SECURITIES AND EXCHANGE COMMISSION
                       Washington, D.C.  20549

                             FORM 10-K/A

                           AMENDMENT NUMBER 2 to
            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
                OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1997Commission File Number 0-18540

                         UNITED INCOME, INC.
        (Exact name of registrant as specified in its charter)

                    2500 CORPORATE EXCHANGE DRIVE
                         COLUMBUS, OH  43231
     (Address of principal executive offices, including zip code)

           OHIO                                             37-1224044
(State or other jurisdiction of                       (I.R.S. Employer
 incorporation or organization)                    Identification No.)

Registrant's telephone number, including area code: (614) 899-6773

                              Amendment No. 2

The  undersigned  registrant hereby amends the following  items,  financial
statements, exhibits, or other portions of its December 31, 1997 filing  of
Form 10-K as set forth in the pages attached hereto:

          Each amendment as shown on the index page is amended to
          replace   the  existing  item,  statement  or   exhibit
          reflected  in  the December 31, 1997 Form 10-K  filing.
          Changes  to  the original filing have been  shaded  for
          easy identification.

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

                                            UNITED INCOME, INC.

                                                (Registrant)



                                   By:  /s/ James E. Melville
                                        James E. Melville
                                        President and Chief
                                        Operating Officer
                                   
                                   
                                   
                                   By:  /s/ Theodore C. Miller
                                        Senior Vice President and
                                        Chief Financial Officer
                                   
Date:     October 9, 1998
                                      1
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                            UNITED INCOME, INC,
                                     
                                FORM 10-K/A
                                     
                                   INDEX
                                     
CERTIFIED PUBLIC ACCOUNTANT'S CONSENT

                 KERBER, ECK, & BRAECKEL LLP                            3

PART I

ITEM 1.     BUSINESS

                      Products                                          4
                                                                           
                      Reinsurance                                       5
                                                                           
ITEM 3.     LEGAL PROCEEDINGS                                           5



PART II

ITEM 7.   MNAGEMENT'S DISCUSSION AND ANALYSIS OF
          FNANCIAL CONDITION AND RESULTS OF OPERATIONS               5-17

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

              Net loss per common share                                18

              Note 1B - Nature of operations                           18

              Note 2 - Disclosures about fair values of financial
               instruments                                             18

              Note 10 - Pending change in control of United Trust,
               Inc.                                                    19

EXHIBIT 99(d) AUDITED FINANCIAL STATEMENTS OF UNITED TRUST GROUP, INC.

              Exhibit 99(d), Note 1G - Recognition of revenues and
               related expenses                                        20

              Exhibit 99(d), Note 1H - Deferred policy acquisition
               costs                                                   20

              Exhibit 99(d), Note 1I - Cost of Insurance acquired      20

              Exhibit 99(d), Note 1J - Cost in excess of net assets
               purchased                                            20-21

              Exhibit 99(d), Note 17 - Pending change in control of
               United Trust, Inc.                                      21
                                                                           
                                      2
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            Consent of Independent Certified Public Accountant
                                     
                                     
We  consent  to  the  amendments on page 18-19 of this  Form  10-K/A  dated
October  9,  1998, and to the use of our opinion dated March 26,  1998,  as
originally filed with the United Income, Inc. Form 10-K for 1997 after such
amendment.  We also consent to the amendments in Exhibit 99(d) on pages 20-
21 of this Form 10-K/A and to the use of our opinion on United Trust Group,
Inc. dated March 26, 1998.



                              KERBER, ECK & BRAECKEL LLP





Springfield, Illinois
October 9, 1998

                                      3
<PAGE>

PART I, ITEM I, BUSINESS, PRODUCTS OF UII SHOULD BE AMENDED AS FOLLOWS:


Products

The  Company's portfolio consists of two universal life insurance products.
Universal  life  insurance is a form of permanent  life insurance  that  is
characterized  by  its  flexible  premiums,  flexible  face  amounts,   and
unbundled pricing factors.  The primary universal life insurance product is
referred  to  as  the "Century 2000".  This product was introduced  to  the
marketing  force  in  1993  and  has  become  the  cornerstone  of  current
marketing.  This product has a minimum face amount of $25,000 and currently
credits  6% interest with a guaranteed rate of 4.5% in the first  20  years
and  3% in years 21 and greater.  The policy values are subject to a  $4.50
monthly  policy fee, an administrative load and a premium load of  6.5%  in
all  years.   The  premium and administrative loads are a  general  expense
charge which is added to a policy's net premium to cover the insurer's cost
of  doing  business.   A premium load is assessed upon  the  receipt  of  a
premium  payment.  An administrative load is a monthly maintenance  charge.
The  administrative load and surrender charge are based on the  issue  age,
sex  and  rating class of the policy.  A surrender charge is effective  for
the  first 14 policy years.  In general, the surrender charge is very  high
in  the  first couple of years and then declines to zero at the end  of  14
years.  Policy loans are available at 7% interest in advance.  The policy's
accumulated fund will be credited the guaranteed interest rate in  relation
to the amount of the policy loan.

The second universal life product referred to as the "UL90A", has a minimum
face amount of $25,000.  The administrative load is based on the issue age,
sex and rating class of the policy.  Policy fees vary from $1 per month  in
the  first  year to $4 per month in the second and third years and  $3  per
month each year thereafter.  The UL90A currently credits 5.5% interest with
a  4.5%  guaranteed  interest  rate.  Partial  withdrawals,  subject  to  a
remaining minimum $500 cash surrender value and a $25 fee, are allowed once
a year after the first duration.  Policy loans are available at 7% interest
in  advance.  The policy's accumulated fund will be credited the guaranteed
interest  rate  in  relation to the amount of the policy  loan.   Surrender
charges  are based on a percentage of target premium starting at  120%  for
years 1-5 then grading downward to zero in year 15.  This policy contains a
guaranteed  interest  credit  bonus for the long-term  policyholder.   From
years 10 through 20, additional interest bonuses are earned with a total in
the  twentieth  year of 1.375%.  The bonus is calculated  from  the  policy
issue date and is contractually guaranteed.

The  Company's  actual  experience  for earned  interest,  persistency  and
mortality  vary from the assumptions applied to pricing and for determining
premiums.  Accordingly, differences between the Company's actual experience
and  those assumptions applied may impact the profitability of the Company.
The  minimum interest spread between earned and credited rates is 1% on the
"Century  2000"  universal life insurance product.   The  Company  monitors
investment  yields, and when necessary adjusts credited interest  rates  on
its  insurance  products to preserve targeted interest  spreads.   Credited
rates  are  reviewed  and  established by the Board  of  Directors  of  the
respective life insurance subsidiaries.

The premium rates are competitive with other insurers doing business in the
states in which the Company is marketing its products.

The  Company  markets  other  products, none of  which  is  significant  to
operations.  The Company has a variety of policies in force different  from
those which are currently being marketed.  The previously defined Universal
life  and  interest sensitive whole life, which is a type of  indeterminate
premium life insurance which provides that the policy's cash value  may  be
greater  than that guaranteed if changing assumptions warrant an  increase,
business  account  for  approximately  46%  of  the  insurance  in   force.
Approximately  29%  of  the insurance in force is  participating  business,
which  represents  policies  under  which the  policyowner  shares  in  the
insurance  companies divisible surplus.  The Company's average  persistency
rate  for its policies in force for 1997 and 1996 has been 89.4% and 87.9%,
respectively.  The Company does not anticipate any material fluctuations in
these rates in the future that may result from competition.

Interest-sensitive life insurance products have characteristics similar  to
annuities with respect to the crediting of a current rate of interest at or
above  a  guaranteed  minimum  rate and the use  of  surrender  charges  to
discourage  premature withdrawal of cash values. Universal  life  insurance
policies  also  involve variable premium charges against the policyholder's
account  balance  for  the  cost of insurance and administrative  expenses.
Interest-
                                      4
<PAGE>

sensitive  whole  life  products generally  have  fixed  premiums.
Interest-sensitive life insurance products are designed with a  combination
of  front-end  loads,  periodic variable charges,  and  back-end  loads  or
surrender  charges. Traditional life insurance products have  premiums  and
benefits  predetermined at issue; the premiums are set at levels  that  are
designed  to  exceed expected policyholder benefits and  Company  expenses.
Participating business is traditional life insurance with the added feature
of  an  annual  return of a portion of the premium paid by the policyholder
through  a  policyholder dividend.  This dividend is set  annually  by  the
Board   of   Directors  of  each  insurance  company  and   is   completely
discretionary.


