EXHIBIT 99(d)
                                     
                      AUDITED FINANCIAL STATEMENTS OF
                                     
                         UNITED TRUST GROUP, INC.
                                     59
<PAGE>







                       Independent Auditors' Report



Board of Directors and Shareholders
United Trust Group, Inc.


     We have audited the accompanying consolidated balance sheets of United
Trust Group, Inc. (an Illinois corporation) and subsidiaries as of December
31,  1998  and 1997, and the related consolidated statements of operations,
shareholders'  equity, and cash flows for each of the three  years  in  the
period  ended  December  31,  1998.  These  financial  statements  are  the
responsibility  of  the  Company's management.  Our  responsibility  is  to
express an opinion on these financial statements based on our audits.

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

      In  our  opinion, the financial statements referred to above  present
fairly,  in  all material respects, the consolidated financial position  of
United Trust Group, Inc. and subsidiaries as of December 31, 1998 and 1997,
and  the  consolidated results of their operations and  their  consolidated
cash  flows  for each of the three years in the period ended  December  31,
1998, in conformity with generally accepted accounting principles.

     We have also audited Schedule I as of December 31, 1998, and Schedules
II,  IV and V as of December 31, 1998 and 1997, of United Trust Group, Inc.
and subsidiaries and Schedules II, IV and V for each of the three years  in
the period then ended.  In our opinion, these schedules present fairly,  in
all material respects, the information required to be set forth therein.




                                   KERBER, ECK & BRAECKEL LLP




Springfield, Illinois
March 26, 1999


                                    60

<PAGE>

                        UNITED TRUST GROUP, INC.
                      CONSOLIDATED BALANCE SHEETS
                    As of December 31, 1998 and 1997

ASSETS
                               1998        1997
<TABLE>
<S>                     <C>          <C>
Investments:
        Fixed maturities at
         amortized cost   $ 174,240,848$ 180,970,333
          (market $179,885,379
            and $184,782,568)
        Investments held
         for sale:
        Fixed maturities,
         at market (cost $1,494,636
          and $1,672,298)     1,505,406   1,668,630
        Equity securities, at
         market (cost $2,725,061
          and $3,184,357)     2,087,416   3,001,744
        Mortgage loans on
         real estate at
          amortized cost     10,941,614   9,469,444
        Investment real estate,
         at cost, net of accumulated
           depreciation       8,979,183   9,760,732
        Real estate acquired in
         satisfaction
          of debt             1,550,000   1,724,544
        Policy loans         14,134,041  14,207,189
        Other long-term
          investments         1,746,278   1,680,066
        Short-term
         investments          1,062,796   1,798,878
                            216,247,582 224,281,560

Cash and cash
 equivalents                 25,867,577  15,763,639
Investment in
 affiliates                     350,000     350,000
Accrued investment
  income                      3,543,937   3,665,228
Reinsurance
 receivables:
        Future policy
         benefits            36,965,938  37,814,106
        Policy claims and
         other benefits       3,563,963   3,529,078

Cost of insurance
 acquired                    42,673,693  45,009,452
Deferred policy acquisition
 costs                        6,324,548  10,600,720
Cost in excess of net
 assets purchased,
  net of accumulated
   amortization               2,642,210   2,777,089
Property and equipment, net of
 accumulated depreciation     3,166,835   3,392,905
Other assets                    941,656     767,258
        Total assets      $ 342,287,939 347,951,035

LIABILITIES AND SHAREHOLDERS' EQUITY
Policy liabilities and accruals:
        Future policy
         benefits         $ 248,391,753 248,805,695
        Policy claims and
         benefits payable     2,183,434   2,080,907
        Other policyholder
         funds                2,150,632   2,445,469
        Dividend and endowment
         accumulations       15,329,048  14,905,816
Income taxes payable:
        Current                 115,785      15,730
        Deferred              7,543,678  12,157,685
Notes payable                17,559,482  19,081,602
Indebtedness to
 affiliates, net                 52,313      49,977
Other liabilities             5,887,513   3,987,586
            Total
             Liabilities    299,213,638 303,530,467
Minority interests in
 consolidated subsidiaries    9,749,693  10,130,024


Shareholders' equity:
Common stock - no par value
        Authorized 10,000 shares  -
         100 shares issued   46,577,216  45,926,705
Accumulated deficit         (12,867,333)(11,594,453)
Accumulated other
 comprehensive income          (385,275)    (41,708)
   Total shareholders'
     equity                  33,324,608  34,290,544
   Total liabilities
    and shareholders'
     equity                 342,287,939 347,951,035
</TABLE>
                       See accompanying notes
                                 61

<PAGE>

                      1998       1997       1996


<TABLE>
<S>               <C>        <C>        <C>
Premiums and
 policy fees      $30,938,609$33,373,950$35,891,609
Reinsurance premiums
 and policy fees   (4,542,532)(4,734,705)(4,947,151)
Net investment
 income            15,080,005 14,882,677 15,902,107
Realized investment gains
 and (losses), net (1,119,156)  (279,096)  (465,879)
Other income           17,937    107,792     95,425
                   40,374,863 43,350,618 46,476,111




Benefits, claims and settlement expenses:
        Life       23,078,145 23,644,252 26,568,062
        Reinsurance benefits
         and claims(2,499,394)(2,078,982)(2,283,827)
        Annuity     1,462,385  1,560,828  1,892,489
    Dividends to
     Policyholders  3,431,238  3,929,073  4,149,308
Commissions and
 amortization of deferred
        policy acquisition
         costs      6,450,529  3,616,365  4,224,885
Amortization of cost of
 insurance acquired 2,335,759  2,527,360  5,690,069
Operating expenses 10,481,145  8,957,372 11,285,566
Interest expense    1,647,400  1,675,440  1,752,573
                   46,387,207 43,831,708 53,279,125


Loss before income taxes,
minority interest
and equity in loss
 of investees      (6,012,344) (481,090) (6,803,014)

Income tax credit
 (expense)          4,502,537  (571,999)  4,643,961

Minority interest loss
of consolidated
 subsidiaries         236,927    129,712    498,356
Net loss          $(1,272,880)$ (923,377)(1,660,697)

Basic loss per share
 from continuing
   operations and
    net loss      $(12,728.80)$(9,233.77)(16,606.97)

Diluted loss per share
 from continuing
   operations and
    net loss      $(12,728.80)$(9,233.77)(16,606.97)

Basic weighted average
 shares outstanding       100        100        100

Diluted weighted average
 shares outstanding       100        100        100
                     See accompanying notes
                               62
</TABLE>

<PAGE>




                    1998                   1997                  1996
<TABLE>
<S>        <C>          <C>       <C>          <C>       <C>        <C>
Balance, beginning
 of year   $45,926,705             45,926,705            45,726,705
Capital
 contribution  650,511                      0               200,000
Balance, end
 of year   $46,577,216             45,926,705            45,926,705


Accumulated deficit
Balance, beginning
 of year  $(11,594,453)          (10,671,076)           (9,010,379)
Net income
 (loss)     (1,272,880)(1,272,880)  (923,377) (923,377) (1,660,697)(1,660,697)
Balance, end
 of year  $(12,867,333)          (11,594,453)          (10,671,076)




Balance, beginning
 of year       (41,708)             (126,612)                 (501)
Other comprehensive
 income
  Unrealized holding gain
   (loss) on
   securities (343,567)  (343,567)    84,904    84,904    (126,111) (126,111)
Comprehensive
 income               $(1,616,447)           $(838,473)           (1,786,808)
Balance, end
 of year      (385,275)              (41,708)             (126,612)

Total shareholders'
equity, end
 of year   $33,324,608            34,290,544            35,129,017
</TABLE>
                            See accompanying notes
                                      63


<PAGE>
                           UNITED TRUST GROUP, INC.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                   Three Years Ended December 31, 1998

                             1998        1997        1996
<TABLE>
<S>                     <C>          <C>         <C>
Increase (decrease) in cash and
 cash equivalents
Cash flows from
 operating activities:
   Net loss             $ (1,272,880)$  (923,377)$ (1,660,697)
   Adjustments to reconcile net
    loss to net cash provided by
     (used in) operating activities net
       of changes in assets and
     liabilities resulting from the sales
      and purchases of subsidiaries:
        Amortization/accretion
         of fixed maturities 657,863     670,185     899,445
        Realized investment (gains)
         losses, net       1,119,156     279,096     465,879
        Policy acquisition
         costs deferred     (892,000)   (586,000) (1,276,000)
        Amortization of deferred policy
         acquisition costs 5,168,172   1,310,636   1,387,372
        Amortization of cost of
         of insurance
         acquired          2,335,759   2,527,360   5,690,069
        Amortization of costs in
         excess of net
          assets purchased    90,000     155,000     185,279
        Depreciation         486,681     457,415     371,991
        Minority interest   (236,927)   (129,712)   (498,356)
        Change in accrued
         investment income   121,291    (205,480)    195,821
        Change in reinsurance
         receivables         813,283   1,257,953      83,871
        Change in policy liabilities
         and accruals         75,087    (547,081)  3,326,651
        Charges for mortality and
         administration of
          universal life and
           annuity
           products      (10,771,795)(10,588,874)(10,239,476)
        Interest credited to
         account balances  7,014,683   7,212,406   7,075,921
        Change in income
         taxes payable    (4,513,952)    511,666  (4,653,734)
        Change in
         indebtedness (to) from
          affiliates, net      2,336     (12,107)    224,472
        Change in other assets
         and liabilities,
          net              1,725,527  (1,634,387)  1,392,938
Net cash provided by (used in)
 operating activities      1,922,284    (245,301)  2,971,446

Cash flows from investing activities:
   Proceeds from investments
    sold and matured:
        Fixed maturities
         held for sale       164,520     290,660   1,219,036
        Fixed maturities
         sold                      0           0  18,736,612
        Fixed maturities
         matured          54,642,223  21,488,265  20,721,482
        Equity securities    450,000      76,302       8,990
        Mortgage loans     1,785,859   1,794,518   3,364,427
        Real estate        1,716,124   1,136,995   3,219,851
        Policy loans       3,661,834   4,785,222   3,937,471
        Short term         1,593,749     410,000     825,000
   Total proceeds from investments
    sold and matured      64,014,309  29,981,962  52,032,869
   Cost of investments acquired:
        Fixed maturities (48,745,594)(23,220,172)(29,365,111)
        Equity securities    (79,053) (1,248,738)          0
        Mortgage loans    (3,667,061)   (245,234)   (503,113)
        Real estate       (1,346,299) (1,444,980)   (813,331)
        Policy loans      (3,588,686) (4,554,291) (4,329,124)
        Other long-term
         investments         (66,212)          0           0
        Short term          (851,198) (1,726,035)   (830,983)
   Total cost of investments
    acquired             (58,344,103)(32,439,450)(35,841,662)
   Purchase of property
    and equipment           (114,449)   (531,528)   (383,411)
Net cash provided by (used in)
 investing activities      5,555,757  (2,989,016) 15,807,796

