SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, D. C.  20549

                                    FORM 10-KSB


(X)       ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES AND
          EXCHANGE ACT OF 1934 


For the fiscal year ended December 31, 1996


                              Commission file number 0-21572

                             AMERICAN INVESTMENT NETWORK, INC.
                        (formerly Great American Investment Network, Inc.)
                           Name of Small Business Issuer in Its Charter

Mississippi                                                74-2447294
(State or Other Jurisdiction                             (I.R.S. Employer
of Incorporation or Organization)                       Identification Number)

660 Lakeland East Drive, Flowood, Mississippi              39208
(Address of Principal Executive Offices)                   (Zip Code)

(601)936-2090
(Issuer's telephone Number, Including Area Code)


Securities registered under Section 12 (b) of the Exchange Act:
NONE

Securities registered under Section 12 (g) of the Exchange Act:

                                   CLASS "A" COMMON, NO PAR VALUE
                                          (Title of Class)

Check whether the issuer:  (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12
months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.

                           Yes    X           No       

Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B contained in this Form 10-KSB, and no
disclosure will be contained, to the best of Registrant's
knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-KSB or any
amendment to this Form 10-KSB.

                                                  X   


The Registrant's revenues for its most recent fiscal year were
$3,105,403.

The aggregate market value of the voting stock held by non-
affiliates (computed by reference to the average of the high and
low sales prices for 1996 of $.50 per share) as of March 1, 1997
was $2,512,132.

The number of shares issued of AIN's Class A and Class B Common
Stock as of March 1, 1997 was 5,025,490 and 2,500, respectively. 
There were 3,276 shares of treasury stock held as of March 1, 1997. 
The total number of shares outstanding as of March 1, 1997 was
5,024,264. 


                      DOCUMENTS INCORPORATED BY REFERENCE

Portions of AIN's Proxy Statement to be filed in connection with
AIN's 1997 Annual Meeting of Shareholders are incorporated by
reference into Part III of this report.






ITEM I.  BUSINESS

     American Investment Network, Inc., (formerly Great American Investment
Network, Inc.) a Mississippi corporation, ("AIN") was incorporated January 15, 
1987. The Company was organized to serve as a parent company of a life insurance
company and other subsidiary companies dealing with insurance and financial 
services.  

     Presently, the Company owns 100% of the outstanding capital stock of United
Security Life Insurance Company, a Mississippi domestic life insurance company 
("USLI") and The Gain Agency, Inc., a Mississippi corporation ("Agency").  

      From the inception of the Company in January, 1987, until May 1990, the 
Company was in a development stage of organizational planning, receiving capital
through a private intrastate offering and a public intrastate offering, 
establishing operating procedures, training a staff in USLI, acquiring its 
insurance agency business, and buying and renting an office building.  Its 
principal revenues were from interest on invested capital, rental from the 
portion of its building rented to outsiders and agency commissions.  

      AIN's Board of Directors has entered into a Plan and Agreement of Exchange
of shares between and among Citizens, Inc. and Citizens Insurance Company of 
America located in Austin, Texas.  The Plan and Agreement is dated October 28, 
1996.  It provides for the holders of each issued and outstanding share of AIN's
Class A and Class B common stock to be exchanged for shares of Citizens, Inc.  
The shareholders of AIN are to receive one (1) share of Citizens Class A common
stock for each seven and two-tenths (7.2) shares of American's Class A or Class 
B stock.  The Plan and Agreement is subject to the approval of regulatory 
authorities and shareholders.  Neither of these approvals had been received on 
March 28, 1997.  

UNITED SECURITY LIFE INSURANCE COMPANY

      Effective December 31, 1994, AIN purchased Financial Security Life of
Mississippi (FSL), a Mississippi domestic life insurance company and USLI and 
FSL were merged.  FSL was the surviving company and simultaneously with the 
merger the name of the surviving company was changed to United Security Life 
Insurance Company.  In compliance with the requirements of the Mississippi 
Department of Insurance, certain operating transactions of both companies were 
combined in the annual statutory financial statement for 1994.  Statutory gain 
from operations in 1996 and 1995 were approximately $4,000 and $13,000.  On a 
generally accepted accounting principle basis, net (loss) income of USLI 
approximated $(203,000) in 1996 and $293,000 in 1995.

      As of December 31, 1996, USLI had $55,585,000 of life insurance in force 
and $19,277,000 in accidental death benefits.  Of the life insurance in force, 
USLI reinsured $30,760,000 and retained $24,825,000.  The maximum retention by 
USLI on any one life for life insurance policies is $20,000.  It reinsured all 
of the accidental death benefit coverage.  USLI had 6,214 accident and health 
policies with $2,037,000 of annualized premium in-force. Reinsurance is provided
for amounts in excess of $25,000 on any one claim in any calendar year on the 
cancer policy.  Additionally, during 1996, the Company entered into reinsurance 
agreements which provide coverage of claims in excess of various amounts on 
several of its other accident and health policies and riders.

      USLI has approximately 300 full and part time licensed representatives.  
These agents are licensed to sell life, accident and health insurance products 
and USLI will be recruiting additional agents in the nine states it is 
authorized to sell its products.

INSURANCE PRODUCTS    

      USLI offers customary forms of life insurance, including non-participating
whole life, decreasing term, level term policies, and a participating whole life
policy.  It has begun offering a limited line of supplementary health policies. 
Its leading life policy in the past has been the "Lifetime Accumulator," a 
participating whole life insurance policy.  This policy differs from the usual 
offering of life insurance in that the premium is uniform but the amount of 
insurance varies by the age of the proposed insured.  The product is sold, 
therefore, in premium units rather than in face amount units.  While this policy
is written only on persons at ages 0 - 40, other life insurance products are 
offered at ages 0 - 70.  

      The Lifetime Accumulator, by being sold at ages less than 40 and in small 
insurance amounts,does not usually require a medical examination of the proposed
insured.  Examinations are obtained if the amounts exceed the usual published 
guidelines of the company.  These guidelines affect all of its life insurance 
products.Electrocardiograms, X-rays, blood profiles and urinalysis are obtained.
USLI can, and does, request records from the proposed insured's attending 
physician, and it obtains investigative consumer reports as well.  Applications
must be submitted on every proposed insured with questions of a medical nature 
asked.  Also questions regarding driving, habits, hazardous sports and flying 
re asked. Supplementary questionnaires are also obtained where required on 
aviation and hazardous avocations.The underwriting department may always request
additional information of this nature where indicated by responses on the 
application.

     Through 1993, USLI had written primarily the Lifetime Accumulator, which 
accounted for approximately 98% of premium income.  During latter 1993, the 
company shifted its marketing thrust to non-participating ordinary life products
and supplementary accident and health products.  For 1996, 36% of premium income
was from life policies and 64% was from accident and health policies.  The 
persistency of the products has followed the Company's actuarial projection for 
the products and lapses have not exceeded the assumptions.  It is anticipated 
that a major portion of the premium revenues in 1997 will come from the accident
and health products.

      As mentioned above, USLI writes various forms of life insurance, and since
early 1994 it has developed several new supplementary health insurance products,
ie:cancer, hospital indemnity, mental illness, outpatient sickness, catastrophic
illness, emergency accident, intensive care, disability income, and Medicare 
supplement.

      USLI plans to aggressively mass market these products through various 
companies employee groups.  Premiums will be employer paid or paid through 
payroll deduction. USLI has been very selective in its acceptance of the life 
insurance risks.  USLI can issue life insurance on a rated premium substandard
basis up through Table 16 (400% extra mortality), but in so doing it will 
reinsure all of the risk. USLI only issues through Table 4(100% extra mortality)
on its Lifetime Accumulator policy to improve the mortality and potential 
profitability on that product line.  The substandard risks are those that by 
reason of health, occupation or avocation fall outside the normal anticipated 
mortality levels of the general population as developed by the actuarial 
sciences.  USLI, prior to January 8, 1993, retained $15,000 of life insurance
on any one life; on January 8, 1993 it increased its retention to $20,000 on any
one life.  It reinsures all of its accidental death risk.  USLI also has a 
reinsurance agreement on its cancer policy which limits its claim risk to 
$25,000 in any calendar year on any one claim. It also reinsures various amounts
on several other health products.

      The applications for accident and health policies which USLI issues are 
underwritten.  Applications or applicants personal medical history records which
show pre-existing medical conditions will be declined or the policy will be 
issued with exclusion endorsements.  In those instances where the employer pays 
a portion of the premium and at least 75% of the employees apply for the 
coverage, the policies may be issued covering pre-existing conditions.

      USLI's  selling efforts are not usually concentrated on any one economic, 
occupational, hazard or age group.  The Lifetime Accumulator is the only 
exception, and that is an exception due to limiting the age of proposed insureds
to a maximum of 40.  As a result of the acquisition of FSL, the marketing 
territory for USLI was expanded from three to nine states.  The direct sale of 
policies for the immediate future is limited to Alabama, Arizona, Arkansas, 
Indiana, Louisiana, Mississippi, Oklahoma, Tennessee and Texas.  The company's 
products are generally competitive with those of other insurers in those states.

      The Company's actual lapse ratios are well within the lapse assumptions 
used in the development of the liability for future policy benefits.

      The Company has a conservation program in place where a representative of 
the Company contacts any policyholder whose policy has lapsed in an attempt to 
retain the business. Because the Lifetime Accumulator product was sold primarily
to company shareholders as opposed to sophisticated product shoppers in a 
competitive environment, no excess lapsation is expected to occur even though
dividend reductions have and will occur.

      Substandard life risk will not be offered with the supplementary health 
insurance products.  Standard and substandard life risk are offered separately 
from the health products.  All of the company's life policies may be issued sub-
standard whereby an extra premium is charged the insured provided there is an 
increased mortality risk due to health or life style of the individual.  
Additionally, a special guaranteed issue whole life policy is offered 
exclusively to individuals who are substandard risk.

ADMINISTRATION

      Prior to 1996, the issuance of policies, billing, preparation of 
commission and production statements, posting of premium payments and serving 
policyholders through computerized communications was performed by Wakely & 
Associates, an unaffiliated service company in Florida. Management developed in 
1995 its own data processing equipment and programs for the administration of 
the accident and health business, life products and general accounting.  All 
policy administration and general accounting functions began being processed in 
the Company's home office effective March 31, 1996. This eliminated 
approximately $5,000 each month in service fee expenses.

      Actuarial services for the development of new policies and rates are per-
formed by the actuarial firm of Allen Bailey and Associates, Austin, Texas.

SALES

      USLI's policies are being sold by direct licensed representatives and 
licensed general agents.  None of these agents has underwriting authority.  The 
commissions paid are believed by Management to be competitive with commissions 
paid by other life insurance companies in the states in which the company is 
licensed to operate.  USLI is aware that there is considerable competition for 
obtaining qualified agents and that it will be competing with well-established 
life insurance companies for agents to sell its policies. USLI will also recruit
agents from among persons who are not now engaged in the selling of life and
accident and health insurance, and USLI expects to train such agents.  USLI 
presently has approximately 300 licensed agents.  The agents recruited and 
licensed by USLI hold licenses with other companies and possibly could sell 
other companies' policies that are similar in some respects to USLI's policies. 
This arrangement is quite common with companies that recruit and license general
agents.

      Effective with the acquisition and merger of FSL on December 31, 1994, 
USLI became licensed in the states of Alabama, Arizona, Arkansas, Georgia, 
Indiana, Louisiana, Mississippi, Oklahoma, Tennessee and Texas.  The Company's 
insurance policies are being submitted to all these states Insurance Departments
for approval and agents are being recruited to sell the products in those 
states, except Georgia, in which USLI does not meet that states minimum capital 
and surplus requirements in order to sell its products.

INVESTMENTS

          USLI invests and reinvests certain of its reserves and other funds.  A
part of its income will be derived from this source.  The investments of USLI 
are limited as to type and amount by the Mississippi insurance laws which are 
designed to insure prudent investment policies.

