty made by
      Reinsurer contained in this Agreement or in any exhibit, schedule,
      certificate or other document delivered pursuant hereto was untrue as
      of the Closing Date (determined as if such representation or warranty
      had been made as of the Closing Date).
              
      Section 14.4  Payment.  Payment required to be made to any party
entitled to indemnification hereunder shall be made within ten days after
receipt of an invoice or claim ("claim") therefor from a party seeking
indemnification.  In the event of any dispute with respect to a party's
obligation to make any such payment, the parties shall use their best
efforts to resolve such dispute as promptly as practicable.  In any event,
however, that the claim made by a party entitled to indemnification
hereunder is not paid in full within said 10 day period, such party (the
"Indemnity" as hereinafter defined) shall be entitled to initiate
arbitration proceedings in accordance with the Arbitration Agreement.  Any
such payment amount shall include interest thereon at the rate of ten
percent (10%) per annum (compounded annually) which shall accrue beginning
on the first day of the obligation that resulted in a finding that an amount
became payable, and shall continue to accrue until paid.

      Section 14.5  Notice.  Any person, corporation or other legal entity
entitled to indemnification under this Agreement, as the case may be, making
a claim under this Article XIV is hereinafter referred to as the
"Indemnitee" and the party against whom such claim is asserted is
hereinafter referred to as the "Indemnitor."  All claims by any Indemnitee
under this Article XIV shall be asserted by Indemnitee delivering or causing
to be delivered, to Indemnitor, a written notice (the "Claim Notice")
describing in reasonable detail the facts or circumstances which may result
in a claim of Loss.  (Such claim of Loss is hereinafter referred to as an
"Asserted Liability.")  Indemnitee shall use reasonable efforts to give the
Claim Notice not later than the earlier of:

      (i)  Three months after the time at which Indemnitee is notified
      in writing, actually becomes aware of or otherwise obtains actual
      knowledge of any action, proceeding, investigation, demand or claim
      (whether actual or threatened) or any other circumstance or state of
      facts which could give rise to an Asserted Liability, or

      (ii) With respect to any Asserted Liability which has become the
      subject of proceedings before any court or tribunal or in which
      Indemnitee has been served with legal process within such time as
      would allow Indemnitor to timely file responsive pleadings in such
      proceeding or action.

      If a claim is not given by the Indemnitee as herein provided, the
Indemnitee shall be entitled to indemnification hereunder only (i) if the
Indemnitee can establish that the time elapsed between the time the Claims
Notice should have been given pursuant to this Agreement and the actual
giving of the Claims Notice is reasonable under all the circumstances, (ii)
to the extent that the Indemnitee can establish that the Indemnitor has not
been prejudiced by such time elapsed, or (iii) if the Indemnitee can
establish that the Indemnitor received actual notice of such Asserted
Liability from a party other than the Indemnitee, or otherwise had actual
notice of the basic facts constituting the Asserted Liability, within the
time periods specified in this Agreement or that the receipt of such notice
satisfies the requirements of either clause (i) or (ii) of this paragraph.

      Section 14.6  Defense of Claims.

      (a)  Subject to the limitations hereinafter set forth, Indemnitor
      shall have the right to control the contest of any Asserted Liability
      and shall defend, at its own expense and by its own counsel, any
      Asserted Liability.  If Indemnitor does not notify Indemnitee in
      writing within sixty days after receipt of the Claim Notice, or within
      the time period prior to the date on which responsive pleadings must
      be filed, whichever is less, that it elects to undertake the defense
      thereof, Indemnitee shall have the right to defend the Asserted
      Liability with counsel of its choosing reasonably satisfactory to
      Indemnitor.  Even in the event that Indemnitor does not notify
      Indemnitee that it elects to undertake the defense of an Asserted
      Liability within the applicable time periods set forth in this
      Agreement, Indemnitor shall have the right to assume the defense of
      such Asserted Liability, and to select counsel reasonably satisfactory
      to Indemnitee, at any time prior to settlement or final determination
      thereof; provided, however, that in such event Indemnitor shall be
      responsible for and shall pay (or reimburse Indemnitee for) the fees
      and expenses of counsel employed by Indemnitee prior to Indemnitor's
      assumption of the defense of any such Asserted Liability.