Cash flows from financing activities:
        Policyholder contract
         deposits         15,480,745  17,902,246  22,245,369
        Policyholder contract
         withdrawals     (12,402,530)(14,515,576)(15,433,644)
        Net cash transferred from
         coinsurance ceded         0           0 (19,088,371)
        Net cash transferred from
         coinsurance assumed 420,790           0           0
        Proceeds from notes
         payable           9,408,099   1,000,000   9,300,000
        Payments on principal of
         notes payable   (10,279,707) (1,758,252)(10,923,475)
        Purchase of stock
         of affiliates        (1,500)          0           0
        Payment for fractional shares
         from reverse stock split
          of subsidiary            0    (534,251)          0
Net cash provided by (used in)
 financing activities      2,625,897   2,094,167 (13,900,121)

Net increase (decrease) in cash
 and cash equivalents     10,103,938  (1,140,150)  4,879,121
Cash and cash equivalents at
 beginning of year        15,763,639  16,903,789  12,024,668
Cash and cash equivalents
 at end of year         $ 25,867,577$ 15,763,639$ 16,903,789
</TABLE>
                           See accompanying notes
                                    64


<PAGE>
UNITED TRUST, GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.  ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

     A. ORGANIZATION -  At  December  31,  1998,   the  parent,  significant
     majority-owned subsidiaries  and  affiliates  of United   Trust  Group,
     Inc.,  were  as  depicted  on  the   following organizational chart.

                      ORGANIZATIONAL CHART
                    AS OF DECEMBER 31, 1998



United  Trust, Inc. ("UTI") is the ultimate controlling company.  UTI  owns
53%  of  United Trust Group ("UTG") and 41% of United Income, Inc. ("UII").
UII  owns  47%  of  UTG.   UTG  owns 79% of First Commonwealth  Corporation
("FCC") and 100% of Roosevelt Equity Corporation ("REC").  FCC owns 100% of
Universal  Guaranty Life Insurance Company ("UG").  UG owns 100% of  United
Security  Assurance  Company ("USA").  USA owns  84%  of  Appalachian  Life
Insurance  Company ("APPL") and APPL owns 100% of Abraham Lincoln Insurance
Company ("ABE").



 The  Company's  significant accounting policies, consistently  applied  in
 the  preparation  of  the accompanying consolidated financial  statements,
 are summarized as follows.

     B. NATURE   OF   OPERATIONS   -   United   Trust  Group,   Inc.  is an
     insurance  holding  company,  which sells  individual  life  insurance
     products  through its  subsidiaries.   The  Company's principal market
     is  the  Midwestern United  States.  The  Company's dominant  business
     is individual  life  insurance   which   includes   the  servicing  of
     existing  insurance  business  in  force,  the   solicitation  of  new
     individual  life  insurance  and  the  acquisition  of  other companies
     in the insurance business.

     C.BUSINESS  SEGMENTS  - The Company has only one significant  business
     segment - insurance.
                                    65
<PAGE>

     D. BASIS  OF PRESENTATION - The  financial statements  of United Trust
     Group, Inc.'s life  insurance   subsidiaries  have   been  prepared in
     accordance with generally accepted  accounting principles which differ
     from statutory accounting practices permitted by insurance  regulatory
     authorities.

     E. PRINCIPLES OF CONSOLIDATION - The consolidated financial statements
     include the accounts of the Company and its majority-owned subsidiaries.
     All  significant  intercompany  accounts  and  transactions  have  been
     eliminated.

     F. INVESTMENTS - Investments  are  shown  on the following bases:

     Fixed maturities -- at cost, adjusted for amortization  of  premium or
     discount and other-than-temporary market value declines. The amortized
     cost of such investments differs  from their  market  values; however,
     the Company has the ability and  intent to  hold  these investments to
     maturity, at which time the full face value is expected to be realized.

     Investments held for sale --  at   current  market  value,  unrealized
     appreciation  or  depreciation  is  charged  directly  to shareholders'
     equity.

     Mortgage  loans  on  real  estate  --  at unpaid   balances,  adjusted
     for amortization of premium  or  discount, less allowance for possible
     losses.

     Real  estate - Investment real estate  at cost,   less  allowances for
     depreciation  and,   as   appropriate, provisions  for possible losses.
     Foreclosed real  estate   is   adjusted  for   any  impairment  at the
     foreclosure date.  Accumulated depreciation on  investment real estate
     was  $685,526  and  $539,366  as   of   December  31,  1998  and 1997,
     respectively.

     Policy   loans  --  at unpaid balances including accumulated  interest
     but  not  in  excess  of  the   cash surrender value.

     Short-term investments -- at cost,  which approximates  current market
     value.

     Realized  gains and losses  on  sales  of investments are   recognized
     in  net   income   on   the   specific identification basis.

     G.CASH  EQUIVALENTS  - The Company considers certificates  of  deposit
     and  other short-term instruments with an original purchased  maturity
     of three months or less cash equivalents.

     H.REINSURANCE  - In the normal course of business, the  Company  seeks
     to  limit its exposure to loss on any single insured and to recover  a
     portion  of  benefits paid by ceding reinsurance  to  other  insurance
     enterprises  or  reinsurers  under  excess  coverage  and  coinsurance
     contracts.  The Company retains a maximum of $125,000 of coverage  per
     individual life.

     Amounts  paid  or  deemed to have been paid for reinsurance  contracts
     are  recorded as reinsurance receivables.  Reinsurance receivables  is
     recognized  in  a manner consistent with the liabilities  relating  to
     the  underlying reinsured contracts.  The cost of reinsurance  related
     to  long-duration  contracts is accounted for over  the  life  of  the
     underlying reinsured policies using assumptions consistent with  those
     used to account for the underlying policies.

     I.FUTURE   POLICY   BENEFITS  AND  EXPENSES  -  The  liabilities   for
     traditional  life  insurance and accident and health insurance  policy
     benefits  are  computed using a net level method.   These  liabilities
     include  assumptions as to investment yields, mortality,  withdrawals,
     and  other  assumptions  based  on the  life  insurance  subsidiaries'
     experience  adjusted  to reflect anticipated  trends  and  to  include
     provisions  for  possible unfavorable deviations.  The  Company  makes
     these  assumptions at the time the contract is issued or, in the  case
     of  contracts  acquired  by purchase, at the purchase  date.   Benefit
     reserves  for  traditional  life insurance  policies  include  certain
     deferred   profits  on  limited-payment  policies   that   are   being
                                       66
<PAGE>
     recognized in income over the policy term.  Policy benefit claims  are
     charged  to  expense  in  the period that  the  claims  are  incurred.
     Current  mortality  rate assumptions are based on 1975-80  select  and
     ultimate tables.  Withdrawal rate assumptions are based upon Linton  B
     or  Linton  C,  which  are  industry  standard  actuarial  tables  for
     forecasting assumed policy lapse rates.

     Benefit  reserves for universal life insurance and interest  sensitive
     life  insurance  products are computed under a  retrospective  deposit
     method   and  represent  policy  account  balances  before  applicable
     surrender  charges.  Policy benefits and claims that  are  charged  to
     expense  include  benefit claims in excess of related  policy  account
     balances.   Interest crediting rates for universal life  and  interest
     sensitive  products range from 4.5% to 5.5% in 1998 and 4.5%  to  6.0%
     in 1997 and 1996.

     J.POLICY  AND  CONTRACT  CLAIMS - Policy and contract  claims  include
     provisions  for  reported claims in process of settlement,  valued  in
     accordance  with the terms of the policies and contracts, as  well  as
     provisions  for  claims  incurred  and  unreported  based   on   prior
     experience of the Company.

     K.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 9%  discount
     rate  on  approximately 31% of the business and 15% discount  rate  on
     approximately  69%  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  31%  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.

                                 1998           1997           1996
<TABLE>
    <S>                    <C>            <C>            <C>
    Cost of insurance                                      
    acquired,
    beginning of year      $ 45,009,452   $ 47,536,812   $ 59,601,720

    Interest accretion        5,938,673      6,288,402      6,649,203
    Amortization             (8,274,432)    (8,815,762)   (12,339,272)
    Net amortization         (2,335,759)    (2,527,360)    (5,690,069)
    Balance attributable                                   
    to coinsurance agreement          0              0     (6,374,839)
                                                                       
    Cost of insurance                                      
    acquired,
    end of year             $ 42,673,693   $ 45,009,452   $ 47,536,812
</TABLE>


     Estimated  net amortization expense of cost of insurance acquired  for
     the next five years is as follows:

                                  Interest               Net
                                 Accretion Amortization  Amortization

     1999                        5,622,000  7,304,000    1,682,000
     2000                        5,400,000  6,840,000    1,440,000
     2001                        5,216,000  6,825,000    1,609,000
     2002                        5,008,000  6,569,000    1,561,000
     2003                        4,804,000  6,521,000    1,717,000

     L. DEFERRED  POLICY ACQUISITION COSTS - Commissions and other costs of
     acquiring life insurance products  that vary  with  and  are primarily
     related to the production of new business.
                                   67
<PAGE>
     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.

     For universal life insurance and  interest  sensitive  life  insurance
     products,  acquisition  costs   are    being  amortized   generally in
     proportion to the present  value   of   expected  gross  profits  from
     surrender charges and  investment,  mortality,  and  expense  margins.
     Under SFAS No. 97, "Accounting  and Reporting by Insurance Enterprises
     for Certain  Long-Duration   Contracts   and  for  Realized  Gains and
     Losses    from    the    Sale     of   Investments,"   the     Company
     makes   certain  assumptions  regarding  the  mortality,  persistency,
     expenses,  and  interest  rates it expects  to  experience  in  future
     periods.   These assumptions are to be best estimates and  are  to  be
     periodically  updated whenever actual experience  and/or  expectations
     for  the future change from initial assumptions.  The amortization  is
     adjusted  retrospectively when estimates of current  or  future  gross
     profits to be realized from a group of products are revised.

