UNITED STATES
                        SECURITIES AND EXCHANGE COMMISSION
                               Washington, DC  20549

                                 FORM 10-K/A NO. 3

                   ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
                      OF THE SECURITIES EXCHANGE ACT OF 1934

  For the fiscal year ended December 31, 1995     Commission file number 1-10176

                              MERCURY FINANCE COMPANY
              (Exact name of registrant as specified in its charter)

       Delaware                                               36-3627010
  (State or other jurisdiction of                             (I.R.S. Employer
  incorporation or organization)                              Identification
  No.)

  100 Field Drive, Suite 340, Lake Forest, Illinois               60045
  (Address of principal executive offices)                      (Zip Code)

  Registrant's telephone number, including area code          847-295-8600

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

                            Common Stock ($1 par value)
                                 (Title of Class)

  Indicate by check mark whether the registrant (1) has filed all reports
  required to be filed by section 13 OR 15(D) of the Securities Exchange Act of
  1934 during the preceding 12 months and (2) has been subject to such filing
  requirements for the past 90 days. Yes ___     No  X 

  Indicate by check mark if disclosure statement of delinquent filers pursuant
  to Item 405 of Regulation S-K is not contained herein and will not be
  contained, to the best of registrant's knowledge, in definitive Proxy or
  information statements incorporated by reference in Part III of this form 10-
  K or any amendment to this form 10-K.  / /

  State the aggregate market value of the voting stock held by nonaffiliates of
  the registrant.  Such aggregate market value totaled $1,923,995,444 (based on
  the closing price of the Company's common stock on the New York Stock
  Exchange, as reported by The Wall Street Journal (Midwest edition for March
  26, 1996.))
  Indicate the number of shares outstanding of each of the registrant's classes
  of common stock, as of the latest practicable date.

  Common stock, $1 par value 172,583,306 shares outstanding at March 26, 1996
  (net of Treasury stock).

  Documents incorporated by reference: List the following documents if
  incorporated by reference and the part of the form 10-K into which the
  document is incorporated:

  Portions of the definitive Proxy Statement for the 1996 Annual Meeting of
  Shareholders (filed on March 6, 1996) are incorporated herein by reference.


  Part I                                 FORM 10-K CROSS REFERENCE INDEXPAGE
  Item 3.   Legal Proceedings                                  1   
  Part II
  Item 5.   Market for Registrant's Common Equity and Related
            Shareholder Matters                                2   
  Item 6.   Selected Financial Data                            2   
  Item 7.   Management's Discussion and Analysis of Financial      
            Condition and Results of Operations                4   
  Item 8.   Financial Statements and Supplemental Data             
            Independent Auditors' Report                      11   
            Consolidated Balance Sheets                       12   
            Consolidated Statements of Income                 13   
            Consolidated Statements of Changes in
              Shareholders' Equity                            14   
            Consolidated Statements of Cash Flows             15   
            Notes to Consolidated Financial Statements        17   
            Quarterly Financial Data (Unaudited)              32
  Item 9.   Changes in and Disagreements with Accountants on
              Accounting and Financial Disclosures            34   
  Part III
  Item 10.  Directors and Executive Officers of the
              Registrant                                      35   
  Part IV
  Item 14   Exhibits, Financial Statement Schedules and
               Reports on Form 8-K                            35
  SIGNATURES                                                  36   
  EXHIBITS INDEX                                              37  


                                      PART I

  As more fully described in the Notes to Consolidated Financial Statements,
  financial information in this Report has been restated to correct improper
  adjustments reflected in previous reports which had the effect of overstating
  earnings.

  ITEM 3.

  LEGAL PROCEEDINGS

  In the normal course of its business, Mercury and its subsidiaries are named
  as defendants in legal proceedings.  A number of such actions, including two
  cases which have been brought as putative class actions, are pending in the
  various states in which subsidiaries of Mercury do business.  It is the
  policy of Mercury and its subsidiaries to vigorously defend litigation, but
  Mercury and (or) its subsidiaries have and may in the future enter into
  settlements of claims where management deems appropriate.

  Although management is of the opinion that the resolution of these
  proceedings will not have a material effect on the financial position of
  Mercury, it is not possible at this time to estimate the amount of damages or
  settlement expenses that may be incurred.  Accordingly, no provision has been
  made in the consolidated financial statements for any of the pending
  proceedings.

  At December 31, 1995, Lyndon was a party to a number of reinsurance
  agreements entered into by its former reinsurance operation.  These
  agreements resulted in Lyndon assuming business on low risk basis primarily
  from large and highly rated life and health insurers for the purpose of
  providing statutory surplus to the ceding companies.  Prior to the
  acquisition of Lyndon by Mercury, this business was retroceded to a joint
  venture of third party reinsurers under similar terms as the original
  agreements.  All the risks of this business have been effectively transferred
  to the third party reinsurers.  ITT Corporation has also agreed to indemnify
  Mercury Finance in the event any losses are incurred by Lyndon under the
  agreements.  There was approximately $567 million of statutory surplus
  provided (assumed and ceded) under these agreements as of December 31, 1995. 
  Virtually all of these reinsurance agreements are expected to be either
  terminated or novated during 1996 which will remove Lyndon from any potential
  contingent liabilities related to these agreements.

  The Company has been named as a defendant in a variety of lawsuits generally
  arising from the Company's announcement on January 29, 1997 that it would
  restate previously reported financial information for prior years and interim
  earnings for 1996 as a result of the discovery of accounting irregularities. 
  See Footnote 10 of the 1996, 1995 (as restated) and 1994 financial statements
  contained in the Current Report on Form 8-K filed November 6, 1997 for
  additional information.



                                      PART II

  ITEM 5.

  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

  <TABLE>
  <CAPTION>
                                                          1995                                        1994
                                          4th       3rd      2nd Qrtr     1st        4th        3rd     2nd Qrtr    1st Qrtr
                                         Qrtr       Qrtr                  Qrtr      Qrtr       Qrtr

     <S>                                <C>       <C>         <C>        <C>       <C>        <C>         <C>         <C>    
     Average Common & Equivalent
       Shares Outstanding  . . . . .    174,518   175,137     173,764    173,018   173,147    175,792     175,833     175,836

     Per Common Share (adjusted for
       stock splits)
     Net Income  . . . . . . . . . .   $    .07   $   .12   $     .11   $    .13   $   .14   $    .13   $     .12   $     .11
     Cash Dividend . . . . . . . . .        .08       .06         .06        .05       .05        .05         .04         .04
     Market Price:
       High  . . . . . . . . . . . .     16-3/8    16-5/8      12-7/8     11-1/4    10-1/8     11-3/4      12-5/8      12-3/4
       Low . . . . . . . . . . . . .     11-3/8    12-1/8       9-3/4      8-1/4     7-3/8          9      10-1/8       9-7/8
       Close at End of Period  . . .     13-1/4    16-1/4      12-7/8     10-5/8     8-5/8      9-5/8          11      11-1/4

    The common stock of Mercury Finance Company began trading on the New York Stock Exchange on April 11, 1989 under the symbol
    MFN.  Mercury common stock is also traded on the Chicago Stock Exchange.  On December 31, 1995 Mercury had approximately 4,100
    holders of record of common stock, exclusive of holders of shares in "street" or nominee names.

    </TABLE>

  ITEM 6.

  SELECTED FINANCIAL DATA

  <TABLE>

  FIVE YEAR SELECTED FINANCIAL DATA
  (Dollars in thousands except per share amounts)

  <CAPTION>

                      1995          1994         1993         1992         1991

    <S>                <C>           <C>          <C>          <C>          <C>
    SUMMARY INCOME STATEMENT

    Interest income    $255,066      $211,565     $165,054     $121,531     $99,199
    Interest expense   57,303        39,375       32,933       29,525       28,796
    Net interest 
    income             197,763       172,190      132,121      92,006       70,403
    Provision for 
    finance credit 
    losses             32,641        7,376        6,392        4,330        3,984
    Net                165,122       164,814      125,729      87,676       66,419
    Other income       58,349        40,907       29,342       20,345       16,339
    Other expenses     103,363       64,731       50,204       34,359       29,256
    Income before
    income taxes and
    cumulative effect
    of change in 
    accounting 
    principle          120,108       140,990      104,867      73,662       53,502
    Income taxes       45,979        54,445       40,174       27,939       20,686
    Income before 
    cumulative effect 
    of change in 
    accounting 
    principle          74,129        86,545       64,693       45,723       32,816
    Cumulative effect
    of change in
    accounting
    principle          -             -            234          -            -
    Net income         74,129        86,545       64,927       45,723       32,816
    Net income per 
    share              .43           .49          .37          .26          .19
    Dividends per 
    share              .25           .19          .14          .10          .06
    Market value per
    share              13.25         8.67         12.75        7.44          6.31
    SELECTED BALANCES AT YEAR END
    Total assets       $1,598,098    $1,036,403   $797,090     $593,703     $498,437
    Finance receivables
    (gross)            1,441,288     1,272,430    1,004,517    747,573      618,455
    Finance receivables
    (Net of unearned 
    charges)           1,197,776     1,039,867    820,287      618,648      514,586
    Allowance for 
    finance credit 
    losses             46,366        22,488       18,344       13,198       11,334 
    Nonrefundable
    dealer reserves    61,961        66,477       57,241       38,262       28,226
    Senior debt,
    commercial paper
    and other notes    489,990       449,945      260,260      200,000      169,135
    Senior debt, term
    notes              438,750       265,375      266,000      175,500      143,000
    Subordinated debt  29,500        35,500       35,000       41,000       51,000 
    Shareholders' 
    equity             259,487       227,514      193,527      144,920      105,089
    SELECTED RATIOS
    Net income average
    assets             6.01%         9.71%        9.12%        8.36%         7.24%
    Net income to 
    average share-
    holders' equity    29.64         40.23        38.95        37.62         36.91
    Earnings to fixed
    charges            3.05          4.48         4.10         3.44          2.82
    Shareholders' 
    equity to assets   16.24         21.95        24.28        24.41         21.08

    </TABLE>

  ITEM 7.

  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
  OPERATIONS
  (Dollars in tables in thousands)
  The following discussion is intended to assist readers in their analysis of
  the accompanying consolidated financial statements and notes that are
  presented elsewhere in this Annual Report of Mercury Finance Company.

  As more fully described in the Notes to Consolidated Financial Statements,
  financial information in this Report has been restated to correct improper
  adjustments reflected in previous reports which had the effect of overstating
  earnings.

  FINANCIAL CONDITION
  ASSETS AND FINANCE RECEIVABLES

  Total assets of Mercury increased 54% to $1.6 billion at December 31, 1995. 
  This follows an increase of 30% during 1994.  Finance receivables increased
  15% to $1.2 billion at December 31, 1995 which compared to an increase of 27%
  during 1994.  $416 million of the increase in assets was attributable to
  Lyndon Insurance Companies, which Mercury acquired in October 1995.  The
  remaining increases in assets and finance receivables are primarily
  attributable to the production of receivables from the increased number of
  offices operated by Mercury, the Midland acquisition and increased volume in
  existing offices.  The Mercury offices in Florida, Texas and Illinois
  accounted for approximately 50% of all finance receivables in the 28 states
  where Mercury offices are located.  The total number of offices was 276 at
  December 31, 1995, 247 at December 31, 1994 and 218 at December 31, 1993. 
  The following tables summarize the composition of finance receivables at
  December 31:

  <TABLE>
  <CAPTION>
                                  1995        1994         1993   

    <S>                           <C>         <C>          <C>
    Sales finance receivables     $1,256,631  $1,136,958   $905,223 
    Direct finance receivables    184,657     135,472      99,294 
    Total gross finance 
     receivables                  1,441,288   1,272,430    1,004,517
    Less:  Unearned finance 
     charges                      234,792     222,284      174,440  
    Unearned commissions, 
     insurance premiums and 
     insurance claim reserves     8,720       10,279       9,790  
    Finance receivables           $1,197,776  $1,039,867   $820,287 
    </TABLE>

    <TABLE>

    Gross Finance Receivables By Year of Office Openings

                                    1995        1994         1993   

    <S>                             <C>         <C>          <C>
    Offices open at 12/31/93        $1,265,617  $1,190,723   $1,004,517
    1994 office openings            92,525      41,060       0 
    1995 office openings            32,946      0            0 
    1994 Acquisition of Midland     50,200      40,647       0 
    Total gross finance receivables $1,441,288  $1,272,430   $1,004,517

    </TABLE>

  ALLOWANCE AND PROVISION FOR FINANCE CREDIT LOSSES

  Mercury maintains an allowance for losses at a level which, in the opinion of
  management, provides adequately for current and possible future losses in the
  finance receivables portfolio.

