UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC 20549

                                  FORM 10-K


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

               FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999 or

     TRANSITION  REPORT  PURSUANT  TO  SECTION  13  or  15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

                       Commission file number 0-20882

                       STANDARD MANAGEMENT CORPORATION
           (Exact name of registrant as specified in its charter)

Indiana35-1773567
(State or other jurisdiction of(I.R.S. employer
incorporation or organization)identification no.)

9100 Keystone Crossing, Indianapolis, Indiana 46240(317) 574-6200
(Address of principal executive offices)(Telephone)

Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:  Common  Stock,  No
Par Value

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

Indicate by check mark if disclosure of delinquent  filers pursuant to Item 405
of Regulation S-K 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. [  ]

The aggregate market value of the  voting  stock  held by non-affiliates of the
Registrant, based upon the closing sale price of the  Common Stock on March 15,
2000 as reported on The NASDAQ Stock Market, was approximately  $31.9  million.
Shares of Common Stock held by each executive officer and director and by  each
person  who  owns 5% or more of the outstanding Common Stock have been excluded
in that such persons  may  be  deemed  to  be affiliates. This determination of
affiliate  status  is  not  necessarily a conclusive  determination  for  other
purposes.

As of March 15, 2000, Registrant  had  outstanding  7,785,156  shares of Common
Stock.

Documents Incorporated by Reference:
Portions of the Registrant's definitive Proxy Statement for the  Annual Meeting
of Stockholders are incorporated by reference into Part III of this Form 10-K.




<PAGE>
                                    PART I


AS  USED IN THIS REPORT, UNLESS THE CONTEXT OTHERWISE CLEARLY REQUIRES,  "SMC",
OR THE "COMPANY" REFERS TO STANDARD MANAGEMENT CORPORATION AND ITS CONSOLIDATED
SUBSIDIARIES   AND   "STANDARD   MANAGEMENT"   REFERS  TO  STANDARD  MANAGEMENT
CORPORATION ON AN UNCONSOLIDATED BASIS. ALL FINANCIAL  INFORMATION CONTAINED IN
THIS  REPORT  IS  PRESENTED  IN  ACCORDANCE WITH GENERALLY ACCEPTED  ACCOUNTING
PRINCIPLES ("GAAP") UNLESS OTHERWISE SPECIFIED.

ITEM 1.BUSINESS OF SMC

SMC is an international financial  services  holding  company that directly and
through  its  subsidiaries  develops, markets and administers  profitable  life
insurance, annuities and unit-linked  assurance in force business and products.
A primary component of SMC's growth relates  to  the  acquisition  of  selected
insurance  companies  and  blocks  of  in  force  life  insurance  and  annuity
businesses.   Since 1993, the Company has acquired 5 insurance companies.   See
"Acquisition  Strategy   and  Recent  Acquisitions"  for  related  information.
Through its insurance subsidiaries,  the  Company's  operating  strategy  is to
develop  profitable  products,  enhance  marketing  distribution  channels  and
consolidate  and streamline management and administrative functions of acquired
companies.

OPERATING SEGMENTS

The Company conducts  and  manages its business through the following operating
segments  reflecting  the  geographical   locations   of   principal  insurance
subsidiaries:

DOMESTIC OPERATIONS includes the following insurance subsidiaries  at  December
31, 1999:

Standard  Life  Insurance Company of Indiana ("Standard Life"), SMC's principal
insurance subsidiary,  was  organized  in  1934  as  an  Indiana domiciled life
insurer. It is licensed to write new business or service existing  business  in
the  District  of  Columbia  and  all  states  except  New York and New Jersey.
Standard  Life offers flexible premium deferred annuities  ("FPDA's"),  equity-
indexed annuities,  whole  and  universal  life  insurance and critical illness
products.  Standard Life also generates cash flow and income from closed blocks
of in force life insurance and annuities. At December 31, 1999, Standard Life's
statutory assets were $664.7 million and the aggregate of its statutory capital
and surplus, asset valuation reserve ("AVR") and interest  maintenance  reserve
("IMR")  (its  "adjusted  statutory  capital")  was $61.2 million. The ratio of
adjusted statutory capital to its total statutory  assets  was 9.2% at December
31, 1999. Standard Life has a rating of B+ (Very Good, Secure)  by  the  rating
agency, A.M. Best Company, Inc. ("A.M. Best").

Dixie  National  Life  Insurance  Company  ("Dixie  Life")  is  a  99.4%  owned
subsidiary  of  Standard Life, was organized in 1965 as a Mississippi domiciled
life insurer.  Dixie  Life  is  licensed in 22 states and services a variety of
life insurance products, primarily  consisting  of  "burial  expense" policies.
Effective  January  1,  1999,  the Company ceased selling new business  through
Dixie Life.  At December 31, 1999,  Dixie  Life's  statutory  assets were $35.8
million, the adjusted statutory capital was $3.9 million and the  ratio  of its
adjusted statutory capital to its statutory assets was 10.8%. Dixie Life has  a
rating of "B" ("Adequate") by A.M. Best.

Standard   Marketing   Corporation   ("Standard  Marketing"),  is  a  wholesale
distributor of life insurance and annuity  products.  Until  December 31, 1998,
its network of managing general agents and independent agents  distributed life
insurance  and  annuity  products for Standard Life and for a select  group  of
unaffiliated insurance companies. Standard Marketing earned override commission
income  from  the sale of these  products.   Effective  January  1,  1999,  the
operations of Standard Marketing were merged into Standard Life.

Savers Marketing  Corporation  ("Savers  Marketing")  is  the  prior  marketing
distributor  of  Savers  Life  Insurance  Company  ("Savers  Life").   Refer to
"Acquisition  Strategy  and  Recent  Acquisitions".   Savers  Marketing markets
Standard Life's products through financial institutions and independent agents.
Savers  Marketing  also receives administrative, marketing and commission  fees
for services provided to unaffiliated companies.

INTERNATIONAL OPERATIONS  include  the  following  holding  company and its two
wholly-owned insurance subsidiaries at December 31, 1999:

Standard Management International S.A., a wholly-owned subsidiary  of SMC, is a
holding  company  organized under Luxembourg law with its registered office  in
Luxembourg.  At December  31, 1999, Standard Management International, S.A. and
its subsidiaries ("SMI") had $339.3 million in assets with policies in force in
over  80 countries. The majority  of  its  business  is  unit-linked  assurance
products  with a range of policyholder directed investment choices coupled with
a small death benefit, sold through its subsidiaries.

Premier Life  (Luxembourg)  S.A. ("Premier Life (Luxembourg)") primarily offers
standard unit-linked products  throughout  the European Union.  At December 31,
1999 it had statutory capital and surplus of $6.9 million.

Premier  Life (Bermuda) Ltd. ("Premier Life (Bermuda)")  primarily  offers  tax
deferred unit-linked  products  in  niche  markets  throughout  the  world.  At
December 31, 1999 it had statutory capital and surplus of $2.2 million.





<PAGE>
ACQUISITION STRATEGY AND RECENT ACQUISITIONS

A  principal component of SMC's strategy is to grow through the acquisition  of
life  insurance  companies and blocks of in force life insurance and annuities.
SMC regularly investigates  acquisition  opportunities  in  the  life insurance
industry  that  complement or are otherwise strategically consistent  with  its
existing business.  Any decision to acquire a block of business or an insurance
company will depend on  a favorable evaluation of various factors. SMC believes
that availability of blocks  of  business  in  the marketplace will continue in
response to ongoing industry consolidation, risk-based capital requirements and
other regulatory and rating agency concerns. In  addition,  SMC plans to market
annuity and life insurance products directly as it has done in  the  past.  SMC
currently  has  no  plans  or  commitments  to  acquire  any specific insurance
business or other material assets.

SMC  has the information systems and administrative capabilities  necessary  to
add additional  blocks of business without a proportional increase in operating
expenses. In addition,  SMC has developed management techniques for reducing or
eliminating the expenses of the companies it acquires through the consolidation
of their operations with  those  of  SMC.  Such techniques include reduction or
elimination of overhead, including the acquired company's management, staff and
home office, elimination of marketing  expenses  and,  where  appropriate,  the
substitution  of  Standard  Life's  network  for the acquired company's current
distribution  system,  and  the  conversion  of  the  acquired  company's  data
processing operations to SMC's system.

SMC typically acquires companies or blocks of business  through the purchase or
exchange  of  shares.   This  method  is  also used for assumption  reinsurance
transactions.   SMC's  acquisitions  may  be  subject   to  certain  regulatory
approvals, policyholder consents and stockholder approval.

The following is a list of SMC's most recent acquisitions  and  the terms under
which they were purchased:

On March 12, 1998, SMC acquired Savers Life Insurance Company ("Savers  Life").
Each  of  the  1,779,908  shares  of  Savers  Life Common Stock outstanding was
converted  into  1.2 shares of SMC Common Stock plus  $1.50.   Each  holder  of
Savers Life Common  Stock could elect to receive the $1.50 per share portion of
the merger consideration  in the form of additional shares of SMC Common Stock.
SMC issued approximately 2.2 million shares with a value of approximately $14.9
million, paid $2.2 million in cash and $1.5 million in acquisition costs for an
aggregate purchase price of  $18.6 million.  SMC increased an Amended Revolving
Line of Credit Agreement ("Amended  Credit  Agreement")  to  $20.0 million as a
result of the Savers Life acquisition.  The acquisition of Savers Life included
its wholly-owned subsidiary Savers Marketing.

On October 30, 1998, SMC acquired Midwestern National Life Insurance Company of
Ohio,  ("Midwestern  Life").   SMC  issued  696,453 shares of its common  stock
valued at $4.6 million, increased its bank debt by $6.0 million on restructured
terms by increasing the Amended Credit Agreement  to  $26.0  million,  and paid
$2.9  million  in  cash  and  $.6 million of acquisition costs for an aggregate
purchase price of $14.1 million to acquire Midwestern Life.

The acquisitions of  Savers Life  and  Midwestern Life were accounted for using
the purchase method of accounting and accordingly, SMC's consolidated financial
statements include the results of operations of the acquired companies from the
effective dates of their respective acquisitions.  Savers  Life  and Midwestern
Life were merged into Standard Life effective December 31, 1998.   As  a result
of  these  mergers,  Standard  Life  remained  as  the surviving entity.  Under
purchase accounting, SMC allocated the total purchase  price  of the assets and
liabilities  acquired,  based  on  a  determination  of  their fair values  and
recorded the excess of acquisition cost over net assets acquired  as  goodwill,
which is being amortized on a straight-line basis over 20 - 30 years.

MARKETING

DOMESTIC MARKETING

GENERAL: The Company's agency force, of approximately 4,000 independent general
agents,  was  organized  to provide a lower cost alternative to the traditional
captive agency force.   These  agents distribute a full line of life insurance,
annuity and critical illness products  issued  by  Standard  Life.  The Company
selectively  recruits  new agents from those formerly associated with companies
acquired by SMC.

SMC believes that both agents  and  policy owners value the service provided by
SMC.  The  Company  i)  assists  agents in  submitting  and  processing  policy
applications, ii) assists with licensing  applications, iii) provides marketing
support for its agents, and iv) can introduce agents to lead services.

STANDARD LIFE offers a full portfolio of life  insurance  and  annuity products
selected on the basis of their competitive position, company profitability  and
likely  consumer  acceptance.  Such  portfolio  includes FPDA's, equity-indexed
annuities,  whole and universal life insurance and  critical  illness  products
issued by Standard Life.

<PAGE>

Each general  agent operates his own agency and is responsible for all expenses
of the agency.   The  general agents are compensated directly by Standard Life,
who performs all policy  issuance,  underwriting  and  accounting  functions.
Standard  Life  is not dependent on any one agent or agency for any substantial
amount of its business.  No single agent accounted for more than 4% of Standard
Life's annual sales in 1999, and the top twenty individual agents accounted for
approximately 34%  of  Standard  Life's  volume in 1999.  At December 31, 1999,
approximately 60% of Standard Life's independent  agents  were located in Ohio,
Indiana,  California, Florida, and North Carolina with the balance  distributed
across the  country.   Standard  Life  is attempting to increase the number and
geographic diversity of its agents.

Standard Life does not have exclusive agency  agreements  with  its  agents and
management  believes  most  of  these  agents  sell  similar products for other
insurance companies.  This could result in a sales decline  if  Standard Life's
products were to become relatively less competitive. Standard Life's  1999 FPDA
and  equity  indexed  annuity  sales  increased  partially due to an aggressive
marketing  campaign  targeted  to  high  volume  sales  agents   and  marketing
companies.   Also  contributing  to the increase in premiums was the  continued
development  of  Standard  Life's distribution  system  through  an  aggressive
program  aimed  at  retention  of   key  producers  and  expanded  geographical
concentration.