     The  following table summarizes  deferred policy acquisition costs and
     related data for the years shown.

                                 1998           1997           1996
<TABLE>
    <S>                    <C>            <C>            <C>
    Deferred, beginning   
     of year               $ 10,600,720   $ 11,325,356   $ 11,436,728

                                                                       
    Acquisition costs deferred:
      Commissions               690,000        998,000      1,441,000
      Other expenses            202,000        274,000        431,000
      Total                     892,000      1,272,000      1,872,000
                                                                       
      Interest accretion        397,000        425,000        408,000
      Amortization
       charged to income     (2,582,172)    (2,421,636)    (2,391,372)

      Net amortization       (2,185,172)    (1,996,636)    (1,983,372)
                                                                       
      Amortization due to    (2,983,000)             0              0
       impairment             
                                                                       
      Change for the year    (4,276,172)      (724,636)      (111,372)
                                                                       
    Deferred, end of year   $ 6,324,548   $ 10,600,720   $ 11,325,356
</TABLE>
     The  following  table reflects the components of the income  statement
     for  the  line  item Commissions and amortization of  deferred  policy
     acquisition costs:

 
                                  1998           1997        1996

   Net amortization of deferred
    policy acquisition costs   $ 5,168,172 $ 1,996,636  $ 1,983,372
     Commissions                 1,282,357   1,619,729    2,241,513
       Total                   $ 6,450,529 $ 3,616,365$ $ 4,224,885

     Estimated  net  amortization  expense of deferred  policy  acquisition
     costs for the next five years is as follows:

                                  Interest               Net
                                 Accretion Amortization  Amortization

     1999                      $   157,000 $ 1,367,000   $ 1,210,000
     2000                          140,000   1,202,000     1,062,000
     2001                          124,000   1,053,000       929,000
     2002                          110,000     920,000       810,000
     2003                           98,000     803,000       705,000
                                       68
<PAGE>
     M.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  over   the   remaining
     amortization period, the carrying value of goodwill would  be  reduced
     with   a  corresponding  charge  to  expense  or  by  shortening   the
     amortization  period  (no  such changes have  occurred).   Accumulated
     amortization of cost in excess of net assets purchased was  $1,510,146
     and $1,420,146 as of December 31, 1998 and 1997, respectively.

     N. PROPERTY AND EQUIPMENT -  Company-occupied property, data processing
     equipment  and furniture and office equipment are stated at cost  less
     accumulated depreciation of $1,715,626 and $1,375,105 at December 31, 1998
     and 1997, respectively.  Depreciation is computed on a straight-line basis
     for financial reporting purposes using estimated useful lives of three to
     thirty years.  Depreciation expense was $340,521 and $360,422 for the years
     ended December 31, 1998 and 1997, respectively.
 
     O.INCOME TAXES - Income taxes are reported under Statement of Financial
     Accounting Standards Number 109.  Deferred income taxes are recorded to
     reflect the tax consequences on future periods of differences between the
     tax bases of assets and liabilities and their financial reporting amounts
     at the end of each such period.
 
     P.EARNINGS  PER SHARE - Earnings per share are based on  the  weighted
     average  number  of  common  shares  outstanding  during  each   year,
     retroactively  adjusted  to  give  effect  to  all  stock  splits,  in
     accordance with Statement of Financial Accounting Standards 128.   The
     computation  of  diluted  earnings per share  is  the  same  as  basic
     earnings  per  share  since the Company has  no  dilutive  instruments
     outstanding.
 
     Q.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, limited-payment life insurance policies, and
     certain  annuities  with life contingencies are recognized as revenues
     when due.  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.

     R.PARTICIPATING INSURANCE - Participating business represents 34%  and
     39%  of the ordinary life insurance in force at December 31, 1998  and
     1997,   respectively.   Premium  income  from  participating  business
     represents  39%,  50%, and 52% of total premiums for the  years  ended
     December  31,  1998,  1997  and  1996, respectively.   The  amount  of
     dividends  to  be  paid  is  determined  annually  by  the  respective
     insurance  subsidiary's  Board of Directors.   Earnings  allocable  to
     participating policyholders are based on legal requirements that  vary
     by state.

     S.RECLASSIFICATIONS   -   Certain  prior  year   amounts   have   been
     reclassified   to   conform   with  the   1998   presentation.    Such
     reclassifications  had  no  effect on previously  reported  net  loss,
     total assets, or shareholders' equity.
                                   69
<PAGE>
     T.USE OF ESTIMATES - In preparing financial statements in   conformity
     with generally accepted accounting principles,  management is required
     to make estimates and  assumptions that  affect the  reported  amounts
     of assets  and  liabilities,  the disclosure  of contingent assets and
     liabilities at the  date of the financial statements, and the reported
     amounts  of revenues and expenses during the reporting period.  Actual
     results  could  differ from those estimates.


2.  SHAREHOLDER DIVIDEND RESTRICTION

At  December  31,  1998,  substantially all of  consolidated  shareholders'
equity  represents net assets of UTG's subsidiaries.  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.   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, 1998, UG had a statutory gain from operations of  $3,226,364.
At  December  31,  1998,  UG's statutory capital and  surplus  amounted  to
$15,280,577.   Extraordinary  dividends  (amounts  in  excess  of  ordinary
dividend  limitations) require prior approval of the insurance commissioner
and are not restricted to a specific calculation.


3.  INCOME TAXES

Until 1984, the insurance companies were taxed under the provisions of  the
Life  Insurance Company Income Tax Act of 1959 as amended by the Tax Equity
and  Fiscal Responsibility Act of 1982.  These laws were superseded by  the
Deficit Reduction Act of 1984.  All of these laws are based primarily  upon
statutory results with certain special deductions and other items available
only to life insurance companies.  Under the provision of the pre-1984 life
insurance  company  income  tax  regulations,  a  portion  of   "gain  from
operations" of a life insurance company was not subject to current taxation
but  was accumulated, for tax purposes, in a special tax memorandum account
designated as "policyholders' surplus account".  Federal income taxes  will
become  payable on this account at the then current tax rate  when  and  if
distributions to shareholders, other than stock dividends and other limited
exceptions,  are made in excess of the accumulated previously taxed  income
maintained in the "shareholders surplus account".

The  following table summarizes the companies with this situation  and  the
maximum amount of income that has not been taxed in each.

               Shareholder       Untaxed
    Company       Surplus         Balance
 
     ABE    $    5,180,494 $    1,149,693
     APPL        6,137,321      1,525,367
      UG        30,998,215      4,363,821
      USA                0              0

The  payment  of taxes on this income is not anticipated; and, accordingly,
no deferred taxes have been established.

The  life insurance company subsidiaries file a consolidated federal income
tax return.  The holding companies of the group file separate returns.
                                   70
<PAGE>

Life  insurance  company taxation is based primarily  upon  statutory
results  with certain special deductions and other items available only  to
life  insurance  companies.  Income tax expense consists of  the  following
components:

                          1998           1997           1996
<TABLE>
    <S>             <C>            <C>            <C>
    Current tax     
     expense        $      111,470 $        5,400 $  (148,148)

    Deferred tax       
     expense (credit)   (4,614,007)       566,599  (4,495,813)

                     $  (4,502,537)$      571,999 $(4,643,961)
</TABLE>
The  Companies have net operating loss carryforwards for federal income tax
purposes expiring as follows:
 
                      UG            FCC
<TABLE>
     <S>   <C>            <C>
     2007  $            0 $      136,058
     2008               0          4,595
     2009               0        168,800
     2010               0         19,112
     2012         386,669              0
    TOTAL  $      386,669 $      328,565
</TABLE>
The  Company  has  established a deferred tax asset  of  $250,332  for  its
operating loss carryforwards and has established an allowance of $250,332.

The expense or (credit) for income taxes differed from the amounts computed
by  applying the applicable United States statutory rate of 35% to the loss
before taxes as a result of the following differences:

                                    1998           1997           1996
<TABLE>
    <S>                  <C>                 <C>            <C>
    Tax computed         
     at statutory rate   $       (2,104,320) $  (168,382)   $  (2,381,055)

    Changes in taxes due to:
      Cost in 
       excess of net
        assets purchased             31,500       54,250           64,848

      Current year
       loss for which
        no benefit realized               0    1,039,742                0

      Benefit of
       prior losses              (2,587,353)    (324,705)      (2,393,395)

      Other                         157,636      (28,906)          65,641
    Income tax
     expense (credit)    $       (4,502,537) $   571,999    $  (4,643,961)
</TABLE>
                                   71
<PAGE>
The following table summarizes the major components that comprise the
deferred tax liability as reflected in the balance sheets:
                            1998            1997
<TABLE>
    <S>                <C>             <C>
    Investments        $  (182,000)    $  (228,027)
    Cost of
     insurance acquired 14,935,793      15,753,308

    Deferred policy
     acquisition costs   2,213,592       3,710,252

    Agent balances         (22,257)        (23,954)
    Property and
     equipment                (149)        (19,818)

    Discount of
     notes                       0         896,113

    Management/consulting
     fees                 (376,852)       (573,182)
    Future policy
     benefits           (6,144,399)     (4,421,038)
    Other liabilities     (797,833)       (756,482)
    Federal tax DAC     (2,082,217)     (2,179,487)
    Deferred tax
     liability        $  7,543,678   $  12,157,685
</TABLE>

4.  ANALYSIS OF INVESTMENTS, INVESTMENT INCOME AND INVESTMENT GAIN

A.NET  INVESTMENT  INCOME  -  The following table reflects  net  investment
  income by type of investment:

                                          December 31,
                                   1998           1997          1996
<TABLE>
<S>                        <C>           <C>            <C>
Fixed maturities and fixed                                              
 maturities held for sale  $ 11,981,660  $ 12,677,348   $ 13,326,312
Equity securities                92,196        87,211         88,661
Mortgage loans                  859,543       802,123      1,047,461
Real estate                     842,724       745,502        794,844
Policy loans                    984,761       976,064      1,121,538
Other long-term investments     125,478       126,532        126,005
Short-term investments           29,907        70,624         17,664
Cash                          1,210,605       595,334        602,525
Total consolidated
 investment income           16,126,874    16,080,738     17,125,010
Investment expenses          (1,046,869)   (1,198,061)    (1,222,903)
Consolidated net
 investment income         $ 15,080,005  $ 14,882,677   $ 15,902,107
</TABLE>
At December 31, 1998, the Company had a total of $4,187,000 of investments,
comprised  of $3,152,000 in real estate, $968,000 in equity securities  and
$66,000 in other invested assets, which did not produce income during 1998.
                                      72
<PAGE>
The   following  table  summarizes  the  Company's  fixed  maturities
distribution at December 31, 1998 and 1997 by ratings category as issued by
Standard and Poor's, a leading ratings analyst.