  Management evaluates allowance requirements by examining current
  delinquencies, the characteristics of the accounts, the value of the
  underlying collateral, and general economic conditions and trends. 
  Management also evaluates the availability of dealer reserves to absorb
  finance credit losses.  A provision for losses is charged to earnings in an
  amount sufficient to maintain the allowance.  The following table sets forth
  a reconciliation of the changes in the allowance for finance credit losses
  for the three years ended December 31:

  <TABLE>
  <CAPTION>
                                 1995        1994         1993   

    <S>                          <C>         <C>          <C>
    Balance at beginning of year $22,488     $18,344      $13,198 
    Allowance acquired           0           1,052        2,456 
    Provision charged to expense 32,641      7,376        6,392 
    Finance receivables 
     charged-off                 (12,846)    (6,467)      (4,882)
    Recoveries                   4,083       2,183        1,180 
    Balance at  year end         $46,366     $22,488      $18,344  
    Allowance as a percent of 
     finance
     receivables outstanding     3.87%       2.16%        2.24%

    </TABLE>

  The increase in the provision and allowance for finance credit losses in 1995
  and 1994 is attributable to the increase in finance receivables outstanding
  and the increase in net charge-offs, including amounts related to insurance
  add-on products. Mercury purchases a majority of its sales finance contracts
  from dealers at a discount.  A significant portion of the discount represents
  anticipated credit losses and, based upon projected loss experience, is
  allocated to nonrefundable dealer reserves.  Mercury negotiates the amount of
  the discount with the dealers based upon various criteria, one of which is
  the credit risk associated with the sales finance contracts being purchased.  
  The following table sets forth a reconciliation of the changes in
  nonrefundable dealer reserves for the years ended December 31: 

  <TABLE>
  <CAPTION>
                                 1995       1994         1993   

    <S>                          <C>        <C>          <C>
    Balance at beginning of year $66,477    $57,241      $38,262
    Discounts acquired on 
     new volume                   98,559    84,252       71,400 
    Losses absorbed              (96,117)   (70,419)     (50,281) 
    Other                        (6,958)    (4,597)      (2,140)
    Balance at end of year       61,961     66,477       57,241

    </TABLE>

  DEBT

  The primary source for funding Mercury's finance receivables comes from debt
  issued by Mercury.  At December 31, 1995, Mercury had total debt of $958.2
  million, which compares to $750.8 million and $561.3 million at December 31,
  1994 and 1993, respectively.  During 1995 Mercury issued $200.0 million in
  senior term notes at an average rate of 7.2%. The following table represents
  Mercury's debt instruments and the corresponding rates on the debt at the end
  of the periods indicated:

  <TABLE>
  <CAPTION>
                  Dec. 31, 1995      Dec. 31,1994      Dec. 31, 1993
                 Balance     Rate   Balance    Rate   Balance     Rate

    <S>          <C>         <C>    <C>         <C>    <C>        <C>
    Senior Debt: 
     Commercial 
     paper       $489,990    6.0%   $449,945    6.4%   $260,260   3.5% 
    Term notes   438,750     7.2    265,375     7.1    266,000    7.2 
    Subordinated 
     debt        29,500      10.2   35,500      10.2   35,000     10.2 
    Total        $958,240    6.6%   $750,820    6.8%   $561,260   5.7%

    </TABLE>

  The interest rates in the preceding table do not include certain costs
  related to the placement of debt associated with debt assumed in the
  acquisition of Gulfco, fees associated with the revolving credit facility and
  interest associated with interest exchange agreements which are amortized to
  interest expense.  The effect of such costs which are included in interest
  expense in the consolidated financial statements increases the effective
  interest rate by approximately 20 basis points in 1995 and 30 basis points in
  both 1994 and 1993.

  SHAREHOLDERS' EQUITY

  The other primary source for funding the growth in finance receivables comes
  from the retention of earnings by Mercury.  Total shareholders' equity at
  December 31, 1995 was $259.5 million which compares with $227.5 million at
  December 31, 1994.  During the year Mercury had net income of $74.1 million,
  paid dividends of $42.8 million and purchased back 1.1 million shares costing
  $14.0 million.  At December 31, 1995, Mercury's shareholders' equity as a
  percent of total assets was 16.24% which compares with 21.95% at December 31,
  1994.  The decrease in the percentage of shareholders' equity to total assets
  resulted from the purchase of the assets of the Lyndon Insurance Companies. 

  RESULTS OF OPERATIONS
  NET INCOME

  For the year ended December 31, 1995, Mercury had net income of $74.1
  million, which represents a decrease of 14% from the $86.5 million earned in
  1994.  The 1994 result was an increase of 33% over the $64.9 million earned
  in 1993.  The decrease in 1995 net income versus 1994 is the result of an
  increase in finance charge income and other income more than offset by an
  increase in the provision for credit losses and an increase in expenses
  relating to the additional offices opened during 1994 and 1995 without a
  corresponding increase in net interest income after provision for credit
  losses.

  INTEREST INCOME AND INTEREST EXPENSE

  The largest single component of net income is net interest income which is
  the difference between interest income and interest expense before provision
  for finance credit losses.  For the year ended December 31, 1995, net
  interest income was $197.8 million, which compares with $172.2 million and
  $132.1 million in 1994 and 1993, respectively.  The primary factor
  attributable to the growth in net interest income is the volume increase in
  finance receivables outstanding. Also impacting growth in interest income was
  the investment portfolio of the Lyndon Insurance Companies, acquired in
  October 1995. For the year ended December 31, 1995, Mercury's net interest
  margin, which is the ratio of net interest income divided by average interest
  earning assets, was 16.24%.  This compares with a net interest margin of
  18.55% and 17.73% in 1994 and 1993, respectively.  The change in the net
  interest margin is primarily attributable to interest rate changes on
  interest earning assets and interest bearing liabilities.  The changes in
  interest rates are reflective of general interest rate trends in the U.S.
  economy. 

  In addition, the investment portfolio of Lyndon (which yields approximately
  7% vs. approximately 23% for the finance receivable portfolio), contributed
  to the reduction in the margin percentage in 1995 from 1994. The following
  table summarizes net interest income and the net interest margin for the
  three years ended December 31:

  <TABLE>
  <CAPTION>
                                 1995          1994         1993

    <S>                          <C>           <C>          <C>
    Average interest earning 
      assets                     $1,217,798    $928,060     $745,164
    Average interest bearing 
      liabilities                   843,239     612,700      494,590 
    Net                          $  374,559    $315,360     $250,574
    Interest income              $  255,066    $211,565     $165,054
    Interest expense                 57,303      39,375       32,933 
    Net interest income          $  197,763    $172,190     $132,121
    Rate earned                       20.94%      22.80%       22.15% 
    Rate paid                          6.80%       6.43%        6.65%    
    Net                               14.15%      16.37%       15.50% 
    Net interest margin               16.24%      18.55%       17.73%

    </TABLE>

  OTHER INCOME

  In addition to finance charges and interest, Mercury derives commission
  income from the sale of other credit related products.  These products
  include insurance relating to the issuance of credit life, accident and
  health and other credit insurance policies to borrowers of Mercury. Other
  credit-related sources of revenue are derived from the sale of other products
  and services.

  Lyndon earns insurance premiums on business it has underwritten through
  outside distributors, business in a run-off mode from subsidiaries of its
  prior owner, and going forward, through Mercury's branch offices.  Insurance
  premiums are also earned by Mercury's other insurance subsidiaries as a
  reinsurers of credit life and accident and health policies issued through
  Mercury branch offices. For the year ended December 31, 1995, Mercury
  experienced increases in its insurance premiums which is primarily
  attributable to the fourth quarter acquisition of Lyndon.  The following
  table summarizes the amounts earned from these products for the three years
  ended December 31:

  <TABLE>
  <CAPTION>
                                  1995        1994         1993

    <S>                           <C>         <C>          <C>
    Insurance commissions         $21,365     $20,507      $12,318
    Insurance premiums            29,686      9,056        8,648
    Vehicle protection club 
     memberships                  3,242       3,929        3,478 
    Fees and other                4,056       7,415        4,898 
    Total                         $58,349     $40,907      $29,342
    Other income as a % of 
     average interest earning
     assets                       4.79%       4.41%        3.94%

    </TABLE>

  OTHER EXPENSES

  In addition to interest expense and the provision for finance credit losses,
  Mercury incurs other operating expenses in the conduct of its business. 
  During 1995 other operating expenses increased 60% over 1994, which in turn
  had increased 30% over 1993.  During the same period, total assets of Mercury
  have increased 54% and 30%.  During 1994 additional legal fees and settlement
  costs were incurred associated with a judgement which was rendered against
  one of Mercury's subsidiaries in Alabama.  The following table summarizes the
  components of other expenses for the three years ended December 31:

  <TABLE>
  <CAPTION>
                                  1995       1994         1993 

    <S>                           <C>        <C>          <C>
    Salaries and employee 
     benefits                     $48,590    $36,852      $29,058
    Incurred insurance claims 
     expense
     and other underwriting 
     expense                      17,703     2,722        3,338 
    Other operating expenses      37,070     25,157       17,808 
    Total                         $103,363   $64,731      $50,204
    Operating expenses as a % of
     average interest earning 
     assets                       8.49%      6.97%        6.74%

    </TABLE>

  INCOME TAXES

  Income taxes decreased 15% to $46.0 million when compared with $54.4 million
  and $40.2 million in 1994 and 1993, respectively. The decrease in income
  taxes is primarily attributable to a lower level of pretax earnings during
  1995.  The effective tax rates on income before income taxes were 38.3%,
  38.6% and 38.3% in 1995, 1994 and 1993, respectively.

  CREDIT LOSSES AND DELINQUENCIES

  Direct finance receivables on which no payment is received within 149 days,
  on a recency basis, are charged off.  Sales finance receivables which are
  contractually delinquent 150 days are charged off monthly before they become
  180 days delinquent.  Accounts which are deemed uncollectible prior to the
  maximum charge-off period are charged off immediately.  Management may
  authorize an extension if collection appears imminent during the next
  calendar month.

  The following table sets forth information relating to charge-offs, the
  allowance for finance credit losses and dealer reserves (dollars in
  thousands):

  <TABLE>
  <CAPTION>
                                      1995         1994         1993

    <S>                               <C>          <C>          <C>
    Loss provision charged to income  $32,641      $7,376       $6,392
    Charge-offs net of recoveries     8,763        4,284        3,702
    Net charge-offs against           
     nonrefundable dealer reserves    96,117       70,419       50,281
    Allowance for finance credit 
     losses at end of period          46,366       22,488       18,344
    Dealer reserves at end of period  61,961       66,477       57,241

    RATIOS
     
                                      1995         1994         1993

    Net charge-offs against allowance
     to average finance receivables   .76%         .47%         .49%
    Net charge-offs against          
     nonrefundable dealer reserves to 
     average finance receivables      8.37%        7.69%        6.84%
    Allowance for finance credit 
     losses at end of period          3.87%        2.16%        2.24%
    Dealer reserves to net sales 
     finance receivables at end of 
     period                           6.00%        7.11%        7.65%

    </TABLE>

  The increase in net charge-offs is attributable to changes in the mix of the
  finance receivables portfolio during 1994 and 1995, the decline in economic
  conditions of consumer borrowers which is reflective of general trends in the
  economy and charge offs resulting from certain insurance add-on products
  which were not collected from borrowers.

  If an account becomes 60 or more days contractually delinquent and no full
  contractual payment is received in the month the account attains such
  delinquency status, it is classified as delinquent. The following table sets
  forth certain information regarding 60 day and greater contractually
  delinquent accounts, at December 31 (dollars in thousands):

  <TABLE>
  <CAPTION>

   60 Days and Over Delinquencies   1995        1994         1993 

    <S>                             <C>         <C>          <C>
    Sales finance receivables       $13,965     $7,492       $5,366
    Direct finance receivables      2,782       2,709        3,099
    Total                           $16,747     $10,201      $8,465
    Outstanding
    Sales finance receivables       $1,256,631  $1,136,958   $905,223
    Direct finance receivables      184,657     135,472      99,294
    Total                           $1,441,288  $1,272,430   $1,004,517
    Delinquency as a % of 
    Receivables Outstanding
    Sales finance receivables       1.11%       .66%         .59%
    Direct finance receivables      1.51%       2.00%        3.12%
    Total                           1.16%       .80%         .84%

    </TABLE>

  LIQUIDITY AND FINANCIAL RESOURCES

  Because the consumer finance business involves the purchase and carrying of
  receivables, a relatively high ratio of borrowings to net worth is customary
  and is an important element in Mercury's operations.  Mercury endeavors to
  maximize its liquidity by diversifying its sources of funds which include (a)
  cash from operations, (b) the issuance of short-term commercial paper, and
  (c) direct borrowings available from commercial banks and insurance
  companies, consisting of short-term lines of credit and long-term senior and
  subordinated notes.  Most of the assets of Mercury are at fixed rates, and
  have an average initial maturity of approximately 24 months.  Of Mercury's
  total debt, 49% has an original maturity of greater than one year at a fixed
  rate of interest.