         The investment of capital, paid-in and operating surplus and other 
funds of insurers organized under the laws of the State of Mississippi is 
specified by Mississippi Insurance Code 83-19-51.  This statute includes general
and specific limitations on investments, records of investments and other 
matters.  The Mississippi insurance law regulating investments and other aspects
of the management of insurance companies is designed primarily for the protec-
tion of policyholders rather than investors.

         The administration of USLI's investment portfolio is handled by a 
committee of its Board of Directors with consultation and advice from 
experienced professional investment experts from J. C. Bradford and Company.  
The guidelines used require that bonds, both government and corporate, are of
the highest quality and comprise a majority of the investment portfolio.  The 
assets selected are intended to mature in accordance with the average maturity 
of the insurance products and to provide the cash flow for USLI to meet its 
policyholder obligations.  The type, quality and mix will enable USLI to compete
effectively in the life insurance marketplace and to provide appropriate 
interest margins to assure its continued solvency and attain profitability.

         The Mississippi Insurance Code allows an insurance company a lesser 
premium tax if up to 25% of its investments are invested in the State of 
Mississippi including Mississippi corporation, state, county, and other sub-
division bonds.  It is and has been the policy of USLI to invest its assets in a
percentage in excess of the Mississippi requirement, contingent on the 
availability in the market of these securities, both for purposes of incurring 
the lower premium tax and returning USLI's appreciation for the support given
to it by the AIN shareholders and USLI policyholders.

         In both 1996 and 1995 net investment income represented approximately 
9.4%, and 9.0% respectively of the Company's total revenues. Investment balances
which are held principally by USLI, and investment results for the two years 
ended December 31, 1996, are as follows:

        Investments at     Unrestricted             Investment        Investment
        Amortized Costs    Cash        Total          Income             Yield

1996    $3,702,365         $282,277    $3,984,642     $290,417             7.3% 

1995    $3,599,517         $121,102    $3,720,619     $294,807             7.6%


     Investment yield reflects net investment income on the sum of average 
invested assets plus average investment income accrued.

     The following table compares USLI's fixed maturity investment portfolio at 
amortized cost by investment rating category as of December 31, 1996 and 1995.
 
                            Rating        12/31/96       Rating     12/31/95    
                            Class   Amount     Percent   Class   Amount Percent 
                                                                                
U. S. Treasury and other
   government agencies            $  461,608     17.0        $  580,371     22.2
Public utilities and industrial
   and miscellaneous:
          Class            1       1,344,680     49.5      1    1,056,888   40.5
          Class            2         810,167     29.9      2      876,574   33.6
          Class            3          98,673      3.6      3       98,477    3.7
                                  $2,715,128    100.0          $2,612,280  100.0

     The ratings used in the above schedule are those used by the Securities 
Valuation Office of the National Association of Insurance Commissioners and 
compare generally to the Moody and Standard and Poor's bond ratings as follows:

    SVO RATING       MOODY & STANDARD & POOR
          
          1          AAA, AA, A                         Highest Quality
          2          Baa, BBB                           High Quality
          3          Ba, BB                             Medium Quality
          4          B                                  Low Quality
          5          Caa, Ca, CCC, CC                   Lower Quality
          6          CI, D                              In or Near Default

The Company has classified all its investments as securities available-for-sale 
which are  carried at fair value.  As of December 31, 1996, the unrealized loss 
of the Company's available-for-sale security portfolio approximated $15,000 and 
was presented as a component of stockholders' equity.

REINSURANCE

     As is customary among insurance companies, USLI will reinsure with other 
companies portions of the life insurance risks it will underwrite.  The two 
principal types of reinsurance treaties commonly in use in the industry are the 
"automatic" and the "facultative" agreements.  Under an "automatic" treaty,
the reinsurer agrees that it will assume liability automatically for the excess 
over the company's retention limits on any application acceptable to USLI. Under
a "facultative" treaty, the reinsurer retains the right to accept or reject any 
reinsurance submitted, after a survey of each individual application.  In order 
to gain advantage of the reinsurer's underwriting experience in evaluating 
applications for insurance, USLI may submit some applications for insurance to 
the reinsurer on a facultative basis, and, if the reinsurer rejects any such 
application as an unsatisfactory risk, USLI will also reject the application.

     If the application exceeds the Company's automatic binding limit, it must 
send the application and all underwriting papers to the appropriate reinsurer 
according to the alphabetical split (per the reinsurance treaty) for their 
underwriting action.  The amount of the automatic binding limit is set at 
$200,000.  This limit is ten times the Company's life retention, and it may be 
increased as USLI's retention increases.  USLI may send any application on a 
facultative basis to the appropriate reinsurer, if after evaluation of the 
underwriting information, USLI's underwriter wishes to take advantage of the 
reinsurer's enlarged data base and experience for additional underwriting input.
If the case is rejected by the reinsurer, USLI must also reject the application.

     The primary purpose of reinsurance agreements is to enable an insurance 
company to reduce the amount of its risk on any particular policy and, by re-
insuring the amount exceeding the maximum amount the insurance company is 
willing to retain, to write policies in amounts larger than it could without 
such agreements.  The effect of reinsurance is to transfer a portion of the 
profit, if any, on the insurance ceded to the reinsurer.  Even though a portion 
of the risk may be reinsured, USLI will remain liable to perform all obligations
imposed by the policies issued by it and is liable if its reinsurer should be 
unable to meet its obligation under the reinsurance agreements.  It should be 
noted that when insurance is reinsured under either a facultative or automatic 
arrangement, a portion of the premium received on that policy is still utilized 
to post the required actuarial reserves to cover the risk.  USLI's general 
policy is to reinsure business with insurance companies with an A.M. Best and 
Company rating of "A" or better.

     USLI's life reinsurance is being ceded through automatic and facultative 
treaties to two unaffiliated insurance companies.  These reinsurance companies 
are Business Men's Assurance Company, Kansas City, Missouri, and Optimum Re, 
Irving, Texas, both rated "A" by A.M. Best and Company.

     It is the practice of USLI to reinsure all accidental death benefit risks 
that are written with the Participating Lifetime Accumulator or with other forms
of insurance.

     USLI has reinsurance agreements with Reliastar Financial Corporation, 
Minneapolis, Minnesota, Life Reassurance Corporation of American, Stanford, 
Connecticut, and Reassurance Company of Hanover, Orlando, Florida which provide 
coverage of claims in excess of various amounts on several of its accident
and health policies.

RESERVES

     In accordance with the Mississippi insurance laws and regulations under 
which USLI operates, USLI has set up actuarially computed reserves as 
liabilities to meet the obligations on the policies it writes. These reserves 
are the amounts which, with additions from premiums to be received and with 
interest on such reserves, compounded annually at certain assumed rates, are 
calculated to be sufficient according to accepted actuarial principles to meet 
USLI policy obligations as they mature.  The various actuarial factors are 
determined from mortality tables and interest rates in effect when the policies 
are issued.  The reserves to be included in statutory filings will be valued on 
a basis that meets the requirements of law in Mississippi.

REGULATION AND SPECIAL ACCOUNTING PRACTICES RELATING TO LIFE INSURANCE
COMPANIES

     Mississippi insurance laws and regulations generally govern the accounting 
practices and prescribe the procedures and forms for financial reports of 
insurance companies.  Reports prepared in accordance with the prescribed 
statutory accounting practices are primarily intended to insure the ability of 
an insurance company to meet its obligations to policyholders and do not 
necessarily reflect going concern value.  Balance sheets prepared in accordance 
with statutory accounting practices are designed primarily to reflect the 
financial position of insurance companies from the standpoint of solvency.  
Certain of the prescribed or permitted accounting practices differ in some 
respects from generally accepted accounting principles (GAAP) followed by other 
business enterprises in determining financial position and results of 
operations.

     Basically, a life insurance company's gross income is generated from two 
sources, premiums and investment income.  The cost of placing new policies in 
force may exceed the premiums received for the first year.  In subsequent policy
years some of these costs, such as commissions, medical examinations and 
investigative expenses, are reduced substantially or do not recur.  Also, policy
lapses and surrenders are generally greater in the first few years that policies
are in force.  Although the costs of acquiring new business are large and 
generally not duplicated thereafter, statutory accounting procedures for 
insurance companies and state laws and regulations designed to protect 
policyholders provide that the entire amount of acquisition costs must be 
charged to operations currently, instead of being spread over the life of the
policies.  As a result of this and other factors, new insurance companies 
normally show no profit on a statutory accounting basis in their early years 
of operation.

     The interests of policyholders and of the public in the financial integrity
of the life insurance industry make it important and proper that the solvency of
life insurance companies be demonstrated to insurance regulatory authorities.  
Solvency must be continuously demonstrated for a life insurance company to be 
permitted to offer its services to the public.

     The National Association of Insurance Commissioners has established a model
act for insurance companies regarding risk-based capital.  Risk based capital is
a method of measuring the amount of capital appropriate for an insurance company
to support its overall business operations in light of its size and risk 
profile.  It provides a means of setting the capital requirement in which the 
degrees of risk taken by the insurer is the primary determinant.  The four major
risks involved are:

Asset risk.                     This is the risk of asset default.

Insurance risk.                 This is the risk of adverse mortality and 
                                morbidity experience.

Interest rate risk.             This is the disintermediation risk of 
                                policyholders withdrawing funds.

Business risk.                  This is normal business and management risk.

     A company's risk based capital is calculated by applying a factor to 
various assets, premium and reserve items, where the factor is higher for those 
items with greater underlying risk and lower for less risky items.  The adequacy
of a company's actual capital may then be measured by its risk based capital
ratio, that is, the ratio of its total capital, as defined by the formula, to 
its risk based capital.  In addition to providing a new standard for minimum 
capital, risk based capital standards will be used by regulations to set in 
motion appropriate regulatory actions relating to insurers which show signs of 
weak or deteriorating condition.  The first level requires company action.  The 
three levels of regulatory action and involvement are:

Level A:     Identifies situations requiring the initial level of regulatory 
             scrutiny.

Level B:     Identifies situations requiring a detailed investigation of the  
             company.

Level C:     Identifies the minimum level of total adjusted capital below which 
             state conservatorship shall be required.                   
 
     As of December 31, 1996, USLI had a statutory-basis paid-in capital and 
surplus of $2,325,096. This capital and surplus is invested in government 
obligations, corporate bonds, and other investments currently permitted by the 
insurance company investment laws of the State of Mississippi. 

     Pursuant to the laws and regulations of the State of Mississippi, USLI is 
presently required to maintain minimum capital of $400,000 and minimum surplus 
of $600,000.  These minimum requirements may require amendment as a result of 
recently adopted risk based capital requirements effective for 1993 as issued by
the National Association of Insurance Commissioners.  The Total Adjusted Capital
for USLI at December 31, 1996 was $2,388,568 and the Risk Based Capital was 
$112,211.  No action is required by USLI regarding its capital and surplus.

     The insurance laws of the State of Mississippi also provide that a life 
insurance company will be assessed a lower premium tax if up to 25% of the life 
company's investments are in Mississippi securities. The management of USLI has 
invested its assets in a manner to incur the lower tax rate. 

     Statutory accounting requires that the policy reserve liabilities be 
increased in each year that a policy is in force.  The amount of the reserves is
recorded as an expense for statutory accounting purposes. Cash received from 
renewal premiums, net of amounts used for current operations, is invested by 
a life insurance company in accordance with applicable state law.  Income earned
on invested assets becomes operating income to the life insurance company to the
extent that it exceeds the interest required to be added to reserves. 

     The financial statements presented to shareholders, the public, and the 
Securities and Exchange Commission are required to be prepared in conformity 
with generally accepted accounting principles. The objective of these statements
is to provide reliable financial information about economic resources and 
obligations of a business enterprise and changes in net resources resulting from
its business activities, measured as a going concern.  To the extent that the 
accounting practices prescribed or permitted by state regulatory authorities 
differ from generally accepted accounting principles, appropriate adjustments 
will be made including, but not limited to the following:

     1.  Premiums are recognized as revenues over the premium-paying period and 
future benefits and expenses are related to such premium revenues resulting in 
the recognition of profits over the life of the insurance contracts.  This 
relationship is accomplished by a provision for future policy benefit 
liabilities and amortization of deferred policy acquisition costs.

