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, 1999 to March 31, 1999

                           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.RS. 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

                                   6,224,369
        Number of shares of common stock outstanding as of May 12, 1999


                                       1

<PAGE>
                         PART 1 - FINANCIAL INFORMATION

ITEM 1 - FINANCIAL STATEMENTS
-----------------------------

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

                                                                                            March 31         December 31
                                                                                              1999              1998
                                                                                              ----              ---- 
                                                           ASSETS
                                                           ------
<S>                                                                                       <C>               <C>           
Investments
   Available for sale:
      Fixed maturities, at market value (amortized cost:  March 31,
         1999  $98,673,898;  December 31, 1998  $96,358,812                               $100,488,578      $ 99,472,720

      Equity securities at market (cost: March 31, 1999
         $782,249;  December 31, 1998  $503,503)                                               623,894           481,500
   Short-term investments, at cost                                                           6,110,286         6,573,862
                                                                                             ---------         ---------
      Total Investments                                                                    107,222,758       106,528,082
Cash                                                                                           346,010           277,544
Accrued investment income                                                                    1,832,853         2,022,197
Premiums and notes receivable, net                                                           6,151,043         5,922,716
Reinsurance recoverable:
   Paid losses and loss adjustment expenses                                                    182,935           146,205

   Unpaid losses and loss adjustment expenses                                                2,335,336         1,139,713
Prepaid reinsurance premiums                                                                    17,389            19,452
Deferred policy acquisition costs                                                            4,603,662         4,665,772
Property and equipment (net of accumulated depreciation)                                       189,812           205,369
Deferred income taxes                                                                          316,760           208,976

Other assets                                                                                   570,716           581,617
                                                                                           -----------       -----------
     Total Assets                                                                         $123,769,274      $121,717,643
                                                                                           ===========       ===========

                                           LIABILITIES AND STOCKHOLDERS' EQUITY
                                           ------------------------------------
LIABILITIES
-----------
Unpaid losses and loss adjustment expenses                                                 $41,455,649       $41,513,945
Unearned premiums                                                                           17,954,466        18,136,895
Advance premium and premium deposits                                                         2,484,460         2,329,356
Accrued expenses and other liabilities                                                       6,142,504         5,418,459
Income taxes payable                                                                           437,687           150,906
Dividends payable                                                                            1,556,092                 -
                                                                                            ----------        ----------
    Total Liabilities                                                                      $70,030,858       $67,549,561
                                                                                            ----------        ----------

STOCKHOLDERS'  EQUITY
---------------------
Common stock,  no par - authorized  10,000,000  shares;  issued and  outstanding
   shares 6,224,369 at March 31, 1999, and 6,223,424 at December 31, 1998                   $2,895,726        $2,895,702
Accumulated other comprehensive income:                                                      1,093,175         1,998,536
Retained earnings                                                                           49,749,515        49,273,844
                                                                                            ----------        ----------
  Total Stockholders' Equity                                                               $53,738,416       $54,168,082
                                                                                            ----------        ----------

  Total Liabilities and Stockholders' Equity                                              $123,769,274      $121,717,643
                                                                                           ===========       ===========
</TABLE>




           See notes to unaudited consolidated financial statements.


                                       2

<PAGE>
                   UNICO AMERICAN CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                            Three Months Ended March 31
                                                                                            --------------------------- 
                                                                                               1999             1998
                                                                                               ----             ----
<S>                                                                                         <C>              <C>    
REVENUES
--------
Insurance Company Revenues
     Premium earned                                                                         $8,908,324       $10,554,810
     Premium ceded                                                                           1,416,796         1,171,028
                                                                                             ---------         ---------
          Net premium earned                                                                 7,491,528         9,383,782
     Net investment income                                                                   1,416,410         1,309,785
     Net realized investment (losses)                                                             (625)                -
     Other income                                                                                    -               958
                                                                                            ----------         ---------
          Total Insurance Company Revenues                                                   8,907,313        10,694,525

