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

                                      ASSETS
                                                 1997       1996
<S>                                        <C>              <C>
Investments:
Fixed maturities at amortized cost
  (market $184,782,568 and $181,815,225)   $ 180,970,333    $179,926,785
Investments held for sale:
Fixed maturities, at market
  (cost $1,672,298 and $1,984,661)             1,668,630       1,961,166
Equity securities, at market
  (cost $3,184,357 and $2,086,159)             3,001,744       1,794,405
Mortgage loans on real estate at
  amortized cost                               9,469,444      11,022,792
Investment real estate, at cost,
  net of accumulated depreciation              9,760,732       9,779,984
Real estate acquired in satisfaction of debt   1,724,544       1,724,544
Policy loans                                  14,207,189      14,438,120
Short-term investments                         1,798,878         430,983
                                             222,601,494     221,078,779

Cash and cash equivalent                      15,763,639      16,903,789
Investment in affiliates                         350,000         350,000
Accrued investment incom                       3,665,228       3,459,748
Reinsurance receivables:
  Future policy benefits                      37,814,106      38,745,013
  Policy claims and other benefits             3,529,078       3,856,124
Other accounts and notes receivable            1,680,066       1,734,321
Cost of insurance acquired                    45,009,452      47,536,812
Deferred policy acquisition costs             10,600,720      11,325,356
Cost in excess of net assets purchased,
  net of accumulated amortization              2,777,089       5,496,808
Property and equipment, net of
  accumulated depreciation                     3,392,905       3,255,171
Other assets                                     767,258       1,257,701
     Total assets                           $347,951,035    $354,999,622

                       LIABILITIES AND SHAREHOLDERS' EQUITY
Policy liabilities and accruals:
  Future policy benefits                    $248,805,695    $248,879,317
  Policy claims and benefits payable           2,080,907       3,193,806
  Other policyholder funds                     2,445,469       2,784,967
  Dividend and endowment accumulations        14,905,816      13,913,676
Income taxes payable:
  Current                                         15,730          70,663
  Deferred                                    12,157,685      11,591,086
Notes payable                                 19,081,602      19,839,853
Indebtedness to affiliates, net                   49,977          62,084
Other liabilities                              3,987,586       6,203,119
     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
Authorized 10,000 shares - 100 shares issued  45,926,705      45,926,705
Unrealized depreciation of investments held
  for sale                                       (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>
                          See accompanying notes.
                                    56
<PAGE>
<TABLE>

UNITED TRUST GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Years Ended December 31, 1997



                                       1997          1996          1995

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

 Premiums and policy fees        $  33,373,950 $  35,891,609 $  38,481,638
  Reinsurance premiums
    and policy fees                 (4,734,705)   (4,947,151)   (5,383,102)
  Net investment income             14,882,677    15,902,107    15,497,547
  Realized investment gains
    and (losses), net                 (279,096)     (465,879)     (114,235)
Other income                           107,792        95,425       115,472
                                    43,350,618    46,476,111    48,597,320


Benefits and other expenses:
  Benefits, claims and settlement expenses:
   Life                             23,644,252    26,568,062    26,680,217
   Reinsurance benefits and claims  (2,078,982)   (2,283,827)   (2,850,228)
   Annuity                           1,560,828     1,892,489     1,797,475
   Dividends to policyholders        3,929,073     4,149,308     4,228,300
  Commissions and amortization of
   deferred policy acquisition costs 3,616,365     4,224,885     4,907,653
  Amortization of cost of
   insurance acquired                2,527,360     5,690,069     4,509,755
  Amortization of agency force               0             0       396,852
  Non-recurring write down of
   value of agency force                     0             0     8,296,974
  Operating expenses                 8,957,372    11,285,566    10,634,314
  Interest expense                   1,675,440     1,752,573     1,980,360
                                    43,831,708    53,279,125    60,581,672

Loss before income taxes, minority
  interest and equity in loss
  of investees                        (481,090)   (6,803,014)  (11,984,352)
Credit (provision) for income taxes   (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)
Net loss per
  common share                   $   (9,233.77)$  (16,606.97)  $(53,208.76)
Average common
  shares outstanding                       100           100           100

</TABLE>
                          See accompanying notes.
                                    57
<PAGE>
<TABLE>
UNITED TRUST GROUP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Years Ended December 31, 1997



                                        1997          1996          1995


<S>                               <C>           <C>           <C>
Common stock
  Balance, beginning of year      $  45,926,705 $  45,726,705 $  45,626,705
  Capital contribution                     0          200,000       100,000
  Balance, end of year            $  45,926,705 $  45,926,705 $  45,726,705



Unrealized appreciation (depreciation)
  of investments held for sale
  Balance, beginning of year      $    (126,612)$        (501)$    (212,567)
  Change during year                     84,904      (126,111)      212,066
  Balance, end of year            $     (41,708)$    (126,612)$        (501)


Accumulated deficit
  Balance, beginning of year      $ (10,671,076)$  (9,010,379)$  (3,689,503)
  Net loss                             (923,377)   (1,660,697)   (5,320,876)
  Balance, end of year            $ (11,594,453)$ (10,671,076)$  (9,010,379)


Total shareholders' equity,
  end of year                     $  34,290,544 $  35,129,017 $  36,715,825



                          See accompanying notes.
                                    58
<PAGE>

</TABLE>
<TABLE>
UNITED TRUST GROUP, INC.
CONSOLIDATED 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                          $    (923,377)$  (1,660,697)$(5,320,876)
 Adjustments to reconcile net loss to
  net cash provided by (used in) operating
  activities net of changes in assets and
  liabilities resulting from the sales
   and purchases of subsidiaries:
   Amortization/accretion
    of fixed maturities                  670,185       899,445     803,696
   Realized investment (gains)
    losses, net                          279,096       465,879     114,235
   Policy acquisition costs deferred    (586,000)   (1,276,000) (2,370,000)
   Amortization of deferred
    policy acquisition costs           1,310,636     1,387,372   1,567,748
   Amortization of cost of
    insurance acquired                 2,527,360     5,690,069   4,509,755
Amortization of value of
    agency force                               0             0     396,852
   Non-recurring write down of
    value of agency force                      0             0   8,296,974
   Amortization of costs in excess
    of net assets purchased              155,000       185,279     423,192
   Depreciation                          457,415       371,991     694,194
   Minority interest                     129,712       498,356  (1,938,684)
   Change in accrued investment income  (205,480)      195,821    (173,517)
   Change in reinsurance receivables   1,257,953        83,871    (482,275)
   Change in policy liabilities
    and accruals                        (547,081)    3,326,651   3,581,928
   Charges for mortality and
    administration of universal
    life and annuity products        (10,588,874)  (10,239,476) (9,757,354)
   Interest credited to
    account balances                   7,212,406     7,075,921   6,644,282
   Change in income taxes payable        511,666    (4,653,734) (4,749,335)
   Change in indebtedness (to) from
    affiliates, net                      (12,107)      224,472      (3,023)
   Change in other assets and
    liabilities, net                  (1,893,811)      396,226  (1,529,727)
Net cash provided by (used in)
  operating activities                  (245,301)    2,971,446     708,065