     2.  Certain assets designated as "non-admitted assets" for statutory 
purposes (normally office equipment and agents' balances) are included in the 
balance sheet.  In this connection, the Registrant will purchase all office 
equipment and lease it to USLI at prevailing lease rates for purposes of 
generating operating revenues for the Registrant.

      3.  The Asset Valuation Reserve is reclassified as retained earnings 
rather than as a liability.

      4.  Deferred federal income taxes are provided for differences in the 
timing of recognition of certain items of income or expense for tax and 
financial statement purposes.  These temporary differences relate primarily to 
different methods of calculating policy reserves, treatment of acquisition 
costs, and recognition of deferred and uncollected premiums.

     In common with other insurance companies operating in Mississippi, USLI is 
subject to the regulation and supervision of the Mississippi Insurance 
Commissioner.  After making application for admission and receiving proper 
license, USLI will operate in other states and, at that time, will be subject
to regulation and supervision in any other state where it may be permitted to 
transact business.  Such regulation is primarily for the benefit and protection 
of insurance policyholders rather than shareholders of insurance companies.  
Broad administrative powers are possessed by the Mississippi Department of
Insurance and other supervising agencies.  Although the powers differ from state
to state, in general they include authority to grant and revoke licenses to 
transact business, to be an agent, to supervise premium rates, to approve the 
form of insurance contracts, to supervise the form of financial statements filed
with such agency, to regulate capital requirements, to regulate the investment 
portfolio, to regulate insurable interest on one life and to require the filing 
of a detailed annual report.  USLI's business and accounts will be subject to 
examination by the Mississippi Department of Insurance.  Such regulation 
includes the filing of financial statements by USLI, periodic reporting and 
examination by the insurance regulatory authorities, and review of transactions 
between members of the holding company group.  

     State laws regulating insurance holding companies such as AIN may signifi-
cantly limit the ability of USLI to pay, or AIN's ability to cause USLI to pay 
or make dividends, loans or advances to AIN.

     Under insurance guaranty fund laws, insurers doing business in states 
having such laws can be assessed up to prescribed limits for policyholder losses
incurred by insolvent companies.  Mississippi and the other states in which USLI
is licensed have guaranty fund laws and USLI has been assessed amounts under 
these laws of $41,695 for 1996 and $446 for 1995.  While actual assessments 
for the last three years have been immaterial, the amount of any future assess-
ments on USLI under this law cannot be reasonably estimated.  State laws provide
for carrying the assessed amounts as an asset and amortizing the amount over 
a five year period by deductions from premium taxes.  Management is not aware of
any known uncertainties relating to future assessments that would materially 
impact the Company's liquidity or results of operations.  Additional discussion 
regarding the guaranty fund is included in the Management's Discussion and 
Analysis.

     Mississippi, in which USLI is licensed to do business, regulates insurers 
and their affiliates under insurance holding company legislation.  Under such 
laws, transactions by USLI with GAIN or any other future affiliates may be 
subject to prior notice or approval depending on the size of the transaction in
relation to their financial position.

     Although the federal government generally does not directly regulate the 
business of insurance, federal initiatives often have an impact on the business 
in a variety of ways.  Current and proposed federal measures which may 
significantly affect the insurance business include employee benefit regulation,
securities regulation concerning insurance products, tax law changes affecting 
the taxation of insurance companies, the tax treatment of insurance products and
its impact on the relative desirability of various personal investment vehicles 
and proposed legislation to more fully subject insurance companies to antitrust 
laws.

COMPETITION

     The life insurance industry is highly competitive.  There are approximately
2,100 life insurance companies in the United States and approximately 750 life 
insurance companies licensed to do business in Mississippi.  Many of them are 
well-established firms with fine reputations, offering a broader line of 
insurance policies, having larger selling organizations and having greater 
financial resources than USLI.  Many of these companies operate on a mutual 
basis, which may give them a competitive advantage over USLI on certain types of
policies due to the fact that all profits accrue to the policyholders.

EMPLOYEES

     As of December 31, 1996, AIN had 18 full time and 4 temporary employees.  
Agents marketing USLI's insurance portfolio are designated by the USLI as 
independent contractors and are not considered employees.           
 
THE GAIN AGENCY, INC.

     Prior to April 1995 the Agency was a general insurance agency selling 
property and casualty insurance for various insurance companies.  In April 1995,
the Agency sold its inforce business and certain net assets.  Prior to this 
sale, the Agency received commissions from various insurance companies on the
premiums collected from the policies sold by the Agency.  Commission and other 
income received by the Agency approximated $65,000 in 1995.  The Agency had no 
business activity in 1996 except the receipt of principal and interest on a note
receivable executed in April 1995 for the sale of its assets.

     After negotiations between AIN's management and Mr. John U. White, Jr., the
manager of the Gain Agency, Inc., an agreement was reached to sell to Mr. White 
the in-force property and casualty business which had been produced by the Gain 
Agency, Inc.  The agreement also included the sale of net book value of certain 
assets and liabilities in The Gain Agency, Inc.  After an independent appraisal 
of the in-force business and the other assets, the Board of Director's approved 
the sale for the sum of $180,000 and a definitive contract was executed 
effective April 1, 1995.

     The gain on disposition and the income (loss) from operations of the Agency
have been accounted for as discontinued operations.

     The Board of Directors has no immediate plans for the future use of The 
Gain Agency, Inc.                                     

U.S. STAR INTERNATIONAL, INC.

     On November 5, 1993, AIN acquired controlling interest in U. S. Star 
International, Inc., a Cayman Island corporation.  This company was acquired 
to serve as an entity to purchase the foreign reinsurance license in Mexico for 
USLI and to serve as the marketing agency for USLI's international sales opera-
tion.  USLI was licensed in Mexico as a foreign reinsurer on March 14, 1994.  

     The Board of Directors determined that the objective to get USLI licensed 
in Mexico as a foreign reinsurer had been accomplished and that U. S. Star 
International could not serve any other immediate useful purpose.  The Board 
decided to terminate AIN's interest in U. S. Star International and a contract
was executed to this effect on April 28, 1995.  Accordingly, the Company's 
investment of $30,000 was written off in 1995 as foreign operations marketing 
expense.

ITEM 2:              DESCRIPTION OF PROPERTY

     AIN owns a two story brick building and lot located at 660 Lakeland East 
Drive, Flowood, Mississippi.  There is approximately 13,600 square feet in the 
building which is leased to USLI.  AIN and its wholly owned subsidiaries occupy 
approximately 7,500 square feet.  The remaining space in the building is leased 
to third party tenants at approximately $8 per square foot.  As of December 31, 
1996, the building and lot had a cost basis of approximately $564,000.  The 
building is being depreciated over thirty-two years by the straight-line method.
Its carrying value as of December 31, 1996 approximated $371,000.

     On December 19, 1994, the mortgage on the property was refinanced with 
Merchants and Farmers Bank, Brandon, Mississippi.  The refinancing allowed AIN 
to receive cash of $175,000 from the equity in the property which was used to 
purchase Financial Security Life of Mississippi. The property received a current
appraisal of $925,000.  The mortgage amount at December 31, 1996 was 
approximately $509,000 with an interest rate of prime plus 1 and 1/2 percent.  
Principal and interest payments are approximately $5,800 per month.  The note is
secured by a deed of trust on the building and lot.  The rental income received 
from third party tenants totaled $54,000 in 1996 and $52,000 in 1995.

     There are several commercial office buildings located in the area of the 
property which have rentable office space.  This creates a highly competitive 
market and there may be periods of time when AIN is unable to find suitable 
tenants. 
         
     AIN carries insurance on the property of $750,000 which represents approxi-
mately $200,000 more than the purchase price paid by AIN.  It is management's 
judgement that there is adequate insurance coverage on the property.  

     The occupancy rate of the property was 100% as of December 31, 1996.  

     The tax value is carried at $438,000 with a tax base of approximately 
$66,000.  The realty tax rate is .11187 and the current annual realty taxes 
approximate $7,000. 

     Management believes that its corporate office building will be adequate for
AIN and its subsidiaries' anticipated growth for the next several years.

ITEM 3:              LEGAL PROCEEDINGS

     The Registrant was a party to legal proceeding filed on December 20, 1990 
in the Chancery Court, First Judicial District, Hinds County, Mississippi.

     The principal parties:  Plaintiffs were Tillman Insurance Agency, Inc. and 
Robert Tillman.  Defendants were the Gain Agency, Inc., American Investment 
Network, Inc., Walter L. Shelton, Jesse L. Byrd, and Sam Dunlap.

     Description of facts underlying the proceedings:  In 1988, the Gain Agency,
Inc., a wholly owned subsidiary of American Investment Network, Inc. bought the 
book of business of a general insurance agency in Philadelphia, Mississippi; 
namely, the Tillman Insurance Agency, Inc.  The purchase price was to be twenty-
five percent (25%) of the commission income from the book of business for the 
life of the plaintiff, Robert Tillman.  The commission income was not as great 
as the plaintiff anticipated and in fact has ceased altogether.  The plaintiff 
claims the conduct of the defendants caused this reduction in the commission 
income and was seeking actual and punitive damages.

    Relief sought: Actual damages of $500,000 and punitive damage of $5,000,000.

    On March 3, 1995, an out of court settlement agreement was executed by all 
parties wherein the defendants will pay to the plaintiffs the sum of $180,000 
including attorneys fees (discounted to a present value of $150,000).  An 
initial amount of $35,000 was paid on the settlement date and the balance will 
be paid in installments over a period of 5 years beginning April 1, 1995.  
Nothing contained in any of the settlement documents shall be deemed an 
admission by any party thereto for purposes of the Civil Action. Adequate 
reserve provisions have been included in the 1995 and 1996 consolidated 
financial statement.

     USLI is a party to legal proceedings filed on December 5, 1995 with the 
Circuit Court of Lee County, Mississippi.

     The principal parties are Donald and Karen Mayo, Plaintiffs and United 
Security Life Insurance Company, Defendant.

     The complaint results from USLI's denial of a claim for benefits under a 
policy issued by USLI. The policy provides benefits for up to twelve (12) out-
patient treatments for Chiropractic service for an individual and up to thirty-
six (36) for a family.  The complainant had thirty-two treatments.  USLI paid
for the first twelve and denied benefits for the additional treatments which 
is in accordance with the policy provisions.  The plaintiff contends she was 
entitled to benefits for the additional treatments because she purchased a 
policy with family coverage.

     The plaintiff is requesting in her suit that she be awarded actual and 
punitive damages in an amount to be determined by a jury, but no less than 
$100,000.

     Legal counsel is unable to render an opinion on the estimated outcome of 
these matters as they are presently in discovery stage.  However, management 
intends to vigorously defend these matters and, is of the opinion that the 
ultimate outcome of these matters will not result in a material adverse effect 
on the consolidated financial statements.  Accordingly, no provision for any 
loss or liability has been provided in the consolidated financial statements.

     USLI is a party to legal proceedings filed on February 5, 1996 in the 
Circuit Court of Lee County, Mississippi.

     The principal parties are David Anderson and Marty Stanford, d/b/a Premier 
Insurance Agency and Chiropractic National Associations, Plaintiffs; United 
Security Life Insurance Company, Defendant.

     The plaintiffs were licensed in 1994 with USLI as insurance agents to 
solicit and sell insurance policies to pay primarily for chiropractic services. 
The plaintiffs allege the following:  (1) that the defendant refused to pay 
claims which were owed, (2) that the defendant arbitrarily refused to pay the
chiropractic doctors five percent fees claiming that it was illegal, (3) that 
the defendant placed "riders" on certain of the policies which were so broad to 
eliminate any coverage at all, (4) that the company threatened plaintiffs with 
potential criminal prosecution if false claims were made of which the purpose
for this was to discourage the making of claims.  The plaintiffs allege that 
they have suffered damages because their reputations have been greatly damaged 
and they have suffered extreme mental anxiety and stress by reason of the 
defendant's action in these matters. The plaintiffs are claiming for unspecified
punitive damages.

