FORM 10-Q
                                
               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, 1996
                                
                               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: 35,265,800 Shares of Common Stock Outstanding, as of November
1, 1996.
                                

                                 15
                       Total Number of Pages
                       
                       
                        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 Cash Flows                    6 
                 Notes to Consolidated Financial Statements               7
                 
              
                 
    ITEM 2 -  MANAGEMENT'S DISCUSSION AND ANALYSIS
              OF FINANCIAL CONDITION AND RESULTS OF
              OPERATIONS                                             8 - 13
              
              
PART II - OTHER INFORMATION



    ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K                            14




SIGNATURES                                                               15




<TABLE>


                               PART I - FINANCIAL INFORMATION

                                ITEM 1 - FINANCIAL STATEMENTS

                                    CITIZENS CORPORATION
                             CONSOLIDATED STATEMENTS OF INCOME

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

                                                     (Unaudited)          (Unaudited)
                                                     Quarter Ended        Nine Months Ended
(In millions, except per share data)                 September 30,        September 30,
                                                      1996     1995        1996     1995
Revenues                                                                 
   Net premiums written                            $  229.7 $  233.9    $  651.5 $  648.7
   Change in unearned premiums,
      net of prepaid reinsurance premiums              18.9     24.4        25.1     41.0
   Net premiums earned                                210.8    209.5       626.4    607.7
   Net investment income                               23.6     19.2        64.4     59.9
   Net realized gains on investments                   (0.8)     3.9        14.2      4.1
   Other income, net                                    0.3     (0.1)        1.4      0.6

      Total revenues                                  233.9    232.5       706.4    672.3
 
Expenses
   Losses and loss adjustment expenses                141.6    145.3       461.1    431.4
   Policy acquisition and other operating expenses     56.1     57.4       162.3    165.0
   Policyholders' dividends                             2.0      1.5         5.6      4.2

      Total expenses                                  199.7    204.2       629.0    600.6

Income before federal income taxes                     34.2     28.3        77.4     71.7

Federal income tax expense                              7.1      7.4        15.7     15.2


Net income                                         $   27.1 $   20.9    $   61.7 $   56.5

Per share data

   Net income                                      $   0.77 $   0.58    $   1.74 $   1.51

   Dividends declared to shareholders              $   0.05 $   0.05    $   0.15 $   0.15

   Weighted average shares outstanding                 35.3     36.1        35.5     36.1


          The accompanying notes are an integral part of these financial statements.


</TABLE>

<TABLE>



                                 CITIZENS CORPORATION
                              CONSOLIDATED BALANCE SHEETS

<S>                                                                          <C>         <C>

                                                                               (Unaudited)
(In millions, except per share data)                                          September 30,  December 31,
                                                                                   1996          1995
Assets
  Investments:
    Debt securities available-for-sale, at fair value
      (Amortized cost of $1,362.3 and $1,247.5)                               $  1,378.7  $    1,289.5
    Equity securities available-for-sale, at fair value                       
      (Cost of $130.3 and $149.6)                                                  175.8         189.5
    Other investments, at fair value (Cost of $11.4 and $9.6)                       13.8          11.8
      Total investments                                                          1,568.3       1,490.8
  
  Cash and cash equivalents                                                         47.3          59.1
  Accrued investment income                                                         23.6          25.1
  Premiums and notes receivable (less allowance for                           
    doubtful accounts of $0.8 and $0.8)                                            157.3         141.0
  Reinsurance recoverable on paid and unpaid losses                                551.7         521.8
  Prepaid reinsurance premiums                                                      59.3          54.5
  Deferred policy acquisition expenses                                              57.8          52.2
  Deferred federal income taxes                                                     35.2          29.7
  Other assets                                                                      77.6          96.6
                                                                              
                                                                              $  2,578.1  $    2,470.8
Liabilities and Shareholders' Equity

Liabilities:
  Reserve for losses and loss adjustment expenses                             $  1,322.0  $    1,291.6
  Unearned premiums                                                                381.3         351.4
  Other liabilities                                                                159.5         145.0

