SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q
                  Quarterly Report Under Section 13 or 15 (d) of the 
                        Securities Exchange Act of 1934

            For the quarterly period from January 1, 1997 to March 31, 1997

                           Commission File No. 0-3978

                           UNICO AMERICAN CORPORATION
             (Exact name of registrant as specified in its charter)

                Nevada                                   95-2583928
     (State or other jurisdiction of                   (I.R.S. Employee
       incorporation or organization)                   Identification No.)

        23251 Mulholland Drive,  Woodland Hills, California      91364
            (Address of Principal Executive Offices)           (Zip Code)

                                 (818) 591-9800
                          Registrant's telephone number

          Securities  registered pursuant to Section 12(b)of the Act:
                                      None
                             (Title of each class)

          Securities  registered pursuant to section 12(g)of the Act:
                           Common Stock, No Par Value
                                (Title of Class)

                                    No Change
(Former name,former address and former fiscal year,if changed since last report)

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


                                   6,120,081
          Number of shares of common stock outstanding as of May 9, 1997




                                       1 of 9
<PAGE>


                         PART 1 - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS

                   UNICO AMERICAN CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                         March 31,            December 31,
                                                                                           1997                   1996   
                                                                                        ----------            -----------
                                         
<S>                                                                                   <C>                   <C>
ASSETS
Investments
  Available for sale:
   Fixed maturities, at market value (amortized cost:  March
    31, 1997  $79,631,910,  December 31, 1996  $75,984,966                            $ 79,558,418          $ 77,109,214
    Equity securities at market (cost: March 31, 1997
     $999,460;  December 31, 1996  $0)                                                     856,200                     -
   Short-term investments, at cost                                                       4,042,389             4,861,745
                                                                                       -----------           -----------
      Total Investments                                                                 84,457,007            81,970,959
Cash                                                                                       506,434                82,637
Accrued investment income                                                                1,414,983             1,443,551
Accounts and notes receivable, net                                                       7,687,955             8,898,839
Reinsurance recoverable:
   Paid losses and loss adjustment expenses                                                919,350               452,943
   Unpaid losses and loss adjustment expenses                                            1,513,537             2,629,019
Prepaid reinsurance premiums                                                             1,302,229             1,647,806
Deferred policy acquisition costs                                                        5,093,193             4,953,085
Property and equipment (net of accumulated depreciation)                                   231,699               229,972
Deferred income taxes                                                                    1,923,189             1,503,655
Other assets                                                                               597,107               638,856
                                                                                       -----------           -----------
     Total Assets                                                                     $105,646,683          $104,451,322
                                                                                       ===========           ===========

                      LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Unpaid losses and loss adjustment expenses                                             $39,830,411           $39,740,865
Unearned premiums                                                                       21,705,006            22,120,241
Advance premiums                                                                         1,413,497             1,358,671
Funds held as security for performance                                                     739,497               730,426
Accrued expenses and other liabilities                                                   2,635,734             2,395,699
Income taxes payable                                                                       586,674                     -
Note payable-bank                                                                          500,001               750,001
Dividends payable                                                                          428,405                     -
                                                                                        ----------            ----------
    Total Liabilities                                                                  $67,839,225           $67,095,903
                                                                                        ----------            ----------

STOCKHOLDERS'  EQUITY
Common stock,  no par -  authorized  10,000,000  shares  issued and  outstanding
   shares 6,120,081 at March 31, 1997
   and 6,028,781 at December 31, 1996                                                    2,836,772             2,836,422
Net unrealized investment gains (losses)                                                  (143,056)              742,004
Retained  earnings                                                                      35,113,742            33,776,993
                                                                                        ----------            ----------
  Total Stockholders' Equity                                                            37,807,458            37,355,419
                                                                                        ----------            ----------
  Total Liabilities and Stockholders' Equity                                          $105,646,683          $104,451,322
                                                                                       ===========           ===========
</TABLE>

                    See notes to consolidated financial statements.