     Legal counsel is unable to render an opinion on the estimated outcome of 
these matters as they are presently in discovery stage.  However, management 
intends to vigorously defend these matters and, is of the opinion that the 
ultimate outcome of these matters will not result in a material adverse effect 
on the consolidated financial statements.  Accordingly, no provision for any 
loss or liability has been provided in the consolidated financial statements.

ITEM 4:              SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     There have been no matters submitted to a vote of security holders, through
the solicitation of proxies or otherwise, since the last annual meeting held May
7, 1996. 


                                       PART II


ITEM 5:              MARKET AND DIVIDENDS ON AIN'S CLASS A AND B COMMON EQUITIES
                     AND RELATED STOCKHOLDER MATTERS.

     There are 15,000,000 shares authorized of Class "A" common stock of which 
5,025,490 shares are issued and held by approximately 2,300 shareholders.  There
are 2,500 shares of authorized and issued Class "B" common stock which are held 
equally (833.33 shares) by Jesse L. Byrd, Walter L. Shelton, and Ben S. Yandell.
There are 3,726 shares of Treasury stock.

     The Class "A" common shares have been traded on a very limited basis 
between individuals.  On January 30, 1996, the National Association of 
Securities Dealers, Inc. cleared a request to allow the buy and sell trans-
actions of the Class A Common stock to be shown on Over-The-Counter Electronic 
Bulletin Board.  Over-The-Counter Electronic Bulletin Board is an electronic 
computer system whereby securities dealers have access to information regarding 
the trading of shares of various companies' stock.  The symbol for the 
Registrant's stock is GANI.  Morgan Keegan and Company has agreed to match 
buyers and sellers of the stock to the best of their ability in an effort to 
create a market.  None of the Class B Common stock has traded and there is no 
market.

     The present policy of AIN's Board of Directors is to retain funds for the 
operation and expansion of AIN and its subsidiaries.  There have been no cash 
dividends paid on the Class A Common or the Class B Common, and the Board of 
Directors of AIN has no immediate plans for the payment of dividends but, from 
time to time will review this policy in light of AIN's earnings, financial 
condition and other relevant factors.  AIN currently intends to retain the major
portion of any future earnings to finance the development and expansion of its 
business and does not contemplate the payment of cash dividends in the 
foreseeable future.  See Item 6 for a discussion of USLI's regulatory dividend 
restrictions. 

    An Incentive Stock Plan for employees was approved by shareholders on May 3,
1994.  There were 147,500 share options outstanding on December 31, 1996.  No 
options have been exercised.  A copy of the Employee Stock Plan is included by 
reference to the proxy statement sent to the shareholders for the annual share-
holders meeting of May 3, 1994.

     AIN's shareholders adopted, at the Annual meeting on May 3, 1994, an amend-
ment to the Articles of Incorporation wherein the Articles were restructured to 
equalize the rights of the shareholders of the Class A Common and the Class B 
Common.  A copy of the amendment is included by reference to the proxy statement
sent to the shareholders for the annual shareholders meeting of May 3, 1994.

     AIN's Board of Directors adopted on November 11, 1994, an Executive Compen-
sation Plan and Agreement for Walter L. Shelton, Chairman and Jesse L. Byrd, 
Vice Chairman.  The compensation plan and agreement was presented to Share-
holders and approved at the annual meeting on May 2, 1995.  A copy of the plan 
is enclosed herewith by reference to the proxy statement filed in connection 
with the 1995 Annual Shareholders' meeting.  In connection with the adoption of 
this plan, the Company accrued the minimum obligation relative to past services 
which approximated $55,000 at December 31, 1996 and 1995.

    On May 7, 1996, stockholders of the Company approved the adoption of an 
Agents' Stock Option Plan for eligible agents licensed with the Company wherein 
200,000 shares of Class A common stock were reserved for option as directed by 
the Board of Directors.  Under the terms of the plan, agents writing premiums 
which exceed certain minimum levels will be granted options at an exercise price
equal to fair value at the date of grant.  There have been no options granted 
under the arrangement.


ITEM 6:  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
         CONDITION AND RESULTS OF OPERATIONS

Overview

        This section discusses and analyzes AIN's results of operations, 
financial condition, and the changes in financial condition.  Also included is 
information regarding AIN's operation that may not be evident in the financial 
statements.  This analysis should be read in conjunction with AIN's consolidated
Financial Statements and related notes included elsewhere in this form.

Proposed Sale of Company

        On October 25, 1996, the Company signed a definitive written agreement 
whereby Citizens Insurance Company of America, (CICA), Austin, Texas, a wholly-
owned subsidiary of Citizens, Inc. (Citizens) will acquire 100% of the 
outstanding shares of the Company for shares of Citizens Class A common stock.

        Pursuant to the terms of the agreement, which is subject to approval of 
regulatory authorities and shareholders of the Company, CICA will issue one 
share of Citizens Class A common stock it owns for each 7.2 shares of the 
Company's Class A and Class B common stock issued and outstanding.  CICA expects
to issue approximately 700,000 shares of Citizens common stock to consummate the
transaction.  Management anticipates that the sale will occur during 1997.

Liquidity and Capital Resources

        AIN was initially capitalized though a private placement of stock 
followed by two intrastate stock offerings.  A total of $4,481,000, net of 
commission and other costs of issuance, was received through these offerings 
principally for the purchase and capitalization of the insurance subsidiary, 
USLI, and the insurance agency subsidiary, The GAIN Agency. 

        The capital funds contributed to USLI were invested in fixed maturities 
and equity securities.  The fair values of the Company's total portfolio 
approximated $3,687,000 as of December 31, 1996.  The net investment income 
received from these investments, plus unrestricted cash (effective yield of 7.3%
in 1996) and premiums received from insurance policies represent the primary 
sources of operating funds for USLI. Investment income and portions of the asset
account provide sources for operating funds as needed. In addition, AIN receives
rental income from the lease of office space in its home office building.  USLI
leases the entire building from AIN and in 1996 and 1995 paid approximately 
$136,000 in rental income (approximately $10 per square foot) to AIN.  Another 
possible source of operating funds to AIN is dividends from its subsidiaries.  
There have been no dividends paid to AIN by either subsidiary.  Mississippi 
insurance regulations limit the amount of dividends USLI is permitted to pay 
without prior approval by the Department of Insurance of the State of 
Mississippi to the lesser of statutory earnings, as defined to include the prior
two years, or ten percent of capital and surplus.  As of December 31, 1996, 
approximately $201,000 was available for dividends to AIN without such approval.

     Management believes that AIN's retained cash, its investment and lease 
income, and its source for subsidiary dividends, as well as principal and 
interest collections received from a note receivable relating to the sale, 
during 1995, of its in-force business and certain other net assets of its agency
subsidiary will be sufficient to finance its short term operations and its 
present forecast of long term needs. 
 
     For its principal subsidiary, USLI, management believes that cash flows 
from operations and proceeds from investment maturities will be sufficient to 
finance current and forecasted operations, which do not anticipate significant 
outlays of cash for ordinary life claim settlements within the next three to 
five years due to the type of insureds covered.  During 1996, USLI continued a
significant increase in the volume of accident and health claims as a result of 
its penetration and emphasis into the limited benefit accident and health 
insurance business.  Total claims paid increased to $618,000 in 1996 compared to
$490,000 in 1995.  USLI anticipates that the volume of accident and health 
claims will increase in 1997. However, the Company's positive cash flow in 1996 
and the maturities of investments should provide proceeds more than sufficient 
for its operations.  The Company has classified its marketable securities as
available-for-sale which will provide an additional source of liquidity as 
needed.

     Since 1993, the Company has had an aggressive mass marketing program to 
sell limited benefit accident and health policies the premiums for which are 
collected through company monthly payroll deduction from the policyholder's 
employer.  Total revenues in 1996 included approximately $1,725,000 of accident 
and sickness premiums.  The accident and health polices in force on December 31,
1996, will generate approximately $2,037,000 in annualized premiums.  Management
anticipates this program will generate additional sources for liquidity and 
operational needs for USLI through increased revenues.

     A regular triennial examination of USLI was conducted by the Mississippi 
Department of Insurance in 1994 for the period of January 1, 1990 through 
December 31, 1993.  Recommendations of the examiners had no material effect on 
the financial conditions or operational results of the Company.

     AIN, or its insurance subsidiary are not a party to any surplus relief re-
insurance or any other agreement wherein reserve credits would be disallowed and
the likelihood of such an agreement is remote. Further, there are no transaction
or items in USLI's statutory surplus which has enhanced the statutory surplus 
and which has been eliminated in the preparation of the consolidated GAAP 
financial statements.

Financial Condition

     Total assets as of December 31, 1996 were $7,688,000, an increase of 
$200,000 from December 31, 1995.  Significant changes within the Company's 
composition of assets and liabilities compared to the 1995 year end related 
principally to (i) a general decline in the fair values of the Company's fixed 
maturity and preferred stock securities resulting from market and economic 
changes, (ii) anticipated increases in assets and liabilities related to the 
Company's growth in the accident and health insurance market, and (iii) the
payment of contingent liabilities resulting from a prior acquisition.  As of 
December 31, 1996, the Company's unrealized loss on marketable securities 
available for sale was $15,000 compared to an unrealized gain of $48,000 as of 
December 31, 1995.

     Cash and cash equivalents increased $66,000 as compared to December 31, 
1995, exclusive of the decrease in cash previously restricted.  Included in this
amount were the proceeds from the issuer of one of the fixed maturity invest-
ments held by the Company, the proceeds of which were invested in cash 
equivalents.  Restricted cash decreased $95,000 (as well as the corresponding 
liability included in accounts payable and other liabilities at December 31, 
1995) as a result of the settlement of certain liabilities and contingencies of 
a prior acquisition for which seller funds were escrowed.  As of December 31, 
1996, the Company's deferred policy acquisition cost increased $64,000 as 
compared to December 31, 1995 and future policy benefit and unpaid claims 
liabilities increased an aggregate of $429,000.  Substantially all of this 
increase is related primarily to accident and health products.  Other policy-
holder funds increased $105,000 principally as a result of dividend 
accumulations relating to the insurance subsidiary's life products (principally 
the Lifetime Accumulator Policy which is a participating policy requiring 
dividend benefit accruals).

     Notes and accounts receivable decreased $33,000 as compared to December 31,
1995.  Of this decrease, approximately $12,000 related to collections on a note 
receivable pursuant to the sale of the inforce business and certain net assets 
of the Company's insurance agency subsidiary to a former officer.  This sale 
occurred in 1995 and the note which bears interest at 7.5% per annum, is payable
in monthly installments of $2,006, including interest, and approximated $152,000
as of December 31, 1996. Additionally, due and unreceived premiums which are 
included in notes and accounts receivable, decreased approximately $21,000 as 
remittances by corporate employers of the premiums collected through payroll 
deductions.  

      Other assets increased $41,000 as compared to December 31, 1995.  This was
primarily due to guaranty fund assessments of approximately $40,000 for which 
the Company is entitled to future credits against future premium taxes.

      Included in accounts payable and other liabilities as of December 31, 1996
and 1995 was approximately $55,000 accrued as a minimum obligation under an 
executive compensation plan for two executives.  The plan provides for future 
and past services in the form of benefits that could range from a minimum fixed 
benefit of $20,000 to a maximum benefit of $100,000 annually for each of the 
executives over a ten year period.  Benefits in excess of the fixed minimum are 
based upon a specified ratio of statutory net gain from operations to gross 
statutory premiums of the insurance subsidiary.  Payments under the plan 
approximated $40,000 in 1996 and $27,000 in 1995.  Management evaluates the 
propriety of the recorded obligation for past services at each reporting period 
based upon their best estimates of anticipated future statutory premium revenues
and statutory operating gains.

Results of Operations

     Total revenues for the year ended December 31, 1996 were $3,105,000 
compared with revenues of $3,151,000 for 1995 or a decrease of $46,000.  