      Total liabilities                                                          1,862.8       1,788.0
                                                                              
Shareholders' Equity:                                                         
   Common stock, $0.01 par value per share; authorized 100.0 million shares;  
    36.1 million shares issued                                                       0.4           0.4
   Additional paid-in capital                                                      156.1         156.1
   Retained earnings                                                               531.9         475.5
   Unrealized appreciation on investments, net of                             
    deferred federal income taxes                                                   41.9          54.7
   Treasury stock, at cost (0.8 million shares and 0.2 million shares)             (15.0)         (3.9)

      Total shareholders' equity                                                   715.3         682.8
                                                                               
                                                                              $  2,578.1  $    2,470.8


                  The accompanying notes are an integral part of these financial statements.
                   
</TABLE>

<TABLE>
 
 
 
 
 
                                    CITIZENS CORPORATION
                      CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

<S>                                                                    <C>           <C>

                                                                                (Unaudited)
                                                                             Nine Months Ended
(In millions)                                                                   September 30,
                                                                             1996          1995

Preferred stock
   Balance at beginning of period                                       $       -     $    100.0
   Redemption of preferred stock                                                -         (100.0)
   Balance at end of period                                             $       -     $       -          

Common stock                                                             
   Balance at beginning and end of period                                      0.4           0.4

Additional paid-in capital                                              
   Balance at beginning and end of period                                    156.1         156.1

Retained earnings                                                       
   Balance at beginning of period                                            475.5         409.8
   Net income                                                                 61.7          56.5
   Dividends declared to shareholders                                         (5.3)         (7.4)
   Balance at end of period                                                  531.9         458.9

Unrealized appreciation (depreciation) on investments, net
      Balance at beginning of period                                          54.7         (20.4)
      (Depreciation) appreciation during the period                          (19.7)         93.2
      Benefit (provision) for deferred federal income taxes                    6.9         (32.7)
      Balance at end of period                                                41.9          40.1
                                                                        
Treasury stock
   Balance at beginning of period                                             (3.9)            -  
   Shares purchased at cost                                                  (11.1)         (1.0)
   Balance at end of period                                                  (15.0)         (1.0)

   Total shareholders' equity                                           $    715.3    $    654.5





               The accompanying notes are an integral part of these financial statements.
               
</TABLE>

<TABLE>


                              CITIZENS CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS

<S>                                                                          <C>      <C>

                                                                                  (Unaudited)
                                                                              Nine Months Ended
(In millions)                                                                    September 30,
                                                                                1996      1995
Cash was (used for) provided by:
Operating Activities
    Net income                                                                $  61.7  $   56.5
    Adjustments to reconcile net income to net cash
     provided by operating activities:                                        
      Net realized gains on investments                                         (14.2)     (4.1)
      Deferred federal income tax provision (benefit)                             1.5       1.9
      Change in assets and liabilities:                                       
        Deferred policy acquisition expenses                                     (5.6)     (6.8)
        Net premiums receivable, net of reinsurance premiums payable            (13.7)    (42.9)
        Unearned premiums, net of prepaid reinsurance premiums                   25.1      41.0
        Reserve for losses and loss adjustment expenses,                      
          net of reinsurance recoverable                                          0.5      35.5
        Other, net                                                                3.2      15.2
         Net cash provided by operating activities                               58.5      96.3

Investing Activities                                                          
    Proceeds from sale of available-for-sale debt securities                    315.6     398.2
    Proceeds from available-for-sale debt securities maturing or called         139.2      72.0
    Proceeds from held-to-maturity debt securities maturing or called               -      10.1
    Proceeds from sale of available-for-sale equity securities                
      and other investments                                                      69.8      24.9
    Purchases of available-for-sale debt securities                            (572.5)   (478.7)
    Purchases of available-for-sale equity securities and other investments     (35.9)    (68.1)
    Change in net receivable from securities transactions not settled            32.1      12.2
    Other investing activities, net                                              (2.2)     (2.7)
       Net cash used for investing activities                                   (53.9)    (32.1)

