FORM 10-Q
                                   
                             UNITED STATES
                  SECURITIES AND EXCHANGE COMMISSION
                         Washington, DC 20549
                                   
                                   
 (Mark One)
      [X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
                    SECURITIES EXCHANGE ACT OF 1934
       For the quarterly period ended:  September 30, 1998
                                       --------------------
                                   
                                  OR
                                   
                                   
      [ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                    SECURITIES EXCHANGE ACT OF 1934
          For the transition period from:        to
                                          -------  --------
                                   
                 Commission file number:       1-11714
                                        -------------------
                                   
                               CITIZENS CORPORATION
                              ----------------------
              (Exact name of registrant as specified in its charter)
                                   
          Delaware                           04-3178765
          --------                           ----------
(State or other jurisdiction of           (I.R.S. Employer
incorporation or organization)         Identification Number)
                                   
                                   
         440 Lincoln Street, Worcester, Massachusetts  01653
         ---------------------------------------------------
            (Address of principal executive offices)(Zip Code)
                                   
                           (508) 855-1000
                           --------------
         (Registrant's telephone number, including area code)
                                   
    --------------------------------------------------------------
   (Former name, former address and former fiscal year, if changed
                           since last report)

Indicate  by  check  mark whether the registrant  (1)  has  filed  all
reports  required to be filed by Section 13 or 15(d) of the Securities
Exchange  Act  of  1934 during the preceding 12 months  (or  for  such
shorter period that the registrant was required to file such reports),
and  (2) has been subject to such filing requirements for the past  90
days.
Yes [ X ]        No [   ]

           APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
             PROCEEDINGS DURING THE PRECEDING FIVE YEARS:

Indicate  by check mark whether the registrant has filed all documents
and  reports  required to be filed by Section 12, 13 or 15(d)  of  the
Securities  Exchange  Act of 1934 subsequent to  the  distribution  of
securities under a plan confirmed by a court.
Yes [   ]          No [   ]

                 APPLICABLE ONLY TO CORPORATE ISSUERS:

Indicate  the number of shares outstanding of each of the registrant's
classes  of common stock as of the latest practicable date: 34,986,400
Shares of Common Stock Outstanding, as of September 30, 1998.
                                   
                                   
                                  20
                         Total Number of Pages
                                   
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                           TABLE OF CONTENTS





PART I - FINANCIAL INFORMATION



   ITEM 1 - FINANCIAL STATEMENTS
           Consolidated Statements of Income                     3
           Consolidated Balance Sheets                           4
           Consolidated Statements of Shareholders' Equity       5
           Consolidated Statements of Comprehensive Income       6
           Consolidated Statements of Cash Flows                 7
           Notes to Consolidated Financial Statements            8-9


   ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS
             OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
10-17


PART II - OTHER INFORMATION


    ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 18


   ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K                    19





SIGNATURES                                                       20

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                    PART 1 - FINANCIAL INFORMATION
                                   
                     ITEM 1 - FINANCIAL STATEMENTS

                         CITIZENS CORPORATION
                   CONSOLIDATED STATEMENTS OF INCOME
                                   
<TABLE>
<S>                           <C>        <C>       <C>      <C>
                                 (Unaudited)         (Unaudited)    
                                Quarter Ended        Nine Months    
                                                        Ended
(In millions, except per        September 30,       September 30,   
share data)
                                1998      1997      1998     1997   
                               ------    ------    ------   ------  
Revenues                                                            
                                                                    
 Net premiums written         $ 238.0    $ 242.2   $683.3   $662.1
 Change in unearned premiums,                                       
  net of prepaid reinsurance
  premiums                       17.2       27.6     24.1     27.5  
                               ------     ------   ------   ------  
                                                                    
 Net premiums earned            220.8      214.6    659.2    634.6
                                                                    
 Net investment income           25.1       25.2     75.8     74.9
                                                                    
 Net realized gains on           24.1        8.3     29.9     27.4
  investments
                                                                    
                                  1.7        1.6      4.6      4.6
 Other income
                               ------     ------   ------   ------  
                                                                    
     Total revenues             271.7      249.7    769.5    741.5
                               ------     ------   ------   ------  
                                                                    
Expenses                                                            
 Losses and loss adjustment                                         
  expenses                      180.9      171.2    517.9    488.4
                                                                    
 Policy acquisition and other   
  operating expenses             52.3       57.0    168.7    171.5
                                                                    
                                
 Policyholders' dividends         0.9        1.3      3.7      4.7
                               ------     ------   ------   ------  
                                                                    
     Total expenses             234.1      229.5    690.3    664.6
                               ------     ------   ------   ------  
                                                                    
                                                                    
                                                               
 Income before federal income
  taxes                          37.6      20.2      79.2     76.9
                          
                                
Federal income tax expense        7.6       2.9      14.2     14.6
                               ------    ------    ------   ------  
                                                                    
                                                               
Net Income                     $ 30.0    $ 17.3     $65.0    $62.3
                               ======    ======    ======   ======  
                                                                    
Per share data (basic and diluted)
                                                                    
  Net income                   $ 0.85    $ 0.50    $ 1.85   $ 1.77 

Dividends declared to
shareholders                   $ 0.05    $ 0.05    $ 0.15   $ 0.15
                                                                    
Weighted average shares                                             
outstanding                      35.2      35.3      35.2     35.3

The accompanying notes are an integral part of these financial statements
</TABLE>
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                         CITIZENS CORPORATION
                      CONSOLIDATED BALANCE SHEETS
                                   
 <TABLE>                                  
 <S>                                        <C>            <C>
                                            (Unaudited)
(In millions, except per share data)        September 30   December 31,
                                               1998            1997
                                            ------------   ------------
Assets                                                         
Investments:                                                   
 Debt securities available-for-sale, at     
  fair value                                  
  (Amortized cost of $1,516.5 and $1,453.1)  $  1,584.0     $  1,522.4                  
 Equity securities available-for-sale, at                 
  fair value (Cost of $86.3 and $110.2)           134.6          182.7
 Other investments, at fair value (Cost of                 
  $2.5 and $17.7)                                   2.5           16.5
                                            ------------   ------------
   Total investments                            1,721.1        1,721.6
                                             
 Cash and cash equivalents                         55.3           46.5
 Accrued investment income                         25.8           26.5
 Premiums and notes receivable                    161.5          139.4
 Reinsurance recoverable on paid and unpaid
  balances                                        476.3          474.3
 Prepaid reinsurance premiums                      72.1           70.4
 Deferred policy acquisition expenses              55.0           54.8
 Deferred federal income taxes                      6.5            3.7
 Other assets                                      59.7           68.1
                                            ------------   ------------    
   Total assets                              $  2,633.3     $  2,605.3
                                            ============   ============
                                                               
Liabilities and Shareholders' Equity                           
Liabilities:                                                   
 Reserve for losses and loss adjustment 
  expenses                                   $  1,212.0     $  1,206.1
 Unearned premiums                                404.3          378.5
 Other liabilities                                103.4          147.8
                                            ------------   ------------
   Total liabilities                            1,719.7        1,732.4
                                            ------------   ------------ 
                                                               