  ACCOUNTING CHANGES

  In December 1986, the Financial Accounting Standards Board issued FASB
  Statement No. 91 which relates to the accounting for nonrefundable fees and
  cost associated with originating or acquiring loans.  The statement requires
  that loan origination and commitment fees and certain direct loan origination
  costs be deferred and amortized as an adjustment to the related loan's yield.
  Mercury has not adopted the provisions of this statement because adoption
  would not have a material effect on Mercury's reported results of operation
  or financial condition. Effective January 1, 1993 Mercury adopted the
  provisions of Statement of Financial Accounting Standards No. 109, Accounting
  for Income Taxes, and has reported the cumulative effect of that change in
  the method of accounting for income taxes in the 1993 consolidated statement
  of income.  Under the asset and liability method of Statement 109, deferred
  tax assets and liabilities are recognized for the future tax consequences
  attributable to differences between the financial statement carrying amounts
  of existing assets and liabilities and their respective tax bases.  Deferred
  tax assets and liabilities are measured using enacted tax rates expected to
  apply to taxable income in the years in which those temporary differences are
  expected to be recovered or settled.  Under Statement 109, the effect on
  deferred tax assets and liabilities of a change in tax rates is recognized in
  income in the period that includes the enactment date.  Prior to adoption of
  FASB 109 Mercury accounted for income taxes under APB 11. The Financial
  Accounting Standards Board has issued FASB Statement No. 121, Accounting for
  Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed of. 
  Statement 121 will be effective for financial statements for the fiscal years
  beginning after December 15, 1995. Statement 121 requires entities to perform
  separate calculations for long-lived assets to determine whether recognition
  of an impairment loss is required and, if so, to measure that impairment.
  Management believes that the impact of the adoption of this statement will
  not have any impact on the financial position of Mercury. 

  The Financial Accounting Standards Board has issued FASB Statement No. 123,
  Accounting for Stock-Based Compensation.  Statement 123 allows companies to
  retain the current approach for recognizing stock-based expense in the
  financial statements; however, companies are encouraged to adopt a new
  accounting method based on the estimated fair value of employee stock
  options. Companies that do not elect the new fair value based method will be
  required to provide expanded disclosures in the footnotes.  Statement 123 is
  effective for fiscal years beginning after December 15, 1995.  At this time
  management expects to comply with the disclosure alternative provide by
  Statement 123. 

  ITEM 8.

  FINANCIAL STATEMENTS AND SUPPLEMENTAL DATA

                           INDEPENDENT AUDITORS' REPORT


  THE BOARD OF DIRECTORS AND SHAREHOLDERS
  MERCURY FINANCE COMPANY:

  We have audited the accompanying consolidated balance sheets of Mercury
  Finance Company and subsidiaries as of December 31, 1995 and 1994, and the
  related consolidated statements of income, changes in shareholders' equity
  and cash flows for each of the years in the three-year period ended December
  31, 1995.  These consolidated financial statements are the responsibility of
  Mercury Finance Company's management.  Our responsibility is to express an
  opinion on these consolidated financial statements based on our audits.

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

  In our opinion, the consolidated financial statements referred to above
  present fairly, in all material respects, the financial position of Mercury
  Finance Company and subsidiaries as of December 31, 1995 and 1994, and the
  results of their operations and their cash flows for each of the years in the
  three-year period ended December 31, 1995, in conformity with generally
  accepted accounting principles.

                                     /s/ KPMG Peat Marwick LLP

  February 12, 1996, except as to notes 1, 4, 7, 12, 14, 15 and 16,
    which are dated as of October 27, 1997.
  Chicago, Illinois

  <TABLE>

  CONSOLIDATED BALANCE SHEETS
  (Dollars in thousands)

  <CAPTION>
                                                  December 31,     
                                                  1995        1994

    <S>                                           <C>         <C>
    ASSETS
    Cash                                          $22,967     $19,980 
    Investments available-for-sale at fair value  229,418     -
    Investments to be held-to-maturity 
    (fair value of $12,909 and $13,942)           12,625      14,184 
    Finance receivables                           1,197,776   1,039,867
    Less allowance for finance credit losses      (46,366)    (22,488)
    Less nonrefundable dealer reserves            (61,961)    (66,477)
    Finance receivables, net                      1,089,449   950,902
    Deferred income taxes                         21,353      7,290
    Premises and equipment (at cost less 
    accumulated depreciation of $7,247 and 
    $6,158)                                       7,022       3,492
    Goodwill                                      15,274      15,404
    Reinsurance receivable                        89,962      -
    Deferred acquisition costs and present
      value of future profits                     23,242      243 
    Other assets (including repossessions)        86,786      24,908
    TOTAL ASSETS                                  1,598,098   1,036,403 
    LIABILITIES AND SHAREHOLDERS' EQUITY
    LIABILITIES
    Senior debt, commercial paper and notes       $489,990    $449,945
    Senior debt, term notes                       438,750     265,375
    Subordinated debt                             29,500      35,500
    Accounts payable and other liabilities        70,268      52,635
    Unearned premium and claim reserves           195,761     766
    Reinsurance payable                           105,081     - 
    Income taxes payable                          9,261       4,668
    TOTAL LIABILITIES                             1,338,611   808,889
    SHAREHOLDERS' EQUITY
    Common stock - $1.00 par value: 
      300,000,000 shares authorized
      1995 - 176,477,520 shares outstanding
      1994 - 116,079,703 shares outstanding       176,478     116,080
    Paid in capital                               39          6,384
    Retained earnings                             118,138     128,157
    Unrealized appreciation on available-for-
      sale securities, net of tax                 1,969       -
    Treasury stock, 3,896,557 and 1,839,705
      shares at cost                              (37,137)    (23,107)
    TOTAL SHAREHOLDERS' EQUITY                    259,487     227,514
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    1,598,098   1,036,403

    See accompanying notes to consolidated financial statements. 

    </TABLE>

  <TABLE>

  CONSOLIDATED STATEMENTS OF INCOME
  (Dollars in thousands except per share amounts)         

  <CAPTION>
  Years ended December 31,
   Text                          1995          1994         1993      

    <S>                          <C>           <C>          <C>
    INTEREST INCOME
    Finance charges and loan 
      fees                       $249,913      $210,891     $164,572
    Investment income            5,153         674          482 
    Total finance charges, fees 
      and investment income      255,066       211,565      165,054   
    Interest expense             57,303        39,375       32,933 
    Net interest income          197,763       172,190      132,121
    Provision for finance credit
      losses                     32,641        7,376        6,392 
    Net interest income after 
      provision for finance
      credit losses              165,122       164,814      125,729
    OTHER INCOME
    Insurance commissions        21,365        20,507       12,318
    Insurance premiums           29,686        9,056        8,648
    Fees and other               7,298         11,344       8,376
    Total other income           58,349        40,907       29,342
    OTHER EXPENSES
    Salaries and employee 
      benefits                   48,590        36,852       29,058
    Occupancy expense            4,880         3,730        3,216
    Equipment expense            2,041         1,665        1,244
    Data processing expense      3,071         2,551        1,984
    Incurred insurance claims
      and other underwriting 
      expense                    17,703        2,722        3,338
    Other operating expenses     27,078        17,211       11,364
    Total other expenses         103,363       64,731       50,204
    Income before income taxes
      and cumulative effect of 
      change in accounting 
      principle                  120,108       140,990      104,867
    Applicable income taxes      45,979        54,445       40,174
    Income before cumulative 
      effect of change in
      accounting principle       74,129        86,545       64,693
    Cumulative effect of change
      in accounting principle    -             -            234 
    NET INCOME                   74,129        86,545       64,927
    NET INCOME PER SHARE         $ .43         $ .49        $ .37

    See accompanying notes to consolidated financial statements.

    </TABLE>

  <TABLE>

  CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
  (Dollars in thousands except per share amounts)

  <CAPTION>
                        Common      Paid in     Retained   Unrealized   Treasury
                        Stock       Capital     Earnings   Appreciation Stock        Total

    <S>                 <C>         <C>         <C>        <C>         <C>          <C>
    Balance at January  
      1, 1993           $86,125     $5,274      $53,692    $0          ($171)       $144,920
    1993 net income                             64,927                              64,927
    Stock options 
      exercised         703         6,328                                           7,031
    Cash dividends 
      ($.14 per share)                          (23,351)                            (23,351)
    Transfer to Paid 
      in Capital                    20,075      (20,075)                             -
    Two for one stock
      split             28,821      (28,821)                                         -
    Balance at December
      31, 1993          115,649     2,856       75,193     0            (171)       193,527
    1994 net income                             86,545                              86,545
    Stock options
      exercised         431         3,528                                           3,959
    Cash dividends 
      ($.19) per share                          (33,581)                            (33,581)
    Treasury stock 
      acquired                                                         (22,936)    (22,936)
    Balance at December
      31, 1994          116,080     6,384       128,157    0           (23,107)     227,514
    1995 net income                             74,129                              74,129
    Stock options
      exercised         1,573       11,181                                          12,754
    Cash dividends
      ($.25) per share                          (42,849)                            (42,849)
    Transfer to Paid
      in Capital                    41,299      (41,299)                            -
    Three for two
      stock split       58,825      (58,825)                                        -
    Unrealized 
      appreciation on
      available-for-
      sale securities
      net of tax                                           1,969                    1,969
    Treasury stock
      acquired                                                         (14,030)     (14,030)
    BALANCE AT 
    DECEMBER 31,
    1995                $176,478    $39         $118,138   $1,969      ($37,137)    $259,487

    See accompanying notes to consolidated financial statements.

    </TABLE>

  <TABLE>

  CONSOLIDATED STATEMENTS OF CASH FLOWS

  <CAPTION>

   (Dollars in thousands)       Years ended December 31, 
                                           1995     1994     1993 

    <S>                                    <C>      <C>      <C>
    CASH FLOWS FROM OPERATING ACTIVITIES
    Net income                             $74,129  $86,545  $64,927
    Adjustments to reconcile net income to
      cash provided by operating activities:
      Provision for finance credit losses  32,641   7,376    6,392   
    Provision for deferred income taxes   (10,595) (1,779)  (1,305)  
    Depreciation                           1,153    902      673  
    Amortization of goodwill and purchase
       accounting adjustments              3,208    596      385  
    Gain on sale of investment securities  (19)     (24)     (28)  
    Net (increase) decrease in
       reinsurance receivable              (37,476) -        -   
    Net (increase) decrease in deferred
       acquisition costs and present value
       of future profits                   (2,176)  (220)    (23)  
    Net (increase) decrease in other
       assets                              (14,044) (13,008) (1,166)  
    Net increase (decrease) in
       reinsurance payable                 (14,116) -        -   
    Net increase (decrease) in 
       unearned premium and claim reserves 10,970   10       (157)  
    Increase in taxes payable              4,593    1,441    909
    Net increase (decrease) in other
       liabilities                         3,120    13,478   5,493  
    Net increase (decrease)in 
       nonrefundable dealer
       reserves                            (4,516)  5,727    18,979   
     Net cash provided by operating 
       activities                          46,872   101,044  95,079
    CASH FLOWS FROM INVESTING ACTIVITIES
      Principal collected on finance
       receivables                         825,779  690,508  569,290  
    Finance receivables originated or 
       acquired                           (992,450)(887,902)(724,104) 
      Purchases of investment securities   (24,010) (7,896)  (3,646)  
    Proceeds from sales of investment
       securities                          55,694   3,938    2,165  
    Proceeds from maturities of 
       investment securities               3,413    331      2,320  
    Purchase of premises and equipment    (4,683)  (1,456)  (1,032)   
    Assets acquired                       (393,318)(26,014) (55,504)  
    Liabilities assumed                    310,519  16,866   43,746  
    Net assets acquired                    (82,799) (9,148)  (11,758) 
    Purchase price less than (in excess
       of) fair value of net assets 
       acquired                            10,299   (5,905) (10,498)  
    Net cash used in investing 
        activities                       (208,757)(217,530)(177,263) 
                                                                      