PART  I,  ITEM  I, BUSINESS, REINSURANCE PARAGRAPH 1 SHOULD BE  AMENDED  AS
FOLLOWS:

Reinsurance

As  is  customary in the insurance industry, the insurance affiliates  cede
insurance  to  other  insurance  companies  under  reinsurance  agreements.
Reinsurance agreements are intended to limit a life insurer's maximum  loss
on   a   large  or  unusually  hazardous  risk  or  to  obtain  a   greater
diversification  of risk.  The ceding insurance company  remains  primarily
liable  with respect to ceded insurance should any reinsurer be  unable  to
meet  the obligations assumed by it, however it is the practice of insurers
to  reduce  their  exposure  to loss to the  extent  that  they  have  been
reinsured with other insurance companies.  The Company sets a limit on  the
amount  of  insurance retained on the life of any one person.  The  Company
will not retain more than $125,000, including accidental death benefits, on
any one life.  At December 31, 1997, the Company had insurance in force  of
$3.692  billion  of  which  approximately  $1.022  billion  was  ceded   to
reinsurers.


PART I, ITEM 3, LEGAL PROCEEDINGS, SHOULD BE AMENDED AS FOLLOWS:

The Company and its affiliates are named as defendants in a number of legal
actions arising primarily from claims made under insurance policies.  Those
actions  have  been  considered in establishing the Company's  liabilities.
Management is of the opinion that the settlement of those actions will  not
have  a  material  adverse effect on the Company's  financial  position  or
results of operations.


PART II, ITEM 7 SHOULD BE AMENDED AS FOLLOWS:

UII MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE YEAR ENDED DECEMBER 31, 1997

At  December 31, 1997 and 1996, the balance sheet reflects the  assets  and
liabilities  of UII and its 47% equity interest in UTG.  The statements  of
operations and statements of cash flows presented for 1997, 1996  and  1995
include the operating results of UII.


Results of Operations

1997compared to 1996

(a)  Revenues

UII's  primary source of revenues is derived from service fee income, which
is provided via a service agreement with USA.  The agreement was originally
established upon the formation of USA, which was a 100% owned subsidiary of
UII.   Changes  in the affiliate structure have resulted in USA  no  longer
being  a  direct  subsidiary of UII, though still  a  member  of  the  same
affiliated  group.   The original service agreement has remained  in  place
without  modification.   The  fees are based on  a  percentage  of  premium
revenue  ofUSA.  The percentages are applied to both first year and renewal
premiums  at  different rates.  Under the current structure, FCC  pays  all
general  operating  expenses of the affiliated group.   FCC  then  receives
management and service fees from the various affiliates, including UTI  and
UII.  Pursuant  to  the terms of the agreement, USA pays UII  monthly  fees
equal to 22% of the amount of collected first

                                      5
<PAGE>

year statutory premiums,  20%
in  second  year and 6% of the renewal premiums in years three  and  after.
The Company recognized service agreement income of $989,295, $1,567,891 and
$2,015,325  in  1997,  1996  and  1995, respectively,  based  on  statutory
collected  premiums in USA of $10,300,332, $13,298,597, and $14,128,199  in
1997,1996  and  1995,  respectively.  First year premium  revenues  of  USA
decreased 54% in 1997 from 1996.  This decline is primarily related to  the
potential change in control of UTI over the last two years to two different
parties.  The possible changes and resulting uncertainties have hurt  USA's
ability  to  recruit and maintain sales agents.  Management  expects  first
year production to decline slightly in 1998, and then growth is anticipated
in  subsequent periods following the resolution of the change in control of
UTI.

The  Company holds $864,100 of notes receivable from affiliates.  The notes
receivable from affiliates consists of three separate notes.  The  $700,000
note bears interest at the rate of 1% above the variable per annum rate  of
interest  most recently published by the Wall Street Journal as  the  prime
rate.  Interest is payable quarterly with principal due at maturity on  May
8, 2006.  In February 1996, FCC borrowed an additional $150,000 from UII to
provide additional cash for liquidity.  The note bears interest at the rate
of  1%  over  prime as published in the Wall Street Journal, with  interest
payments due quarterly and principal due upon maturity of the note on  June
1,  1999.  The remaining $14,100 are 20 year notes of UTG with interest  at
8.5%  payable  semi-annually.  At current interest levels, the  notes  will
generate approximately $80,000 annually.


(b)  Expenses

The  Company  has a sub-contract service agreement with United Trust,  Inc.
("UTI")  for  certain administrative services. Through its  facilities  and
personnel,  UTI  performs  such services as may  be  mutually  agreed  upon
between the parties.  The fees are based on 60% of the fees paid to UII  by
USA.   The  Company  has incurred $744,000, $1,241,000  and  $1,809,000  in
service fee expense in 1997, 1996, and 1995, respectively.

Interest expense of $85,000, $84,000 and $89,000 was incurred in 1997, 1996
and  1995, respectively.  The interest expense is directly attributable  to
the  convertible debentures.  The Debentures bear interest  at  a  variable
rate  equal to one percentage point above the prime rate published  in  the
Wall Street Journal from time to time.


(c)  Equity in loss of Investees

Equity in earnings of investees represents UII's 47% share of the net  loss
of  UTG.   Included with this filing as Exhibit 99(d) are audited financial
statements  of UTG.  Following is a discussion of the results of operations
of UTG:


    Revenues of UTG
    
    Premiums  and  policy  fee  revenues, net of reinsurance  premiums  and
    policy  fees, decreased 7% when comparing 1997 to 1996.   UTG  and  its
    subsidiaries   currently  writes  little  new   traditional   business,
    consequently,  traditional  premiums will decrease  as  the  amount  of
    traditional   business  in-force  decreases.   Collected  premiums   on
    universal  life  and interest sensitive products is  not  reflected  in
    premiums  and  policy  revenues because Generally  Accepted  Accounting
    Principles ("GAAP") requires that premiums collected on these types  of
    products be treated as deposit liabilities rather than revenue.  Unless
    UTG  and  its  subsidiaries' acquires a block of in-force  business  or
    marketing  changes its focus to traditional business,  premium  revenue
    will continue to decline.
    
    Another  cause for the decrease in premium revenues is related  to  the
    potential  change  in control of UTI over the last  two  years  to  two
    different  parties.   During September of 1996, it was  announced  that
    control  of  UTI would pass to an unrelated party, but  the  change  in
    control  did  not  materialize.   At  this  writing,  negotiations  are
    progressing with a different unrelated party for the change in  control
    of  UTI.   Please  refer  to  the Notes to the  Consolidated  Financial
    Statements of UTG for additional information.  The possible changes and
    resulting  uncertainties have hurt the insurance companies' ability  to
    recruit and maintain sales agents.

                                      6
<PAGE>
    
    New  business  production decreased significantly  over  the  last  two
    years.   New  business  production decreased  43%  or  $3,935,000  when
    comparing 1997 to 1996.  In recent years, the insurance industry  as  a
    whole has experienced a decline in the total number of agents who  sell
    insurance  products,  therefore competition  has  intensified  for  top
    producing  sales agents.  The relatively small size of  our  companies,
    and  the resulting limitations, have made it challenging to compete  in
    this area.
    
    A  positive impact on premium income is the improvement of persistency.
    Persistency is a measure of insurance in force retained in relation  to
    the  previous year.  The average persistency rate for all  policies  in
    force  for  1997  and  1996  has been approximately  89.4%  and  87.9%,
    respectively.
    
    Net  investment income decreased 6% when comparing 1997 to  1996.   The
    decrease  relates to the decrease in invested assets from a coinsurance
    agreement.   UTG's insurance subsidiary UG entered into  a  coinsurance
    agreement with First International Life Insurance Company ("FILIC"), an
    unrelated party, as of September 30, 1996.  During 1997, FILIC  changed
    its  name  to Park Avenue Life Insurance Company ("PALIC").  Under  the
    terms of the agreement, UG ceded to FILIC substantially all of its paid-
    up life insurance policies.  Paid-up life insurance generally refers to
    non-premium  paying  life  insurance  policies.   At  closing  of   the
    transaction, UG received a coinsurance credit of $28,318,000 for policy
    liabilities  covered under the agreement.  UG transferred assets  equal
    to  the  credit  received.  This  transfer  included  policy  loans  of
    $2,855,000 associated with policies under the agreement and a net  cash
    transfer of $19,088,000, after deducting the ceding commission  due  UG
    of  $6,375,000.   To provide the cash required to be transferred  under
    the agreement, UG sold $18,737,000 of fixed maturity investments.
    