      (b)  In the event that Indemnitor commences or thereafter assumes
      the defense of any Asserted Liability as provided in this Agreement,
      Indemnitee shall have the right to employ separate counsel with
      respect to such claim and to participate in the defense thereof,
      provided that the fees and expenses of counsel employed by Indemnitee
      shall be at the expense of Indemnitee unless the employment of such
      counsel has been specifically authorized in writing by Indemnitor.

      Section 14.7  Cooperation.  After the Closing Date, Reinsurer and
Universal shall each cooperate fully with the other (including, without
limitation, affording the other an opportunity to participate in the
defense) as to all Asserted Liabilities, shall make available to the other
as reasonably requested all information, records and documents relating
thereto and shall preserve all such information, records and documents until
the termination of any claim.  Reinsurer and Universal shall each also make
available to the other, as reasonably requested, its personnel, agents and
other representatives who are responsible for preparing or maintaining
information, records or other documents, or who may have particular
knowledge with respect to any such Asserted Liability.

      Section 14.8  No Insurance.  The indemnifications provided in this
Agreement shall not be construed as a form of insurance and shall be binding
upon and inure to the benefit of Reinsurer, and Universal; and the
indemnification provisions shall apply with full force and effect
notwithstanding the fact the Indemnitee has insurance covering all or a
portion of the Losses.

                                  ARTICLE XV
                            SURVIVAL OF OBLIGATIONS

      Unless otherwise specifically set forth in this Agreement or in any of
the exhibits, schedules, certificates or other agreements delivered pursuant
hereto, all covenants, representations and warranties and other obligations
of the parties hereto as expressed in this Agreement shall survive
indefinitely.  Any obligation resulting from or arising out of the non-
performance of any such covenant, agreement, obligation or commitment or of
any representation or warranty being untrue as of the Closing Date as to
which a written notice of possible Loss shall have been given to the
indemnifying party in accordance with the requirements of Article XIV hereof
shall survive, as to matters identified with particularity in such notice,
until the resolution of the matters referred to therein.  Unless otherwise
specifically set forth herein or in any of the exhibits, schedules,
certificates or other agreements delivered pursuant hereto, in case of any
representation or warranty being untrue as of the Closing Date or any non-
performance of any covenant, agreement, obligation or commitment contained
in this Agreement, or in any exhibit, schedule, certificate or other
agreement delivered pursuant hereto, the exclusive remedy therefor shall be
indemnification pursuant to Article XIV hereof, except to the extent the
remedy of specific performance may be available under applicable equitable
principles.

                                  Article XVI
                           Miscellaneous Provisions

       Section 16.1.  Extracontractual Damages.  The Reinsurer does not agree
to indemnify the Company for, and shall not be liable for, any
extracontractual damages or liability of any kind whatsoever of the
Company's, except for any of Reinsurer's obligation stated in the
Administrative Services Agreement.

       Section 16.2.  Misunderstandings and Oversights.  If any failure to
pay amounts due or to perform any other act required by this Agreement is
unintentional and caused by oversight, the Company and the Reinsurer will
adjust the situation to what it would have been had the oversight not
occurred.

       Section 16.3.  Facility of Reinsurance.  The Company shall not enter
into any other reinsurance agreements, including assumption reinsurance that
would cover the Policies, or by any other act impair the value of the
Policies ceded to Reinsurer under this Agreement, without the express
written approval of the Reinsurer.

       Section 16.4.  Policy Changes.  The Company shall not make any changes
after the Effective Date of this Agreement in the provisions and conditions
of the Policies.

       Section 16.5.  Audit.  The Company or the Reinsurer, their respective
employees or authorized representatives may audit, inspect and examine,
during regular business hours, at the home office of the Company or the
Reinsurer, as the case may be, provided that three working days advance
notice has been given to the other party, any and all books, records,
statements, correspondence, reports, trust accounts and their related
documents or other documents that relate to the Policies.  The audited party
agrees to provide a reasonable work space for such audit, inspection or
examination and to cooperate fully and to faithfully disclose the existence
of and produce any and all materials reasonably requested by such auditors,
investigators, or examiners.  The expense of the respective party's
employee(s) or authorized representative(s) engaged in such activities shall
be borne solely by such auditing party, and the party being audited shall be
entitled to reimbursement for expenses reasonably incurred by such audited
party.  The auditing party agrees to conduct such audit in a courteous,
prompt, professional and reasonable manner, and to provide immediate written
disclosure to the audited party of any discrepancy or variance (when
compared to any previously reported information) discovered by the auditing
party.