    CASH FLOW FROM FINANCING ACTIVITIES                           
    Net increase (decrease) in senior
       debt, commercial paper              40,045   184,485  55,289  
    Senior debt, term notes retired        (26,625) (35,125) (79,500) 
    Subordinated debt retired              (6,000)  (2,320)  (6,000)  
    Senior debt, term notes issued         200,000  30,000   135,000  
    Stock options exercised                12,754   3,959    7,031  
    Dividends paid                         (42,849) (33,581) (23,351) 
    Treasury stock acquired                (14,030) (22,936) -    
    Net cash provided by financing
        activities                         163,295  124,482  88,469   
    Net increase (decrease) in cash
        and cash equivalents               1,410    7,996    6,285 
    CASH AT BEGINNING OF YEAR              19,980   11,621   4,820 
    CASH ACQUIRED                          1,577    363      516 
    CASH AT END OF YEAR                    $22,967  $19,980  $11,621  
    Supplemental Disclosures             
       Income taxes paid to federal and
       state governments                   $51,967  $53,262  $39,160
    Interest Paid to Creditors             $57,797  $39,502  $33,038

    See accompanying notes to consolidated financial statements

    </TABLE>

  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

  December 31, 1995, 1994 and 1993 (Dollars in thousands except per share
  amounts)

  1) Organization and Affiliations

  Mercury Finance Company ("Mercury"), through its predecessor companies,
  commenced operations in February 1984 and through December 31, 1995
  established consumer finance subsidiaries in 28 states, doing business in 276
  offices under the Mercury Finance Company, MFC Finance Company, MERC Finance
  Company, Gulfco Finance Company and Midland Finance Co. names.  On April 1,
  1993 Mercury acquired all the shares of Gulfco Investment Inc. for $22.3
  million in cash.  Gulfco Investment Inc. was the parent company which owned
  all of the stock of Gulfco Finance Company and Gulfco Life Insurance Company. 
  Gulfco Finance Company conducted its consumer finance business through a
  branch network of 62 offices located in Louisiana, Mississippi and Texas.  

  On September 30, 1994 Mercury acquired all the shares of Midland Finance Co.
  for $15.1 million in cash and the assumption of its net liabilities.  Midland
  Finance Co. conducted its consumer finance business through a central office
  in Chicago, Illinois. The acquisitions were accounted for under the purchase
  method of accounting.  Accordingly their results of operations have been
  included in the consolidated statements of income and statements of cash flow
  since the dates of acquisition.  The excess of cost over fair value of net
  assets acquired (goodwill) relating to the acquisitions is being amortized
  over twenty years on the straight line method.

  On October 20, 1995 Mercury acquired all the shares of ITT Lyndon Property
  and ITT Lyndon Life Insurance Company for $72.5 million in cash and the
  assumption of their net liabilities. ITT Lyndon Property and ITT Lyndon Life
  Insurance Company conducted their business through a central office in St.
  Louis, Missouri.  Following the acquisition, the names of the companies were
  changed to Lyndon Property and Lyndon Life Insurance Companies "Lyndon".  The
  acquisition was accounted for under the purchase method of accounting. 
  Accordingly their results of operations have been included in the
  consolidated statements of income and statements of cash flow since the date
  of acquisition.  The excess of fair value over cost of net assets acquired
  negative goodwill of $10,299) relating to the acquisition was offset against
  the present value of future profits of acquired insurance in force.  The
  balance of the present value of future profits was $16.6 million at December
  31, 1995 and is being amortized over an approximate three year period.

  The following table presents unaudited, proforma financial results for the
  years ended December 31, 1995 and 1994, as though Lyndon had been acquired on
  January 1, 1994.  These proforma  results have been prepared for comparative
  purposes only and are not indicative of the results of operations which
  actually would have resulted had the combination been in effect on the dates
  indicated, or which may result in the future.  The business which was
  acquired by Mercury was substantially different than the business Lyndon had
  been conducting prior to the acquisition.  Lyndon is no longer underwriting
  certain business it previously conducted with current and prior subsidiaries
  of ITT Corporation.

  <TABLE>
  <CAPTION>
                                               1995            1994 

    <S>                                        <C>             <C>
    Net interest income & other income         $371,092        $318,824
    Net income                                 92,372          121,979
    Net income per share                       $ .53           $ .70

    </TABLE>

  2) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

  BASIS OF PRESENTATION

  The accounting and reporting policies of Mercury conform to generally
  accepted accounting principles and to the general practice within the finance
  and insurance industries. The consolidated financial statements include the
  accounts of the consumer finance subsidiaries, Mercury Life Insurance
  Company("Mercury Life"), Gulfco Investment Inc. ("Gulfco"), Midland Finance
  Co. ("Midland"), Gulfco Life Insurance Company ("Gulfco Life") and Lyndon
  Property and Lyndon Life Insurance Companies ("Lyndon").  In addition certain
  data from prior years has been reclassified to conform to the 1995
  presentation. 

  REVENUE RECOGNITION
  CONSUMER FINANCE SUBSIDIARIES

  Finance charges on precomputed loans and sales finance contracts are credited
  to unearned finance charges at the time the loans and sales finance contracts
  are made or acquired.  Interest income is calculated using the interest
  method. If a precompute account becomes 60 or more days contractually
  delinquent and no full contractual payment is received in the month the
  account attains such delinquency status, the accrual of income is suspended
  until one or more full contractual monthly payments are received.  Interest
  on interest bearing loans and sales finance contracts is calculated on a
  360-day year basis and recorded on the accrual basis; accrual is suspended
  during the time an account is 60 or more days contractually delinquent.  Late
  charges and deferment charges on all contracts are taken into income as
  collected.  Extension fees are taken into income on the same basis as finance
  charges. 

  Fees and other income are derived from the sale of other products and
  services.

  INSURANCE OPERATIONS

  In conjunction with their lending practices, the consumer finance
  subsidiaries, as agents for Gulfco Life, Lyndon and unaffiliated insurers,
  offer credit life, accident and health and property insurance to borrowers
  who obtain finance receivables directly from the consumer finance
  subsidiaries, and to borrowers under sales finance contracts and financing
  contracts purchased from merchants and automobile dealers.  Commissions on
  credit life insurance and credit accident and health insurance from
  unaffiliated insurers are earned by Mercury over the average terms of the
  related policies on the sum-of-the months digits method.

  Lyndon is engaged in the business of direct writing of credit life, accident
  and health and various other credit related insurance policies for customers
  of Mercury and other companies.  Lyndon Life is licensed in forty-eight (48)
  states and Lyndon Property is licensed in forty-seven (47) states.  Mercury
  Life and Gulfco Life are engaged primarily in the business of reinsuring  and
  direct writing, respectively, of credit life and accident and health
  insurance policies issued to borrowers of finance receivables and sales
  finance contracts originated by Mercury.  The policies insure the holder of a
  sales finance contract or other debt instrument for the outstanding balance
  payable in the event of death or disability of the debtor.  Premiums are
  earned over the life of the contracts principally using pro-rata and
  sum-of-the months digits methods or in relation to anticipated benefits to
  the policy holders.

  Mercury Life, Gulfco Life and Lyndon have established policy liabilities and
  claim reserves.  The claim reserves are based upon accumulated estimates of
  claims reported, plus estimates of incurred but unreported claims.

  ALLOWANCE FOR FINANCE CREDIT LOSSES

  Mercury maintains an allowance for finance credit losses at a level which, in
  the opinion of management, provides adequately for current and possible
  future losses that may develop in the  present receivables portfolio. 
  Management evaluates allowance requirements by examining current
  delinquencies, the characteristics of the accounts, the value of the
  underlying collateral, and general economic conditions and trends. 
  Management also evaluates the availability of dealer reserves to absorb
  finance credit losses (losses on sales finance contracts are primarily
  charged off against nonrefundable dealer reserves). A provision for losses is
  charged to earnings in an amount sufficient to maintain the allowance. 

  Direct installment loans on which no payment is received within 149 days, on
  a recency basis, are charged off.  Sales finance accounts which are
  contractually delinquent 150 days are charged off monthly before they become
  180 days delinquent.  Accounts which are deemed uncollectible prior to the
  maximum charge-off period are charged off immediately. Management may
  authorize an extension if collection appears imminent during the next
  calendar month.

  INVESTMENTS

  Mercury accounts for its investments in accordance with Statement of
  Financial Accounting Standards No. 115, ACCOUNTING FOR CERTAIN INVESTMENTS IN
  DEBT AND EQUITY SECURITIES (Statement 115). Statement 115 addresses the
  accounting and reporting for investments in equity securities that have
  readily determinable fair values, and all investments in debt securities. 
  Mercury classifies its debt securities into one or more of three categories
  specified by Statement 115: held-to-maturity, available-for-sale, or trading. 
  Held-to-maturity securities are those which management has the positive
  intent and ability to hold to maturity. Available-for-sale securities are
  those securities which management may sell prior to maturity as a result of
  changes in interest rates, prepayment factors, or as part of Mercury's
  overall asset and liability strategy.  Trading securities are those
  securities bought and held principally for the purpose of selling them in the
  near term.  Mercury has no securities designated as trading. 
  Held-to-maturity securities are recorded at cost adjusted for amortization of
  premium and accretion of discount to the earlier of the call date or maturity
  date using the level yield method. 

  Available-for-sale securities are recorded at fair value. Unrealized gains
  and losses, net of the related income tax effect, are excluded from income
  and reported as a separate component of shareholders' equity.  If a decrease
  in the market value of a security is expected to be other than temporary, the
  security is written down to its fair value through a charge to income. 
  Realized gains and losses on the sale of investment securities are recorded
  using the specific identification method.

  PREMISES AND EQUIPMENT

  Premises and equipment are carried at cost less accumulated depreciation and
  are depreciated on a straight-line basis over their estimated useful lives.

  NONREFUNDABLE DEALER RESERVES

  Mercury purchases a majority of its sales finance contracts from dealers at a
  discount.  A significant portion of this discount represents anticipated
  credit losses and, based upon projected loss experience, is allocated to
  nonrefundable dealer reserves.  Mercury negotiates the amount of the
  discounts with the dealers based upon various criteria, one of which is the
  credit risk associated with the sales finance contracts being purchased.   

  REINSURANCE ACTIVITIES

  The balance sheet includes approximately $90 million and $105 million of
  reinsurance receivable and reinsurance payable, respectively.  These amounts
  relate to certain reinsurance agreements entered into by Lyndon Insurance
  Companies' former reinsurance operations (prior to acquisition by Mercury). 
  The business assumed by Lyndon under these agreements has been retroceded to
  third parties under similar terms as the original agreements, resulting in
  offsetting receivable and payable amounts (the difference represents cash
  received by Lyndon).  Prior to the acquisition of Lyndon by Mercury, Lyndon's
  reinsurance operations were ceded to third party reinsurers.  The majority of
  these reinsurance agreements are expected to be either terminated or novated
  to the third parties during 1996 as part of the sale agreement and the
  corresponding assets and liabilities will be removed from Mercury's financial
  statements.

  In the normal course of business, the insurance companies assume and cede
  reinsurance on both a pro rata and excess basis.  Reinsurance provides
  greater diversification of business and limits the maximum net loss potential
  arising from large claims.  Although the ceding of reinsurance does not
  discharge an insurer from its primary legal liability to a policy holder, the
  reinsuring company assumes the related liability.  Lyndon monitors the
  financial condition of its reinsurers on a periodic basis. 

  DEFERRED ACQUISITION COSTS AND PRESENT VALUE OF FUTURE PROFITS

  Policy acquisition costs, representing commissions, premium taxes and certain
  other underwriting expenses, are deferred and amortized over policy terms. 
  Estimates of future revenues, including investment income and tax benefits,
  are compared to estimates of future costs, including amortization of policy
  acquisition costs, to determine if business currently in force is expected to
  result in a net loss.  No revenue deficiencies have been determined in the
  periods presented.  The present value of future profits represents the
  portion of the purchase price of Lyndon allocated to the future profits
  attributable to the insurance in force at the date of acquisition.  The
  present value of future profits is amortized in relationship to the expected
  emergence of such future profits and is discounted at rates between 12-15%.

  INTEREST EXCHANGE AGREEMENTS

  The interest differential to be paid or received on interest exchange
  agreements is accrued monthly and is recognized over the life of the
  agreement.