    The overall investment yields for 1997, 1996 and 1995, are 7.25%, 7.31%
    and  7.14%, respectively.  Since 1995 investment yield improved due  to
    the  fixed  maturity investments.  Cash generated  from  the  sales  of
    universal life insurance products, has been invested primarily  in  our
    fixed maturity portfolio.
    
    The  investments are generally managed to match related  insurance  and
    policyholder  liabilities.  The comparison of  investment  return  with
    insurance or investment product crediting rates establishes an interest
    spread.  The minimum interest spread between earned and credited  rates
    is  1%  on  the "Century 2000" universal life insurance product,  which
    currently  is  the  primary sales product.  UTG and  its  subsidiaries'
    monitor investment yields, and when necessary adjusts credited interest
    rates  on its insurance products to preserve targeted interest spreads.
    It  is  expected that monitoring of the interest spreads by  management
    will  provide the necessary margin to adequately provide for associated
    costs on the insurance policies the Company currently has in force  and
    will write in the future.
    
    Realized investment losses were $279,000 and $466,000 in 1997 and 1996,
    respectively.  UTG and its subsidiaries sold two foreclosed real estate
    properties  that resulted in approximately $357,000 in realized  losses
    in  1996.   There  were other gains and losses during the  period  that
    comprised  the remaining amount reported but were immaterial in  nature
    on an individual basis.
    
    
    Expenses of UTG
    
    Life benefits, net of reinsurance benefits and claims, decreased 11% in
    1997 as compared to 1996.  The decrease in premium revenues resulted in
    lower  benefit  reserve  increases in 1997.  In addition,  policyholder
    benefits  decreased  due  to  a decrease in  death  benefit  claims  of
    $162,000.
    
    In  1994, UG became aware that certain new insurance business was being
    solicited by certain agents and issued to individuals considered to  be
    not  insurable  by  UTG  and its subsidiaries' standards.   These  non-
    standard policies had a face amount of $22,700,000 and represented  1/2
    of 1% of the insurance in-force in 1994.  Management's initial analysis
    indicated  that  expected  death claims on the  business  in-force  was
    adequate  in  relation  to  mortality  assumptions  inherent   in   the
    calculation of statutory reserves.  Nevertheless, management determined
    it  was in the best interest of UTG and its subsidiaries' to repurchase
    as many of the non-standard policies as possible.  Through December 31,
    1996, the UTG and its subsidiaries' spent approximately $7,099,000  for
    the  settlement of non-standard policies and for the legal  defense  of
    related litigation.  In relation to settlement of non-standard policies
    UTG  and  its  subsidiaries' incurred life benefit costs

                                      7
<PAGE>

    of $3,307,000,
    and $720,000 in 1996 and 1995, respectively.  UTG and its subsidiaries'
    incurred  legal  costs  of  $906,000 and $687,000  in  1996  and  1995,
    respectively.   All  policies associated  with  this  issue  have  been
    settled  as  of  December 31, 1996.  Therefore, expense reductions  for
    1997 would follow.
    
    Commissions  and  amortization  of deferred  policy  acquisition  costs
    decreased  14% in 1997 compared to 1996. The decrease is due  primarily
    due  to a reduction in commissions paid.  Commissions decreased 19%  in
    1997  compared  to 1996.  The decrease in commissions was  due  to  the
    decline  in  new  business production.  There is a direct  relationship
    premium revenues and commission expense.  First year premium production
    decreased  43% and first year commissions decreased 33% when  comparing
    1997  to  1996.   Amortization  of deferred  policy  acquisition  costs
    decreased  6%  in  1997  compared  to 1996.   Management  would  expect
    commissions  and amortization of deferred policy acquisition  costs  to
    decrease in the future if premium revenues continue to decline.
    
    Amortization  of  cost  of insurance acquired  decreased  56%  in  1997
    compared  to  1996. Cost of insurance acquired is established  when  an
    insurance  company is acquired.  The Company assigns a portion  of  its
    cost to the right to receive future cash flows from insurance contracts
    existing  at  the  date  of  the acquisition.   The  cost  of  policies
    purchased  represents the actuarially determined present value  of  the
    projected  future  cash  flows from the  acquired  policies.   Cost  of
    insurance  acquired is comprised of individual life insurance  products
    including whole life, interest sensitive whole life and universal  life
    insurance  products.   Cost  of insurance acquired  is  amortized  with
    interest  in  relation  to  expected future profits,  including  direct
    charge-offs for any excess of the unamortized asset over the  projected
    future  profits.   The  interest  rates utilized  in  the  amortization
    calculation are 9% on approximately 24% of the balance and 15%  on  the
    remaining  balance.   The  interest rates vary  due  to  risk  analysis
    performed  at  the time of acquisition on the business  acquired.   The
    amortization is adjusted retrospectively when estimates of  current  or
    future  gross  profits  to be realized from a  group  of  products  are
    revised.  UTG and its subsidiaries' did not have any charge-offs during
    the  periods  covered  by  this report.  The decrease  in  amortization
    during  the current period is a fluctuation due to the expected  future
    profits.   Amortization of cost of insurance acquired  is  particularly
    sensitive to changes in persistency of certain blocks of insurance  in-
    force.   The improvement of persistency during the year had a  positive
    impact on amortization of cost of insurance acquired.  Persistency is a
    measure  of  insurance in force retained in relation  to  the  previous
    year.  The average persistency rate for all policies in force for  1997
    and 1996 has been approximately 89.4% and 87.9%, respectively.
    
    Operating   expenses   decreased  21%  in  1997   compared   to   1996.
    Approximately  one-half  of  the  decrease  in  operating  expenses  is
    related  to  the settlement of certain litigation in December  of  1996
    regarding non-standard policies.  Included in this decrease were  legal
    fees  and  payments to the litigants to settle the issue.  In 1992,  as
    part  of  the  acquisition of Commonwealth Industries  Corporation,  an
    agreement  was  entered into between John Cantrell and FCC  for  future
    payments  to be made by FCC.  A liability was established at  the  date
    of  the  agreement.   Upon  the death of Mr.  Cantrell  in  late  1997,
    obligations under this agreement transferred to Mr. Cantrell's wife  at
    a  reduced  amount.   This  resulted in a  reduction  of  approximately
    $600,000   of  the  liability  held  for  future  payments  under   the
    agreement.   In addition, 1997 Consulting fees, primarily in  the  area
    of  actuarial  services.  were reduced approximately  $400,000  as  the
    Company  was able to hire an actuary, on a part-time basis, at  a  cost
    less than fees paid in the previous year to consulting actuaries.   The
    remaining  reduction in operating expenses is attributable  to  reduced
    salary  and  employee  benefit costs in 1997, as a  result  of  natural
    attrition.
    
    
    Interest expense decreased 4% in 1997 compared to 1996.  Since December
    31,  1996,  notes  payable decreased approximately  $758,000.   Average
    outstanding indebtedness was $19,461,000 with an average cost  of  8.6%
    in 1997 compared to average outstanding indebtedness of 20,652,000 with
    an average cost of 8.5% in 1996.  In March 1997, the base interest rate
    for  most of the notes payable increased a quarter of a point. The base
    rate  is  defined  as  the floating daily, variable  rate  of  interest
    determined  and  announced by First of America Bank.  Please  refer  to
    Note  12  "Notes  Payable" in the Notes to the  Consolidated  Financial
    Statements of UTG for more information.
   
                                      8
<PAGE>
 
    Net loss of UTG
  
    UTG  had  a  net  loss of $923,000 in 1997 compared to a  net  loss  of
    $1,661,000  in  1996.   The  improvement is  directly  related  to  the
    decrease  in life benefits and operating expenses primarily  associated
    with  the  1996 settlement and other related costs of the  non-standard
    life insurance policies.

 (d) Net loss

The  Company  recorded a net loss of $79,000 for 1997 compared to  $319,000
for the same period one year ago.  The net loss is from the equity share of
UTG's operating results.


Results of Operations

1996 compared to 1995

(a)  Revenues

The  Company's source of revenues is derived from service fee income  which
is  provided  via  a  service agreement with USA.   The  service  agreement
between UII and USA is to provide USA with certain administrative services.
The  fees  are  based  on  a percentage of premium  revenue  of  USA.   The
percentages  are  applied  to  both first  year  and  renewal  premiums  at
different rates.