     Total premiums earned by the Company's insurance subsidiary decreased 
$44,000 compared to December 1995.  The primary reason for the decrease relates 
to the decrease in the insurance subsidiary's life business.  Life premiums 
decreased approximately $187,000 to $1,028,000 in 1996 compared to $1,215,000 
in 1995.  This is the result of the policyholders allowing coverage to lapse 
during 1996 as a result of the general decline in life insurance business and 
related marketing efforts.  Accident and health premiums continued to increase 
in 1996 with premium revenues of $1,725,000 in 1996 compared with $1,582,000 in 
1995.  The Company began issuing accident and health products in latter 1993 and
anticipates that this will represent its major market emphasis in 1997.  The 
insurance subsidiary offers limited pay accident and health products principally
through a mass marketing payroll deduction process. 

     Net investment income decreased $4,000 or 1.5% for 1996 as compared to the 
prior year.  Included in net investment income was interest income on the note 
receivable from the sale of the Agency of approximately $7,000.  

     Policy benefits and claims increased $299,000 for year ended December 31, 
1996 as compared to 1995.  This increase is principally related to the growth in
accident and health business.  During 1996, accident and health benefits 
approximated $1,057,000 compared to total accident and health benefits in 1995 
of $557,000.  This included an increase in claims paid of approximately $128,000
and an increase in accident and health future policy benefits and unpaid claim 
liabilities of $372,000.  Future policy benefits relating to life insurance 
policies decreased by $17,000 as policyholders allowed coverage to lapse during
1996 as a result of the general decline in life insurance business and related 
marketing efforts.  As a result the change in future policy benefits decreased 
by $192,000.  In addition claims paid, net of reinsurance, on life policies 
decreased by approximately $25,000.  The remaining change related to a net 
increase in policyholder dividends of approximately $16,000.

     Amortization of deferred policy acquisition cost increased $196,000 for 
1996 as compared to the same period of the prior year.  Approximately $87,000 of
this increase is due to anticipated increases related to the amortization of 
accident and health acquisition cost which approximated $257,000 in 1996 as 
compared to $170,000 in 1995.  The remaining increase relates to anticipated 
run-off of the insurance subsidiary's life insurance business and related policy
lapses or terminations during the year.

     Interest expense decreased $9,000 as a result of variable interest rate 
changes and reductions of amounts outstanding on the mortgage obligation.

     Depreciation and amortization approximated $77,000 during both 1996 and 
1995.  Approximately $85,000 of data processing equipment and related software 
was acquired during the year, however the resulting increase in depreciation was
offset by assets which became fully depreciated in 1995.

     Other general operating expenses decreased approximately $68,000 for 1996 
as compared to 1995.  This decrease was a combination of several factors 
including a decrease in computer expenses of approximately $58,000.  This 
decrease resulted from managements efforts to better utilize current data 
processing capabilities available from the Company's own computer equipment.  
Additionally, renewal commissions relating to the Company's insurance 
subsidiary's life insurance business decreased by approximately $26,000 as 
compared to the prior year.  In 1995, the company conveyed its interest in US
Star International, Inc., an inactive Cayman Island Corporation, to US Star's 
other shareholder and wrote-off its remaining investment of $30,000 which was 
included in total general operating expenses for 1995 as a reduction of foreign 
marketing subsidiary investment.  

     Management believes that the cash flow generated from the Company's 
insurance operations, investment income and proceeds from sales and maturities 
of investments will be sufficient to meet its current and future operating 
requirements.  The Company is monitoring the volume of new accident and health 
business written in order to manage the possible cash flow and statutory surplus
effects resulting from the related acquisition expenses to secure such business 
in the first year.

     All insurers licensed to transact a life and health insurance business in 
Mississippi are members of the Mississippi Life and Health Insurance Guaranty 
Association.  Membership in the association is required as a condition for 
authority to transact insurance in the State.  For the purpose of providing
funds necessary to carry out the powers and duties of the association each 
member insurer is assessed amounts that are required to pay the administrative, 
legal, and other expenses of the association and assessed amounts necessary to 
carry out the duties of the association regarding impaired or insolvent insurers
operating in Mississippi.  Actual assessments during 1996 approximated $42,000 
while assessments in 1995 were immaterial.  Future assessments cannot be 
reasonably estimated.  Assessments are based on a factor calculated by the 
amount of premiums received by each company as it relates to the total premiums 
collected by all companies operating in the State and the amount of funds needed
by the Association.  USLI is subject to assessments by each state's Life and 
Health Guaranty Association in the states in which it is licensed to operate.  
Generally, each state will allow a percentage of the assessment as a credit 
against premium taxes each year until the total of the credits equal the 
assessment. 


ITEM 7:              FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

          See index to consolidated financial statements on page F1.


ITEM 8:              CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING
                     AND FINANCIAL DISCLOSURE.

     There was no change in or disagreement with the Registrant's certified 
public accountants during the last two year period.  

                                                   PART III

ITEM 9:        DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS

     The information required under this item is incorporated by reference to 
the Company's definitive proxy statement to be filed within 120 days from the 
fiscal year end.


ITEM 10:        EXECUTIVE COMPENSATION

     The information required under this item is incorporated by reference to 
the Company's definitive proxy statement to be filed within 120 days from the 
fiscal year end.


ITEM 11:        SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND 
                MANAGEMENT

     The information required under this item is incorporated by reference to 
the Company's definitive proxy statement to be filed within 120 days from the 
fiscal year end.


ITEM 12:        CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS

     AIN maintains regular bank checking and money market accounts at a local 
bank of which one of AIN's founders and shareholders is a director.  This bank 
also holds the mortgage on AIN's home office building.  No compensation has been
paid to this shareholder as a result of these account.

     Non-management directors of AIN and its life insurance subsidiary receive 
director's fees in the amount of $200 plus reimbursement for out-of-pocket 
travel expenses in connection with the attendance of each meeting of the Board 
of Directors.  Messrs. Elton Cook, Will Henderson, and Shannon Williford, non-
management directors, who are members of the Executive and Finance Committees, 
also receive $500 each month in connection with the monthly or more frequent 
meetings of the Executive and Finance committees.

     During September 1992, the Company entered into consulting arrangements 
with 13 of its original founders who subscribed for stock pursuant to its 1992 
intrastate offering for purposes of solicitation of their advice, support and 
promotion of the Company through a consulting group.  Consulting fees are based 
upon an 8.33% return on each respective founder's investment during the 1992 
intrastate offering and payable over twelve years.  Consulting fees paid 
approximated $42,000 in 1996 and in 1995.  Future consulting fees will be 
approximately $42,000 annually.

     As indicated above, the primary purpose of the consulting arrangements with
AIN's founders is for AIN to benefit from the expertise and influence through 
the advice, support, and promotion of a group of very successful business and 
professional individuals located in various areas of the State of Mississippi. 
AIN invites these founders to an annual meeting at the home office at which the 
management solicits their advice regarding marketing, investments and various 
other aspects of its operations.  All through the year these founders are 
contacted by management and sales representatives for their recommendations as 
to prospects for insurance agents in their communities and applicants for life 
insurance coverage and, in addition, for property and casualty insurance written
through AIN's subsidiary, The GAIN Agency. During AIN's stock offerings, 
numerous stock sales were made as a result of the promotion and recommendations 
given by these founders.  None of the founders received any commission from 
stock sold during the offering which began October 2, 1991 and ended September 
30, 1992.

     On August 23, 1996, the Company entered into employment agreements with 
four executive officers of the Company for a five year period.  Under the terms 
of the agreements, severance benefits equal to one year's annual salary are 
available to these officers in the event the Company is sold or merged and the 
officers are required to relocate or terminate employment.  No liability existed
under these agreements at December 31, 1996.

ITEM 13:             FINANCIAL STATEMENTS AND EXHIBITS

EXHIBIT
NUMBER               DESCRIPTION OF EXHIBIT

     
13.1               Audited Consolidated Financial Statements for the years ended
                   December 31, 1996 and 1995

21                 Subsidiaries of Registrant
                   _______________________________________________

                   All other exhibits are either not applicable or have been 
                   previously filed and are incorporated herein by reference.


                                        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.

AMERICAN INVESTMENT NETWORK, INC.

BY:s/H. Harold Crumpler
   H. Harold Crumpler, Executive Vice President,
   Treasurer, Chief Operating Officer

     Pursuant to the requirements of the Securities Exchange Act of 1934, this 
report has been signed by the following persons in the capacities and on the 
dates indicated.

                     SIGNATURES                                     DATE

s/H. Shannon Williford                                            03/25/97
H. Shannon Williford, Chairman of the Board of Directors

s/Jesse L. Byrd                                                   03/25/97      
Jesse L. Byrd, Vice Chairman of the Board of Directors

s/John S. Camara                                                  03/25/97
John S. Camara, President, Director

s/H. Harold Crumpler                                              03/25/97
H. Harold Crumpler, Executive Vice President, Treasurer, Director

s/Phillip E. Faller                                               03/25/97
Phillip E. Faller, Vice President, Secretary, Director

______________________________________                            
H. Elton Cook, Director

______________________________________   
Thomas S. Hayes, Jr., Director

______________________________________                                          
Billy George Janous, Director

______________________________________                                          
John T. Keeton, Jr., Director

______________________________________                                          
L. Homer Martin, Jr., Director

s/Walter L. Shelton                                                   03/25/97
Walter L. Shelton, Director









                             SUBSIDIARIES OF REGISTRANT




NAME:                           UNITED SECURITY LIFE INSURANCE COMPANY

STATE OF INCORPORATION:         MISSISSIPPI          




NAME:                           THE GAIN AGENCY, INC.

STATE OF INCORPORATION:         MISSISSIPPI          






                                                            EXHIBIT 1        






  AMERICAN INVESTMENT NETWORK, INC. AND SUBSIDIARIES (FORMERLY GREAT
  AMERICAN INVESTMENT NETWORK, INC.)
  Consolidated Financial Statements
  Years Ended December 31, 1996 and 1995, and 
  Independent Auditors Report

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS


                                                                         Page
Consolidated Financial Statements:
  Independent Auditors Report                                            F-2
  Consolidated Balance Sheets - December 31, 1996 and 1995               F-3
  Consolidated Statements of Operations - Years Ended
     December 31, 1996 and 1995                                          F-5
  Consolidated Statements of Changes in Stockholders Equity - Years Ended
     December 31, 1996 and 1995                                          F-7    
  Consolidated Statements of Cash Flows - Years Ended
     December 31, 1996 and 1995                                          F-9    
  Notes to Consolidated Financial Statements                             F-11   
 


INDEPENDENT AUDITORS' REPORT


To the Board of Directors and Shareholders
  American Investment Network, Inc.
Jackson, Mississippi

We have audited the consolidated balance sheets of American Investment Network, 
Inc. (formerly Great American Investment Network, Inc.) and subsidiaries as of 
December 31, 1996 and 1995, and the related consolidated statements of 
operations, changes in stockholders equity and cash flows for the years then 
ended.  These financial statements are the responsibility of the Companys 
management.  Our responsibility is to express an opinion on these financial 
statements based on our audits. 

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

In our opinion, such consolidated financial statements present fairly, in all 
material respects, the consolidated financial position of American Investment 
Network, Inc. and subsidiaries as of December 31, 1996 and 1995, and the results
of their operations and their cash flows for the years then ended in conformity 
with generally accepted accounting principles.

/s/ DELOITTE & TOUCHE LLP
Jackson, Mississippi
March 17, 1997



AMERICAN INVESTMENT NETWORK, INC. AND SUBSIDIARIES                              
                                                                                
CONSOLIDATED BALANCE SHEETS                                                     
DECEMBER 31, 1996 AND 1995                                                     
 
ASSETS                                               1996                1995
                                                                                
 
SECURITIES  AVAILABLE FOR SALE - AT FAIR VALUE:                                 
 
                                       
    Fixed maturities                              $  2,706,059      $  2,666,979
 
    Equity securities                                  981,163           980,600
 
                                      
                                                     3,687,222         3,647,579
 
                                                                                
OTHER ASSETS:                                                                   
                                       
  Cash and cash equivalents                            282,277           121,102
  Restricted cash                                                         95,000
  Accrued investment income                             86,830            76,737
  Notes and accounts receivable, no allowance for uncollectible                 
    accounts deemed necessary                          305,795           339,172
  Reinsurance receivable                                34,552            35,393
  Property and equipment - net                         738,522           723,864
  Deferred policy acquisition costs                  2,305,365         2,241,403
    $18,000 (1996) and $7,000 (1995)                   247,423           206,338
                                                               
TOTAL ASSETS                                      $ 7,687,986        $7,486,588

See notes to consolidated financial statements.                                