Cash flows from investing activities:
 Proceeds from investments sold and matured:
   Fixed maturities held for sale        290,660     1,219,036     619,612
   Fixed maturities sold                       0    18,736,612           0
   Fixed maturities matured           21,488,265    20,721,482  16,265,140
   Equity securities                      76,302         8,990     104,260
   Mortgage loans                      1,794,518     3,364,427   2,252,423
   Real estate                         1,136,995     3,219,851   1,768,254
   Policy loans                        4,785,222     3,937,471   4,110,744
   Short term                            410,000       825,000      25,000
 Total proceeds from investments
  sold and matured                    29,981,962    52,032,869  25,145,433
 Cost of investments acquired:
   Fixed maturities                  (23,220,172)  (29,365,111)(25,112,358)
   Equity securities                  (1,248,738)            0  (1,000,000)
   Mortgage loans                       (245,234)     (503,113)   (322,129)
   Real estate                        (1,444,980)     (813,331) (1,902,609)
   Policy loans                       (4,554,291)   (4,329,124) (4,713,471)
   Short term                         (1,726,035)     (830,983)   (100,000)
      Total cost of investments
       acquired                      (32,439,450)  (35,841,662)(33,150,567)
 Purchase of property and equipment     (531,528)     (383,411)    (57,625)
Net cash provided by (used in)
  investing activities                (2,989,016)   15,807,796  (8,062,759)
Cash flows from financing activities:
   Policyholder contract deposits     17,902,246    22,245,369  25,021,983
   Policyholder contract withdrawals (14,515,576)  (15,433,644)(16,008,462)
   Net cash transferred from
    coinsurance ceded                          0   (19,088,371)          0
   Proceeds from notes payable         1,000,000     9,300,000     300,000
   Payments on principal of
    notes payable                     (1,758,252)  (10,923,475) (1,205,861)
   Payment for fractional shares
    from reverse stock split
    of subsidiary                       (534,251)            0           0
Net cash provided by
  financing activities                 2,094,167   (13,900,121)  8,107,660
Net increase (decrease) in
  cash and cash equivalents           (1,140,150)    4,879,121     752,966
Cash and cash equivalents
  at beginning of year                16,903,789    12,024,668  11,271,702
Cash and cash equivalents
  at end of year                   $  15,763,639 $  16,903,789 $12,024,668

</TABLE>
                          See accompanying notes.
                                    59
<PAGE>

UNITED TRUST, GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

   A. ORGANIZATION - At December 31, 1997,  the parent, significant
      majority-owned subsidiaries  and  affiliates  of United Trust
      Group,  Inc.,  were  as  depicted  on  the following organizational
      chart.

                          ORGANIZATIONAL CHART
                          AS OF DECEMBER 31, 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").


                                     60


<PAGE>

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

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

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

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

E.  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.

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

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

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

    Real   estate  -  Investment real estate  at cost,   less    allowances
    for   depreciation  and,   as   appropriate, provisions   for  possible
    losses.   Foreclosed real estate  is  adjusted for  any  impairment  at
    the  foreclosure  date.  Accumulated depreciation on  investment   real
    estate  was $539,366 and $442,373 as  of  December 31, 1997  and  1996,
    respectively.

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

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

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

G.  RECOGNITION   OF   REVENUES  AND   RELATED EXPENSES   -   Premiums  for
    traditional  life insurance  products,  which include  those   products
    with    fixed    and   guaranteed   premiums  and  benefits,    consist
    principally   of   whole   life   insurance  policies,  limited-payment
    life   insurance   policies,   and  certain    annuities    with   life
    contingencies  are  recognized as revenues  when  due.   Accident   and
    health insurance premiums are recognized as revenue pro rata over   the
    terms of the policies.  Benefits and related expenses associated   with
    the   premiums earned are charged to expense proportionately  over  the
    lives   of  the policies through a provision for future policy  benefit
    liabilities  and through deferral and amortization of deferred   policy
    acquisition  costs.   For  universal  life  and  investment   products,
    generally  there is no requirement for payment of premium  other   than
    to   maintain account values at a level sufficient to pay mortality and
    expense   charges. Consequently, premiums for universal  life  policies
    and   investment products are not reported as revenue, but as deposits.
    Policy    fee  revenue  for  universal  life  policies  and  investment
    products  consists  of  charges for the cost of insurance  and   policy
    administration  fees  assessed during the  period.   Expenses   include
    interest  credited  to  policy  account balances  and  benefit   claims
    incurred in excess of policy account balances.

                                           61
<PAGE>

H.  DEFERRED   POLICY  ACQUISITION  COSTS   - Commissions and  other  costs
    of   acquiring  life  insurance  products   that  vary   with  and  are
    primarily  related  to  the  production  of  new  business  have   been
    deferred.   Traditional  life insurance acquisition  costs   are  being
    amortized    over   the   premium-paying   period   of   the    related
    policies   using  assumptions consistent with those used  in  computing
    policy benefit reserves.

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

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

                                       1997        1996           1995
  Deferred, beginning of year    $ 11,325,356  $ 11,436,728  $ 10,634,476


  Acquisition costs deferred:
  Commissions                         312,000       845,000     1,838,000
  Other expenses                      274,000       431,000       532,000
  Total                               586,000     1,276,000     2,370,000

  Interest accretion                  425,000       408,000       338,000
  Amortization charged to income   (1,735,636)   (1,795,372)   (1,905,748)
  Net amortization                 (1,310,636)   (1,387,372)   (1,567,748)
  Change for the year                (724,636)     (111,372)      802,252
Deferred, end of year            $ 10,600,720  $ 11,325,356  $ 11,436,728



 The  following  table reflects the components of the income  statement for
 the    line   item  Commissions  and  amortization  of   deferred   policy
 acquisition costs:

                                         1997        1996        1995
Net amortization of
deferred policy acquisition costs   $ 1,310,636 $ 1,387,372  $ 1,567,748
Commissions                           2,305,729   2,837,513    3,339,905


Total                               $ 3,616,365 $ 4,224,885  $ 4,907,653

                                    62

<PAGE>

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

                             Interest                         Net
                            Accretion     Amortization   Amortization

     1998                 $   403,000     $ 1,530,000    $ 1,127,000
     1999                     365,000       1,359,000        994,000
     2000                     330,000       1,211,000        881,000
     2001                     299,000       1,082,000        783,000
     2002                     270,000         969,000        699,000


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

                                         1997        1996        1995
    Cost of insurance
     acquired, beginning of year   $ 47,536,812  $ 59,601,720  $ 64,111,475
    Interest accretion                6,288,402     6,649,203     7,044,239
    Amortization                     (8,815,762)  (12,339,272)  (11,553,994)
    Net amortization                 (2,527,360)   (5,690,069)   (4,509,755)
    Balance attributable
     to coinsurance agreement                 0    (6,374,839)            0

