SECURITIES AND EXCHANGE COMMISSION
                      Washington, D. C.  20549

                              FORM 10-K
           ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
               OF THE SECURITIES EXCHANGE ACT OF 1934

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

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

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


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


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

Securities registered pursuant to Section 12(b) of the Act:

                                                 Name of each exchange
Title of each class                              on which registered
      None                                              None

Securities registered pursuant to Section 12(g) of the Act:

                         Title of each class

                               Common Stock

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

Indicate by check mark if disclosure of delinquent filers pursuant to  Item
405  of  Regulation S-K (229.405 of this chapter) is not contained  herein,
and  will  not  be  contained,  to the best of registrant's  knowledge,  in
definitive  proxy or  information statements incorporated by  reference  in
Part  III  of  this Form 10-K or any amendment to this Form 10-K. [ ].

At  March  13,  1998,  the Registrant had outstanding 1,391,919  shares  of
Common Stock, stated value $.033 per share.

DOCUMENTS INCORPORATED BY REFERENCE:  None

                             Page 1 of 89

<PAGE>

                                      PART I

ITEM 1.  BUSINESS

United  Income, Inc. (the "Registrant") was incorporated in 1987 under  the
laws  of  the  State of Ohio to serve as an insurance holding company.   At
December 31, 1997, the affiliates of the Registrant were as depicted on the
following organizational chart:


                      ORGANIZATIONAL CHART
                    AS OF DECEMBER 31, 1997


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").



                                      2



<PAGE>

The  Registrant  and its affiliates (the "Company") operate principally  in
the   individual  life insurance business.  The primary business   of   the
Company has been the servicing of existing insurance business in force, the
solicitation  of  new  insurance business, and  the  acquisition  of  other
companies in similar lines of business.

United  Income, Inc. ("UII"), was incorporated on November 2, 1987,  as  an
Ohio  corporation.  Between March 1988 and August 1990, UII raised a  total
of  approximately  $15,000,000 in an intrastate public  offering  in  Ohio.
During 1990, UII formed a life insurance subsidiary and began selling  life
insurance products.

On  February 20, 1992, UII and its affiliate, UTI, formed a joint  venture,
United Trust Group, Inc., ("UTG").  On June 16, 1992, UII contributed  $7.6
million  in  cash  and 100% of the common stock of its  wholly  owned  life
insurance  subsidiary.  UTI contributed $2.7 million in cash,  an  $840,000
promissory  note  and  100% of the common stock of its  wholly  owned  life
insurance  subsidiary.  After the contributions of cash, subsidiaries,  and
the note, UII owns 47% and UTI owns 53% of UTG.

On  June 16, 1992, UTG acquired 67% of the outstanding common stock of  the
now  dissolved Commonwealth Industries Corporation, ("CIC") for a  purchase
price  of  $15,567,000.  Following the acquisition, UTG  controlled  eleven
life  insurance  subsidiaries.  The Company  has  taken  several  steps  to
streamline and simplify the corporate structure following the acquisitions.

On  December 28, 1992, Universal Guaranty Life Insurance Company ("UG") was
the  surviving  company of a merger with Roosevelt National Life  Insurance
Company  ("RNLIC"), United Trust Assurance Company ("UTAC"), Cimarron  Life
Insurance  Company  ("CIM")  and  Home  Security  Life  Insurance   Company
("HSLIC").   On June 30, 1993, Alliance Life Insurance Company ("ALLI"),  a
subsidiary of UG, was merged into UG.

On  July  31, 1994, Investors Trust Assurance Company ("ITAC")  was  merged
into Abraham Lincoln Insurance Company ("ABE").

On  August  15,  1995,  the shareholders of CIC, ITI,  and  UGIC  voted  to
voluntarily  liquidate each of the companies and distribute the  assets  to
the  shareholders  (consisting solely of common stock of  their  respective
subsidiary).   As  a  result, the shareholders of the liquidated  companies
became shareholders of FCC.

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

The holding companies within the group, UTI, UII, UTG and FCC, are all life
insurance  holding companies.  These companies became members of  the  same
affiliated group through a history of acquisitions in which life  insurance
companies  were  involved.   The  focus of the  holding  companies  is  the
acquisition of other companies in similar lines of business and  management
of  the  insurance subsidiaries.  The companies have no activities  outside
the life insurance focus.

The insurance companies of the group, UG, USA, APPL and ABE, all operate in
the  individual  life  insurance business.   The  primary  focus  of  these
companies  has been the servicing of existing insurance business  in  force
and the solicitation of new insurance business.

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

                                   3
<PAGE>

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


PRODUCTS

The  Company's portfolio consists of two universal life insurance products.
The primary universal life insurance product is referred to as the "Century
2000".  This product was introduced to the marketing force in 1993 and  has
become  the cornerstone of current marketing.  This product has  a  minimum
face  amount of $25,000 and currently credits 6% interest with a guaranteed
rate   of 4.5%  in the first 20 years and 3% in years 21 and greater.   The
policy  values are subject to a $4.50 monthly policy fee, an administrative
load and a premium load of 6.5% in all years.  The administrative load  and
surrender  charge are based on the issue age, sex and rating class  of  the
policy.  A surrender charge is effective for the first 14 policy years.  In
general, the surrender charge is very high in the first couple of years and
then  declines to zero at the end of 14 years.  Policy loans are  available
at  7% interest in advance.  The policy's accumulated fund will be credited
the guaranteed interest rate in relation to the amount of the policy loan.

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

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

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

The  Company  markets  other  products, none of  which  is  significant  to
operations.  The Company has a variety of policies in force different  from
those  which  are  currently being marketed.  Universal life  and  interest
sensitive  whole  life  business  account  for  approximately  46%  of  the
insurance  in  force.   Approximately 29% of  the  insurance  in  force  is
participating  business.  The Company's average persistency  rate  for  its
policies in force for 1997 and 1996 has been 89.4% and 87.9%, respectively.
The Company does not anticipate any material fluctuations in these rates in
the future that may result from competition.


                                   4


<PAGE>


Interest-sensitive life insurance products have characteristics similar  to
annuities with respect to the crediting of a current rate of interest at or
above  a  guaranteed  minimum  rate and the use  of  surrender  charges  to
discourage  premature withdrawal of cash values. Universal  life  insurance
policies  also  involve variable premium charges against the policyholder's
account  balance  for  the  cost of insurance and administrative  expenses.
Interest-sensitive  whole  life  products generally  have  fixed  premiums.
Interest-sensitive life insurance products are designed with a  combination
of  front-end  loads,  periodic variable charges,  and  back-end  loads  or
surrender  charges. Traditional life insurance products have  premiums  and
benefits  predetermined at issue; the premiums are set at levels  that  are
designed  to  exceed expected policyholder benefits and  Company  expenses.
Participating business is traditional life insurance with the added feature
of  an  annual  return of a portion of the premium paid by the policyholder
through  a  policyholder dividend.  This dividend is set  annually  by  the
Board   of   Directors  of  each  insurance  company  and   is   completely
discretionary.


MARKETING

The  Company  markets  its products through separate  and  distinct  agency
forces.  The Company has approximately 45 captive agents who actively write
new  business,  and  15  independent agents  who  primarily  service  their
existing  customers.  No individual sales agent accounted for over  10%  of
the  Company's premium volume in 1997.  The Company's sales agents  do  not
have the power to bind the Company.

Marketing  is   based  on  referral  network  of  community    leaders  and
shareholders of UII and UTI.  Recruiting of sales agents is also  based  on
the  same referral network.  The industry has experienced a downward  trend
in  the total number of agents who sell insurance products, and competition
for  the  top  sales producers has intensified.  As this trend  appears  to
continue,  the  recruiting focus of the Company  has  been  on  introducing
quality individuals to the insurance industry through an extensive internal
training  program.   The Company feels this approach is  conducive  to  the
mutual success of our new recruits and the Company as these recruits market
our products in a professional, company structured manner.

New  sales  are  marketed by UG and USA through their agency  forces  using
contemporary   sales  approaches  with  personal  computer   illustrations.
Current marketing efforts are primarily focused on the Midwest region.

USA is licensed in Illinois, Indiana and Ohio.  During 1997, Ohio accounted
for 99% of USA's direct premiums collected.

ABE  is  licensed  in  Alabama, Arizona, Illinois, Indiana,  Louisiana  and
Missouri.  During 1997, Illinois and Indiana accounted for  46%  and   32%,
respectively of ABE's direct premiums collected.

APPL   is  licensed  in  Alabama,  Arizona,  Arkansas,  Colorado,  Georgia,
Illinois,  Indiana,   Kansas,  Kentucky,  Louisiana,  Missouri,    Montana,
Nebraska,  Ohio,  Oklahoma, Pennsylvania, Tennessee, Utah,  Virginia,  West
Virginia  and  Wyoming.  During 1997, West Virginia accounted  for  95%  of
APPL's direct premiums collected.

UG  is licensed in Alabama, Arizona, Arkansas, Colorado, Delaware, Florida,
Georgia,  Idaho,  Illinois,  Indiana, Iowa,  Kansas,  Kentucky,  Louisiana,
Massachusetts,   Michigan,  Minnesota,  Mississippi,   Missouri,   Montana,
Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma,
Oregon,   Pennsylvania,  Rhode  Island,  South  Carolina,   South   Dakota,
Tennessee,  Texas, Utah, Virginia, Washington, West Virginia and Wisconsin.
During  1997,  Illinois accounted for 33%, and Ohio accounted  for  14%  of
direct  premiums collected.  No other state accounted for more than  7%  of
direct premiums collected in 1997.

In  1997 $38,471,452 of total direct premium was written by USA, ABE,  APPL
and   UG.  Ohio  accounted for 35% , Illinois accounted for 21%,  and  West
Virginia accounted for 10% of total direct premiums collected.

New  business production has decreased 15% from 1995 to 1996 and  43%  from
1996  to  1997.   Several  factors have had a  significant  impact  on  new
business   production.   Over  the  last  two  years  there  has  been  the
possibility  of  a  change in control of UTI.  In  September  of  1996,  an
agreement  was reached effecting a change in control of UTI to an unrelated
party.   The transaction did not materialize.  At this writing negotiations

                                    5
<PAGE>

are  progressing with a different unrelated party for change in control  of
UTI.   Please  refer to the Notes to the Consolidated Financial  Statements
for  additional  information.  The possible changes  in  control,  and  the
uncertainty  surrounding  each potential event,  have  hurt  the  insurance
Companies'  ability  to attract and maintain sales  agents.   In  addition,
increased  competition   for  consumer  dollars    from    other  financial
institutions,  product Illustration guideline changes  by  State  Insurance
Departments,  and a decrease in the total number of insurance sales  agents
in the industry, have all had an impact, given the relatively small size of
the Company.

Management recognizes the aforementioned challenges and is responding.  The
potential  change  in control of the Company is progressing,  bringing  the
possibility  for  future  growth,  efforts  are  being  made  to  introduce
additional  products,  and  the  recruitment  of  quality  individuals  for
intensive  sales  training,  are directed at  reversing  current  marketing
trends.


UNDERWRITING

The underwriting procedures of the insurance affiliates are established  by
management.   Insurance  policies are issued  by  the  Company  based  upon
underwriting  practices established for each market in  which  the  Company
operates.   Most policies are individually underwritten.  Applications  for
insurance are reviewed to determine additional information required to make
an  underwriting decision, which depends on the amount of insurance applied
for  and  the  applicant's age and medical history.  Additional information
may  include  inspection  reports, medical  examinations,  statements  from
doctors  who  have treated the applicant in the past and, where  indicated,
special  medical  tests.   After reviewing the information  collected,  the
Company  either issues the policy as applied for or with an  extra  premium
charge  because  of  unfavorable  factors  or  rejects  the    application.
Substandard  risks  may  be  referred to reinsurers  for  full  or  partial
reinsurance of the substandard risk.

The  insurance affiliates require blood samples to be drawn with individual
insurance  applications for coverage over $45,000 (age  46  and  above)  or
$95,000 (age 16-45).  Blood samples are tested for a wide range of chemical
values and are screened for antibodies to the HIV virus.  Applications also
contain  questions permitted by law regarding the HIV virus which  must  be
answered by the proposed insureds.