The  Company holds $864,100 of notes receivable from affiliates.  The notes
receivable from affiliates consists of three separate notes.  The  $700,000
note bears interest at the rate of 1% above the variable per annum rate  of
interest  most recently published by the Wall Street Journal as  the  prime
rate.  Interest is payable quarterly with principal due at maturity on  May
8, 2006.  In February 1996, FCC borrowed an additional $150,000 from UII to
provide additional cash for liquidity.  The note bears interest at the rate
of  1%  over  prime as published in the Wall Street Journal, with  interest
payments due quarterly and principal due upon maturity of the note on  June
1,  1999.  The remaining $14,100 are 20 year notes of UTG with interest  at
8.5%  payable  semi-annually.  At current interest levels, the  notes  will
generate approximately $80,000 annually.


(b)  Expenses

The  Company  has a sub-contract service agreement with United Trust,  Inc.
("UTI")  for  certain administrative services.  Through its facilities  and
personnel,  UTI  performs  such services as may  be  mutually  agreed  upon
between  the parties.  The fees are based on a percentage of the fees  paid
to  UII  by  USA.   The  Company has incurred $1,241,000,  $1,809,000,  and
$1,210,000 in service fee expense in 1996, 1995, and 1994, respectively.

Interest expense of $84,000, $89,000 and $59,000 was incurred in 1996, 1995
and  1994, respectively.  The interest expense is directly attributable  to
the  convertible debentures.  The Debentures bear interest  at  a  variable
rate  equal to one percentage point above the prime rate published  in  the
Wall Street Journal from time to time.

                                      9
<PAGE>

(c)  Equity in loss of Investees

Equity in earnings of investees represents UII's 47% share of the net  loss
of  UTG.   Included with this filing as Exhibit 99(d) are audited financial
statements  of UTG.  Following is a discussion of the results of operations
of UTG:

    Revenues of UTG
    
    Premium  and policy fee revenues, net of reinsurance premium, decreased
    7%  when  comparing  1996 to 1995. The decrease in  premium  income  is
    primarily attributed to a 15% decrease in new business production.  The
    decrease is due to two factors.  The first factor is that UTG  and  its
    subsidiaries'  changed  its  focus  from  primarily  a  broker   agency
    distribution  system to a captive agent system.  The second  factor  is
    that   UTG  and  its subsidiaries' changed its product  portfolio  from
    traditional life insurance to universal life insurance.
    
   Business  written by the broker agency force, in recent years,  did  not
   meet  UTG and its subsidiaries' expectations.  With the change in  focus
   of  distribution  systems, most of the broker  agents  were  terminated.
   (The  termination  of  the broker agency force  caused  a  non-recurring
   write  down  of the value of agency force asset in 1995, see  discussion
   of  amortization of agency force for further details.).  The  change  in
   distribution  systems  effectively reduced the total  number  of  agents
   representing  and  producing  business for  UTG  and  its  subsidiaries'
   Broker   agents  sell  insurance  and  related  products   for   several
   companies.   Captive agents sell for only one company.  The change  from
   a  brokerage agency system to a captive agent system caused a decline in
   new  premium writings as the captive agents required training  from  the
   home  office  and  often  had  little or  no  previous  insurance  sales
   experience.    Additionally,  the  products  sold  were   changed   from
   traditional  whole life to universal life, resulting in veteran  captive
   agents  having to learn the features of the new products.  Broker agents
   typically  sell products for several companies and typically  have  more
   experience in the industry or have experienced agents within the  agency
   to  assist  and  train them.  The captive agent approach, though  slower
   and  requiring  more home office training, is believed to  be  the  best
   long  term  approach for UTG and its subsidiaries'  as  agents  will  be
   trained  in  the procedures and practices of the insurance  subsidiaries
   and  will be more familiar through the training process.  This will help
   in  recruiting  quality  individuals with  the  character  and  attitude
   conducive with UTG and its subsidiaries' desires.
   
   Universal life and interest sensitive products contribute only the  risk
   charge  to  premium  income;  however,  traditional  insurance  products
   contribute  all  monies  received  to  premium  income.   UTG  and   its
   subsidiaries'  changed  their  product portfolio to  remain  competitive
   based on consumer demand.
   
    A  positive impact on premium income is the improvement of persistency.
    Persistency is a measure of insurance in force retained in relation  to
    the  previous year.  Average persistency rate for all policies in force
    for 1996 and 1995 has been approximately 87.9% and 87.3%, respectively.
    
    Net  investment income increased 3% when comparing 1996 to  1995.   The
    overall  investment  yields  for 1996 and 1995  are  7.31%  and  7.14%,
    respectively.   The  improvement  in  investment  yield  is   primarily
    attributed  to  fixed maturity investments.  Cash  generated  from  the
    sales of universal life insurance products, has been invested primarily
    in our fixed investment portfolio.
    
    The  investments are generally managed to match related  insurance  and
    policyholder  liabilities.  The comparison of  investment  return  with
    insurance or investment product crediting rates establishes an interest
    spread.  The minimum interest spread between earned and credited  rates
    is  1%  on  the "Century 2000" universal life insurance product,  which
    currently  is  the  primary sales product.  UTG and  its  subsidiaries'
    monitors   investment  yields,  and  when  necessary  adjusts  credited
    interest  rates on its insurance products to preserve targeted interest
    spreads.   It  is expected that monitoring of the interest  spreads  by
    management will provide the necessary margin to adequately provide  for
    associated  costs  on the insurance policies UTG and its  subsidiaries'
    currently has in force and will write in the future.
    
    Realized investment losses were $466,000 and $114,000 in 1996 and 1995,
    respectively.   UTG  and  its subsidiaries' sold  two  foreclosed  real
    estate  properties that resulted in approximately $357,000 in  realized
    losses  in  1996.  There were other gains and losses during the  period
    that  comprised  the remaining amount reported but were  immaterial  in
    nature on an individual basis.
                                      10
<PAGE>

    Expenses of UTG
    
    Life  benefits,  net of reinsurance benefits and claims,  increased  2%
    compared  to  1995.  The increase in life benefits is due primarily  to
    settlement expenses discussed in the following paragraph:
    
    In  1994, UG became aware that certain new insurance business was being
    solicited by certain agents and issued to individuals considered to  be
    not  insurable  by  UTG  and its subsidiaries' standards.   These  non-
    standard policies had a face amount of $22,700,000 and represented  1/2
    of 1% of the insurance in-force in 1994.  Management's initial analysis
    indicated  that  expected  death claims on the  business  in-force  was
    adequate  in  relation  to  mortality  assumptions  inherent   in   the
    calculation of statutory reserves.  Nevertheless, management determined
    it  was in the best interest of UTG and its subsidiaries' to repurchase
    as many of the non-standard policies as possible.  Through December 31,
    1996, UTG and its subsidiaries' spent approximately $7,099,000 for  the
    settlement  of  non-standard policies and  for  the  legal  defense  of
    related litigation.  In relation to settlement of non-standard policies
    UTG  and  its  subsidiaries incurred life benefits  of  $3,307,000  and
    $720,000  in  1996  and 1995, respectively.  UTG and its  subsidiaries'
    incurred  legal  costs  of  $906,000 and $687,000  in  1996  and  1995,
    respectively.   All the policies associated with this issue  have  been
    settled  as  of December 31, 1996.  UTG and its insurance subsidiaries'
    has  approximately $3,742,000 of insurance in-force and  $1,871,000  of
    reserves  from  the  issuance of paid-up life  insurance  policies  for
    settlement  of  matters related to the original non-standard  policies.
    Management  believes the reserves are adequate in relation to  expected
    mortality on this block of in-force.
    
    Commissions  and  amortization  of deferred  policy  acquisition  costs
    decreased  14%  in  1996 compared to 1995. The decrease  is  due  to  a
    decrease  in  commissions expense.  Commissions decreased 15%  in  1996
    compared  to 1995.  The decrease in commissions was due to the  decline
    in  new  business  production.  There is a direct relationship  between
    premium   revenues  and  commission  expenses.   First   year   premium
    production decreased 15% and first year commissions decreased 32%  when
    comparing  1996  to 1995.  Amortization of deferred policy  acquisition
    costs  decreased  12%  in  1996 compared to 1995.   Management  expects
    commissions  and amortization of deferred policy acquisition  costs  to
    decrease in the future if premium revenues continue to decline.
    