Shareholder's Equity                                           
 Series A preferred stock, $0.01 par value
  per share; authorized 10.0 million
  shares; none issued or outstanding in
  1998 and 1997                                      -              -
 Common stock, par value $0.01 per share;                      
  authorized 100.0 million shares; issued                  
  36.1 million shares                               0.4            0.4
 Additional paid-in capital                       161.2          156.1
 Retained earnings                                699.3          639.6
 Accumulated other comprehensive income            75.4           91.6
 Treasury stock, at cost (1.1 million                    
  shares)                                         (22.7)         (14.8)
                                            ------------   ------------
    Total shareholder's equity                    913.6          872.9
                                            ------------   ------------   
     Total liabilities and shareholder's        
      equity                                 $   2,633.3    $  2,605.3
                                            ============   ============
                                            
 The accompanying notes are an integral part of these financial statements
</TABLE>
                                   4
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                         CITIZENS CORPORATION
            CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY


 <TABLE>
 <S>                                           <C>       <C>
                                                 (Unaudited)
                                                 Nine Months
(In millions)                                       Ended
                                                September 30,
                                                1998      1997
                                               ------    ------
Preferred stock                                          
 Balance at beginning and end of period            -         -            
                                               ------    ------                 
Common stock                                                   
 Balance at beginning and end of period        $  0.4    $  0.4
                                               ------    ------                
Additional paid-in capital                                     
 Balance at beginning of period                 156.1     156.1
 Capital contributions                            5.1        -
                                               ------    ------
 Balance at end of period                       161.2     156.1
                                                               
Retained earnings                                              
 Balance at beginning of period                 639.6     552.5
 Net income                                      65.0      62.3
 Dividends declared to shareholders              (5.3)     (5.3)
                                               ------    ------
 Balance at end of period                       699.3     609.5
                                                
                                                               
Accumulated Other Comprehensive Income                         
 Balance at beginning of period                  91.5      60.5
 (Depreciation) Appreciation during the                    
  period                                        (24.8)     35.3
 Provision for deferred federal income taxes      8.7     (12.3)
                                               ------    ------  
 Balance at end of period                        75.4      83.5
                                               ------    ------  
                                                               
Treasury stock                                                 
 Balance at beginning of period                 (14.8)    (15.0)
 Shares purchased at cost                        (8.0)       -
 Shares reissued                                  0.1       0.1
                                               ------    ------ 
 Balance at end of period                       (22.7)    (14.9)
                                               ------    ------                
Total shareholders' equity                     $913.6    $834.6
                                               ======    ======
                                               
The accompanying notes are an integral part of these financial statements
</TABLE>
                                   5
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                         CITIZENS CORPORATION
            CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

<TABLE>
<S>                                     <C>      <C>       <C>     <C>

                                          (Unaudited)        (Unaudited)                                              
                                         Quarter Ended    Nine Months Ended
(In millions)                            September 30,      September 30,
                                         1998     1997      1998    1997
                                        ------   ------    ------  ------              
Net income                              $ 30.0   $ 17.3    $ 65.0  $ 62.3
                                                                   
Other comprehensive income:                                        
 Unrealized (depreciation)                                         
  appreciation on investments during      
  period                                 (48.1)    27.3     (24.8)   35.3
 Benefit (provision) for deferred                                  
  federal income taxes related to                                    
  items of other comprehensive income     16.9     (9.5)      8.7   (12.3)
                                        ------   ------    ------  ------ 
 Other comprehensive income              (31.2)    17.8     (16.1)   23.0
                                        ------   ------    ------  ------
 Comprehensive income                   $ (1.2)  $ 35.1    $ 48.9  $ 85.3
                                        ======   ======    ======  ======
                                   
The accompanying notes are an integral part of these financial statements
</TABLE>
                                   6
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                         CITIZENS CORPORATION
                 CONSOLIDATED STATEMENTS OF CASH FLOWS



<TABLE>
<S>                                             <C>      <C>
                                                  (Unaudited)
                                                  Nine Months
(In millions)                                        Ended
                                                 September 30,
                                                 1998      1997
                                                ------    ------ 
Cash flows from operating activities                      
Net income                                      $ 65.0    $ 62.3
Adjustments to reconcile net income to                          
 net cash provided by operating activities:                     
 Net realized gains on investments               (29.9)    (27.4)
 Deferred federal income tax benefit              (4.1)     (3.4)
 Change in assets and liabilities:                              
  Deferred policy acquisition expenses            (0.2)     (3.6)
  Premiums and notes receivable, net of          
   reinsurance premiums                          (38.7)    (16.9)  
  Unearned premiums, net of prepaid                         
   reinsurance premiums                           24.1      27.5
  Reserve for losses and loss adjustment                        
   expenses, net of reinsurance recoverable        5.9      (9.8)
  Payment related to pension liability                  
   transfer                                      (13.6)       -
  Other, net                                      (8.8)      6.5
                                                ------    ------
   Net cash (used for) provided by operating                 
    activities                                    (0.3)     35.2
                                                ------    ------            
Cash flows from investing activities                            
 Proceeds from sale of available-for-sale debt               
  securities                                     131.6     284.2
 Proceeds from available-for-sale debt                       
  securities maturing or called                   91.5      71.1
 Proceeds from sale of available-for-sale                    
  equity securities and other investments         94.2     115.1
 Purchases of available-for-sale debt                        
  securities                                    (286.5)   (431.3)
 Purchases of sale of available-for-sale                     
  equity securities and other investments        (27.7)    (63.8)
 Change in net receivable from securities                    
  transactions not settled                        14.8       3.7
 Other investing activities                        4.4      (1.8)          
                                                ------    ------
   Net cash provided by (used for) by               
    investing activities                          22.3     (22.8)
                                                ------    ------         
Cash flows from financing activities                         
 Dividends paid to shareholders                   (5.3)     (5.3) 
 Treasury stock reissued, at cost                 (8.0)       -  
 Shares reissued                                   0.1       0.1          
                                                ------    ------
  Net cash used for financing activities         (13.2)     (5.2) 
                                                ------    ------          
Change in cash and cash equivalents                8.8       7.2          
                                                 
Cash and cash equivalents at beginning of                    
 period                                           46.5      36.1
                                                ------    ------
Cash and cash equivalents at end of period        55.3      43.3
                                                ======    ======

The accompanying notes are an integral part of these financial statements
</TABLE>
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                         CITIZENS CORPORATION
        NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
                                   
1.     Basis of Presentation

The  accompanying  unaudited  consolidated  financial  statements   of
Citizens  Corporation ("the Company") have been prepared in accordance
with  generally  accepted accounting principles  applicable  to  stock
property  and  casualty  insurance  companies  for  interim  financial
information and with the requirements of Form 10-Q. Certain prior year
amounts  have  been  reclassified to conform with the  current  year's
presentation.

In  the  opinion of management, the financial statements  reflect  all
adjustments  of  a  normal  recurring  nature  necessary  for  a  fair
presentation  of  the  interim  periods.   Interim  results  are   not
necessarily indicative of results expected for the entire year.  These
financial  statements should be read in conjunction with the Company's
1997  Annual  Report to Shareholders, as filed on Form 10-K  with  the
Securities and Exchange Commission.