    Cost of insurance
    acquired, end of year          $ 45,009,452  $ 47,536,812  $ 59,601,720


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

                                  Interest                          Net
                                 Accretion     Amortization    Amortization

     1998                     $  6,427,000     $  8,696,000   $  2,269,000
     1999                        6,090,000        7,688,000      1,598,000
     2000                        5,851,000        7,229,000      1,378,000
     2001                        5,649,000        7,229,000      1,580,000
     2002                        5,008,000        6,569,000      1,561,000



                                      63

<PAGE>

J. COST   IN   EXCESS  OF NET ASSETS PURCHASED - Cost in  excess   of   net
   assets   purchased  is  the  excess of the amount  paid  to  acquire   a
   company   over  the fair value of its net assets.  Costs in  excess   of
   net   assets purchased are amortized on the straight-line basis over   a
   40-year   period.  Management continually reviews the value of  goodwill
   based   on  estimates  of future earnings.  As  part  of  this   review,
   management   determines  whether goodwill  is  fully  recoverable   from
   projected                  undiscounted    net    cash    flows     from
   earnings     of              the   subsidiaries   over   the   remaining
   amortization  period.   If  management were  to determine  that  changes
   in  such  projected cash flows no longer supported the    recoverability
   of   goodwill  over   the   remaining amortization period, the  carrying
   value  of  goodwill  would  be  reduced with   a  corresponding   charge
   to   expense   or   by  shortening the amortization  period   (no   such
   changes have  occurred).  Accumulated amortization of cost in excess  of
   net  assets  purchased was  $1,420,146 and  $1,265,146  as  of  December
   31,  1997 and 1996,  respectively.   A reverse  stock  split of  FCC  in
   May  of 1997 created negative  goodwill of  $2,564,719.   The credit  to
   goodwill  resulted from the  retirement of  fractional  shares.   Please
   refer  to  Note  11  to   the   Consolidated Financial  Statements   for
   additional  information  concerning the reverse stock split.

K. PROPERTY  AND  EQUIPMENT - Company- occupied property,  data  processing
   equipment  and  furniture and  office equipment  are  stated   at   cost
   less   accumulated   depreciation of$1,375,105    and    $1,014,683   at
   December    31,    1997  and    1996,   respectively.   Depreciation  is
   computed  on  a  straight-line  basis  for financial reporting  purposes
   using  estimated  useful lives of three  to thirty years.   Depreciation
   expense  was  $360,422 and $277,567 for  the years  ended  December  31,
   1997 and 1996, respectively.

L. FUTURE    POLICY    BENEFITS  AND  EXPENSES   -   The   liabilities  for
   traditional   life  insurance and accident and health insurance   policy
   benefits   are  computed using a net level method.   These   liabilities
   include   assumptions as to investment yields, mortality,   withdrawals,
   and   other   assumptions  based  on the  life  insurance  subsidiaries'
   experience   adjusted  to reflect anticipated  trends  and  to   include
   provisions   for  possible unfavorable deviations.  The  Company   makes
   these   assumptions at the time the contract is issued or, in the   case
   of   contracts   acquired  by purchase, at the purchase  date.   Benefit
   reserves   for  traditional  life insurance  policies  include   certain
   deferred    profits  on  limited-payment  policies    that  are    being
   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 1997,  1996
   and 1995.

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

N. PARTICIPATING  INSURANCE - Participating business  represents  29%   and
   30%   of the ordinary life insurance in force at December 31, 1997   and
   1996,    respectively.   Premium  income  from  participating   business
   represents   50%,  52%, and 55% of total premiums for the  years   ended
   December   31,  1997,  1996  and  1995, respectively.   The  amount   of
   dividends   to  be  paid  is  determined  annually  by  the   respective
   insurance   subsidiary's  Board of Directors.   Earnings  allocable   to
   participating policyholders are based on legal requirements  that   vary
   by state.

O. INCOME  TAXES  -  Income  taxes  are  reported  under  Statement   of
   Financial  Accounting Standards Number 109.  Deferred income taxes   are
   recorded   to  reflect  the  tax  consequences  on  future  periods   of
   differences between the tax bases of assets and liabilities  and   their
   financial reporting amounts at the end of each such period.

                                        64


<PAGE>

P. BUSINESS  SEGMENTS  -  The  Company  operates  principally   in    the
   individual life insurance business.

Q. EARNINGS   PER  SHARE - Earnings per share are based on   the   weighted
   average number of common shares outstanding during each year.

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

S. RECLASSIFICATIONS    -    Certain  prior   year    amounts  have    been
   reclassified    to   conform   with  the   1997   presentation.     Such
   reclassifications  had  no  effect on previously  reported   net   loss,
   total assets, or shareholders' equity.

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

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


2.  SHAREHOLDER DIVIDEND RESTRICTION

At  December  31,  1997,  substantially all of  consolidated  shareholders'
equity  represents net assets of UTG's subsidiaries.  The payment  of  cash
dividends  to  shareholders is not legally restricted.  However,  insurance
company  dividend payments are regulated by the state insurance  department
where  the company is domiciled.  UTI is the ultimate parent of UG  through
ownership  of  several intermediary holding companies.  UG can  not  pay  a
dividend  directly  to UII due to the ownership structure.   UG's  dividend
limitations are described below without effect of the ownership structure.

Ohio domiciled insurance companies require five days prior notification  to
the  insurance  commissioner  for  the payment  of  an  ordinary  dividend.
Ordinary  dividends are defined as the greater of:  a) prior year statutory
earnings  or b) 10% of statutory capital and surplus.  For the  year  ended
December  31, 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.


3.  INCOME TAXES

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

                                   65
<PAGE>

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


                                   Shareholders'       Untaxed
                   Company            Surplus          Balance



                   ABE            $  5,237,958      $  1,149,693
                   APPL              5,417,825         1,525,367
                   UG               27,760,313         4,363,821
                   USA                       0                 0

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

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

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

                                       1997        1996          1995
    Current tax expense           $     5,400   $  (148,148)   $     1,897
    Deferred tax expense (credit)     566,599    (4,495,813)    (4,726,689)
    (credit)
                                  $   571,999   $(4,643,961)   $(4,724,792)

The  Companies have net operating loss carryforwards for federal income tax
purposes expiring as follows:

                                         UG           FCC
                        2004        $        0     $  163,334
                        2005                 0        138,765
                        2006         2,400,574         33,345
                        2007           782,452        676,067
                        2008           939,977          4,595
                        2009                 0        168,800
                        2010                 0         19,112
                        2012         2,970,692              0
                         TOTAL     $ 7,093,695    $ 1,204,018


The  Company  has  established a deferred tax asset of $2,904,200  for  its
operating   loss  carryforwards  and  has  established  an   allowance   of
$2,904,200.