LIABILITIES AND STOCKHOLDERS' EQUITY              1996                 1995
                                                                               
LIABILITIES:                                                                   
  Future policy benefits                       $  2,405,250         $  1,998,386
  Unpaid claims                                     163,214              140,777
  Unearned premiums                                 110,336               71,724
  Policyholders' dividend accumulations             836,352              731,454
  Accounts payable and other liabilities            202,559              315,976
  Note payable                                      509,128              526,447
                                                                                
                                        
           Total liabilities                      4,226,839            3,784,764
  
CONTINGENCIES                                                                  
                                                                               
STOCKHOLDERS' EQUITY:                                                          
  Class A common stock, participating, 
     no par value; authorized 15,000,000 
     shares, issued 5,025,490                     4,480,620            4,480,620
  Class B common stock participating, 
     $1 par value; 2,500 shares authorized, 
     issued and outstanding                           2,500                2,500
  Unrealized (loss) gain on securities 
    available for sale                              (15,143)              48,062
  Retained earnings (deficit)                      (999,378)           (821,906)

                                                  3,468,599            3,709,276
  Less cost of treasury stock - 3,726 shares         (7,452)             (7,452)

           Total stockholders' equity             3,461,147            3,701,824

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $  7,687,986         $  7,486,588






AMERICAN INVESTMENT NETWORK, INC.  AND SUBSIDIARIES                           
                                          
CONSOLIDATED STATEMENTS OF OPERATIONS                                          
YEARS ENDED DECEMBER 31, 1996 AND 1995                                        
                                                          1996           1995

REVENUE:                                                                       
  Premiums (net of ceded premium of $149,000 (1996) and                        
     $70,000 (1995)                                   $2,752,914    $ 2,797,260
  Net investment income                                  290,417        294,807
  Rental income                                           54,008         51,608
  Realized investment losses                                             (2,325)
  Other income                                             8,064          9,365 

                                                       3,105,403      3,150,715
                                                                                
BENEFITS AND EXPENSES:                                                         
  Benefits and claims                                  1,406,297      1,107,183
  Amortization of deferred policy acquisition costs      644,754        449,204
  Interest expense                                        61,517         70,148
  Actuarial and other professional fees                  156,725        175,620
  Depreciation and amortization                           76,926         77,721
  Other expenses                                         240,602        308,273
 

  Reduction of foreign marketing subsidiary investment                   30,000
                                                                               
                                                       3,282,875      2,961,789
                                                                               
                                                                               
(LOSS) EARNINGS FROM CONTINUING OPERATIONS              (177,472)       188,926
                                                                               
DISCONTINUED OPERATIONS:                                                       
  Loss from operations                                                   (9,871)
  Gain on sale of agency subsidiary                                      47,133

                                                                         37,262

NET (LOSS) EARNINGS                              $    (177,472)     $ 226,188





AMERICAN INVESTMENT NETWORK, INC. AND SUBSIDIARIES                             
                                                                               
CONSOLIDATED STATEMENTS OF OPERATIONS                                         
YEARS ENDED DECEMBER 31, 1996 AND 1995                                        
                                                  1996                1995

NET (LOSS) EARNINGS PER COMMON SHARE:

  Continuing operations                   $      (0.04)        $      0.04 
  Discontinued operations                                             0.01   

  Net (loss) earnings                     $      (0.04)        $      0.05 


WEIGHTED AVERAGE COMMON SHARES                                      
  OUTSTANDING                               5,024,264            5,024,264  

See notes to consolidated financial statements.                          
                                               (Concluded)


AMERICAN INVESTMENT NETWORK, INC.  AND SUBSIDIARIES                           
                                                                   
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY                    
YEARS ENDED DECEMBER 31, 1996 AND 1995                          


                                                      Common Stock             
                                      Class A                   Class B        
                                      Shares        Amount      Shares   Amount

                                                                  
BALANCE, JANUARY 1, 1995              5,025,490    $4,480,620    2,500   $2,500
    Unrealized gain on securities                                              
      available for sale                                                       
    Net earnings                                                               


BALANCE, DECEMBER 31, 1995            5,025,490     4,480,620    2,500    2,500
    Unrealized (loss) on securities                                            
      available for sale                                                       
    Net (loss) 

                                      5,025,490    $4,480,620   2,500   $2,500  
                                                                   
See notes to consolidated finanicial statements.                   
                                                  



                                                                        
                                                                        
                                                                        
  Unrealized                                                            
  Gain (Loss)             Retained                                 Total
  on Marketable           Earnings                Treasury        Stockholders'
  Securities              (Deficit)               Stock           Equity
                                                                        
                                                                        
$  (374,653)        $   (1,048,094)          $   (7,452)          $ 3,052,921  
    422,715                                                           422,715  
                                                            
                           226,188                                    226,188  
                                                                        
     48,062               (821,906)              (7,452)            3,701,824  
                                                                        
    (63,205)                                                          (63,205) 
                          (177,472)                                  (177,472) 
                                                                        
$   (15,143)         $    (999,378)         $    (7,452)          $ 3,461,147  
                                                                        


AMERICAN INVESTMENT NETWORK, INC. AND SUBSIDIARIES                          

CONSOLIDATED STATEMENTS OF CASH FLOWS
YEARS ENDED DECEMBER 31, 1996 AND 1995 

                                                           1996           1995

OPERATING ACTIVITIES:                                                          
  Net (loss) earnings                                $  (177,472)    $  226,188
  Adjustments to reconcile net (loss) earnings to net cash
    provided by operating activities:                     
      Discontinued operations                                           (37,262)
      Realized loss on sale of investments                                2,325
      Reduction of foreign marketing subsidiary investment               30,000
      Provision for doubtful accounts                      3,140          4,243
      Amortization on investment premium and discounts       192           (157)
      Depreciation and amortization                       76,926         77,721
      Amortization of deferred policy acquisition costs  644,754        449,204
      Policy acquisition costs deferred                 (708,716)      (849,139)
      Decrease in restricted cash                         95,000        161,000
      Increase in accrued investment income              (10,092)       (26,417)
      Decrease (increase) in accounts receivable          18,062        (27,544)
      Decrease (increase) in other assets                (48,085)        (5,335)
      Decrease (increase) in reinsurance receivables         841          1,282 
      Increase in liability for future policy benefits   406,864        212,382
      Increase in unpaid claims                           22,437         27,448
      Increase in unearned premiums and policyholders' dividend                
        accumulations                                    143,510        160,593
      Increase in accounts payable and other liabilities(113,417)      (297,291)
      Decrease in net assets of discontinued operations                  16,676

           Net cash provided by operating activities     353,943        125,917

INVESTING ACTIVITIES:                                                          
  Cost of investments acquired                          (330,220)      (429,368)
  Proceeds from sale of investments                      210,000        238,000
  Proceeds from maturities and repayments of 
     fixed-maturities investments                         17,180         22,053
  Property and equipment purchased                       (84,584)      (115,886)
  Collections on note receivable                          12,175          5,755 


           Net cash used in investing activities        (175,449)      (279,446)


AMERICAN INVESTMENT NETWORK, INC. AND SUBSIDIARIES                            
                                                                               
CONSOLIDATED STATEMENTS OF CASH FLOWS                                          
YEARS ENDED DECEMBER 31, 1996 AND 1995                                        

                                                    1996                1995

FINANCING ACTIVITIES -      
  Repayments on notes payable               $    (17,319)       $        (9,116)


    Net cash used in financing activities        (17,319)                (9,116)
 

NET INCREASE (DECREASE) IN CASH AND                                          
  CASH EQUIVALENTS                               161,175               (162,645)
 

CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR   121,102                283,747
  

CASH AND CASH EQUIVALENTS AT END OF YEAR    $    282,277        $       121,102


SUPPLEMENTAL INFORMATION:
  Non-cash activities: 

    Change in unrealized (loss) gain on 
      securities available for sale          $    (63,000)      $      423,000  

    Sale of agency subsidiary in exchange for note receivable   $      170,000  

  Interest paid                              $     54,000       $       60,000  

See notes to consolidated financial statements.              (Concluded)



AMERICAN INVESTMENT NETWORK, INC. AND SUBSIDIARIES 
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.    SUMMARY OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES 

Organization and Business  -  American Investment Network, Inc. (formerly Great 
American Investment Network, Inc.) (AIN) was incorporated in 1987 for the 
purpose of acquiring stock in existing insurance companies and organizing and 
operating other companies in the financial services industry. AIN has two wholly
owned subsidiaries, United Security Life Insurance Company (USLI) and The Gain 
Agency, Inc. (The Agency).  Prior to 1995, AIN owned a 50.025% interest in U. S.
Star International, Inc. (US Star), an inactive Cayman Island Corporation.  In 
1995, the Company conveyed its interest in US Star to US Stars other shareholder
and wrote-off its remaining investment of $30,000, which is included in 
reduction of foreign marketing subsidiary investment.  

Prior to April 1995, the Agency was a general insurance agency selling property 
and casualty insurance.  In April 1995, the Agency sold all of its inforce 
business and certain net assets (see Note 2).

On May 10, 1990, USLI began selling and underwriting a participating modified 
whole life insurance policy which accounts for over 98% of its inforce life 
insurance policies and, in latter 1993, began a mass marketing program to offer 
limited benefit accident and health policies.  The sale of accident and health 
products has been USLIs major focus during the past three years and presently it
plans to offer additional competitive insurance products. 

Prior to 1990 the Company incurred operating losses resulting from its develop-
mental stages and as of December 31, 1996 had a cumulative deficit in retained 
earnings of approximately $999,000.  For continued expansion of its operations, 
the Company will be dependent on (i) attaining and maintaining profitable opera-
tions, (ii) possible additional equity offerings, and (iii) obtaining such 
additional financing as may be required from time to time.  See Note 2 to the 
consolidated financial statements concerning a proposed sale of the Company.

a.     Basis of Presentation  -  The accounts of AIN and its subsidiaries are 
stated on the basis of generally accepted accounting principles. For USLI, these
principles differ in some respects from the statutory basis of accounting 
required by the Mississippi Insurance Department.

b.     Principles of Consolidation  -  The consolidated financial statements 
include the accounts of AIN and its wholly-owned subsidiaries, USLI and The 
Agency (collectively the Company).  All significant intercompany balances and 
transactions have been eliminated.

In preparing the consolidated financial statements, the Company is required to 
make estimates and assumptions that affect the reported amounts of assets and 
liabilities and disclosure of contingent assets and liabilities as of the dates 
of the balance sheets and the reported amounts of revenues and expenses for the 
years then ended.  Actual results could differ significantly from those 
estimates.

c.     Securities Available for Sale  -  Fixed maturities of the Company include
all debt securities and consists of bonds and notes with maturities beyond one 
year.  Equity securities consist of non-redeemable preferred stocks.

The Company has classified all its equity and fixed maturity securities as 
securities available for sale, which are carried at fair value.  Unrealized 
gains and losses are excluded from earnings and reported net of tax, as a 
separate component of stockholders equity.  Securities within the available for 
sale portfolio may be used as part of the Company's asset/liability strategy and
may be sold in response to changes in interest rate risk, prepayment risk or 
other similar economic factors.  The specific identification method is used to 
compute gains or losses on the sale of these assets.  Interest and dividends 
earned on these assets are included in net investment income.