SAVERS  MARKETING  distributes  life and  annuity  products  through  financial
institutions   and   independent  general   agents.    Savers   Marketing   has
approximately 2,000 active  brokers  and  is not dependent on any one broker or
agency  for  any  substantial  amount  of its business.  Each  broker  operates
independently  and is responsible for all  of  his  or  her  expenses.   Savers
Marketing employs  three  Regional Managers, who are responsible for personally
initiating  and  maintaining   direct   communications  with  brokers  and  are
responsible for the recruitment and training of all new brokers.

Savers Marketing also entered into a three-year  marketing  and  administrative
contract with QualChoice of North Carolina ("QualChoice") effective  October 1,
1998  whereby  Savers Marketing is the distribution system for the small  group
product offered by QualChoice.  QualChoice is an HMO in a twenty-county area in
the northwestern  part  of  North  Carolina  offering  HMO  insurance coverage.
Savers  Marketing  is  compensated  for  this  effort  with  a  marketing  fee,
administrative  fee  and  commission reimbursement for the use of its  brokers.
Prior to the agreement with Savers Marketing, QualChoice was under an agreement
with Savers Life that commenced in 1996.

INTERNATIONAL MARKETING

PREMIER LIFE (LUXEMBOURG) AND  PREMIER  LIFE  (BERMUDA), produced aggregate new
premium deposits of approximately $55 million,  $43  million  and  $22  million
during 1999, 1998 and 1997, respectively. The increases in 1998 and 1999 relate
to  renewed  marketing  efforts in certain European countries, particularly  in
Sweden, Belgium and Italy.   The  countries within the European Union have been
the main contributor to these sales.  Although  SMI expects this to be the case
in the future, it plans to increase marketing efforts  in  other  parts  of the
world as well.

Although  SMI  anticipates growing significantly through internal sales as part
of its long term  plan,  acquisitions of other European insurance companies may
be considered. It has designed  and  launched  new  single  and regular premium
products  in  recent  years.  It  is  also  in  discussions  with  a number  of
distribution companies to form alliances to produce tailored products for their
markets.  It  is  currently expected that Premier Life (Luxembourg) will  write
business within the  European  Union  and  Premier  Life  (Bermuda)  will write
international  business  elsewhere  in the world. The primary market for  SMI's
products is considered to be medium to high net worth individuals who typically
have in excess of $75,000 to invest in  a  single  premium policy and medium to
high earners who have in excess of $3,000 per annum  to  invest  in  a  regular
premium savings product. The above individuals would come from a combination of
expatriates,  residents  of  European  Union  countries and from other targeted
areas. The expatriate and European insurance markets  are  well established and
highly  competitive  with  a large number of domestic and international  groups
operating in, or going into, the same markets as SMI.

SMI's products are distributed  via  independent  agents  and stock brokers who
have established connections with these targeted individuals.  SMI  is striving
to develop into an entrepreneurial-intermediary oriented organization committed
to  building  long  term  relationships with high quality distributors, thereby
creating  a niche position.   SMI  places  the  same  emphasis  as  SMC's  U.S.
insurance  companies   on  a  high  level  of  service  to  intermediaries  and
policyholders while striving to achieve low overhead costs.


<PAGE>
PRODUCTS

SMC primarily markets FPDA's,  equity  indexed annuities, whole life, universal
and interest-sensitive life insurance policies  and  unit-linked policies.  The
following table sets forth the amounts and percentages of net premiums received
by SMC from currently marketed products for the years  ended December 31, 1999,
1998  and 1997, respectively (in thousands).  Because GAAP  generally  excludes
annuity  and  unit-linked  product  deposits,  and  premiums from universal and
interest-sensitive life insurance from premium income,  and thus does not fully
reflect SMC's cash flow from new business, the premium information contained in
the  following  table is reported using statutory accounting  principles  which
include the aforementioned items.

<TABLE>
                                                                            Year Ended December 31,
<CAPTION>

                                           1999                       1998                    1997
                                     Amount        %            Amount         %        Amount        %
<S>                                 <C>           <C>           <C>           <C>       <C>          <C>

Currently marketed products:
FPDA's                              $ 98,678      44.9          $ 60,086      45.8      $41,066      55.5
Equity-indexed annuities              59,348      27.0            16,858      12.9           --        --
Unit-linked products                  55,234      25.1            42,536      32.5       21,954      29.7
Single premium immediate annuities     3,162       1.4             2,545       1.9        2,704       3.7
Universal and interest-sensitive life  2,302       1.0             5,816       4.4        5,836       7.9
Traditional life                       1,029        .6             3,282       2.5        2,349       3.2
                                    $219,753     100.0          $131,123     100.0      $73,909     100.0
</TABLE>


Annuity sales increased  in  1999  primarily  due  to  the  introduction of new
products and an increase in the agency base achieved through the recruitment of
high  volume  agents.   Also  attributable  to the annuity sales increase  were
larger  managing  general  agencies  and continued  expansion  of  geographical
marketing efforts.

The increase in deposits from unit linked  products in 1999 is primarily due to
a continuation of marketing efforts in certain European countries, particularly
in Sweden, Belgium and Italy.

CURRENTLY MARKETED PRODUCTS

The  individual  annuity  business is a growing  segment  of  the  savings  and
retirement industry, which  increased  in sales from $1 billion in 1970 to more
than $230 billion in 1998. The individual annuity market, which is one of SMC's
primary targets, comprises 73% of its sales.  As  the  76  million baby boomers
born  from  1946  through  1964  grow older, demand for insurance  products  is
expected to grow. SMC believes that  those  seeking adequate retirement incomes
will become less dependent on Social Security  and  their employers' retirement
programs  and  more  dependent  upon their own financial  resources.  Annuities
currently enjoy an advantage over  certain  other saving mechanisms because the
annuity buyer receives a tax-deferred accrual  of  interest  on  the investment
during the accumulation period.

SMI's  products  are  sold  primarily  in  Western  Europe.  SMC's gross  sales
percentages by U.S. geographical region are summarized as follows:

STATE                        1999          1998         1997

Indiana                       15%           17%          21%
Ohio                          14            15           10
California                    11             5           11
North Carolina                 8            10            4
Arizona                        8             9           --
Florida                        8             8           10
Texas                          8             3            4
Hawaii                         5             7           --
All other states {(1)}        23            26           40
Total                        100%          100%         100%

(1)No other state had gross sales greater than 4%.




<PAGE>
STANDARD LIFE PRODUCTS

FLEXIBLE PREMIUM DEFERRED ANNUITIES ("FPDA's") provide  for  an initial deposit
by an annuitant and optional additional deposits, the time and  amount of which
are  at the discretion of the annuitant. Standard Life credits the  account  of
the annuitant  with  earnings  at  interest rates that are revised periodically
until the maturity date. This accumulated  value  is tax deferred. Revisions to
interest rates on FPDA's are restricted by an initial crediting rate guaranteed
for a specific period of time, usually one year, and  a  minimum crediting rate
guaranteed for the term of the FPDA, which is typically 3%.  At  maturity,  the
annuitant  can elect a lump sum cash payment of the accumulated value or one of
the various  payout  options  available.  Standard Life's FPDA's also typically
provide for penalty-free partial withdrawals  of  up  to  10%  annually  of the
accumulation  value  after  the  annuitant  has  held the FPDA for more than 12
months. In addition, the annuitant may surrender the  FPDA  at  any time before
the maturity date and receive the accumulated value, less any surrender  charge
then  in  effect  for  that contract. To protect holders of FPDA's from a sharp
reduction in the credited  interest  rate after a FPDA is issued, Standard Life
permits the FPDA holder of certain annuities  to surrender the annuity during a
specified period without incurring a surrender  charge if the renewal crediting
rate is below a stated level. This stated level of  interest  is referred to as
the  "bail-out  rate" and is typically below the original crediting  rate,  but
above the minimum guaranteed crediting rate.

As of January 1,  2000,  the  crediting  rates  available  on  Standard  Life's
currently marketed FPDA's ranged from 6.5% to 12.3%, with new issues having  an
interest  rate  with a one year guarantee period. After the initial period, the
crediting rate may be changed periodically, subject to minimum guaranteed rates
from 3.0% to 4.0%.  As  of  January 1, 2000, interest crediting rates after the
initial guarantee period ranged  from  3.5%  to  5.5%.  The surrender charge is
initially  7%  to  15%  of  the  contract  value depending on the  product  and
decreases  over the applicable surrender charge  period  of  five  to  thirteen
years. As of  January 1, 2000, the bail-out rate for Standard Life's FPDA's was
4.5%; certain currently  marketed  products carry a bail out rate for the first
two to five years after issuance. As  of  December  31, 1999, Standard Life had
5,197 currently marketed FPDA contracts in force.

EQUITY-INDEXED  FPDA'S.   In  response  to  consumers' desire  for  alternative
investment  products  with  returns  linked  to common  stocks,  Standard  Life
introduced a line of equity-indexed FPDA products  in May 1998.  These products
accounted  for  $59.3  million of the total premiums collected  in  1999.   The
annuity's contract value  is  equal  to  the premium paid increased for returns
based upon a percentage (the "participation rate") of the change in the S&P 500
Index and/or the Dow Jones Industrial Average (DJIA) Index  during each year of
its  term,  subject  to  a  minimum guaranteed  value.   The  Company  has  the
discretionary  ability  to  annually   change  the  participation  rate  (which
currently  ranges  from  65% to 70% plus a  first-year  "bonus").  The  minimum
guaranteed values are equal  to  85%  of first year and 90% of renewal premiums
collected for FPDA's, plus interest credited  at  an  annual  rate  of 3%.  The
annuities provide for penalty-free withdrawals of up to 10% in each year  after
the  first  year of the annuity's term.  Other withdrawals from the product are
subject to a  surrender  charge.   The  Company purchases Standard & Poor's 500
Index or DJIA Index Call Options to hedge  potential  increases to policyholder
benefits resulting from increases in the Index to which the product's return is
linked.   As  of  December  31,  1999,  Standard Life had 2,220 equity-indexed
contracts.

SINGLE PREMIUM IMMEDIATE ANNUITIES.  Standard  Life  offers  a  single  premium
immediate  annuity ("SPIA") whereby an annuitant purchases an immediate annuity
with a one-time premium deposit at the time of issuance. Standard Life begins a
payout stream  shortly after the time of issuance consisting of principal value
plus accumulated  interest  credited  to  such  annuity.  This  product credits
interest  based  on  an  investment  portfolio  earned rate assumption.  As  of
December 31, 1999, Standard Life had 189 SPIA contracts in force.

UNIVERSAL LIFE.  Flexible premium universal life  ("FPUL") policies provide for
periodic deposits, credit interest to account values and charges to the account
values  for  mortality and administrative costs. As of  January  1,  2000,  the
current interest  rate  on  new  sales  of  FPUL's  was  5.5% with a guaranteed
interest  rate  of  4%.  As of December 31, 1999, Standard Life  had  369 FPUL
policies in force.

TRADITIONAL LIFE.  Standard  Life  offers  several  types  of non-participating
traditional life policies, whole life policies with face amounts  up to $50,000
and  a  15  year  term product with a critical illness rider. Traditional  life
insurance products  involve  fixed  premium  payments  made over time, with the
stated  death  benefit  paid  in  full  upon  the  death  of the  insured.  The
traditional life policy combines the death benefit with a forced  savings plan.
Premiums  remain  level  over  the  life  of  the policy, with the policyholder
prefunding during the early years of coverage when  risk  of death is low. Over
time, traditional life policies begin to accrue a cash value  which can be made
available to the policyholder net of taxes and withdrawal penalties.   The term
policy provides benefits only as long as premiums are paid.  As of December  31,
1999,  Standard  Life had 1,663 currently marketed traditional life policies in
force.

DIXIE LIFE PRODUCTS

Life insurance policies  sold  by  Dixie  Life  in the final expense, or burial
market  include  fixed  premium interest sensitive policies  that  provide  for
increasing death benefits,  as  well  as traditional whole life policies. These
policies are designed to cover expenses such as funeral, last illness, monument
and cemetery lot. The policies provide  for  a  death benefit, generally not in
excess of $10,000, and a level premium payment. The  products  include  a  cash
value which may be borrowed by the policyholder. Dixie Life's policies sold  in
other  markets  include  interest sensitive and traditional whole life policies
and forms of term policies.   The  interest  sensitive  and whole life policies
include  cash  values  which  may be borrowed by the policyholder.  Dixie  Life
issued policies on both a participating  and  non-participating  basis.  As  of
December  31, 1999, Dixie Life had 645 and 19,743 individual annuities and life
policies in force, respectively.  Effective January 1, 1999, SMC decided not to
sell new business  through  Dixie  Life,  but  continues  to sell final expense
policies through Standard Life.

SMI PRODUCTS

UNIT-LINKED  POLICIES.  SMI currently writes unit-linked life  products,  which
are similar to  U.S.  produced  variable life products. Separate account assets
and  liabilities  are  maintained  primarily  for  the  exclusive  benefit of
universal  life  contracts  and investment  contracts  of  which  the  majority
represents unit-linked business,  where  benefits on surrender and maturity are
not  guaranteed.  They  generally represent funds  held  in  accounts  to  meet
specific investment objectives  of  policyholders who bear the investment risk.
Investment income and investment gains  and losses within the separate accounts
accrue  directly  to  the  policyholders.  The   fees   received   by  SMI  for
administrative  and  contract  holder maintenance services performed for  these
separate accounts are included in SMC's statement of operations.