                                       66
<PAGE>

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

                                           1997        1996         1995
    Tax computed at statutory rate   $  (168,382)  $(2,381,055) $(4,194,523)
    Changes in
    taxes due to:
      Cost in excess of net
       assets purchased                   54,250        64,848       60,594
      Current year loss for which
       no benefit realized             1,039,742             0            0
      Benefit of prior losses           (324,705)   (2,393,395)    (598,563)
      Other                              (28,906)       65,641        7,700
    Income tax expense (credit)     $    571,999   $(4,643,961) $(4,724,792)

The  following  table  summarizes the major components  that  comprise  the
deferred tax liability as reflected in the balance sheets:


                                             1997         1996
    Investments                          $  (228,027)  $  (122,251)
    Cost of insurance acquired            15,753,308    16,637,883
    Deferred policy acquisition costs      3,710,252     3,963,875
    Agent balances                           (23,954       (65,609)
    Property and equipment                   (19,818)      (37,683)
    Discount of notes                        896,113       922,766
    Management/consulting fees              (573,182)     (733,867)
    Future policy benefits                (4,421,038)   (5,906,087)
    Other liabilities                       (756,482)   (1,151,405)
    Federal tax DAC                       (2,179,487)   (1,916,536)
    Deferred tax liability               $12,157,685   $11,591,086)



                                  67

<PAGE>

4.    ANALYSIS OF INVESTMENTS, INVESTMENT INCOME AND INVESTMENT GAIN

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


                                             December 31,
                                  1997       1996       1995
Fixed maturities and fixed
maturities held for sale   $ 12,677,348  $ 13,326,312  $ 13,253,122
Equity securities                87,211        88,661        52,445
Mortgage loans                  802,123     1,047,461     1,257,189
Real estate                     745,502       794,844       975,080
Policy loans                    976,064     1,121,538     1,041,900
Short-term investments           70,624        21,423        21,295
Other                           721,866       724,771       620,954
Total consolidated
  investment income          16,080,738    17,125,010    17,221,985
Investment expenses          (1,198,061)   (1,222,903)   (1,724,438)
Consolidated net
  investment income        $ 14,882,677  $ 15,902,107  $ 15,497,547

At December 31, 1997, the Company had a total of $5,797,000 of investments,
comprised of $3,848,000 in real estate and $1,949,000 in equity securities,
which did not produce income during 1997.

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


                                               Carrying Value
                                       1997                  1996


Investments held for sale:
  Fixed maturities                      $   1,668,630    $   1,961,166
  Equity securities                         3,001,744        1,794,405
Fixed maturitiies:
  U.S. Government, government
   agencies and authorities                28,259,322       28,554,631
  State, municipalities and
   political subdivisions                  22,778,816       14,421,735
  Collateralized mortgage obligations      11,093,926       13,246,781
  Public  utilities                        47,984,322       51,821,989
  All other corporate bonds                70,853,947       71,891,649
                                        $ 185,640,707    $ 183,692,356


By insurance statute, the majority of the Company's investment portfolio is
required  to  be invested in investment grade securities to  provide  ample
protection  for  policyholders.  The Company does not invest  in  so-called
"junk bonds" or derivative investments.


                                             68
<PAGE>

Below   investment   grade   debt securities   generally   provide   higher
yields  and  involve  greater risks than investment grade  debt  securities
because  their  issuers  typically  are  more  highly  leveraged  and  more
vulnerable  to  adverse economic conditions than investment grade  issuers.
In  addition,  the  trading  market for these securities  is  usually  more
limited  than  for  investment  grade  debt  securities.   Debt  securities
classified  as below-investment grade are those that receive a  Standard  &
Poor's rating of BB or below.

The   following  table  summarizes by category securities  held  that   are
below investment grade at amortized cost:

      Below Investment
           Grade                             1997         1996       1995
        Investments
      State, Municipalities
       and Political Subdivisions         $       0    $   10,042  $       0
      Public Utiliites                       80,497       117,609    116,879
      Corporate                             656,784       813,717    819,010
      Total                               $ 737,281     $ 941,368  $ 935,889


B.     INVESTMENT SECURITIES

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

                               Cost or       Gross        Gross     Estimated
                              Amortized    Unrealized   Unrealized    Market
1997                             Cost        Gains        Losses      Value
Investments Held
for Sale:
  U.S. Government and govt.
   agencies and authoriites  $  1,448,202   $      0  $    (5,645) $ 1,442,557
  States, municipalities and
   political subdivisions          35,000         485           0       35,485
  Collateralized mortgage
   obligations                          0           0           0            0
    Obligations
  Public utilities                 80,169         328           0       80,497
  All other corporate bonds       108,927       1,164           0      110,091
                                1,672,298       1,977      (5,645)   1,668,630
  Equity securities             3,184,357     176,508    (359,121)   3,001,744
  Total                     $   4,856,655   $ 178,485 $ (364,766) $  4,670,374


Held to Maturity Securities:
  U.S. Government and govt.
   agencies and authorities $  28,259,322   $ 415,419 $  (51,771) $ 28,622,970
  States, municipalities and
   political subdivisions      22,778,816     672,676     (1,891)   23,449,601
  Collateralized mortgage
   obligations                 11,093,926     210,435    (96,714)   11,207,647
  Public utilities             47,984,322   1,241,969    (84,754)   49,141,537
  All other corporate bonds    70,853,947   1,599,983    (93,117)   72,360,813
  Total                     $ 180,970,333 $ 4,140,482 $ (328,247) $184,782,568



                                           69

<PAGE>


                               Cost or       Gross        Gross     Estimated
                              Amortized    Unrealized   Unrealized    Market
1996                             Cost        Gains        Losses      Value

Investments Held
for Sale:
  U.S. Government and govt.
   agencies and authoriites  $  1,461,068   $       0  $  (17,458) $ 1,443,609
  States, municipalities and
   political subdivisions         145,199         665      (6,397)     139,467
  Collateralized mortgage
   obligations                          0           0           0            0
    Obligations
  Public utilities                119,970         363        (675)     119,658
  All other corporate bonds       258,424       4,222      (4,215)     258,432
                                1,984,661       5,250     (28,745)   1,961,166
  Equity securities             2,086,159      37,000    (328,754)   1,794,405
  Total                     $   4,070,820   $  42,250  $ (357,499) $ 3,755,571


Held to Maturity Securities:
  U.S. Government and govt.
   agencies and authorities $  28,554,631   $ 421,523 $  (136,410) $28,839,744
  States, municipalities and
   political subdivisions      14,421,735     318,682     (28,084)  14,712,333
  Collateralized mortgage
   obligations                 13,246,780     175,163    (157,799)  13,264,145
  Public utilities             51,821,990     884,858    (381,286)  52,325,561
  All other corporate bonds    71,881,649   1,240,230    (448,437)  72,673,442
  Total                     $ 179,926,785 $ 3,040,456 $(1,152,016)$181,815,225



The   amortized  cost  of  debt  securities  at  December  31,  1997,    by
contractual   maturity, are shown below.  Expected maturities will   differ
from   contractual maturities because borrowers may have the right to  call
or prepay obligations with or without call or prepayment penalties.