RESERVES

The  applicable insurance laws under which the insurance affiliates operate
require  that each insurance company report policy reserves as  liabilities
to  meet  future obligations on the policies in force.  These reserves  are
the amounts which, with the additional premiums to be received and interest
thereon  compounded annually at certain assumed rates,  are  calculated  in
accordance with applicable law to be sufficient to meet the various  policy
and  contract  obligations as they mature.  These  laws  specify  that  the
reserves shall not be less than reserves calculated using certain mortality
tables and interest rates.

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  affiliates'
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

                                  6
<PAGE>

purchase,  at  the  purchase date.  Benefit reserves for  traditional  life
insurance  policies  include  certain deferred profits  on  limited-payment
policies that are being 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 5.0% to
6.0% in each of the years 1997, 1996 and 1995.


REINSURANCE

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

The  Company's  reinsured  business is ceded to numerous  reinsurers.   The
Company  believes the assuming companies are able to honor all  contractual
commitments,  based  on the Company's periodic reviews of  their  financial
statements,  insurance  industry  reports  and  reports  filed  with  state
insurance departments.

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 affiliates.   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, 1997.


INVESTMENTS

At  December  31,  1997, substantially all of the assets of  UII  represent
investments  in or receivables from affiliates.  UII does own one  mortgage
loan  as  of  December 31, 1997.  The mortgage loan is  in  good  standing.
Interest  income  was  derived  from  mortgage  loans  and  cash  and  cash
equivalents.


COMPETITION

The  insurance business is a highly competitive industry and  there  are  a
number  of other companies, both stock and mutual, doing business in  areas
where  the Company operates.  Many of these competing insurers are  larger,
have  more  diversified  lines  of insurance coverage,  have  substantially
greater  financial resources and have a greater number  of  agents.   Other
significant competitive factors include policyholder benefits,  service  to
policyholders, and premium rates.

                                 7
<PAGE>

The insurance industry is a mature industry.  In recent years, the industry
has  experienced  virtually no growth in life insurance sales,  though  the
aging  population has increased the demand for retirement savings products.
The  products offered (see Products) are similar to those offered by  other
major companies.  The product features are regulated by the states and  are
subject to extensive competition among major insurance organizations.   The
Company  believes a strong service commitment to policyholders,  efficiency
and  flexibility of operations, timely service to the agency force and  the
expertise of its key executives help minimize the competitive pressures  of
the insurance industry.

The industry has experienced a downward trend in the total number of agents
who  sell  insurance products, and competition for the top sales  producers
has  intensified.  As this trend appears to continue, the recruiting  focus
of the Company has been on introducing quality individuals to the insurance
industry through an extensive internal training program.  The Company feels
this  approach is conducive to the mutual success of our new  recruits  and
the  Company  as  these  recruits market our products  in  a  professional,
company structured manner.


GOVERNMENT REGULATION

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

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

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

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


                                  8

<PAGE>

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

At  year end 1997, the insurance companies had one ratio outside the normal
range.  The ratio is related to the decrease in premium income.  The  ratio
fell  outside  the normal range the last three years.  The  cause  for  the
decrease in premium income is related to the possible change in control  of
UTI over the last two years to two different parties.  At year end 1996  it
was  announced that UTI was to be acquired by an unrelated party,  but  the
sale  did  not  materialize.  At this writing negotiations are  progressing
with  a different unrelated party for the change in control of UTI.  Please
refer  to the Notes to the Consolidated Financial Statements for additional
information.  The possible changes in control over the last two years  have
hurt  the  insurance companies' ability to recruit new agents.  The  active
agents were apprehensive due to uncertainties in relation to the change  in
control of UTI.  In recent years, the industry experienced a decline in the
total number of agents selling insurance products and therefore competition
has  increased  for  quality agents.  Accordingly, new business  production
decreased significantly over the last two years.

A life insurance company's statutory capital is computed according to rules
prescribed by the National Association of Insurance Commissioners ("NAIC"),
as  modified  by  the  insurance company's state  of  domicile.   Statutory
accounting    rules   are  different  from  generally  accepted  accounting
principles  and are intended to reflect a more conservative  view  by,  for
example,  requiring immediate expensing of policy acquisition  costs.   The
achievement  of  long-term  growth will require  growth  in  the  statutory
capital  of the Company's insurance affiliates.  The affiliates may  secure
additional  statutory capital through various sources, such  as  internally
generated  statutory earnings or equity contributions by the  Company  from
funds generated through debt or equity offerings.

The  NAIC's risk-based capital requirements require insurance companies  to
calculate  and report information under a risk-based capital formula.   The
risk-based  capital formula measures the adequacy of statutory capital  and
surplus  in  relation  to  investment and insurance  risks  such  as  asset
quality,  mortality and morbidity, asset and liability matching  and  other
business factors.  The RBC formula is used by state insurance regulators as
an early warning tool to identify, for the purpose of initiating regulatory
action,  insurance companies that potentially are inadequately capitalized.
In  addition, the formula defines new minimum capital standards  that  will
supplement  the  current system of low fixed minimum  capital  and  surplus
requirements    on  a  state-by-state  basis.   Regulatory   compliance  is
determined by a ratio of the insurance company's regulatory total  adjusted
capital,  as defined by the NAIC, to its authorized control level  RBC,  as
defined by the NAIC.  Insurance companies below specific trigger points  or
ratios  are  classified  within  certain levels,  each  of  which  requires
specific corrective action.  The levels and ratios are as follows:

                                     Ratio of Total Adjusted Capital to
                                        Authorized Control Level RBC
       Regulatory Event                    (Less Than or Equal to)

  Company action level                                2*
  Regulatory action level                             1.5
  Authorized control level                            1
  Mandatory control level                             0.7

  * Or, 2.5 with negative trend.

At  December 31, 1997, each of the insurance subsidiaries has a Ratio  that
is  in  excess  of  3,  which  is  300% of the  authorized  control  level;
accordingly the insurance subsidiaries meet the RBC requirements.

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

                                   9
<PAGE>

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

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

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


EMPLOYEES

UII  has  no employees of its own.  There are approximately 90 persons  who
are employed by the Company's affiliates.


ITEM 2.  PROPERTIES

The  Company leases approximately 1,951 square feet of office space at 2500
Corporate  Exchange  Drive, Suite 345, Columbus,  Ohio  43231.   The  lease
expires  June  30,  1999 with annual lease rent of $23,000  unadjusted  for
additional  rent  for  the  Company's pro rata  share  of  building  taxes,
operating  expenses  and  management expenses.   Under  the  current  lease
agreement, the Company will pay a minimum of $35,000 through the  remaining
term  of  the  lease.  The rent expense will be approximately  $35,000  for
1998.  The lease contains no renewal or purchase option clause.  The leased
space  cannot  be sublet without written approval of lessor.  Rent  expense
for  1997,  1996 and 1995 was approximately $35,000, $61,000  and  $69,000,
respectively.


ITEM 3.  LEGAL PROCEEDINGS

The Company and its affiliates are named as defendants in a number of legal
actions arising primarily from claims made under insurance policies.  Those
actions  have  been  considered in establishing the Company's  liabilities.
Management 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.


ITEM 4.  SUBMISSION OF MATTERS OF A VOTE OF SECURITY HOLDERS

None

                                  10
<PAGE>
                               PART II


ITEM  5.   MARKET  FOR COMPANY'S COMMON STOCK AND RELATED SECURITY  HOLDERS
MATTERS

As  of  March 13, 1998, there was no established public trading market  for
the  Company's common stock.  The Company's common stock is not  listed  on
any exchange.

As  of December 31, 1997, no cash dividends had been declared on the common
stock of UII.

See  Note  7  in  the  accompanying financial  statements  for  information
regarding dividend restrictions.

On  May  13,  1997,  UII  effected a 1 for  14.2857  reverse  stock  split.
Fractional shares received a cash payment on the basis of $.70 for each old
share.   Prior  period numbers have been restated to  give  effect  of  the
reverse stock split.

Number of Common Shareholders as of March 13, 1998 is 6,487.


ITEM 6.     SELECTED FINANCIAL DATA

                                    FINANCIAL  HIGHLIGHTS
                            (000's omitted, except per share data)
                        1997       1996       1995        1994       1993
Net Operating
  Revenues           $ 1,186    $  1,791    $  2,234   $  1,667   $ 1,459
Operating Costs
  and Expenses       $   909    $  1,414    $  1,976   $  1,627   $ 1,384
Income taxes         $     0    $     0     $     0    $     0    $     0
Equity in loss
  of investees       $  (357)      (696)    $(2,406)   $  (384)   $  (580)
Net  loss            $   (79)   $  (319)    $(2,148)   $   (344)  $  (505)
Net loss
  per common share   $ (0.06)   $ (0.23)    $ (1.54)   $ (0.25)   $ (0.36)
Cash Dividend Declared
 per  common share   $     0    $     0     $     0    $     0    $     0
Total Assets         $12,840    $12,881     $13,386    $15,414    $14,919
Long Term
Obligations          $   902    $   902     $   902    $   902    $     0


                                      11
<PAGE>

ITEM 7.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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

RESULTS OF OPERATIONS

1997 COMPARED TO 1996

(a)  REVENUES

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

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


(b)  EXPENSES

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

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

(c)  EQUITY IN LOSS OF INVESTEES

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


    REVENUES OF UTG

    Premiums  and  policy  fee  revenues, net of reinsurance  premiums  and
    policy  fees, decreased 7% when comparing 1997 to 1996.   UTG  and  its
    subsidiaries   currently  writes  little  new   traditional   business,
    consequently,  traditional  premiums will decrease  as  the  amount  of
    traditional    business  in-force  decreases.   Collected  premiums  on
    universal  life  and interest sensitive products is  not  reflected  in
    premiums  and  policy  revenues because Generally  Accepted  Accounting
    Principles ("GAAP") requires that premiums collected on these types  of
    products be treated as deposit liabilities rather than revenue.  Unless
    UTG  and  its  subsidiaries' acquires a block of in-force  business  or
    marketing  changes its focus to traditional business,  premium  revenue
    will continue to decline.

                                     12
<PAGE>

    Another  cause for the decrease in premium revenues is related  to  the
    potential  change  in control of UTI over the last  two  years  to  two
    different  parties.   During September of 1996, it was  announced  that
    control  of  UTI would pass to an unrelated party, but  the  change  in
    control  did  not  materialize.   At  this  writing,  negotiations  are
    progressing with a different unrelated party for the change in  control
    of   UTI.  Please  refer  to  the Notes to the  Consolidated  Financial
    Statements of UTG for additional information.  The possible changes and
    resulting  uncertainties have hurt the insurance companies' ability  to
    recruit and maintain sales agents.

    New  business  production decreased significantly  over  the  last  two
    years.   New  business  production decreased  43%  or  $3,935,000  when
    comparing 1997 to 1996.  In recent years, the insurance industry  as  a
    whole has experienced a decline in the total number of agents who  sell
    insurance  products,  therefore competition  has  intensified  for  top
    producing  sales agents.  The relatively small size of  our  companies,
    and  the resulting limitations, have made it challenging to compete  in
    this area.

    A  positive impact on premium income is the improvement of persistency.
    Persistency is a measure of insurance in force retained in relation  to
    the  previous year.  The average persistency rate for all  policies  in
    force  for  1997  and  1996  has been approximately  89.4%  and  87.9%,
    respectively.

Net  investment  income  decreased  6%  when  comparing 1997 to 1996.   The
decrease   relates  to the decrease in invested assets from  a  coinsurance
agreement.    UTG's  insurance subsidiary UG entered into   a   coinsurance
agreement  with  First International Life Insurance Company  ("FILIC"),  an
unrelated party, as of September 30, 1996.  During 1997, FILIC  changed its
name  to Park Avenue Life Insurance Company ("PALIC").  Under  the terms of
the  agreement,  UG  ceded to FILIC substantially all of  its  paidup  life
insurance policies.  Paid-up life insurance generally refers to non-premium
paying   life   insurance  policies.   At  closing  of the transaction,  UG
received  a  coinsurance  credit  of  $28,318,000  for  policy  liabilities
covered under the agreement.  UG transferred assets  equal to  the   credit
received.    This   transfer   included   policy   loans    of   $2,855,000
associated  with policies under the agreement and a net  cash  transfer  of
$19,088,000, after deducting the ceding commission  due  UG of  $6,375,000.
To  provide  the cash required to be transferred  under the  agreement,  UG
sold $18,737,000 of fixed maturity investments.