    Amortization  of  cost  of insurance acquired  increased  26%  in  1996
    compared  to  1995. Cost of insurance acquired is established  when  an
    insurance  company is acquired.  The Company assigns a portion  of  its
    cost to the right to receive future cash flows from insurance contracts
    existing  at  the  date  of  the acquisition.   The  cost  of  policies
    purchased  represents the actuarially determined present value  of  the
    projected  future  cash  flows from the  acquired  policies.   Cost  of
    insurance  acquired is comprised of individual life insurance  products
    including whole life, interest sensitive whole life and universal  life
    insurance  products.   Cost  of insurance acquired  is  amortized  with
    interest  in  relation  to  expected future profits,  including  direct
    charge-offs for any excess of the unamortized asset over the  projected
    future  profits.   The  interest  rates utilized  in  the  amortization
    calculation are 9% on approximately 24% of the balance and 15%  on  the
    remaining  balance.   The  interest rates vary  due  to  risk  analysis
    performed  at  the time of acquisition on the business  acquired.   The
    amortization is adjusted retrospectively when estimates of  current  or
    future  gross  profits  to be realized from a  group  of  products  are
    revised.  UTG and its subsidiaries' did not have any charge-offs during
    the  periods  covered  by  this report.  The increase  in  amortization
    during  the current period is a fluctuation due to the expected  future
    profits.   Amortization of cost of insurance acquired  is  particularly
    sensitive to changes in persistency of certain blocks of insurance  in-
    force.
    
    UTG  and its subsidiaries' reported a non-recurring write down of value
    of  agency  force of $0 and $8,297,000 in 1996 and 1995,  respectively.
    The  write  down  was  directly related to the change  in  distribution
    systems.  UTG and its subsidiaries' changed its focus from primarily  a
    broker  agency distribution system to a captive agent system.  Business
    produced  by  the  broker agency force in recent  years  did  not  meet
    expectations.   With the change in focus of distribution systems,  most
    of  the broker agents were terminated.  The termination of most of  the
    agents  involved  in the broker agency force caused management  to  re-
    evaluate  and  write-off the value of the agency force carried  on  the
    balance sheet.
                                      11
<PAGE>

    Operating expenses increased 6% in 1996 compared to 1995.  The  primary
    factor  that  caused  the increase in operating  expenses  is  directly
    related   to  increased  legal  costs  and  reserves  established   for
    litigation.   The legal costs are due to the settlement of non-standard
    insurance  policies as was discussed in the review  of  life  benefits.
    UTG and its subsidiaries' incurred legal costs of $906,000 and $687,000
    in 1996 and 1995, respectively in relation to the settlement of the non-
    standard insurance policies.
    
    Interest  expense  decreased  12% in  1996  compared  to  1995.   Since
    December  31,  1995,  notes payable decreased approximately  $1,623,000
    that has directly attributed to the decrease in interest expense during
    1996.   Interest  expense  was  also  reduced,  as  a  result  of   the
    refinancing  of  the senior debt under which the new interest  rate  is
    more  favorable.   Please  refer to Note  12  "Notes  Payable"  of  the
    Consolidated  Notes  to  the  Financial  Statements  of  UTG  for  more
    information on this matter.
    
    Net loss of UTG
    
    UTG and its subsidiaries' had a net loss of $1,661,000 in 1996 compared
    to  a  net  loss  of  $5,321,000 in 1995.  The  net  loss  in  1996  is
    attributed  to  the  increase in life benefits net of  reinsurance  and
    operating  expenses  primarily associated  with  settlement  and  other
    related costs of the non-standard life insurance policies.
    
    
(d) Net loss

The Company recorded a net loss of $319,000 for 1996 compared to a net loss
of  $2,148,000 for the same period one year ago.  The net loss is from  the
equity share of UTG's operating results.


Financial Condition

The Company owns 47% equity interest in UTG which controls total assets  of
approximately  $348,000,000.   Audited  financial  statements  of  UTG  are
presented as Exhibit 99(d) of this filing.


Liquidity and Capital Resources

Since  UII  is  a holding company, funds required to meet its debt  service
requirements  and other expenses are primarily provided by its  affiliates.
UII's  cash flow is dependent on revenues from a management agreement  with
USA  and  its  earnings received on invested assets and cash balances.   At
December  31, 1997,substantially all of the shareholders equity  represents
investment  in  affiliates.   UII does not  have  significant  day  to  day
operations  of  its own. Cash requirements of UII primarily relate  to  the
payment  of interest on its convertible debentures and expenses related  to
maintaining the Company as a corporation in good standing with the  various
regulatory bodies which govern corporations in the jurisdictions where  the
Company  does  business.  The payment of cash dividends to shareholders  is
not  legally restricted.  However, insurance company dividend payments  are
regulated by the state insurance department where the company is domiciled.
UTI  is the ultimate parent of UG through ownership of several intermediary
holding  companies.  UG can not pay a dividend directly to UII due  to  the
ownership  structure.  However, if UG paid a dividend to its direct  parent
and  each  subsequent  intermediate  company  within  the  holding  company
structure  paid  a  dividend equal to the amount  it  received,  UII  would
receive 37% of the original dividend paid by UG.  Please refer to Note 1 of
the  Notes  to  the  Financial Statements.  UG's dividend  limitations  are
described below without effect of the ownership structure.  Please refer to
Note 1 of the Notes to the Financial Statements.  UG's dividend limitations
are described below without effect of the ownership structure.

Ohio domiciled insurance companies require five days prior notification  to
the  insurance  commissioner  for  the payment  of  an  ordinary  dividend.
Ordinary  dividends are defined as the greater of:  a) prior year statutory
earnings  or b) 10% of statutory capital and surplus.  For the  year  ended
December  31, 1997, UG had a statutory gain from operations of  $1,779,000.
At  December  31,  1997,  UG  statutory capital  and  surplus  amounted  to
$10,997,000.   Extraordinary  dividends  (amounts  in  excess  of  ordinary
dividend  limitations) require prior approval of the insurance commissioner
and are not restricted to a specific calculation.

                                      12
<PAGE>

The  Company  currently  has $711,000 in cash and  cash  equivalents.   The
Company  holds  one  mortgage loan.  Operating activities  of  the  Company
produced  cash flows of $324,097, $255,675 and $326,905 in 1997,  1996  and
1995, respectively.  The Company had uses of cash from investing activities
of  $50,764,  $180,402 and $192,801 in 1997, 1996 and  1995,  respectively.
Cash  flows  from financing activities were ($2,112), $33 and $0  in  1997,
1996 and 1995, respectively.

In  early  1994,  UII received $902,300 from the sale of  Debentures.   The
Debentures  were  issued pursuant to an indenture between the  Company  and
First  of  America  Bank  -  Southeast Michigan,  N.A.,  as  trustee.   The
Debentures are general unsecured obligations of UII, subordinate  in  right
of  payment  to any existing or future senior debt of UII.  The  Debentures
are exchangeable and transferable, and are convertible at any time prior to
March  31,  1999 into UII's Common Stock at a conversion price of  $25  per
share,  subject  to  adjustment in certain  events.   The  Debentures  bear
interest  from March 31, 1994, payable quarterly, at a variable rate  equal
to  one  percentage point above the prime rate published in the Wall Street
Journal  from time to time.  The prime rate was 8.25% during first  quarter
1997, increasing to 8.5% April 1, 1997, and has remained unchanged.  On  or
after March 31, 1999, the Debentures will be redeemable at UII's option, in
whole  or  in  part,  at redemption prices declining  from  103%  of  their
principal  amount.   No  sinking fund will be  established  to  redeem  the
Debentures.  The Debentures will mature on March 31, 2004.  The  Debentures
are  not  listed on any national securities exchange or the NASDAQ National
Market System.

The  Company  is  not  aware of any litigation that will  have  a  material
adverse effect on the financial position of the Company.  In addition,  the
Company  does  not believe that the regulatory initiatives currently  under
consideration  by various regulatory agencies will have a material  adverse
impact on the Company.  The Company is not aware of any material pending or
threatened  regulatory action with respect to the Company  or  any  of  its
affiliates.  The Company does not believe that any insurance guaranty  fund
assessments will be materially different from amounts already provided  for
in the financial statements.

Management believes that the overall sources of liquidity available to  the
Company will be more than sufficient to satisfy its financial obligations.


Regulatory Environment

The  Company's insurance affiliates are assessed contributions by life  and
health   guaranty   associations  in  almost  all   states   to   indemnify
policyholders  of  failed companies.  In several  states  the  company  may
reduce  premium taxes paid to recover a portion of assessments paid to  the
states'  guaranty fund association.  This right of "offset" may come  under
review by the various states, and the company cannot predict whether and to
what extent legislative initiatives may affect this right to offset.  Also,
some  state  guaranty associations have adjusted the basis  by  which  they
assess  the  cost  of  insolvencies to individual companies.   The  Company
believes  that  its  reserve  for  future  guaranty  fund  assessments   is
sufficient to provide for assessments related to known insolvencies.   This
reserve  is based upon management's current expectation of the availability
of  this  right  of  offset, known insolvencies  and  state  guaranty  fund
assessment  bases.  However, changes in the basis whereby  assessments  are
charged  to  individual companies and changes in the  availability  of  the
right  to  offset assessments against premium tax payments could materially
affect the company's results.