            Fixed Maturities Held                          Estimated
                  for Sale                   Amortized       Market
             December 31, 1997                  Cost         Value

   Due in one year or less                   $    83,927  $    84,952
   Due after one year through five years       1,533,202    1,528,211
   Due after five years through ten years         55,169       55,467
   Due after ten years                                 0            0
   Collateralized mortgage obligations                 0            0
   Total                                     $ 1,672,298  $ 1,668,630


                                       70
<PAGE>

            Fixed Maturities Held                             Estimated
                to Maturity                    Amortized        Market
             December 31, 1997                    Cost          Value

  Due  in one  year  or  less                $  15,023,173  $  15,003,728
  Due after one year through five years        118,849,668    120,857,201
  Due after five years through ten years        30,266,228     31,726,265
  Due after ten years                            5,737,338      5,987,726
  Collateralized mortgage obligations           11,093,926     11,207,648
  Total                                      $ 180,970,333  $ 184,782,568


An   analysis  of  sales,  maturities  and  principal  repayments  of   the
Company's   fixed  maturities portfolio for the years ended  December   31,
1997, 1996 and 1995 is as follows:

                                         70
<PAGE>



                                 Cost or     Gross       Gross     Proceeds
                                Amortized  Realized     Realized     from
Year ended December 31, 1997       Cost      Gains       Losses      Sale

Scheduled principal repayments,
  calls and tenders:
   Held for sale               $   299,390 $     931  $   (9,661) $   290,660
   Held to maturity             21,467,552    21,435        (722)  21,488,265
Sales:
   Held for sale                         0         0           0            0
   Held to maturity                      0         0           0            0
Total                          $21,766,942 $  22,366  $  (10,383) $21,778,925



                                 Cost or     Gross       Gross     Proceeds
                                Amortized  Realized     Realized     from
Year ended December 31, 1996       Cost      Gains       Losses      Sale

Scheduled principal repayments,
  calls and tenders:
   Held for sale               $   699,361 $   6,035  $     (813) $   704,583
   Held to maturity             20,900,159    13,469    (192,146)  20,721,482
Sales:
   Held for sale                   517,111         0      (2,658)     514,453
   Held to maturity             18,735,848    81,283     (80,519)  18,736,612
Total                          $40,852,479 $ 100,787  $ (276,136) $40,677,130



                                        71
<PAGE>

                                 Cost or     Gross       Gross     Proceeds
                                Amortized  Realized     Realized     from
Year ended December 31, 1995       Cost      Gains       Losses      Sale

Scheduled principal repayments,
  calls and tenders:
   Held for sale               $   621,461 $       0  $   (1,849) $   619,612
   Held to maturity             16,383,921   125,740    (244,521)  16,265,140
Sales:
   Held for sale                         0         0           0            0
   Held to maturity                      0         0           0            0
Total                          $17,005,382 $ 125,740  $ (246,370) $16,884,752



C.INVESTMENTS  ON  DEPOSIT - At December 31, 1997, investments  carried  at
  approximately  $17,801,000 were on deposit with various  state  insurance
  departments.


5.  DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS

The  financial statements include various estimated fair value  information
at  December  31,  1997  and 1996, as required by  Statement  of  Financial
Accounting   Standards  107,  Disclosure  about  Fair  Value  of  Financial
Instruments  ("SFAS  107").   Such  information,  which  pertains  to   the
Company's financial instruments, is based on the requirements set forth  in
that  Statement  and does not purport to represent the aggregate  net  fair
value of the Company.

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

(a)  Cash and Cash equivalents

The  carrying  amount in the financial statements approximates  fair  value
because  of the relatively short period of time between the origination  of
the instruments and their expected realization.

(b)  Fixed maturities and investments held for sale

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

(c)  Mortgage loans on real estate

The  fair values of mortgage loans are estimated using discounted cash flow
analyses  and  interest rates being offered for similar loans to  borrowers
with similar credit ratings.

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

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

                                  72
<PAGE>

(e)  Policy loans

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

(f)  Short-term investments

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

(g)  Notes and accounts receivable and uncollected premiums

The Company holds a $840,066 note receivable for which the determination of
fair  value  is  estimated by discounting the future cash flows  using  the
current  rates  at  which  similar loans would be made  to  borrowers  with
similar  credit  ratings and for the same remaining  maturities.   Accounts
receivable  and  uncollected  premiums  are  primarily  insurance  contract
related   receivables  which  are  determined  based  upon  the  underlying
insurance liabilities and added reinsurance amounts, and thus are  excluded
for the purpose of fair value disclosure by paragraph 8(c) of SFAS 107.

(h)  Notes payable

For  borrowings  under  the  senior loan agreement,  which  is  subject  to
floating rates of interest, carrying value is a reasonable estimate of fair
value.  For subordinated borrowings fair value was determined based on  the
borrowing  rates currently available to the Company for loans with  similar
terms and average maturities.

The  estimated fair values of the Company's financial instruments  required
to be valued by SFAS 107 are as follows as of December 31:

<TABLE>
                                1997                      1996
                                     Estimated                     Estimated
                        Carrying        Fair          Carrying        Fair
                          Amount        Value           Amount        Value


<S>                   <C>           <C>            <C>           <C>
ASSETS
Fixed maturities      $180,970,333  $184,782,568   $179,926,785  $181,815,225
Fixed maturities
 held for sale           1,668,630     1,668,630      1,961,166     1,961,166
Equity securities        3,001,744     3,001,744      1,794,405     1,794,405
Mortgage loans on
 real estate             9,469,444     9,837,530     11,022,792    11,022,792
Policy loans            14,207,189    14,207,189     14,438,120    14,438,120
Short-term
 investments             1,798,878     1,798,878        430,983       430,983
Investment in
 real estate             9,760,732     9,760,732      9,779,984     9,779,984
Real estate acquired
 in satisfaction
 of debt                 1,724,544     1,724,544      1,724,544     1,724,544
Notes receivable         1,680,066     1,569,603      1,680,066     1,566,562

LIABILITIES
Notes payable           19,081,602    18,539,301     19,839,853    18,671,155

</TABLE>
                                          73

<PAGE>

6.   STATUTORY EQUITY AND GAIN FROM OPERATIONS

The  Company's insurance subsidiaries are domiciled in Ohio,  Illinois  and
West  Virginia  and prepare their statutory-based financial  statements  in
accordance  with  accounting  practices  prescribed  or  permitted  by  the
respective  insurance  department.  These principles  differ  significantly
from  generally  accepted  accounting principles.   "Prescribed"  statutory
accounting   practices  include  state  laws,  regulations,   and   general
administrative rules, as well as a variety of publications of the  National
Association  of  Insurance Commissioners ("NAIC").   "Permitted"  statutory
accounting  practices  encompass  all accounting  practices  that  are  not
prescribed; such practices may differ from state to state, from company  to
company  within a state, and may change in the future.  The NAIC  currently
is  in  the process of codifying statutory accounting practices, the result
of  which  is  expected  to  constitute the  only  source  of  "prescribed"
statutory accounting practices.  Accordingly, that project, which  has  not
yet  been  completed,  will likely change prescribed  statutory  accounting
practices  and  may  result  in changes to the  accounting  practices  that
insurance  enterprises use to prepare their statutory financial statements.
UG's  total  statutory shareholders' equity was $10,997,365 and $10,226,566
at  December  31,  1997  and 1996, respectively.  The  Company's  insurance
subsidiaries reported combined statutory gain from operations (exclusive of
intercompany  dividends) was $3,978,000,  $10,692,000  and  $4,076,000  for
1997, 1996 and 1995, respectively.