Financing Activities                                                          
    Dividends paid to shareholders                                               (5.3)     (7.4)
    Redemption of Series A preferred stock                                          -    (100.0)
    Treasury stock purchased, at cost                                           (11.1)     (1.0)
       Net cash used for financing activities                                   (16.4)   (108.4)

Net decrease in cash and cash equivalents                                       (11.8)    (44.2)
                                                                              
Cash and cash equivalents at beginning of period                                 59.1     141.4
Cash and cash equivalents at end of period                                    $  47.3  $   97.2



             The accompanying notes are an integral part of these financial statements.
             
             
             
</TABLE>             
 
 




                      CITIZENS CORPORATION
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                
1. Earnings per Common Share

Earnings  per  common share for the quarters ended September  30,
1996  and  1995,  are based upon weighted average  common  shares
outstanding  of  35.3 and  36.1 million, respectively.   Earnings
per common share for the nine months ended September 30, 1996 and
1995,  are  based upon weighted average common shares outstanding
of  35.5  million  and  36.1 million, respectively.   Net  income
available  to  common  shareholders for  the  nine  months  ended
September 30, 1995, was reduced by $2.0 million for dividends  on
preferred  stock.  On July 26, 1995, the Board  of  Directors  of
Citizens Corporation ("the Company") authorized the repurchase of
up  to  0.5 million shares, or slightly more than one percent  of
its outstanding common stock.  On February 27, 1996, and June  7,
1996,  the  Board  of Directors authorized the repurchase  of  an
additional   0.3   million  shares  and   1.0   million   shares,
respectively, of common stock, for a total authorization  of  1.8
million  shares or slightly less than five percent of its  issued
common  stock  and  has purchased a total of 0.8  million  shares
since the implementation of the repurchase program.


                                
MANAGEMENT'S REPRESENTATION

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.  Certain reclassifications
have  been  made  to the 1995 financial statements  in  order  to
conform  to  the  1996  presentation.  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 1995 Annual Report to Shareholders, as filed on Form 10-
K to the Securities and Exchange Commission.



                 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, 1996,  was  $27.1
million, or $0.77 per  share, compared to $20.9 million, or $0.58
per   share, for the quarter ended September 30, 1995.  Excluding
realized  gains  and losses, net of taxes, net  income  increased
$9.3  million,  to $27.7 million for the quarter ended  September
30,  1996.   The increase in net income is primarily attributable
to   a  $3.7  million,  or  2.5%  decrease  in  losses  and  loss
adjustment  expenses (LAE) to $141.6 million, resulting   from  a
favorable  re-estimation of the catastrophe losses which  occured
in  the  first  half  of 1996.  This adjustment  reduced  related
reserves  by  $6.0  million,  and  resulted  in  a  $3.8  million
catastrophe net benefit, compared to catastrophe losses  of  $7.7
million  in the quarter ended September 30, 1995.  Net investment
income  increased  $4.4  million, or  22.9%,  to  $23.6  million,
primarily  as  a result of a change in estimated equity  earnings
from  a limited partnership of $2.6 million.  Federal income  tax
expense  decreased  $0.3  million, to  $7.1  million,  while  the
effective  tax  rate decreased from 26.1% in  the  quarter  ended
September 30, 1995, to 20.8% for the same period in 1996.