       Section 16.6.  Law and Venue.  It is agreed that this Agreement is
subject to and is to be interpreted in accordance with the laws of the State
of Texas.  Venue for any action, suit or other proceeding shall be
exclusively in Harris County, Texas, or Shelby County, Tennessee.  The
parties agree to waive any other venue.

       Section 16.7.  Counterparts.  This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed
an original, but all of which shall constitute one and the same instrument.

       Section 16.8.  Severability.  In the event that any provision or term
of this Agreement shall be held by any court to be illegal or unenforceable,
all of the other terms and provisions shall remain in full force and effect,
except if the provision or term held to be illegal or unenforceable is also
held to be a material part of this Agreement such that the party in whose
favor the material term or provision was stipulated herein would not have
entered into this Agreement without such term or provision, then the party
in whose favor the material term or provision was stipulated shall have the
right, upon such holding, to terminate this Agreement.

       Section 16.9.  Amendments.  This Agreement shall be amended only by
mutual consent and written agreement executed and delivered by the parties.

       Section 16.10.  Schedules and Paragraph Headings.  Schedules attached
hereto are made a part of this Agreement.  Paragraph headings are provided
for reference purposes only and are not made a part of this Agreement.

       Section 16.11.  Financial Reports.  The Company and the Reinsurer each
agree to furnish the other with their respective NAIC Annual and Quarterly
Statements, as required by their respective state laws within five (5) days
after such reports are filed with such respective states.

       Section 16.12.  Survival.  The representations, warranties, covenants
and agreements respectively made by the Company and the Reinsurer in this
Agreement shall survive the termination or expiration of this Agreement.

       Section 16.13.  Notices.  Any notices made pursuant to this Agreement
shall be in writing and shall be deemed to have been duly given on the date
of delivery if delivered personally (including overnight delivery service)
or by facsimile transmission to the party to whom notice is given, or on the
third day after mailing if mailed to the party to whom notice is to be given
by certified mail, return receipt requested, and properly addressed as
follows:

       If to the Company:

            Universal Life Insurance Company
            Attn: Dr. Benjamin L. Hooks
            Chairman of the Board
            480 Linden Avenue
            Memphis, TN 38126

            FAX: (901) 528-8231

            With a copy to:

                 Allan J. Wade, Esq.
                 Twentieth Floor
                 First Tennessee Building
                 165 Madison Avenue
                 Memphis, Tennessee 38103
                 
                 FAX: (901) 577-2303           
                 

          If to the Reinsurer:

          American Capitol Insurance Company
          Attn:  William F. Guest, Chairman
          10555 Richmond Avenue
          Houston, Texas 77042

          FAX: (713) 953-7920

Any party to this Agreement may change the address to which notice is to be
delivered to such party under this Section 16.13 by delivering written
notice to that effect to the other party in accordance with this Section
16.13.  Any document delivered via facsimile transmission shall be treated
as the original for all purposes unless the original is substituted
therefor.

     Section 16.14.  Understanding of Agreement.  The Parties agree that
the drafting of this Agreement has been a joint effort and no special weight
or presumption should arise in favor of or against either Party based on
whether one Party or the other was more responsible for the drafting of this
Agreement.  Each Party has consulted with its accounting, actuarial and
legal advisers in respect to the negotiations and the drafting of this
Agreement.  Each Party has read and understands this Agreement, and each
party agrees that it shall not be entitled to claim a failure to understand
the meaning and effect of this Agreement, or any part thereof, as a defense
under any circumstances.

     Section 16.15. Assignment.  No party may assign this Agreement or any
of its rights, interests, or obligations hereunder without the prior written
consent of the other party, if the assignment is to an entity other than an
affiliate of Reinsurer.

     Section 16.16.  Broker Fees.  Each party hereby represents and
warrants that it has not taken any action that would impose on any other
party hereto liability for payment of any broker, finder, or similar fee in
connection with the origin, negotiation, execution, or performance of this
Agreement, except that Reinsurer shall be solely responsible for the payment
of a finder's fee to Merger Acquisition Profiles of Chatsworth, California.