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<PAGE>



                   UNICO AMERICAN CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                                                  Three Months Ended         
                                                                                                        March 31,
                                                                                              1997                  1996
                                                                                           ----------            ----------
<S>                                                                                       <C>                   <C>    

REVENUES
Insurance Company Revenues
     Premium earned                                                                       $10,097,163           $ 9,294,192
     Premium ceded                                                                            955,623             1,080,365
                                                                                          -----------            ----------
          Net premium earned                                                                9,141,540             8,213,827
     Investment income                                                                      1,154,516               957,956
     Net realized investment gains                                                                919                19,542
     Other income                                                                                 115                    30
                                                                                           ----------             ---------
          Total Insurance Company Revenues                                                 10,297,090             9,191,355

Other Revenues from Insurance Operations
     Gross commissions and fees                                                             1,418,736             1,468,340
     Investment income                                                                         34,954                42,530
     Finance charges and late fees earned                                                     290,068               293,625
     Other income                                                                               2,801                  (235)
                                                                                           ----------            ----------
          Total Revenues                                                                   12,043,649            10,995,615
                                                                                           ----------            ----------

EXPENSES
Losses & loss adjustment expenses                                                           4,974,473             4,399,361
Policy  acquisition costs                                                                   2,639,930             2,215,129
Salaries and employee benefits                                                                924,413               912,681
Commissions to agents/brokers                                                                 274,976               306,584
Other operating expenses                                                                      733,627               764,770
                                                                                          -----------           -----------
     Total Expenses                                                                         9,547,419             8,598,525
                                                                                           ----------            ----------

     Income Before  Income Taxes                                                            2,496,230             2,397,090

Income Tax Provision                                                                          731,076               722,273
                                                                                            ---------             ---------

     Net Income                                                                           $ 1,765,154           $ 1,674,817
                                                                                                         

Retained Earnings December 31,                                                             33,776,993            27,345,753
Dividend declared                                                                            (428,405)                    -
                                                                                           -----------           ----------
     Retained Earnings March 31,                                                          $35,113,742           $29,020,570
                                                                                           ==========            ==========


PER SHARE DATA
Weighted Average Shares Outstanding                                                         6,330,790             6,210,632
Earnings Per Share                                                                              $0.28                 $0.27


</TABLE>




                 See notes to consolidated financial statements




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<PAGE>



                   UNICO AMERICAN CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

                      FOR THE THREE MONTHS ENDED MARCH 31,
<TABLE>
<CAPTION>

                                                                                            1997                 1996
                                                                                          ---------           ----------

<S>                                                                                      <C>                  <C>       
Net Income                                                                               $1,765,154           $1,674,817
Adjustments to reconcile net income to net cash from operations
     Depreciation & amortization                                                             20,308               54,599
     Bond amortization, net                                                                 111,766              156,442
     Net realized (gain) on sale of securities                                                 (919)             (19,542)
Changes in assets and liabilities
     Premium, notes & investment income receivable                                        1,239,452              325,735
     Reinsurance recoverable                                                                649,075              546,243
     Prepaid reinsurance premiums                                                           345,577              100,880
     Deferred policy acquisitions costs                                                    (140,108)            (113,622)
     Other assets                                                                            41,750              (74,354)
     Reserve for unpaid losses & loss adjustment expenses                                    89,546              309,576
     Unearned premium reserve                                                              (415,235)             284,410
     Funds held as security & advanced premiums                                              63,897               10,833
     Accrued expenses & other liabilities                                                   240,035               27,604
     Income taxes current/deferred                                                          623,080              (43,995)
                                                                                          ---------            --------- 
          Net Cash Provided from Operations                                               4,633,378            3,239,626
                                                                                          ----------           ---------

Investing Activities
     Purchase of fixed maturity investments                                              (5,768,290)          (3,888,377)
     Proceeds from maturity of fixed maturity investments                                 2,000,000            1,818,514
     Purchase of equity securities  -  cost                                              (1,019,500)          (1,293,561)
     Proceeds from sale of equity securities                                                 20,959              317,865
     Net increase in short-term investments                                                 828,935              878,406
     Additions to property & equipment                                                      (22,035)             (24,078)
                                                                                         ----------           ---------- 
          Net Cash (Used) by Investing Activities                                        (3,959,931)          (2,191,231)
                                                                                          ---------            --------- 

Financing Activities
     Proceeds from issuance of common stock                                                     350                    -
     Repayment of note payable - bank                                                      (250,000)            (895,000)
                                                                                            -------              ------- 
          Net Cash  (Used) by Financing Activities                                         (249,650)            (895,000)
                                                                                            -------              ------- 

Net increase in cash                                                                        423,797              153,395
Cash at beginning of period                                                                  82,637                  951
                                                                                           --------           ----------

          Cash at End of Period                                                            $506,434             $154,346
                                                                                            =======              =======

Supplemental cash flow information Cash paid during the period for:
          Interest                                                                          $12,314              $47,063
          Income taxes                                                                            -             $775,000

</TABLE>

                 See notes to consolidated financial statements.