In  June 1997, the Financial Accounting Standards Board (FASB)  issued
Statement   of  Financial  Accounting  Standards  No.  130,  Reporting
Comprehensive Income (Statement No. 130), which establishes  standards
for  the  reporting  and  display  of  comprehensive  income  and  its
components in a full set of general-purpose financial statements.  All
items that are required to be recognized under accounting standards as
components  of comprehensive income are to be reported in a  financial
statement  that  is  displayed  with  the  same  prominence  as  other
financial  statements.  This statement stipulates  that  comprehensive
income  reflect the change in equity of an enterprise during a  period
from  transactions and other events and circumstances  from  non-owner
sources.  This statement is effective for fiscal years beginning after
December  15,  1997.  The Company adopted Statement No.  130  for  the
first  quarter  of  1998, resulting primarily in reporting  unrealized
gains  and  losses  on  investments in debt and equity  securities  in
comprehensive income.

In  June  1997, the FASB also issued Statement of Financial Accounting
Standards  No.  131, Disclosures About Segments of an  Enterprise  and
Related   Information  (Statement  No.  131).    Statement   No.   131
establishes  standards  for  the way that  public  enterprises  report
information  about  operating segments in annual financial  statements
and  requires that selected information about those operating segments
be   reported   in  interim  financial  statements.   This   statement
supersedes  Statement  of  Financial  Accounting  Standards  No.   14,
Financial  Reporting for Segments of a Business Enterprise.  Statement
No.  131  requires  that all public enterprises report  financial  and
descriptive  information  about their reportable  operating  segments.
Operating  segments are defined as components of an  enterprise  about
which separate financial information is available that it is evaluated
regularly  by  the chief operating decision maker in deciding  how  to
allocate  resources and in assessing performance.  This  statement  is
effective  for  fiscal years beginning after December 15,  1997.   The
Company  adopted  Statement No. 131 for the  first  quarter  of  1998,
resulting in no change in the Company's reportable segments.

In   December  1997,  the  American  Institute  of  Certified   Public
Accountants  (AICPA) issued Statement of Position 97-3, Accounting  by
Insurance and Other Enterprises for Insurance-Related Assessments (SoP
No.  97-3).  SoP 97-3 provides guidance on when a liability should  be
recognized  for  guaranty fund and other assessments  and  on  how  to
measure  the liability.  This statement allows for the discounting  of
the  liability if the amount and timing of the cash payments are fixed
and determinable.  In addition, it provides criteria for when an asset
may be recognized for a portion or all of the assessment liability  or
paid  assessment that can be recovered through premium tax offsets  or
policy  surcharges.   This  statement is effective  for  fiscal  years
beginning  after  December 15, 1998.  The Company  believes  that  the
adoption  of  this statement will not have a material  effect  on  the
results of operations or financial position.

In March 1998, the AICPA issued Statement of Position 98-1, Accounting
for  the  Cost of Computer Software Developed or Obtained for Internal
Use (SoP No. 98-1).  SoP No. 98-1 requires that certain costs incurred
in  developing  internal-use  computer  software  be  capitalized  and
provides guidance for determining whether computer software is  to  be
considered  for internal use.  This statement is effective for  fiscal
years  beginning after December 15, 1998.  In the quarter ended   June
30,  1998, the Company adopted SoP No. 98-1 effective January 1, 1998.
The adoption of SoP No. 98-1 had no material effect on the results  of
operation  or  financial position for the nine months ended  September
30, 1998.

In June 1998, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (Statement No. 133),
which establishes accounting and reporting standards for derivative
instruments.  Statement No. 133 requires that an entity recognize all

                                    8
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derivatives as either assets or liabilities at fair value in the
statement of financial position, and establishes special accounting
for the following three different types of hedges:  fair value hedges,
cash flow hedges, and hedges of foreign currency exposures of net
investments in foreign operations.  This statement is effective for
fiscal years beginning after June 15, 1999.  The Company believes that
the adoption of this statement will not have a material effect on the
results of operations or financial position.

2. Earnings per Share

Earnings per share are based on the weighted average number of  common
shares and common share equivalents. The Board of Directors authorized
the  repurchase  of  1.8  million shares or slightly  less  than  five
percent  of its issued common stock and has purchased a total  of  1.0
million  shares since the implementation of the repurchase program  in
1995.   As of September 30, 1998, the Company is holding these  shares
as  treasury stock for the purpose of funding current and future stock
option  awards  and  for  other purposes.  In 1997,  the  FASB  issued
Statement  of  Financial Accounting Standards No.  128,  Earnings  Per
Share  (Statement  No.  128)  which supersedes  Accounting  Principles
Board  Opinion No. 15, Earnings Per Share. This standard replaces  the
primary  and fully diluted earnings per share with a basic and diluted
earnings  per  share computation, and requires a dual presentation  of
basic  and diluted earnings per share for those companies with complex
capital  structures.   All earnings per share amounts for all  periods
have  been presented to conform to the Statement No. 128 requirements.
The  adoption  of  the aforementioned standard had no  effect  on  the
Company's previously reported earnings per share.

3.  MCCA Assessment

The Company is required under Michigan law to participate in a pooling
arrangement with the Michigan Catastrophic Claims Association  (MCCA).
The  Company  is  indemnified  by the  MCCA  for  personal  protection
insurance  losses  in  excess  of  $0.25  million.   Participation  is
required for all Michigan-licensed automobile and motorcycle insurers.
The  MCCA assesses its member companies an annual premium on  each  of
such  member  companies' policies covering automobile and  motorcycles
written  in  Michigan.  The  assessment  is  passed  on  directly   to
policyholders as a surcharge to premium.  The Company cedes a  portion
of its private passenger automobile premiums to the MCCA.

On  May 11, 1998, the MCCA voted to issue a refund of $180 per insured
vehicle.  The MCCA issued refunds to member companies during  June  of
1998.  The MCCA refunded $127 million to Citizens Insurance Company of
America  (CICA) based on CICA's 1997 insured vehicles, in  June  1998.
The  Company  remitted  the  refund  to policyholders.   This  had  no
significant effect on the results of operations.

4.  Single Employer Transfer

On  January 1, 1998, substantially all of the employees of the Company
were  transferred to a single employer, First Allmerica Financial Life
Insurance  Company  (FAFLIC), which is a subsidiary  of  the  ultimate
parent,  Allmerica Financial Corporation (AFC). Substantially  all  of
the  defined  benefit, defined contribution 401(k) and  postretirement
plans  were  merged with the existing benefit plans  of  FAFLIC.   The
transfer  of benefit plans did not impact the results of operations  .
Assets equal to the fair value of the liabilities, net of taxes,  were
transferred  to  FAFLIC.   The excess of the  carrying  value  of  the
liabilities,  net  of  taxes, was assumed  byFAFLIC,  resulting  in  a
capital contribution of $5.1 million.

5.  Allmerica Financial Corporation Cash Tender Offer

On  October  27, 1998, Citizens Corporation announced that its  parent
company,  Allmerica Financial Corporation or one of  its  wholly-owned
subsidiaries, shortly will commence a cash tender offer to acquire the
outstanding shares of Citizens Corporation common stock that Allmerica
Financial  Corporation or its subsidiaries do not  already  own  at  a
price  of  $29.00 per share.  On November 2, 1998, Allmerica Financial
Corporation  commenced the tender offer which, unless  extended,  will
expire on December 2, 1998.  Based on the number of shares of Citizens
Corporation  common  stock  held  by  unaffiliated  stockholders,  the
transaction  is  valued  at  approximately  $171  million.    Citizens
Corporation  has  established a special  committee  of  the  Board  of
Directors,  consisting  of  directors  unaffilliated  with   Allmerica
Financial Corporation, to study the offer and make a recommendation to
Citizens Corporation stockholders.