     Section 16.17. Cooperation.  The parties agree that they will from
time to time, upon the request of any other party and without further
consideration, execute, acknowledge, and deliver in proper form any further
instruments and take such other action as the other party may reasonably
require in order to carry out effectively the intent of this Agreement.

     Section 16.18.  Entire Agreement.  This Agreement constitutes the
entire agreement and understanding of the parties pertaining to the subject
matter contained in this Agreement and supersedes all prior and
contemporaneous oral and written agreements, representations, and
understandings of the parties.

     Section 16.19.  Exhibits and Schedules.  All exhibits and schedules
attached to and referenced in this Agreement are hereby incorporated by
reference into this Agreement as if they were set forth at length in the
text of this Agreement.

     Section 16.20.  Expenses.  Unless otherwise expressly provided in this
Agreement, each party shall pay all of its own costs, fees, and expenses
incurred or to be incurred in negotiating and preparing this Agreement and
in closing and carrying out the transactions contemplated by this Agreement.

     Section 16.21.  Severability.  If any part of this Agreement is
contrary to, prohibited by, or deemed invalid under applicable law or
regulations, that provision shall not apply and shall be omitted to the
extent so contrary, prohibited, or invalid; but the remainder of this
Agreement shall not be invalidated and shall be given full force and effect
insofar as possible.

     Section 16.22.  Successors.  This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors
and permitted assigns.

     Section 16.23.  Third Party Beneficiaries.  Except as to the holders
of the Policies, nothing in this Agreement, whether express or implied, is
intended to confer any rights or remedies under or by reason of this
Agreement on any persons or entities other than the parties to it and their
respective successors and permitted assigns.  In addition, nothing in this
Agreement is intended to relieve or discharge the obligation or liability of
any third person or entity to any party to this Agreement or give any third
person or entity any right of subrogation or action against any party to
this Agreement.

     Section 16.24.  Waiver of Compliance.  The party for whose benefit a
warranty, representation, covenant, or condition is intended may waive any
inaccuracies in the warranties and representations contained in the
Agreement or waive compliance with any of the covenants, warranties, or
conditions contained herein and so waive performance of any of the
obligations of the other party and any defaults under this Agreement, but to
be effective any such waiver must be in writing signed by the party granting
such waiver.  A waiver shall not affect or impair, however, the waiving
party's rights with respect to any other warranty, representation, or
covenant or any default hereunder not specifically waived, nor shall any
waiver constitute a continuing waiver.

     Section 16.25.  Waiver of Right to Trail by Jury.  The Company and
Reinsurer both expressly waive any right to trial by jury of any claim,
demand, action or cause of action (a) arising under this Agreement or any
other instrument or document executed or delivered in connection herewith,
or (b) in any way connected or incident to the dealing of the parties hereto
in connection with the transactions related hereto, in each case whether now
existing or hereafter arising; and the Company and Reinsurer both hereby
agree and consent that any such claim, demand, actin or cause of action
shall be decided by arbitration and to the extent applicable by a court
trial without a jury, and that any party to this Agreement may file an
original counterpart or a copy of this Agreement with any court as written
evidence of the consent of the Company and Reinsurer to the waiver of the
right to trial by jury.


     IN WITNESS WHEREOF, the parties have caused their duly authorized
representatives to execute this Agreement as of the Effective Date.


UNIVERSAL LIFE INSURANCE COMPANY

By:  /s/Benjamin L. Hooks
     --------------------------------------------
     Benjamin L. Hooks,Chairman of the Board of Directors

Witness:/s/Eldredge M. Williams
        --------------------------------------------
        Eldredge M. Williams, 
        Executive Vice President      

              
AMERICAN CAPITOL INSURANCE COMPANY

By:  /s/William F. Guest
     --------------------------------------------
     William F. Guest, Chairman of the Board of Directors

Witness:/s/Dan R. Stites
        --------------------------------------------
        Dan R. Stites, Vice President      