Net  income  for the nine months ended September  30,  1996,  was
$61.7 million, or $1.74 per  share, compared to $56.5 million, or
$1.51  per  share, for the nine months ended September 30,  1995.
Excluding  realized gains and losses, net of  taxes,  net  income
decreased  $1.3  million, to $52.5 million for  the  nine  months
ended  September  30,  1996.   The  increase  in  net  income  is
primarily  attributable to an increase in investment  income  and
realized  gains of $4.5 million and $10.1 million,  respectively,
partially  offset by a decrease in underwriting  profit  of  $9.7
million.   The decrease in underwriting profit primarily reflects
an increase in catastrophes and an increase in claims activity in
the  commercial multiple peril and homeowners lines.  Catastrophe
losses were $16.9 million in the nine months ended September  30,
1996, compared to $7.7 million in the nine months ended September
30,  1995.  The increase in catastrophes was partially offset  by
favorable  claims  experience in the  personal  automobile  line.
This increase in investment income was primarily as a result of a
change in estimated equity earnings from a limited partnership of
$2.6 million.   Federal income tax expense increased $0.5 million
to  $15.7  million, while the effective tax rate  decreased  from
21.2%  in  the nine months ended September 30, 1995 to 20.3%  for
the same period in 1996.

Revenues

Net  premiums earned increased $1.3 million, or 0.6%,  to  $210.8
million for the quarter ended September 30, 1996, resulting  from
a  $4.9 million increase in the Company's personal segment  which
was  partially  offset  by a decrease  of  $3.6  million  in  the
Company's  commercial  segment.  Net  premiums  earned  increased
$18.7  million,  or 3.1%, to $626.4 million for the  nine  months
ended  September  30,  1996, resulting from  increases  of  $14.2
million and $4.5 million increases in the Company's personal  and
commercial  segments,  respectively.   This  growth  is  due   to
increases  in  net premiums earned of $7.7 million  in  Ohio  and
Indiana  resulting from expansion in these states  and  to  price
increases  in  all  major lines except the workers'  compensation
line.   The growth is partially offset by rate reductions in  the
workers'  compensation line where competitive conditions continue
to increase in Michigan.



Segment Results

Personal segment

Personal  segment premiums represented 66.9% and 65.0%  of  total
net premiums earned for the quarters ended September 30, 1996 and
1995,  respectively, and 66.0% and 65.7% of  total  net  premiums
earned  for  the nine months ended September 30, 1996  and  1995,
respectively.


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

                                                          Three Months           Nine Months
For the Periods Ended
September 30, (In millions)                            1996       1995        1996        1995

 
Net premiums earned                                $  141.0   $  136.1    $   413.3   $  399.1
 
Losses and loss adjustment expenses                    96.5      105.6        308.1      304.4
 
Policy acquisition and other underwriting
expenses                                               37.6       36.0        110.2      108.8
 
Underwriting (loss) profit                         $    6.9   $   (5.5)   $    (5.0)  $  (14.1)

</TABLE>


                                                                 

Personal  segment net premiums earned increased $4.9 million,  or
3.6%, to $141.0 million for the quarter ended September 30, 1996.
Personal segment net premiums earned increased $14.2 million,  or
3.6%,  to $413.3 million for the nine months ended September  30,
1996.   This  growth is attributable to price  increases  in  the
personal   automobile  and  homeowners  lines.   The  growth   is
partially offset by a 2.5% decrease in policies in force  in  the
personal automobile line since December 31, 1995, attributable to
continued strong competition in Michigan.

The personal segment underwriting profit was $6.9 million for the
quarter  ended  September 30, 1996, compared to  a  $5.5  million
underwriting  loss  for  the  comparable  period  in  1995.   The
improvement  in  the  underwriting profit  reflects  primarily  a
decrease  in catastrophe losses.  Catastrophe losses  provided  a
$2.3  million benefit during the third quarter of 1996 due  to  a
favorable  re-estimation of catastrophe losses which  occured  in
the  first half of 1996.  The Company incurred catastrophe losses
of  $6.9  million  during  the third quarter  of  1995.    Policy
acquisition costs and other underwriting expenses increased  $1.6
million,  to  $37.6 million in the third quarter  of  1996.   The
increase is primarily attributable to the increase in net  earned
premium   and   expenses  associated  with  an   ongoing   policy
administration technology project, partially offset by  decreases
in employee related expenses and commissions.