Fixed maturities and equity securities that reflect a market decline below cost 
or amortized cost that is deemed other than temporary are written down to net 
realizable value by a charge to earnings.  Investment premiums and discounts are
amortized by a method which approximates the interest method.

d.     Cash and Cash Equivalents  -  For purposes of the consolidated statements
of cash flows, the Company considers checking accounts and cash on hand to be 
cash and cash equivalents.  Short-term investments are included in the invest-
ments category in order to conform to insurance company reporting requirements. 

e.     Property and Equipment  -  Property and equipment are stated at cost.  
Major additions and betterments are charged to the property accounts while 
replacements, maintenance and repairs which do not improve or extend the lives 
of the respective assets are expensed.  Depreciation of property and equipment 
is provided using the straight-line method over the estimated useful lives of 
the related assets which range from five to thirty-two years.

f.     Deferred Policy Acquisition Costs - The costs (consisting of commissions,
premium taxes and other costs) which both vary with and are primarily related to
the production of new insurance business are deferred and amortized over the 
anticipated premium paying period of the related policies in proportion to the 
ratio of the annual premium revenue to the total premium revenue anticipated.  
Such anticipated premium revenue is estimated using the same assumptions as are
used for computing liabilities for future policy benefits.

g.     Intangible Assets  -  Intangible assets consist of the cost of noncompete
and employment agreements, acquired insurance license agreements, and the excess
of cost over net assets of businesses acquired.  These intangibles are being 
amortized by the straight-line method over their estimated lives, which range 
from five to twenty-five years. 

h.     Future Policy Benefits - The liabilities for future policy benefits have 
been determined by the net level premium method.  The significant assumptions 
used to determine these liabilities are as follows:
                               Life                  Accident and Health
Interest rates       8% first five years graded to
                        7% at the fifteenth year        7%
Mortality and       85% of 1965-70 Male Select         50% (cancer) and 60% 
  Morbidity             and Ultimate Table         (non-cancer) of Underwriting
                                                    Selection graded to 100% 
                                                  after five years, 1980 CSO ALB
Withdrawals         22.5% first year graded to 5%  25% first year graded to 7.5%
(Lapse Rates)         in years eleven and later   (cancer) and 10% (non-cancer)
                                                   in years five and later

i.     Unpaid Claims  -  Unpaid claims represent the estimated liabilities on 
claims reported to the Company plus a provision for claims incurred but not yet 
reported.  The liability for unpaid claims is determined using both evaluations 
of each claim and statistical analyses and represents the estimated ultimate net
cost of all claims incurred through the end of the reporting period. 

j.     Income Taxes  -  Prior to 1995, AIN and The Agency filed a consolidated 
income tax return and USLI filed its income tax return on a separate company 
basis.  Beginning in 1995, the Company included USLI in a consolidated income 
tax return.  
             
Deferred tax liabilities and assets are determined based on the differences 
between the financial statement and tax bases of assets and liabilities using 
enacted tax rates in effect in the years in which the differences are expected 
to reverse.

k.     Premium and Commission Revenue Recognition  -  Premiums are recognized as
revenue when due from policyholders.  Benefits and expenses are associated with 
the earned premiums to result in recognition of profits over the life of the 
insurance contracts.  This association is accomplished by accrual of the 
liability for future policy benefits on insurance in force and the amortization 
of deferred policy acquisition costs.

Loss from discontinued operations includes commission income (none of which was 
received from USLI) for insurance coverage, principally property and casualty, 
placed with underwriters.  These revenues are recognized at the effective date 
of the policy.

l.     Net (Loss) Earnings - Net (loss) earnings per common share is computed on
the basis of the weighted average number of shares outstanding during the year.

m.     Fair Values of Financial Instruments  -  The following methods and 
assumptions were used by the Company to estimate the fair value of each class of
financial instruments:

Cash and Cash Equivalents: The carrying amounts reported in the balance sheets 
for these financial instruments, including restricted cash,  approximate their 
fair value.

Securities Available for Sale: Fair values for these financial instruments are 
based upon quoted market prices or dealer quotes, where available.  If quoted 
market prices are not available, fair values are based upon quoted market prices
of comparable instruments.

Note Receivable for Sale of Agency Assets: The fair value of the note receivable
from the sale of agency assets is estimated by discounting the future cash flows
using current rates at which a similar loan would be made to the borrower for 
the same remaining maturity.

Note Payable: The fair value of the note payable is estimated using rates 
currently available to the Company for debt with a similar term and remaining 
maturity.

n.     Stock-Based Compensation  - During 1996, the Company adopted Statement of
Accounting Financial Standards (SFAS) No. 123 "Accounting for Stock-Based 
Compensation" and has applied the measurement requirements to the Agent's Stock 
Option Plan adopted in 1996 (see Note 9).  No compensation cost has been 
recognized as no options have been granted under this plan.

The Company continues to measure compensation cost for the employee stock incen-
tive plan (see Note 9), using the intrinsic value based method of accounting 
prescribed by Accounting Principles Board No. 25 "Accounting for Stock Issued to
Employees".

2.    PROPOSED SALE OF COMPANY AND OTHER BUSINESS DISPOSITIONS

On October 25, 1996, the Company signed a definitive written agreement whereby 
Citizens Insurance Company of America, (CICA), Austin, Texas, a wholly-owned 
subsidiary of Citizens, Inc. (Citizens) will acquire 100% of the outstanding 
shares of the Company for shares of Citizens Class A common stock.

Pursuant to the terms of the Agreement, which is subject to approval of 
regulatory authorities and shareholders of the Company, CICA will issue one 
share of Citizens Class A common stock it owns for each 7.2 shares of the 
Company's Class A and Class B common stock issued and outstanding.  CICA expects
to issue approximately 700,000 shares of Citizens common stock to consummate the
transaction.  Management of the Company anticipates that the sale will occur 
during 1997.

In  April 1995, The Agency sold all of the inforce business and certain net 
assets to a former officer of The Agency for approximately $180,000 of which 
$170,000 was received in the form of a five year note receivable.  The sale 
resulted in a net gain of approximately $47,000.  The gain on disposition of    
this business segment has been accounted for as discontinued operations.  
Revenues of the agency approximated $65,000 in 1995 prior to the sale.  The note
receivable from the former officer, which is included in notes and accounts 
receivables, approximated $152,000 (1996) and $164,000 (1995).

3.     RESTRICTED CASH
     
Pursuant to a business acquisition in 1994, the Company and the seller entered 
into certain agreements to indemnify the Company and the acquired company from 
certain liabilities and contingencies.  In connection therewith, an escrow 
agreement was executed wherein $256,000 of the acquired company's assets, which 
would have been transferred to the seller, were deposited in an escrow account. 
In 1995, these assets were presented as restricted cash of the Company with a
corresponding liability in accounts payable and other liabilities for certain 
potential contingencies. During March 1996, these contingencies were resolved 
and the Company released the remaining funds which were distributed to the 
seller and approximated $95,000.

4.    SECURITIES

The amortized cost and related approximate fair value of securities available 
for sale were as follows:
                                                Gross        Gross             
                                 Amortized    Unrealized   Unrealized    Fair
                                 Cost          Gains        Losses       Value
                                                                           
1996                                                                       
  Fixed Maturities:                                                        
    U.S. Treasury and other U.S. government                                    
      agencies obligations    $  305,253                $   11,253    $  294,000
    State, county and municipal                                            
      obligations                409,258     $  6,442                    415,700
    FHLB and GNMA certificates   156,355                     5,996       150,359
    Public utility bonds         781,614                    14,614       767,000
    Industrial bonds           1,062,648       16,352                  1,079,000
                                                                           
                             $ 2,715,128     $ 22,794    $  31,863    $2,706,059
  
                                                                           
  Equity Securities          $   987,237     $ 12,448    $  18,522    $  981,163
                                                                           
                                                                           
1995                                                                       
  Fixed Maturities:                                                        
    U. S. Treasury and other U.S. government                                    
      agencies obligations   $   306,458    $   1,000    $   4,458    $  303,000
    State, county and municipal                                            
      obligations                214,188        3,862                    218,050
    FHLB and GNMA certificates   273,913        2,000        4,985       270,928
    Public utility bonds         806,544       10,671        3,714       813,501
    Industrial bonds           1,011,177       50,323                  1,061,500
  
                             $ 2,612,280    $  67,856    $  13,157    $2,666,979
                                                                           
  Equity Securities          $   987,237    $            $   6,637    $  980,600
  
      

          

Fixed maturity investments with an amortized cost of $1,161,000 in 1996 and 
$1,156,000 in 1995 (fair values of $1,160,000 in 1996 and $1,189,000 in 1995) 
were held by and pledged to various states in which the Company is licensed 
pursuant to regulatory requirements.

The components of net investment income were as follows:
                                             1996               1995

Fixed maturities                        $   193,246       $   185,487  
Equity securities                            91,225            95,483  
Short-term investments                        4,033             3,860  
Other                                         1,913             9,977  

Net investment income                   $   290,417       $   294,807  


Investment expenses were not material for any of the years presented. 

The following is an analysis of the amortized cost and fair value of investments
in fixed maturities at December 31, 1996, by contractual maturity:
                                                   Amortized             Fair
                                                   Cost                  Value

Due in one year                               $    100,080         $     101,000
Due after one year through five years              350,996               353,700
Due after five years through ten years           1,356,091             1,349,500
Due after ten years                                908,302               901,859
  
                                              $  2,715,128          $  2,706,059
  
      

Actual maturities may differ from contractual maturities because of the 
borrowers right to call or prepay obligations.

Proceeds from sales of fixed maturity securities approximated $210,000 in 1996 
and $238,000 in 1995. There were no gross realized gains in 1996 and 1995. Gross
realized losses approximately $2,000 in 1995 (none in 1996).   

5.     PROPERTY AND EQUIPMENT 

Property and equipment were as follows:
                                                  1996               1995

Land                                       $     80,000         $    80,000  
Buildings                                       483,749             483,749  
Furniture and equipment                         427,783             385,704  

                                                991,532             949,453  

Less accumulated depreciation                   253,010             225,589  

Property and equipment, net                $    738,522         $   723,864  
      


6.    REINSURANCE

The maximum amount of risk that USLI retains on any one life is $20,000.  Life 
insurance coverage in excess of this retention limit, accidental death benefit 
coverage and substandard insurance risks are ceded to other reinsurers.  For 
accident and health policies, the Company reinsures all of its cancer policies 
to provide reinsurance for all individual claims over $25,000 in any calendar 
year.  In addition during 1996, the Company entered into other reinsurance 
agreements which provide coverage of claims in excess of various amounts on 
several other accident and health policies and riders.  Under the terms of the 
life reinsurance contracts dated in May 1990, USLI received a commission 
allowance equal to 100% of first year premiums to be paid on the excess life 
coverage.  Premiums ceded for the excess life coverage relating to the second 
and subsequent years approximated $71,000 in 1996 and $67,000 in 1995.  Accident
and health premiums ceded approximated $79,000 in 1996 and $3,000 in 1995.

Although ceding of insurance does not discharge the primary liability of the 
original insurer, insurance liabilities are presented net of reinsurance.  The 
reinsured portion of the liabilities for future policy benefits for life 
products approximated $31,000 in 1996 and $35,000 in 1995 relating to insurance 
in force of $39,760,000 and $39,236,000, respectively, and is included in re-
insurance receivables. 

7.    NOTE PAYABLE 

Note payable consisted of the following:
                                                     1996               1995

Prime plus 1.5% mortgage note (effective rates of 
  9.75% in 1996 of 10.25% in 1995) payable in 
  monthly installments of $5,751, including 
  interest, with a balloon payment due on 
  December 19, 1999 and collateralized by 
  property with a carrying value of $371,000 
  in 1996 and $386,000 in 1995                   $   509,128         $526,447  
      

Aggregate future principal payments on the note payable were as follows:

Year Ended December 31, 

1997                        $     20,261  
1998                              22,328  
1999                             466,539  

                            $    509,128  
      


8.    REGULATORY DISCLOSURES AND RESTRICTIONS

Pursuant to the laws and regulations of the State of Mississippi, USLI is 
required to maintain minimum capital of $400,000 and minimum surplus of 
$600,000.  The approximate statutory capital and surplus and net income of USLI,
as determined in accordance with statutory accounting practices required by the 
Department of Insurance of the State of Mississippi (the Department), were as
follows:
                                                 1996                  1995

Statutory capital and surplus              $  2,325,000          $  2,372,000  

Statutory net income and realized gains    
 and losses                                $      4,000          $     13,000  


Stockholders' dividends are payable out of statutory surplus of USLI with the 
approval of the Department, based upon limitations relating to statutory capital
and surplus and statutory net income.  As of December 31, 1996, approximately 
$201,000 was available for dividends to GAIN without prior approval by the 
Department.