<PAGE>
Schedule 4.1

1    UNIVERSAL LIFE COINSURANCE-CLOSING  Closing Date  03/03/98
2
3    CEDING FEE                                     13,000,000
4    (including $250,00 for purchase of equipment
5
6    CALCULATION OF CLOSING NET TRANSFER AMOUNT
7
8    Aggregate reserve for life policies            51,650,598
     (AS pg 3 line 1)                                         
9    Supplementary contracts without life
     contingencies (AS pg 3 line 3)                    220,000
10   Policy and contract claims (AS pg 3 line 4)       818,642
11   Premiums received in advance (AS pg 3 line 9)     753,915
12   Remittances and items not allocated                     0
     (AS pg 3 line 19)                             -----------
13   Estimated Reserves                             53,443,155 sum of lines
                                                               8 thru 12
14   
15   less Ceding Fee to be retained by Universal    13,000,000 from line 3
     Life
16   
17   Closing Net Transfer Amount (before interest)  40,443,155 line 13-
                                                               line 15
18   
19   Interest for following number of days from        425,927 line 17 x
     12/31/97 @ 6.2%  62                            ---------- 6.2%/365 x
                                                               days elapsed 
20   Total assets to be transferred to American     40,869,082 line 17 +
     Capitol                                        ========== line 19 21
21
22   LISTING OF ASSETS TO BE TRANSFERRED
23                                                    Amount  
24   Cash                                           25,473,967
25   Policy loans (net of accrued interest           1,059,602
     and unearned interest)
26   Mortgage loans                                  3,514,605 detail
                                                               attached
27   Life insurance premiums deferred and            1,231,771
     and uncollected
28   Accrued invetment income as of Closing Date       144,567 detail
                                                               attached
29   Bonds                                           9,444,570 detail
                                                               attached
                                                    ----------
30     Total                                        40,869,082
                                                    ==========
                                                  sum of lines
                                                    24 thru 29

                                                               
     
<PAGE>
Universal Life Bonds To Be Transferred                        
Closing date                                          03/03/98 
                                                            
                           Book     Coupon  Accrued         
Issuer                     Value     (%)  Interest  Maturity
                                                            
Aetna                    608,919     6.75   18,675  09/15/13
Alabama Power            408,723     8.30    5,703  07/01/22
Alabama Power            516,484     8.75   11,181  12/01/21
Alabama Power            496,190     7.25    3,222  08/01/07
Atlantic City Electric   298,338     6.63    1,767  08/01/13
Boeing                   303,396     6.35    4,022  06/15/03
Carolina Tel & Tel       507,560     5.75    1,278  08/15/00
Coca-Cola                498,208     7.50   13,125  10/25/11
Florida P&L              303,580     7.63    5,846  06/01/24
Florida P&L              408,040     7.30   12,329  04/01/16
Georgia Municipal 
  Electric               351,329     7.40    4,461  01/01/23
Illinois Bell Tel         50,036     4.38      377  07/01/03
New England Power        534,910     8.00    3,733  08/01/22
New England Telephone     50,141     4.63      398  07/01/05
Northern Telecom         300,000     6.00      100  09/01/03
Old Dominion Electric    206,178     7.48    3,823  12/01/13
Otter Tail Power         494,863     8.25    3,535  08/01/22
Pacific Bell             424,850     7.13   13,142  03/15/26
Pacific Northwestern 
  Bell                    50,460     4.50      950  04/01/03
Piedmont Natural Gas     500,000     6.87    5,916  10/06/23
Province of Ontario      209,299     7.38    1,393  01/27/03
Public Service Electric
  & Gas                   178630     6.50    3,855  05/01/04
Seagram & Sons           308,233     7.00    7,933  04/15/08
Shell Oil                206,003     6.70      596  08/15/02
Southern Bell Tel & Tel   50,136     6.00    1,267  10/01/04
US West Comm Global      624,055     7.50    9,500  06/15/23
US West Communications   250,684     6.13    4,509  11/15/05
Wisconsin Bell           305,325     7.25    1,933  02/01/07
                                                            
                       9,444,570           144,567          
<TABLE>
<CAPTION>
UNIVERSAL LIFE           MORTGAGE LOANS ACAP                February 4, 1998


LOAN   CUSTOMER NAME                  Orig. Loan   Maturity   Current Loan
 #                                          Date       Date        Balance