Other Revenues from Insurance Operations
     Gross commissions and fees                                                              1,392,421         1,469,245
     Investment income                                                                          64,849            49,093
     Finance charges and late fees earned                                                      232,890           263,153
     Other income                                                                                3,124             1,528
                                                                                            ----------        ----------
          Total Revenues                                                                    10,600,597        12,477,544
                                                                                            ----------        ----------

EXPENSES
--------
Losses and loss adjustment expenses                                                          3,379,802         4,799,701
Policy acquisition costs                                                                     2,217,491         2,629,106
Salaries and employee benefits                                                               1,115,822         1,049,621
Commissions to agents/brokers                                                                  318,002           244,927
Other operating expenses                                                                       659,852           628,726
                                                                                             ---------         ---------
     Total Expenses                                                                          7,690,969         9,352,081
                                                                                             ---------         ---------

     Income Before Taxes                                                                     2,909,628         3,125,463

Income Tax Provision                                                                           877,866           961,753
                                                                                             ---------         ---------
     Net Income                                                                             $2,031,762      $  2,163,710
                                                                                             =========         =========



PER SHARE DATA:
Basic Shares Outstanding                                                                     6,224,125         6,155,280
Basic Earnings Per Share                                                                         $0.33             $0.35
Diluted Shares Outstanding                                                                   6,353,779         6,424,671
Diluted Earnings Per Share                                                                       $0.32             $0.34

</TABLE>



            See notes to unaudited consolidated financial statements


                                       3

<PAGE>
                   UNICO AMERICAN CORPORATION AND SUBSIDIARIES
                        STATEMENT OF COMPREHENSIVE INCOME
                                   (UNAUDITED)
<TABLE>
<CAPTION>
                                                                                           Three Months Ended March 31
                                                                                           ---------------------------
                                                                                             1999               1998
                                                                                             ----               ----

<S>                                                                                        <C>                <C>       
Net income                                                                                  $2,031,762        $2,163,710
Other changes in comprehensive income net of tax:
   Unrealized  (losses) on securities classified as available-for-sale
      arising during the period                                                               (991,696)          (76,237)
   Less: reclassification adjustment for gains included in net income                           86,335                 -
                                                                                             ---------         ---------
          Comprehensive Income                                                              $1,126,401        $2,087,473
                                                                                             =========         =========
</TABLE>



            See notes to unaudited consolidated financial statements


                                       4

<PAGE>

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

                       FOR THE THREE MONTHS ENDED MARCH 31
<TABLE>
<CAPTION>
                                                                                             1999                1998
                                                                                             ----                ----
<S>                                                                                        <C>                <C>    
Cash Flows from Operating Activities:
   Net income                                                                              $2,031,762         $2,163,710
   Adjustments to reconcile net income to net cash from operations
      Depreciation and amortization                                                            18,696             25,604
      Bond amortization, net                                                                  188,439            167,899
      Net realized loss on sale of securities                                                     625                  -
   Changes in assets and liabilities
      Premium, notes and investment income receivable                                         (38,983)           217,364
      Reinsurance recoverable                                                              (1,232,353)           (55,627)
      Prepaid reinsurance premiums                                                              2,063            691,155
      Deferred policy acquisitions costs                                                       62,110           (471,392)
      Other assets                                                                             10,904            336,655
      Reserve for unpaid losses and loss adjustment expenses                                  (58,296)           719,286
      Unearned premium reserve                                                               (182,429)          (241,067)
      Advance premium and premium deposits                                                    155,104            (27,147)
      Accrued expenses and other liabilities                                                  741,279            656,628
      Income taxes current/deferred                                                           691,980            867,233
                                                                                           ----------         ----------
          Net Cash Provided from Operations                                                 2,390,901          5,050,301
                                                                                            ---------          ---------