         Fixed Maturities
      Rating       % of Portfolio
                   1998    1997
Investment Grade               
   AAA             38%     31%
   AA              18%     14%
   A               36%     46%
   BBB             7%       9%
Below investment
 grade             1%       0%
                 100%     100%

The  following table summarizes the Company's fixed maturity  holdings  and
investments held for sale by major classifications:

                                                 Carrying Value
                                              1998            1997
<TABLE>
<S>                                     <C>             <C>
Investments held for sale:
  Fixed maturities                      $   1,505,406   $   1,668,630
  Equity securities                         2,087,416       3,001,744
Fixed maturities:
  U.S. Government, government                                        
  agencies and authorities                 36,809,239      28,259,322
  State, municipalities                                              
   and political subdivisions              23,835,306      22,778,816
  Collateralized mortgage                                            
   obligations                              9,406,895      11,093,926
  Public                                                             
   utilities                               41,724,208      47,984,322
  All other                                                          
   corporate bonds                         62,465,200      70,853,947
                                        $ 177,833,670   $ 185,640,707
</TABLE>
By insurance statute, the majority of the Company's investment portfolio is
required  to  be invested in investment grade securities to  provide  ample
protection  for  policyholders.  The Company does not invest  in  so-called
"junk bonds" or derivative investments.

Below investment grade debt securities generally provide higher yields  and
involve  greater risks than investment grade debt securities because  their
issuers  typically are more highly leveraged and more vulnerable to adverse
economic  conditions  than  investment grade  issuers.   In  addition,  the
trading  market  for  these securities is usually  more  limited  than  for
investment  grade  debt securities.  Debt securities classified  as  below-
investment grade are those that receive a Standard & Poor's rating of BB or
below.
                                      73
<PAGE>
  The  following  table  summarizes by category securities  held  that  are
  below investment grade at amortized cost:
<TABLE>
<S>              <C>            <C>           <C>
Below Investment                                       
 Grade Investments        1998           1997          1996
State,                                                      
Municipalities
and political
Subdivisions     $            0 $           0 $       10,042

Public
 Utilities              970,311        80,497        117,609

Corporate                47,281       656,784        813,717
Total            $    1,017,592 $     737,281 $      941,368
</TABLE>
B.     INVESTMENT SECURITIES

  The  amortized  cost  and  estimated  market  values  of  investments  in
  securities including investments held for sale are as follows:

                       Cost or         Gross          Gross        Estimated
                      Amortized      Unrealized     Unrealized       Market
1998                     Cost          Gains          Losses         Value
<TABLE>
<S>                <C>            <C>            <C>             <C>
Investments Held for Sale:
 U.S. Government and
  govt. agencies and
   authorities     $    1,434,636 $        3,265 $      0        $   1,437,901
 States, municipalities
  and political
   subdivisions            35,000          7,224        0               42,224
 Collateralized mortgage
  obligations                   0              0        0                    0
 Public utilities               0              0        0                    0
All other corporate
 bonds                     25,000            281        0               25,281
                        1,494,636         10,770        0            1,505,406
  Equity
   securities           2,725,061         42,520   (680,165)         2,087,416
  Total            $    4,219,697 $       53,290 $ (680,165)     $   3,592,822
                                                                             
Held to Maturity Securities:
  U.S. Government                                                            
and govt. agencies
 and autorities    $   36,809,239 $      378,136 $  (53,868)     $  37,133,507
  States,                                                                    
municipalities and
 political
  subdivisions         23,835,306      1,042,876          0         24,878,182
  Collateralized                                                             
mortgage obligations    9,406,895        182,805    (64,769)         9,524,931
  Public utilities     41,724,208      1,810,290     (8,585)        43,525,913
  All other
   corporate bonds     62,465,200      2,358,259       (613)        64,822,846
  Total            $  174,240,848 $    5,772,366 $ (127,835)     $ 179,885,379
</TABLE>
                                         74
<PAGE>
                       Cost or         Gross          Gross        Estimated
                      Amortized      Unrealized     Unrealized       Market
1997                     Cost          Gains          Losses         Value
<TABLE>
<S>                <C>            <C>            <C>             <C>
Investments Held for Sale:
  U.S. Government                                                            
and govt. agencies
 and authorities   $    1,448,202 $            0 $ (5,645)       $   1,442,557
  States,                                                                    
municipalities and
 political subdivisions    35,000            485        0               35,485
  Collateralized                                                             
mortgage obligations            0              0        0                    0
  Public utilities         80,169            328        0               80,497
  All other corporate
   bonds                  108,927          1,164        0              110,091
                        1,672,298          1,977   (5,645)           1,668,630
  Equity securities     3,184,357        176,508   (359,121)         3,001,744
  Total            $    4,856,655 $      178,485 $ (364,766)     $   4,670,374
                                                                             
Held to Maturity Securities:
  U.S. Government                                                            
and govt. agencies
 and authorities   $   28,259,322 $      415,419 $ (51,771)      $  28,622,970
  States,                                                                    
municipalities and
 political
  subdivisions         22,778,816        672,676   (1,891)          23,449,601
  Collateralized                                                             
mortgage obligations   11,093,926        210,435   (96,714)         11,207,647
  Public utilities     47,984,322      1,241,969   (84,754)         49,141,537
  All other corporate
   bonds               70,853,947      1,599,983   (93,117)         72,360,813
  Total            $  180,970,333 $    4,140,482 $ (328,247)     $ 184,782,568
</TABLE>
                                    75
<PAGE>  
  The  amortized  cost of debt securities at December  31,  1998,  by
  contractual  maturity, are shown below.  Expected maturities will  differ
  from  contractual maturities because borrowers may have the right to call
  or prepay obligations with or without call or prepayment penalties.

 Fixed Maturities Held                       Estimated
        for Sale             Amortized         Market
   December 31, 1998            Cost           Value
<TABLE>
<S>                       <C>             <C>
Due in one year or less   $    1,434,636  $   1,437,901
Due after one year 
 through five years               35,000         42,224
Due after five years 
 through ten years                25,000         25,281
Due after ten years                    0              0
Collateralized mortgage
 obligations                           0              0
Total                     $    1,494,636  $   1,505,406
</TABLE>
                                                       

Fixed Maturities Held to     Amortized       Estimated
        Maturity                Cost           Market
   December 31, 1998                           Value
<TABLE>
<S>                       <C>             <C>
Due in one year or less   $   16,996,673  $  17,079,985
Due after one year
 through five years           82,960,251     85,927,556
Due after five years
 through ten years            58,630,433     60,814,932
Due after ten years            6,246,596      6,537,975
Collateralized mortgage
 obligations                   9,406,895      9,524,931
Total                     $  174,240,848  $ 179,885,379
</TABLE>


  An  analysis  of  sales,  maturities  and  principal  repayments  of  the
  Company's  fixed  maturities portfolio for the years ended  December  31,
  1998, 1997 and 1996 is as follows:

                         Cost or         Gross         Gross         Proceeds
                        Amortized       Realized      Realized         from
                           Cost          Gains         Losses          Sale
<TABLE>
<S>                  <C>            <C>             <C>        <C>
Year ended December 31, 1998
Scheduled principal repayments, calls and tenders:
     Held for sale   $     164,161  $         359   $      0   $      164,520
     Held to maturity   54,824,249        126,285   (308,311)      54,642,223
Sales:                                                                         
      Held for sale              0              0          0                0
      Held to maturity           0              0          0                0
  Total              $  54,988,410  $     126,644 $ (308,311)  $   54,806,743
</TABLE>
                                         76
<PAGE>
                          Cost or         Gross         Gross         Proceeds
                        Amortized       Realized      Realized         from
                           Cost          Gains         Losses          Sale
December 31, 1997
<TABLE>
<S>                  <C>            <C>           <C>          <C>
Scheduled principal repayments, calls and tenders:
     Held for sale   $     299,390  $         931 $ (9,661)    $      290,660
     Held to maturity   21,467,552         21,435     (722)        21,488,265
Sales:                                                                         
      Held for sale              0              0        0                    0
      Held to maturity           0              0        0                  0
  Total              $  21,766,942  $      22,366 $(10,383)    $   21,778,925
</TABLE>

                         Cost or         Gross         Gross         Proceeds
                        Amortized       Realized      Realized         from
                           Cost          Gains         Losses          Sale
<TABLE>
<S>               <C>            <C>           <C>            <C>
Year ended December 31, 1996
Scheduled principal repayments, calls and tenders:
  Held for sale   $     699,361  $       6,035 $     (813)    $      704,583
  Held to maturity   20,900,159         13,469   (192,146)        20,721,482
Sales:                                                                         
  Held for sale         517,111              0     (2,658)           514,453
  Held to maturity   18,735,848         81,283    (80,519)        18,736,612
  Total           $  40,852,479  $     100,787 $ (276,136)    $   40,677,130
</TABLE>

C.INVESTMENTS  ON  DEPOSIT - At December 31, 1998, investments  carried  at
  approximately  $15,854,000 were on deposit with various  state  insurance
  departments.


5.  DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS

The  financial statements include various estimated fair value  information
at  December  31,  1998  and 1997, as required by  Statement  of  Financial
Accounting  Standards  107,  Disclosure  about  Fair  Value  of   Financial
Instruments  ("SFAS  107").   Such  information,  which  pertains  to   the
Company's financial instruments, is based on the requirements set forth  in
that  Statement  and does not purport to represent the aggregate  net  fair
value of the Company.

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)  Cash and Cash equivalents

The  carrying  amount in the financial statements approximates  fair  value
because  of the relatively short period of time between the origination  of
the instruments and their expected realization.
                                    77
<PAGE>
(b)  Fixed maturities and investments held for sale

Quoted  market prices, if available, are used to determine the fair  value.
If  quoted market prices are not available, management estimates  the  fair
value  based  on  the  quoted market price of a financial  instrument  with
similar characteristics.