The overall investment yields for 1997, 1996 and 1995, are 7.25%, 7.31% and
7.14%,  respectively.  Since 1995 investment yield  improved  due   to  the
fixed   maturity  investments.   Cash  generated   from   the   sales    of
universal  life  insurance products, has been invested primarily   in   our
fixed maturity portfolio.

The   investments  are generally managed to match related   insurance   and
policyholder   liabilities.  The comparison of   investment   return   with
insurance  or  investment product crediting rates establishes  an  interest
spread.  The minimum interest spread between earned and credited  rates  is
1%   on   the  "Century  2000"  universal life  insurance  product,   which
currently   is   the   primary sales product.  UTG and  its   subsidiaries'
monitor  investment  yields, and when necessary adjusts  credited  interest
rates  on its insurance products to preserve targeted interest spreads.  It
is   expected  that monitoring of the interest spreads by  management  will
provide the necessary margin to adequately provide for associated costs  on
the  insurance policies the Company currently has in force  and will  write
in the future.

Realized  investment losses were $279,000 and $466,000 in  1997  and  1996,
respectively.   UTG  and its subsidiaries sold two foreclosed  real  estate
properties  that resulted in approximately $357,000 in realized  losses  in
1996.    There   were  other  gains and losses  during  the   period   that
comprised  the remaining amount reported but were immaterial in  nature  on
an individual basis.


                                    13


<PAGE>


EXPENSES OF UTG

Life  benefits,  net of reinsurance benefits and claims, decreased  11%  in
1997  as  compared to 1996.  The decrease in premium revenues  resulted  in
lower   benefit   reserve   increases in 1997.  In addition,   policyholder
benefits   decreased  due  to  a decrease in  death   benefit   claims   of
$162,000.

In   1994,  UG became aware that certain new insurance business  was  being
solicited by certain agents and issued to individuals considered to  be not
insurable   by  UTG  and its subsidiaries' standards.   These   nonstandard
policies had a face amount of $22,700,000 and represented  1/2 of 1% of the
insurance in-force in 1994.  Management's initial analysis indicated   that
expected   death  claims  on  the  business   in-force   was  adequate   in
relation   to   mortality  assumptions  inherent   in  the  calculation  of
statutory  reserves.  Nevertheless, management determined it   was  in  the
best interest of UTG and its subsidiaries' to repurchase as many of the non-
standard policies as possible.  Through December 31, 1996, the UTG and  its
subsidiaries' spent approximately $7,099,000  for the  settlement  of  non-
standard  policies and for the legal  defense  of related  litigation.   In
relation   to   settlement  of  non-standard   policies   UTG    and    its
subsidiaries'  incurred life benefit costs of $3,307,000, and  $720,000  in
1996  and  1995,  respectively.  UTG and its subsidiaries' incurred   legal
costs  of  $906,000 and $687,000  in  1996  and  1995, respectively.    All
policies  associated   with   this   issue   have   been  settled   as   of
December 31, 1996.  Therefore, expense reductions  for 1997 would follow.

Commissions   and   amortization  of deferred  policy   acquisition   costs
decreased  14% in 1997 compared to 1996. The decrease is due  primarily due
to  a  reduction in commissions paid.  Commissions decreased 19%   in  1997
compared   to 1996.  The decrease in commissions was  due  to  the  decline
in   new   business  production.  There is a direct   relationship  premium
revenues  and commission expense.  First year premium production  decreased
43%  and  first  year commissions decreased 33% when   comparing  1997   to
1996.   Amortization  of deferred  policy  acquisition  costs decreased  6%
in   1997  compared  to 1996.   Management  would  expect commissions   and
amortization  of  deferred policy acquisition  costs  to  decrease  in  the
future if premium revenues continue to decline.

Amortization   of  cost  of insurance acquired  decreased   56%   in   1997
compared  to 1996.  Cost of insurance acquired is amortized in relation  to
expected  future profits, including direct charge-offs for  any  excess  of
the   unamortized asset over the projected future profits.   UTG   and  its
subsidiaries'  did  not have any charge-offs  during  the  periods  covered
by   this   report.    The decrease in  amortization  during   the  current
period   is   a   normal fluctuation due to the  expected  future  profits.
Amortization  of cost of insurance acquired  is  particularly sensitive  to
changes  in  persistency  of  certain blocks of  insurance   inforce.   The
improvement  of  persistency during the year  had  a   positive  impact  on
amortization of cost of insurance acquired.  Persistency is a  measure   of
insurance  in  force  retained in relation  to  the   previous  year.   The
average  persistency rate for all policies in force for  1997 and 1996  has
been approximately 89.4% and 87.9%, respectively.

Operating   expenses   decreased  21% in  1997  compared   to   1996.   The
decrease   in   operating expenses is directly related to   settlement   of
certain   litigation   in  December of 1996.  UTG and   its   subsidiaries'
incurred   legal   costs of $0, $906,000 and $687,000 in 1997,   1996   and
1995,   respectively  in relation to the settlement of   the   non-standard
insurance policies.

Interest expense decreased 4% in 1997 compared to 1996.  Since December 31,
1996,    notes    payable  decreased  approximately   $758,000.     Average
outstanding indebtedness was $19,461,000 with an average cost  of  8.6%  in
1997  compared  to average outstanding indebtedness of 20,652,000  with  an
average  cost of 8.5% in 1996.  In March 1997, the base interest  rate  for
most of the notes payable increased a quarter of a point. The base rate  is
defined   as   the floating daily, variable  rate  of  interest  determined
and   announced  by  First of America Bank.  Please   refer   to  Note   12
"Notes  Payable" in the Notes to the  Consolidated  Financial Statements of
UTG for more information.


                                   14

<PAGE>

     NET LOSS OF UTG

    UTG  had  a  net  loss of $923,000 in 1997 compared to a  net  loss  of
    $1,661,000  in  1996.   The  improvement is  directly  related  to  the
    decrease  in life benefits and operating expenses primarily  associated
    with  the  1996 settlement and other related costs of the  non-standard
    life insurance policies.


(d) NET LOSS

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


RESULTS OF OPERATIONS

1996 COMPARED TO 1995

(a)  REVENUES

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

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


(b)  EXPENSES

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

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


(c)  EQUITY IN LOSS OF INVESTEES

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

    REVENUES OF UTG

    Premium  and policy fee revenues, net of reinsurance premium, decreased
    7%  when  comparing  1996 to 1995. The decrease in  premium  income  is
    primarily attributed to a 15% decrease in new business production.  UTG
    and  its  subsidiaries' changed its marketing strategy from traditional
    life   insurance   products  to  universal  life  insurance   products.
    Universal life and interest sensitive products contribute only the risk
    charge  to  premium  income,  however  traditional  insurance  products
    contribute  all  monies  received  to  premium  income.   UTG  and  its
    subsidiaries'  changed  its marketing strategy  to  remain  competitive
    based on consumer demand.

                                    15
    <PAGE>

    In addition, UTG and its subsidiaries' changed its focus from primarily
    a  broker  agency  distribution  system  to  a  captive  agent  system.
    Business written by the broker agency force, in recent years,  did  not
    meet  UTG and its subsidiaries' expectations.  With the change in focus
    of  distribution  systems, most of the broker agents  were  terminated.
    (The  termination  of  the broker agency force caused  a  non-recurring
    write  down  of the value of agency force asset in 1995, see discussion
    of  amortization of agency force for further details.).  The change  in
    distribution  systems effectively reduced the total  number  of  agents
    representing and producing business.  Broker agents sell insurance  and
    related  products for several companies.  Captive agents sell for  only
    one company.

    A  positive impact on premium income is the improvement of persistency.
    Persistency is a measure of insurance in force retained in relation  to
    the  previous year.  Average persistency rate for all policies in force
    for 1996 and 1995 has been approximately 87.9% and 87.3%, respectively.

    Net   investment income increased 3% when comparing 1996 to  1995.  The
    overall  investment  yields  for 1996 and 1995  are  7.31%  and  7.14%,
    respectively.   The  improvement  in  investment  yield  is   primarily
    attributed  to  fixed maturity investments.  Cash  generated  from  the
    sales of universal life insurance products, has been invested primarily
    in our fixed investment portfolio.

    The  investments are generally managed to match related  insurance  and
    policyholder  liabilities.  The comparison of  investment  return  with
    insurance or investment product crediting rates establishes an interest
    spread.  The minimum interest spread between earned and credited  rates
    is  1%  on  the "Century 2000" universal life insurance product,  which
    currently  is  the  primary sales product.  UTG and  its  subsidiaries'
    monitors   investment  yields,  and  when  necessary  adjusts  credited
    interest  rates on its insurance products to preserve targeted interest
    spreads.   It  is expected that monitoring of the interest  spreads  by
    management will provide the necessary margin to adequately provide  for
    associated  costs  on the insurance policies UTG and its  subsidiaries'
    currently has in force and will write in the future.

    Realized investment losses were $466,000 and $114,000 in 1996 and 1995,
    respectively  UTG  and  its subsidiaries' sold  two   foreclosed   real
    estate  properties that resulted in approximately $357,000 in  realized
    losses   in 1996.  There were other gains and losses during the  period
    that  comprised  the remaining amount reported but were  immaterial  in
    nature on an individual basis.


      EXPENSES OF UTG

     Life  benefits,  net of reinsurance benefits and claims,  increased 2%
     compared  to  1995.  The increase in life benefits is due primarily to
     settlement expenses discussed in the following paragraph:

     In   1994,  UG  became aware that certain new insurance  business  was
     being solicited by certain agents and issued to individuals considered
     to  be  not   insurable   by   UTG  and its  subsidiaries'  standards.
     These   nonstandard  policies had a face  amount  of  $22,700,000  and
     represented    1/2   of  1%  of  the  insurance  in-force   in   1994.
     Management's initial analysis indicated  that  expected  death  claims
     on  the  business  in-force  was adequate  in  relation  to  mortality
     assumptions   inherent   in                            the calculation
     of statutory reserves.  Nevertheless, management determined it  was in
     the  best interest of UTG and its subsidiaries' to repurchase as  many
     of  the non-standard policies as possible.  Through December 31, 1996,
     UTG  and  its  subsidiaries' spent approximately $7,099,000  for   the
     settlement  of  non-standard policies and  for  the  legal  defense of
     related   litigation.   In  relation  to  settlement  of  non-standard
     policies  UTG   and   its   subsidiaries incurred  life  benefits   of
     $3,307,000  and $720,000  in  1996  and 1995, respectively.   UTG  and
     its   subsidiaries' incurred  legal  costs  of  $906,000 and  $687,000
     in   1996  and  1995, respectively.  All the policies associated  with
     this issue  have  been settled  as  of December 31, 1996.  UTG and its
     insurance subsidiaries' has  approximately $3,742,000 of insurance in-
     force and  $1,871,000 of reserves  from  the  issuance of paid-up life
     insurance   policies   for  settlement  of   matters  related  to  the
     original non-standard  policies. Management  believes the reserves are
     adequate in relation to  expected mortality on this block of in-force.

                                      16
     <PAGE>

     Commissions   and   amortization   of  deferred   policy   acquisition
     costs decreased  14%  in  1996 compared to 1995. The decrease  is  due
     to   a  decrease  in  commissions expense.  Commissions decreased  15%
     in   1996 compared  to 1995.  The decrease in commissions was  due  to
     the   decline  in   new   business  production.   There  is  a  direct
     relationship   between  premium revenues  and   commission   expenses.
     First    year    premium  production  decreased  15%  and  first  year
     commissions   decreased   32%   when   comparing    1996    to   1995.
     Amortization of deferred policy  acquisition costs  decreased  12%  in
     1996   compared  to  1995.    Management   expects  commissions    and
     amortization of deferred policy acquisition  costs    to  decrease  in
     the future if premium revenues continue to decline.

    Amortization  of  cost  of insurance acquired  increased  26%  in  1996
    compared  to 1995.  Cost of insurance acquired is amortized in relation
    to expected future profits, including direct charge-offs for any excess
    of  the  unamortized asset over the projected future profits.  UTG  and
    its  subsidiaries'  did  not have any charge-offs  during  the  periods
    covered  by  this  report.   The increase in  amortization  during  the
    current  period  is  a  normal fluctuation due to the  expected  future
    profits.   Amortization of cost of insurance acquired  is  particularly
    sensitive to changes in persistency of certain blocks of insurance   in
    force.