The  personal segment underwriting loss was $5.0 million, for the
nine months ended September 30, 1996, compared to a loss of $14.1
million  in  the  comparable  1995 period.   The  improvement  in
underwriting  results  reflects the impact  of  a  $14.2  million
increase  in  earned  premiums,  and  reflects  favorable  claims
activity in both current and prior accident years in the personal
automobile  line attributable to improvements in  severity.  This
was   partially  offset by an increase in catastrophe  losses  of
$8.5 million, to $15.4 million, primarily in the homeowners line.
Policy   acquisition  and other underwriting  expenses  increased
$1.4 million, to $110.2 million due to the effect of increases in
net  earned  premium  and  expenses associated  with  the  policy
administration technology project, partially offset by reductions
in employee related expenses.

Commercial segment

Commercial segment premiums represented 33.1% and 35.0% of  total
net premiums earned for the quarters ended September 30, 1996 and
1995,  respectively, and 34.0% and 34.3% of  total  net  premiums
earned  for  the nine months ended September 30, 1996  and  1995,
respectively.

                                                                
<TABLE>
<S>                                                <C>        <C>         <C>         <C>
                                                          Three Months           Nine Months
For the Periods Ended
September 30, (In millions)                            1996       1995        1996        1995

 
Net premiums earned                                $   69.8   $   73.4    $   213.1   $  208.6
 
Losses and loss adjustment expenses                    45.1       39.7        153.0      127.0
 
Policy acquisition and other underwriting
expenses                                               18.5       21.4         52.1       56.2

Policyholders' dividends                                2.0        1.5          5.6        4.2
 
Underwriting (loss) profit                         $    4.2   $   10.8    $     2.4   $   21.2

</TABLE>



Commercial segment net premiums earned decreased $3.6 million, or
4.9%,  to $69.8 million for the quarter ended September 30, 1996.
This decrease is primarily attributable to rate decreases in  the
workers'  compensation  line.  Commercial  segment  net  premiums
earned increased $4.5 million, or 2.2%, to $213.1 million for the
nine months ended September 30, 1996.  The growth during the nine
months primarily reflects a 9.5% increase in policies in force in
the  commercial multiple peril line since December 31, 1995. This
growth  continues to be offset by rate reductions in the workers'
compensation line as a result of continuing competition  in  this
line  in Michigan.  Rates in the workers' compensation line  were
decreased 8.5%, 7.0%, and 6.4% effective May 1, 1995, December 1,
1995, and June 1, 1996, respectively.

The  commercial segment underwriting profit was $4.2  million  in
the  quarter ended September 30, 1996, compared to $10.8  million
in  the  quarter  ended  September  30,  1995.   The  decline  in
underwriting results is due primarily to increased loss frequency
in the commercial multiple peril and workers' compensation lines.
Catastrophe  losses decreased $2.3 million to a benefit  of  $1.5
million.  This benefit resulted from a favorable re-estimation of
catastrophe  losses  which occurred in the first  half  of  1996.
Losses  and  LAE in the commercial multiple peril line  increased
$2.9  million, or 31.5%, to $12.1 million and losses and  LAE  in
the  workers' compensation line increased $1.5 million, or 10.2%,
to  $16.2  million.   Policy acquisition and  other  underwriting
expenses  decreased  $2.9 million, or 13.6%,  to  $18.5  million,
primarily  due  to the decrease in earned premiums,  as  well  as
reductions in employee related expenses and commissions.

The  commercial segment underwriting profit was $2.4  million  in
the  nine  months  ended September 30, 1996,  compared  to  $21.2
million in the nine months ended September 30, 1995.  The decline
in  underwriting profit reflects an increase in loss severity and
frequency  in  the  commercial multiple peril line.    Commercial
multiple peril losses and LAE increased $15.4 million, or  53.1%,
to  $44.4  million in the nine months ended September  30,  1996.
Catastrophe losses in this segment were $1.5 million in the  nine
months  ended September 30, 1996 compared to $0.8 million  during
the  comparable  period  of 1995.  Policy acquisition  and  other
underwriting  expenses decreased $4.1 million, or 7.3%, to  $52.1
million due to reductions in employee related expenses.  This was
partially offset by the effect of increases in earned premium.