Investing Activities
     Purchase of fixed maturity investments                                                (4,021,750)        (8,467,945)
     Proceeds from maturity of fixed maturity investments                                   1,510,000          2,630,000
     Purchase of equity securities - cost                                                  (3,176,206)                 -
     Proceeds from sale of equity securities                                                2,896,835                  -
     Net increase in short-term investments                                                   471,801            836,106
     Additions to property and equipment                                                       (3,139)           (48,163)
                                                                                            ---------          ---------
          Net Cash (Used) by Investing Activities                                          (2,322,459)        (5,050,002)
                                                                                            ---------          ---------

Financing Activities
     Proceeds from issuance of common stock                                                        24             17,155
                                                                                                  ---             ------
          Net Cash Provided by Financing Activities                                                24             17,155
                                                                                                  ---             ------

Net Increase in Cash                                                                           68,466             17,454
Cash at beginning of period                                                                   277,544             55,768
                                                                                              -------             ------
          Cash at End of Period                                                              $346,010            $73,222
                                                                                              =======             ======

Supplemental Cash Flow Information
   Cash paid during the period for:
          Interest                                                                             $1,338               $121
          Income taxes                                                                       $175,000            $93,336

</TABLE>



            See notes to unaudited consolidated financial statements


                                       5

<PAGE>
                           UNICO AMERICAN CORPORATION
                                AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1999


NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
---------------------------------------------------

Nature of Business 
------------------
Unico American Corporation ("Unico") is an insurance holding company.  Unico 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.

Principles of Consolidation 
---------------------------
The  accompanying   unaudited  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 accompanying  unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") for interim
financial  information  and the  instructions  to Form  10-Q and  Article  10 of
Regulation  S-X.  Accordingly,  they do not include all of the  information  and
footnotes required by GAAP for complete financial statements.  In the opinion of
management,   all  adjustments  (consisting  of  normal  recurring  adjustments)
considered  necessary  for a fair  presentation  have been  included.  Operating
results  for the  three  months  ended  March  31,  1999,  are  not  necessarily
indicative of the results that may be expected for the year ending  December 31,
1999.  Quarterly  financial  statements  should be read in conjunction  with the
financial  statements  and related notes in the Company's  1998 Annual Report on
Form 10-K as filed with the Securities and Exchange Commission.

Recently Issued Accounting Standards
------------------------------------
Statement  of  Position  98-1 (SOP 98-1),  Accounting  for the Costs of Computer
Software  Developed  or Obtained for Internal  Use, is effective  for  financial
statements  beginning  after  December 15, 1998.  SOP 98-1 requires that certain
costs of  internally  developed  software  be  capitalized.  There were no costs
incurred for software  purchase or  development  in the quarter  ended March 31,
1999, that were required to be capitalized.

Statement  of  Position  97-3 (SOP  97-3),  Accounting  by  Insurance  and Other
Enterprises  for  Insurance  Related  Assessments,  is effective  for  financial
statements  beginning  after December 15, 1998. SOP 97-3 requires that liability
for insurance related  assessments be recognized when an assessment is probable,
the event  obligating  the  assessment  has occurred and the  assessment  can be
reasonably  estimated.  The  adoption  has no material  effect on the  financial
statements.


NOTE 2 - 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, 1999,  193,546 options were  outstanding and all are currently  exercisable.
During the quarter ended March 31, 1999, options on 1,300 shares of common stock
were exercised. There are no additional options available for future grant under
the 1985 plan.