    UTG  and its subsidiaries' reported a non-recurring write down of value
    of  agency  force of $0 and $8,297,000 in 1996 and 1995,  respectively.
    The  write  down  was  directly related to the change  in  distribution
    systems.  UTG and its subsidiaries' changed its focus from primarily  a
    broker  agency distribution system to a captive agent system.  Business
    produced  by  the  broker agency force in recent  years  did  not  meet
    expectations.   With the change in focus of distribution systems,  most
    of  the broker agents were terminated.  The termination of most of  the
    agents  involved  in the broker agency force caused management  to   re
    evaluate  and  write-off the value of the agency force carried  on  the
    balance sheet.

    Operating expenses increased 6% in 1996 compared to 1995.  The  primary
    factor  that  caused  the increase in operating  expenses  is  directly
    related  to   increased  legal  costs  and  reserves   established  for
    litigation.   The legal costs are due to the settlement of non-standard
    insurance  policies as was discussed in the review  of  life  benefits.
    UTG and its subsidiaries' incurred legal costs of $906,000 and $687,000
    in 1996 and 1995, respectively in relation to the settlement of the non
    standard insurance policies.

    Interest  expense  decreased  12% in  1996  compared  to  1995.   Since
    December  31,  1995,  notes payable decreased approximately  $1,623,000
    that has directly attributed to the decrease in interest expense during
    1996.    Interest  expense  was  also  reduced,  as  a  result  of  the
    refinancing  of  the senior debt under which the new interest  rate  is
    more  favorable.   Please  refer to Note  12  "Notes  Payable"  of  the
    Consolidated  Notes  to  the  Financial  Statements  of  UTG  for  more
    information on this matter.

    NET LOSS OF UTG

    UTG and its subsidiaries' had a net loss of $1,661,000 in 1996 compared
    to  a  net  loss  of  $5,321,000 in 1995.  The  net  loss  in  1996  is
    attributed  to  the  increase in life benefits net of  reinsurance  and
    operating  expenses  primarily associated  with  settlement  and  other
    related costs of the non-standard life insurance policies.


(d) NET LOSS

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


                                   17


<PAGE>


FINANCIAL CONDITION

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


LIQUIDITY AND CAPITAL RESOURCES

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

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

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

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

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

                                  18
<PAGE>

REGULATORY ENVIRONMENT

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

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

The  insurance regulatory framework continues to be scrutinized by  various
states,  the  federal government and the National Association of  Insurance
Commissioners  ("NAIC").   The  NAIC is  an  association  whose  membership
consists  of the insurance commissioners or their designees of the  various
states.   The  NAIC  has  no  direct regulatory  authority  over  insurance
companies,  however  its primary purpose is to provide  a  more  consistent
method  of  regulation  and  reporting  from  state  to  state.  This    is
accomplished  through  the  issuance of model  regulations,  which  can  be
adopted  by individual states unmodified, modified to meet the state's  own
needs  or  requirements, or dismissed entirely.  Most  states   also   have
insurance  holding  company  statutes   which   require  registration   and
periodic   reporting   by   insurance  companies    controlled   by   other
corporations  licensed  to  transact  business  within   their   respective
jurisdictions.   The insurance affiliates are subject to  such  legislation
and  registered as controlled insurers in those jurisdictions in which such
registration is required.  Statutes vary from state to state but  typically
require periodic disclosure, concerning the corporation, that controls  the
registered  insurers and all affiliates of such corporation.  In  addition,
prior notice to, or approval by, the state insurance commission of material
intercorporate  transfers  of  assets, reinsurance  agreements,  management
agreements  (see  Note  9  in  the  notes  to  the  consolidated  financial
statements),  and  payment of dividends (see note 2 in  the  notes  to  the
consolidated  financial statements) in excess of specified amounts  by  the
insurance subsidiary, within the holding company system, are required.

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

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

                                           19
<PAGE>

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

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

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

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


ACCOUNTING AND LEGAL DEVELOPMENTS

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

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

                                   20
<PAGE>


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

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

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

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

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

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


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

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


YEAR 2000 ISSUE

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

                                   21
<PAGE>

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


PROPOSED MERGER

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

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


SUBSEQUENT EVENT

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

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

                                    22
<PAGE>


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

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

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

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

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

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

                                     23
<PAGE>

ITEM 8.   FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA


Listed  below  are the financial statements included in this  Part  of  the
Annual Report on SEC Form 10-K:

                                                     Page No.
UNITED INCOME, INC.


Independent Auditor's Report for the
  Years ended December 31, 1997, 1996, 1995              25



  Balance Sheets                                         26



  Statements of Operations                               27



  Statements of Shareholders' Equity                     28



  Statements of Cash Flows                               29



  Notes to Financial Statements                       30-38





ITEM  9.    DISAGREEMENTS  WITH  ACCOUNTANTS ON  ACCOUNTING  AND  FINANCIAL
DISCLOSURE

None
                                    24


<PAGE>




                          INDEPENDENT AUDITORS' REPORT





Board of Directors and Shareholders
United Income, Inc.


     We have audited the accompanying balance sheets of United Income, Inc.
(an  Ohio  corporation) as of December 31, 1997 and 1996, and  the  related
statements of operations, shareholders' equity, and cash flows for each  of
the  three  years  in the period ended December 31, 1997.  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 financial position of United Income,
Inc.  as  of  December 31, 1997 and 1996, and the results of its operations
and its cash flows for each of the three years in the period ended December
31, 1997, in conformity with generally accepted accounting principles.


                                   KERBER, ECK & BRAECKEL LLP




Springfield, Illinois
March 26, 1998




                                     25
<PAGE>

<TABLE>
UNITED INCOME, INC. BALANCE SHEETS
As of December 31, 1997 and 1996




                                     ASSETS
                                                1997          1996

<S>                                        <C>           <C>
Cash and cash equivalents                  $    710,897  $    439,676
Mortgage loans                                  121,520       122,853
Notes receivable from affiliate                 864,100       864,100
Accrued interest income                          12,068        11,784
Property and equipment (net of accumulated
  depreciation of $93,648 and $92,140)            1,070         2,578
Investment in affiliates                     11,060,682    11,324,947
Receivable from affiliate                        23,192        31,837
Other assets (net of accumulated amortization
  of $138,810 and $101,794)                      46,258        83,274
     Total assets                          $ 12,839,787  $ 12,881,049



                      LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities and accruals:
Convertible debentures                      $   902,300  $    902,300
Other liabilities                                 1,534         1,273
     Total liabilities                          903,834       903,573

Shareholders' equity:
Common stock - no par value, stated value $.033
  per share.  Authorized 2,310,001 shares - 1,391,919
  and 1,392,130 shares issued after deducting
  treasury shares of 177,590 and 177,590         45,934       45,940
Additional paid-in capital                   15,242,365   15,244,471
Unrealized depreciation of investments
  held for sale of affiliate                    (19,603)     (59,508)
Accumulated deficit                          (3,332,743   (3,253,427)
     Total shareholders' equity              11,935,953   11,977,476
     Total liabilities and
      shareholders' equity                  $12,839,787  $12,881,049

</TABLE>
                          See accompanying notes.

                                           26

<PAGE>

<TABLE>
UNITED INCOME, INC.
STATEMENTS OF OPERATIONS
Three Years Ended December 31, 1997


                                       1997          1996          1995
<S>                               <C>           <C>           <C>
Revenues:

  Interest income                 $     27,127  $     13,099  $     16,516
  Interest income from affiliates       82,579        79,433        71,646
  Service agreement income
   from affiliates                     989,295     1,567,891     2,015,325
Other income from affiliates            87,073     127,922       129,627
Realized investment gains                  0         2,599           905
  Other income                              48             3           130
                                     1,186,122     1,790,947     2,234,149
Expenses:

  Management fee to affiliate          743,577     1,240,735     1,809,195
  Operating expenses                    80,173        89,529        78,505
  Interest expense                      85,155        84,027        88,538
                                       908,905     1,414,291     1,976,238

Gain before income taxes and equity
  in loss of investees                 277,217       376,656       257,911
Provision for income taxes                   0             0             0
Equity in loss of investees           (356,533)     (695,739)   (2,405,813)
Net loss                          $    (79,316) $   (319,083) $ (2,147,902)


Net loss per
  common share                    $      (0.06) $      (0.23) $      (1.54)

Average common
  shares outstanding                 1,391,996     1,392,084     1,392,060

</TABLE>

                          See accompanying notes.

                                    27

<PAGE>
<TABLE>

UNITED INCOME, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
Three Years Ended December 31, 1997
                                            1997          1996      1995
<S>                                    <C>          <C>          <C>
Common stock
  Balance, beginning of year           $    45,940  $    45,938  $   45,938
  Exercise of stock options                      0            2           0
  Stock retired from purchase of fractional
   shares of reverse stock split                (6)           0           0
  Balance, end of year                 $    45,934  $    45,940  $   45,938



Additional paid-in capital
  Balance, beginning of year           $15,244,471  $15,243,773 $15,243,773
  Exercise of stock options                      0          698           0
  Stock retired from purchase of fractional
   shares of reverse stock split            (2,106)           0           0
  Balance, end of year                 $15,242,365  $15,244,471 $15,243,773
Unrealized appreciation (depreciation) of
investments held for sale
  Balance, beginning of year           $   (59,508) $      (236) $  (99,907)
  Change during year                        39,905      (59,272)     99,671
  Balance, end of year                 $   (19,603) $   (59,508) $     (236)

Accumulated deficit
  Balance, beginning of year           $(3,253,427) $(2,934,344) $ (786,442)
  Net loss                                  79,316)    (319,083) (2,147,902)
  Balance, end of year                 $(3,332,743) $(3,253,427)$(2,934,344)
Total shareholders' equity,
  end of year                          $11,935,953  $11,977,476 $12,355,131

</TABLE>
                          See accompanying notes.



                                           28

<PAGE>

<TABLE>
UNITED INCOME, INC.
STATEMENTS OF CASH FLOWS
Three Years Ended December 31, 1997
                                     1997         1996          1995
<S>                             <C>           <C>          <C>
Increase (decrease) in cash and
 cash equivalents
Cash flows from operating activities:
  Net loss                             $    (79,316) $  (319,083) $(2,147,902)
Adjustments to reconcile net loss to
   net cash provided by (used in)
    operating activities
Depreciation and amortization                38,524       45,331       52,169
Gain on payoff of mortgage loans                  0       (2,599)           0
  Accretion of discount
   on mortgage loans                           (266)        (481)      (1,591)
  Compensation expense through
   stock option plan                              0          667            0
Equity in loss of investees                 356,533      695,739    2,405,813
Changes in assets and liabilities:
  Change in accrued interest income            (284)      (4,744)      (1,713)
Change in receivable from affiliates          8,645     (119,706)      25,598
  Change in other liabilities                   261      (39,449)      (5,469)
Net cash provided by
  operating activities                      324,097      255,675      326,905

Cash flows from investing activities:
  Change in notes receivable from affiliate       0     (150,000)           0
  Purchase of investments in affiliates     (52,363)           0      (26,091)
  Capital contribution to investee                0      (94,000)     (47,000)
  Sale of investments in affiliates               0            0        1,810
  Payments of principal on mortgage loans     1,599       62,434        4,480
  Purchase of mortgage loan                       0            0     (126,000)
  Proceeds from sale of
   property and equipment                         0        1,164            0
Net cash used in investing activities       (50,764)    (180,402)    (192,801)

Cash flows from financing activities:
  Proceeds from sale of common stock              0           33            0
  Payment for fractional shares
   from reverse stock split                  (2,112)           0            0
Net cash provided by (used in)
  financing activities                       (2,112)          33            0

Net increase in cash and
  cash equivalents                          271,221       75,306      134,104
Cash and cash equivalents
  at beginning of year                      439,676      364,370      230,266
Cash and cash equivalents
  at end of year                        $   710,897  $   439,676  $   364,370


</TABLE>


                          See accompanying notes.



                                    29



<PAGE>

UNITED INCOME, INC.
NOTES TO FINANCIAL STATEMENTS

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A. ORGANIZATION   -   At December 31, 1997, the affiliates  of   United
   Income, Inc. were as Depicted on the following organizational chart.