                                   9
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                    PART I - FINANCIAL INFORMATION
                                   
                                ITEM 2
                                   
           MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                  CONDITION AND RESULTS OF OPERATIONS

The  results  of operations for Citizens Corporation and  subsidiaries
(the Company) include the accounts of Citizens Corporation (Citizens),
a  non-insurance  holding company, and its wholly-owned  subsidiaries,
Citizens  Insurance Company of America, Citizens Insurance Company  of
Ohio,  and  Citizens  Insurance Company of the  Midwest  (collectively
Citizens  Operations), and Citizens Management Inc., which is  wholly-
owned by Citizens Insurance Company of America.

Results of Operations

Net income

Net  income  for  the  quarter ended September  30,  1998,  was  $30.0
million, or $0.85 per  share, compared to $17.3 million, or $0.50  per
share,  for  the  quarter  ended September 30,  1997.   Excluding  net
realized  gains, net of taxes, net income increased $0.8  million,  to
$13.0  million for the quarter ended September 30, 1998, versus  $12.2
million  during  the comparable period of 1997. The  increase  in  net
income  is primarily attributable to a $15.8 million increase  in  net
realized gains on investments, partially offset by an increase in  the
underwriting  loss of $0.9 million. The deterioration in  underwriting
results  is  primarily  due to catastrophe losses  of  $18.6  million,
compared  to  $9.1 million during the same period in  1997,  partially
offset  by a $5.8 million increase in favorable development  on  prior
year reserves, and lower underwriting expenses.

Net  income  for the nine months ended September 30, 1998,  was  $65.0
million,  or $1.85 per share, compared to $62.3 million, or $1.77  per
share,  for  the  nine  months ended September  30,  1997.   Excluding
realized  gains  and restructuring charges, both  net  of  taxes,  net
income  decreased $2.1 million, to $43.6 million for the  nine  months
ended  September  30, 1998, versus $45.7 million  for  the  comparable
period  of 1997.  The decrease in net income is primarily attributable
to  a $4.1 million increase in the underwriting loss, partially offset
by  an  increase in realized gains of $2.5 million.  The  decrease  in
underwriting results is primarily due to catastrophe losses  of  $47.3
million,  compared to $17.7 million during the same  period  in  1997,
significantly offset by improved non-catastrophe current  year  claims
activity,   higher  premiums  earned,  and  lower  policy  acquisition
expenses.

Revenues

Net premiums earned increased $6.2 million, or 2.9%, to $220.8 million
for  the  quarter  ended  September 30, 1998, resulting  from  a  $4.5
million  increase in the Company's personal lines and a  $1.7  million
increase  in  the  Company's commercial lines.   Net  premiums  earned
increased  $24.6  million, or 3.9%, to $659.2  million  for  the  nine
months  ended September 30, 1998, resulting from an increase of  $15.9
million in the Company's personal lines and a increase of $8.7 million
in  the  Company's commercial lines. Contributing to this growth  were
rate  increases  in  all major lines except the workers'  compensation
line,  and an increase in net premiums earned of $3.5 million for  the
three  months ended September 30, 1998 and $11.8 million for the  nine
months  ended September 30, 1998, in Ohio and Indiana, resulting  from
expansion in these states.

                                  10
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Segment Results

Personal segment

Personal  segment premiums represented 68.0% and 67.9%  of  total  net
premiums  earned for the quarters ended September 30, 1998  and  1997,
respectively, and 68.1% and 68.2% of total net premiums earned for the
nine months ended September 30, 1998 and 1997, respectively.

<TABLE>
<S>                          <C>       <C>       <C>      <C>
                                                                    
For the Periods Ended           Three Months        Nine Months     
September 30, (in millions)   ------    ------    ------   ------                          
                               1998      1997      1998     1997
                              ------    ------    ------   ------                           
Net premiums earned           $150.2    $145.7    $448.6   $432.7
                                                                    
Losses and loss adjustment                                          
 expenses                      124.3     113.9     348.9    335.6
                                                                    
Policy acquisition and other                                        
 underwriting expenses          36.4      37.3     114.0    114.5                               
                              ------    ------    ------   ------ 
                                                                    
Underwriting loss             $(10.5)   $ (5.5)   $(14.3)  $(17.4)
                              ======    ======    ======   ======
</TABLE>                                                         

Personal segment net premiums earned increased $4.5 million, or  3.1%,
to  $150.2  million  for the quarter ended September  30,  1998,  from
$145.7  million  for  the quarter ended September 30,  1997.  Personal
segment  net  premiums  earned increased $15.9 million,  or  3.7%,  to
$448.6  million  for the nine months ended September  30,  1998,  from
$432.7  million for the nine months ended September 30,  1997.   These
increases  are primarily attributable to a twelve month  average  rate
increase of 15.9% in the homeowners line.  This is partially offset by
a  continued  decrease  in  policies in force  in  both  the  personal
automobile and homeowner lines.  While management has taken  steps  to
increase  penetration in the affinity groups and has  initiated  other
marketing  programs, the Company believes that heightened  competition
may result in reduced premium growth in the personal segment.

The  personal  segment underwriting loss was $10.5  million  and  $5.5
million   for  the  quarters  ended  September  30,  1998  and   1997,
respectively.   Loss and LAE increased $10.4 million  primarily  as  a
result  of  a  $7.4 million increase in catastrophe  losses  to  $14.3
million  for  the quarter ended September 30, 1998, from $6.9  million
for  the  same  period ended 1997, primarily in the homeowner's  line.
Policy  acquisition  and  other underwriting expenses  decreased  $0.9
million,  or  2.4%,  to  $36.4  million for  the  three  months  ended
September   30,  1998,  reflecting  reductions  in  employee   related
expenses.

The  personal segment underwriting loss improved to $14.3 million from
$17.4  million for the nine months ended September  30, 1998 and 1997,
respectively.   The decrease in the underwriting loss is  attributable
to  the  improved  current year claims activity in both  the  personal
automobile   and  homeowner  lines  and  an  increase   in   favorable
development on prior year reserves in the homeowner's line.   This  is
partially offset by an increase in catastrophe losses of $18.1 million
over  the  prior  year,  primarily in the  homeowner's  line.   Policy
acquisition  and other underwriting expenses decreased  $0.5  million,
to  $114.0  million  for  the nine months ended  September  30,  1998,
reflecting reductions in employee related expenses.

                                    11
    =============================================================

Commercial segment

Commercial segment premiums represented 32.0% and 32.1% of  total  net
premiums  earned for the quarters ended September 30, 1998  and  1997,
respectively.  Commercial segment premiums represented 31.9% and 31.8%
of  the  total net premiums earned for the nine months ended September
30, 1998 and 1997 respectively.