Reserve for Losses and Loss Adjustment Expenses

The  Company  maintains  reserves to provide  for  its  estimated
ultimate  liability for losses and loss adjustment expenses  with
respect to reported and unreported claims incurred as of the  end
of   each  accounting  period.   These  reserves  are  estimates,
involving actuarial projections at a given point in time, of what
management expects the ultimate settlement and administration  of
claims  will  cost based on facts and circumstances  then  known,
predictions of future events, estimates of future trends in claim
severity  and  judicial theories of liabiltiy and other  factors.
The  inherent  uncertainty of estimating  insurance  reserves  is
greater  for  certain  types of property and  casualty  insurance
lines,  particularly  workers' compensation and  other  liability
lines,  where  a  longer  period of  time  may  elapse  before  a
definitive determination of ultimate liability may be  made,  and
where   the   technological,  judicial  and  political   climates
involving these types of claims are changing.

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 to be needed and recorded.  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 periods ended September 30, (in millions)                            1996        1995


Reserve for losses and LAE, beginning of period                           $ 1,291.6   $1,196.6

Reserve for losses and LAE, net of reinsurance recoverable:

  Provision for insured events of the current period                          487.1      447.8

  Decrease in provision for insured events of prior years                     (26.0)     (16.4)
                                                                                       
Total incurred losses and LAE                                                 461.1      431.4
                                                                                       

Payments, net of reinsurance recoverable:

  Losses and LAE attributable to insured events of current period             253.0      209.9

  Losses and LAE attributable to insured events of prior years                201.7      188.2
                                                                                       
Total payments                                                                454.7      398.1
                                                                                       

Change in reinsurance recoverable on unpaid losses                             24.0       18.5
                                                                                       
Reserve for losses and LAE, end of period                                 $ 1,322.0   $1,248.4
                                                                                       
</TABLE>



As  part  of  an  ongoing  process, the reserves  have  been  re-
estimated  for  all  prior accident years and were  decreased  by
$26.0  million,  and  $16.4 million for  the  nine  months  ended
September  30,  1996  and 1995, respectively.   The  increase  in
favorable reserve development in 1996 primarily reflects  reduced
medical costs in the personal automobile line.

The  Company  regularly  reviews its  reserving  techniques,  its
overall  reserving position and its reinsurance.   Based  on  (i)
review  of  historical  data,  legislative  enactments,  judicial
decisions, legal developments in impositions of damages,  changes
in political attitudes and trends in general economic conditions,
(ii)  review  of  per  claim information, (iii)  historical  loss
experience  of  the  Company  and  the  industry,  and  (iv)  the
relatively  short-term nature of most policies, and (v)  periodic
estimates  of  required  reserves  by  an  independent  actuarial
consulting firm, management believes that adequate provision  has
been   made   for  loss  reserves.   However,  establishment   of
appropriate reseves 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.

Investment Results

Net  investment income before taxes was $23.6 million  and  $19.2
million  for  the  quarters ended September 30,  1996  and  1995,
respectively.  This increase is primarily the result of a  change
in  estimated equity earnings from a limited partnership  of $2.6
million.   The average yield on debt securities was  6.0%  during
the  quarter ended September 30, 1996 as compared to 5.7% for the
quarter  ended September 30, 1995.  Net investment  income  after
taxes  was $19.2 million and $15.1 million for the quarters ended
September 30, 1996 and 1995, respectively.

Net  investment income before taxes was $64.4 million  and  $59.9
million  for the nine months ended September 30, 1996  and  1995,
respectively.  This increase is primarily the result of a  change
in  estimated equity earnings from a limited partnership of  $2.6
million.  The average yield on debt securities was 6.1% and  6.0%
for   the  nine  months  ended  September  30,  1996  and   1995,
respectively.   Net  investment  income  after  taxes  was  $53.3
million and $49.3 million for the nine months ended September 30,
1996 and 1995, respectively.