<S>    <C>                             <C>         <C>          <C>          
217    Bethel Temple COGIC               10/7/85     5/7/11     571,889.46
238    Burning Bush Baptist Church       8/16/89    12/1/04      51,953.53
283    Freeman, Robert                   9/28/88    10/1/13     113,332.36
297    Great Beulahland COGIC            11/2/90    11/1/10     321,407.84
299    Greater Gethsemane Baptist        10/1/86    11/1/06      67,196.32
300    Greater Hope Missionary Baptist  10/16/86     2/1/07     213,365.39
301    Agape Christian Faith Ministry    1/12/90    1/12/10     127,894.69
400    Pilgram Rest Baptist Church        7/1/74     7/1/12     121,394.23
452    The New Friendship Missionary    12/12/89   11/12/10     128,633.82
471    Unity Center of Memphis           1/12/84     5/1/04     133,238.37
649    Greater Deliverance COGIC         2/14/91     3/1/11      51,575.27
672    Robinson, Paul A & Chrysti C       8/2/91     9/1/16      55,733.03
683    Patterson, Mary P                12/13/91    9/13/11      70,090.28
688    Gospel Temple COGIC              12/31/91     3/1/12     292,282.43
701    Pentecostal Temple COGIC          4/10/92     5/1/97     191,048.78
702    Highland Heights COGIC             4/9/92     5/1/12     215,086.51
713    United Missionary Baptist         7/21/92     8/1/12     198,953.95
716    South Main Renaissance            8/12/92     9/1/12     194,285.15
741    Little, Constance L                3/3/94     4/1/16      43,163.86
748    Greater Rose of Sharon A         11/16/94    12/1/24      83,519.48
750    African American Holiness Church 12/21/94     1/1/17     128,490.53
757    Mercer, Frank Jr & Dolores S      1/17/96    2/20/16      89,428.98
766    Green Pastures                    5/13/97    12/1/12      50,721.64


<CAPTION>

LOAN   CUSTOMER NAME                    Int.  Reg Paymt   Int. Pd  Prin Pd
 #                                      Rate      (P&I)     Since    Since
                                                         12/31/97 12/31/97

<S>    <C>                             <C>         <C>  <C>      <C>  
217    Bethel Temple COGIC              10.0   6,462.82         *        *
238    Burning Bush Baptist Church      13.5     903.83    576.47   327.36
283    Freeman, Robert                   8.5   1,106.51    818.17   288.34
297    Great Beulahland COGIC            9.5   3,495.56  2,593.28   902.28
299    Greater Gethsemane Baptist       12.5   1,022.53    713.39   309.14
300    Greater Hope Missionary Baptist  12.0   3,303.26  2,154.57 1,129.43
301    Agape Christian Faith Ministry   13.0   1,757.36  1,412.10   345.26
400    Pilgram Rest Baptist Church       9.0   1,247.71    927.92   319.79
452    The New Friendship Missionary    13.0   1,757.36  1,420.26   337.10
471    Unity Center of Memphis          14.5   2,696.91         *        *
649    Greater Deliverance COGIC        10.0     583.84         *   159.93
672    Robinson, Paul A & Chrysti C     10.5     566.51         *        *
683    Patterson, Mary P                10.5   2,402.25     Qtrly         
688    Gospel Temple COGIC               8.0   2,873.88  1,985.92 1,043.75
701    Pentecostal Temple COGIC         10.0   2,588.20  1,605.76 2,965.96@
702    Highland Heights COGIC           10.5   2,406.10         *        *
713    United Missionary Baptist        11.0   2,281.15  1,858.72   422.46
716    South Main Renaissance           10.0   2,101.00         *        *
741    Little, Constance L               8.0     410.76    293.28   117.48
748    Greater Rose of Sharon A          9.0     686.70         *        *
750    African American Holiness Church  8.8   1,153.24         *        *
757    Mercer, Frank Jr & Dolores S      8.5     806.67    645.60   161.07
766    Green Pastures                   10.5     562.57    452.33   110.24
                                                                          
                                              43,176.72 17,457.77 5,973.63
<FN>
*This loan will likely have a double payment during February or at some
point during the next few months.
@This loan had multiple payments made in January.
</FN>
</TABLE>