(c)  Mortgage loans on real estate

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.

(d)   Investment  real estate and real estate acquired in  satisfaction  of
debt

An estimate of fair value is based on management's review of the individual
real estate holdings.  Management utilizes sales of surrounding properties,
current   market  conditions  and  geographic  considerations.   Management
conservatively estimates the fair value of the portfolio is  equal  to  the
carrying value.

(e)  Policy loans

It  is  not practicable to estimate the fair value of policy loans as  they
have  no  stated  maturity and their rates are set at  a  fixed  spread  to
related  policy liability rates.  Policy loans are carried at the aggregate
unpaid  principal  balances in the consolidated balance  sheets,  and  earn
interest at rates ranging from 4% to 8%.  Individual policy liabilities  in
all cases equal or exceed outstanding policy loan balances.

(f)  Short-term investments

For short-term instruments, the carrying amount is a reasonable estimate of
fair   value.    Short-term  instruments  represent  mortgage   loans   and
certificates of deposit with various banks that are protected under FDIC.

(g)  Other long-term investments

The Company holds a $840,066 note receivable for which the determination of
fair  value  is  estimated by discounting the future cash flows  using  the
current  rates  at  which  similar loans would be made  to  borrowers  with
similar credit ratings and for the same remaining maturities.

(h)  Notes payable

For  borrowings  under  the  senior loan agreement,  which  is  subject  to
floating rates of interest, carrying value is a reasonable estimate of fair
value.  For subordinated borrowings fair value was determined based on  the
borrowing  rates currently available to the Company for loans with  similar
terms and average maturities.
                                   78
<PAGE>
The  estimated  fair  values of the Company's  financial  instruments
required to be valued by SFAS 107 are as follows as of December 31:

                         1998                         1997
                              Estimated                     Estimated
                Carrying         Fair         Carrying         Fair
Assets           Amount         Value          Amount         Value
<TABLE>
<S>         <C>            <C>            <C>            <C>
Fixed
 maturities $  174,240,848 $  179,885,379 $  180,970,333 $ 184,782,568
Fixed                                                                 
 maturities
  held for sale  1,505,406      1,505,406      1,668,630     1,668,630
Equity
 securities      2,087,416      2,087,416      3,001,744     3,001,744
Mortgage                                                              
 loans on
   real estate  10,941,614     10,979,378      9,469,444     9,837,530
Investment                                                            
 in real estate  8,979,183      8,979,183      9,760,732     9,760,732
Real estate                                                           
  acquired                                                            
in satisfaction
 of debt         1,550,000      1,550,000      1,724,544     1,724,544
Policy loans    14,134,041     14,134,041     14,207,189    14,207,189
Other long                                                            
term invested
 assets            906,278        879,037      1,680,066     1,569,603
Short-term                                                            
 investments     1,036,251      1,036,251      1,798,878     1,798,878
                                                                      
Liabilities
Notes payable   17,559,482     17,203,574     19,081,602    18,539,301
</TABLE>

6.  STATUTORY EQUITY AND GAIN FROM OPERATIONS

The  Company's insurance subsidiaries are domiciled in Ohio,  Illinois  and
West  Virginia  and prepare their statutory-based financial  statements  in
accordance  with  accounting  practices  prescribed  or  permitted  by  the
respective  insurance  department.  These principles  differ  significantly
from  generally  accepted  accounting principles.   "Prescribed"  statutory
accounting   practices  include  state  laws,  regulations,   and   general
administrative rules, as well as a variety of publications of the  National
Association  of  Insurance Commissioners ("NAIC").   "Permitted"  statutory
accounting  practices  encompass  all accounting  practices  that  are  not
prescribed; such practices may differ from state to state, from company  to
company  within a state, and may change in the future.  The NAIC  currently
is  in  the process of codifying statutory accounting practices, the result
of  which  is  expected  to  constitute the  only  source  of  "prescribed"
statutory  accounting  practices.   Accordingly,  that  project,  which  is
expected to become effective January 1, 2001, will likely change prescribed
statutory  accounting practices and may result in changes to the accounting
practices  that  insurance  enterprises  use  to  prepare  their  statutory
financial  statements.   UG's  total  statutory  shareholders'  equity  was
$15,280,577  and  $10,997,365 at December 31, 1998 and 1997,  respectively.
The  Company's four life insurance subsidiaries reported combined statutory
operating  income  before  taxes (exclusive of intercompany  dividends)  of
$5,485,000,   $2,067,000  and  $2,134,000  for   1998,   1997   and   1996,
respectively.
                                   79
<PAGE>
7.  REINSURANCE

Reinsurance  contracts do not relieve the Company from its  obligations  to
policyholders.   Failure  of reinsurers to honor  their  obligations  could
result  in  losses  to  the Company.  The Company evaluates  the  financial
condition of its reinsurers to minimize its exposure to significant  losses
from reinsurer insolvencies.

The  Company assumes risks from, and reinsures certain parts of  its  risks
with  other insurers under yearly renewable term and coinsurance agreements
that  are  accounted for by passing a portion of the risk to the reinsurer.
Generally, the reinsurer receives a proportionate part of the premiums less
commissions and is liable for a corresponding part of all benefit payments.
While  the amount retained on an individual life will vary based  upon  age
and  mortality prospects of the risk, the Company generally will not  carry
more than $125,000 individual life insurance on a single risk.

The  Company  has reinsured approximately $924 million, $1.022 billion  and
$1.109  billion in face amount of life insurance risks with other  insurers
for  1998, 1997 and 1996, respectively.  Reinsurance receivables for future
policy  benefits were $36,965,938 and $37,814,106 at December 31, 1998  and
1997,  respectively,  for estimated recoveries under reinsurance  treaties.
Should  any  reinsurer be unable to meet its obligation at the  time  of  a
claim, obligation to pay such claim would remain with the Company.

Currently,  the Company is utilizing reinsurance agreements  with  Business
Men's  Assurance Company, ("BMA") and Life Reassurance Corporation,  ("LIFE
RE") for new business.  BMA and LIFE RE each hold an "A+" (Superior) rating
from  A.M.  Best,  an industry rating company.  The reinsurance  agreements
were effective December 1, 1993, and cover all new business of the Company.
The agreements are a yearly renewable term ("YRT") treaty where the Company
cedes  amounts above its retention limit of $100,000 with a minimum cession
of $25,000.

One of the Company's insurance subsidiaries (UG) entered into a coinsurance
agreement with First International Life Insurance Company ("FILIC")  as  of
September  30, 1996.  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.
A.M. Best assigned FILIC a Financial Performance Rating (FPR) of 7 (Strong)
on a scale of 1 to 9.  A.M. Best assigned a Best's Rating of A++ (Superior)
to  The Guardian Life Insurance Company of America ("Guardian"), parent  of
FILIC,   based  on  the  consolidated  financial  condition  and  operating
performance of the company and its life/health subsidiaries.  During  1997,
FILIC  changed  its  name to Park Avenue Life Insurance Company  ("PALIC").
The  agreement with PALIC accounts for approximately 65% of the reinsurance
receivables as of December 31, 1998.

The  Company  does not have any short-duration reinsurance contracts.   The
effect  of  the Company's long-duration reinsurance contracts  on  premiums
earned in 1998, 1997 and 1996 was as follows:

                         Shown in thousands
                   1998          1997           1996
                 Premiums      Premiums       Premiums
                  Earned        Earned         Earned
<TABLE>
<S>        <C>             <C>             <C>
Direct     $    30,919     $   33,374      $  35,891
Assumed             20              0              0
Ceded           (4,543)        (4,735)        (4,947)
Net
 premiums  $    26,396     $   28,639      $  30,944
</TABLE>
                               80
<PAGE>
8.  COMMITMENTS AND CONTINGENCIES

The  insurance  industry has experienced a number of  civil  jury  verdicts
which  have  been  returned  against  life  and  health  insurers  in   the
jurisdictions  in which the Company does business involving  the  insurers'
sales  practices,  alleged agent misconduct, failure to properly  supervise
agents, and other matters.  Some of the lawsuits have resulted in the award
of substantial judgments against the insurer, including material amounts of
punitive  damages.  In some states, juries have substantial  discretion  in
awarding punitive damages in these circumstances.

Under  the insurance guaranty fund laws in most states, insurance companies
doing  business in a participating state can be assessed up  to  prescribed
limits  for  policyholder losses incurred by insolvent or failed  insurance
companies.   Although the Company cannot predict the amount of  any  future
assessments,  most insurance guaranty fund laws currently provide  that  an
assessment  may  be excused or deferred if it would threaten  an  insurer's
financial  strength.   Mandatory assessments  may  be  partially  recovered
through a reduction in future premium tax in some states. The Company  does
not  believe  such  assessments will be materially different  from  amounts
already provided for in the financial statements.

The  Company  and its subsidiaries 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 and its legal counsel are 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.


9.  RELATED PARTY TRANSACTIONS

Under  the  current structure, FCC pays a majority of the general operating
expenses  of  the affiliated group.  FCC then receives management,  service
fees and reimbursements from the various affiliates.

UII  has  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.  USA is to pay UII monthly fees equal to 22%  of  the
amount  of collected first year premiums, 20% in second year and 6% of  the
renewal premiums in years three and after.  UII has a subcontract agreement
with  UTI  to  perform services and provide personnel and facilities.   The
services  included  in  the  agreement are claim processing,  underwriting,
processing and servicing of policies, accounting services, agency services,
data  processing and all other expenses necessary to carry on the  business
of  a  life insurance company.  UII's subcontract agreement with UTI states
that  UII is to pay UTI monthly fees equal to 60% of collected service fees
from  USA as stated above.  The service fees received from UII are recorded
in UTI's financial statements as other income.

On January 1, 1993, FCC entered into an agreement with UG pursuant to which
FCC provides management services necessary for UG to carry on its business.
In  addition  to  the  UG  agreement, FCC and its  affiliates  have  either
directly   or   indirectly  entered  into  management  and/or  cost-sharing
arrangements  for FCC's management services.  FCC received  net  management
fees  of $8,793,905, $9,893,321 and $9,927,000 under these arrangements  in
1998,  1997  and  1996, respectively.  UG paid $8,018,141,  $8,660,481  and
$9,626,559 to FCC in 1998, 1997 and 1996, respectively.