7.  REINSURANCE

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

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

The  Company has reinsured approximately $1.022 billion, $1.109 billion and
$1.088  billion in face amount of life insurance risks with other  insurers
for  1997, 1996 and 1995, respectively.  Reinsurance receivables for future
policy  benefits were $37,814,106 and $38,745,093 at December 31, 1997  and
1996,  respectively,  for estimated recoveries under reinsurance  treaties.
Should  any  reinsurer be unable to meet its obligation at the  time  of  a
claim, obligation to pay such claim would remain with the Company.

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

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

                                            74
<PAGE>

The   Company  does not have any short-duration reinsurance contracts.  The
effect  of  the Company's long-duration reinsurance contracts  on  premiums
earned in 1997, 1996 and 1995 was as follows:

                                     Shown in thousands
                                1997       1996        1995
                              Premiums    Premiums   Premiums
                               Earned      Earned      Earned
          Direct            $    33,374  $  35,891   $  38,482
          Assumed                     0          0           0
          Ceded                  (4,735)    (4,947)     (5,383)
          Net premiums      $    28,639  $  30,944   $  33,099


8.  COMMITMENTS AND CONTINGENCIES

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

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

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


9.  RELATED PARTY TRANSACTIONS

UII  has  a service agreement with USA which states that USA is to pay  UII
monthly  fees equal to 22% of the amount of collected first year  premiums,
20% in second year and 6% of the renewal premiums in years three and after.
UII's  subcontract agreement with UTI states that UII is to pay UTI monthly
fees equal to 60% of collected service fees from USA as stated above.

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

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 UTG  for
services include costs related to the production of new business, which are
deferred  as  policy  acquisition costs  and  charged  off  to  the  income
statement  through  "Amortization of deferred  policy  acquisition  costs".
Also  included  are  costs  associated with  the  maintenance  of  existing
policies  that are charged as current period costs and included in "general
expenses".

                                  75
<PAGE>

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


10.   DEFERRED COMPENSATION PLAN

UTI  and  FCC established a deferred compensation plan during 1993 pursuant
to  which an officer or agent of FCC, UTI or affiliates of UTI, could defer
a  portion  of their income over the next two and one-half years in  return
for  a  deferred compensation payment payable at the end of seven years  in
the  amount equal to the total income deferred plus interest at a  rate  of
approximately  8.5%  per annum and a stock option  to  purchase  shares  of
common stock of UTI.  At the beginning of the deferral period an officer or
agent  received an immediately exercisable option to purchase 2,300  shares
of  UTI common stock at $17.50 per share for each $25,000 ($10,000 per year
for  two  and one-half years) of total income deferred.  The option expires
on   December  31, 2000.  A total of 105,000 options were granted  in  1993
under  this  plan.  As of December 31, 1997 no options were exercised.   At
December 31, 1997 and 1996, the Company held a liability of $1,376,384  and
$1,267,598, respectively, relating to this plan. At December 31, 1997,  UTI
common stock had a bid price of $8.00 and an ask price of $9.00 per share.

The  following  information  applies to deferred  compensation  plan  stock
options outstanding at December 31, 1997:

  Number outstanding                       105,000
  Exercise price                            $17.50
  Remaining contractual life               3 years



11.  REVERSE STOCK SPLIT OF FCC

On  May 13, 1997, FCC effected a 1 for 400 reverse stock split.  Fractional
shares  received  a cash payment on the basis of $.25 for each  old  share.
FCC  maintained a significant number of shareholder accounts with less than
$100  of  market  value of stock.  The reverse stock  split  enabled  these
smaller  shareholders  to receive cash for their shares  without  incurring
broker costs and will save the Company administrative costs associated with
maintaining these small accounts.


12.  NOTES PAYABLE

At  December 31, 1997 and 1996, the Company has $19,081,602 and $19,839,853
in  long-term debt outstanding, respectively.  The debt is comprised of the
following components:

                                       1997     1996
      Senior debt                   $ 6,900,000     $ 8,400,000
      Subordinated 10 yr. notes       5,746,774       6,209,293
      Subordinated 20 yr. notes       4,034,828       3,830,560
      Other notes payable             2,400,000       1,400,000
                                    $19,081,602     $19,839,853

A.  Senior debt

The  senior  debt  is through First of America Bank - Illinois  NA  and  is
subject to a credit agreement.  The debt bears interest at a rate equal  to
the  "base  rate" plus nine-sixteenths of one percent.  The  Base  rate  is
defined  as  the  floating daily, variable rate of interest determined  and
announced  by First of America Bank from time to time as its "base  lending
rate."   The  base  rate at December 31, 1997 was 8.5%.  Interest  is  paid
quarterly.   Principal payments of $1,000,000 are due in May of  each  year
beginning  in 1997, with a final payment due May 8, 2005.  On  November  8,
1997, the Company prepaid the May 1998 principal payment.

                                  76
<PAGE>

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

B.  Subordinated debt

The  subordinated  debt  was  incurred June 16,  1992  as  a  part  of  the
acquisition  of  the  now  dissolved Commonwealth  Industries  Corporation,
(CIC).   The  10-year notes bear interest at the rate of 7 1/2% per  annum,
payable semi-annually beginning December 16, 1992.  These notes, except for
one  $840,000 note, provide for principal payments equal to 1/20th  of  the
principal balance due with each interest installment beginning December 16,
1997,  with a final payment due June 16, 2002.  The aforementioned $840,000
note  provides for a lump sum principal payment due June 16, 2002.  In June
1997,  the  Company refinanced a $204,267 subordinated 10-year  note  as  a
subordinated 20-year note bearing interest at the rate of 8.75% per  annum.
The  repayment  terms of the refinanced note are the same as  the  original
subordinated  20 year notes.  The original 20-year notes bear  interest  at
the  rate of 8 1/2% per annum on $3,397,620 and 8.75% per annum on $504,962
(of  which  the $204,267 note refinanced in the current year is  included),
payable semi-annually with a lump sum principal payment due June 16, 2012.

C.  Other notes payable

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

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

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

                           Year      Amount
                           1998   $   516,504
                           1999     1,916,504
                           2000     1,516,504
                           2001     1,516,504
                           2002     2,356,504


13.  OTHER CASH FLOW DISCLOSURES

On  a cash basis, the Company paid $1,658,703, $1,700,973 and $1,934,326 in
interest  expense  for  the years 1997, 1996 and 1995,  respectively.   The
Company  paid $57,277, $17,634 and $25,821 in federal income tax for  1997,
1996 and 1995, respectively.