<TABLE>
<S>  
                              <C>      <C>        <C>      <C>                 
For the Periods Ended           Three Months        Nine Months     
September 30, (in millions)   ------    ------    ------   ------                           
                               1998      1997      1998     1997
                              ------    ------    ------   ------
                                                          
Net premiums earned           $ 70.6    $ 68.9    $210.6   $201.9
                                                                    
Losses and loss adjustment                                          
 expenses                       56.6      57.3     169.0    151.4
                                                                    
Policy acquisition and other                                        
 underwriting expenses          16.9      18.2      52.8     53.5
                               
Policyholders' dividends         0.9       1.3       3.7      4.7  
                              ------    ------    ------   ------
                               
Underwriting loss               (3.8)     (7.9)    (14.9)    (7.7)
                              ======    ======    ======   ====== 
                                                        
</TABLE>


Commercial  segment  net premiums earned increased  $1.7  million,  or
2.5%,  to $70.6 million for the quarter ended September 30, 1998  from
$68.9  million  for the quarter ended September 30, 1997.   Commercial
segment net premiums earned increased $8.7 million, or 4.3%, to $210.6
million  for  the  nine months ended September 30, 1998,  from  $201.9
million  for the nine months ended September 30, 1997.  The  increases
in  net premiums earned primarily reflects growth in policies in force
of  11.9%  in  the commercial multiple peril line since September  30,
1997,  and  twelve month average rate increases of 8.0%  and  6.2%  in
commercial   multiple   peril   and   commercial   automobile   lines,
respectively.   These  increases  are  partially  offset  by  a  13.6%
decrease  in policies in force since September 30, 1997 and  a  twelve
month average rate decrease of 6.6% in the workers' compensation line.
Management  believes that competitive conditions in  Michigan  in  the
workers' compensation line may continue to impact future growth in net
premiums earned.

The  commercial  segment underwriting loss was $3.8 million  and  $7.9
million   for  the  quarters  ended  September  30,  1998  and   1997,
respectively.  The decrease in underwriting loss is attributable to  a
$6.1 million increase in favorable development on prior year reserves,
partially  offset  by  a $2.1 million increase in catastrophe  losses,
primarily  in the commercial multiple peril line.  Policy  acquisition
and other underwriting expenses decreased $1.3 million as a result  of
a decrease in employee related costs.

The  commercial  segment underwriting loss was $14.9 million  for  the
nine  months  ended  September 30, 1998, compared to  a  $7.7  million
underwriting loss for the nine months ended September 30,  1997.   The
increase  in  underwriting loss is attributable  to  a  $11.5  million
increase  in catastrophe losses, primarily in the commercial  multiple
peril  line  and  unfavorable  current year  claims  activity  in  the
workers'  compensation line.  These increases are partially offset  by
favorable  current  year  claims activity in the  commercial  multiple
peril  and commercial automobile lines.  Policy acquisition and  other
underwriting expenses decreased $0.7 million as a result of a decrease
in employee related costs.

                                    12
    =============================================================


Reserve for Losses and Loss Adjustment Expenses

The Company regularly updates its reserve estimates as new information
becomes  available  and  further events occur  which  may  impact  the
resolution  of  unsettled claims.  Changes in prior reserve  estimates
are  reflected in results of operations in the year such  changes  are
determined.   The  table  below  provides  a  reconciliation  of   the
beginning and ending reserve for unpaid losses and LAE as follows:

<TABLE>
<S>                                       <C>        <C>
                                                               
For the nine months ended September 30,       1998      1997   
(in millions)                             ---------- ----------
                                                               
Reserve for losses and LAE, beginning of           
 period                                   $  1,206.1 $  1,238.5
                                                               
Reserve for losses and LAE, net of                             
 reinsurance recoverable:
                                                               
     Provision for insured events of the                       
      current period                           555.8      526.2
                                                               
     Decrease in provision for insured                         
      events of prior years                    (37.9)     (37.8)
                                          ---------- ----------
                                                               
Total incurred losses and LAE                  517.9      488.4                                      
                                                               
                                                               
Payments, net of reinsurance recoverable:                      
                                                               
Losses and LAE attributable to insured                    
 events of current period                      282.5      272.9
                                                               
Losses and LAE attributable to insured                    
 events of prior years                         230.8      223.7
                                          ---------- ---------- 
                                                              
Total payments                                 513.3      496.6 
                                                              
                                                               
Change in reinsurance recoverable on                        
 unpaid losses                                   1.3        0.5
                                          ---------- ----------                    
                                                               
Reserve for losses and LAE, end of period $  1,212.0 $  1,230.8
                                          ========== ==========
                                          
</TABLE>                                                               


As part of an ongoing process, the reserves have been re-estimated for
all  prior  accident  years and were decreased by $37.9  million,  and
$37.8  million, for the nine months ended September 30, 1998 and 1997,
respectively.  The overall favorable reserve development in both years
primarily  reflects  the initiatives taken by the  Company  to  manage
claim adjustment costs, and a modest shift over the past few years  of
the  workers' compensation business to Western and Northern  Michigan,
which  have  demonstrated more favorable loss experience than  Eastern
Michigan.

This favorable development reflects the Company's reserving philosophy
consistently  applied over the periods.  Conditions  and  trends  that
have  affected development of the losses and LAE reserves in the  past
may not necessarily occur in the future.

Inflation  generally increases the cost of losses covered by insurance
contracts.  The effect of inflation on the Company varies by  product.
Property  and casualty insurance premiums are established  before  the
amount of losses and LAE, and the extent to which inflation may affect
such  expenses,  are  known.  Consequently, the Company  attempts,  in
establishing rates, to anticipate the potential impact of inflation in
the  projection of ultimate costs.  The impact of inflation  has  been
relatively  insignificant in recent years.  However,  inflation  could
contribute to increased losses and LAE in the future.


The  company  regularly reviews its reserving techniques, its  overall
reserving  position  and  its reinsurance.  Based  on  (i)  review  of
historical  data,  legislative enactment,  judicial  decisions,  legal
developments in impositions of damages, changes in political attitudes
and  trends in general economic conditions, (ii) review of  per  claim

                                 13
    =============================================================

information, (iii) historical loss experience of the Company  and  the
industry,  (iv) the relatively short-term nature of most policies  and
(v)  internal estimates of required reserves, management believes that
adequate   provision  has  been  made  for  loss  reserves.   However,
establishment  of  appropriate reserves  is  an  inherently  uncertain
process  and  there  can  be  no certainty  that  current  established
reserves will prove adequate in light of subsequent actual experience.
A  significant change to the estimated reserves could have a  material
impact on the results of operations.


Reinsurance

The  Company  maintains  a  reinsurance program  designed  to  protect
against  large  or  unusual losses and allocated  LAE  activity.  This
includes   pro-rata,  excess  of  loss  reinsurance  and   catastrophe
reinsurance.  Catastrophe reinsurance serves  to  protect  the  ceding
insurer from significant aggregate losses arising from a single  event
such   as   windstorm,  hail,  hurricane,  tornado,  riot   or   other
extraordinary events. The Company determines the appropriate amount of
reinsurance  based on the Company's evaluation of the  risks  accepted
and  analyses  prepared by consultants and reinsurers  and  on  market
conditions including the availability and pricing of reinsurance.  The
Company has reinsurance for casualty business.