USA  paid $835,345, $989,295 and $1,567,891 under their agreement with  UII
for  1998,  1997 and 1996, respectively.  UII paid $501,207,  $593,577  and
$940,734  under  their  agreement  with  UTI  for  1998,  1997  and   1996,
respectively.   Additionally, UII paid FCC $0,  $150,000  and  $300,000  in
1998, 1997 and 1996, respectively for reimbursement of costs attributed  to
UII.  These reimbursements are reflected as a credit to general expenses.

Respective  domiciliary insurance departments have approved the  agreements
of  the  insurance  companies  and it is Management's  opinion  that  where
applicable, costs have been allocated fairly and such allocations are based
upon  generally accepted accounting principles.  The costs paid by UTI  for
services include costs related to the production of new business, which are
deferred  as  policy  acquisition costs  and  charged  off  to  the  income
statement  through  "Amortization of deferred  policy  acquisition  costs".
                                     81
<PAGE>
Amounts  recorded by USA as deferred acquisition costs are no greater  than
what  would have been recorded had all such expenses been directly incurred
by  USA.   Also  included  are costs associated  with  the  maintenance  of
existing policies that are charged as current period costs and included  in
"general expenses".

On  July  31,  1997, United Trust Inc. issued convertible  notes  for  cash
received  totaling  $2,560,000  to  seven  individuals,  all  officers   or
employees  of United Trust Inc.  The notes bear interest at a  rate  of  1%
over  prime,  with interest payments due quarterly and principal  due  upon
maturity  of July 31, 2004.  The conversion price of the notes  are  graded
from  $12.50 per share for the first three years, increasing to $15.00  per
share  for  the next two years and increasing to $20.00 per share  for  the
last  two years.  Conditional upon the seven individuals placing the  funds
with  the  Company were the acquisition by UTI of a portion of the holdings
of  UTI  owned  by  Larry E. Ryherd and his family and the  acquisition  of
common stock of UTI and UII held by Thomas F. Morrow and his family and the
simultaneous retirement of Mr. Morrow.  Neither Mr. Morrow nor  Mr.  Ryherd
was  a  party  to the convertible notes.  On March 1, 1999, the individuals
holding  the convertible notes sold their interests in said notes to  First
Southern Bancorp, Inc. in private transactions.

Approximately  $1,048,000 of the cash received from  the  issuance  of  the
convertible notes was used to acquire stock holdings of United  Trust  Inc.
and  United  Income, Inc. of Mr. Morrow and to acquire  a  portion  of  the
United  Trust  Inc.  holdings  of Larry E.  Ryherd  and  his  family.   The
remaining  cash received will be used by the Company to provide  additional
operating   liquidity  and  for  future  acquisitions  of  life   insurance
companies.   On  July  31, 1997, the Company acquired a  total  of  126,921
shares  of  United  Trust  Inc. common stock and 47,250  shares  of  United
Income, Inc. common stock from Thomas F. Morrow and his family.  Mr. Morrow
simultaneously retired as an executive officer of the Company.  Mr.  Morrow
will  remain  as a member of the Board of Directors.  In exchange  for  his
stock,  Mr. Morrow and his family received approximately $348,000 in  cash,
promissory  notes valued at $140,000 due in eighteen months, and promissory
notes valued at $1,030,000 due January 31, 2005.  These notes bear interest
at  a rate of 1% over prime, with interest due quarterly and principal  due
upon  maturity.   The  notes  do  not contain  any  conversion  privileges.
Additionally,  on  July 31, 1997, the Company acquired a  total  of  97,499
shares  of  United  Trust Inc. common stock from Larry E.  Ryherd  and  his
family.  Mr. Ryherd and his family received approximately $700,000 in  cash
and  a  promissory  note  valued at $251,000 due  January  31,  2005.   The
acquisition of approximately 16% of Mr. Ryherd's stock holdings  in  United
Trust  Inc. was completed as a prerequisite to the convertible notes placed
by  other  management personnel to reduce the total holdings of Mr.  Ryherd
and  his  family  in the Company to make the stock more attractive  to  the
investment community.  Following the transaction, Mr. Ryherd and his family
owned  approximately 31% of the outstanding common stock  of  United  Trust
Inc.   The market price of UTI common stock on July 31, 1997 was $6.00  per
share.   The  stock acquired in the above transaction was from the  largest
two shareholders of UTI stock.  There were no additional stated or unstated
items or agreements relating to the stock purchase.

On  July 31,1997, the Company entered into employment agreements with eight
individuals, all officers or employees of the Company.  The agreements have
a  term  of three years, excepting the agreements with Mr. Ryherd  and  Mr.
Melville,  which have five-year terms.  The agreements secure the  services
of  these  key  individuals,  providing the  Company  a  stable  management
environment and positioning for future growth.


10.   DEFERRED COMPENSATION PLAN
   
UTI  and  FCC established a deferred compensation plan during 1993 pursuant
to  which an officer or agent of FCC, UTI or affiliates of UTI, could defer
a  portion  of their income over the next two and one-half years in  return
for  a  deferred compensation payment payable at the end of seven years  in
the  amount equal to the total income deferred plus interest at a  rate  of
approximately  8.5%  per annum and a stock option  to  purchase  shares  of
common stock of UTI.  At the beginning of the deferral period an officer or
agent  received an immediately exercisable option to purchase 2,300  shares
of  UTI common stock at $17.50 per share for each $25,000 ($10,000 per year
for  two  and one-half years) of total income deferred.  The option expires
on  December  31,  2000.  A total of 105,000 options were granted  in  1993
under  this  plan.  As of December 31, 1998 no options were exercised.   At
December 31, 1998 and 1997, the Company held a liability of $1,494,520  and
$1,376,384, respectively, relating to this plan. At December 31, 1998,  UTI
common stock had a market price of $8.125 per share.
                                    82
<PAGE>
The following information applies to deferred compensation plan stock
options outstanding at December 31, 1998:
  
  Number outstanding                       105,000
  Exercise price                            $17.50
  Remaining contractual life               2 years
  

11.  NOTES PAYABLE

At  December 31, 1998 and 1997, the Company has $17,559,482 and $19,081,602
in  long-term debt outstanding, respectively.  The debt is comprised of the
following components:

                          1998          1997
<TABLE>
<S>                 <C>           <C>
Senior debt         $     100,000 $   6,900,000
Subordinated 10 yr.
 notes                  2,267,067     5,746,774
Subordinated 20 yr.
 notes                  3,384,316     4,034,828
Other notes payable    11,808,099     2,400,000
                    $  17,559,482 $  19,081,602
</TABLE>
A.  SENIOR DEBT

The  senior  debt is through National City Bank (formerly First of  America
Bank  - Illinois NA) and is subject to a credit agreement.  The debt  bears
interest  at  a rate equal to the "base rate" plus nine-sixteenths  of  one
percent.  The Base rate is defined as the floating daily, variable rate  of
interest determined and announced by National City Bank from time  to  time
as  its "base lending rate."  The base rate at December 31, 1998 was 7.75%.
Interest  is paid quarterly.  Principal payments of $1,000,000 are  due  in
May  of each year beginning in 1997, with a final payment due May 8,  2005.
On November 8, 1998, the Company prepaid $500,000 of the May 1999 principal
payment,  and on November 23, 1998, the Company paid a $6,300,000 principal
payment.  The November 23, 1998 principal payment was facilitated through a
borrowing  from  United  Trust, Inc., which is an affiliate,  and  ultimate
parent to the Company.  The remaining principal balance of $100,000 will be
payable  on or before the debt maturity date of May 8, 2005, and  is  being
maintained  to  keep the Company's credit relationship with  National  City
Bank in place.

The credit agreement contains certain covenants with which the Company must
comply.   These covenants contain provisions common to a loan of this  type
and include such items as; a minimum consolidated net worth of FCC to be no
less  than  400% of the outstanding balance of the debt; Statutory  capital
and  surplus of Universal Guaranty Life Insurance Company be maintained  at
no less than $6,500,000; an earnings covenant requiring the sum of the pre-
tax   earnings  of  Universal  Guaranty  Life  Insurance  Company  and  its
subsidiaries  (based on Statutory Accounting Practices) and  the  after-tax
earnings plus non-cash charges of FCC (based on parent only GAAP practices)
shall not be less than two hundred percent (200%) of the Company's interest
expense on all of its debt service.  The Company is in compliance with  all
of the covenants of the agreement.

B.  SUBORDINATED DEBT

The  subordinated  debt  was  incurred June 16,  1992  as  a  part  of  the
acquisition  of  the  now  dissolved Commonwealth  Industries  Corporation,
(CIC).   The  10-year notes bear interest at the rate of 7 1/2% per  annum,
payable semi-annually beginning December 16, 1992.  These notes provide for
principal  payments equal to 1/20th of the principal balance due with  each
interest installment beginning December 16, 1997, with a final payment  due
June  16,  2002. In  addition to regularly scheduled semi-annual  principal
payments, the Company made principal reduction payments totaling $2,608,099
on  November  23, 1998, and $500,000 on December 16, 1998, on its  10  year
subordinated  debt.   The  additional principal payments  were  facilitated
through borrowings from affiliated party and ultimate parent, United Trust,
Inc.   The  original 20-year notes bear interest at the rate of 8 1/2%  per
annum  on  $2,879,354 and 8.75% per annum on $504,962 payable semi-annually
with  a  lump  sum principal payment due June 16, 2012.  In  May  of  1998,
$650,511 of the 20 year debt was retired through a capital contribution  by
UTG's  parent companies.  The capital contribution was facilitated  through
the aforementioned parent companies acquisition of the debt.
                                 83
<PAGE>
C.  AFFILIATED NOTES PAYABLE

United Income, Inc. holds two promissory notes receivable totaling $850,000
due  from  FCC.  Each note bears interest at the rate of 1% over  prime  as
published in the Wall Street Journal, with interest payments due quarterly.
Principal  of $150,000 is due upon the maturity date of June 1, 1999,  with
the  remaining principal payment of $700,000 becoming due upon the maturity
date of May 8, 2006.

United  Trust,  Inc.  holds  three  promissory  notes  receivable  totaling
$1,550,000 due from FCC.  Each note bears interest at the rate of  1%  over
prime  as published in the Wall Street Journal, with interest payments  due
quarterly. Principal of $250,000 is due upon the maturity date of  June  1,
1999, with the remaining principal payment of $1,300,000 becoming due  upon
maturity in 2006.