  INCOME TAXES

  The consumer finance subsidiaries are members of Mercury's consolidated
  Federal income tax group.  The consumer finance subsidiaries file individual
  state income tax returns. Lyndon Insurance Companies, Mercury Life and Gulfco
  Life file their own tax returns and are not part of Mercury's consolidated
  tax group for Federal and state income tax purposes.

  Effective January 1, 1993 Mercury adopted the provisions of Statement of
  Financial Accounting Standards No. 109, ACCOUNTING FOR INCOME TAXES, and has
  reported the cumulative effect of that change in the method of accounting for
  income taxes in the 1993 consolidated statement of income.  Under the asset
  and liability method of Statement 109, deferred tax assets and liabilities
  are recognized for the future tax consequences attributable to differences
  between the financial statement carrying amounts of existing assets and
  liabilities and their respective tax bases.  Deferred tax assets and
  liabilities are measured using enacted tax rates expected to apply to taxable
  income in the years in which those temporary differences are expected to be
  recovered or settled.  Under Statement 109, the effect on deferred tax assets
  and liabilities of a change in tax rates is recognized in income in the
  period that includes the enactment date.  

  USE OF ESTIMATES

  The preparation of financial statements in conformity with generally accepted
  accounting principles requires management to make estimates and assumptions
  that affect the amounts reported in the consolidated financial statements and
  accompanying notes.  The accounts which are subject to such estimation
  techniques most significantly include the allowance for finance credit losses
  and insurance claim reserves.  Actual results could differ from these
  estimates. 
  3) INVESTMENTS

  The amortized cost, gross unrealized gains and losses and approximate fair
  values for available-for-sale and held-to-maturity securities by major
  security type at December 31, 1995 and 1994 were as follows:

  <TABLE>
  <CAPTION>
                                     December 31, 1995
                            Amortized Cost   Gross Unrealized   Gross Unrealized     Approximate
                                             Gains              Losses               Fair Value 

    <S>                     <C>              <C>                <C>                  <C>
    AVAILABLE-FOR-SALE:
      U.S. Treasury securities 
       and obligations of 
       U.S. Government  
       agencies and
       corporations         $10,802          $75                $3                   $10,874
      Obligations 
       of States 
       and political
       subdivisions         50,864           853                142                  51,575
      Corporate             139,786          2,246              1                    142,031
      Mortgage backed 
       securities           14,238           37                 18                   14,257
      Other securities      10,681           0                  0                    10,681
      Total available-
       for-sale             226,371          3,211              164                  229,418

    HELD-TO-MATURITY:
      U.S. Treasury 
       securities and 
       obligations of 
       U.S. Government 
       agencies and
       corporations         1,950            27                 3                    1,974
      Obligations of 
       States and 
       political sub-
       divisions            2,994            77                 1                    3,070
      Corporate             1,046            70                 0                    1,116
      Other securities      6,320            0                  0                    6,320
      Equity securities     315              121                7                    429
      Total held-to-
       maturity             12,625           295                11                   12,909
      TOTAL                 $238,996         $3,506             $175                 $242,327

                                      December 31, 1994
                         Amortized Cost      Gross Unrealized   Gross Unrealized   Approximate
                                             Gains              Losses             Fair Value 

    HELD-TO-MATURITY:
      U.S. Treasury 
       securities and 
       obligations of 
       U.S. Government 
       agencies and
       corporations      $1,424              $5                  $87               $1,342
      Obligations of 
       States and 
       political
       subdivisions      1,912               0                   120               1,792
      Corporate          1,096               2                   45                1,053
      Other securities   9,311               0                   43                9,268
      Equity securities  441                 55                  9                 487
      Total held-to-
       maturity          $14,184             $62                 $304              $13,942

    </TABLE>

  Other securities include mutual fund and money market investments. Proceeds
  from the sale of investment securities, gross realized gains and losses were
  as follows during the years ended December 31, 1995, 1994, and 1993:

  <TABLE>
  <CAPTION>
                               1995       1994       1993

    <S>                        <C>        <C>        <C>
    Proceed from sales         $55,694    $3,938     $2,165     
    Gains                      73         42         31
    Losses                     54         18         4

    </TABLE>

  Maturities of investment securities were as follows at December 31, 1995. 
  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.  Equity securities are excluded from the table.

  <TABLE>
  <CAPTION>
                               Amortized Cost   Approximate Fair      
                                                Value     

    <S>                        <C>              <C>
    AVAILABLE-FOR-SALE:
      Due in one year or less  $81,977          $81,785   
      Due after one thru 
       five years              61,091           62,177   
      Due after five thru ten 
       years                   51,411           52,806   
      Due after ten years      31,892           32,650   
      TOTAL AVAILABLE-FOR-SALE 
       SECURITIES              226,371          229,418   
    HELD-TO-MATURITY:
      Due in one year or less  $6,496           $6,496   
      Due after one thru five 
       years                   2,807            2,833   
      Due after five thru ten 
       years                   2,144            2,246   
      Due after ten years      863              905   
      TOTAL HELD-TO-MATURITY 
      DEBT SECURITIES          12,310           12,480   
     TOTAL                     $238,681         $241,898 

    </TABLE>

  To comply with state regulatory requirements, the company has securities
  totaling $9,685 and $110 pledged to meet depository requirements of various
  state insurance departments at December 31, 1995 and 1994, respectively.

  4) FINANCE RECEIVABLES

  Direct loans generally have terms of 12 to 24 months with maximum terms of 36
  months; secured loans are generally collateralized by real or personal
  property.  Sales finance contracts are generally accounted for on a discount
  basis and generally have terms of 18 to 36 months with maximum terms of 48
  months.  Loans outstanding at December 31, 1995 and 1994, were as follows:   


  <TABLE>
  <CAPTION>

    Text                            1995            1994

    <S>                             <C>             <C>
    DIRECT FINANCE RECEIVABLES
     Interest bearing               $72,394         $34,191
     Precompute                     112,263         101,281

     Total direct finance 
      receivables                   184,657         135,472


    SALES FINANCE RECEIVABLES       1,256,631       1,136,958
    Total gross finance receivables 1,441,288       1,272,430
    Less: Unearned finance charges  234,792         222,284
          Unearned commissions, 
           insurance premiums
           and insurance claim 
           reserves                 8,720            10,279

    Finance receivables             $1,197,776      $1,039,867

    </TABLE>

  Included in finance receivables at December 31, 1995 and 1994 were $41,249
  and $10,201, respectively, of receivables for which interest accrual had been
  suspended.  Repossessed assets totaled $10,621 and $8,258 at December 31,
  1995 and 1994, respectively. Contractual maturities of the finance
  receivables by year are not readily available at December 31, 1995 and 1994,
  but experience has shown that such information is not significant in that
  receivables may be renewed, converted, or paid in full prior to actual
  maturity.

  Principal cash collections (excluding finance charges earned) for the years
  ended December 31, 1995 and 1994, were as follows:  

  <TABLE>
  <CAPTION>
                                            1995            1994 

    <S>                                     <C>             <C>
    DIRECT FINANCE RECEIVABLES
    Principal cash collections              $105,901        $70,892
    Percent of average net balances         85%             82%
    SALES FINANCE RECEIVABLES
    Principal cash collections              $728,641        $623,990
    Percent of average net balances         72%             72%

    </TABLE>

  A summary of the activity in the allowance for finance credit losses for the
  years ended December 31, was as follows:

  <TABLE>
  <CAPTION>
                                          1995       1994       1993 

    <S>                                   <C>        <C>        <C>
    Balance at beginning of year          $22,488    $18,344    $13,198
    Allowance acquired                    -          1,052      2,456
    Provision for finance credit losses   32,641     7,376      6,392
    Finance receivables charged off       (12,846)   (6,467)    (4,882)
    Recoveries                            4,083      2,183      1,180
    Balance at end of year                $46,366    $22,488    $18,344 

    </TABLE>

  A summary of the activity in nonrefundable dealer reserves for the years
  ended December 31, was as follows:

  <TABLE>
  <CAPTION>
                                       1995        1994        1993 

    <S>                                <C>         <C>         <C>
    Balance at beginning of year       $66,477     $57,241     $38,262
    Discounts acquired on new volume   98,559      84,252      71,400
    Losses absorbed                    (96,117)    (70,419)    (50,281)
    Other                              (6,958)     (4,597)     (2,140)
    Balance at end of year             $61,961     $66,477     $57,241 

    </TABLE>

  5) SENIOR AND SUBORDINATED DEBT, LINES OF CREDIT AND COMMITMENT FEES

  Senior and Subordinated debt at December 31, 1995 and 1994,
  consisted of the following:

  <TABLE>
  <CAPTION>
                                             1995        1994

    <S>                                      <C>         <C>
    SENIOR DEBT, COMMERCIAL PAPER AND NOTES  $489,990    $449,945
    SENIOR DEBT, TERM NOTES
    Due 1995 - interest rate 9.02%           $0          $10,000
    Due 1995 - interest rate 5.88%           0           15,000 
    Due 1995 - interest rate 7.13%           0           125
    Due 1996 - interest rate 9.00%           25,000      25,000 
    Due 1996 - interest rate 6.41%           15,000      15,000 
    Due 1996 - interest rate 7.13%           125         125
    Due 1997 - interest rate 7.67%           15,000      15,000 
    Due 1997 - interest rate 8.15%           17,500      17,500 
    Due 1997 - interest rate 6.29%           24,000      24,000
    Due 1997 - interest rate 7.13%           125         125
    Due 1997 - interest rate 6.86%           0           1,500 
    Due 1997 - interest rate 6.41%           40,000      0
    Due 1998 - interest rate 6.70%           35,000      35,000 
    Due 1998 - interest rate 6.16%           76,000      76,000 
    Due 1998 - interest rate 8.62%           20,000      20,000 
    Due 1998 - interest rate 8.50%           10,000      10,000 
    Due 1998 - interest rate 7.13%           1,000       1,000 
    Due 1998 - interest rate 7.16%           25,000      0
    Due 1999 - interest rate 7.33%           30,000      0
    Due 2000 - interest rate 7.42%           58,000      0
    Due 2001 - interest rate 7.50%           30,000      0
    Due 2002 - interest rate 7.59%           17,000      0
    TOTAL SENIOR DEBT, TERM NOTES            $438,750    $265,375

                                             1995       1994
    SUBORDINATED DEBT
    Due 1995 - interest rate 9.76%           $0         $4,000 
    Due 1995 - interest rate 10.86%.         0          1,500
    Due 1996 - interest rate 9.76%           4,000      4,000
    Due 1996 - interest rate 10.86%          3,000      3,000
    Due 1997 - interest rate 9.76%           12,000     12,000 
    Due 1997 - interest rate 10.86%.         3,000      3,000
    Due 1998 - interest rate 10.86%.         7,500      7,500
    Due 1998 - interest rate 7.38%           0          500
    TOTAL SUBORDINATED DEBT                  $29,500    $ 35,500

    </TABLE>

  The following table sets forth information with respect to maturities of
  senior and subordinated debt at December 31, 1995.

  <TABLE>
  <CAPTION>
              Senior debt                                             
              commercial      Senior debt     Subordinated
              Paper & Notes   Term Notes      Debt         Total      

    <S>       <C>             <C>             <C>          <C>
    1996      $489,990        $40,125         $7,000       $537,115
    1997      0               96,625          15,000       111,625
    1998      0               167,000         7,500        174,500
    1999      0               30,000          0            30,000
    2000      0               58,000          0            58,000
    2001      0               30,000          0            30,000
    2002      0               17,000          0            17,000
    TOTAL     $489,990        $438,750        $29,500      $958,240

    </TABLE>

  Credit facilities extended by banks and related commitment fees at December
  31, 1995 and 1994, were as follows:

  <TABLE>
  <CAPTION>
                                    1995          1994

    <S>                             <C>           <C>
    Unused bank lines               $0            $  20,000
    Revolving credit facilities     500,000       400,000
    Total lines of credit           $500,000      $420,000
    Commitment fees (charged to 
    interest expense)               $884          $928

    </TABLE>

  The revolving credit facilities have commitment periods through August 31,
  1998 and are subject to annual extension for additional one year periods at
  the request of Mercury with the consent of each of the banks in the facility. 
  Currently the facilities carry a weighted average annual commitment fee of 17
  basis points of the total amount.  Outstanding borrowings bear interest at
  floating rates, at Mercury's option, either equal to the reference bank's
  prime rate, or 1/2 of 1% above LIBOR rate. 