Investment Portfolio

The  Company's investment portfolio increased $77.5 million, from
$1,490.8  million  at December 31, 1995, to $1,568.3  million  at
September 30, 1996.  Debt securities increased $89.2 million,  to
$1,378.7  million,  from $1,289.5 million, and represented  87.9%
and  86.5%  of the carrying value of all investments at September
30, 1996, and December 31, 1995, respectively.  This increase  is
consistent with  the Company's strategy of increasing  the  level
of  debt  securities in the portfolio. This was  accomplished  by
reducing  the level of equities in the portfolio, which  resulted
in  a  $13.7  million  decrease in equity  securities  to  $175.8
million  in the first nine months of 1996.  Tax-exempt securities
increased $48.8 million, to $967.1 million, from $918.3  million,
during  the period.  Tax-exempt securities represented  70.1%  of
total debt securities at September 30, 1996, compared to 71.2% at
December 31, 1995.

Net  unrealized  appreciation  in  the  investment  portfolio  at
September 30, 1996 was $64.3 million compared to $84.1 million at
December  31, 1995.  Unrealized depreciation in the  nine  months
was  $25.4  million  for  bonds, and unrealized  appreciation  on
equity securities and other investments was $5.7 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.  The  Company  periodically
adjusts its investment policy to respond to changes in short-term
and long-term cash requirements.

Net  cash  provided by operating activities for the  nine  months
ended  September  30, 1996, was $58.5 million compared  to  $96.3
million  in  the comparable prior year period.  This decrease  is
primarily  attributable  to the increase in  underwriting  losses
during  the first nine months of 1996 and to the timing of claims
payments.
Net  cash used for investing activities by the Company was  $53.9
million  for the first nine months of 1996 compared to  net  cash
used of $32.1 million for the comparable prior year period.  Cash
used  for  investing activity in the 1995 period was historically
low  due  to the need to provide for the $100.0 million Series  A
Preferred Stock redemption on June 30, 1995.

Net  cash used for financing activities by the Company was  $16.4
million and $108.4 million, for the first nine months of 1996 and
1995, respectively.  This decrease in net cash used for financing
activities  reflects  the redemption of the  Series  A  Preferred
Stock  for  $100.0 million from The Hanover Insurance Company  in
1995 and is partially  offset by an increase of $10.1 million  of
treasury stock purchased in 1996.

Shareholders' equity was $715.3 million at September 30, 1996, or
$20.26  per common share, compared to $682.8  million at December
31,  1995,  or  $19.04  per common share.   Shareholders'  equity
reflects  a decrease of $12.8 million due to a decrease,  net  of
deferred  income  taxes, in the fair values of available-for-sale
debt securities.  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.

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.

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 1996 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 herewith as Exhibit  99-1  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,  and
increases  in  minimum  capital  and  reserve  requirements;  (v)
changes  in  interest  rates causing a  reduction  of  investment
income  and  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) adverse changes
in  the  ratings obtained by independent rating agencies such  as
Moody's, Standard and Poors and A.M. Best.










                   PART II - OTHER INFORMATION





                             ITEM 6


                Exhibits and Reports on Form 8-K

(a) Exhibits

  EX-11         Statement regarding computation of per share earnings
  EX-27         Financial Data Schedule
  EX-99.1       Important Factors Regarding Forward-Looking Statements.



(b) Reports on Form 8-K

  None.

  
                           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 12, 1996          /s/ John F. O'Brien
                                      John F. O'Brien 
                                      President and Chief Executive
                                      Officer





Dated  November 12, 1996          /s/ James R. McAuliffe
                                      James R. McAuliffe
                                      Vice President




Dated  November 12, 1996          /s/ Edward J. Parry III
                                      Edward J. Parry III
                                      Vice President, Treasurer and
                                      Principal Accounting Officer