Currently,  the  Company's insurance affiliates are subject  to  government
regulation  in  each  of the states in which they conduct  business.   Such
regulation  is  vested in state agencies having broad administrative  power
dealing with all aspects of the insurance business, including the power to:
(i)  grant  and  revoke licenses to transact business;  (ii)  regulate  and
supervise  trade  practices and market conduct;  (iii)  establish  guaranty
associations;   (iv)  license  agents;  (v)  approve  policy  forms;   (vi)
approve  premium rates for some lines of business;  (vii) establish reserve
requirements;  (viii) prescribe the form and content of required  financial
statements and reports;  (ix) determine the reasonableness and adequacy  of
statutory  capital and surplus; and  (x) regulate the type  and  amount  of
permitted  investments.  Insurance regulation is concerned  primarily  with
the  protection of policyholders. The Company cannot predict the impact  of
any  future  proposals, regulations or market conduct  investigations.  The
Company's insurance affiliates, USA, UG, APPL and ABE are domiciled in  the
states of Ohio, Ohio, West Virginia and Illinois, respectively.

                                      13
<PAGE>

The  insurance regulatory framework continues to be scrutinized by  various
states,  the  federal government and the National Association of  Insurance
Commissioners  ("NAIC").   The  NAIC is  an  association  whose  membership
consists  of the insurance commissioners or their designees of the  various
states.   The  NAIC  has  no  direct regulatory  authority  over  insurance
companies,  however  its primary purpose is to provide  a  more  consistent
method  of  regulation  and  reporting  from  state  to  state.   This   is
accomplished  through  the  issuance of model  regulations,  which  can  be
adopted  by individual states unmodified, modified to meet the state's  own
needs or requirements, or dismissed entirely.

Most  states  also  have insurance holding company statutes  which  require
registration  and periodic reporting by insurance companies  controlled  by
other  corporations licensed to transact business within  their  respective
jurisdictions.   The insurance affiliates are subject to  such  legislation
and  registered as controlled insurers in those jurisdictions in which such
registration is required.  Statutes vary from state to state but  typically
require periodic disclosure, concerning the corporation, that controls  the
registered  insurers and all affiliates of such corporation.  In  addition,
prior notice to, or approval by, the state insurance commission of material
intercorporate  transfers  of  assets, reinsurance  agreements,  management
agreements  (see  Note  9  in  the  notes  to  the  consolidated  financial
statements),  and  payment of dividends (see note 2 in  the  notes  to  the
consolidated  financial statements) in excess of specified amounts  by  the
insurance subsidiary, within the holding company system, are required.

Each year the NAIC calculates financial ratio results (commonly referred to
as  IRIS  ratios) for each company.  These ratios compare various financial
information pertaining to the statutory balance sheet and income statement.
The  results are then compared to pre-established normal ranges  determined
by  the  NAIC.  Results outside the range typically require explanation  to
the domiciliary insurance department.

At  year-end 1997, the insurance companies had one ratio outside the normal
range.  The ratio is related to the decrease in premium income.  The  ratio
fell  outside the normal range the last three years.  A primary  cause  for
the  decrease  in  premium revenues is related to the potential  change  in
control  of  UTI over the last two years to two different parties.   During
September  of 1996, it was announced that control of UTI would pass  to  an
unrelated party, but the transaction did not materialize.  At this writing,
negotiations  are  progressing with a different  unrelated  party  for  the
change  in  control of UTI.  Please refer to the Notes to the  Consolidated
Financial Statements for additional information.  The possible changes  and
resulting  uncertainties  have  hurt the insurance  companies'  ability  to
recruit and maintain sales agents.  The industry has experienced a downward
trend  in  the  total  number of agents who sell  insurance  products,  and
competition  for the top sales producers has intensified.   As  this  trend
appears  to  continue,  the recruiting focus of the  Company  has  been  on
introducing  quality  individuals  to the  insurance  industry  through  an
extensive  internal training program.  The Company feels this  approach  is
conducive  to  the mutual success of our new recruits and  the  Company  as
these  recruits  market our products in a professional, company  structured
manner.

The NAIC, in conjunction with state regulators, has been reviewing existing
insurance  laws and regulations.  A committee of the NAIC proposed  changes
in  the  regulations  governing insurance company investments  and  holding
company  investments in subsidiaries and affiliates which were  adopted  by
the  NAIC as model laws in 1996.  The Company does not presently anticipate
any material adverse change in its business as a result of these changes.

Legislative and regulatory initiatives regarding changes in the  regulation
of  banks and other financial services businesses and restructuring of  the
federal income tax system could, if adopted and depending on the form  they
take,  have  an  adverse impact on the Company by altering the  competitive
environment  for its products.  The outcome and timing of any such  changes
cannot  be  anticipated  at  this time, but the Company  will  continue  to
monitor  developments in order to respond to any opportunities or increased
competition that may occur.

The  NAIC adopted the Life Illustration Model Regulation.  Many states have
adopted the regulation effective January 1, 1997.  This regulation requires
products which contain non-guaranteed elements, such as universal life  and
interest  sensitive  life, to comply with certain  actuarially  established
tests.   These  tests  are  intended  to  target  future  performance   and
profitability  of a product under various scenarios.  The  regulation  does
not prevent a company from selling a product that does not meet the various
tests.  The only implication is the way in which the product is marketed to
the  consumer.   A  product that does not pass the  tests  uses  guaranteed
assumptions  rather than current assumptions in presenting  future  product
performance  to  the  consumer.  The Company conducts an  ongoing  thorough
review  of  its sales and marketing process and continues to emphasize  its
compliance efforts.

                                      14
<PAGE>

A  task  force of the NAIC is currently undertaking a project to  codify  a
comprehensive set of statutory insurance accounting rules and  regulations.
This  project is not expected to be completed earlier than 1999.   Specific
recommendations  have  been set forth in papers  issued  by  the  NAIC  for
industry  review.  The Company is monitoring the process, but the potential
impact of any changes in insurance accounting standards is not yet known.

Accounting and Legal Developments

The  Financial  Accounting Standards Board (FASB) has issued  Statement  of
Financial Accounting Standards (SFAS) No. 128 entitled Earnings per  share,
which  is  effective  for financial statements for fiscal  years  beginning
after   December  15,  1997.   SFAS  No.  128  specifies  the  computation,
presentation, and disclosure requirements for earnings per share (EPS)  for
entities  with publicly held common stock or potential common  stock.   The
Statement's objective is to simplify the computation of earnings per share,
and  to  make the U.S. standard for computing EPS more compatible with  the
EPS standards of other countries.

Under  SFAS  No.  128,  primary EPS computed in  accordance  with  previous
opinions  is replaced with a simpler calculation called basic  EPS.   Basic
EPS  is  calculated  by  dividing income available to  common  stockholders
(i.e.,  net income or loss adjusted for preferred stock dividends)  by  the
weighted-average number of common shares outstanding.  Thus,  in  the  most
significant  change in current practice, options, warrants, and convertible
securities   are  excluded  from  the  basic  EPS  calculation.    Further,
contingently  issuable shares are included in basic EPS  only  if  all  the
necessary conditions for the issuance of such shares have been satisfied by
the end of the period.

Fully  diluted  EPS  has not changed significantly  but  has  been  renamed
diluted  EPS.   Income  available to common stockholders  continues  to  be
adjusted  for  assumed  conversion of all potentially  dilutive  securities
using the treasury stock method to calculate the dilutive effect of options
and  warrants.  However, unlike the calculation of fully diluted EPS  under
previous opinions, a new treasury stock method is applied using the average
market   price  or  the  ending  market  price.   Further,  prior   opinion
requirement  to use the modified treasury stock method when the  number  of
options  or  warrants outstanding is greater than 20%  of  the  outstanding
shares  also  has been eliminated.  SFAS 128 also includes  certain  shares
that  are contingently issuable; however, the test for inclusion under  the
new rules is much more restrictive.

SFAS   No.   128  requires  companies  reporting  discontinued  operations,
extraordinary items, or the cumulative effect of accounting changes are  to
use  income from operations as the control number or benchmark to determine
whether  potential  common  shares  are  dilutive  or  antidilutive.   Only
dilutive securities are to be included in the calculation of diluted EPS.