In the past, SMI also sold investment  contracts,  universal life policies, and
to  a  lesser extent, traditional life policies. The investment  contracts  are
mainly short-term  single premium endowments or temporary annuities under which
fixed benefits are paid  to  the policyholder. The terms of these contracts are
such that SMI has relatively small  morbidity  or mortality risk. The universal
life  contracts are mainly regular premium and single  premium  endowment.  The
benefits  payable  to  the  policyholders are directly linked to the investment
performance of the underlying assets.

FORMER PRODUCTS ("CLOSED BLOCKS")

SMC also generates cash flow and income from its closed blocks of in force life
insurance and annuities. Closed  blocks  consist of in force life insurance and
annuities  that  are not currently being marketed  by  SMC.  The  closed  block
designation does not  have  legal  or  regulatory significance and there are no
restrictions on their assets or future profits.   The  premiums received on the
closed  blocks  are  primarily from the ordinary and universal  life  business.
Closed block premiums  typically  decline  over  extended  periods of time as a
result of policy lapses, surrenders and expiries.

ANNUITIES.   SMC's  closed  blocks of deferred annuities consist  primarily  of
FPDA's  and a small amount of  single  premium  deferred  annuities  ("SPDA's")
which, unlike FPDA's, do not provide for additional deposits.  As of January 1,
2000, these  deferred  annuities  had crediting rates ranging from 3.5% to 5.5%
and guaranteed minimum crediting rates ranging from 3.0% to 5.5%. The crediting
rate may be changed periodically. The  contract  owner is permitted to withdraw
all or part of the accumulation value. SMC's closed blocks of annuities include
payout annuities. Payout annuities consist of those annuities in which benefits
are  being paid out over a specified time period. Payout  annuities  cannot  be
terminated  by  surrender  or  withdrawal.  SMC's  crediting  rates  on  payout
annuities range from 3.0% to 7.0% and cannot be changed.  At December 31, 1999,
SMC had 16,071 annuity contracts in force for closed blocks.

ORDINARY LIFE.  The ordinary life policies included in SMC's closed blocks  are
composed  primarily  of  fixed  premium,  cash  value  whole  life products. In
addition, they include annually renewable term policies as well  as  five,  ten
and  fifteen  year  level premium term policies.  At December 31, 1999, SMC had
30,709 ordinary life policies in force for closed blocks.

UNIVERSAL LIFE.  Certain  closed  blocks  include  universal life business. For
this business, SMC credits deposits and interest to  account values and charges
the  account values for mortality and administrative costs.   At  December  31,
1999,  SMC  had 9,089 universal life policies in force for the closed block of
business.

PRODUCT PROFITABILITY

The profitability  of  the  life  insurance  and  annuity  products depend to a
significant  degree  on  the  maintenance of profit margins between  investment
results from invested assets and  interest  credited  on  insurance and annuity
products. During 1999, such margins increased slightly as a result of decreased
crediting rates on insurance and annuity products.  Refer to  "Investments"  in
Item 1 of this report.

The  long-term  profitability  of insurance products depends on the accuracy of
the actuarial assumptions that underlie the pricing of such products. Actuarial
calculations for such insurance  products,  and  the  ultimate profitability of
such products, are based on four major factors: i) persistency,  ii) mortality,
iii) return on cash invested by the insurer during the life of the  policy  and
iv) expenses of acquiring and administering the policies.

The  average  expected remaining life of Standard Life's ordinary life business
in force at December  31,  1999  was 9.3 years. This calculation was determined
based upon SMC's actuarial models  and  assumptions  as to expected persistency
and mortality. Persistency is the extent to which insurance  policies  sold are
maintained  by  the  insured.  The  persistency  of  life insurance and annuity
products  is a critical element of their profitability.  However,  a  surrender
charge often  applies  in  the  early  contract years and declines to zero over
time.

Policyholders sometimes do not pay premiums,  thus  causing  their  policies to
lapse. For the years 1999, 1998 and 1997 Standard Life experienced total policy
lapses of 6.2%, 6.1% and 6.5% of total policies in force at December 31 of each
year,  respectively.  The  American  Council  of Life Insurance 1999 Fact  Book
reported industry life insurance voluntary termination  rates  in 1998 of 14.9%
for policies in force less than two years, 4.2% for policies in  force  for two
years or more and 5.8% for all policies in force.

OPERATIONS

SMC  emphasizes a high level of service to agents and policyholders and strives
to achieve  low  overhead costs. SMC's principal administrative departments are
its  financial,  policyholder  services  and  management  information  services
("MIS") departments.  The  financial department provides accounting, budgeting,
tax, investment, financial reporting  and  actuarial  services  and establishes
cost  control  systems  for  SMC. The policyholder services department  reviews
policy   applications,  issues  and   administers   policies   and   authorizes
disbursements related to claims and surrenders. The MIS department oversees and
administers SMC's information processing systems.

SMC's administrative  departments  in the United States use a common integrated
system that permits efficiency and cost  control.   SMC's  MIS  system serviced
approximately 202,000 active and inactive policies at December 31,  1999 and is
continually being improved to provide for growth from acquisitions and sales.

SMI's  administrative and MIS departments in Luxembourg are an autonomous  unit
from the systems in the United States.
UNDERWRITING

Premiums  charged  on insurance products are based in part on assumptions about
the incidence and timing  of  insurance  claims.  SMC  has  adopted and follows
underwriting  procedures  for  traditional life,  universal life  and  critical
illness  insurance  policies. To implement  these  procedures,  SMC  employs  a
professional underwriting  staff.  All underwriting decisions are made in SMC's
home office. To the extent that an applicant  does  not meet SMC's underwriting
standards  for issuance of a policy at the standard risk  classifications,  SMC
may rate or  decline  the  application.  Underwriting with respect to FPDA's is
minimal.

Traditional underwriting procedures are not  applied  to  policies  acquired in
blocks.  In these cases, SMC reviews the mortality experience for recent  years
and compares actual experience to that assumed in the actuarial projections for
the acquired policies.

INVESTMENTS

Investment  activities are an integral part of SMC's business as the investment
income of SMC's  insurance  subsidiaries  is  an  important  part  of its total
revenues.  Profitability is significantly affected by spreads between  interest
earned  on  invested  assets  and  rates  credited  on  insurance  liabilities.
Substantially  all  credited  rates on FPDA's may be changed at least annually.
For the year ended December 31,  1999,  the weighted average net yield of SMC's
investment portfolio was 7.15% and the weighted  average interest rate credited
on SMC's interest-sensitive liability portfolio, excluding  liabilities related
to separate accounts and equity indexed annuities, was approximately  4.89% per
annum for an average interest spread of 226 basis points at December 31,  1999,
compared  to 223 basis points at December 31, 1998. The increase in the average
interest spread  includes  lower  crediting  rates  on  new  and  existing FPDA
business in order to meet targeted pricing spreads.  Increases or decreases  in
interest  rates  could  increase  or  decrease the average interest rate spread
between investment yields and interest rates credited on insurance liabilities,
which  in  turn  could  have  a beneficial or  adverse  effect  on  the  future
profitability  of  SMC. Sales of  fixed  maturity  securities  that  result  in
investment gains may  also  tend  to  decrease  future  average  interest  rate
spreads.  State insurance laws and regulations prescribe the types of permitted
investments and limit their concentration in certain classes of investments.

SMC balances  the duration of its invested assets with the expected duration of
benefit payments  arising  from  insurance  liabilities.  The  "duration"  of a
security  is  a  measure of a security's price sensitivity to changes in market
interest  rates.   The   option  adjusted  duration  of  fixed  maturities  and
short-term investments for  its  U.S. insurance subsidiaries was 5.3 and 5.6 at
December 31, 1999 and 1998, respectively.

SMC's investment strategy is guided  by strategic objectives established by the
Investment  Committee  of  the  Board  of  Directors.  SMC's  major  investment
objectives are to: i) ensure adequate safety  of  investments  and  protect and
enhance  capital; ii) maximize after-tax return on investments; iii) match  the
anticipated  duration  of  investments  with the anticipated duration of policy
liabilities; and iv) provide sufficient liquidity  to  meet  cash  requirements
with  minimum sacrifice of investment yield. Consistent with its strategy,  SMC
invests  primarily  in  securities  of  the  U.S.  government and its agencies,
investment  grade  utilities and corporate debt securities  and  collateralized
mortgage obligations ("CMOs").  When opportunities arise below investment grade
securities may be purchased,  however,  protection  against  default  risk is a
primary  consideration. SMC has determined it will not invest more than  7%  of
its bond portfolio in below investment grade securities.





<PAGE>
The National  Association  of  Insurance Commissioners ("NAIC") assigns quality
ratings and uniform book values  to securities called "NAIC Designations" which
are used by insurers when preparing  their  annual statements. The NAIC assigns
ratings  to  publicly  traded  and  privately-placed  securities.  The  ratings
assigned  range from Class 1 to Class 6, with a rating in Class 1
being of the highest quality.  The following  table  sets  forth the quality of
SMC's  fixed  maturity  securities  as  of  December  31,  1999, classified  in
accordance with the ratings assigned by the NAIC:

                               Percent of Fixed
NAIC RATING (1)               MATURITY SECURITIES

1                                     54
2                                     42
Investment Grade                      96
3-4                                    4
Below Investment Grade                 -
   Total fixed maturity securities   100%


Conseco Capital Management Inc. ("CCM"), a wholly owned subsidiary  of Conseco,
Inc., manages SMC's domestic invested assets (other than mortgage loans, policy
loans,  real  estate  and  other invested assets), subject to the direction  of
SMC's Investment Committee. In 1999, a quarterly fee of .035% on the first $500
million and .025% on amounts  in  excess  of  $500  million of the total market
value of the assets under management was paid to CCM  for  investment  advisory
services.

Approximately  16%  of SMC's fixed maturity securities at December 31, 1999  is
comprised of mortgage-backed  securities which include CMOs and mortgage-backed
pass-through securities. Approximately 18% of the book value of mortgage-backed
securities in SMC's portfolio is  backed  by  the  full faith and credit of the
U.S. government as to the full amount of both principal  and  interest  and 59%
are backed by an agency of the U.S. government (although not by the full  faith
and  credit of the U.S. government).  SMC closely monitors the market value  of
all investments within its mortgage-backed portfolio.

The following table summarizes SMC's mortgage-backed securities at December 31,
1999 (in thousands):

<TABLE>
<CAPTION>

                                                                                                             Estimated      Avg.
                                                           % of                            % of              Avg. Life      Term
                                       Amortized           Fixed            Fair           Fixed                of        to Final
                                          Cost           Maturities        Value         Maturities         Investment    Maturity
                                                                                                            (In Years)   (In Years)
Agency CMOs:
<S>                                     <C>                 <C>          <C>                <C>                 <C>            <C>
Planned and target amortization          $31,141             4.9%         $29,896            4.9%               5.9            22.5
     classes
Sequential and support classes             8,611             1.3%           8,026            1.3%               5.0            22.5
     Total                               $39,752             6.2%         $37,922            6.2%               5.7            22.5

Non-agency CMOs:
Sequential classes                         1,363             0.2%           1,338            0.2%               2.0            11.1
Other                                      8,176             1.3%           7,775            1.3%               6.1            23.2

Total CMOs                               $49,291             7.7%         $47,035            7.7%               5.7            22.3
Non agency CMBS                           12,947             2.0%          12,581            2.1%               5.3            18.0
Agency mortgage-backed pass-through       42,175             6.5%          41,238            6.8%               4.1            23.1
securities
Total mortgage-backed securities        $104,413            16.2%        $100,854           16.6%               5.0            22.1
</TABLE>





<PAGE>
The market values for SMC's mortgage-backed securities were determined from
broker-dealer   markets,   internally   developed  methods  and  nationally
recognized statistical rating organizations.

Certain mortgage-backed securities are subject  to  significant  prepayment
risk,  since,  in  periods  of  declining interest rates, mortgages may  be
repaid more rapidly than scheduled  as  individuals  refinance  higher rate
mortgages  to  take  advantage  of  the  lower  current rates. As a result,
holders  of  mortgage-backed securities may receive  large  prepayments  on
their investment  which cannot be reinvested at an interest rate comparable
to the rate on the  prepaying  mortgages.  SMC  has  addressed this risk of
prepayment  risk  by  investing  30%  of  its  mortgage-backed   investment
portfolio in planned and target amortization classes. These investments are
designed  to amortize in a more predictable manner by shifting the  primary
risk of prepayment  of  the  underlying  collateral  to  investors in other
tranches  ("support  classes").  Mortgage-backed  pass-through  securities,
"sequential" and support class CMOs, which comprised  the  remaining 70% of
the  book value of SMC's mortgage-backed securities at December  31,  1999,
are more sensitive to this prepayment risk.