Effective  January  1,  1998,  the Company  modified  its  catastrophe
reinsurance program to include a higher retention. Under the Company's
1998  catastrophe reinsurance program, the Company retains  the  first
$45.0 million.  For losses in excess of $45.0 million and up to $180.0
million, the Company retains 10% of the loss.  Effective June 1, 1998,
the  Company  purchased an additional treaty for losses in  excess  of
$180.0  million and up to $230.0 million, of which the Company retains
10%  of  the  loss.  Amounts in excess of $230.0 million are  retained
100% by the Company.  Under the Company's 1997 catastrophe reinsurance
program, the Company retained 5% of losses in excess of $10.0 million,
up  to $25.0 million. For losses in excess of $25.0 million and up  to
$180.0  million,  the  Company retained 10% of the  loss.  Amounts  in
excess of $180.0 million were retained 100% by the Company.

Under  the Company's casualty reinsurance program, the reinsurers  are
responsible  for  100% of the amount of each loss in  excess  of  $0.5
million  per occurrence up to $30.5 million for general liability  and
workers'  compensation. Additionally, this reinsurance covers workers'
compensation  losses in excess of $30.5 million to $60.5  million  per
occurrence.  Amounts in excess of $60.5 million are retained  100%  by
the Company.

The  Company cedes to reinsurers a portion of its risk and pays a  fee
based  upon  premiums  received  on  all  policies  subject  to   such
reinsurance. Reinsurance contracts do not relieve the Company from its
obligations  to  policyholders. Failure of reinsurers to  honor  their
obligations  could result in losses to the Company.  The Company  also
believes  that  the terms of its reinsurance contracts are  consistent
with  industry  practice  in  that they contain  standard  terms  with
respect to lines of business covered, limit and retention, arbitration
and  occurrence.  Based  on  its review of its  reinsurers'  financial
statements and reputations in the reinsurance marketplace, the Company
believes that its reinsurers are financially sound.


Investment Results

Net investment income before taxes was $25.1 million and $25.2 million
for the quarters ended September 30, 1998 and 1997, respectively.  The
decrease  is  the  result of a $1.0 million decrease  in  income  from
limited  partnerships to a $0.5 loss from a $0.5 gain for the quarters
ended  September 30, 1998 and 1997, respectively.  This is   partially
offset by a decrease in investment expenses.  The limited partnerships
pursue  investment opportunities primarily through global fixed-income
trading  strategies.  The average pre-tax yields  on  debt  securities
were  6.6%  for both the quarters ended September 30, 1998  and  1997.
Net  investment income after taxes was $21.2 million and $20.8 million
for the quarters ended September 30, 1998 and 1997, respectively.  Net
realized  gains on investments before taxes were $24.1 million  during
the  third quarter of 1998 compared to $8.3 million for the comparable
period  in  1997.  The increase is the result of  the  sale  of  $60.0
million  of  equity securities resulting in $20.0 million in  realized
gains on equity securities.

Net investment income before taxes was $75.8 million and $74.9 million
for  the  nine months ended September 30, 1998 and 1997, respectively.
The increase is the result of a shift from equity securities to higher
yielding  debt securities and reduced investment expenses.   This  was
partially  offset  by  $3.2 million decrease in  income  from  limited
partnerships  to  a loss of  $0.4 for the nine months ended  September
30, 1998 from a gain of $2.8 for the same period in 1997.  The average
pre-tax yield on debt securities was 6.6% during the first nine months
of  1998 and 6.7% for the same period in 1997.  Net investment  income
after  taxes  was $63.5 million and $61.8 million for the nine  months
ended  September 30, 1998 and 1997, respectively.  Net realized  gains
on  investments  before  taxes were $29.9 million  and  $27.4  million
during the first nine months of 1998 and 1997 respectively.

                                  14
    =============================================================

Investment Portfolio

The Company's investment portfolio decreased $0.5 million, to $1,721.1
million during the first nine months of 1998, from $1,721.6 million at
December 31, 1997, primarily due to market depreciation of high  yield
debt securities and a $4.2 million permanent impairment write-down  of
long  term  partnership investments.  Debt securities increased  $61.6
million,  to  $1,584.0 million, from $1,522.4 million, and represented
92.0%  and 88.5% of the carrying value of all investments at September
30,  1998  and December 31, 1997, respectively. Tax-exempt  securities
represented  70.8%  of  total debt securities at  September  30,  1998
compared  to 66.1% at December 31, 1997.  The Company may make  modest
extensions in portfolio incremental credit risk and adjustments to its
taxable  and  tax-exempt positions in the future to seek  to  maximize
after tax income.

The  unrealized appreciation in the investment portfolio at  September
30,  1998  was $115.8.0 million compared to $140.6 million at December
31, 1997.  Unrealized depreciation during the first nine months of the
year  was $1.9 million for bonds, and unrealized appreciation on other
investments and equity securities was $22.9 million.


Liquidity and Capital Resources

Liquidity  describes  the ability of a company to generate  sufficient
cash flows to meet the cash requirements of business operations.  As a
holding  company,  Citizens' primary source of  cash  for  payment  of
dividends   to  its  shareholders  is  dividends  from  its  insurance
subsidiaries,  which  are  subject to  limitations  imposed  by  state
regulators.  Such limitations require that dividends be paid only  out
of  statutory  earned surplus (unassigned funds) and a restriction  on
the payment of "extraordinary" dividends without prior approval of the
state authorities.

Underwriting  and  investing, typically  the  two  distinct,  but  not
separate operations in an insurance company, are the sources  of  cash
for  Citizens  Insurance.  The primary sources of  cash  are  premiums
collected,  investment income and maturing investments.  Primary  cash
outflows  are paid losses and LAE, policy acquisition expenses,  other
underwriting  expenses, and purchases of investments.   Cash  outflows
related   to  claim  losses  and  LAE  can  be  variable  because   of
uncertainties surrounding settlement dates for unpaid losses  and  the
potential  for  large losses either individually or in the  aggregate.
Accordingly, the Company's strategy is to monitor available  cash  and
short-term investment balances in relation to projected cash needs  by
matching  the  maturities of its investments to expected  payments  of
current and long-term liabilities.

Net  cash  (used for) provided by operating activities, for  the  nine
months ended September 30, 1998, was $(0.3) million compared to  $35.2
million  in  the prior year period.  The decrease in cash provided  by
operating   activities  is  primarily  due  to  the  high   level   of
catastrophes during 1998.  In addition, the company paid $13.6 million
,  in  the  second quarter of 1998, to First Allmerica Financial  Life
Insurance   Company  (FAFLIC)  for  the  transfer  of   benefit   plan
liabilities.

Net  cash provided by (used for) investing activities for the  Company
was  $22.3  million and $(22.8) million for the first nine  months  of
1998  and  1997, respectively, resulting primarily from a  decline  in
purchases  of  debt securities due to a decrease in cash  provided  by
operations.

Net  cash  used  for  financing activities for the Company  was  $13.2
million and $5.2 million, for the first nine months of 1998 and  1997,
respectively.  The  increase  in  cash  used  for  financing activites
represents  treasury  stock  repurchased  in  1998.  Dividends paid to
shareholders  were  $5.3  million  for  both  the  nine  months  ended
September 30, 1998 and 1997.

Shareholders'  equity  was  $913.6  million,  or  $26.11per  share  at
September  30,  1998,  compared to $872.9,  or  $24.75  per  share  at
December  31,  1997.  Changes in shareholders' equity related  to  the
unrealized values of underlying portfolio investments will continue to
be volatile as market prices of debt securities fluctuate with changes
in the interest rate environment.