This  statement  was  adopted for the 1997 Financial Statements.   For  all
periods presented the Company reported a loss from continuing operations so
any  potential issuance of common shares would have an antidilutive  effect
on  EPS.  Consequently, the adoption of SFAS No. 128 did not have an impact
on the Company's financial statement.

The  FASB  has issued SFAS No. 130 entitled Reporting Comprehensive  Income
and   SFAS  No.  132  Employers'  Disclosures  about  Pensions  and   Other
Postretirement  Benefits.  Both of the above statements are  effective  for
financial statements with fiscal years beginning after December 15, 1997.

SFAS No. 130 defines how to report and display comprehensive income and its
components in a full set of financial statements.  The purpose of reporting
comprehensive income is to report a measure of all changes in equity of  an
enterprise  that  result from recognized transactions  and  other  economic
events  of the period other than transactions with owners in their capacity
as owners.

SFAS   No.   132  addresses  disclosure  requirements  for  post-retirement
benefits.   The  statement does not change post-retirement  measurement  or
recognition issues.

The  Company  will adopt both SFAS No. 130 and SFAS No. 132  for  the  1998
financial statements.  Management does not expect either adoption to have a
material impact on the Company's financial statements.

                                      15
<PAGE>

The  Company  is  not  aware of any litigation that will  have  a  material
adverse effect on the financial position of the Company.  In addition,  the
Company  does  not believe that the regulatory initiatives currently  under
consideration  by various regulatory agencies will have a material  adverse
impact on the Company.  The Company is not aware of any material pending or
threatened  regulatory action with respect to the Company  or  any  of  its
affiliates.  The Company does not believe that any insurance guaranty  fund
assessments will be materially different from amounts already provided  for
in the financial statements.

Year 2000 Issue

The  "Year  2000  Issue"  is  the  inability  of  computers  and  computing
technology  to recognize correctly the Year 2000 date change.  The  problem
results  from a long-standing practice by programmers to save memory  space
by  denoting  Years  using just two digits instead of four  digits.   Thus,
systems  that  are  not  Year 2000 compliant may be unable  to  read  dates
correctly  after  the Year 1999 and can return incorrect  or  unpredictable
results.    This   could  have  a  significant  effect  on  the   Company's
business/financial  systems  as  well as  products  and  services,  if  not
corrected.

The  Company established a project to address year 2000 processing concerns
in  September  of 1996.  In 1997 the Company completed the  review  of  the
Company's   internally  and  externally  developed   software,   and   made
corrections  to all year 2000 non-compliant processing.  The  Company  also
secured  verification of current and future year 2000 compliance  from  all
major  external software vendors.  In December of 1997, a separate computer
operating  environment was established with the system  dates  advanced  to
December  of 1999.  A parallel model office was established with all  dates
in the data advanced to December of 1999.  Parallel model office processing
is being performed using dates from December of 1999 to January of 2001, to
insure all year 2000 processing errors have been corrected.  Testing should
be  completed  by the end of the first quarter of 1998.  After  testing  is
completed,  periodic  regression  testing  will  be  performed  to  monitor
continuing  compliance.   By addressing year 2000 compliance  in  a  timely
manner,  compliance  will  be  achieved using existing  staff  and  without
significant impact on the Company operationally or financially.


Proposed Merger

On March 25, 1997, the Board of Directors of UTI and UII voted to recommend
to  the  shareholders a merger of the two companies.   Under  the  Plan  of
Merger, UTI would be the surviving entity with UTI issuing one share of its
stock for each share held by UII shareholders.

UTI owns 53% of United Trust Group, Inc., an insurance holding company, and
UII  owns  47%  of United Trust Group, Inc.  Neither UTI nor UII  have  any
other significant holdings or business dealings.  The Board of Directors of
each  company thus concluded a merger of the two companies would be in  the
best interests of the shareholders.  The merger will result in certain cost
savings,   primarily  related  to  costs  associated  with  maintaining   a
corporation in good standing in the states in which it transacts  business.
A  vote of the shareholders of UTI and UII regarding the proposed merger is
anticipated to occur sometime during the third quarter of 1998.


Subsequent Event

On  February 19, 1998, UTI signed a letter of intent with Jesse T. Correll,
whereby   Mr.  Correll  will  personally  or  in  combination  with   other
individuals make an equity investment in UTI over a period of three  years.
Upon  completion of the transaction Mr. Correll will own 51% of UTI.  Under
the terms of the letter of intent Mr. Correll will buy 2,000,000 authorized
but  unissued shares of UTI common stock for $15.00 per share and will also
buy  389,715 shares of UTI common stock, representing stock of UTI and UII,
that UTI purchased during the last eight months in private transactions  at
the  average price UTI paid for such stock, plus interest, or approximately
$10.00  per  share.  Mr. Correll also will purchase 66,667  shares  of  UTI
common stock and $2,560,000 of face amount of convertible bonds (which  are
due  and  payable on any change in control of UTI) in private transactions,
primarily  from  officers of UTI.  Upon completion of the transaction,  Mr.
Correll would be the largest shareholder of UTI.

                                      16
<PAGE>

UTI  intends  to use the equity that is being contributed to  expand  their
operations through the acquisition of other life insurance companies.   The
transaction  is subject to negotiation of a definitive purchase  agreement;
completion  of due diligence by Mr. Correll; the receipt of regulatory  and
other   approvals;  and  the  satisfaction  of  certain  conditions.    The
transaction is not expected to be completed before June 30, 1998, and there
can be no assurance that the transaction will be completed.

Cautionary Statement Regarding Forward-Looking Statements

Any  forward-looking statement contained herein or in  any  other  oral  or
written  statement  by  the company or any of its  officers,  directors  or
employees  is qualified by the fact that actual results of the company  may
differ  materially  from any such statement due to the following  important
factors,  among  other risks and uncertainties inherent  in  the  company's
business:

1.   Prevailing interest rate levels, which may affect the ability  of  the
     company  to  sell  its  products, the market value  of  the  company's
     investments   and   the   lapse  ratio  of  the  company's   policies,
     notwithstanding   product   design  features   intended   to   enhance
     persistency of the company's products.

2.   Changes  in  the  federal income tax laws and  regulations  which  may
     affect the relative tax advantages of the company's products.

3.   Changes in the regulation of financial services, including bank  sales
     and   underwriting  of  insurance  products,  which  may  affect   the
     competitive environment for the company's products.

4.   Other  factors affecting the performance of  the   company, including,
     but  not  limited   to,  market  conduct    claims, insurance industry
     insolvencies, stock   market  performance, and investment performance.

                                      17
<PAGE>

PART   II,  ITEM  8,  FINANCIAL  STATEMENTS,  CONSOLIDATED  STATEMENTS   OF
OPERATIONS SHOULD BE AMENDED TO REPLACE NET LOSS PER COMMON SHARE

<TABLE>
                        1997           1996            1995
<S>                 <C>            <C>             <C>
Net loss per common $  (0.06)      $  (0.23)       $  (1.54)
share
</TABLE>



PART  II, ITEM 8 NOTES TO FINANCIAL STATEMENTS, NOTE 1B, SHOULD BE  AMENDED
AS FOLLOWS:

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

B.NATURE  OF OPERATIONS - United Income, Inc. ("UII"), referred to  as  the
  ("Company"),  was  incorporated  November  2,  1987,  and  commenced  its
  activities  January 20, 1988.  UII is an insurance holding  company  that
  through   its  insurance  affiliates  sells  individual  life   insurance
  products.   UII  is  an affiliate of UTI, an Illinois  insurance  holding
  company.   UTI owns 40.6% of UII.  The officers of UII are  the  same  as
  those of its parent UTI.

PART II, ITEM 8, NOTES TO FINANCIAL STATEMENTS, NOTE 2 SHOULD BE AMENDED AS
FOLLOWS:

2.   DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS

The  following methods and assumptions were used to estimate the fair value
of each class of financial instrument required to be valued by SFAS 107 for
which it is practicable to estimate that value:

(a) Mortgage loans

The  fair values of mortgage loans are estimated using discounted cash flow
analyses  and  interest rates being offered for similar loans to  borrowers
with  similar  credit ratings.  As of December 31, 1997 the estimated  fair
value and carrying amountt were $138,519 and $121,520, respectively.  As of
December  31, 1996 the estimated fair value and carrying amount  were  each
$122,853.

(b) Notes receivable from affiliate

For notes receivable from affiliate, which is subject to a floating rate of
interest, carrying value is a reasonable estimate of fair value.