SEPARATE ACCOUNTS

Separate  account  assets  and  liabilities  are  maintained  primarily for
universal  life  contracts  of  which  the  majority represents unit-linked
business where benefits on surrender and maturity  are not guaranteed. They
generally  represent  funds  held  in accounts to meet specific  investment
objectives of policyholders who bear the investment risk. Investment income
and investment gains and losses accrue directly to such policyholders.

RESERVES

In accordance with applicable insurance  laws, SMC's insurance subsidiaries
have  established and carry as liabilities  in  their  statutory  financial
statements,  actuarially  determined  reserves  to satisfy their respective
annuity contract and life insurance policy obligations.  Reserves, together
with  premiums to be received on outstanding policies and interest  thereon
at certain assumed rates, are calculated to be sufficient to satisfy policy
and contract  obligations.  The  actuarial factors used in determining such
reserves are based on statutorily  prescribed mortality tables and interest
rates.

The reserves in the consolidated financial  statements  in  this report are
calculated based on GAAP and differ from those specified by the laws of the
various states and recorded in the statutory financial statements  of SMC's
insurance  subsidiaries.  These differences arise from the use of different
mortality tables and interest  rate  assumptions, the introduction of lapse
assumptions into the reserve calculation  and  the  use  of  the  net level
premium  reserve  method  on  all  insurance  business.  See  note 1 to the
consolidated financial statements for reserve assumptions under GAAP.

To  determine  policy  benefit reserves for its life insurance and  annuity
products, SMC performs periodic  studies  to compare current experience for
mortality,  interest  and  lapse rates with projected  experience  used  in
calculating the reserves. Differences  are  reflected currently in earnings
for each period. SMC historically has not experienced  significant  adverse
deviations from its assumptions.

REINSURANCE

Consistent  with  the general practice of the life insurance industry,  SMC
has reinsured portions  of  the coverage provided by its insurance products
with other insurance companies  under  agreements of indemnity reinsurance.
SMC's policy risk retention limit on the  life  of  any one individual does
not exceed $150,000.

Indemnity  reinsurance agreements are intended to limit  a  life  insurer's
maximum loss on a particular risk or to obtain a greater diversification of
risk. Indemnity reinsurance does not discharge the primary liability of the
original insurer  to  the  insured,  but it is the practice of insurers for
statutory accounting purposes (subject  to  certain  limitations  of  state
insurance  statutes)  to  account  for risks which have been reinsured with
other approved companies, to the extent  of the reinsurance, as though they
are  not risks for which the original insurer  is  liable.  However,  under
Statement   of   Financial  Accounting  Standards  No.  113  ("SFAS  113"),
"Accounting  and  Reporting   for   Reinsurance   of   Short-Duration   and
Long-Duration  Contracts"  these  amounts are added back to policy reserves
and recorded as amounts due from reinsurers.

Reinsurance ceded on life insurance  policies  to unaffiliated companies by
SMC   in  1999,  1998  and  1997  represented  50.1%,  48.9%   and   51.9%,
respectively,  of  gross combined individual life insurance in force at the
end  of  such  years.   Reinsurance  assumed  in  the  normal  course  from
unaffiliated companies by SMC represented 0.0% in 1999 and .02% in 1998 and
1997,  of  net  combined  individual  life  insurance  in  force  excluding
reinsurance from The Guardian Insurance and Annuity Company, Inc. ("GIAC"),
a subsidiary of The Guardian Group, New York, New York.




<PAGE>
The following is  reinsurance ceded information for in force life insurance
policies at December 31, 1999 (in thousands):

<TABLE>
<CAPTION>

                                                        % of Total
                                 Face Value of          Reinsurance           Reinsurance
INSURANCE COMPANY                LIFE POLICIES             CEDED              RECOVERABLE
<S>                                <C>                     <C>                  <C>

Lincoln National Life              $313,755                28.4%                $3,853
Insurance Company

Swiss Re Life and Health            149,238                13.5%                   592

Security Life of Denver             130,577                11.8%                   821
</TABLE>

Reinsured life insurance in force at December 31, 1999 is ceded to insurers
rated "A" or better  by A.M. Best. SMC historically has not experienced any
material losses in collection of reinsurance receivables.

Commencing January 1,  1995, SMC began to reinsure a portion of its annuity
business. The primary purposes  of  the reinsurance agreement were to limit
the net loss arising from large risks,  maintain  SMC's  exposure  to  loss
within capital resources and provide additional capacity for future growth.
Furthermore, these reinsurance agreements have allowed SMC to write volumes
of  business  that  it  would  not otherwise have been able to write due to
restrictions based on its ratio  of surplus to liabilities as determined by
regulatory authorities in the State  of Florida. By reinsuring a portion of
the annuity business, the liability growth  is slowed, thereby avoiding the
erosion of surplus that can occur in periods  of increasing sales. If SMC's
ratio of surplus to liabilities falls below 4%,  the State of Florida could
prohibit SMC from writing new business in Florida.  SMC's  largest  annuity
reinsurer  at  December  31,  1999,  Winterthur  Life  Re Insurance Company
("Winterthur"),  represented  $28.5 million, or 60.5% of total  reinsurance
recoverable, $.1 million of premium deposits ceded in 1999 and is rated "A"
("Excellent")  by A.M. Best. From  January  1,  1996  to  March  31,  1996,
Standard Life ceded  a  50%  quota-share  portion  of its annuity business.
Effective  April  1, 1996, Standard Life reduced it to  25%  and  effective
October 1, 1998, discontinued  ceding  its annuity business. This reduction
was possible since the surplus strain experienced  by Standard Life was not
as great as originally anticipated. Winterthur limits  dividends  and other
transfers  by  Standard  Life  to  SMC  or affiliated companies if adjusted
surplus is less than 5.5% of admitted assets  or  $36.6 million at December
31, 1999.

On March 18, 1996, Standard Life completed the sale  of First International
to GIAC and received proceeds of $10.4 million including  $1.5  million for
the charter and licenses.  Standard Life realized a net pretax gain of $1.0
million   and   a   tax  benefit  of  $1.4  million  on  the  sale.   First
International, Standard  Life  and  GIAC  have  entered  into  a  series of
reinsurance and other agreements that include provisions for Standard  Life
to  administer  First  International policies in force at the date of sale,
and for Standard Life to continue to receive the profit stream from certain
First International policies in force effective January 1, 1996.

Effective  January  1, 1996,  GIAC  entered  into  a  modified  coinsurance
indemnity reinsurance agreement with Standard Life with respect to Blocks I
(ordinary life policies issued in New York and New Jersey) and II (ordinary
life policies not issued  in  New  York  and  New Jersey). Pursuant to this
agreement,  Standard Life administers the policies  in  both  Block  I  and
Block  II.  Under  the  terms  of  the  agreement,  Standard  Life  assumed
approximately  $18.8 million of reserves for Block I and Block II from GIAC
as of January 1,  1996.  During  1996,  Standard  Life  incurred  and  paid
experience  rating  refunds to GIAC on Block I for profits earned in excess
of specified amounts. These refunds were calculated and paid on a quarterly
basis. As a result, the economic risks and benefits associated with Block I
remained with GIAC. Effective  January  1,  1997,  GIAC  and  Standard Life
agreed to terminate the Block I agreement.

Savers  Life  issued  and  marketed  Medicare  supplement policies in  1998
including  the  time period from March 12, 1998, the  acquisition  date  of
Savers Life, through  July  1,  1998, when the Medicare supplement business
was sold. In connection with the  sale of the Medicare supplement business,
Savers Life received an initial statutory  ceding allowance of $4.2 million
which was offset by a reserve reduction of $1.6  million  and  write off of
present value of future profits of $2.6 million and resulted in  no gain or
loss for GAAP.  Under the terms of the reinsurance agreement, Standard Life
administered  the  Medicare supplement business through October 1, 1999  in
exchange  for   administration   fee   income.  The  consummation  of  this
transaction  resulted in the Company exiting  from  the Medicare supplement
business it acquired with the Savers Life acquisition.

Standard  Life  and Dixie Life have financial reinsurance  agreements  that
entitles them to reductions of $2.0 million and  $.7 million, respectively,
to statutory reserves at December 31, 1999.

COMPETITION

The life insurance  industry  is highly competitive and consists of a large
number of both stock and mutual  insurance  companies,  many  of which have
substantially  greater  financial  resources,  broader and more diversified
product  lines and larger staffs than those possessed  by  SMC.  There  are
approximately 2,000 life insurance companies in the United States which may
offer insurance  products  similar  to  those  marketed by SMC. Competition
within  the life insurance industry occurs on the  basis  of,  among  other
things, i) product features such as price and interest rates, ii) perceived
financial  stability  of  the  insurer, iii) policyholder service, iv) name
recognition  and v) ratings assigned  by  insurance  rating  organizations.
Additionally, when SMC bids on companies it wishes to acquire, it typically
is in competition with other entities.

SMC must also  compete  with  other  insurers  to  attract  and  retain the
allegiance of agents. SMC believes it has been successful in attracting and
retaining agents because it has been able to offer a competitive package of
innovative  products,  competitive  commission  structures,  prompt  policy
issuance and responsive policyholder service. Because most annuity business
written  by  life  companies  is  through  agents, management believes that
competition centers more on the strength of  the  agent relationship rather
than on the identity of the insurer.

Competition  also  is  encountered  from  the expanding  number  of  banks,
securities  brokerage firms and other financial  intermediaries  which  are
marketing insurance  products  and  which  offer competing products such as
savings accounts and securities. The Company  began  distributing annuities
through  financial  institutions as a result of the acquisition  of  Savers
Marketing in March 1998.   The  recent  passage, by Congress, of the Gramm-
Leach-Bliley Financial Services Modernization Act  ("GLB Act") has expanded
competitive opportunities for non-insurance  financial  services companies.
The full effects of the GLB Act on our competition cannot be predicted with
certainty at this time.

The unit-linked life insurance market in Europe is highly  competitive  and
consists of many companies domiciled in the United Kingdom and its offshore
centers,  as  well  as  many companies in Luxembourg and Ireland which sell
products similar to those  of  SMI.   SMI is able to develop its share of a
competitive  market by developing strong  relationships  with  high-quality
independent intermediaries  and  by  continual  innovation in the design of
niche market products.

Financial institutions, school districts, marketing  companies,  agents who
market  insurance products and policyholders use the ratings of an  insurer
as one factor in determining which insurer's annuity to market or purchase.
Standard Life and Dixie Life have a rating of "B+" and "B", respectively by
A.M. Best.   A  rating of "B+" is assigned by A.M. Best to companies which,
in their opinion, have achieved very good overall performance when compared
to the standards  established by A.M. Best, and have a good ability to meet
their obligations to policyholders over a long period of time.  A rating of
"B" is assigned by  A.M.  Best  to  companies which, in their opinion, have
achieved  good  overall  performance  when   compared   to   the  standards
established by A.M. Best. According to A.M. Best, these companies generally
have  an  adequate ability to meet their obligations to policyholders,  but
their  financial   strength   is   vulnerable  to  unfavorable  changes  in
underwriting or economic conditions.  In  evaluating  a company's financial
and  operating performance, A.M. Best reviews the company's  profitability,
leverage  and  liquidity  as  well  as  the company's book of business, the
adequacy and soundness of its reinsurance, the quality and estimated market
value of its assets, the adequacy of its  reserves  and  the experience and
competence  of its management. A.M. Best's ratings are based  upon  factors
relevant to policyholders, agents, insurance brokers and intermediaries and
are not directed to the protection of investors. Generally, rating agencies
base their ratings  on  information  furnished to them by the issuer and on
their own  investigations, studies and  assumptions by the rating agencies.
There is no assurance that any particular  rating  will  continue  for  any
given  period  of time or that it will not be changed or withdrawn entirely
if,  in the judgment  of  the  rating  agency,  circumstances  so  warrant.
Although  a  higher  rating  by  A.M.  Best  or  another  insurance  rating
organization  could  have  a  favorable effect on Standard Life's business,
management believes that it is  able  to  compete  on  the  basis  of their
competitive  crediting  rates,  asset  quality,  strong  relations with its
independent agents and the quality of service to its policyholders.

FEDERAL INCOME TAXATION

The  life  insurance and annuity products marketed and issued  by  Standard
Life generally  provide  the  policyholder with an income tax advantage, as
compared to other saving investments  such  as  certificates of deposit and
bonds, in that income taxation on the increase in  value  of the product is
deferred until receipt by the policyholder. With other savings investments,
the  increase  in  value is taxed as earned. Life insurance benefits  which
accrue prior to the  death  of  the policyholder, and annuity benefits, are
generally not taxable until paid,  and  life  insurance  death benefits are
generally exempt from income tax. The tax advantage for life  insurance and
annuity products is provided in the Internal Revenue Code ("IRC"),  and  is
generally   followed   in   all  states  and  other  United  States  taxing
jurisdictions. Accordingly, it  is  subject  to  change by Congress and the
legislatures of the respective taxing jurisdictions.