The  Company  expects to continue to pay dividends in the  foreseeable
future.  However, payment of future dividends is subject to the  Board
of  Directors'  approval and is dependent, among  other  things,  upon
earnings and the financial condition of the Company.

                                   15
    =============================================================
    
Based  on  current trends, the Company expects to continue to generate
sufficient  positive operating cash to meet all short-term  and  long-
term  cash  requirements.  The Company  maintains  a  high  degree  of
liquidity   within   the  investment  portfolio  in   fixed   maturity
investments, common stock and short-term investments.

Recent Events

On  October  27, 1998, Citizens Corporation announced that its  parent
company,  Allmerica Financial Corporation or one of  its  wholly-owned
subsidiaries, shortly will commence a cash tender offer to acquire the
outstanding shares of Citizens Corporation common stock that Allmerica
Financial  Corporation or its subsidiaries do not  already  own  at  a
price  of  $29.00 per share.  On November 2, 1998, Allmerica Financial
Corporation  commenced the tender offer which, unless  extended,  will
expire on December 2, 1998.  Based on the number of shares of Citizens
Corporation  common  stock  held  by  unaffiliated  stockholders,  the
transaction  is  valued  at  approximately  $171  million.    Citizens
Corporation  has  established a special  committee  of  the  Board  of
Directors,  consisting  of  directors  unaffilliated  with   Allmerica
Financial Corporation, to study the offer and make a recommendation to
Citizens Corporation stockholders.

Since   the   announcement  by  Citizens  Corporation   of   Allmerica
Financial's intention to commence a tender offer to acquire all of the
outstanding shares of Citizens Corporation Common Stock that Allmerica
Financial  Corporation or  its  subsidiaries do not own, five lawsuits
have been commenced  by Citizens stockholders in the Delaware Court of
Chancery: Susser v. O'Brien, et. al., Civil Action No.  16745;  Specht
v. O'Brien, et.  al., Civil Action No. 16746; Steiner vs. O'Brien, et.
al.,  Civil Action  No.  16747; Finkelstein v. O'Brien, et. al., Civil
Action  No.  16748; and McKinnie v. O'Brien, et. al., Civil Action No.
16749.  Each  of  the actions purports to be a class action brought on
behalf  of  the  Citizens  stockholders  unaffiliated  with  Allmerica
Financial Corporation and asserts claims against  Allmerica  Financial
Corporation,  Citizens  Corporation  and  the  members of the Citizens
Corporation Board of Directors.  The actions each allege that, through
the conduct  of  the defendants,  Allmerica Financial Corporation  has
proposed  to  acquire the  shares  owned  by the unaffiliated Citizens
stockholders  at  an  unfair   and  inadequate   price,  in  violation
of   fiduciary   duties  allegedly  owed  by  the  defendants  to  the
unaffiliated   Citizens stockholders.  The various  complaints purport
by their terms  to  seek  injunctive  relief   preventing consummation
of the  tender  offer  and related  merger,  or rescission if they are
successfully  consummated, and   compensatory  damages.  No motion for
injunctive relief  has  been filed.  The complaints have been formally
served upon the  defendants with regard to Susser v. O'Brien, et, al.,
Civil Action No. 16745, and the time within which  the defendants have
to respond to the complaints  has not expired.  For the four remaining
lawsuits, the complaints have not  yet  been formally  served upon the
defendants and  the time  within  which the defendants have to respond
to  the  complaints  accordingly  has not  expired.   The   defendants
anticipate that  the  complaints   will  be consolidated into a single
action.  Citizens Corporation believes   the  actions  to  be  without
merit, and intends  to  defend  the  actions vigorously.


Impact of the Year 2000 Issue

The  Year 2000 issue is the result of computer programs being  written
using two digits rather than four to define the applicable year.   Any
of  the  Company's computer programs that have date-sensitive software
may  recognize a date using "00" as the year 1900 rather than the year
2000.   This  could  result  in  a system failure  or  miscalculations
causing  disruptions of operations, including, among other  things,  a
temporary inability to process transactions, send invoices, or  engage
in similar normal business activities.

Based  on a  third  party  assessment,  the  Company  determined  that
significant   protions  of  its  software   required  modification  or
replacement to enable its computer systems to properly  process  dates
beyond December 31, 1999.  The  Company is  presently  completing  the
process of modifying or replacing existing software and beleives  that
this action  will  resolve  the  Year  2000  issue.   However, if such
modifications and conversions are not made,or are not completed timely,
or should there be serious unanticipated  interruptions  from  unknown
sources, the Year 2000 issue could have a material  adverse  impact on
the  operations  of  the  Company.   Specifically,  the  Company could
experience,  among  other  things, an interruption  in  its ability to
collect  and  process  premiums,  process  claim  payments,  safeguard
and  manage  its  invested  assets, accurately  maintain  policyholder
information,  accurately  maintain   accounting records,  and  perform
customer service. Any of these specific events, depending on duration,
could  have  a  material impact on the results of  operations and  the
financial position of the Company.

The  Company  has  initiated formal communications  with  all  of  its
significant suppliers and large customers to determine the  extent  to
which  the  Company is vulnerable to those third parties'  failure  to
remediate  their own Year 2000 issue.  The Company's total  Year  2000
project  cost  and  estimates  to complete  the  project  include  the
estimated costs and time associated with the impact of a third party's
Year  2000  issue,  and are based on presently available  information.
However, there can be no guarantee that the systems of other companies
on  which the Company's systems rely will be timely converted, or that
a  failure  to  convert by another company, or a  conversion  that  is
incompatible  with  the  Company's systems, would  not  have  material
adverse  effect on the Company.  The Company does not believe that  it
has  material exposure to contingencies related to the Year 2000 Issue
for  the  products it has sold.  Although the Company does not believe

                                   16
    =============================================================
    
that  there  is a material contingency associated with the  Year  2000
project,  there  can  be  no  assurance  that  exposure  for  material
contingencies will not arise.

The  Company  will  utilize both internal and  external  resources  to
reprogram,   or  replace,  and  test both information  technology  and
embedded technology systems for Year 2000 modifications.  The  Company
plans to  complete  the   mission   critical elements of the Year 2000
project by December 31, 1998.  The  cost of the Year 2000 project will
be expensed as incurred primarily over the  next  year,  and  is being
funded primarilythrough a reallocation of resources from discretionary
projects.  Therefore,  the  Year 2000 project   is   not  expected  to
result  in  significant  incremental  technology   costs  or  to  have
material  effect  on  the  results  of  operations.  Through September
30, 1998, the Company has incurred  and  expensed  approximately $16.0
million related to the assessment  of,  and  preliminary   efforts  in
connection  with, the project  and  the development of  a  remediation
plan.  The total remaining cost  of the Year 2000 project is estimated
at $8.6 million.

The  Company's  contingency plans related to the Year 2000  issue  are
addressed in a plan developed jointly with an outside vendor. The plan
contains immediate steps  to  keep  business functions operating while
unforeseen  Year   2000  issues  are  being  addressed.   It  outlines
responses to situations  that  may affect critical business functions.
The COOP also provides triage guidance, a documented  order of actions
to respond to problems. During the triage process, business priorities
are  established  and  "Critical  Points of Failure" are identified as
having a significant impact on the business. The Company's contingency
plans are designed  to  keep  a  business unit's operation functioning
in the event  of  a  failure  or  delay due to Year 2000 record format
and date calculation changes.