NOTE 3 - EARNINGS PER SHARE
---------------------------
The  following  table  represents  the  reconciliation  of  the  numerators  and
denominators of the Company's basic earnings per share and diluted  earnings per
share computations reported on the Consolidated Statements of Operations for the
three months ended March 31, 1999 and 1998:


                                       6

<PAGE>
                           UNICO AMERICAN CORPORATION
                                AND SUBSIDIARIES
              NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 1999


                                                   Three Months Ended March 31
                                                   --------------------------- 
                                                     1999              1998
                                                     ----              ---- 
Basic Earnings Per Share
------------------------
Net income numerator                              $2,031,762         $2,163,710

Weighted average shares outstanding denominator    6,224,125          6,155,280

     Per share amount                                  $0.33              $0.35


Diluted Earnings Per Share
--------------------------
Net income numerator                              $2,031,762         $2,163,710

Weighted average shares outstanding                6,224,125          6,155,280
Effect of diluted securities                         129,654            269,391
                                                  ----------         ----------
Diluted shares outstanding denominator             6,353,779          6,424,671
                                                   ---------          ---------

     Per share amount                                  $0.32              $0.34


NOTE 4 - SEGMENT REPORTING
--------------------------
Statement of Financial Accounting Standards No. 131 (SFAS No. 131), "Disclosures
about Segments of an Enterprise and Related  Information,"  became effective for
fiscal  years  effective  after  December  15,  1997.  SFAS No. 131  establishes
standards  for the way  information  about  operating  segments  is  reported in
financial  statements.  The Company has adopted SFAS No. 131 and has  identified
its insurance company operation, Crusader Insurance Company ("Crusader"), as its
primary  reporting   segment.   Revenues  from  this  segment  comprise  84%  of
consolidated  revenues.  The Company's remaining operations constitute a variety
of  specialty   insurance  services,   each  with  unique   characteristics  and
individually insignificant to consolidated revenues.

                                                   Three Months Ended March 31
                                                   ---------------------------
                                                     1999               1998
                                                     ----               ----
Revenues
--------
Insurance company operation                       $8,907,313        $10,694,525

 Other insurance operations                        4,301,613          4,865,373
  Intersegment elimination (1)                    (2,608,329)        (3,082,354)
                                                   ---------          ---------
     Total other insurance operations              1,693,284          1,783,019
                                                   ---------          ---------

      Total Revenues                             $10,600,597        $12,477,544
                                                  ==========         ==========

Income (Loss) Before Income Taxes
---------------------------------
Insurance company operation                       $2,952,107         $2,768,542
Other insurance operations                           (42,479)           356,919
                                                   ---------          ---------
     Total Income Before Income Taxes             $2,909,628         $3,125,463
                                                   =========          =========

Assets
------
Insurance company operation                     $105,239,708       $ 98,042,859
Intersegment eliminations (2)                       (210,274)        (1,503,878)
                                                 -----------         ----------
     Total insurance company operation           105,029,434         96,538,981

Other insurance operations                        18,739,840         20,205,293
                                                 -----------        -----------
     Total Assets                               $123,769,274       $116,744,274
                                                 ===========        ===========

(1)  Intersegment  revenue  eliminations  reflect commission paid by Crusader to
     Unifax Insurance Systems, Inc., ("Unifax") a wholly owned subsidiary of the
     Company.
(2)  Intersegment  asset  eliminations   reflect  the  elimination  of  Crusader
     receivables and Unifax payables.


                                       7

<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  reinvestments of
profits into  property or equipment,  the cash flow  generated  from  operations
usually results in improved liquidity for the Company.

Crusader  generates a significant  amount of cash as a result of its holdings of
unearned  premium  reserves,  reserves  for loss  payments,  and its capital and
surplus.  Crusader's  loss 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,
1999, the Company had cash and cash  investments of  $105,912,443  (at amortized
cost) of which $98,563,508 (93%) were investments of Crusader.

As of the quarter ended March 31, 1999, the Company had invested $98,673,898 (at
amortized cost) or 93% of its invested assets in fixed maturity obligations.  In
accordance with Statement of Financial  Accounting  Standard No. 115, Accounting
for Certain  Investments in Debt and Equity Securities,  the Company is required
to classify  its  investments  in debt and equity  securities  into one of three
categories: held-to-maturity, available-for-sale or trading securities. Although
all of the  Company's  investments  are  classified as  available-for-sale,  the
Company's  investment  guidelines  place primary  emphasis on buying and holding
high-quality investments.