SMC and its U.S. non-insurance subsidiaries file a  consolidated return for
federal  income  tax  purposes  and,  as  of  December 31, 1999,  have  net
operating  loss carryforwards of approximately $9.4  million  which  expire
from 2005 to 2018.

In addition,  Standard  Life  and Dixie Life file a consolidated return for
federal income tax purposes and  at December 31, 1999, have a net operating
loss carryforward of approximately  $5.3 million, which expires in 2010 and
2019.   This carryforward will be available to reduce future taxable income
of Standard Life.

Standard Management International is a Luxembourg 1929 holding company, and
has a preferential tax status.  SMI is  completely  exempt  from  corporate
income  tax, municipal business tax and net capital tax, but is subject  to
"taxe d'abonnement",  levied  annually  at  a  rate  of 0.2% of the paid up
capital.  Premier Life (Bermuda) is exempt from income tax until March 2016
pursuant   to  a  decree  from  the  Minister  of  Finance.  Premier   Life
(Luxembourg)  is subject to Luxembourg income taxation (statutory corporate
rate of 37.45%)  and a capital tax of approximately 0.5% of its net equity.
At December 31, 1999,  Premier  Life (Luxembourg) had accumulated corporate
income tax loss carryforwards of  approximately  $1.6 million, all of which
may  be carried forward indefinitely. To the extent  that  such  income  is
taxable under U.S. law, it will be included in SMC's consolidated return.




<PAGE>

INFLATION

The primary  direct effect on SMC of inflation is the increase in operating
expenses. A large  portion of SMC's operating expenses consists of salaries
which are subject to wage increases at least partly affected by the rate of
inflation. SMC attempts  to  minimize  the impact of inflation on operating
expenses through programs to improve productivity.

The rate of inflation also has an indirect  effect  on  SMC.  To the extent
that  the  government's  economic  policy to control the level of inflation
results in changes in interest rates, SMC's new sales of insurance products
and investment income are affected.  Changes in the level of interest rates
also  have  an  effect  on interest spreads,  as  investment  earnings  are
reinvested.

FOREIGN OPERATIONS AND CURRENCY RISK

SMI  policyholders invest  in  assets  denominated  in  a  broad  range  of
currencies.  Policyholders  effectively  bear the currency risk, if any, as
these investments are matched by policyholder separate account liabilities.
Therefore, their investment and currency risk  is  limited to premiums they
have paid. Policyholders are not permitted to invest  directly  in options,
futures and derivatives.

SMI  could  be  exposed  to currency fluctuations if currencies within  the
conventional  investment  portfolio   or  certain  actuarial  reserves  are
mismatched. The assets and liabilities  of  this portfolio and the reserves
are  continually  matched by the company and at  regular  intervals  by  an
independent actuary. In addition, Premier Life (Luxembourg's) stockholder's
equity is denominated  in Luxembourg francs. Premier Life (Luxembourg) does
not hedge its translation risk because its stockholder's equity will remain
in Luxembourg francs for the foreseeable future and no significant realized
foreign exchange gains or  losses  are  anticipated.  At December 31, 1999,
there is a $.9 million unrealized loss from foreign currency translation.

Due  to the nature of unit-linked products issued by SMI,  which  represent
98% of  the SMI portfolio, the investment risk rests with the policyholder.
Investment  risk  for  SMI  exists where investment decisions are made with
respect to the remaining traditional  business  and  for the assets backing
certain actuarial and regulatory reserves. The investments underlying these
liabilities  mostly  represent  short term investments and  fixed  maturity
securities which are normally bought  and/or disposed of only on the advice
of  independent  consulting  actuaries  who   perform  an  annual  exercise
comparing anticipated cash flows on the insurance  portfolio  with the cash
flows  from  the fixed maturity securities. Any resulting material  foreign
currency  mismatches   are  then  covered  by  buying  and/or  selling  the
securities as appropriate.

REGULATORY FACTORS

SMC's insurance subsidiaries  are  subject to significant regulation by the
insurance regulatory authorities in  the  jurisdictions  in  which they are
domiciled and the insurance regulatory bodies in the other jurisdictions in
which  they are licensed to sell insurance. The purpose of such  regulation
is primarily  to  ensure the financial stability of insurance companies and
to provide safeguards for policyholders rather than to protect the interest
of stockholders. The  insurance  laws  of  various  jurisdictions establish
regulatory agencies with broad administrative powers  relating  to  i)  the
licensing  of  insurers  and  their  agents,  ii)  the  regulation of trade
practices,   iii)   management  agreements,  iv)  the  types  of  permitted
investments and maximum  concentration,  v) deposits of securities, vi) the
form  and  content  of  financial  statements,  vii)  premiums  charged  by
insurance companies, viii) sales literature  and  insurance  policies,  ix)
accounting  practices  and  the  maintenance  of specified reserves, and x)
capital and surplus.  SMC's insurance subsidiaries  are  required  to  file
detailed  periodic  financial  reports with supervisory agencies in certain
jurisdictions.

Most  states  have also enacted legislation  regulating  insurance  holding
company activities  including  acquisitions, extraordinary dividends, terms
of surplus debentures, terms of  affiliate  transactions  and other related
matters. The insurance holding company laws and regulations  vary by state,
but  generally  require  an  insurance  holding  company  and its insurance
company subsidiaries licensed to do business in the state to  register  and
file certain reports with the regulatory authorities, including information
concerning  capital  structure,  ownership,  financial  condition,  certain
intercompany  transactions  and  general business operations. State holding
company laws also require prior notice  or  regulatory  agency  approval of
certain  material  intercompany  transfers  of  assets  within  the holding
company  structure.   Recently a number of state regulators have considered
or have enacted legislation  proposing  that  change,  and  in  many  cases
increase,  the  authority of state agencies to regulate insurance companies
and holding companies.  For additional information on state laws regulating
insurance company  subsidiaries,  refer  to  "Management's  Discussion  and
Analysis  of  Financial Condition and Results of Operations - Liquidity and
Capital Resources",  and  Note  13  to the Company's consolidated financial
statements.

Under Indiana insurance law, Standard  Life  may  not  enter  into  certain
transactions,  including management agreements and service contracts,  with
members  of  its  insurance  holding  company  system,  including  Standard
Management, unless  Standard  Life  has  notified the Indiana Department of
Insurance of its intention to enter into such  transactions and the Indiana
Department  of  Insurance  has not disapproved of them  within  the  period
specified by Indiana law. Among other things, such transactions are subject
to the requirement that their  terms  and  charges  or  fees  for  services
performed be fair and reasonable.




<PAGE>

The  Indiana  insurance  laws  and  regulations  require that the statutory
surplus  of  Standard  Life  following  any  dividend  or  distribution  be
reasonable in relation to its outstanding liabilities and  adequate  to its
financial needs. The Indiana Department of Insurance may bring an action to
enjoin  or  rescind  the  payment of a dividend or distribution by Standard
Life  that  would  cause  its  statutory  surplus  to  be  unreasonable  or
inadequate under this requirement.

Most states, including Indiana,  require  administrative  approval  of  the
acquisition  of  10%  or  more  of  the  outstanding shares of an insurance
company incorporated in the state or the acquisition  of 10% or more of the
outstanding  shares  of  an  insurance  holding  company  whose   insurance
subsidiary  is incorporated in the state. The request for approval must  be
accompanied by  detailed  information  concerning the acquiring parties and
the plan of acquisition. The acquisition of 10% of such shares is generally
deemed to be the acquisition of "control"  for  the  purpose of the holding
company  statutes.  However, in many states the insurance  authorities  may
find that "control" in  fact  does  or  does  not exist in circumstances in
which a person owns or controls either a lesser  or  a  greater  amount  of
securities.

In  some  instances state regulatory authorities require deposits of assets
for the protection  of  either  policyholders  in  those  states or for all
policyholders.  At  December  31,  1999,  securities  of  $12.5 million  or
approximately  2%  of the book value of SMC's U.S. insurance  subsidiaries'
invested  assets  were   on   deposit  with  various  state  treasurers  or
custodians. Such deposits must  consist  of securities that comply with the
standards that the particular state has established.  Assets of SMI of $4.8
million at December 31, 1999 were held by a custodian bank  approved by the
Luxembourg regulatory authorities to comply with local insurance laws.

In  recent  years, the NAIC and state insurance regulators have  reexamined
existing laws and regulations and their application to insurance companies.
This reexamination  has  focused  on  i)  insurance  company investment and
solvency  issues,  ii)  risk-based  capital  guidelines,  iii)   assumption
reinsurance,  iv)  interpretations of existing laws, v) the development  of
new  laws, vi) the interpretation  of  nonstatutory  guidelines,  vii)  the
standardization  of  statutory accounting rules and viii) the circumstances
under which dividends  may be paid. The NAIC has encouraged states to adopt
model NAIC laws on specific  topics such as holding company regulations and
the definition of extraordinary  dividends.  It  is not possible to predict
the future impact of changing state regulation on the operations of SMC.

The NAIC, as well as Indiana and Mississippi, have  each adopted Risk-Based
Capital  ("RBC")  requirements for life and health insurance  companies  to
evaluate the adequacy  of  statutory  capital  and  surplus  in relation to
investment  and  insurance risks.  State insurance regulators use  the  RBC
requirements as regulatory  tools  only, which aid in the identification of
insurance  companies  that  could  potentially   lack  sufficient  capital.
Regulatory compliance is determined by a ratio (the  "RBC  Ratio")  of  the
company's regulatory total adjusted capital to its authorized control level
RBC.  The two components of the RBC Ratio are defined by the NAIC.  The RBC
ratios which require corrective action as follows:

<TABLE>
<CAPTION>
                 LEVEL                                RBC RATIO                          CORRECTIVE ACTION
<S>                                                 <C>                       <C>

Company Action                                         1.5 - 2                Company is required to submit a plan
                                                                              to improve its RBC Ratio

Regulatory Action                                      1 - 1.5                Regulators will order corrective
                                                                              actions

Authorized Control                                     0.7 - 1                Regulators are authorized to take
                                                                              control of the company

Mandatory Control                                   less than 0.7             Regulators must take over the company
</TABLE>





<PAGE>

At  December  31, 1999, the RBC Ratios of Standard Life and Dixie Life were
both at least two and a half times greater than the levels at which company
action is required.   If  these  RBC  Ratios  should decline in the future,
those subsidiaries might be subject to increased regulatory supervision and
decreased ability to pay dividends, management  fees  and surplus debenture
interest to SMC.

On  the basis of annual statutory statements filed with  state  regulators,
the NAIC  calculates  twelve financial ratios to assist state regulators in
monitoring the financial condition of insurance companies.  A "usual range"
of results for each ratio  is  used as a benchmark.  In the past, variances
in certain ratios of our insurance  subsidiaries have resulted in inquiries
from insurance departments to which we  have responded.  Such inquiries did
not lead to any restrictions affecting the Company's operations.

SMC  attempts  to  manage its assets and liabilities  so  that  income  and
principal payments received  from investments are adequate to meet the cash
flow requirements of its policyholder  liabilities. The cash flows of SMC's
liabilities  are affected by actual maturities,  surrender  experience  and
credited interest  rates. SMC periodically performs cash flow studies under
various interest rate  scenarios  to evaluate the adequacy of expected cash
flows  from  its  assets  to meet the expected  cash  requirements  of  its
liabilities. SMC utilizes these  studies to determine if it is necessary to
lengthen  or  shorten  the average life  and  duration  of  its  investment
portfolio.  Because  of  the  significant  uncertainties  involved  in  the
estimation of asset and liability  cash  flows,  there  can be no assurance
that  SMC will be able to effectively manage the relationship  between  its
asset and liability cash flows.

The   statutory   filings   of   SMC's   insurance   subsidiaries   require
classifications  of investments and the establishment of an Asset Valuation
Reserve  ("AVR"), designed  to  stabilize  a  company's  statutory  surplus
against fluctuations  in the market value of stocks and bonds, according to
regulations  prescribed   by  the  NAIC.  The  AVR  consists  of  two  main
components: a "default component"  to  provide  for  future  credit-related
losses on fixed income investments and an "equity component" to provide for
losses on all types of equity investments, including real estate.  The NAIC
requires  an  additional  reserve,  called the Interest Maintenance Reserve
("IMR"), which consists of the portion of realized capital gains and losses
from  the  sale  of  fixed income securities  attributable  to  changes  in
interest rates. The IMR  is  required to be amortized against earnings on a
basis reflecting the remaining  period  to  maturity  of  the  fixed income
securities  sold.  These  regulations affect the ability of SMC's insurance
subsidiaries to reflect future  investment  gains  and  losses  in  current
period statutory earnings and surplus.