The National Association of Insurance Commissioners (NAIC) adopted certain risk-
based capital requirements effective for all insurance companies.  These 
requirements provide a measurement of minimum capital appropriate for an 
insurance company to support its overall business operations based upon its size
and risk profile which considers (i) asset risk, (ii) insurance risk, (iii) 
interest rate risk, and (iv) business risk.  An insurance company's risk-based 
capital is calculated by applying a defined factor to various statutory based 
assets, premiums and reserve items, wherein the factor is higher for items with
greater underlying risk.  The adequacy of a company's capital is then measured 
by its risk-based capital ratio (the ratio of its total capital, as defined, to 
its risk-based capital).

The NAIC has provided levels of progressively increasing regulatory action for 
remedies when an insurance company's risk-based capital ratio falls below a 
ratio of 1:1.  USLI was in compliance with these new minimum capital require-
ments as follows:
                                                    1996                 1995

Total adjusted capital                        $ 2,389,000          $  2,431,000
Authorized control level risk-based capital       112,000               107,000
Ratio (in percentages)                              2,133 %               2,272%
      


9.    STOCKHOLDERS' EQUITY

Prior to 1995, the Company amended its articles of incorporation to equalize the
rights of its two classes of common stock and provided for identical voting and 
participating rights.

On May 7, 1996, stockholders of the Company approved the adoption of an Agents'
Stock Option Plan for eligible agents licensed with the Company wherein 200,000 
shares of Class A common stock were reserved for option as directed by the Board
of Directors.  Under the terms of the plan, agents writing premiums which exceed
certain minimum levels will be granted options at an exercise price equal to 
fair value at the date of grant.  There have been no options granted under the 
arrangement.

Prior to 1995, the Company adopted a stock incentive plan for employees wherein 
500,000 shares of unissued Class A common stock were reserved for option as 
directed by the Board of Directors.  As of December 31, 1996, the Company had 
granted options to acquire 150,000 shares of Class A common stock at an exercise
price of $1.80 per share (estimated fair value at date of grant) which were 
still outstanding.  These options are exercisable at any time and expire at the 
earlier of November 29, 2003 or termination of employment.  During 1996, 2,500 
shares of the options previously granted were forfeited due to the termination 
of an employee.

10.   PARTICIPATING POLICIES 

Approximately 98% of the Company's life insurance in force and 37% of total 
premium revenue in 1996 is participating whole life insurance.  Dividends on 
these policies are payable at the discretion of the Board of Directors from 
divisible surplus as calculated using statutory accounting practices as required
by law.  All amounts allocable to policyholders have been accrued and none of 
the Company's retained earnings as reported was allocable to participating 
policies.  No dividends are paid until the second annual premium has been paid 
in full.  The accrued dividends on participating policies have been included in 
the liability for future policy benefits.  Dividends, included in benefits and 
claims expense, approximated $356,000 in 1996 and $336,000 in 1995.

11.     LIABILITY FOR UNPAID CLAIMS

Activity in the liability for unpaid claims is summarized as follows:

                                              1996               1995

Balance at January 1                    $   140,777          $ 113,329  
  Less reinsurance recoverables                   

Net Balance at January 1                    140,777            113,329  
                                                                        
Incurred related to: 
  Current year                              533,977            444,384  
  Prior years                               106,319             73,514  

Total incurred                              640,296            517,898  

Paid related to: 
  Current year                              511,540            416,936  
  Prior years                               106,319             73,514  

Total paid                                  617,859            490,450  
                                                                              
Net Balance at December 31                  163,214            140,777  
  Plus reinsurance recoverables                                               
  
Balance at December 31                  $   163,214         $  140,777  
      

Recoveries of settlements paid relating to reinsurance ceded approximated 
$42,000 in 1995 and 1996.

12.   INCOME TAXES

There was no provision for income taxes in 1996 and 1995 as a result of the 
utilization of net operating loss carryforwards and the offset of potential net 
deferred tax assets by valuation allowances. Deferred income taxes reflect the 
net tax effects of (a) temporary differences between the carrying amounts of 
assets and liabilities for financial reporting purposes and the amounts used 
for income tax purposes, and (b) operating loss carryforwards.  The tax effects 
of significant items comprising the Company's net deferred tax asset as of 
December 31, 1996 and 1995 are as follows:
                                              1996                1995
                                                                               
Deferred tax liabilities:                                                     
  Property and equipment               $    (61,754)       $    (34,900) 
  Deferred policy acquisition costs        (682,993)           (681,889) 
  Unrealized gain on securities 
   available for sale                          -                 17,927  

                                       $  (744,747)        $   (734,716) 

Deferred tax assets:  
  Unrealized loss on securities 
    available for sale                 $      5,657        $       -       
  Future policy benefit liabilities         810,763             646,926  
  Deferred compensation liability            20,515              20,515  
  Accrual for litigation                     25,664              35,127  
  Operating loss carryforwards              306,979             281,283  

                                          1,169,578             983,851  
Valuation allowance                        (424,831)           (249,135) 

                                            744,747             734,716  

Net deferred tax asset                $       -             $     -       

          

The valuation allowance increased by approximately $170,000 in 1996 and 
decreased by approximately $115,000 in 1995, exclusive of valuation changes 
related to the 1996 unrealized loss on securities available for sale.

The provision for federal income taxes differs from the amount computed by 
applying the federal income tax statutory rate to income from operations before 
income taxes as follows:
                                                1996                1995

Taxes calculated at federal statutory rate  $    (60,340)       $      76,904  
Increases (decreases) resulting from: 
  Change in deferred tax valuation allowance                              
     and utilization of operating loss 
     carryforwards                                63,750              (61,888) 
  Other                                           (3,410)             (15,016) 
        
                                    $        -          $        -       
      
At December 31, 1996, the Company had net operating loss carryforwards for 
income tax reporting purposes available to offset future taxable income as 
follows:

Year of Expiration                       USLI             Gain 

2004                                                 $ 263,000  
2005                                                   220,000  
2006                                                    46,000  
2007                                                    60,000  
2008                                                    96,000  
2009                                                    53,000  
2010                                                    58,000  
2011                                $   24,000           3,000  

                                    $   24,000       $ 796,000  
      


The Company has not been examined by the Internal Revenue Service for any of the
periods presented.

13.   TRANSACTIONS WITH RELATED PARTIES 

In a prior year, the Board of Directors approved the expenditure of up to 
$200,000 for purposes of determining the feasibility of marketing certain of its
products in Mexico and obtaining license approval of USLI as a foreign re-
insurer.  As of December 31, 1994, the Company had expended the $200,000, 
including the purchase of an investment in an inactive foreign corporation 
approximating $30,000.  Expenses charged to operations include the write-off of 
the investment of the foreign corporation, US Star, in 1995 of $30,000. 
Considering the current economic conditions in Mexico and the instability of the
current Mexican government, management has suspended any additional foreign
operations marketing activities and conveyed its interest in US Star to US 
Star's other shareholder.

On May 2, 1995, shareholders of the Company approved an executive compensation 
plan and agreement for the Company's Chairman and Vice Chairman of the Board.  
Pursuant to the non-qualified compensation plan, the executives will receive the
greater of fixed annual compensation of $20,000 each or 1% of statutory premium 
revenues of USLI up to a maximum premium amount of $10,000,000 (equivalent to 
annual benefits of $100,000 each).  The 1% is reduced based upon the ratio of 
statutory net gain from operations to gross statutory revenues.  The plan is 
effective for a ten year period beginning May 2, 1995.  In connection with the 
adoption of this plan, the Company accrued the minimum obligation relative to 
past services, based upon its best estimates of anticipated future statutory 
premium revenues and statutory operating gains.  This obligation, which 
approximated $55,000 at December 31, 1996 and 1995, is included in accounts 
payable and other liabilities.  Compensation expense paid to the executive 
officers pursuant to this plan approximated $40,000 in 1996 and $27,000 in 1995.

The Company entered into consulting arrangements with certain of its original 
founders who subscribed for stock for purposes of solicitation of their advice, 
support and promotion of the Company through a consulting group.  Consulting 
fees are based upon an 8.33% return on each respective founder's original 
investment and payable over twelve years.  Consulting fees incurred approximated
$42,000 in 1996 and in 1995.

Prior to the sale of its inforce business and certain net assets in April 1995, 
The Agency had entered into an employment and non-competition agreement with an 
officer of The Agency which provided for payment to the officer of amounts equal
to 40% of all commissions earned by The Agency while the officer was employed.  
The agreement further provided that the officer would own 50% of all new 
business produced after the date of his employment with a first right of refusal
between The Agency and the officer for the purchase or sell of its respective 
50% ownership at such time as the officer retired or terminated employment.  
This arrangement was considered in the negotiation and sale of the inforce 
business (see Note 2).  Compensation expense paid to the officer under this 
arrangement approximated $18,000 in 1995.

14.   COMMITMENTS AND CONTINGENCIES 

The Company has been named defendant in two litigation matters resulting from 
the denial of claim benefits under a policy issued by USLI.  Legal counsel is 
unable to render an opinion on the estimated outcome of these matters as they 
are presently in discovery stage.  However, management intends to vigorously 
defend these matters and is of the opinion that the ultimate outcome of these
matters will not result in a material adverse effect on the consolidated 
financial statements. Accordingly, no provision for any loss or liability has 
been provided in the consolidated financial statements.

Prior to 1995, the Company was a defendant in litigation filed by the former 
owner of an insurance agency acquired by the Agency wherein the plaintiff sought
damages for alleged failure to make payments due under a purchase agreement for 
a specified percentage of renewal commissions.  On March 3, 1995, an out-of-
court settlement was reached wherein the Company agreed to pay over a five year 
period installments aggregating $180,000, including plaintiff legal costs.  The 
Company accrued the present value of this settlement which is included in 
accounts payable and other liabilities and approximated $68,000 and $94,000, 
respectively, as of December 31, 1996 and 1995.

On August 23, 1996, the Company entered into employment agreements with four 
executive officers of the Company for a five year period.  Under the terms of 
these agreements, severance benefits equal to one year's annual salary are 
available to these officers in the event the Company is sold or merged and the 
officers are required to relocate or terminate employment.  No liability existed
under these agreements at December 31, 1996.

15.     FAIR VALUE DISCLOSURES

The carrying values and estimated fair values of the Company's financial 
instruments as of December 31, 1996 and 1995 were as follows:
                                         1996                    1995          
                                Carrying      Estimated   Carrying  Estimated
                                  Value       Fair Value   Value    Fair Value

Financial Assets:   
  Securities available for sale $3,687,222  $3,687,222   $3,647,579  $3,647,579
  Cash and cash equivalents        282,277     282,277      121,102     121,102
  Restricted cash                                            95,000      95,000
  Note receivable from sale of                                          
    agency assets                  152,070     179,000      164,245     184,444

Financial Liabilities -
  Notes payable                  $ 509,128  $  510,000    $ 526,447   $ 522,337
      


The estimated fair values are significantly affected by assumptions used, 
principally the timing of future cash flows, the discount rate, judgments 
regarding current economic conditions, risk characteristics of various financial
instruments and other factors.  Because assumptions are inherently subjective in
nature, the estimated fair values cannot be substantiated by comparison to 
independent quotes and, in many cases, the estimated fair values could not 
necessarily be realized in an immediate sale or settlement of the instrument.  
Potential tax ramifications related to the realization of unrealized gains or 
losses that would be incurred in an actual sale and/or settlement have not been 
taken into consideration.
      
* * * * * *