                          ORGANIZATIONAL CHART
                        AS OF DECEMBER 31, 1997



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").



                                     30

<PAGE>

The   summary   of   the   Company's   significant   accounting    policies
consistently  applied  in the preparation of the accompanying  consolidated
financial statements follows.

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

C.MORTGAGE  LOANS  - at unpaid balances, adjusted for amortization  premium
  or  discount,  less  allowance for possible losses.  Realized  gains  and
  losses  on  sales  of mortgage loans are recognized in net  income  on  a
  specific identification basis.

D.PROPERTY  AND  EQUIPMENT - Property and equipment is  recorded  at  cost.
  Depreciation  is  provided  using  a straight-line  method.   Accumulated
  depreciation  was  $93,648  in 1997 and $92,140  in  1996.   Depreciation
  expense  for  the years ended December 1997, 1996, and 1995  was  $1,508,
  $8,315, and $11,265 respectively.

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

F.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 No. 128,  the
  computation of diluted earnings per share is not shown since the  Company
  has  a loss from continuing operations in each period presented, and  any
  assumed conversion, exercise, or contingent issuance of securities  would
  have an antidilutive effect on earnings per share.

G.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.

H.RECLASSIFICATIONS - Certain prior year amounts have been reclassified  to
  conform  with the current year presentation.  Such reclassifications  had
  no  effect  on  previously reported net income (loss), total  assets,  or
  shareholders' equity.


2.   DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS

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

(a) Mortgage loans

Mortgage  loans  are  carried  at  the unpaid  principal  balances  net  of
unamortized  purchase  discounts.  Yields on  these  loans  exceed  current
mortgage  loan  rates  in the market.  Therefore, management  believes  the
market value of these loans is at least equal to carrying value.

(b) Notes receivable from affiliate

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

                                    31
<PAGE>

(c) Convertible debentures

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


3.   RELATED PARTY TRANSACTIONS

Effective  November  8,  1989, United Security  Assurance  Company  ("USA")
entered  a service agreement with its then direct parent, UII, for  certain
administrative services.  Pursuant to the terms of the agreement, USA  pays
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.  The Company recognized service agreement income of  $989,295,
$1,567,891 and $2,015,325 in 1997, 1996 and 1995, respectively.

Effective  September 1, 1990, UII entered a service agreement  with  United
Trust,  Inc.  (UTI)  for  certain  administrative  services.   Through  its
personnel,  UTI  performs  such services as may  be  mutually  agreed  upon
between  the  parties.  In compensation for its services, UII  pays  UTI  a
contractually established fee.  The Company incurred expenses of  $593,577,
$940,735  and $1,209,195 during 1997, 1996 and 1995, respectively, pursuant
to  the  terms of the service agreement with UTI.  In addition, the Company
incurred  $150,000,  $300,000  and $600,000 during  1997,  1996  and  1995,
respectively, as reimbursement for services performed on its behalf by FCC.

At  December  31, 1997, the Company owns $864,100 in notes receivable  from
affiliates.  The  notes  carry interest at  a  rate  of  1%  above   prime.
Interest  is  received  quarterly.  Principal is due  upon  maturity,  with
$150,000  maturing in 1999, $700,000 maturing in 2006 and $14,100  maturing
in 2012.


4.   STOCK OPTION PLANS

The Company has a stock option plan under which certain directors, officers
and  employees  may be issued options to purchase up to  31,500  shares  of
common  stock  at  $13.07  per share.  Options become  exercisable  at  25%
annually  beginning  one year after date of grant and expire  generally  in
five  years.   In  November 1992, 10,437 option shares  were  granted.   At
December 31, 1997, options for 451 shares were exercisable and options  for
20,576  shares were available for grant.  Options for 10,437 shares expired
during 1997.  No options were exercised during 1997.

A  summary  of the status of the Company's stock option plan for the  three
years ended December 31, 1997, and changes during the years ending on those
dates is presented below.


                          1997                1996                1995
                              Exercise           Exercise          Exercise
                     Shares     Price   Shares     Price   Shares    Price
 Outstanding  at
  beginning of year  10,888  $  13.07   10,888  $  13.07   10,437  $  13.07
 Granted                  0      0.00        0      0.00      451     13.07
 Exercised                0      0.00        0      0.00        0      0.00
 Forfeited           10,437     13.07        0      0.00        0      0.00
 Outstanding at
  end of year           451  $  13.07   10,888  $  13.07   10,888  $  13.07

 Options exercisable
  at year end           451  $  13.07   10,888  $  13.07   10,888  $  13.07

                                          32
<PAGE>

   The following information applies to options outstanding at December 31,
1997:

  Number outstanding                             451
  Exercise price                             $ 13.07
  Remaining contractual life                 3 years

On  January 15, 1991, the Company adopted an additional Non-Qualified Stock
Option  Plan  under  which certain employees and  sales  personnel  may  be
granted  options.   The  plan provides for the granting  of  up  to  42,000
options  at  an  exercise price of $.47 per share.  The  options  generally
expire  five  years from the date of grant.  Options for 10,220  shares  of
common stock were granted in 1991, options for 1,330 shares were granted in
1993  and  options for 301 shares were granted in 1995.  A total of  11,620
option shares have been exercised as of December 31, 1997.  At December 31,
1997, 231 options have been granted and are exercisable.  Options for 0 and
70 shares were exercised during 1997 and 1996, respectively.

  A  summary of the status of the Company's stock option plan for the three
  years  ended  December 31, 1997, and changes during the years  ending  on
  those dates is presented below.

                            1997               1996               1995
                               Exercise           Exercise           Exercise
                      Shares     Price   Shares     Price   Shares     Price
 Outstanding at
   beginning of year     231   $  0.47      301   $  0.47        0   $  0.47
 Granted                   0      0.00        0      0.00      301      0.47
 Exercised                 0      0.00      (70)     0.47        0      0.00
 Forfeited                 0      0.00        0      0.00        0      0.00
 Outstanding
  at end of year         231   $  0.47      231   $  0.47      301   $  0.47

 Options exercisable
   at year end           231   $  0.47      231   $  0.47      301   $  0.47
 Fair value of options
   granted during
   the year                     $ 0.00            $  0.00            $  8.40


   The following information applies to options outstanding at December 31,
1997:

  Number outstanding                             231
  Exercise price                              $ 0.47
  Remaining contractual life                 3 years


5.   INCOME TAXES

The  Company  has net operating loss carryforwards for federal  income  tax
purposes expiring as follows:

                                     UII
             2006                    $   41,314
             2007                       531,747

                TOTAL                $  573,061


The  Company  has  established a deferred tax asset  of  $200,571  for  its
operating  loss carryforwards and has established an allowance of  $200,571
against this asset.  The Company has no other deferred tax components which
would be reflected in the balance sheets.

                                   33
<PAGE>

The  provision for income taxes shown in the statements of operations  does
not  bear the normal relationship to pre-tax income as a result of  certain
permanent  differences.  The sources and effects of  such  differences  are
summarized in the following table:

                                            1997       1996       1995
Income tax at statutory rate of
  35% of income before income taxes      $ 97,026   $ 131,830   $ 90,269
Utilization of net operating loss
 carryforward                             (97,026    (133,866)   (92,049)
Depreciation                                    0       2,036      1,780
Provision for income taxes               $      0   $       0   $      0


6.  SUMMARIZED FINANCIAL INFORMATION OF UNITED TRUST GROUP, INC.

The  following provides summarized financial information for the  Company's
50% or less owned affiliate:

<TABLE>

                                  December 31,     December31,
ASSETS                              1997              1996
<S>                             <C>              <C>
Total investments               $ 222,601,494    $ 221,078,779
Cash and cash equivalents          15,763,639       16,903,789
Cost of insurance acquired         45,009,452       47,536,812
Other assets                       64,576,450       69,480,242

     Total assets               $ 347,951,035    $ 354,999,622


       LIABILITIES AND SHAREHOLDERS' EQUITY
Policy liabilities              $ 268,237,887    $ 268,771,766
Notes payable                      19,081,602       19,839,853
Deferred taxes                     12,157,685       11,591,086
Other liabilities                   4,053,293        6,335,866
     Total liabilities            303,530,467      306,538,571
Minority interests in
 consolidated subsidiaries         10,130,024       13,332,034


Shareholders' equity
Common stock no par value          45,926,705       45,926,705
Authorized 10,000 shares - 100 issued
Unrealized depreciation of
 investment in stocks                 (41,708)        (126,612)
Accumulated deficit               (11,594,453)     (10,671,076)
  Total shareholders' equity       34,290,544       35,129,017
  Total liabilities and
     shareholders' equity       $ 347,951,035    $ 354,999,622

</TABLE>
                                      34

<PAGE>
<TABLE>
                                      1997           1996           1995

<S>                             <C>             <C>             <C>
Premiums and policy fees,
    net  of  reinsurance        $  28,639,245   $  30,944,458   $  33,098,536
Net investment income              14,882,677      15,902,107      15,497,547
Other                                (171,304)       (370,454)          1,237
                                   43,350,618      46,476,111      48,597,320
Benefits, claims and
 settlement expenses               27,055,171      30,326,032      29,855,764
Other expenses                     16,776,537      22,953,093      30,725,908

                                   43,831,708      53,279,125      60,581,672

Loss before income tax and
  minority interest                  (481,090)     (6,803,014)    (11,984,352)
Income tax credit (provision)        (571,999)      4,643,961       4,724,792
Minority interest in loss of
  consolidated subsidiaries           129,712         498,356       1,938,684
Net loss                           $ (923,377)   $ (1,660,697)  $  (5,320,876)

</TABLE>

7.   SHAREHOLDER DIVIDEND RESTRICTION

At  December  31,  1997,  substantially all of  consolidated  shareholders'
equity  represents investment in affiliates.  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, 1997, UG had a statutory gain from operations of  $1,779,246.
At  December  31,  1997,  UG's statutory capital and  surplus  amounted  to
$10,997,365.   Extraordinary  dividends  (amounts  in  excess  of  ordinary
dividend  limitations) require prior approval of the insurance commissioner
and are not restricted to a specific calculation.

8.   CONVERTIBLE DEBENTURES

In   early  1994,  UII received $902,300 from the sale of  Debentures.  The
Debentures  were  issued pursuant to an indenture between the  Company  and
First  of  America  Bank  -  Southeast Michigan,  N.A.,  as  trustee.   The
Debentures are general unsecured obligations of UII, subordinate  in  right
of  payment  to any existing or future senior debt of UII.  The  Debentures
are exchangeable and transferable, and are convertible at any time prior to
March 31, 1999 into UII's Common Stock at a conversion price of $25.00  per
share,  subject  to  adjustment in certain  events.   The  Debentures  bear
interest  from March 31, 1994, payable quarterly, at a variable rate  equal
to  one  percentage point above the prime rate published in the Wall Street
Journal from time to time.  On or after March 31, 1999, the Debentures will
be  redeemable  at UII's option, in whole or in part, at redemption  prices
declining  from 103% of their principal amount.  No sinking  fund  will  be
established to redeem Debentures.  The Debentures will mature on March  31,
2004.  The Debentures are not listed on any national securities exchange or
the NASDAQ National Market System.

                                   35
<PAGE>

9.   NEW ACCOUNTING STANDARDS

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

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

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

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

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

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

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

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

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

                                    36
<PAGE>

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

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

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


11.   REVERSE STOCK SPLIT

On  May  13,  1997,  UII  effected a 1 for  14.2857  reverse  stock  split.
Fractional  shares received a cash payment on the basis of $0.70  for  each
old  share.  Prior period numbers have been restated to give effect of  the
reverse split.


12.   PROPOSED MERGER

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

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

A  vote of the shareholders of UTI and UII regarding the proposed merger is
anticipated to occur sometime during the third quarter of 1998.