The  amounts  related  to  AVR  and  IMR  for the insurance subsidiaries at
December 31, 1999 are summarized as follows (in thousands):

                                       Maximum
                     AVR                 AVR              IMR

Standard Life      $4,562              $5,716           $12,860
Dixie Life            180                 261               158

The annual addition to the AVR for 1999 is  20% of the maximum reserve over
the  accumulated  balance.  If  the calculated reserve  with  current  year
additions exceeds the maximum reserve amount, the reserve is reduced to the
maximum  amount.  For  the  year  ended   December  31,  1999,  SMC's  U.S.
subsidiaries each made the required contribution to the AVR.

Most jurisdictions require insurance companies  to  participate in guaranty
funds  designed  to  cover  claims  against  insolvent  insurers.  Insurers
authorized  to  transact  business  in  these  jurisdictions are  generally
subject  to  assessments based on annual direct premiums  written  in  that
jurisdiction to  pay such claims, if any. These assessments may be deferred
or forgiven under  most  guaranty  laws if they would threaten an insurer's
financial strength and, in certain instances,  may be offset against future
state  premium taxes. The incurrence and amount of  such  assessments  have
increased  in  recent  years and may increase further in future years.  The
likelihood  and amount of  all  future  assessments  cannot  be  reasonably
estimated and are beyond the control of SMC.

As part of their  routine  regulatory oversight process, approximately once
every three to five years, state  insurance  departments  conduct  periodic
detailed  examinations  ("Examinations") of the books, records and accounts
of insurance companies domiciled  in  their states. Standard Life underwent
an Examination during 1996 for the five-year period ended December 31, 1995
and  Dixie Life underwent an examination  during  1998  for  the  five-year
period ended December 31, 1997. The final examination reports issued by the
Indiana  and Mississippi Departments of Insurance did not raise significant
issues.

The federal  government  does not directly regulate the insurance business.
However, federal legislation  and administrative policies in several areas,
including  pension  regulation,  age   and  sex  discrimination,  financial
services regulation and federal taxation, do affect the insurance business.
In addition, legislation has been introduced  from  time  to time in recent
years which, if enacted, could result in the federal government  assuming a
more direct role in the regulation of the insurance industry.  The recently
passed  GLB  Act  has left the currently-existing regime of state insurance
regulation largely  intact; however, more comprehensive Federal legislation
in this area is still being actively considered by Congress.




<PAGE>

EMPLOYEES

As of March 15, 2000,  SMC  had  141  employees which were comprised of the
following: Standard Life - 85 employees,  SMI - 20 employees (9 of whom are
covered by a collective bargaining agreement),  Standard  Management  -  10
employees  and  Savers  Marketing  -  26  employees.  SMC believes that its
future success will depend, in part, on its  ability to continue to attract
and  retain  highly-skilled technical, marketing,  support  and  management
personnel. Management  believes  that  it  has excellent relations with its
employees.

ITEM 2.  PROPERTIES

DOMESTIC OPERATIONS.  SMC leases approximately  31,000  square  feet  in an
office  building  located at 9100 Keystone Crossing, Indianapolis, Indiana,
under the terms of  a lease which expires on June 1, 2001. SMC entered into
a lease on March 31,  1997,  for  approximately  16,000  square  feet  in a
warehouse located at 2525 North Shadeland, Indianapolis, Indiana, under the
terms of a lease which expires on September 30, 2001.

Savers  Marketing  leases  approximately  6,000  square  feet  in an office
building  located  at  8064  North  Point  Boulevard,  Winston-Salem, North
Carolina, under the terms of a lease that expires on September 30, 2001.

INTERNATIONAL  OPERATIONS.  SMI entered into a lease on November  17,  1997
for approximately  4,500  square feet in an office building located at 13A,
rue de Bitbourg, L-1273 Luxembourg,  Grand  Duchy  of Luxembourg, under the
terms of a lease which expires on November 16, 2003.

ITEM 3.  LEGAL PROCEEDINGS

An officer and director of SMC resigned effective April  15, 1997.  On June
19, 1997, this former office commenced an action in the Superior  Court  of
Marion  County,  Indiana against SMC claiming that his employment agreement
contained a provision  to  the  effect that, following a termination of his
employment with SMC under certain  circumstances,  he  would be entitled to
receive certain benefits.  This former officer has asserted  to SMC that he
is  entitled  to  a  lump  sum  termination  payment  of  $1.7 million  and
liquidated damages not exceeding $3.3 million by virtue of  his voluntarily
leaving SMC's employment.  SMC disputes those claims. SMC filed  its Answer
and  Counterclaim  on  September  11, 1997.  SMC's investigation since  the
action was filed revealed a basis for  the termination of employment of the
former office for cause relative to after-acquired  evidence.   On  October
14,  1997, the Board of Directors of SMC terminated the former officer  for
cause  effective  March 15, 1997.  Such termination will also be  argued by
SMC as a complete defense to all claims asserted by the former officer. The
ultimate outcome of the action cannot presently be determined. Accordingly,
no provision for any  liability that  may  result  has  been  made  in  the
consolidated financial statements.  Management believes that the conclusion
of  such  litigation  will  not  have a material adverse  effect  on  SMC's
consolidated financial condition.

In addition, SMC is involved in various legal  proceedings  in  the  normal
course  of  business.  In most cases, such proceedings involve claims under
insurance policies  or other contracts of SMC.  The outcomes of these legal
proceedings are not expected  to  have  a  material  adverse  effect on the
consolidated financial position, liquidity, or future results of operations
of SMC based on SMC's current understanding of the relevant facts and law.




<PAGE>
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

At the Company's Annual Meeting of Stockholders held on June 10,  1999, the
following individuals were elected to the Board of Directors:

                               Shares For            Shares Withheld
Robert A. Borns                 6,421,300                 77,161
Jerry E. Francis                6,412,311                 86,150
Raymond J. Ohlson               6,420,197                 78,264

A  total  of  6,498,461  shares  were  present in person or by proxy at the
Annual Meeting of Stockholders.


EXECUTIVE OFFICERS

The  following  table  sets  forth information  concerning  each  of  SMC's
executive officers:

NAME               AGE                     POSITION

Ronald D. Hunter  48  Chairman of the Board, Chief Executive Officer and
                      President
Raymond J. Ohlson 49  Executive Vice President and Chief Marketing Officer
Paul B. Pheffer   48  Executive Vice President, Chief Financial Officer
Stephen M. Coons  58  Executive Vice President, General Counsel and Secretary
Edward T. Stahl   53  Executive Vice President and Chief Administrative Officer

RONALD D.  HUNTER   Mr.  Hunter  has  been the Chairman of the Board, Chief
Executive Officer and President of SMC since its formation in June 1989 and
the  Chairman of the Board and Chief Executive  Officer  of  Standard  Life
since  December  1987.  Previously,  Mr. Hunter held several management and
sales positions in the life insurance  industry  with a number of companies
including  Conseco,  Inc.  (1981-1986),  Aetna  Life  &   Casualty  Company
(1978-1981), United Home Life Insurance Company (1975-1977)  and Prudential
Life Insurance Company (1972-1975).

RAYMOND  J.  OHLSON  Mr. Ohlson has served as Executive Vice President  and
director of SMC  since  December  1993.   Since  June  1993, Mr. Ohlson has
served as President of Standard Life. Mr. Ohlson entered the life insurance
business in 1971 and is a life member of the Million Dollar Round Table. He
earned his CLU designation in 1980.

PAUL  ("PETE") B. PHEFFER  Mr. Pheffer has been Executive  Vice  President,
Chief Financial  Officer  and  director  of  SMC  since June 1997. Prior to
joining  SMC,  Mr.  Pheffer was Senior Vice President  --  Chief  Financial
Officer and Treasurer  of Jackson National Life Insurance Company from 1994
to 1996 and prior to that  was  Senior  Vice  President  -- Chief Financial
Officer at Kemper Life Insurance Companies from 1992 to 1994.  Mr. Pheffer,
a CPA, received his MBA from the University of Chicago in 1988.

STEPHEN  M. COONS  Mr. Coons has been a director of SMC since August  1989.
Mr. Coons  has  been  General  Counsel  and Executive Vice President of SMC
since March 1993 and has been Secretary of  SMC since March 1994. He was of
counsel  to  the law firm of Coons, Maddox & Koeller  from  March  1993  to
December  1996.  Prior  to March 1993, Mr. Coons was a partner with the law
firm of Coons & Saint. He  has  been practicing law for 29 years. Mr. Coons
served as Indiana Securities Commissioner from 1978 to 1983.

EDWARD T. STAHL  Mr. Stahl has been  an  Executive  Vice  President  of SMC
since  its  formation,  has  been  a director of SMC from July 1989 and was
appointed Chief Administrative Officer  in  November  1998.   Mr. Stahl was
Secretary of SMC from June 1989 to March 1994. Mr. Stahl was President  and
Chief  Operations  Officer  of Standard Life from May 1988 to June 1993. He
has been a director of Standard  Life  since  December  1987, and Executive
Vice  President  and  Secretary  since June 1993. Mr. Stahl has  served  in
various capacities in the insurance industry since 1966. He earned his FLMI
designation in 1981, and is a member of several insurance associations.




<PAGE>
                                  PART II

ITEM 5.MARKET FOR SMC COMMON STOCK AND RELATED STOCKHOLDER MATTERS

SMC Common Stock trades on NASDAQ  under  the  symbol "SMAN". The following
table sets forth, for the periods indicated, the  range of the high and low
sales prices of SMC Common Stock as reported by NASDAQ.  SMC has never paid
cash dividends on its Common Stock. At the  close of business on  March 15,
2000 there were  approximately 3,016  holders of  record of the outstanding
shares of SMC Common Stock.  Although SMC Common Stock is traded on NASDAQ,
no assurance can be given as to the future price of or the markets for  the
stock.

                                           SMC
                                       COMMON STOCK
                                    HIGH          LOW
1998
Quarter ended March 31, 1998        7.500        6.125
Quarter ended June 30, 1998         7.625        7.000
Quarter ended September 30, 1998    7.563        6.625
Quarter ended December 31, 1998     7.000        6.000

1999
Quarter ended March 31, 1999        7.125        5.375
Quarter ended June 30, 1999         6.563        5.250
Quarter ended September 30, 1999    6.938        4.656
Quarter ended December 31, 1999     6.219        4.250





<PAGE>
ITEM 6.SMC SELECTED HISTORICAL FINANCIAL DATA (A)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS AND SHARES OUTSTANDING)

The following historical financial data of SMC was derived from its audited
consolidated financial statements.  This historical financial  data  should
be  read  in  conjunction  with  "Management's  Discussion  and Analysis of
Financial  Condition  and  Results  of Operations" and the SMC Consolidated
Financial Statements and related Notes.

<TABLE>
<CAPTION>
                                                            Year Ended December 31

                                         1999           1998           1997         1996               1995
<S>                                    <C>            <C>            <C>           <C>               <C>

STATEMENT OF OPERATIONS DATA:
Premium income                          $ 13,090      $14,479 (e)     $7,100       $10,468 (d)       $ 5,504
Investment activity:
Net investment income                     44,821       34,221         29,197        20,871            18,517
Net realized investment gains                 78          353            396         1,302               688
Total revenues                            72,963       63,275         46,855        40,205            30,238
Interest expense and financing costs       3,385        2,955          2,381           805               118
Total benefits and expenses               65,565       56,964         43,593        36,670 (d)        28,682
Income before income taxes and
extraordinary gain                         7,398        6,311          3,262         3,535             1,556
Net income                                 5,272        4,681          2,645         4,767             1,313
Operating income (b)                       5,221        4,448          2,384         1,174               461

PER SHARE DATA:
Income per share before extraordinary       $.69         $.68           $.54          $.88              $.25
gain
Net income                                   .69          .68            .54           .98               .25
Net income, assuming dilution                .65          .62            .48           .91               .25
Operating income (b)                         .69          .65            .49           .24               .09
Operating income, assuming dilution (b)      .65          .58            .43           .21               .09
Weighted average common shares         9,553,731    9,363,763      5,591,217     5,549,057         5,345,937
outstanding, assuming dilution
Book value per common share               $ 6.85       $ 8.64         $ 8.88        $ 7.95            $ 7.73
Book value per common share excluding     $ 8.89       $ 8.43         $ 8.44        $ 8.09            $ 7.23
unrealized gain (loss) on securities
available for sale
Common shares outstanding              7,785,156    7,641,454      4,876,490     5,024,270         5,205,425

BALANCE SHEET DATA (at year end):
Invested assets                        $ 648,503    $ 592,123      $ 398,782     $ 370,138         $ 280,597
Assets held in separate accounts         319,973      190,246        148,064       128,546           122,705
Total assets                           1,150,977      956,150        668,992       628,413           479,598
Long-term debt, notes payable and         34,500       35,000         26,141        20,697             4,191
capital
lease obligations
Series A preferred stock                   6,530        6,530             --            --                --
Class S preferred stock                       --           --             --         1,757                --
Shareholders' equity                      53,360       66,042         43,313        39,919            40,242
Shareholders' equity, excluding           69,219       64,382         41,142        40,665            37,660
unrealized gain (loss) on securities
available for sale
Ratio of debt to total capitalization (c)    31%          33%            39%           33%               10%
</TABLE>






<PAGE>
                NOTES TO SMC SELECTED HISTORICAL FINANCIAL DATA
               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


(a)Comparison of consolidated financial  information  is significantly affected
by  the  acquisitions  of  Dixie  Life  on  October  2,  1995, Shelby  Life  on
November 8, 1996, Savers Life on March 12, 1998, Midwestern Life on October 30,
1998 and on the disposal of First International on March 18, 1996. Refer to the
notes to the consolidated financial statements in this report for a description
of business combinations.