In  November  1998  FCC  borrowed $2,608,099 from  UTI  to  facilitate  the
prepayment of principal on its 10 year subordinated 10-year debt.  The note
bears  interest at the rate of 7.50%, with interest payments due  quarterly
and  principal  due  upon maturity of the note on December  31,  2005.   In
addition, FCC borrowed $6,300,000 from UTI to facilitate the prepayment  of
principal  on  the senior debt.  This note bears interest at  the  rate  of
9/16%  over  the  prime rate of interest as published in  the  Wall  Street
Journal,  with  interest  payments due quarterly  and  principal  due  upon
maturity of the note on December 31, 2006.

Scheduled  principal reductions on the Company's debt  for  the  next  five
years is as follows:

              Year      Amount

              1999   $   626,714
              2000       226,714
              2001       226,714
              2002     1,586,925
              2003             0


12.  OTHER CASH FLOW DISCLOSURES

On  a cash basis, the Company paid $1,686,657, $1,658,703 and $1,700,973 in
interest  expense  for  the years 1998, 1997 and 1996,  respectively.   The
Company  paid $15,805, $57,277 and $17,634 in federal income tax for  1998,
1997 and 1996, respectively.

One  of  the  Company's  insurance  subsidiaries  ("UG")  entered  into   a
coinsurance agreement with Park Avenue Life Insurance Company ("PALIC")  at
September  30,  1996.   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, the Company sold  $18,737,000  of  fixed
maturity investments.


13.  CONCENTRATION OF CREDIT RISK

The Company maintains cash balances in financial institutions that at times
may  exceed federally insured limits.  The Company has not experienced  any
losses  in  such accounts and believes it is not exposed to any significant
credit risk on cash and cash equivalents.
                                   84
<PAGE>
14.  NEW ACCOUNTING STANDARDS

The  Financial  Accounting Standards Board (FASB) has issued  Statement  of
Financial  Accounting  Standards (SFAS) 128 entitled  Earnings  per  share,
which  is  effective  for financial statements for fiscal  years  beginning
after December 15, 1997.  SFAS 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.

This  statement  was  adopted for the 1997 Financial Statements.   For  all
periods presented the computation of diluted earnings per share is the same
as  basic  earnings per share since the Company had no dilutive instruments
outstanding.  Adopting the new standard required the Company to change  its
financial  presentation and disclosure, but did not  affect  the  Company's
financial position or results of operations.

The FASB has issued SFAS 130 entitled Reporting Comprehensive Income, which
is  effective  for  financial statements for fiscal years  beginning  after
December  15,  1997.   SFAS  130 establishes standards  for  reporting  and
presentation of comprehensive income and its components in a  full  set  of
financial  statements.   Comprehensive  income  includes  all  changes   in
shareholders'   equity,  except  those  arising  from   transactions   with
shareholders, and includes net income and net unrealized gains (losses)  on
securities.  SFAS 130 was adopted as of January 1, 1998.  Adopting the  new
standard  required  the  Company  to make  additional  disclosures  in  the
consolidated  financial  statements,  but  did  not  affect  the  Company's
financial position or results of operations.

All  items  of  other comprehensive income reflect no related  tax  effect,
since the Company has an allowance against the collection of any future tax
benefits.   In  addition, there was no sale or liquidation  of  investments
requiring a reclassification adjustment for the period presented.

The  FASB  has issued SFAS 131 entitled, Disclosures about Segments  of  an
Enterprise  and  Related  Information, which  is  effective  for  financial
statements  for fiscal years beginning after December 15, 1997.   SFAS  131
requires that a public business enterprise report financial and descriptive
information  about  its reportable operating segments.  Operating  segments
are  components of an enterprise about which separate financial information
is  available  that  is  evaluated regularly in deciding  how  to  allocate
resources and in assessing performance. SFAS 131 was adopted as of  January
1,  1998.   Adopting  the  new  standard had no  affect  on  the  Company's
financial  position  or results of operations, since  the  Company  has  no
reportable operating segments.

The  FASB  has  issued  SFAS  132  entitled, Employers'  Disclosures  about
Pensions  and  Other  Postretirement  Benefits,  which  is  effective   for
financial  statements for fiscal years beginning after December  15,  1997.
SFAS 132 revises current disclosure requirements for employer provided post-
retirement  benefits.  The statement does not change retirement measurement
or  recognition  issues.   SFAS 132 was adopted  as  of  January  1,  1998.
Adopting the new standard had no affect on the Company's financial position
or  results of operations, since the Company has no pension plan  or  other
obligation for post-retirement benefits.

The   FASB   has  issued  SFAS  133  entitled,  Accounting  for  Derivative
Instruments  and  Hedging  Activities, which is effective  for  all  fiscal
quarters  of fiscal years beginning after June 15, 1999.  SFAS 133 requires
that an entity recognize all derivatives as either assets or liabilities in
the  statement of financial position and measure those instruments at  fair
value.   If  certain conditions are met, a derivative may  be  specifically
designated  as  a  specific  type of exposure hedge.   The  accounting  for
changes  in the fair value of a derivative depends on the intended  use  of
the derivative and the resulting designation.  The adoption of SFAS 133  is
not  expected to have a material effect on the Company's financial position
or  results  of operations, since the Company has no derivative or  hedging
type investments.
                                     85
<PAGE>
15.  CHANGE IN CONTROL OF UNITED TRUST, INC.

On November 20, 1998, First Southern Funding, Inc., a Kentucky corporation,
("FSF")  and affiliates acquired 929,904 shares of common stock  of  United
Trust,  Inc.,  an  Illinois corporation, ("UTI") from UTI and  certain  UTI
shareholders.   As consideration for the shares, FSF paid  UTI  $10,999,995
and  certain  shareholders  of UTI $999,990 in cash.   FSF  and  affiliates
employed working capital to make these purchases of common stock, including
funds  on  hand and amounts drawn under existing lines of credit with  Star
Bank,  NA.   FSF borrowed $7,082,878 and First Southern Bancorp,  Inc.,  an
affiliate  of  FSF,  borrowed $495,775 in making the  purchases.   FSF  and
affiliates  expect to repay the borrowings through the sale of assets  they
currently own.

Details of the transaction can be outlined as follows: FSF acquired 389,715
shares  of  UTI common stock at $10.00 per share.  These shares represented
stock  acquired during 1997 by UTI in private transactions.   Additionally,
FSF  acquired  473,523 shares of authorized but unissued  common  stock  at
$15.00 per share.  FSF acquired 66,666 shares of common stock from UTI  CEO
Larry  Ryherd, and his family, at $15.00 per share.  FSF has  committed  to
purchase  $2,560,000 of face amount of UTI convertible notes  from  certain
officers  and directors of UTI for a cash price of $3,072,000 by  March  1,
1999.  FSF is required to convert the notes to UTI common stock by July 31,
2000.    UTI  has  granted,  for  nominal  consideration,  an  irrevocable,
exclusive  option to FSF to purchase up to 1,450,000 shares of  UTI  common
stock  for  a purchase price in cash equal to $15.00 per share,  with  such
option  to  expire  on  July 1, 2001.  UTI has also  caused  three  persons
designated  by FSF to be appointed, as part of the maximum of  11,  to  the
Board of Directors of UTI.

Following the transactions described above, and together with shares of UTI
acquired  on the market, FSF and affiliates currently own 1,073,577  shares
of  UTI  common  stock  (43.1%) becoming the largest  shareholder  of  UTI.
Through the shares acquired and options owned, FSF can ultimately own  over
51% of UTI.  Mr. Jesse T. Correll is the majority shareholder of FSF, which
is  an  affiliate  of First Southern Bancorp, Inc., a bank holding  company
that owns a bank that operates out of 14 locations in central Kentucky.


16.  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.  At the time the decision to merge
was  made,  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 second quarter of 1999.
                                86
<PAGE>
17.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)


                   1998
                        1st             2nd             3rd             4th
<TABLE>
<S>                <C>            <C>             <C>             <C>
Premiums and policy
 fees, net         $  7,231,481   $   7,111,079   $  6,243,869    $  5,809,648
Net investment
 income               3,738,105       3,797,376      3,804,066       3,740,458
Total revenues       11,080,718      10,436,960      9,632,383       9,224,802
Policy benefits                                                                 
including dividends   6,827,040       6,287,460      6,217,272       6,140,602
Commissions and                                                                 
 amortization of
  DAC and COI         1,686,864       1,418,423      1,350,553       4,330,448
Operating and
  interest expenses   2,620,664       2,776,983      2,321,915       4,408,983
Operating income
 (loss)                 (53,850)        (45,906)      (257,357)     (5,655,231)
Net income (loss)        31,311         (24,667)       446,540      (1,726,064)
Basic and diluted earnings
 (loss) per share        313.11         (246.67)      4,465.40      (17,260.64)
</TABLE>


                                              1997
                          1st           2nd             3rd            4th
<TABLE>
<S>                <C>            <C>             <C>             <C>
Premiums and policy
 fees, net         $  7,926,386   $   7,808,782   $  6,639,394    $  6,264,683
Net investment
 income               3,859,875       3,839,519      3,691,584       3,491,699
Total revenues       11,781,878      11,687,887     10,216,109       9,664,744
Policy benefits                                                                 
including dividends   7,718,015       6,861,699      6,467,739       6,007,718
Commissions and                                                                 
amortization of
 DAC and COI          1,670,854       1,174,116      1,727,317       1,571,438
Operating and
 interest expenses    2,884,663       3,084,239      2,778,435       1,885,475
Operating income
 (loss)                (491,654)        567,833       (757,382)        200,113
Net income (loss)       (23,565)         27,351       (512,444)       (414,719)
Basic and diluted earnings
 (loss) per share       (235.65)         273.51      (5,124.44)      (4,147.19)
</TABLE>
                  
                                              1996
                         1st             2nd            3rd           4th
<TABLE>
<S>                <C>            <C>             <C>             <C>
Premiums and policy
 fees, net         $  7,637,503   $   8,514,175   $  7,348,199    $  7,444,581
Net investment
 income               3,974,407       3,930,487      4,002,258       3,994,955
Total revenues       12,513,692      12,187,077     11,331,283      10,444,059
Policy benefits                                                                 
including dividends   6,528,760       7,083,803      8,378,710       8,334,759
Commissions and                                                                 
amortization of
 DAC and COI          2,567,921       2,298,549      1,734,048       3,314,436
Operating and interest
 expenses             3,616,660       3,072,535      3,685,600         910,771
Operating income
 (loss)                (198,649)       (267,810)    (2,467,075)    (3,869,480)
Net income (loss)       268,675         (93,640)    (1,563,817)      (271,915)
Basic and diluted earnings
 (loss) per share      2,686.75         (936.40)    (15,638.17)     (2,719.15)
</TABLE>
                                        87
<PAGE>
                         UNITED TRUST GROUP, INC.
                  SUMMARY OF INVESTMENTS - OTHER THAN
                    INVESTMENTS IN RELATED PARTIES
                       As of December 31, 1998
                                                           Schedule I