                                   37
<PAGE>

<TABLE>
13.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)


                                   1997
                          1st           2nd          3rd          4th

<S>                 <C>          <C>          <C>           <C>
Interest income     $    2,659   $   2,680    $   10,806    $   10,982
Interest income/affil.  19,956      20,171        21,521        20,931
Service agreement
 income                294,095      87,596       213,518       194,086
Total revenues         342,657      33,661       266,816       242,988
Management fee         226,457      47,558       153,111       116,451
Operating expenses      50,318       9,682         9,912        10,261
Interest expense        20,866      21,430        21,429        21,430
Operating income        45,016      54,991        82,364        94,846
Net income (loss)       55,572      84,941      (136,852)      (82,977)
Net income (loss)
  per share               0.04        0.06         (0.10)        (0.06)


                                   1996
                       1st           2nd          3rd          4th

Net investment
 income            $     3,673   $   3,793    $    2,893    $    2,740
Interest income/affil.  18,078      20,717        20,249        20,389
Service agreement
 income                536,604     459,454       406,952       164,881
Total revenues         583,627     535,094       456,715       215,511
Management fee         421,963     425,672       294,170        98,930
Operating expenses      51,804      14,514        12,045        11,166
Interest expense        21,430      20,865        20,866        20,866
Operating income        88,430      74,043       129,634        84,549
Net income (loss)      235,469      50,795      (583,728)      (21,619)
Net income (loss)
  per share               0.01        0.00         (0.03)         0.00


                                   1995
                       1st           2nd          3rd          4th

Net investment
 income             $   1,431   $   7,283     $    4,064    $    3,738
Investment
 income/affil.         22,111      13,830         17,778        17,927
Service agreement
 income               505,118     529,411        494,867       485,929
Total revenues        570,284     587,002        540,031       536,832
Management fee        437,041     483,677        452,935       435,542
Operating expenses     46,264      23,951         12,243        (3,953)
Interest expense       21,485      22,676         22,384        21,993
Operating income
 (loss)                65,494      56,698         52,469        83,250
Net income (loss)     137,752    (530,781)       132,804    (1,887,677)
Net income (loss)
  per share              0.01       (0.03)          0.01         (0.11)

</TABLE>
                                      38
<PAGE>

                               PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

THE BOARD OF DIRECTORS

In  accordance  with the laws of Ohio and the Certificate of  Incorporation
and  Bylaws  of  the  Company, as amended, the Company is  managed  by  its
executive  officers  under the direction of the Board  of  Directors.   The
Board  elects executive officers, evaluates their performance,  works  with
management   in  establishing  business  objectives  and  considers   other
fundamental  corporate  matters, such as the issuance  of  stock  or  other
securities,  the  purchase  or  sale of a business  and  other  significant
corporate  business  transactions.  In the fiscal year ended  December  31,
1997, the Board met five times.  All directors attended at least 75% of all
meetings of the board except for Messers. Aveni and Teater.

The  Board  of  Directors  has  an Audit Committee  consisting  of  Messrs.
Berschet, Melville, and Mrs. Donahey.  The Audit Committee reviews and acts
or  reports  to  the Board with respect to various auditing and  accounting
matters,  the  scope of the audit procedures and the results  thereof,  the
internal  accounting  and control systems of the  Company,  the  nature  of
services  performed  for  the  Company and the  fees  to  be  paid  to  the
independent  auditors,  the  performance of the Company's  independent  and
internal  auditors and the accounting practices of the Company.  The  Audit
Committee also recommends to the full Board of Directors the auditors to be
appointed by the Board.  The Audit Committee met once in 1997.

The  Board  of Directors has a Nominating Committee consisting  of  Messrs.
Aveni,  Nash  and Teater.  The Nominating Committee reviews, evaluates  and
recommends  directors, officers and nominees for the  Board  of  Directors.
There  is  no  formal mechanism by which shareholders of  the  Company  can
recommend nominees for the Board of Directors, although any recommendations
by  shareholders of the Company will be considered.  Shareholders  desiring
to  make  nominations  to  the  Board  of  Directors  should  submit  their
nominations in writing to the Chairman of the Board no later than  February
1st  of the year in which the nomination is to be made.  The Committee  did
not meet in 1997.

The  compensation of the Company's executive officers is determined by  the
full Board of Directors (see report on Executive Compensation).

Under  the  Company's Certificate of Incorporation, the Board of  Directors
may  be  comprised  of  between five and twenty-one directors.   The  Board
currently  has  a  fixed  number of directors at six.   Shareholders  elect
Directors  to  serve  for  a period of one year  at  the  Company's  Annual
Shareholders' meeting.

The  following information with respect to business experience of the Board
of  Directors  has been furnished by the respective directors  or  obtained
from the records of the Company.

DIRECTORS
Name,  Age       Position with the Company, Business Experience  and  Other
Directorships

Vincent T. Aveni 71

               Director   of   the Company since  1984;  Chairman  Emeritus
               of  Realty One, Inc. and co-developer of the  Three  Village
               Condominium;  currently  serving  the  Ohio  Association  of
               Realtors as a trustee; past President of Ohio Association of
               Realtors;  past Regional Vice President of  the   Ohio   and
               Michigan National Association Marketing Institute, and  Farm
               and Land Institute.

Marvin W. Berschet 63

               Director  of  the  Company since 1984;  self-employed  since
               1956;     charter     member   of   National     Cattlemen's
               Association;  Board  member of Meat  Export  Federation  for
               seven  years  and Chairman of Beef Council for three  years;
               served  on  the  National Livestock and Meat  Board  for  16
               years; past President of Ohio Cattlemen's Association.


                                      39

<PAGE>


James E. Melville   52

               President  and  Chief Operating Officer  since   July  1997;
               Chief  Financial Officer of the Company  since  1993, Senior
               Executive    ;Vice   President   of   the   Company    since
               September  1992;  President of certain  Affiliate  Companies
               from  May 1989 until September 1991; Chief Operating Officer
               of  FCC from 1989 to September 1991; Chief Operating Officer
               of  certain  Affiliate Companies from 1984  until  September
               1991;  Senior Executive Vice President of certain  Affiliate
               Companies from 1984 until September 1989; Consultant to  UTI
               and  UTG from March to September, 1992; President and  Chief
               Operating   Officer  of  certain  affiliate  life  insurance
               companies  and  Senior  Executive  Vice  President  of   non
               insurance affiliate companies since 1992.

Charlie E. Nash  70

               Director  of the Company since 1984; Executive Director  and
               State  President of the Ohio Farmers Union;  serves  on  the
               Board  of  Directors  for  National  Farmers  Union  Uniform
               Pension  Committee and a member of its Investment  Committee
               for  pension funds; Chairman of the Putnam County  Board  of
               Elections; serves on the Board of Directors of Farmers Union
               Ventures,  Inc.,  Green  Thumb, Inc. and  Farmers  Education
               Foundation; he is a farm owner.

Larry E. Ryherd  58

               Chairman  of the Board of Directors since  1987,  CEO  since
               1992;  President since 1993 and a Director since  1987;  UTI
               Chairman  of  the  Board of Directors and a  Director  since
               1984,  CEO  since  1991; Chairman, CEO and Director  of  UTG
               since 1992; President, CEO and Director of certain affiliate
               companies since 1992.  Mr. Ryherd has served has Chairman of
               the Board, .CEO, President and COO of certain affiliate life
               insurance companies since 1992 and 1993.  He has also been a
               Director  of  the National Alliance of Life Companies  since
               1992 and is the 1994 Membership Committee Chairman; he is  a
               member  of  the  American  Council  of  Life  Companies  and
               Advisory Board Member of its Forum 500 since 1992.

Robert W. Teater  71

               Director  of  the Company since 1984; Director  of  UTG  and
               certain  affiliate companies since 1992; member of  Columbus
               School Board since 1991, President of Columbus School  Board
               since 1992; President of Robert W. Teater and Associates,  a
               comprehensive   consulting   firm   in   natural   resources
               development and organization management since 1983.


EXECUTIVE OFFICERS OF THE COMPANY

More  detailed information on the following officers of the Company appears
under "Election of Directors":

     Larry   E.  Ryherd       Chairman  of  the  Board  and  Chief
                              Executive Officer
     James E. Melville        President and Chief Operating Officer

Other officers of the company are set forth below:

Name,  Age     Position  with the Company, Business Experience  and   Other
               Directorships

George E. Francis  53

               Executive   Vice   President   since   July   1997;
               Secretary  of the Company since February 1993;  Director  of
               certain Affiliate Companies since October 1992; Senior  Vice
               President  and  Chief  Administrative  Officer  of   certain
               Affiliate   Companies  since  1989;  Secretary  of   certain
               Affiliate  Companies since March 1993; Treasurer  and  Chief
               Financial  Officer of certain Affiliate Companies from  1984
               until September 1992.

Theodore C. Miller  35

               Senior  Vice President and Chief Financial Officer
               since  July 1997; Vice President and Treasurer since October
               1992;  Vice  President and Controller of  certain  Affiliate
               Companies from 1984 to 1992.



                                    40

<PAGE>

Others not completing the current term:

Thomas F. Morrow

               Formerly  Director and President of  the   Company
               since 1992; retired effective July 31, 1997.

John K. Cantrell

               Formerly Chairman of the Board of Directors  since
               1984; succumbed after a long illness in November 1997.

Gertrude W. Donahey

               Formerly   Director  of  the  Company  since  1984, resigned
               from  the  Board of Directors effective December   9,  1997.
               Mrs. Donahey stepped down due to scheduling reasons.


ITEM 11.  EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION TABLE

The  following table sets forth certain information regarding  compensation
paid to or earned by the Company's Chief Executive Officer and each of  the
Executive Officers of the Company whose salary plus bonus exceeded $100,000
during  each  of  the Company's last three fiscal years.  Compensation  for
services  provided by the named executive officers to the Company  and  its
affiliates  is  paid  by  FCC as set forth in their employment  agreements.
(See Employment Contracts).

<TABLE>
                           SUMMARY COMPENSATION TABLE

                             Annual Compensation (1)

                                                               Other Annual
Name and                                                     Compensation (2)
Principal Position                              Salary($)          $

<S>                                 <C>          <C>             <C>
Larry E. Ryherd                     1997         400,000         18,863
Chairman of the Board               1996         400,000         17,681
Chief Executive Officer             1995         400,000         13,324

James E. Melville                   1997         237,000         29,538
President, Chief                    1996         237,000         27,537
Operating Officer                   1995         237,000         38,206(3)

George E. Francis                   1997         122,000          8,187
Executive Vice                      1996         119,000          7,348
President, Secretary                1995        119,000           4,441

</TABLE>

(1)  Compensation deferred at the election of named officers is included in
     this section.

(2)  Other   annual  compensation consists of interest earned  on  deferred
     compensation  amounts  pursuant to their employment agreements and the
     Company's  matching contribution to the First Commonwealth Corporation
     Employee Savings Trust 401(k) Plan.

(3)  Includes  $16,000  for the value of personal  perquisites  owing  Mr.
     Melville.


                                     41

<PAGE>

AGGREGATED  OPITON/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END  OPTION/SAR
VALUES

The  following table summarizes for fiscal year ending, December 31,  1997,
the  number  of  shares subject to unexercised options  and  the  value  of
unexercised options of the Common Stock of UTI held by the named  executive
officers.   The values shown were determined by multiplying the  applicable
number of unexercised share options by the difference between the per share
market  price  on December 31, 1997 and the applicable per  share  exercise
price.   There were no options granted to the named executive officers  for
the past three fiscal years.
<TABLE>


                    Number of Shares        Number of Securities Underlying
                     Acquired on     Value     Unexercised Options/SARs
                     Exercise (#)  Realized          ($) at FY-End(#)

Name                                         Exercisable      Unexercisable

<S>                      <C>          <C>       <C>                  <C>
Larry E. Ryherd          -            -         13,800               -
James E. Melville        -            -         30,000               -
George E. Francis        -            -          4,600               -


                                               Value of Unexercised In the
                                                  Money Options/SARs at
                                                       FY-End ($)

                                             Exercisable      Unexercisable
Larry E. Ryherd                                   -                  -
James E. Melville                                 -                  -
George E. Francis                                 -                  -

</TABLE>

COMPENSATION OF DIRECTORS

The  Company's  standard  arrangement for  the  compensation  of  directors
provide that each director shall receive an annual retainer of $2,400, plus
$300  for  each  meeting attended and reimbursement for  reasonable  travel
expenses.   The  Company's director compensation policy also provides  that
directors  who are employees of the Company do not receive any compensation
for  their  services as directors except for reimbursement  for  reasonable
travel expenses for attending each meeting.