The Company's  investments  in fixed maturity  obligations  of  $98,673,898  (at
amortized cost) include  $33,486,161  (34%) of pre-refunded  state and municipal
tax exempt bonds, $8,597,926 (9%) of U.S. treasury securities, $56,389,811 (57%)
of high quality industrial and miscellaneous bonds, and $200,000 of certificates
of deposit.  The tax exempt  interest  income  earned for the three months ended
March 31, 1999 and 1998 was $407,965 and $446,747, respectively.

The  balance  of  the  Company's   investments  are  in  equity  securities  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  investment  policy  limits  investments  in any one  company  to
$1,500,000.  This limitation  excludes bond premiums paid in excess of par value
and U.S.  government  or U.S.  government  guaranteed  issues.  The Company also
limits its  holdings of equity  securities  to no greater  than five  percent of
stockholders' equity. All of the Company's investments are high-grade investment
quality;  all state and municipal  tax-exempt  fixed  maturity  investments  are
pre-refunded issues, and all certificates of deposits are FDIC insured.

On March 12, 1999, the Board of Directors  declared a twenty-five  cents ($0.25)
per share cash dividend  payable on July 15, 1999, to  shareholders of record at
the close of business on July 1, 1999.

Although  material capital  expenditures may also be funded through  borrowings,
the Company  believes that its cash and short-term  investments at year end, net
of trust restriction of $2,816,380,  statutory  deposits of $2,725,000,  and the
dividend  restriction  between  Crusader and Unico plus the cash to be generated
from operations,  should be sufficient to meet its operating requirements during
the next twelve months without the necessity of borrowing funds.

YEAR 2000
--------
The Company has  initiated a review of all computer  programs to ensure that all
computer  systems will function  properly with respect to dates in the year 2000
and  thereafter.  The Year 2000 issue is the result of computer  programs  being
written  utilizing  two digits  rather  than four  digits to define a year.  Any
computer programs which have date sensitive  software utilizing a two digit year
would  recognize a year of "00" as 1900 rather than 2000. This could result in a
system failure or miscalculations causing disruptions of operations,  including,
among  other  things,  a  temporary  inability  to  process  transactions,  send
invoices,  or engage in similar  activities.  The Company has  assessed its Year
2000 issues and has made and tested the necessary  modifications to its computer
system.  The project to review and correct all programs was completed and tested
at December 31, 1998, prior to any anticipated  impact on its operating systems.
The 


                                       8

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

costs of the project has been charged to current  operations as incurred and did
not have a material  effect on the Company's  results of operations or financial
position.

Crusader  anticipates  that any claims from its  policyholders  due to Year 2000
events will not be material.  Any business  interruption  losses  resulting from
Year 2000 events which Crusader  policyholders may incur,  would not be provided
any  coverage  unless such events also caused  physical  damage to the  insureds
property, which the Company believes is not a material exposure.

The Company does business with thousands of licensed agents and brokers and does
not  anticipate  it would be materially  adversely  affected if some of them are
temporarily  unable to  function  due to Year 2000  problems.  The  Company  has
requested and received information from its bank and reinsurers as to their Year
2000 readiness.  Based on the information received to date, the Company believes
that it will not be materially adversely affected by its bank or its reinsurers.
Due to the nature of the Company's business, it is not dependent on any specific
suppliers, and therefore, does not expect to be adversely materially affected by
them.

Due to the unusual nature of the problem and lack of historical  experience with
Year 2000 issues,  it is difficult  to predict with  certainty  what will happen
after  December 31, 1999.  As stated above,  the Company does not  anticipate it
will be  adversely  materially  affected by Year 2000  events from its  internal
operations  or from  others with whom the Company  directly or  indirectly  does
business.  However, other events such as general public infrastructure failures,
may adversely  materially  affect the Company's  ability to operate  during such
failures. The Company has no formal contingency plans for Year 2000.