(b)Operating  income  represents  income before extraordinary  gains  (charge),
excluding net realized investment gains  (less  income  taxes  relating to such
gains),  gain  on  disposal  of  subsidiary  and  class  action litigation  and
settlements.

(c)Total capitalization is the sum of SMC's debt (long term debt, notes payable
and   capital   lease   obligations),   and  redeemable  preferred  stock   and
shareholders' equity (excluding unrealized gains and losses.)

(d)Includes recapture of premiums ceded and  an  increase in benefits due to an
increase in reserves of $4.2 million due to the termination  and recapture of a
reinsurance agreement with National Mutual Life Insurance Company.

(e)Includes Medicare supplement premiums of $6.0 million related  to the Savers
Life acquisition.  This business was sold effective July 1, 1998.




<PAGE>
ITEM 7.MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION  AND RESULTS
OF OPERATIONS

The following discussion highlights the principal factors affecting the results
of  operations and the significant changes in balance sheet items of SMC  on  a
consolidated  basis  for  the  periods listed, as well as liquidity and capital
resources. This discussion should  be read in conjunction with the accompanying
Consolidated  Financial  Statements,  related  Notes  and  selected  historical
financial data.

FORWARD-LOOKING STATEMENTS

All statements, trend analyses, and other  information contained in this Annual
Report on Form 10-K or any document incorporated  by  reference herein relative
to markets for the Company's products and trends in the Company's operations or
financial  results,  as  well  as  other  statements including  words  such  as
"anticipate",  "believe",  "plan", "estimate",  "expect",  "intend"  and  other
similar expressions, constitute  forward-looking  statements  under the Private
Securities Litigation Reform Act of 1995.  These forward-looking statements are
subject to known and unknown risks, uncertainties and other factors  which  may
cause  actual results to be materially different from those contemplated by the
forward-looking statements.  Such factors include, but are not limited to:  (1)
general  economic  conditions  and other factors, including prevailing interest
rate levels, stock market performance  and  health  care  inflation,  which may
affect the ability of the Company to sell its products, the market value of the
Company's  investments  and  the  lapse rate and profitability of the Company's
policies;  (2)  the  Company's  ability   to   achieve  anticipated  levels  of
operational efficiencies at recently acquired companies,  as  well  as  through
other   cost-saving   initiatives;  (3)  customer  response  to  new  products,
distribution channels and  marketing  initiatives;  (4)  mortality,  morbidity,
usage  of  health  care  services  and  other  factors  which  may  affect  the
profitability  of  the Company's insurance products; (5) changes in the Federal
income tax laws and  regulation which may affect the relative tax advantages of
some of the Company's  products;  (6) increasing competition in the sale of the
Company's products; (7) regulatory changes or actions, including those relating
to regulation of financial services  affecting  bank  sales and underwriting of
insurance  products,  regulation  of  the  sale, underwriting  and  pricing  of
insurance products; (8) the availability and  terms of future acquisitions; and
(9) the risk factors or uncertainties listed from  time to time in any document
incorporated by reference herein.

GENERAL

SMC acquired Savers Life on March 12, 1998 and Midwestern  Life  on October 30,
1998.  These  acquisitions  were  accounted  for  using the purchase method  of
accounting  and  are  included  in  the SMC Consolidated  Financial  Statements
commencing with their respective acquisition effective dates.

PRODUCT PROFITABILITY.  Margins on life  insurance  and  annuity  products  are
affected by interest rate fluctuations. Rising interest rates would result in a
decline  in  the  market  value  of assets. However, as there are positive cash
flows  from renewal premiums, investment  income  and  maturities  of  existing
assets,  the  need for early disposition of investment assets to meet operating
cash flow requirements  would  be  unlikely.  Rising  interest rates would also
result  in  available  cash  flows  from  maturities being invested  at  higher
interest rates, which would help support a gradual increase in new business and
renewal interest rates on interest-sensitive  products. A sharp, sudden rise in
the interest rate environment without a concurrent  increase in crediting rates
could result in higher surrenders, particularly for annuities.  The  effect  of
surrenders  would  be  to  reduce  earnings over the long term. Earnings in the
period  of  the  surrender could increase  or  decrease  depending  on  whether
surrender charges  were  applicable  and whether such charges differed from the
write-off of related deferred acquisition  costs  or  present  value  of future
profits.

When  interest  rates  fall,  SMC  generally  attempts  to  adjust the credited
interest  rates  subject to competitive pressures. Although SMC  believes  that
such strategies will  continue  to  permit  it  to achieve a positive spread, a
significant decline in the yield on SMC's investments  could  adversely  affect
the results of operations and financial condition of SMC.

PRESENT  VALUE  OF  FUTURE PROFITS.  In accordance with industry practice, when
SMC purchases additional  insurance  business,  it  assigns  a  portion  of the
purchase  price,  called  the  present value of future profits, to the right to
receive future cash flows arising  from existing insurance policies. This asset
is recorded when the business is purchased  at  the  value  of projected future
cash  flows on existing policies, less a discount to present value.  As  future
cash flows  emerge, they are treated as a recovery of this asset. Therefore, if
cash flows emerging  from  the purchased or recaptured business during a period
exactly equal the projections, they are offset by that period's amortization of
the cost of the policies purchased.  In  that  event, the only income statement
effect from the purchased business is the realization  of the discount that was
initially deducted from the asset to reflect its present  value. Changes in the
future annual amortization of this asset are not expected to have a significant
effect  on  the  results of operations, because the amount of  amortization  is
expected to be equal  to  the profits emerging from the purchased policies, net
of interest on the unrecovered  present  value  of future profits balance. This
asset is amortized over the expected life of the  related  policies  purchased.
Present  value  of  future  profits  is  increased for the estimated effect  of
realizing unrealized investment losses and  decreased  for the estimated effect
of realizing unrealized investment gains.

In selecting the interest rate to calculate the discounted present value of the
projected future profits, SMC uses the risk rate of return  it needs to earn in
order to invest in the business being acquired or recaptured.




<PAGE>
In determining this required risk rate of return, SMC considers  the  following
factors:

The  magnitude  of  the risks associated with each of the actuarial assumptions
used in determining expected future cash flows (as described above).

The cost of the capital required to fund the acquisition or recapture.

The likelihood of changes  in  projected  future cash flows that might occur if
there are changes in insurance regulations and tax laws.

The  acquired  company's  compatibility  with other  SMC  activities  that  may
favorably affect future cash flows.

The complexity of the acquired company or recaptured business.

Recent prices (i.e., discount rates used in  determining  valuations)  paid  by
others to acquire or recapture similar blocks of business.

The  discount  rate  selected may affect subsequent earnings in those instances
where the purchase price  of  the  policies  exceeds  the  value  of net assets
acquired  (including  the  value  of  future profits discounted at the selected
interest rate). Selection of a lower (or  higher)  discount  rate will increase
(or decrease) the portion of the purchase price assigned to the  present  value
of future cash flows and will result in an offsetting decrease (or increase) in
the amount of the purchase price assigned to goodwill. The effect on subsequent
earnings  caused by this variation in purchase price allocation will depend  on
the characteristics  of  the policies purchased. Use of a lower rate may result
in an increase in reported  earnings  in  the  early years after an acquisition
followed by a decrease in earnings in later years.

The percentage of future expected net amortization  of the beginning balance of
the present value of future profits before the effect  of  net unrealized gains
and losses, based on the present value of future profits at  December  31, 1999
and  current assumptions as to future events on all policies in force, will  be
between 8% and 10% in each of the years 2000 through 2004.

SMC used discount rates of 13% and 15% to calculate the present value of future
profits  of  the  Savers  Life  and Midwestern Life acquisitions, respectively.
Each is being amortized over 20 years  based  on  the  mix  of their respective
annuity and life business.

For more information related to Present Value of Future Profits refer to Note 4
to the Consolidated Financial Statements.

DEFERRED ACQUISITION COSTS.  Insurance products generate two  types  of  profit
streams: (i) from the excess of investment income earned over that credited  to
the  policyholder  and  (ii)  from  the  excess of premiums received over costs
incurred for policy issuance, administration  and  mortality. Costs incurred in
issuing  new policies are deferred and recorded as deferred  acquisition  costs
("DAC"), which are amortized using present value techniques so that profits are
realized in  proportion  to  premium revenue for certain products and estimated
gross profits for certain other  products.  Profits  from all of these elements
are recognized over the lives of the policies; no profits  are  recorded at the
time the policies are issued.

Amortization  of  DAC was $4.6 million, $3.3 million and $1.6 million  for  the
years ended December  31,  1999,  1998  and 1997, respectively. The increase in
current   year   amortization  expense  resulted   primarily   from   increased
amortization of DAC  as  gross profits from business sold in recent years began
to emerge. DAC is generally  amortized over the expected lives of the policies,
a period of approximately 20 years,  in  a constant relationship to the present
value of estimated future gross profits. Interest  is  being  accreted  at  the
projected  crediting  rate  on the policies. DAC is increased for the estimated
effect  of  realizing  unrealized  investment  losses  and  decreased  for  the
estimated effect of realizing  unrealized investment gains. The offset to these
amounts is recorded directly to  shareholders'  equity,  net  of  taxes. Future
expected amortization of DAC for the next five years before the effect  of  net
realized and unrealized gains and losses, based on DAC at December 31, 1999 and
current assumptions, is as follows (in thousands):

                   2000     2001      2002      2003   2004

Gross amortization$7,737  $7,872    $7,094    $6,127 $5,254
Interest accreted  2,576   2,047     1,575     1,233    986
Net amortization  $5,161  $5,825    $5,519    $4,894 $4,268

The  amounts included in the foregoing table do not include any amortization of
DAC resulting  from  the  sale  of  new  products  after December 31, 1999. Any
changes in future annual amortization of this asset  are not expected to have a
significant effect on results of operations because the  amount of amortization
is expected to be proportionate to the profits from the produced  policies, net
of interest on DAC.




<PAGE>
VARIANCES BETWEEN ACTUAL AND EXPECTED PROFITS.  Actual experience on  purchased
and produced insurance may vary from projections due to differences in  renewal
premiums   collected,   investment   spreads,   mortality  costs,  persistency,
administrative costs and other factors. Variances  from  original  projections,
whether positive or negative, are included in net income as they occur.  To the
extent  that  these  variances indicate that future experience will differ from
the estimated profits  reflected  in the capitalization and amortization of the
cost of policies purchased or the cost of policies produced, current and future
amortization rates may be adjusted.

ACCOUNTING FOR ANNUITIES AND UNIVERSAL  AND  INTEREST-SENSITIVE  LIFE PRODUCTS.
The    Company    primarily   accounts   for   its   annuity,   universal   and
interest-sensitive  life  policy  deposits  in  accordance  with  Statement  of
Financial  Accounting  Standards  No.  97  ("SFAS  No.  97"),  "Accounting  and
Reporting  by Insurance Enterprises for Certain Long-Duration Contracts and for
Realized Gains  and  Losses  on  the Sale of Investments". Under SFAS No. 97, a
benefit reserve is established at  the  time  of  policy  issuance in an amount
equal to the deposits received. Thereafter, the benefit reserve is adjusted for
any additional deposits, interest credited and partial or complete withdrawals.
Revenues  for  annuities  and universal and interest-sensitive  life  policies,
other than certain non-interest  sensitive annuities, consist of policy charges
for  surrenders  and partial withdrawals,  mortality  and  administration,  and
investment income  earned.  Such revenues do not include the annuity, universal
and interest-sensitive life policy deposits. Expenses related to these products
include interest credited to  policyowner account balances, operating costs for
policy administration, amortization  of  DAC  and  mortality costs in excess of
account balances.

Costs relating to the acquisition of new business, primarily  commissions  paid
to  agents,  which  vary with and are directly related to the production of new
business, are deferred  to  the  extent  that  such  costs are recoverable from
future  profit  margins.  At  the  time of issuance, the acquisition  expenses,
approximately 13% of initial annuity  premium deposits and 50% of premiums from
universal and interest-sensitive life products for SMC, are capitalized as DAC.
In accordance with SFAS No. 97, DAC with  interest  is amortized over the lives
of the policies in a constant relationship to the present  value  of  estimated
future gross profits.