EMPLOYMENT CONTRACTS

On July 31, 1997, Larry E. Ryherd entered into an employment agreement with
FCC.   Formerly, Mr. Ryherd had served as Chairman of the Board  and  Chief
Executive  Officer  of  the Company and its affiliates.   Pursuant  to  the
agreement,  Mr. Ryherd agreed to serve as Chairman of the Board  and  Chief
Executive  Officer  of  the  Company and in addition,  to  serve  in  other
positions  of  the  affiliated  companies if  appointed  or  elected.   The
agreement  provides for an annual salary of $400,000 as determined  by  the
Board  of  Directors.  The term of the agreement is for a  period  of  five
years.   Mr.  Ryherd  has  deferred portions of his  income  under  a  plan
entitling him to a deferred compensation payment on January 2, 2000 in  the
amount  of  $240,000 which includes interest at the rate  of  approximately
8.5%  per year.  Additionally, Mr. Ryherd was granted an option to purchase
up to 13,800 of the Common Stock of UTI at $17.50 per share.  The option is
immediately exercisable and transferable.  The option will expire  December
31, 2000.

FCC entered into an employment agreement dated July 31, 1997 with James  E.
Melville pursuant to which Mr. Melville is employed as President and  Chief
Operating  Officer  and  in addition, to serve in other  positions  of  the
affiliated  companies  if  appointed or elected  at  an  annual  salary  of
$238,200.   The term of the agreement expires July 31, 2002.  Mr.  Melville
has  deferred  portions  of his income under a  plan  entitling  him  to  a
deferred compensation payment on January 2, 2000 of $400,000 which includes
interest  at  the  rate of approximately 8.5% annually.  Additionally,  Mr.
Melville  was  granted  an option to purchase up to 30,000  shares  of  the
Common  Stock  of  UTI  at  $17.50 per share.  The  option  is  immediately
exercisable and transferable.  The option will expire December 31, 2000.

FCC entered into an employment agreement with George E. Francis on July 31,
1997.   Under  the  terms  of the agreement, Mr.  Francis  is  employed  as

                                   42
<PAGE>

Executive  Vice President of the Company at an annual salary  of  $126,200.
Mr. Francis also agreed to serve in other positions if appointed or elected
to  such  positions  without  additional compensation.   The  term  of  the
agreement expires July 31, 2000.  Mr. Francis has deferred portions of  his
income  under  a plan entitling him to a deferred compensation  payment  on
January  2,  2000  of  $80,000  which includes  interest  at  the  rate  of
approximately  8.5%  per year.  Additionally, Mr. Francis  was  granted  an
option  to purchase up to 4,600 shares of the Common Stock of UTI at $17.50
per  share.  The option is immediately exercisable and transferable.   This
option will expire on December 31, 2000.


REPORT ON EXECUTIVE COMPENSATION

INTRODUCTION

The  compensation of the Company's executive officers is determined by  the
full Board of Directors.  The Board of Directors strongly believes that the
Company's  executive officers directly impact the short-term and  long-term
performance  of  the  Company.   With this  belief  and  the  corresponding
objective  of  making  decisions that are  in  the  best  interest  of  the
Company's shareholders, the Board of Directors places significant  emphasis
on  the  design and administration of the Company's executive  compensation
plans.


EXECUTIVE COMPENSATION PLAN ELEMENTS

BASE SALARY.  The Board of Directors establishes base salaries each year at
a  level  intended to be within the competitive market range of  comparable
companies.   In addition to the competitive market range, many factors  are
considered  in  determining base salaries, including  the  responsibilities
assumed   by  the  executive,  the  scope  of  the  executive's   position,
experience,  length of service, individual performance and internal  equity
considerations.  During the last three fiscal years, there were no material
changes in the base salaries of the named executive officers.

STOCK  OPTIONS.  One  of the Company's priorities  is  for  the   executive
officers  to  be  significant shareholders so  that  the  interest  of  the
executives  are  closely aligned with the interests of the Company's  other
shareholders.  The Board of Directors believes that this strategy motivates
executives  to remain focused on the overall long-term performance  of  the
Company.  Stock  options are granted at the discretion  of  the  Board   of
Directors  and are intended to be granted at levels within the  competitive
market  range  of  comparable companies.  During 1993, each  of  the  named
executive  officers were granted options under their employment  agreements
for  the  Company's  Common Stock as described in the Employment  Contracts
section.   There  were no options granted to the named  executive  officers
during the last three fiscal years.

DEFERRED  COMPENSATION.  A very significant component of overall  Executive
Compensation  Plans is found in the flexibility afforded  to  participating
officers  in  the  receipt of their compensation.  The availability,  on  a
voluntary basis, of the deferred compensation arrangements as described  in
the  Employment  Contracts  section may prove to  be  critical  to  certain
officers, depending upon their particular financial circumstance.


CHIEF EXECUTIVE OFFICER

Larry  E. Ryherd has been Chairman of the Board and Chief Executive Officer
since  1988  and Chairman of the Board of the Company's parent, FCC,  since
1984.   The  Board  of Directors used the same compensation  plan  elements
described  above for all executive officers to determine Mr. Ryherd's  1997
compensation.

In  setting  both the cash-based and equity-based elements of Mr.  Ryherd's
compensation,  the  Board of Directors made an overall  assessment  of  Mr.
Ryherd's  leadership  in  achieving the Company's long-term  strategic  and
business goals.

Mr.  Ryherd's  base  salary reflects a consideration  of  both  competitive
forces  and  the  Company's performance.  The Board of Directors  does  not
assign specific weights to these categories.


                                  43

<PAGE>

The Company surveys total cash compensation for chief executive officers at
the  same  group of companies described under "Base Salary"  above.   Based
upon  its  survey,  the Company then determines a median  around  which  it
builds  a  competitive range of compensation for the CEO.  As a  result  of
this review, the Board of Directors concluded that Mr. Ryherd's base salary
was  in  the  low  end  of the competitive market,  and  his  total  direct
compensation (including stock incentives) was competitive for CEOs  running
companies comparable in size and complexity to the Company.

The  Board  of  Directors  considered the Company's  financial  results  as
compared to other companies within the industry, financial performance  for
fiscal  1997  as  compared  to fiscal 1996, the Company's  progress  as  it
relates to the Company's growth through acquisitions and simplification  of
the  organization, the fact that since the Company does not  have  a  Chief
Marketing  Officer, Mr. Ryherd assumes additional responsibilities  of  the
Chief  Marketing  Officer,  and Mr. Ryherd's  salary  history,  performance
ranking and total compensation history.

Through  fiscal 1997, Mr. Ryherd's annual salary was $400,000,  the  amount
the  Board  of Directors set in January 1996.  In July 1997, the  Board  of
Directors  reviewed Mr. Ryherd's salary.  Following a review of  the  above
factors,  the  Board  of  Directors  decided  to  recognize  Mr.   Ryherd's
performance  by  placing a greater emphasis on long-term incentive  awards,
and  therefore retained Mr. Ryherd's base salary at $400,000.   Conclusion.
The Board of Directors believes the mix of structured employment agreements
with   certain   key  executives,  conservative  market   based   salaries,
competitive  cash incentives for short-term performance and  the  potential
for    equity-based  rewards  for  long  term  performance   represents  an
appropriate balance.  This balanced Executive Compensation Plan provides  a
competitive and motivational compensation package to the executive  officer
team  necessary to continue to produce the results the Company  strives  to
achieve.   The  Board of Directors also believes the Executive Compensation
Plan  addresses  both the interests of the shareholders and  the  executive
team.

                             BOARD OF DIRECTORS

               Vincent T. Aveni         Charlie E. Nash
               Marvin W. Berschet       Larry E. Ryherd
               James E. Melville        Robert W. Teater



                             PERFORMANCE GRAPH

The following graph compares the cumulative total shareholder return on the
Company's  Common  Stock during the five fiscal years  ended  December  31,
1997,  with  the  cumulative  total return on the  NASDAQ  Composite  Index
Performance and the NASDAQ Insurance Stock Index (1):



                         Percent Change from Base

               NASDAQ         NASDAQ Insurance      UII

1992           100.00              100.00         100.00
1993           114.68              106.83         100.00
1994           111.93              100.49          92.00
1995           158.72              142.93          92.00
1996           194.95              162.93          40.00
1997           239.45              238.54          32.00


                               44
<PAGE>


(1)The  Company  selected  the NASDAQ Composite  Index  Performance  as  an
   appropriate comparison because the Company's Common Stock is not  listed
   on   any  exchange but the Company's Common Stock is traded in the  over
   the-counter  market.   Furthermore,  the  Company  selected  the  NASDAQ
   Insurance  Stock  Index as the second comparison  because  there  is  no
   similar  single  "peer  company" in the  NASDAQ  system  with  which  to
   compare  stock  performance and the closest additional  line-of-business
   index  which  could  be  found  was the NASDAQ  Insurance  Stock  Index.
   Trading activity in the Company's Common Stock is limited, which may  be
   in  part a result of the Company's low profile from not being listed  on
   any  exchange,  and  its  reported operating losses.   The  Company  has
   experienced  a  tremendous growth rate over  the  period  shown  in  the
   Return  Chart  with assets growing from approximately  $233  million  in
   1991  to  approximately $333 million in 1997.  The growth rate has  been
   the  result  of  acquisitions  of  other  companies  and  new  insurance
   writings.   The   Company  has  incurred  costs  of   conversions    and
   administrative  consolidations associated with  the  acquisitions  which
   has  contributed  to  the operating losses.  The  Return  Chart  is  not
   intended to forecast or be indicative of possible future performance  of
   the Company's stock.


The  foregoing  graph shall not be deemed to be incorporated  by  reference
into  any  filing of the Company under the Securities Act of  1933  or  the
Securities  Exchange  Act of 1934, except to the extent  that  the  Company
specifically incorporates such information by reference.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The  following persons served as directors of the Company during  1997  and
were  officers or employees of the Company or its affiliates  during  1997:
James E. Melville and Larry E. Ryherd.  Accordingly, these individuals have
participated in decisions related to compensation of executive officers  of
the Company and its affiliates.

During  1997,  the  following executive officers of the Company  were  also
members  of the Board of Directors of FCC, two of whose executive  officers
served  on  the  Board of Directors of the Company:  Messrs.  Melville  and
Ryherd.

During  1997, Larry E. Ryherd and James E. Melville, executive officers  of
the  Company, were also members of the Board of Directors of  UTI,  two  of
whose  executive officers served on the Board of Directors of the  Company:
Messrs. Melville, and Ryherd.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

PRINCIPLE HOLDERS OF SECURITIES

The  following  tabulation sets forth the name and address  of  the  entity
known  to be the beneficial owners of more than 5% of the Company's  Common
Stock  and  shows:   (i)  the  total  number  of  shares  of  Common  Stock
beneficially  owned by such person as of March 31, 1998 and the  nature  of
such  ownership; and (ii) the percent of the issued and outstanding  shares
of Common Stock so owned as of the same date.


Title                             Number of Shares        Percent
Of        Name and Address         and Nature of             of
Class     of Beneficial Owner   Beneficial Ownership       Class

Common    United Trust, Inc.          565,766              40.6%.
Stock no  5250 South Sixth Street
par value Springfield, IL 62703

                                  45
<PAGE>

SECURITY OWNERSHIP OF MANAGEMENT

The  following  tabulation shows with respect to each of the directors  and
nominees  of  the  Company, with respect to the Company's  chief  executive
officer  and  each  of the Company's executive officers whose  salary  plus
bonus  exceeded $100,000 for fiscal 1997, and with respect to all executive
officers and directors of the Company as a group:  (i) the total number  of
shares  of  all  classes of stock of the Company or any of its  parents  or
affiliates, beneficially owned as of March 31, 1998 and the nature of  such
ownership;  and  (ii) the percent of the issued and outstanding  shares  of
stock so owned as of the same date.