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


(b)  Results of Operations:
--------------------------
All  comparisons  made in this  discussion  are comparing the three months ended
March 31,  1999,  to the three months  ended March 31,  1998,  unless  otherwise
indicated.

The  Company's  net income  for the  quarter  ended  March 31,  1999,  decreased
$131,948 (6%) to $2,031,762  compared to $2,163,710  for the quarter ended March
31, 1999.  Revenues for the quarter ended March 31, 1999,  decreased  $1,876,947
(15%) to  $10,600,597  compared to  $12,477,544  for the quarter ended March 31,
1998.

PREMIUM EARNED before reinsurance  decreased  $1,646,486 (16%) to $8,908,324 for
the quarter ended March 31, 1999,  compared to $10,554,810 for the quarter ended
March 31,  1998.  In 1998,  the Company  changed its  marketing  strategy in the
states of Washington and Oregon by discontinuing  marketing through an exclusive
agent in those states and commenced  marketing directly to all retail agents and
brokers.  This change resulted in a decrease of $1,224,602,  or 74% of the total
decrease in earned premium.  The Company  anticipates that the long-term results
of this change will be increased revenues with reduced  acquisition  expense and
less  dependence  on  any  one  large  producer.  In  addition,   intense  price
competition  adversely  affected the premium written and earned in all states in
which the Company does business. Although the Company attempts to be competitive
on price, it believes that maintaining adequate rates and a favorable loss ratio
is a better  business  strategy than increasing  premium  writings at inadequate
rates. The Company cannot  determine how long this "soft market"  condition will
continue.

Premium written before reinsurance  decreased $1,587,846 (15%) to $8,725,897 for
the quarter  ended March 31, 1999,  compared to the three months ended March 31,
1998.  The decrease in written  premium in Oregon and  Washington  accounted for
$1,371,777  (86%) of this decrease.  Crusader's  written  premium by state is as
follows:


                                       9

<PAGE>
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
--------------------------------------------------------------------------------
OF OPERATIONS (continued)
------------------------
                            Three Months Ended March 31               
                            ---------------------------               Increase
State                       1999                   1998              (Decrease)
-----                       ----                   ----              ----------

California               $7,406,664             $7,887,528            $(480,864)
Pennsylvania                282,302                 82,477              199,825
Arizona                     270,517                358,690              (88,173)
Washington                  263,878              1,172,332             (908,454)
Oregon                      220,824                684,147             (463,323)
Ohio                        120,570                113,396                7,174
Montana                      87,032                      -               87,032
Texas                        58,846                      -               58,846
Kentucky                     14,123                      -               14,123
Nevada                        1,141                 15,173              (14,032)
                          ---------             ----------            ---------
  Total                  $8,725,897            $10,313,743          $(1,587,846)
                          =========             ==========            =========


INVESTMENT INCOME, excluding realized investment losses, increased $122,381 (9%)
to $1,481,259  for the quarter ended March 31, 1999,  compared to $1,358,878 for
the quarter  ended March 31,  1998.  This  increase was  primarily  due to an 8%
increase (at amortized cost) in invested assets.

COMMISSION AND FEE INCOME  decreased  $76,824 (5%) to $1,392,421  for the three
months ended March 31, 1999,  compared to the three months ended March 31, 1998.
This decrease consisted of the following:

       Health and life insurance program                               $104,381
       Daily automobile rental insurance program                         12,868
       Service fee income                                              (107,982)
       Workers' compensation program                                    (86,091)
                                                                        -------
          Net decrease in commission and fee income                    $(76,824)
                                                                        =======

The  decrease  in the service  fee income for the three  months  ended March 31,
1999, was primarily related to the decrease in written premium.

LOSSES  AND LOSS  ADJUSTMENT  EXPENSES  were 45% of net  premium  earned for the
quarter  ended March 31,  1999,  compared  to 51% of net premium  earned for the
quarter  ended March 31, 1998.  This decrease was primarily due to the 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
reinsurers pay 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 were 30% of net premium  earned for the three  months ended
March 31, 1999, compared to 28% for the three months ended March 31, 1998.