The  costs of the project and the date on which the Company  plans  to
complete  the  Year 2000 modifications are based on management's  best
estimates, which were derived utilizing numerous assumptions of future
events  including  the  continued availability of  certain  resources,
third party modification plans and other factors.  However, there  can
be  no  guarantee  that these estimates will be  achieved  and  actual
results  could  differ materially from those plans.  Specific  factors
that  might  cause  such material differences  include,  but  are  not
limited  to,  the availability and cost of personnel trained  in  this
area,  the ability to locate and correct all relevant computer  codes,
and similar uncertainties.


Forward-Looking Statements

The  Company  wishes  to caution readers that the following  important
factors,  among others, in some cases have affected and in the  future
could  affect,  the  Company's  actual results  and  could  cause  the
Company's actual results for 1998 and beyond to differ materially from
those  expressed  in any forward-looking statements  made  by,  or  on
behalf  of, the Company.  When used in the MD&A discussion, the  words
"believes,"  "anticipated,"  "expects"  and  similar  expressions  are
intended  to  identify  forward-looking  statements.   See  "Important
Factors Regarding Forward-Looking Statements" filed as Exhibit 99.1 to
the  Company's  1997  Annual Report to Shareholders  and  incorporated
herein by reference.

Factors that may cause actual results to differ materially from  those
contemplated  or  projected, forecast, estimated or budgeted  in  such
forward   looking  statements  include  among  others,  the  following
possibilities:  (i) adverse catastrophe experience and severe weather;
(ii)  adverse loss development for events the Company insured in prior
years; (iii) heightened competition, including the intensification  of
price  competition, the entry of new competitors, and the introduction
of  new  products by new and existing competitors; (iv) adverse  state
and federal legislation, including decreases in rates, limitations  on
premium levels, increases in minimum capital and reserve requirements,
benefit  mandates,  limitations on the  ability  to  manage  care  and
utilization,  liabilities  related  to  tobacco  products,   and   tax
treatment of insurance products; (v) changes in interest rates causing
a  reduction  of investment income or in the market value of  interest
rate  sensitive  investments; (vi) failure to  obtain  new  customers,
retain  existing  customers or reductions  in  policies  in  force  by
existing  customers; (vii) higher service, administrative, or  general
expense  due  to  the  need  for  additional  advertising,  marketing,
administrative or management information systems expenditures;  (viii)
loss or retirement of key executives; (ix) increases in medical costs,
including   increases  in  utilization,  costs  of  medical  services,
pharmaceuticals,  durable medical equipment and other  covered  items;
(x)  termination of provider contracts or renegotiation at less  cost-
effective  rates  or terms of payment; (xi) changes in  the  Company's
liquidity  due  to  changes  in asset and  liability  matching;  (xii)
restrictions  on  insurance underwriting, based on  certain  criteria;
(xiii)  adverse changes in the ratings obtained by independent  rating
agencies  such  as  Moody's, Standard and Poors and A.M.  Best;  (xiv)
uncertainty  related  to  the  Year 2000  Issue;  and  (xv)  potential
liabilities  associated with Allmerica Financial Corporation's  tender
offer  for  shares  of  Citizens  Corporation  common  stock  held  by
unaffiliated stockholders.

                                   17
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                       PART II - OTHER INFORMATION
                                   
                                ITEM 4
                                ------   
                                   
          Submission of Matters to a Vote of Security Holders
          ---------------------------------------------------

The  registrant's annual shareholders' meeting was  held  on  May  12,
1998.   All  six directors nominated for re-election by the  board  of
directors  were  named in the proxies for the meeting,  which  proxies
were  solicited pursuant to Regulation 14A of the Securities  Exchange
Act  of 1934.  The following individuals were elected to serve  a  one
year term:



                         VOTES FOR      WITHHELD
                         ----------     --------
  James A. Cotter, Jr.   34,910,309       33,598
  Neal J. Curtin         34,910,309       33,598
  Dona Scott Laskey      34,910,309       33,598
  J. Barry May           34,910,309       33,598
  James R. McAuliffe     34,910,309       33,598
  John F. O'Brien        34,909,809       34,098
  Eric A. Simonsen       34,909,759       34,148

Shareholders ratified the appointment of PricewaterhouseCoopers LLP as
the  Independent Public Accountants of Citizens Corporation for  1998:
for 34,936,512; against 3,895; withheld 3,500.

Shareholders  voted  against  a shareholder  sponsored  proposal  with
respect  to commissioning a study as set forth in more detail  in  the
Proxy Statement: for 28,875; against 34,408,635; withheld 52,908; non-
vote 453,489.
                                   
                                 18
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                                ITEM 6
                                ------
                                   
                   Exhibits and Reports  on Form 8-K


(a) Exhibits

    EX-27              Financial Data Schedule

 .
(b) Reports on Form 8-K

      On  July 31, 1998, a report on Form 8-K was filed under Item  5,
Other Events, the Registrant's announcement that third quarter results
will  be  adversely  impacted  by catastrophe  losses  resulting  from
electrical,  rain  and wind storms which struck the Detroit,  Michigan
metropolitan  area on July 22, 1998.  Currently, the  company  expects
approximately $6.8 million in pre-tax catastrophe losses.
                                   
                                   
     On October 15, 1998, a report on Form 8-K was filed under Item 5,
Other Events, the Registrant's announcement that third quarter results
will  be  adversely  impacted by catastrophe  losses  attributable  to
electrical,  rain and wind storms in the Michigan area totaling  $18.6
million.   This total includes pre-tax catastrophe losses from  storms
in  the  months  of  July  and September totaling  $13.7  million,  in
addition  to  unfavorable loss development of $4.9  million  on  prior
storms reported in the months of May and June.
                                   
     On October 27, 1998, a report on Form 8-K was filed under Item 5,
Other  Events, the Registrant's announcement that its parent  company,
Allmerica   Financial   Corporation  or  one   of   its   wholly-owned
subsidiaries, shortly will commence a cash tender offer to acquire all
of the outstanding shares of Citizens Corporation common stock that it
does  not  already own at a price of $29.00 per share.  Based  on  the
number  of  shared  of  Citizens  Corporation  common  stock  held  by
unaffiliated  stockholders, the transaction is valued at approximately
$171 million.

     On November 3, 1998, a report on Form 8-K was filed under Item 5,
Other Events, the Registrant's announced its financial results for the
three months ended September 30, 1998.


                                  19
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                              SIGNATURES


Pursuant  to the requirements of the Securities Exchange Act of  1934,
the  registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.


                         Citizens Corporation
                         --------------------
                              Registrant




Dated  November 13, 1998           /s/ John F. O'Brien
       -----------------           ------------------------
                                   John F. O'Brien
                                   President and Chief Executive
                                   Officer, and Chairman of the Board




Dated  November 13, 1998           /s/ Edward J. Parry, III
       -----------------           ------------------------
                                   Edward J. Parry, III
                                   Vice President, Chief Financial
                                   Officer, Treasurer and Principal
                                   Accounting Officer


                                20
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