  Column A                       Column B     Column C     Column D

                                                           Amount at
                                                           Which Shown
                                                           in Balance
                                 Cost         Value        Sheet
<TABLE>
<S>                            <C>          <C>          <C>
Fixed maturities:
  Bonds:
       United States Goverment and
          government agencies
           and authorities     $ 36,809,239 $ 37,133,507 $ 36,809,239
       State, municipalities,
        and political
          subdivisions           23,835,306   24,878,182   23,835,306
       Collateralized mortgage
        obligations               9,406,895    9,524,931    9,406,895
       Public utilities          41,724,208   43,525,913   41,724,208
       All other corporate
        bonds                    62,465,200   64,822,846   62,465,200
  Total fixed maturities        174,240,848$ 179,885,379  174,240,848

Investments held for sale:
  Fixed maturities:
       United States Goverment and
          government agencies
           and authorities        1,434,636 $  1,437,901    1,437,901
       State, municipalities,
        and political
          subdivisions               35,000       42,224       42,224
       Public utilities                   0            0            0
       All other corporate
        bonds                        25,000       25,281       25,281
                                  1,494,636 $  1,505,406    1,505,406

  Equity securities:
       Banks, trusts and
        insurance companies       1,935,619 $  1,607,798    1,607,798
       All other corporate
        securities                  789,442      479,618      479,618
                                  2,725,061 $  2,087,416    2,087,416


Mortgage loans on real estate    10,941,614                10,941,614
Investment real estate            8,979,183                 8,979,183
Real estate acquired in
 satisfaction of debt             1,550,000                 1,550,000
Policy loans                     14,134,041                14,134,041
Other long-term
 investments                      1,746,278                 1,746,278
Short-term investments            1,062,796                 1,062,796
  Total investments           $ 216,874,457             $ 216,247,582
</TABLE>
                                 88
<PAGE>
                        UNITED TRUST GROUP, INC.
                  CONDENSED FINANCIAL INFORMATION OF
                 REGISTRANT PARENT ONLY BALANCE SHEETS
                   As of December 31, 1998 and 1997

                                        Schedule II


                               1998        1997

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

  Investment in affiliates$ 33,012,770$ 34,683,168
  Cash and cash equivalents     52,127      25,980
  Notes receivable from
    Affiliate                6,301,894   9,781,602
  Accrued interest income       22,856      34,455
          Total assets    $ 39,389,647$ 44,525,205




LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Notes payable            $ 5,505,038 $ 9,635,257
  Notes payable to affiliate   146,345     146,345
  Income taxes payable          12,467       5,175
  Accrued interest payable      21,074      34,455
  Other liabilities            380,115     413,429
          Total liabilities  6,065,039  10,234,661




Shareholders' equity:
  Common stock              46,577,216  45,926,705
  Accumulated deficit      (12,867,333)(11,594,453)
  Accumulated other
   comprehensive income       (385,275)    (41,708)
          Total shareholders'
           equity           33,324,608  34,290,544
          Total liabilities and
           shareholders'
            equity        $ 39,389,647$ 44,525,205
</TABLE>
                             89
<PAGE>
                    UNITED TRUST GROUP, INC.
               CONDENSED FINANCIAL INFORMATION OF
          REGISTRANT PARENT ONLY STATEMENTS OF OPERATIONS
               Three Years Ended December 31, 1998

                                                 Schedule II

                              1998       1997      1996

<TABLE>
<S>                       <C>        <C>       <C>
Revenues:

  Interest income from
    Affiliates            $  743,080 $ 782,892 $  792,046
  Other income                37,435    37,641     34,600
                             780,515   820,533    826,646


Expenses:

  Interest expense           696,543   776,230    789,496
  Interest expense to
    Affiliates                12,439     6,662      2,550
  Operating expenses           5,115     5,585      4,624
                             714,097   788,477    796,670

  Operating income            66,418    32,056     29,976

  Income tax credit
   (expense)                 (12,467)   (5,362)    (4,664)
  Equity in loss of
   Subsidiaries           (1,326,831) (950,071)(1,686,009)
          Net loss      $ (1,272,880)$(923,377)(1,660,697)

  Basic loss per
   share from continuing
     operations and
      net loss          $ (12,728.80)(9,233.77)(16,606.97)

  Diluted loss per
   share from continuing
     operations and
      net loss          $ (12,728.80)(9,233.77)(16,606.97)

  Basic weighted average
   shares outstanding            100       100        100

  Diluted weighted average
   shares outstanding            100       100        100
</TABLE>
                                90
<PAGE>
                     UNITED TRUST GROUP, INC.
          CONDENSED FINANCIAL INFORMATION OF REGISTRANT
              PARENT ONLY STATEMENTS OF CASH FLOWS
              Three Years Ended December 31, 1998


                                                         Schedule II

                                      1998       1997      1996
<TABLE>
<S>                              <C>         <C>       <C>
Increase (decrease) in cash
 and cash equivalents
Cash flows from operating activities:
   Net loss                      $(1,272,880)$(923,377)(1,660,697)
   Adjustments to reconcile
    net loss to net cash
     provided by (used in)
      operating activities:
  Equity in loss of subsidiaries   1,326,831   950,071  1,686,009
  Change in accrued interest income   11,599       747          0
  Change in accrued interest payable (13,381)     (747)         0
  Change in income taxes payable       7,292    (1,488)     3,442
  Change in other liabilities        (33,314)  (38,834)  (139,256)
Net cash provided by (used in)
 operating activities                 26,147   (13,628)  (110,502)

Cash flows from investing activities:
  Proceeds for fractional shares
   from reverse stock
    split of subsidiary                    0        79          0
  Purchase of stock of affiliates          0         0    (95,000)
Net cash provided by (used in)
 investing activities                      0        79    (95,000)

Cash flows from financing activities:
  Receipt of principal on notes
   receivable from affiliate       3,479,707   258,252          0
  Payments of principal
   on notes payable               (3,479,707) (258,252)         0
  Capital contribution from
    affiliates                             0         0    200,000
Net cash provided by
 financing activities                      0         0    200,000

Net increase (decrease) in
 cash and cash equivalents            26,147   (13,549)    (5,502)
Cash and cash equivalents
 at beginning of year                 25,980    39,529     45,031
Cash and cash equivalents
 at end of year                   $   52,127 $  25,980 $   39,529
</TABLE>
                                  91
<PAGE>

                     UNITED TRUST GROUP, INC.
                           REINSURANCE 
     As of December 31, 1998 and the year ended December 31, 1998

                                                          Schedule IV





  Column A Column B     Column C    Column D     Column E    Column F

                                                           Percentage
                      Ceded to    Assumed                  of amount
                      other       from other               assumed to
         Gross amount companies   companies*   Net amount  net

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





Life insurance
in force $3,424,677,000 $924,404,000 $1,036,005,000 $3,536,278,000  29.3%



Premiums and policy fees:

Life
insurance$   30,685,493 $  4,492,304 $       20,091 $   26,213,280   0.1%

Accident and health
insurance       233,025       50,228              0        182,797   0.0%

         $   30,918,518 $  4,542,532 $       20,091 $   26,396,077   0.1%
</TABLE>
                                      92
<PAGE>
                       UNITED TRUST GROUP, INC.
                            REINSURANCE
     As of December 31, 1997 and the year ended December 31, 1997


                                                            Schedule IV




 Column A Column B     Column C     Column D     Column E    Column F

                                                            Percentage
                      Ceded to     Assumed                  of amount
                      other        from other               assumed to
         Gross amount companies    companies*   Net amount  net





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

Life insurance
in
 force $3,691,867,000 $1,022,458,000 $1,079,885,000 $3,749,294,000   28.8%



Premiums and policy fees:

Life
Insurance $33,133,414 $    4,681,928 $            0 $   28,451,486    0.0%

Accident and health
 insurance    240,536         52,777              0       187,759     0.0%

         $ 33,373,950 $    4,734,705 $            0 $  28,639,245     0.0%

</TABLE>



* All assumed business represents the Company's
  participation in the Servicemen's Group Life
   Insurance Program (SGLI).
                                     93
<PAGE>
                        UNITED TRUST GROUP, INC.
                             REINSURANCE
      As of December 31, 1996 and the year ended December 31, 1996

                                                           Schedule IV





 Column A Column B     Column C     Column D    Column E    Column F

                                                           Percentage
                      Ceded to     Assumed                 of amount
                      other        from other              assumed to
         Gross amount companies    companies*  Net amount  net




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


Life insurance
in
force  $3,952,958,000 $1,108,534,000 $1,271,766,000 4,116,190,000   30.9%



Premiums and policy fees:

Life
Insurance$ 35,633,232 $   4,896,896 $            0    30,736,336    0.0%

 Accident
  and health
 insurance    258,377        50,255              0       208,122    0.0%

         $ 35,891,609 $   4,947,151 $            0    30,944,458    0.0%


</TABLE>



* All assumed business represents the Company's
  participation in the Servicemen's Group Life
   Insurance Program (SGLI).
                                     94
<PAGE>
                      UNITED TRUST GROUP, INC.
                  VALUATION AND QUALIFYING ACCOUNTS
          For the years ended December 31, 1998, 1997 and 1996
                                                          Schedule V
                          Balance at Additions
                          Beginning  Charges                Balances at
Description               Of Period  and Expenses Deductions End of Period

<TABLE>
<S>                     <C>          <C>          <C>           <C>
December 31, 1998

Allowance for doubtful accounts -
    mortgage loans      $  10,000    $  70,000    $  10,000     $  70,000


December 31, 1997

Allowance for doubtful accounts -
    mortgage loans      $  10,000    $       0    $       0     $  10,000


December 31, 1996

Allowance for doubtful accounts -
    mortgage loans      $  10,000    $       0    $       0     $  10,000

</TABLE>
                                   95
<PAGE>