  6) INTEREST EXCHANGE AGREEMENTS

  In the past Mercury had entered into interest exchange agreements ranging in
  maturity from one to five years.  These agreements called for Mercury to pay
  interest at a fixed rate and receive interest at a floating rate on notional
  amounts.  The net (income) expense associated with these agreements, which is
  included in interest expense in the accompanying consolidated statements of
  income, was $0, $192 and $1,497 in 1995, 1994 and 1993, respectively.

  At December 31, 1995 Mercury was not a party to any open interest exchange
  agreements.

  7) DIVIDEND RESTRICTIONS

  Payment of dividends by Mercury is subject to certain limitations in the
  various debt agreements and the revolving credit facilities. Under the most
  restrictive provisions of these agreements, no amounts were available for
  distribution as of December 31, 1995.  Payment of dividends by the insurance
  subsidiaries to Mercury from statutory- basis retained earnings (surplus) in
  excess of defined limits (generally, the lesser of statutory-basis net gain
  from operations or 10% of prior year-end statutory-basis surplus) is subject
  to approval by state regulatory authorities.  The amount available for
  payment of dividends to Mercury by its insurance subsidiaries without
  regulatory approval, totaled $6,135 at December 31, 1995.

  8) COMMON STOCK

  During the period since Mercury became an independent publicly traded company
  the following stock splits have been distributed:

  <TABLE>
  <CAPTION>

    Dates                               Type

    <S>                                 <C>
    December 28, 1989                   4 for 3 split          
    October 31, 1990                    4 for 3 split
    June 10, 1991                       4 for 3 split               
    December 5, 1991                    4 for 3 split
    June 19, 1992                       2 for 1 split
    June 22, 1993                       4 for 3 split
    October  31, 1995                   3 for 2 split

    </TABLE>

  Earnings per share is computed by dividing net income by the total of
  weighted average common shares and common stock equivalents outstanding
  during the periods, adjusted for all stock splits. The calculated averages
  were as follows:

  <TABLE>
  <CAPTION>
                            1995            1994          1993   

    <S>                     <C>             <C>           <C>
    Weighted Average:
    Common Shares           175,631,175     173,864,469   172,976,916 
    Treasury Shares         (3,182,283)     (522,158)     (94,808)
    Common Equivalents      1,660,524       1,808,034     2,567,556 
    Total                   174,109,416     175,150,345   175,449,664 

    </TABLE>

  9) STOCK OPTIONS

  Under the terms of Mercury's 1989 Stock Option and Incentive Compensation
  Plan, 24,837,036 common shares were reserved for the future granting of
  options to officers, non-employee directors and other key employees.  Options
  become exercisable in whole or in part up to two years after the date of
  grant at the closing price of Mercury's common stock on the date of grant.
  Options are forfeited upon termination of employment.  Shares available for
  future grants totaled 891,055 and 2,044,680 at December 31, 1995 and 1994
  respectively.

  Activity with respect to stock options follows:
  (As adjusted for all stock splits)

  <TABLE>
  <CAPTION>
                                     1995                1994    

    <S>                              <C>                 <C>
    Outstanding January 1            10,183,320          6,252,314 
    Options granted (average price 
     of $11.38 in
     1995 and $11.17 in 1994)        1,582,375           4,622,625   
    Forfeited                        (428,750)           (45,000)
    Options exercised (average 
     price of $3.12 in
     1995 and $3.74 in 1994)         (2,622,453)         (646,619)
    Outstanding December 31          8,714,492           10,183,320 

    </TABLE>

  The average option price under the plans was $9.45 and $7.53 at December 31,
  1995 and 1994 respectively.

  10) CONTINGENCIES AND LEGAL MATTERS

  In the normal course of its business, Mercury and its subsidiaries are named
  as defendants in legal proceedings.  A number of such actions, including two
  cases which have been brought as putative class actions, are pending in the
  various states in which subsidiaries of Mercury do business.  It is the
  policy of Mercury and its subsidiaries to vigorously defend litigation, but
  Mercury and (or) its subsidiaries have and may in the future enter into
  settlements of claims where management deems appropriate.  Although
  management is of the opinion that the resolution of these proceedings will
  not have a material effect on the financial position of Mercury, it is not
  possible at this time to estimate the amount of damages or settlement
  expenses that may be incurred.  Accordingly, no provision has been made in
  the consolidated financial statements for any of the pending proceedings.

  At December 31, 1995, Lyndon was a party to a number of reinsurance
  agreements entered into by its former reinsurance operation.  These
  agreements resulted in Lyndon assuming business on a low risk basis primarily
  from large and highly rated life and health insurers for the purpose of
  providing statutory surplus to the ceding companies. Prior to the acquisition
  of Lyndon by Mercury, this business was retroceded to a joint venture of
  third party reinsurers under similar terms as the original agreements.  All
  the risks of this business have been effectively transferred to the third
  party reinsurers.  ITT Corporation has also agreed to indemnify Mercury
  Finance in the event any losses are incurred by Lyndon under the agreements. 
  There was approximately $567 million of statutory surplus provided (assumed
  and ceded) under these agreements as of December 31, 1995.  Virtually all of
  these reinsurance agreements are expected to be either terminated or novated
  during 1996 which will remove Lyndon from any potential contingent
  liabilities related to these agreements. 

  11) PENSION PLAN AND OTHER EMPLOYEE BENEFITS

  Substantially all employees of Mercury are covered by a non-contributory
  defined benefit pension plan.  Total pension expense aggregated $317, $654
  and $554 in 1995, 1994 and 1993 respectively.  The following table sets forth
  the funded status of Mercury's qualified plan amounts recognized in the 1995,
  1994 and 1993 consolidated financial statements.

  <TABLE>
  <CAPTION>
                                1995        1994          1993 

    <S>                         <C>         <C>           <C>
    Actuarial present value of 
     benefit obligation:
    Accumulated benefit 
     obligations, including 
     vested benefits of $5,631, 
     $4,407, and $4,296         $6,430      $4,973        $4,905 
    Projected benefit 
     obligation for service 
     rendered to date           $(9,763)    $(7,596)      $(8,193)
    Plan assets at fair value   11,542      9,303         9,685  
    Plan assets in excess of 
     projected benefit 
     obligation.                1,779       1,707         1,492 
    Unrecognized net asset 
     as of December 31, being 
     recognized over 22 years   (442)       (830)         (337)
    Unrecognized net loss (gain)(1,397)     (437)         (185)
    Unrecognized prior service 
     cost                       106         67             70 
    Prepaid pension expense     $46         $507           $1,040 
    Components of net pension 
     expense:
    Service cost-benefits 
     earned during the period   $884        $964           $764 
    Interest cost on projected 
     benefit obligation         601         567            416 
    Actual return on plan 
     assets                     (1,743)     321            (1,809)
    Net amortization and 
     deferral                   575         (1,198)        1,183 
    Net periodic pension 
     expense                    $317        $654           $554 

    </TABLE>

  The weighted average discount rate used in determining the actuarial present
  value of the projected benefit obligation was 7.50%, 8.25% and 7.25% at
  December 31, 1995, 1994 and 1993 respectively.  The rates of increase in
  future compensation were 5.5% - 7% at December 31, 1995, 1994 and 1993.  The
  expected long-term rate of return on plan assets in 1995, 1994 and 1993 was
  9%.

  Mercury also maintains a nonqualified, unfunded pension benefit plan for
  certain employees whose calculated benefit payments under the qualified plan
  are expected to exceed the limits imposed by Federal tax law.  The projected
  benefit obligations of the plan, and the expenses related to this plan, are
  not material.

  Mercury has an employee stock purchase plan and a tax deferred Retirement
  Savings Trust (401-k) plan; employees are eligible to participate in the
  plans after having attained specified terms of service.  Both plans cover
  substantially all full time employees of Mercury and provide for employee
  contributions and partial matching contributions by Mercury.  The expenses
  related to these plans are not material. 

  12) INCOME TAXES

  The components of the 1995, 1994 and 1993 provisions were as follows:

  <TABLE>
  <CAPTION>
                                    1995      1994     1993  

    <S>                             <C>       <C>      <C>
    CURRENT INCOME TAX EXPENSE
    Federal                         $47,858   $48,365  $35,792  
    State                           8,716     7,859    5,453 
    Total                           56,574    56,224   41,245 
    Deferred income tax benefit     (10,595)  (1,779)  (1,305) 
    Total income tax provision      $45,979   $54,445  $39,940 

    </TABLE>

  The effective tax rates on income before income taxes were 38.3%, 38.6% and
  38.3% in 1995, 1994, and 1993 respectively.  State income taxes accounted for
  the difference between the effective income tax rate and the statutory
  Federal tax rate of 35% for 1995, 1994 and 1993.  The total income tax
  benefit reflected in shareholders' equity for stock options exercised was
  $7,363, $1,535 and $2,698 in 1995, 1994 and 1993 respectively.  Temporary
  differences between the amounts reported in the financial statements and the
  tax basis of assets and liabilities result in deferred taxes. Deferred tax
  assets and liabilities at December 31, were as follows:

  <TABLE>
  <CAPTION>
                                          1995          1994

    <S>                                   <C>           <C>
    DEFERRED TAX ASSETS:
    Allowance for finance credit
     losses and prepaid pension expense   $17,885       $8,048
    Purchase accounting adjustments       $4,830        $0
    Deferred tax assets                   $22,715       $8,048
    DEFERRED TAX LIABILITIES:
    Unrealized appreciation on
     available-for-sale securities        $1,362        $0
    Premises and equipment
     depreciation and other miscellaneous 
     items                                0             758
    Net deferred tax assets               $21,353       $7,290

    </TABLE>

  No valuation allowance for deferred tax assets has been recorded at December
  31, 1995 and 1994 as Mercury believes it is more likely than not that the tax
  deferred tax assets will be realized in the future.

  As discussed in note 1, Mercury adopted Statement 109 as of January 1, 1993. 
  The cumulative effect of this change in accounting for income taxes of $234
  is determined as of January 1, 1993 and is reported separately in the
  consolidated statement of income for the year ended December 31, 1993.

  13) LEASES

  Mercury and its subsidiaries lease offices generally under cancelable
  operating leases expiring in various years through 2001. Most of these leases
  are renewable for periods ranging from three to five years.  Future minimum
  payments, by year and in the aggregate, under operating leases with initial
  or remaining terms of one year or more consisted of the following at December
  31,
  1995:

  <TABLE>
  <CAPTION>

    Year                       Amount

    <S>                        <C>
    1996                       $ 3,920
    1997                       3,323
    1998                       2,470
    1999                       1,204
    2000 and after             394
    Total                      $11,311 

    </TABLE>

  It is expected that in the normal course of business, office leases that
  expire will be renewed or replaced by leases on other properties.  Total rent
  expense approximated $4,176, $3,169, and $2,619 in 1995, 1994 and 1993
  respectively.

  14) DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

  The following methods and assumptions were used to estimate the fair value of
  each class of financial instruments for which it is practicable to estimate
  that value.  Fair value estimates are made at a specific point in time for
  Mercury's financial instruments; they are subjective in nature and involve
  uncertainties, matters of significant judgment and, therefore, cannot be
  determined with precision.  Fair value estimates do not reflect the total
  value of Mercury as a going concern.

  INVESTMENTS

  For bonds the estimated fair value is based on quoted market price. For other
  investments, which consist primarily of short-term money market instruments,
  the carrying amount is a reasonable estimate of fair value.  

  FINANCE RECEIVABLES

  The fair value of finance receivables is computed using estimated market
  rates of return desired by bulk purchasers.

  SENIOR DEBT, COMMERCIAL PAPER

  The debt consists principally of short term commercial paper for which the
  carrying amount is a reasonable estimate of fair value.