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<PAGE>



                           UNICO AMERICAN CORPORATION
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1997


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Nature of Business
Unico American  Corporation is an insurance holding company.  Unico American and
its  subsidiaries,  all of which are  wholly  owned  (the  "Company"),  provide,
primarily in California,  property,  casualty,  health and life  insurance,  and
related premium financing.

Change of Fiscal Year
On December 16, 1996, the Board of Directors  approved a change in the Company's
fiscal year end from March 31 to December 31 effective December 31, 1996.

Principles of Consolidation
The  consolidated  financial  statements  include the accounts of Unico American
Corporation and its  subsidiaries.  All significant  inter-company  accounts and
transactions have been eliminated in consolidation.

Basis of Presentation
The  consolidated  financial  statements  have been prepared in conformity  with
generally  accepted  accounting  principles (GAAP) which differ in some respects
from those followed in reports to insurance regulatory authorities.

Use of Estimates
The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the reported  amounts and disclosure of certain assets and liabilities at
the date of the financial  statements  and the reported  amounts of revenues and
expenses during the reporting  period.  While every effort is made to ensure the
integrity of such estimates, actual results could differ from those estimates.

Investments
Although all of the  Company's  fixed  maturity  investments  are  classified as
available-for-sale  and are stated at market  value,  the  Company's  investment
guidelines   place   primary   emphasis  on  buying  and  holding   high-quality
investments.  Investments in equity  securities are carried at market value. The
unrealized  gains or losses  from fixed  maturities  and equity  securities  are
reported as a separate  component of stockholders'  equity,  net of any deferred
tax effect. Short-term investments are carried at cost which approximates market
value.  When a decline in the value of a fixed  maturity  or equity  security is
considered  other  than  temporary,  a loss is  recognized  in the  consolidated
statement  of  operations.  Realized  gains  and  losses  are  included  in  the
consolidated  statements  of operations  based upon the specific  identification
method.

Property and Equipment
Property  and  equipment  are  stated  at cost  less  accumulated  depreciation.
Depreciation  is  computed  using  accelerated  depreciation  methods  over  the
estimated useful lives of the related assets.

Income Taxes
The  provision  for income  taxes is computed on the basis of income as reported
for financial reporting purposes under generally accepted accounting principles.
Deferred  income taxes arise  principally  from certain  assets and  liabilities
which are  recognized  for income tax  purposes in  different  periods  than for
financial statements.


NOTE 2 - FUNDS HELD AS SECURITY
Funds held as security  for  performance  represent  funds  received in order to
guarantee the contractual obligations entered into with customers.




                                       5 of 9
<PAGE>



                           UNICO AMERICAN CORPORATION
                                AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1997


NOTE 3 - RESTRICTED FUNDS
As required by law, the Company  segregates from its operating accounts premiums
collected  from insureds into separate trust  accounts.  As of a March 31, 1997,
these trust funds  represent  $2,137,672  of the Company's  cash and  short-term
investments.  In  addition,  $725,000  of the  Company's  investments  represent
statutory  deposits of Crusader which are assigned to and held by the California
State  Treasurer and the Insurance  Commissioner  of the State of Nevada.  These
deposits  are  required  for  Crusader  to write  certain  lines of  business in
California and for its admission in states other than California.

NOTE 4 - STATUTORY CAPITAL AND SURPLUS
As of March 31,  1997,  Crusader's  statutory  capital and  surplus  were deemed
sufficient to support its present insurance premium writings.

NOTE 5 - INCENTIVE STOCK OPTION PLAN
The Company's 1985 stock option plan provided for the grant of "incentive  stock
options"  to  officers  and key  employees.  The plan  covers  an  aggregate  of
1,500,000  shares of the  Company's  common stock  (subject to adjustment in the
case of stock splits, reverse stock splits, stock dividends,  etc.). As of March
31, 1997,  424,599  options were  outstanding  of which  325,697 were  currently
exercisable.  During the quarter ended March 31, 1997, options on 136,100 shares
of common stock were exercised.  There are no additional  options  available for
future grant under the 1985 plan.

NOTE 6 - CLAIMS AND LITIGATION
The Company,  by virtue of the nature of the business  conducted by it,  becomes
involved  in  numerous  legal  proceedings  in which  it may be named as  either
plaintiff or defendant.  The Company is required to resort to legal  proceedings
from  time-to-time  in order to enforce  collection of premiums,  commissions or
fees for the services  rendered to customers or to their  agents.  These routine
items of  litigation do not  materially  affect the Company and are handled on a
routine basis by the Company through its general counsel.