(c) Convertible debentures

For  the  convertible debentures, which are subject to a floating  rate  of
interest, carrying value is a reasonable estimate of fair value.

                                      18
<PAGE>

PART  II, ITEM 8, NOTES TO FINANCIAL STATEMENTS, NOTE 10 SHOULD BE  AMENDED
AS FOLLOWS:

10.  PENDING CHANGE IN CONTROL OF UNITED TRUST, INC.

On  February 19, 1998, UTI signed a letter of intent with Jesse T. Correll,
whereby   Mr.  Correll  will  personally  or  in  combination  with   other
individuals  make an equity investment in UTI over a three year  period  of
time.  Upon completion of the transaction Mr. Correll will own 51% of  UTI.
Under  the  terms of the letter of intent, Mr. Correll will  buy  2,000,000
authorized but unissued shares of UTI common stock for $15.00 per share and
will also buy 389,715 shares of UTI common stock, representing stock of UTI
and  UII,  that  UTI  purchased during the last  eight  months  in  private
transactions  at the average price UTI paid for such stock, plus  interest,
or  approximately $10.00 per share.  Mr. Correll also will purchase  66,667
shares  of  UTI  common stock and $2,560,000 of face amount of  convertible
bonds  (which  are  due and payable on any change in  control  of  UTI)  in
private transactions, primarily from officers of UTI.

UTI  intends  to use the equity that is being contributed to  expand  their
operations through the acquisition of other life insurance companies.   The
transaction  is subject to negotiation of a definitive purchase  agreement;
completion  of due diligence by Mr. Correll; the receipt of regulatory  and
other   approvals;  and  the  satisfaction  of  certain  conditions.    The
transaction is not expected to be completed before June 30, 1998, and there
can be no assurance that the transaction will be completed.

                                      19
<PAGE>

EXHIBIT  99(d)  AUDITED FINANCIAL STATEMENTS OF UNITED TRUST  GROUP,  INC.,
NOTE 1G, SHOULD BE AMENDED AS FOLLOWS:

 G.  RECOGNITION  OF   REVENUES   AND   RELATED  EXPENSES  -  Premiums  for
     traditional life insurance products, which include those products with
     fixed   and  guaranteed  premiums and benefits, consist principally of
     whole  life   insurance policies, and certain   annuities  with   life
     contingencies are  recognized   as revenues when due.  Limited payment
     life insurance policies defer gross premiums received in excess of net
     premiums which is then recognized in income in a constant relationship
     with insurance in force.  Accident  and  health insurance premiums are
     recognized as revenue pro rata over the terms of the policies.Benefits
     and related expenses associated   with the premiums earned are charged
     to expense proportionately over the    lives  of  the policies through
     a provision for future policy benefit liabilities and through deferral
     and amortization of deferred  policy acquisition costs.  For universal
     life and investment products, generally   there  is no requirement for
     payment of premium other than to maintain    account values at a level
     sufficient to pay mortality and expense charges.Consequently, premiums
     for universal life policies and investment products  are  not reported
     as revenue, but as deposits.  Policy fee revenue for    universal life
     policies and investment products consists of charges for    the   cost
     of    insurance   and policy   administration fees assessed during the
     period.  Expenses include interest credited to policy account balances
     and  benefit claims incurred in excess of policy account balances.
 
 
EXHIBIT  99(d)  AUDITED FINANCIAL STATEMENTS OF UNITED TRUST  GROUP,  INC.,
NOTE 1H, FIRST PARAGRAGH SHOULD BE AMENDED AS FOLLOWS:
 
H.   DEFERRED  POLICY  ACQUISITION  COSTS   -
     Commissions  and  other costs (salaries of certain employees  involved
     in  the  underwriting  and  policy issue functions,  and  medical  and
     inspection fees) of acquiring life insurance products that  vary  with
     and  are primarily related to the production of new business have been
     deferred.   Traditional  life insurance acquisition  costs  are  being
     amortized  over  the  premium-paying period of  the  related  policies
     using  assumptions  consistent with those  used  in  computing  policy
     benefit reserves.
 
 EXHIBIT  99(d) AUDITED FINANCIAL STATEMENTS OF UNITED TRUST  GROUP,  INC.,
 NOTE 1I, FIRST PARAGRAGH SHOULD BE AMENDED AS FOLLOWS:

I.   COST  OF  INSURANCE ACQUIRED - When an insurance company is  acquired,
     the  Company  assigns a portion of its cost to the  right  to  receive
     future  cash  flows from insurance contracts existing at the  date  of
     the  acquisition.   The  cost  of policies  purchased  represents  the
     actuarially  determined  present value of the  projected  future  cash
     flows  from the acquired policies.  The Company utilized a 9% discount
     rate  on approximately 24% of the business and a 15% discount rate  on
     approximately  76%  of  the business.  Cost of Insurance  Acquired  is
     amortized  with  interest  in  relation to  expected  future  profits,
     including  direct charge-offs for any excess of the unamortized  asset
     over  the  projected future profits..  The interest rates utilized  in
     the  amortization  calculation are 9%  on  approximately  24%  of  the
     balance  and  15% on the remaining balance.  The interest  rates  vary
     due  to  differences in the blocks of business.  The  amortization  is
     adjusted  retrospectively when estimates of current  or  future  gross
     profits to be realized from a group of products are revised.


EXHIBIT  99(d)  AUDITED FINANCIAL STATEMENTS OF UNITED TRUST  GROUP,  INC.,
NOTE 1J SHOULD BE AMENDED AS FOLLOWS:

     J.COST  IN  EXCESS  OF NET ASSETS PURCHASED - Cost in  excess  of  net
     assets  purchased  is  the  excess of the amount  paid  to  acquire  a
     company  over  the fair value of its net assets.  Costs in  excess  of
     net  assets purchased are amortized on the straight-line basis over  a
     40-year  period.  Management continually reviews the value of goodwill
     based  on  estimates  of future earnings.  As  part  of  this  review,
     management  determines  whether goodwill  is  fully  recoverable  from
     projected   undiscounted  net  cash  flows  from   earnings   of   the
     subsidiaries  over the remaining amortization period.   If  management
     were  to determine that changes in such projected cash flows no longer
     supported   the   recoverability  of  goodwill

                                      20
<PAGE>

     over   the   remaining
     amortization period, the carrying value of goodwill would  be  reduced
     with  a  corresponding charge to expense       (no such  changes  have
     occurred).   Accumulated amortization of cost in excess of net  assets
     purchased  was $1,420,146 and $1,265,146 as of December 31,  1997  and
     1996,  respectively.  A reverse stock split of  FCC  in  May  of  1997
     created  negative  goodwill of $2,564,719.   The  credit  to  goodwill
     resulted  from the retirement of fractional shares.  Please  refer  to
     Note  11  to  the  Consolidated Financial  Statements  for  additional
     information concerning the reverse stock split.


EXHIBIT  99(d)  AUDITED FINANCIAL STATEMENTS OF UNITED TRUST  GROUP,  INC.,
NOTE 17 SHOULD BE AMENDED AS FOLLOWS:

17.  PENDING CHANGE IN CONTROL OF UNITED TRUST, INC.

On  February 19, 1998, UTI signed a letter of intent with Jesse T. Correll,
whereby   Mr.  Correll  will  personally  or  in  combination  with   other
individuals make an equity investment in UTI over a period of three  years.
Upon  completion of the transaction Mr. Correll will own 51% of UTI.  Under
the terms of the letter of intent Mr. Correll will buy 2,000,000 authorized
but  unissued shares of UTI common stock for $15.00 per share and will also
buy  389,715 shares of UTI common stock, representing stock of UTI and UII,
that UTI purchased during the last eight months in private transactions  at
the  average price UTI paid for such stock, plus interest, or approximately
$10.00  per  share.  Mr. Correll also will purchase 66,667  shares  of  UTI
common stock and $2,560,000 of face amount of convertible bonds (which  are
due  and  payable on any change in control of UTI) in private transactions,
primarily  from  officers of UTI.  Upon completion of the transaction,  Mr.
Correll would be the largest shareholder of UTI.
UTI  intends  to use the equity that is being contributed to  expand  their
operations through the acquisition of other life insurance companies.   The
transaction  is subject to negotiation of a definitive purchase  agreement;
completion  of due diligence by Mr. Correll; the receipt of regulatory  and
other   approvals;  and  the  satisfaction  of  certain  conditions.    The
transaction is not expected to be completed before June 30, 1998, and there
can be no assurance that the transaction will be completed.

                                      21
<PAGE>