  SENIOR AND SUBORDINATED DEBT, TERM NOTES

  Rates currently available to Mercury for debt with similar terms and
  remaining maturities are used to estimate the fair value of existing debt.
  The estimated fair values of Mercury's financial instruments at December 31,
  were as follows:

  <TABLE>
  <CAPTION>
                                                  1995                  
                                                  Carrying   Fair       
                                                  Amount     Value   

    <S>                                           <C>        <C>
    FINANCIAL ASSETS:
    Cash                                          $ 22,967   $22,967  
    Investments                                   242,043    242,327  
    Finance Receivables                           1,197,776  1,251,422 
    Less Allowance for Finance Credit Losses      (46,366)   (46,366) 
    Less Nonrefundable Dealer Reserves            (61,961)   (61,961) 
    Total                                         $1,354,459 $1,408,389 

    FINANCIAL LIABILITIES:
    Senior Debt, Commercial Paper                 $489,990   $489,990 
    Senior Debt, Term Notes                       438,750    443,437  
    Subordinated Debt                             29,500     30,715   
    Total                                         $958,240   $964,142  

                                                  1994                  
                                                  Carrying   Fair       
                                                  Amount     Value   

    FINANCIAL ASSETS    
    Cash                                          $19,980    $19,980  
    Investments                                   14,184     13,942   
    Finance Receivables                           1,039,867  1,096,249 
    Less Allowance for Finance Credit Losses      (22,488)   (22,488) 
    Less Nonrefundable Dealer Reserves            (66,477)   (66,477) 
    Total                                         $985,066   $1,041,206 

    FINANCIAL LIABILITIES:
    Senior Debt, Commercial Paper                 $449,945   $449,945 
    Senior Debt, Term Notes                       265,375    255,618  
    Subordinated Debt                             35,500     35,746   
    Total                                         $750,820   $741,309 

    </TABLE>

  15) BUSINESS SEGMENT DATA

  The Finance segment consists of the noninsurance segment of Mercury. The
  insurance segment consists of Mercury's insurance subsidiaries including
  Gulfco Life, Mercury Life and the Lyndon Insurance Companies. Included in
  revenues are net interest income and other income. Operating profit
  represents income before income taxes but includes interest expense, as
  financing costs are integral to the Company's operations.  Income by segment
  assumes each business services its own debt (including acquisition debt). 
  The segments generally provide for income taxes as if separate returns were
  filed subject to certain consolidated return limitations and benefits. 
  Equity is allocated to the business segments based on underlying regulatory
  and business requirements.  The following table presents the business segment
  data of Mercury (in millions).  
  Year Ended December 31

  <TABLE>
  <CAPTION>
                          1995             1994           1993 

    <S>                   <C>              <C>            <C>
    REVENUES
    Finance               $218.3           $203.5         $152.4
    Insurance             37.8             9.6            9.1
    Total                 $256.1           $213.1         $161.5
    OPERATING PROFITS      
    Finance               $107.7           $137.9         $102.5
    Insurance             12.4             3.1            2.4
    Total                 $120.1           $141.0         $104.9 
    NET INCOME
    Finance               $66.3            $84.4          $63.3
    Insurance             7.8              2.1            1.6
    Total                 $74.1            $86.5          $64.9
    IDENTIFIABLE ASSETS   
    Finance               $1,168.1         $1,025.1       $789.0
    Insurance             430.0            11.3           8.1
    Total                 $1,598.1         $1,036.4       $797.1

    </TABLE>

  16) SUBSEQUENT EVENTS - RESTATEMENT OF 1995 FINANCIAL STATEMENTS

  In January 1997, Mercury discovered that certain improper adjustments had
  been made to overstate earnings in previously issued financial statements.
  As a result, a Special Committee of the Board of Directors commenced an
  investigation of the misstatements of previously issued financial statements. 
  As a result of this investigation, Mercury has restated the previously
  reported financial statements for 1995 as follows:

  <TABLE>
  <CAPTION>

     <S>                                                                           <C>    
     Decrease in finance charges and loan fees                                     $15,350
     Increase in provision for finance credit losses                                 1,800
     Decrease in other income                                                       19,562
     Increase in other expenses                                                      2,130
     Decrease in income before income taxes                                         38,842
     Decrease in provision for income taxes                                         14,064
     Decrease in net income for 1995 and decrease in
       retained earnings as of December 31, 1995                                   $24,778

     Decrease in net income per common share                                         $0.14

    </TABLE>

  <TABLE>

  QUARTERLY FINANCIAL DATA (UNAUDITED)

  BALANCE SHEET AVERAGE FOR THE QUARTER 1995

  <CAPTION>

                        4th Qrtr    3rd Qrtr    2nd Qrtr    1st Qrtr

    <S>                  <C>         <C>         <C>         <C>
    Cash                 $22,266     $13,913     $15,252     $17,786
    Investments          260,312     11,885      14,048      13,240
    Finance Receivables  1,174,398   1,162,846   1,126,064   1,064,352
    Allowance for Credit 
     Losses              (28,459)    (25,123)    (24,313)    (22,955)
    Nonrefundable Dealer 
     Reserves            (64,270)    (73,160)    (70,573)    (67,931)
    Other Assets         184,875     50,931      45,667      48,839
    Total Assets         $1,549,122  $1,141,292  $1,106,145  $1,053,331
    LIABILITIES AND
     SHAREHOLDERS' EQUITY
    Senior Debt, Short 
     Term                $432,291    $363,360    $493,654    $453,593
    Senior Debt, Long  
     Term                432,104     419,708     267,641     265,375
    Subordinated Debt    32,167      33,833      35,500      35,500
    Other Liabilities    378,836     59,976      65,377      71,527
    Total Shareholders' 
     Equity              273,724     264,415     243,973     227,336
    Liabilities and 
     Shareholders' 
     Equity              $1,549,122  $1,141,292  $1,106,145  $1,053,331
    INCOME STATEMENT

    Interest Income      $68,803     $65,000     $61,993     $59,270
    Interest Expense     15,797      14,499      13,897      13,110 
    Net Interest Income  53,006      50,501      48,096      46,160
    Provision for Credit 
     Losses              23,879      3,312       3,026       2,424 
    Net Interest Income 
     after Credit Losses 29,127      47,189      45,070      43,736
    Other Income         31,765      8,135       8,068       10,382
    Other Expenses       39,716      20,376      24,241      19,030
    Income Before Income 
     Taxes               21,176      34,948      28,897      35,088
    Applicable Income 
     Taxes               8,861       13,093      10,578      13,448 
    Net Income           12,315      21,855      18,319      21,640
    Average Common & 
     Equivalent
     Shares Outstanding  174,518     175,137     173,764     173,018
    Per Common Share 
     (adjusted for
     stock splits)
    Net Income           $.07        $.12        $.11        $.13 
    Cash Dividend        .08         .06         .06         .05 
    Market Price:
      High               16 3/8      16 5/8      12 7/8      11 1/4  
      Low                11 3/8      12 1/8      9 3/4       8 1/4     
      Close at End of 
      Period             13 1/4      16 1/4      12 7/8      10 5/8
    Ratios
    Net Interest Margin  14.81%      17.24%      16.86%      17.07% 
    Net Income to 
    Average Assets         3.18%     7.66%       6.62%       8.22%
    Net Income to 
     Average 
     Shareholders' 
     Equity              18.00%      33.06%      30.03%      38.08%
          
    BALANCE SHEET AVERAGE FOR THE QUARTER 1994

                         4th Qrtr    3rd Qrtr    2nd Qrtr    1st Qrtr

    ASSETS
    Cash                 $14,742     $13,859     $12,629     $13,464
    Investments          $12,600     $12,448     $11,746     $11,248
    Finance Receivables  $1,000,640  $932,434    $892,076    $839,051
    Allowance for Credit
     Losses              (22,002)    (20,331)    (19,617)    (18,681)
    Nonrefundable Dealer
     Reserves            (71,261)    (68,829)    (65,818)    (59,675)
    Other Assets         48,356      34,910      30,153      29,805
    Total Assets         983,075     904,491     861,169     815,212
    LIABILITIES AND
     SHAREHOLDERS' EQUITY 
    Senior Debt, Short
     Term                $385,243    $316,070    $288,452    $258,582
    Senior Debt, Long
     Term                264,533     265,167     266,000     266,000
    Subordinated Debt    35,750      35,000      35,000      35,000
    Other Liabilities    67,888      64,814      61,044      58,820
    Total Shareholders'
     Equity              229,661     223,440     210,673     196,810
    Liabilities and
     Shareholders' Equity $983,075    $904,491    $861,169    $815,212
    INCOME STATEMENT
    Interest Income      $59,531     $53,399     $50,818     $47,816
    Interest Expense     11,575      9,969       9,302       8,528 
    Net Interest Income  47,956      43,430      41,516      39,288
    Provision for Credit
     Losses              2,543       1,657       1,409       1,766 
    Net Interest Income
     After Credit Losses 45,413      41,773      40,107      37,522
    Other Income         13,575      10,228      8,588       8,516
    Other Expenses       20,653      15,362      14,523      14,192
    Income Before
     Income Taxes        38,335      36,639      34,172      31,846  
    Applicable Income
     Taxes               14,827      14,158      13,170      12,290 
    Net Income           23,508      22,481      21,002      19,556
    Average Common and
     Equivalent Shares
     Outstanding         173,147     175,792     175,833     175,836
    Per Common Share
     (adjusted for stock
     splits)
    Net Income           $.14        $.13        $.12        $.11 
    Cash Dividend        .05         .05         .04         .04 
    Market Price:
     High                10 1/8      11 3/4      12 5/8      12 3/4     
     Low                 7 3/8       9           10 1/8      9 7/8 
    Close at End of
     Period              8 5/8       9 5/8       11          11 1/4
    Ratios:
    Net Interest Margins 18.97%      18.42%      18.36%      18.43%
    Net Income to 
    Average Assets       9.57        9.94        9.76        9.60 
    Net Income to Ave
     rage Shareholders'
     Equity              40.94       40.25       39.88       39.75

    </TABLE>

  The common stock of Mercury Finance Company began trading on The New York
  Stock Exchange on April 11, 1989 under the symbol MFN. Mercury common stock
  is also traded on The Chicago Stock Exchange. On December 31, 1995 Mercury
  had approximately 4,100 holders of record of common stock, exclusive of
  holders of shares in "street" or nominee names. 

  ITEM 9.

  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
  DISCLOSURES

  See Current Report on Form 8-K filed on February 25, 1997 regarding changes
  in Registrant's certifying accountant.


                                     PART III

  ITEM 10.

  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

       Information regarding directors is contained in Mercury's 1996 Proxy and
       information regarding executive officers is set forth in Item 1 herein.

       Certain executive officers and directors of the Company have been
       delinquent in the reporting requirements of Section 16(a) of the
       Securities Exchange Act of 1934.


                                      PART IV
  ITEM 14.

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

  Financial Statements Filed Under Item 8 of this Report

  Consolidated Balance Sheets as of December 31, 1995 and 1994.
  Consolidated Statements of Income for the Three Year Period Ended December
  31, 1995, 1994  and 1993.
  Consolidated Statements of Changes in Shareholders' Equity for the Three Year
  Period Ended December 31, 1995, 1994 and 1993.
  Consolidated Statements of Cash Flows for the Three Year Period Ended
  December 31, 1995, 1994 and 1993.
  Notes to Consolidated Financial Statements for the Three Year Period Ended
  December 31, 1995, 1994 and 1993. 
  Independent Auditors' Report.
  Quarterly Financial Data (Unaudited)

  FINANCIAL STATEMENT SCHEDULE

  None.  All schedules omitted are inappropriate or the information required is
  shown in the consolidated financial statements or notes hereto.

  Reports on Form 8-K

  Mercury filed a report on Form 8-K on November 10, 1995.  In that report,
  Mercury disclosed that on October 23, 1995, it had acquired all the stock of
  ITT Life Insurance Company and ITT Lyndon Property Insurance Company for
  $72.5 million in cash.  Financial statements were filed for this acquisition
  in a subsequent report on Form 8-K January 9, 1996.

  Exhibits

  A list of all exhibits included as part of this report is set forth in the
  Exhibit Index accompanying this report, which is included herein.


                                    SIGNATURES

  Pursuant to the requirements of Section 13 or 15(d) of the Securities
  Exchange Act of 1934, the registrant has duly caused this report to be signed
  on its behalf by the undersigned, thereunto duly authorized.