Likewise,  the Company is sometimes  named as a  cross-defendant  in  litigation
which is  principally  directed  against that insurer who has issued a policy of
insurance  directly or indirectly  through the Company.  Incidental  actions are
sometimes  brought  by  customers  or other  agents  which  relate  to  disputes
concerning the issuance or non-issuance of individual policies.  These items are
also handled on a routine basis by the Company's  general  counsel,  and they do
not  materially  affect the  operations of the Company.  Management is confident
that the  ultimate  outcome  of  pending  litigation  should not have an adverse
effect on the Company's consolidated operation or financial position.

NOTE 7 - LEASE COMMITMENTS AND CONTINGENCIES
The Company  presently  occupies a 46,000 square foot building  located at 23251
Mulholland  Drive,  Woodland  Hills,  California,  under a master lease expiring
March 31, 2007.  The lease  provides  for an annual gross rental of  $1,025,952.
Erwin Cheldin, the Company's president,  chairman and principal stockholder,  is
the owner of the  building.  The terms of the lease at inception and at the time
the lease  extension  was executed  were at least as favorable to the Company as
could have been obtained from unaffiliated  third parties.  The Company utilizes
for its own operation 100% of the space it leases.

NOTE 8
In the opinion of the Company, the accompanying unaudited consolidated financial
statements contain all necessary adjustments,  which consist of normal recurring
adjustments,  to present  fairly the results of operations  for the three months
ended March 31, 1997, and March 31, 1996.

NOTE 9
The results of operations for the three months ended March 31, 1997,  should not
be  considered as  necessarily  indicative of the results to be expected for the
full year.




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<PAGE>



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

(a)  Liquidity and Capital Resources:

Due to the nature of the Company's business  (insurance and insurance  services)
and whereas Company growth does not normally  require  material  reinvestment of
profits into  property or equipment,  the cash flow  generated  from  operations
usually results in improved liquidity for the Company.

Crusader's losses and loss adjustment  expense payments are the most significant
cash flow requirement of the Company.  These payments are continually  monitored
and  projected  to ensure  that the  Company  has the  liquidity  to cover these
payments  without the need to liquidate its  investments.  As of March 31, 1997,
the Company had cash and cash  investments of $85,180,193 (at amortized cost) of
which $81,734,760 (96%) were investments of Crusader.

As of the quarter ended March 31, 1997, the Company had invested $79,631,910 (at
amortized  cost) or 94% of its invested  assets in fixed  maturity  obligations.
Although all of the  Company's  fixed  maturity  investments  are  classified as
available-for-sale,  the Company's investment  guidelines place primary emphasis
on buying and holding high  quality  investments.  The balance of the  Company's
investments  were  in  equity  securities  of  regional  utility  companies  and
high-quality  short-term  investments  that include a U.S.  treasury bill,  bank
money  market  accounts,   certificates  of  deposit,  commercial  paper  and  a
short-term treasury money market fund.

The Company's  investments  in fixed maturity  obligations  of  $79,631,910  (at
amortized cost) include  $39,474,855  (49%) of pre-refunded  state and municipal
tax exempt bonds,  $20,453,922  (26%) of U.S. treasury  securities,  $19,703,133
(25%) in high quality  industrial  bonds and  certificates  of deposit.  The tax
exempt interest income earned for the three months ended March 31, 1997 and 1996
was $454,616 and $410,488 respectively.

The Company's investment policy limits investments in any one company to no more
than  $1,000,000.  This limitation  excludes bond premiums paid in excess of par
value and U.S.  Government or U.S.  Government  guaranteed issues. The Company's
fixed maturity  obligations  have maturities no greater than eight years. All of
the Company's investments are high-grade investment quality.

On March 4,  1997,  the Board of  Directors  declared  a ($0.07)  per share cash
dividend  payable on August 15, 1997, to  shareholders of record at the close of
business on August 1, 1997.

The  Company's  premium  finance  subsidiary,  American  Acceptance  Corporation
("AAC"),  has a bank credit line of $4,000,000  with a variable rate of interest
based on  fluctuations  in the London Inter Bank Offered  Rate  ("LIBOR").  This
credit line is only used to provide AAC with the additional funds it requires to
finance insurance premiums.  AAC has been paying down its bank note payable from
its internal cash flow as well as from  intercompany  loans from Unico. The bank
note payable has been reduced from  $750,001 as of December 31, 1996 to $500,001
as of March 31, 1997.