                                     77
<PAGE>


One   of   the  Company's insurance subsidiaries ("UG")  entered   into   a
coinsurance agreement with Park Avenue Life Insurance Company ("PALIC")  at
September  30,  1996.   At  closing  of  the  transaction,  UG  received  a
coinsurance credit of $28,318,000 for policy liabilities covered under  the
agreement.   UG  transferred  assets equal to the  credit  received.   This
transfer included policy loans of $2,855,000 associated with policies under
the  agreement  and a net cash transfer of $19,088,000 after deducting  the
ceding commission due UG of $6,375,000.  To provide the cash required to be
transferred  under  the agreement, the Company sold  $18,737,000  of  fixed
maturity investments.


14.  NON-RECURRING WRITE DOWN OF VALUE OF AGENCY FORCE ACQUIRED

During  the  year-ended December 31, 1995, the Company  recognized  a   non
recurring  write down of $8,297,000 on its value of agency  force  acquired
The  write  down  released  $2,904,000 of the deferred  tax  liability  and
$3,327,000  was  attributed to minority interest in  loss  of  consolidated
subsidiaries.   In  addition,  equity  loss  of  investees  was  negatively
impacted  by  $542,000.   The  effect of this write  down  resulted  in  an
increase  in  the  net  loss of $2,608,000.  This write  down  is  directly
related to the Company's change in distribution systems.  Due to the broker
agency  force not meeting management's expectations and lack of production,
the   Company  has  changed  its  focus  from  a  primarily  broker  agency
distribution system to a captive agent system.  With the change  in  focus,
most  of  the  broker agents were terminated and therefore, management   re
evaluated the value of the agency force carried on the balance sheet.   For
purposes  of the write-down, the broker agency force has no future expected
cash  flows  and therefore warranted a write-off of the value.   The  write
down is reported as a separate line item "non-recurring write down of value
of  agency force acquired" and the release of the deferred tax liability is
reported  in  the  credit  for income taxes payable  in  the  Statement  of
Operations.  In  addition,  the impact to minority  interest  in  loss   of
consolidated subsidiaries and equity loss of investees is in the  Statement
of Operations.


15.  CONCENTRATION OF CREDIT RISK

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


16.  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.

                                 78
<PAGE>

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.


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

On  February 19, 1998, UTI signed a letter of intent with Jesse T. Correll,
whereby   Mr.  Correll  will  personally  or  in  combination  with   other
individuals make an equity investment in UTI over a period of three  years.
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.

                                 79
<PAGE>

18.   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.

                               80

<PAGE>
<TABLE>
19.   SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

                                            1997
                         1st           2nd           3rd           4th

<S>                 <C>           <C>           <C>            <C>
Premiums and policy
 fees, net          $  7,926,386  $  7,808,782  $   6,639,394  $  6,264,683
Net investment income  3,859,875     3,839,519      3,691,584     3,491,699
Total revenues        11,781,878    11,687,887     10,216,109     9,664,744
Policy benefits
including dividends    7,718,015     6,861,699      6,467,739     6,007,718
Commissions and
 amortization of
 DAC and COI           1,670,854     1,174,116      1,727,317     1,571,438
Operating and interest
 expenses              2,884,663     3,084,239      2,778,435     1,885,475
Operating income (loss) (491,654)      567,833       (757,382)      200,113
Net income (loss)        (23,565)       27,351       (512,444)     (414,719)
Net income (loss)
per share                (235.65)       273.51      (5,124.44)    (4,147.19)



                                            1996
                         1st           2nd           3rd           4th

Premiums and policy
 fees, net          $  7,637,503  $  8,514,175  $  7,348,199  $   7,444,581
Net investment income  3,974,407     3,930,487     4,002,258      3,994,955
Total revenues        12,513,692    12,187,077    11,331,283     10,444,059
Policy benefits
including dividends    6,528,760     7,083,803     8,378,710      8,334,759
Commissions and
 amortization of
 DAC and COI           2,567,921     2,298,549     1,734,048      3,314,436
Operating and interest
 expenses              3,616,660     3,072,535     3,685,600        910,771
Operating income (loss) (198,649)     (267,810)   (2,467,075)    (3,869,480)
Net income (loss)       (268,675)      (93,640)   (1,563,817)      (271,915)
Net income (loss)
per share              (2,686.75)      (936.40)   (15,638.17)     (2,719.15)



                                            1995
                         1st           2nd           3rd           4th

Premiums and policy
 fees, net          $  8,703,332  $  9,507,694  $  7,868,803  $   7,018,707
Net investment income  3,857,562     3,849,212     3,757,605      3,918,933
Total revenues        13,385,477    12,566,391    11,514,869     11,130,583
Policy benefits
including dividends    8,097,830     9,113,933     5,978,795      6,665,206
Commissions and
 amortization of
 DAC and COI           2,451,030     2,860,032     3,044,057      1,459,141
Operating and interest
 expenses              3,449,062     2,742,174     2,498,472      3,924,966
Operating income (loss) (612,445)   (2,149,748)       (6,455)    (9,215,704)
Net income (loss)         95,608    (1,305,599)      126,751     (4,237,636)
Net income (loss)
per share                (956.08)   (13,055.99)     1,267.51     (42,376.60)

</TABLE>
                                           81
<PAGE>
<TABLE>

UNITED TRUST GROUP, INC.                                    Schedule I
SUMMARY OF INVESTMENTS - OTHER THAN
INVESTMENTS IN RELATED PARTIES As of December 31, 1997



Column A                            Column B     Column C      Column D
                                                               Amount at
                                                             Which Shown in
                                                                Balance
                                      Cost         Value          Sheet
<S>                              <C>          <C>            <C>
Fixed maturities:
 Bonds:
  United States Government and
   government agencies and
  authorities                    $ 28,259,322 $ 28,622,970   $ 28,259,322
  State, municipalities, and
   political subdivisions           22,778,816   23,449,601   22,778,816
  Collateralized mortgage
   obligations                      11,093,926   11,207,647   11,093,926
  Public utilities                  47,984,322   49,141,537   47,984,322
  All other corporate bonds         70,853,947   72,360,813   70,853,947
Total fixed maturities             180,970,333 $184,782,568  180,970,333

Investments held for sale:
 Fixed maturities:
  United States Government and government agencies and
authorities                          1,448,202 $  1,442,557    1,442,557
  State, municipalities, and
   political subdivisions               35,000       35,485       35,485
  Public utilities                      80,169       80,496       80,496
  All other corporate bonds            108,927      110,092      110,092
                                     1,672,298 $  1,668,630    1,668,630
Equity securities:
  Banks, trusts and insurance
   companies                         2,473,969 $  2,167,368    2,167,368
  All other corporate securities       710,388      834,376      834,376
                                     3,184,357 $  3,001,744    3,001,744