Title       Directors, Named Executive    Number of Shares    Percent
of           Officers, & All Directors &   and Nature of         of
Class       Executive Officers as a Group    Ownership          Class

UTI's       Vincent T. Aveni                      0              *
Common      Marvin W. Berschet                    0              *
Stock, no   George E. Francis                 4,600 (1)          *
Par value   James E. Melville                52,500 (2)         3.2%
            Charlie E. Nash                       0              *
            Larry E. Ryherd                 562,431 (3)        33.8%
            Robert W. Teater                      0              *
            All directors and
            executive officers              619,531            37.2%
            as a group (seven in number)

FCC's       Vincent T. Aveni                      0              *
Common      Marvin W. Berschet                    0              *
Stock,$1.00 George E. Francis                     0              *
Par value   James E. Melville                   544 (4)          *
            Charlie E. Nash                       0              *
            Larry E. Ryherd                       0              *
            Robert W. Teater                      0              *
            All  directors and
            executive officers                  544              *
            as a group (seven in number)

Company's   Vincent T. Aveni                  7,716 (5)          *
Common      Marvin W. Berschet                7,161 (6)          *
Stock, no   George E. Francis                     0              *
Par value   James E. Melville                     0              *
            Charlie E. Nash                   7,052 (7)          *
            Larry E. Ryherd                  47,250 (9)          *
            Robert W. Teater                  7,380 (8)          *
            All directors and
            executive officers               76,559            5.5%
            as a group (seven in number)


(1)Includes  4,600  shares  which  may be acquired  upon  the  exercise  of
   outstanding stock options.

(2)  James  E.  Melville owns 2,500 shares individually and  14,000  shares
     jointly with his spouse.  Includes: (i)  3,000 shares of UTI's Common Stock
     which are held beneficially in trust for his daughter, namely Bonnie J.
     Melville; (ii) 3,000 shares of UTI's Common Stock, 750 shares of which are
     in the name of Matthew C. Hartman, his nephew; 750 shares of which are in
     the name of Zachary T. Hartman, his nephew; 750 shares of which are in the
     name of Elizabeth A. Hartman, his niece; and 750 shares of which are in the
     name of Margaret M. Hartman, his niece; and (iii) 30,000 shares which may
     be  acquired  by James E. Melville upon exercise of outstanding  stock
     options.

                                      46

<PAGE>

(3)Larry  E.  Ryherd  owns 230,621 shares of UTI's Common Stock in his  own
   name.   Includes:  (i) 150,050 shares of UTI's Common Stock in the  name
   of  Dorothy LouVae Ryherd, his wife; (ii) 150,000 shares of UTI's Common
   Stock  which  are held beneficially in trust for the three  children  of
   Larry  E.  Ryherd and Dorothy LouVae Ryherd, namely Shari Lynette  Serr,
   Derek  Scott Ryherd and Jarad John Ryherd; (iii) 14,800 shares of  UTI's
   Common  Stock,  6,700 shares of which are in the name of  Shari  Lynette
   Serr,  1,200 shares of which are held in the name of Derek Scott Ryherd,
   6,900  shares  of which are in the name of Jarad John Ryherd;  (iv)  500
   shares  of  UTI's Common Stock held in the name of Larry  E.  Ryherd  as
   custodian for Charity Lynn Newby, his niece; (v) 500 shares held in  the
   name  of Larry E. Ryherd as custodian for Lesley Carol Newby, his niece;
   (vi)  2,000 shares held by Dorothy LouVae Ryherd, his wife as  custodian
   for  granddaughter, 160 shares held by Larry E. Ryherd as custodian  for
   granddaughter; and (vii) 13,800 shares which may be acquired by Larry E.
   Ryherd upon exercise of outstanding stock options.

(4)James E. Melville  owns  168 shares individually and 376 shares jointly
   with his spouse.

(5)Includes  272  shares owned directly by  Mr. Aveni's   brother  and  210
   shares owned directly by Mr. Aveni's son.

(6)Includes 42 shares owned directly by each of Mr. Berschet's two  sons and
   77 shares owned directly by Mr. Berschet's daughter, a total of 161 shares.


(7)Includes 47,250 shares beneficially in trust for the three children  of
   Larry E. Ryherd and Dorothy LouVae Ryherd, namely Shari Lynette Serr, Derek
   Scott Ryherd and Jarad John Ryherd.

(8)Includes 210 shares owned directly by Mr. Teater's spouse.

(9)In  addition,  Mr. Ryherd is a director and officer of UTI,  who  owns
   565,766  shares  (29.9%)  of  the Company.   Mr.  Ryherd  disclaims  any
   beneficial interest in the shares of the Company owned by UTI as the UTI
   board   of  directors  controls  the  voting  and  investment  decisions
   regarding such shares.

   * Less than 1%.

Except  as  indicated  above, the foregoing persons hold  sole  voting  and
investment power.

Directors  and  officers  of  the Company file periodic  reports  regarding
ownership of Company securities with the Securities and Exchange Commission
pursuant  to  Section  16(a) of the Securities  Exchange  Act  of  1934  as
amended, and the rules promulgated thereunder.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATED PARTY TRANSACTIONS

UTI  has a service agreement with its affiliate, UII (equity investee),  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.

The  Company has a service agreement with USA which states that USA  is  to
pay  the Company 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.  A subcontract agreement with UTI states that the Company
is  to pay UTI monthly fees equal to 60% of collected service fees from USA
as stated above.


                                   47


<PAGE>


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 $9,893,321, $9,927,000 and $10,464,000 under these arrangements  in
1997,  1996  and  1995, respectively.  UG paid $8,660,481,  $9,626,559  and
$10,164,000 to FCC in 1997, 1996 and 1995, respectively.

USA paid $989,295, $1,567,891 and $2,015,325 under their agreement with UII
for 1997, 1996 and 1995, respectively.  The Company paid $593,577, $940,734
and  $1,209,195  under their agreement with UTI for 1997,  1996  and  1995,
respectively.

Their  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 these 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".   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, UTI issued convertible notes for cash received totaling
$2,560,000 to seven individuals, all officers or employees of the  Company.
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 UTI 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.

Approximately  $1,048,000 of the cash received from  the  issuance  of  the
convertible  notes  was  used to acquire stock  holdings  of  UTI  and  the
Company's  of  Mr. Morrow and to acquire a portion of the UTI  holdings  of
Larry  E. Ryherd and his family.  The remaining cash received will be  used
by  UTI    to  provide  additional  operating  liquidity  and  for   future
acquisitions of life insurance companies.  On July 31, 1997, UTI acquired a
total of 126,921 of its own shares of common stock and 47,250 shares of the
Company's  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 of UTI.  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, UTI acquired a total of 97,499
shares of UTI 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 UTI 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 UTI  to  make
the  stock  more  attractive to the investment  community.   Following  the
transaction,  Mr.  Ryherd  and  his family own  approximately  31%  of  the
outstanding common stock of UTI.


PENDING CHANGE IN CONTROL OF UNITED TRUST, INC.

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

                                       48

<PAGE>


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


PROPOSED MERGER

On  March 25, 1997, the Board of Directors of UTI and the Company 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 the Company's shareholders.

UTI owns 53% of United Trust Group, Inc., an insurance holding company, and
the  Company  owns  47% of United Trust Group, Inc.  Neither  UTI  nor  the
Company  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 the Company regarding the  proposed
merger is anticipated to occur sometime during the third quarter of 1998.


RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

Kerber,  Eck and Braeckel LLP served as the Company's independent certified
public accounting firm for the fiscal year ended December 31, 1997 and  for
fiscal  year  ended December 31, 1996.  In serving its primary function  as
outside auditor for the Company, Kerber, Eck and Braeckel LLP performed the
following  audit  services:  examination of annual  consolidated  financial
statements;  assistance  and  consultation  on  reports  filed   with   the
Securities  and  Exchange Commission and; assistance  and  consultation  on
separate    financial    reports   filed  with    the    State    insurance
regulatory authorities pursuant to certain statutory requirements.


                                 49
<PAGE>

                               PART IV


ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K


(a) The following documents are filed as a part of the report:

 (1)  Financial Statements:
      See Item 8, Index to Financial Statements


 NOTE:   Schedules other than those listed above are omitted  because  they
are   not  required  or  the  information is  disclosed  in  the  financial
statements or footnotes.


(b) Reports on Form 8-K filed during fourth quarter.

 None

(c) Exhibits:

 Index to Exhibits (See Page 51-52).

                                  50

<PAGE>

                       INDEX TO EXHIBITS

 Exhibit
 Number


3(i)   (1)   Articles  of Incorporation for the Company dated  November
             2, 1987.

3(i)   (1)   Amended  Articles of Incorporation for the  Company  dated
             January 27,  1988.

3(ii)  (1)    Code of Regulations for the Company.

10(a)  (1)    Service Agreement between United Income, Inc.  and   United
              Security  Assurance Company dated November 8, 1989.

10(b)  (2)    Subcontract Service Agreement between United Income,   Inc.
              and United Trust, Inc. dated September 1, 1990.


10(c)  (2)    Non-Qualified Stock Option Plan

10(d)  (2)    Stock Option Plan

10(e)  (3)    Credit  Agreement  dated May  8,  1996  between  First  of
              America   Bank   -  Illinois,  N.A.,  as  lender  and  First
              Commonwealth Corporation, as borrower.

10(f)  (3)    $8,900,000 Term Note of First Commonwealth Corporation  to
              First of America Bank - Illinois, N.A. dated May 8, 1996.

10(g)  (3)    Coinsurance  Agreement dated September  30,  1996  between
              Universal Guaranty Life Insurance Company and First
              International  Life Insurance Company, including assumption
              reinsurance  agreement exhibit and amendments.

10(h)         Employment  Agreement dated as of July  31,  1997  between  Larry
              E. Ryherd and First Commonwealth Corporation

10(i)         Employment Agreement dated as of July 31, 1997 between  James
              E. Melville and First Commonwealth Corporation

10(j)         Employment  Agreement dated as of July 31, 1997 between  George
              E. Francis and First Commonwealth   Corporation.   Agreements
              containing  the  same  terms and conditions  excepting  title
              and  current salary  were  also  entered into by Joseph H.
              Metzger,   Brad  M.   Wilson, Theodore C. Miller, Michael K.
              Borden and Patricia  G. Fowler.

99(a) (1)     Order  of  Ohio Division of Securities registering  United
              Income, Inc.'s securities dated March 9, 1988.

99(b) (1)     Order  of  Ohio Division of Securities registering  United
              Income, Inc.'s Securities dated April 5, 1989.

99(c) (1)     Order  of  Ohio Division of Securities registering  United
              Income, Inc.'s Securities dated April 23, 1990.

99(d)         Audited financial statements of United Trust Group, Inc.


                                    51
<PAGE>

FOOTNOTE

(1)  Incorporated  by reference from the Company's Registration   Statement
     on Form 10, File  No.  0-18540,  filed  on April 30, 1990.

(2)  Incorporated by reference from the Company's Annual  Report on Form 10-
     K, File No. 0-18540, as of December  31, 1991.

(3)  Incorporated by reference from the Company's Annual  Report on Form 10-
     K, File No. 0-18540, as of December  31, 1996.


                                      52
<PAGE>

                              SIGNATURES

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


                         UNITED INCOME, INC.
Registrant


                                                    Date:  March 24, 1998
Vincent T. Aveni, Director


/s/   Marvin W. Berschet                            Date:  March 24, 1998
Marvin W. Berschet, Director


/s/   Charlie E. Nash                               Date:  March 24, 1998
Charlie E. Nash, Director


/s/   Larry E. Ryherd                               Date:  March 24, 1998
Larry E. Ryherd, Chairman of the
 Board, Chief Executive Officer,
 and Director


/s/    Robert W. Teater                            Date:   March 24, 1998
Robert W. Teater, Director


/s/    James E. Melville                           Date:   March 24, 1998
James E. Melville, Chief Operating
 Officer; President and Director


/s/    Theodore C. Miller                          Date:   March 24, 1998
Theodore C. Miller, Chief Financial
 Officer

                                    53

<PAGE>


                              EXHIBIT 99(d)

                    AUDITED FINANCIAL STATEMENTS OF

                         UNITED TRUST GROUP, INC.



                                   54


<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,  1997  and 1996, and the related consolidated statements of operations,
shareholders'  equity, and cash flows for each of the three  years  in  the
period  ended  December  31,  1997.  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, 1997 and 1996,
and  the  consolidated results of their operations and  their  consolidated
cash  flows  for each of the three years in the period ended  December  31,
1997, in conformity with generally accepted accounting principles.

     We have also audited Schedule I as of December 31, 1997, and Schedules
II,  IV and V as of December 31, 1997 and 1996, 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, 1998





                                 55
<PAGE>