                              Mercury Finance Company   
                                   (Registrant)

                              /s/ William A. Brandt, Jr.     01/07/98 
                                  William A. Brandt, Jr.
                                  President and
                                  Chief Executive Officer




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


       /s/ William A. Brandt, Jr.    01/07/98
           William A. Brandt, Jr.
           President and
           Chief Executive Officer




  The following exhibits required by Item 601 of Regulation S-K are not
  contained herein (except exhibits 11, 12, 13, 22 and 23) but are filed
  separately with this Form 10-K filing and are incorporated by reference to
  previous filings as indicated:

  EXHIBIT
  NUMBER   DESCRIPTION OF EXHIBITS ENCLOSED                           SEQUENTIAL
                                                                         PAGE   
                                                                       NUMBERS  

  3A       *Certificate of Incorporation
  3B       *Bylaws
  10A      *1989 Stock Option Plan
  10B      *Employee Stock Purchase Plan
  10C      *Retirement Plan and Trust
  10D      *Deferred Compensation Plan for Directors
  10E      *Dividend Reinvestment Plan
  10G      *Employment Agreement Dated as of January 1, 1989, Between
             First Illinois Corporation and John N. Brincat
  10H      **Employment Agreement Dated as of February 20, 1989,    
             Between Mercury Finance Company and Charely A. Pond
  10J      *Lease Dated December 6, 1985 Between Teachers Realty    
             Corporation and First Illinois Finance Company
  10K      *Life Reinsurance Agreement Between American Bankers Life 
             Assurance Company of Florida and First Illinois Finance 
             Company
  10L      *Accident and Health Reinsurance Agreement Between       
             American Bankers Life Assurance Company of Florida and 
             First Illinois Finance Company Dated as of June 1, 1986.
  10M      *Agency Agreement Dated February 1, 1985 Between American 
             Bankers Insurance Group and First Illinois Finance     
             Company
  10N      *Form of Mercury Finance Company Commercial Paper Note
  10O      *$200,000,000 Credit Agreement Dated as of December 23,  
             1988 Among Mercury Finance Company and Harris Trust and 
             Savings Bank
  10P      **First Amendment Dated as of December 18, 1989 to       
              $200,000,000 Credit Agreement Dated as of December 23, 
              1988 Among Mercury Finance Company and Harris Trust and
              Savings Bank as agent for the Bank Parties thereto
  10Q      **Second Amendment Dated as of December 31, 1989 to      
              $200,000,000 Credit Agreement Dated as of December 23, 
              1988 Among Mercury Finance Company and Harris Trust and
              Savings Bank as agent for the Bank Parties thereto 
  10R      Third Amendment Dated as of May 14, 1990 to              
            $200,000,000 Credit Agreement Dated as of December 23,  
            1988 Among Mercury Finance Company and Harris Trust and 
            Savings Bank as agent for the Bank Parties thereto
  10S      Fourth Amendment Dated as of December 23, 1990 to        
            $200,000,000 Credit Agreement Dated as of December 23,  
            1988 Among Mercury Finance Company and Harris Trust and 
            Savings Bank as agent for the Bank Parties thereto
  10T      *Senior Subordinated Note Dated as of March 3, 1989      
             Between Australia and New Zealand Banking Group Limited 
             and First Illinois Finance Company
  10U      *Note Purchase Agreement Dated as of May 30, 1986 Between 
             First Illinois Finance Company and American Bankers Life
             Assurance Company of Florida
  10V      *Note Purchase Agreement Dated as of May 30, 1986 Between 
           First Illinois Finance Company and American Bankers Life 
           Assurance Company of Florida
  10W      *Interest Rate Swap Agreement Dated as of May 10, 1988   
           Between Continental Illinois National Bank and Trust     
           Company of Chicago and First Illinois Finance Company
  10X      *Master Interest Rate Swap Agreement Dated as of June 18, 
           1986 Between Harris Trust and Savings Bank and First     
           Illinois Finance Company
  10Y      **Term Loan Agreement Dated as of September 27, 1989     
           Between Mercury Finance Company and National Westminster 
           Bank, U.S.A
  10Z      **Term Loan Agreement Dated as of September 28, 1989     
           Between Mercury Finance Company and Northern Trust Company
  10AA     **Term Loan Agreement Dated as of September 29, 1989     
           Between Mercury Finance and Mellon Bank, N.A.
  10AB     **Subordinated Note Agreement Dated as of October 17,    
           1989, Between Mercury Finance Company and State Bank of  
           South Australia
  10AC     **Amendment Dated December 1, 1989 to Subordinated Note  
           Agreement Dated as of October 17, 1989 Between Mercury   
           Finance Company and State Bank of South Australia
  10AD     **Senior Note Agreement Series A and B Dated as of       
           December 1, 1989 Between Mercury Finance Company and:
           - Insurance Company of North America
           - Life Insurance Company of North America
           - The Lincoln National Life Insurance Company 
           - First-Penn Pacific Life Insurance Company
           - The Mutual Life Insurance Company
           - Phoenix Mutual Life Insurance Company
           - Provident Mutual Life Insurance Company
           - SMA Life Assurance Company
           - State Mutual Life Assurance Company
           - State Mutual Life Assurance Company of America
  10AE     **Senior Subordinated Note Agreement Series C Dated as of 
           December 1, 1989 Between Mercury Finance Company and:
           - Cigna Property and Casualty Insurance Company
           - Connecticut General Life Insurance Company
           - Life Insurance Company of North America
           - Phoenix Mutual Life Insurance Company
  10AF     ***Senior Subordinated Note Agreement Series D Dated as of 
           May 15, 1990 Between Mercury Finance Company and:
           - Cigna Property and Casualty Company
           _ Connecticut General Life Insurance Company
  10AG     ***Senior Note Agreement Dated as of September 1, 1990   
           Between Mercury Finance Company and Aetna Life Insurance 
           Company
  10AH     ****Senior Note Agreement Dated as of June 1, 1991 Between 
           Mercury Finance Company and Allstate Insurance Company
  10AI     ****Senior Note Agreement Dated as of September 1, 1991  
           Between Mercury Finance Company and Principal Mutual Life 
           Insurance Company
  10AJ     ****Loan Agreement Dated October 30, 1992 Between mercury 
           Finance Company and Allomon Funding Corporation          
           (Uncommitted Credit Facility)
  10AK     *****Senior Note Agreement Dated march 1, 1992 Between   
           Mercury Finance Company and Principal Mutual Life        
           Insurance Company
  10AL     *****Senior Note Agreement Dated may 1, 1992 Between     
           Mercury Finance Company and:
           - Allstate Life Insurance Company
           - State Mutual Life Assurance Company of America
  10AM     *****Interest Rate Swap Transaction Dated July 2, 1992   
           Between Mercury Finance Company and Continental Bank N.A.
  10AN     *****Senior Note Agreement Dated September 1, 1992 Between
           Mercury Finance Company and The Equitable Life Assurance 
           Society of the United States
  10AO     *****Senior Note Agreement Dated September 15, 1992      
           Between Mercury Finance Company and The Equitable Life   
           Assurance Society of the United States
  10AP     *****Credit Agreement Dated September 15, 1992 Between   
           Mercury Finance Company and:
           *****Credit Agreement Dated September 15, 1992 Between   
           Mercury Finance Company and:
           - Harris Trust and Savings Bank
           - Continental Bank N.A.
           - Canadian Imperial Bank of Commerce
           - The Northern Trust Company
           - The Daiwa Bank, Ltd.
           - Mellon Bank, N.A.
           - Bank One, Evanston, N.A.
           - NBD Bank, N.A.
           - First Wisconsin national Bank of Milwaukee
           - Dresdner Bank AG/Chicago Branch/Grand Cayman Branch
           - Bank Hapoalim B.M.
           - Bank of Hawaii
  10AQ     *****Credit Agreement Dated September 15, 1992 Between   
           Mercury Finance Company and:
           - Harris Trust and Savings Bank
           - Continental Bank N.A.
           - Canadian Imperial Bank of Commerce
           - The Northern Trust Company
           - The Daiwa Bank, Ltd.
           - Mellon Bank, N.A.
           - Bank One, Evanston, N.A.
           - NBD Bank, N.A.
           - First Wisconsin National Bank of Milwaukee
           - Dresdner Bank AG/Chicago Branch/Grand Cayman Branch
           - Bank Hapoalim B.M.
           - Bank of Hawaii
  10AR     ******Purchase Agreement Dated April 1, 1993 Between     
            Mercury Finance Company and Independent Life Insurance  
            Company
  10AS     ******Senior Note Agreement Dated March 1, 1993 Between  
            Mercury Finance Company and Principal Mutual Life       
            Insurance Company
  10AT     ******Senior Note Agreement Dated July 1, 1993 Between   
            Mercury Finance Company and Pacific Mutual Life Insurance 
           Company
  10AU     ******Senior Note Agreement Dated December 1, 1993 Between 
           Mercury Finance Company and:
           - American United Life Insurance Company
           - MONY Capital Management
           - Pacific Mutual Life Insurance Company
           - Principal Mutual Life Insurance Company
  10AV     ******Second Amendment to Revolving Credit Agreement Dated 
           July 15, 1993 Between Mercury Finance Company and:
           - Harris Trust and Savings Bank
           - Continental Bank N.A.
           - Canadian Imperial Bank of Commerce
           - The Northern Trust Company 
           - The Daiwa Bank, Ltd.
           - Mellon Bank, N.A.
           - Bank One, Evanston, N.A.
           - NBD Bank, N.A.
           - First Wisconsin National Bank of Milwaukee
           - Dresdner Bank AG/Chicago Branch/Grand Cayman Branch
           - Bank Hapoalim B.M.
           - Bank of Hawaii
  10AW     ******Third Amendment to Revolving Credit Agreement Dated 
           July 15, 1993 Between Mercury Finance Company and:
           - Harris Trust and Savings Bank
           - Continental Bank N.A.
           - Canadian Imperial Bank of Commerce
           - The Northern Trust Company
           - The Daiwa Bank, Ltd.
           - Mellon Bank, N.A.
           - Bank One, Evanston, N.A.
           - NBD Bank, N.A.
           - First Wisconsin National Bank of Milwaukee
           - Dresdner Bank AG/Chicago Branch/Grand Cayman Branch
           - Bank Hapoalim B.M.
           - Bank of Hawaii
  10AX     *******Purchase Agreement Dated September 30, 1994 Between 
           Mercury Finance Company and Midland Finance Co.
  10AY     ********Employment Agreement Dated January 1, 1994 Between 
           Mercury Finance Company and John N. Brincat
  10AZ     ********Senior Note Agreement Dated December 15, 1994    
           Between Mercury Finance Company and Norddeutsche         
           Landesbank Girozentrale
  10BA     ********Senior Note Agreement Dated December 15, 1994    
           Between Mercury Finance Company and The Long-Term Credit 
           Bank of Japan, Ltd.
  10BB    +Senior Note Agreement Dated June 29, 1995 Between Mercury 
           Finance Company and:
           - Allstate Life Insurance Company
           - Allstate Insurance Company
           - Metropolitan Life Insurance Company
           - Principal Mutual Life Insurance Company
           - Pacific Mutual Life Insurance Company
           - PM Group Life Insurance Company
           - TMG Life Insurance Company
           - Lincoln-Security Life Insurance Company
           - Security-Connecticut Life Insurance Company
           - Oxford Life Insurance Company
           - London Life International Reinsurance Corporation
           - American States Life Insurance Company
           - Phoenix Home Life Mutual Insurance Company
           - Phoenix American Life Insurance Company
           - American Guardian Life Assurance Company
  10BC    +Senior Note Agreement Date October 3, 1995 Between Mercury 
           Finance Company and Bank of America Illinois
  10BD    +Fourth Amendment to Revolving Credit Agreement Date July 
           15, 1993 Between Mercury Finance Company and:
           - Nations Bank
           - Bank One
           - Harris Trust and Savings Bank
           - Bank of America Illinois
           - NBD Bank
           - Westdeutsche Landesbank Girozentale
           - The Daiwa Bank, Ltd.
           - Mellon Bank, N.A.
           - Dresdner Ban AG
           - Bank Hapoalim B.M.
           - Union Bank
           - The Northern Trust Company
           - Credit Lyonnais New York Branch
           - LaSalle National Bank
           - Bank of Hawaii
           - First Interstate Bank of California
           - The Boatmen's National Bank of St. Louis
           - Firststar Bank Milwaukee, N.A.
           - First National Bank of Chicago
  10BE    +Purchase Agreement Dated October 20, 1995 Between Mercury 
           Finance Company and ITT Corporation 
  11       Computation of Net Income Per Share
  12       Ratio of Earnings to Fixed Charges
  22      +Subsidiaries of Mercury Finance Company
  23       Consent of KPMG Peat Marwick LLP
  *        Incorporated by reference to the Form 10K filed by       
           Mercury Finance Company 1989
  **       Incorporated by reference to the 1989 Form 10K filed by  
           Mercury Finance Company 
  ***      Incorporated by reference to the 1990 Form 10K filed by  
           Mercury Finance Company
  ****     Incorporated by reference to the 1991 Form 10K filed by  
           Mercury Finance Company
  *****    Incorporated by reference to the 1992 Form 10K filed by  
           Mercury Finance Company
  ******   Incorporated by reference to the 1993 Form 10K filed by  
           Mercury Finance Company
  *******  Incorporated by reference to the 1994 Form 10K filed by  
           Mercury Finance Company

  + Incorporated by reference to the 1995 Form 10-K originally filed by Mercury
  Finance Company.