Although  material capital  expenditures may also be funded through  borrowings,
the  Company  believes  that  cash  generated  from  operations,  plus  cash and
short-term  investments  at  the  quarter  end,  net  of  trust  restriction  of
$2,137,672 and statutory deposits of $725,000,  should be sufficient to meet its
operating  requirements  during the next twelve months  without the necessity of
borrowing additional funds. Crusader is restricted in the amount of dividends it
may  pay  to  its  parent,  Unico,  without  prior  regulatory  approval  by the
California  Department of Insurance.  Crusader  anticipates  that it will not be
required to obtain prior  regulatory  approval for any dividend which it may pay
to Unico in the next twelve months.

There are no material  commitments  for capital  expenditures  as of the date of
this report.





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<PAGE>



ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
         AND RESULTS OF OPERATIONS (continued)

(b)  Results of Operations:

All  comparisons  made in this  discussion  are comparing the three months ended
March 31,  1997,  to the three months  ended March 31,  1996,  unless  otherwise
indicated.

The Company's net income for the quarter ended March 31, 1997, increased $90,337
(5%) to $1,765,154. Revenues increased $1,048,034 (10%) to $12,043,649.

Premium earned before reinsurance  increased $802,971 (9%) for the quarter ended
March 31, 1997 of which $328,425 (41%)  was from California  and  $474,546 (59%)
was from states outside of California.

Ceded premium decreased from 12% of premium earned to 9% for the current quarter
primarily  due to  reduced  reinsurance  cost  related  to an  increase  in loss
retention  from  $100,000  to  $150,000  on April  1,  1995,  and to other  rate
decreases due to the Company's favorable loss experience with its reinsurers and
competition in the reinsurance marketplace.

Losses and loss  adjustment  expenses  were 54% of net  premium  earned for both
quarters  ended March 31, 1997 and 1996.  Crusader has  continued to  experience
favorable development of prior period losses.

Policy acquisition costs consist of commissions, premium taxes, inspection fees,
and certain other underwriting costs which are directly or indirectly related to
the production of Crusader insurance policies. These costs include both Crusader
expenses  and  allocated  expenses  of  other  Unico  subsidiaries.   Crusader's
reinsurer pays Crusader a ceding  commission  which is primarily a reimbursement
of the acquisition cost related to the ceded premium.

Policy acquisition  costs, net of ceding commission,  are deferred and amortized
as the related premiums are earned.  These costs increased by $424,801 (19%) for
the quarter  ended March 31,  1997.  The increase in costs  was primarily due to
the increase in Crusader's net earned premium.

Investment income, excluding realized investment gains, increased $188,984 (19%)
to $1,189,470 for the quarter ended March 31, 1997, compared to $1,000,486. This
increase was  primarily  due to a 15% increase (at  amortized  cost) in invested
assets.

Commissions to agents/brokers decreased $31,608 (10%) in the quarter ended March
31, 1997  primarily  due to related  revenue  decreases in the health,  life and
automobile programs.

Other operating  expenses  decreased $31,143 (4%) during the quarter ended March
31, 1997.

There were no significant changes in other revenue or expense items.

The effect of  inflation  on net income of the Company  during the three  months
ended March 31, 1997, and 1996 was not significant.



ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not Applicable







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<PAGE>


                           PART II - OTHER INFORMATION



ITEM 2 - CHANGES IN SECURITIES

(c)   During the quarter ended March 31, 1997,  the Company  issued an aggregate
      of 136,100  shares of its common  stock upon  exercise of  employee  stock
      options granted under the Unico American  Corporation  Employee  Incentive
      Stock  Option  Plan.  These  shares  were  issued to an  aggregate  of two
      employees of the Company.  Of these shares, an aggregate of 136,000 shares
      were issued in exchange for an aggregate of 44,800  shares of common stock
      and an aggregate of 100 shares were issued in exchange for an aggregate of
      $350.00 in cash.  These shares were acquired for  investment and without a
      view to the  public  distribution  or  resale  thereof,  and the  issuance
      thereof was exempt from the registration requirements under the Securities
      Act of 1933, as amended,  under Section 4 (2) thereof as transactions  not
      involving a public offering.


ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits:
      Exhibit 27 - Financial Data Schedule

(b)   Reports on Form 8-K:
      None





                                                             SIGNATURES

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

                                             UNICO AMERICAN CORPORATION



Date:   May 12, 1997     By:   /s/  Erwin Cheldin
                               ---------------------
                               Erwin Cheldin
                               Chairman of the Board, President and Chief
                               Executive Officer, (Principal Executive Officer)



Date:   May 12, 1997     By:   /s/  Lester A. Aaron
                               -----------------------
                               Lester A. Aaron
                               Treasurer, Chief Financial Officer, (Principal
                               Accounting and Principal Financial Officer)


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