Mortgage loans on real estate        9,469,444                 9,469,444
Investment real estate               9,760,732                 9,760,732
Real estate acquired in satisfaction
  of debt                            1,724,544                 1,724,544
Policy loans                        14,207,189                14,207,189
Short-term investments               1,798,878                 1,798,878
Total investments                $ 222,787,775             $ 222,601,494

</TABLE>
                                     82
<PAGE>
<TABLE>

UNITED  TRUST GROUP, INC.
CONDENSED FINANCIAL INFORMATION OF
REGISTRANT PARENT ONLY BALANCE SHEETS
As of December 31, 1997 and 1996                           Schedule II

                                              1997             1996
<S>                                       <C>             <C>
ASSETS

   Investment in affiliates               $ 34,683,168    $ 35,548,414
   Cash and cash equivalents                    25,980          39,529
   Notes receivable from affiliate           9,781,602      10,039,853
   Accrued interest income                      34,455          35,202
     Total assets                         $ 44,525,205    $ 45,662,998




LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Notes payable                          $ 9,635,257     $ 10,009,853
   Notes payable to affiliate                 146,345           30,000
   Income taxes payable                         5,175            6,663
   Accrued interest payable                    34,455           35,202
   Other liabilities                          413,429          452,263
     Total liabilities                     10,234,661       10,533,981
Shareholders' equity:
   Common stock                            45,926,705       45,926,705
   Unrealized depreciation of
    investments held for sale
     of  affiliates                           (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               $ 44,525,205     $ 45,662,998

</TABLE>
                                     83

<PAGE>

<TABLE>
UNITED  TRUST GROUP, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
PARENT ONLY STATEMENTS OF OPERATIONS
Three Years Ended December  31,  1997 Schedule II





                                        1997         1996         1995

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

  Interest income from affiliates   $    782,892 $    792,046 $    790,334
  Other income                            37,641       34,600       31,774
                                         820,533      826,646      822,108


Expenses:

  Interest expense                       776,230      789,496      787,784
  Interest expense to affiliates           6,662        2,550        2,550
  Operating expenses                       5,585        4,624        3,341
                                         788,477      796,670      793,675

  Operating income                        32,056       29,976       28,433

  Provision for income taxes              (5,362)      (4,664)      (3,221)
  Equity in loss of subsidiaries        (950,071)  (1,686,009)  (5,346,088)
     Net loss                       $   (923,377)$ (1,660,697)$ (5,320,876)

</TABLE>
                                        84
<PAGE>
<TABLE>

UNITED TRUST GROUP, INC.
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
PARENT ONLY STATEMENTS OF CASH FLOWS
Three Years Ended December 31, 1997                           Schedule II


                                        1997         1996         1995

<S>                               <C>          <C>          <C>
Increase (decrease) in cash and
 cash equivalents
Cash flows from operating activities:
 Net loss                         $   (923,377)$ (1,660,697)$ (5,320,876)
  Adjustments to reconcile net loss
   to net cash provided by operating
   activities:
  Equity in loss of subsidiaries        950,071    1,686,009    5,346,088
  Change in accrued interest income         747            0         (167)
  Change in accrued interest payable       (747)           0          167
  Change in income taxes payable         (1,488)       3,442        3,221
  Change in other liabilities           (38,834)    (139,256)     (96,843)
Net cash used in operating activities   (13,628)    (110,502)     (68,410)

Cash flows from investing activities:
  Proceeds for fractional shares from reverse
    stock split of subsidiary                79            0            0
Purchase of stock of affiliates               0      (95,000)        (200)
Net cash provided by (used in)
  investing activities                       79      (95,000)        (200)
Cash flows from financing activities:
  Receipt of principal on notes
    receivable from affiliate           258,252            0            0
Payments of principal on
   notes payable                       (258,252)           0            0
  Capital contribution
       from affiliates                        0      200,000      100,000
Net cash provided by
      financing activities                    0      200,000      100,000
Net increase (decrease) in cash
  and cash equivalent                   (13,549)      (5,502)      31,390
Cash and cash equivalents
     at beginning of year                39,529       45,031       13,641
Cash and cash equivalents
  at end of year                   $     25,980 $     39,529 $     45,031

</TABLE>
                                            85
<PAGE>

UNITED TRUST GROUP, INC.
REINSURANCE
As of December 31, 1997 and the year ended December 31, 1997   Schedule IV







Column A      Column B     Column C      Column D     Column E     Column F
                                                                  Percentage
                           Ceded to       Assumed                  of amount
                            other        from other               assumed to
            Gross amount   companies     companies*   Net amount      net
Life insurance
in  force $3,691,867,000 $1,022,458,000 $1,079,885,000 $3,749,294,000 28.8%


Premiums and policy fees:

Life
  insurance $ 33,133,414 $    4,681,928 $            0 $   28,451,486  0.0%
Accident and health
 insurance       240,536         52,777              0        187,759  0.0%

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


* All  assumed  business  represents the Company's  participation  in
  the Servicemen's Group Life Insurance Program (SGLI).

                                     86

<PAGE>

UNITED  TRUST GROUP, INC.
REINSURANCE
As of December 31, 1996 and the year ended December 31, 1996    Schedule IV


Column A      Column B     Column C       Column D      Column E   Column F
                                                                  Percentage
                           Ceded to       Assumed                  of amount
                            other        from other               assumed to
            Gross amount   companies     companies*   Net amount      net




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



Premiums and policy fees:

Life
 insurance $ 35,633,232 $    4,896,896 $            0 $   30,736,336   0.0%
Accident and health
insurance       258,377         50,255              0        208,122   0.0%
           $ 35,891,609 $    4,947,151 $            0  $  30,944,458   0.0%






* All  assumed  business  represents the Company's  participation  in
  the Servicemen's Group Life Insurance Program (SGLI).

                                        87

<PAGE>


UNITED TRUST GROUP, INC.
REINSURANCE
As of December 31, 1995 and the year ended December  31, 1995    Schedule IV


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

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


Life insurance
in force $4,207,695,000  $1,087,774,000 $1,039,517,000 $4,159,438,000   25.0%



Premiums and policy fees:

Life
 insurance $ 38,233,190  $    5,330,351 $            0 $   32,902,839    0.0%
Accident and health
insurance       248,448          52,751              0        195,697    0.0%
           $ 38,481,638  $    5,383,102 $            0 $   33,098,536    0.0%

* All  assumed  business  represents the Company's  participation  in
  the Servicemen's Group Life Insurance Program (SGLI).

                                     88

<PAGE>
UNITED TRUST GROUP, INC.
VALUATION AND QUALIFYING  ACCOUNTS
For the years ended December 31, 1997, 1996 and 1995           Schedule V

                        Balance at  Additions
                        Beginning    Charges                     Balances at
Description             Of Period  and Expenses    Deductions   End of Period


December 31, 1997

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


December 31, 1996

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


December 31, 1995

Allowance for doubtful
 accounts - mortgage
   loans               $   26,000  $          0   $   16,000    $     10,000