SALARIES AND EMPLOYEE  BENEFITS  increased  $66,201 (6%) to  $1,115,822  for the
quarter ended March 31, 1999, compared to $1,049,621 for the quarter ended March
31, 1998.

COMMISSIONS TO AGENTS/BORKERS increased $73,075 (30%) to $318,002 in the quarter
ended March 31, 1999,  compared to the quarter  ended March 31, 1998,  primarily
due to the related revenue increases in the health and life program.

OTHER OPERATING EXPENSES  increased $31,126 (5%) during the quarter ended March
31, 1999, compared to the quarter ended March 31, 1998.

The effect of  inflation  on net income of the Company  during the three  months
ended March 31, 1999, and 1998 was not significant.


                                       10

<PAGE>
Forward looking statements
--------------------------
Information contained in this discussion, other than historical information, are
considered  "forward  looking  statements" and may be subject to change based on
various important factors and  uncertainties.  Some, but not all, of the factors
and  uncertainties  that may cause actual results to differ  significantly  from
those expected in any forward looking  statements are disclosed in the Company's
1998 Form 10-K as filed with the  Securities and Exchange  Commission.  Further,
the statements herein concerning the effects of the Company's stated expectation
as to the long-term  results of marketing in the states of Washington and Oregon
directly to retail agents and brokers  rather than through the Company's  former
general  agent  are  forward   looking   statements   which  involve  risks  and
uncertainties  that could cause actual results to differ  materially  from these
forward looking statements. With respect to the statement concerning the effects
of the change in marketing in the states of Washington and Oregon, factors which
would  cause the  actual  results to differ  materially  include  the  Company's
ability to effectively  market to retail agents and brokers in those states, the
willingness  of the retail  agents and brokers in those states to deal  directly
with the Company,  and general  economic  conditions  and  competition  in those
states.


ITEM 3 - QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
-------------------------------------------------------------------

The  Company's  consolidated  balance  sheet  includes a  substantial  amount of
invested  assets whose fair values are subject to various  market risk exposures
including interest rate risk and equity price risk.

The Company's invested assets consist of the following:
<TABLE>
<CAPTION>
                                                                 March 31           December 31         Increase 
                                                                   1999                 1998           (Decrease)
                                                                   ----                 ----            --------  
<S>                                                            <C>                  <C>                <C>       
Fixed maturity bonds (at amortized value)                      $98,473,898          $96,158,812        $2,315,086
Short-term cash investments (at cost)                            6,110,286            6,573,862          (463,576)
Equity securities (at cost)                                        782,249              503,503           278,746
Certificates of deposit (over 1 year, at cost)                     200,000              200,000                 -
                                                               -----------          -----------         ---------
   Total invested assets                                      $105,566,433         $103,436,177        $2,130,256
                                                               ===========          ===========         =========
</TABLE>

There have been no material changes in the composition of the Company's invested
assets or market risk exposures since the end of the preceding fiscal year end.



PART II - OTHER INFORMATION



ITEM 2 - CHANGES IN SECURITIES
------------------------------

(c)   During the quarter ended March 31, 1999,  the Company  issued 1,300 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 one  employee of the  Company.  These  shares were
      issued in  exchange  for 355  shares of common  stock and  $23.75 of 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


                                       11

<PAGE>
                                   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  13, 1999     By:  /s/ Erwin Cheldin
                               -----------------
                               Erwin Cheldin
                               Chairman of the Board, President and Chief
                               Executive Officer, (Principal Executive Officer)



Date:   May  13, 1999     By:  /s/ LESTER A. AARON
                               --------------------             
                               Lester A. Aaron
                               Treasurer, Chief Financial Officer, (Principal
                               Accounting and Principal Financial Officer)


                                       12
<PAGE>