UNIT-LINKED  PRODUCT  ACCOUNTING.  Separate account assets and liabilities  are
maintained primarily for contracts of which the majority represents unit-linked
products where benefits  on  surrender  and  maturity  are not guaranteed. They
generally  represent  funds  held  in  accounts  to  meet  specific  investment
objectives of policyholders who bear the investment risk. Investment income and
investment  gains and losses accrue directly to such policyholders.  SMC  earns
income from the  investment  management  fee  it  charges  on  such unit-linked
contracts,  which  ranges  from  .8%  to  1.2%  of  the value of the underlying
separate accounts.




<PAGE>
RESULTS OF OPERATIONS BY SEGMENT FOR THE THREE YEARS ENDED DECEMBER 31, 1999:

The following tables and narratives summarize the results  of our operations by
business segment:

<TABLE>
<CAPTION>

                                                                1999                        1998                       1997
                                                                            (Dollars in thousands)

Operating income before income taxes:
<S>                                                      <C>                           <C>                        <C>

Domestic operations                                       $           6,054            $          3,700           $          1,146
International operations                                              1,266                       2,258                      1,720

Consolidated operating income before income taxes                     7,320                       5,958                      2,866
Applicable income taxes related to operating income                   2,099                       1,510                        482

       Consolidated operating income after taxes                      5,221                       4,448                      2,384

Consolidated realized investment gains before                            78                         353                        396
income taxes
Applicable income taxes related to realized investment gains             27                         120                        135

       Consolidated realized investment gains after taxes                51                         233                        261

       Net income                                         $           5,272            $           4,681          $          2,645
</TABLE>

CONSOLIDATED RESULTS AND ANALYSIS

SMC's 1999 operating earnings were $5.2 million, or 65 cents per diluted share,
up 17% and 12% respectively compared to 1998.  Operating earnings  increased as
a  result  of  i)  increased  net  spread  revenue due to increases in weighted
average insurance liabilities caused by increased  sales  in recent periods and
the  acquisition  of  Savers Life and Midwestern Life, ii) economies  of  scale
achieved through the acquisitions  of  Savers Life and Midwestern Life and iii)
increased fees from separate accounts due  to  increases  in  weighted  average
separate  account  liabilities  for  the period.  These increases were somewhat
offset by i) the elimination of negative  goodwill amortization, a nonrecurring
item, which contributed $1.4 million or 15  cents per diluted share in the 1998
period, ii) unfavorable mortality and iii) increased amortization due to profit
realization.

SMC's 1998 operating earnings were $4.4 million, or 58 cents per diluted share,
up 87% and 35%, respectively compared to 1997.  Operating earnings increased as
a  result  of  i) increased net spread revenue due  to  increases  in  weighted
average insurance  liabilities  (primarily  due to the inclusion of Savers Life
and Midwestern Life operations), ii) favorable  mortality experience, iii) fees
from administration contracts and iv) increased fees  from  separate  accounts.
The  percentage  increase in operating earnings was greater than the percentage
increase in operating  earnings  per diluted share primarily because of the 67%
increase in weighted average diluted  common  shares or equivalents outstanding
during  the  period.   This  increase  in weighted average  shares  outstanding
resulted primarily from issued shares in  connection  with  the acquisitions of
Savers Life and Midwestern Life.





<PAGE>
DOMESTIC OPERATIONS:
<TABLE>
<CAPTION>

                                                                   1999                       1998                       1997
                                                                                     (Dollars in thousands)
Premiums and deposits collected:
<S>                                                            <C>                        <C>                        <C>

Traditional life                                                $  12,990                   $  8,392                   $  7,036
Medicare supplement                                                    --                      5,992                         --

Subtotal - traditional and Medicare supplement premiums            12,990                     14,384                      7,036

Flexible premium deferred annuities ("FPDA's")                     98,678                     58,072                     42,251
Equity-indexed annuities                                           59,348                     16,858                         --
Other annuities and deposits                                        5,872                      3,537                      2,809
Universal and interest-sensitive life                               1,778                      3,391                      4,302

   Subtotal - interest-sensitive and other financial              165,676                     81,858                     49,362
   products

               Total premiums and deposits collected            $ 178,666                   $ 96,242                   $ 56,398

Premium income                                                  $  12,990                   $ 14,384                   $  7,036
Policy income                                                       6,826                      6,529                      5,512

               Total policy related income                         19,816                     20,913                     12,548

Net investment income                                              44,376                     33,721                     28,614
Fee and other income                                                4,207                      3,068                      1,093

Total revenues (a)                                                 68,399                     57,702                     42,255

Benefits and claims                                                14,516                     13,310                      8,910
Interest credited to interest sensitive annuities and
other financial products                                           25,728                     19,775                     16,281
Amortization                                                        6,313                      4,755                      3,248
Other operating expenses                                           12,403                     13,207                     10,289
Interest expense and financing costs                                3,385                      2,955                      2,381

Total benefits and expenses                                        62,345                     54,002                     41,109
                 Operating income before income taxes               6,054                      3,700                      1,146

Net realized investment gains                                          78                        353                        396

Income before income taxes                                        $ 6,132                    $ 4,053                    $ 1,542

(a) Total revenues exclude net realized investment gains.

Number of annuity contracts in force                               24,322                     20,121                     14,013
Interest-sensitive annuity and other financial                   $595,388                   $506,749                   $350,607
         products reserves, net of reinsurance ceded
Number of life policies in force                                   61,573                     66,412                     68,571
Life insurance in force, net of reinsurance ceded              $1,208,471                 $1,289,024                 $1,178,171
</TABLE>




<PAGE>
GENERAL:  This segment consists of revenues earned and expenses  incurred  from
United  States  operations  which  includes deposits and/or income from annuity
products (primarily FPDA's), equity  indexed  products, universal life products
and traditional life products.  This segment has been significantly impacted by
the acquisitions of Savers Life, effective March 12, 1998, and Midwestern Life,
effective October 30, 1998.  The profitability  for this segment is primarily a
function  of  its  investment  spread  earned (i.e. the  excess  of  investment
earnings  over  interest  credited on annuity  and  universal  life  deposits),
persistency of the in force  business,  mortality  experience and management of
operating expenses.

PREMIUM  DEPOSITS  consist  of  FPDA's,  equity  indexed  annuities,  interest-
sensitive  annuities  and  other  financial  products  that do not  incorporate
significant mortality features.  For GAAP these premium  deposits are not shown
as premium income in the income statement.  Furthermore, a  change  in  premium
deposits in a single period does not directly cause operating income to change,
although  continued  increases  or  decreases in premiums may affect the growth
rate of total assets on which investment spreads are earned.

Premium deposits for 1999, received from  the  sales of  FPDA's, equity indexed
annuities, interest sensitive annuities and other financial products, increased
$83.8  million  or  102%,  to $165.7 million.  The increase  relates  to  i)  a
continued increase in the agency  base achieved through the recruitment of high
volume agents and larger managing general  agencies, ii) continued expansion of
geographical  concentration, iii) the full year  impact  of  an  equity-indexed
product introduced in 1998, which contributed $46.6 million of deposits for the
period and iv)  the  introduction  of  three equity-indexed annuity products in
1999, which contributed $12.7 million of deposits for the period.

Premium deposits for 1998, received from  the  sales of  FPDA's, equity indexed
annuities, interest sensitive annuities and other  financial products increased
$32.5 million or 66%, to $81.9 million.  The increase relates to i) an increase
in the agency base achieved through the recruitment  of  high volume agents and
larger managing general agencies,   ii)  continued  expansion  of  geographical
concentration, iii) the  introduction  of  an  equity-indexed  annuity  product
in May  1998,  which contributed $16.9 million of deposits for  the  period and
iv) deposits collected from Savers Life and Midwestern Life of $3.6 million.

PREMIUM INCOME consists of premiums earned from  i)  traditional life products,
ii) annuity business that incorporates significant mortality  features and iii)
Medicare supplement premiums for the 1998 period.

Life  premiums  were  up  $4.6  million  or 55% in 1999, to $13.0 million.  The
increase is primarily the result of renewal  premiums  from  Midwestern  Life's
traditional  life  block  of  $3.5  million and first year premiums of existing
traditional life products of $.8 million.

Life premiums were up $1.4 million or 40% in 1998, to $8.4 million. Traditional
life premiums of $1.1 million were earned  from Savers Life and Midwestern Life
in  1998.   The  remaining increase of $.3 million  is  due  to  premiums  from
existing blocks of traditional life business from Standard Life and Dixie Life.

Health premiums for  1998  include $6.0 million of Medicare supplement premiums
that were earned from March  12,  1998,  the  acquisition  date of Savers Life,
through July 1, 1998, the effective sale date of the Medicare  supplement block
of business.

POLICY INCOME represents i) mortality charges and administrative fees earned on
universal  life  products  and  ii)  surrender  charges  earned as a result  of
terminated universal life and annuity policies.

During 1999 policy income increased $.3 million or 5%, to  $6.8  million.   The
increase is due to i) mortality charges of a new universal life product and ii)
surrender  charges  on  certain  FPDA products which is primarily the result of
lowering credited rates on those products.

During 1998 policy income increased  $1.0 million or 18%, to $6.5 million.  The
increase relates to $.8 million of surrender  charges  on certain FPDA products
which is primarily the result of lowering credited rates on those products.

NET  INVESTMENT  INCOME  includes  interest  earned  on  invested   assets  and
fluctuates  with changes in i) the amount of average invested assets supporting
insurance liabilities  and  ii)  and the average yield earned on those invested
assets.

During 1999, net investment income  increased  $10.7  million  or 32%, to $44.4
million.   Average invested assets (at book value) increased by $166.2  million
or 27% due to  the growth in insurance liabilities from premium sales of recent
periods and from  the  acquisitions  of  Savers  Life and Midwestern Life.  Net
investment income also increased due to the impact from equity indexed products
of $1.2 million.

During 1998, net investment income increased $5.1  million  or  18%,  to  $33.7
million.  Average invested assets (at book value) increased by $89.8 million or
23%  due to the growth in insurance liabilities from the acquisitions of Savers
Life and  Midwestern  Life, which contributed $4.2 million of investment income
for the period.  Net investment  income  also  increased due to the impact from
the new equity indexed product of $.6 million.

The net investment yield earned on average invested assets was 7.15%, 7.48% and
7.77% for 1999, 1998 and 1997, respectively.  Investment  yields fluctuate from
period  to  period  primarily  due  to  changes  in  the general interest  rate
environment.

FEE  AND  OTHER INCOME consists of fee income related to  servicing  blocks  of
business for unaffiliated companies, experience refunds, and commission income.

Fee and other  income increased 37% in 1999, to $4.2 million and increased 181%
in 1998, to $3.1  million.   These  increases are due to commission income that
relates  to the Savers Marketing administration  agreement  and  the  marketing
efforts associated with the management of that business.

BENEFITS AND  CLAIMS  include  i) paid life insurance claims, ii) benefits from
annuity policies that incorporate  significant mortality features, iii) changes
in future policy reserves and iv) Medicare  supplement  benefits  in  the  1998
period.   Throughout  the Company's history, it has experienced both periods of
higher and lower benefit  claims.   Such volatility is not uncommon in the life
insurance industry and, over extended  periods of time, periods of higher claim
experience tend to offset periods of lower claim experience.

Benefits and claims in 1999 increased $1.2  million, to $14.5 million.  This is
due to $6.1 million of claims and benefits resulting  from  an  increase in the
average in force life insurance business for the periods due to the acquisition
of Savers Life and Midwestern Life.  This was somewhat offset by  the inclusion
of $4.9 million of benefits and claims in 1998 results related to the  Medicare
supplement business that was sold July, 1998.

INTEREST  CREDITED TO INTEREST-SENSITIVE ANNUITIES AND OTHER FINANCIAL PRODUCTS
represents  interest  credited  to insurance liabilities of the FPDA's, equity-
indexed  annuities, interest sensitive  and  other  financial  products.   This
expense fluctuates  with  changes  in  i)  average interest-sensitive insurance
liabilities and ii) the average credited rate on those liabilities.

In 1999, interest credited increased $6.0 million  or  30%,  to  $25.7 million.
This   increase   was   due  to  larger  average  interest-sensitive  insurance
liabilities of approximately  $124.9  million  or  33%  for  the  period  which
includes increases of i) $44.1 million from the acquisitions of Savers Life and
Midwestern  Life  and  ii)  $40.2  million  from  equity indexed products.  The
remaining increase primarily relates to FPDA products.   These  increases  were
somewhat offset by a decrease in the average credited rate for the period.

In  1998, interest credited on interest sensitive annuities and other financial
products  increased  $3.5  million or  21%, to $19.8 million due to i) interest
credited on the insurance liabilities  of   Savers  Life and Midwestern Life of
$2.4 million, ii) the impact from the new equity indexed product of $.6 million
and iii) interest credited on the general growth of insurance  liabilities from
increased  FPDA sales.  These increases were somewhat offset by a  decrease  in
the weighted average credited rate for the period.

The weighted  average  credited  rate was 4.89%, 5.25% and 5.71 % in 1999, 1998
and 1997, respectively.

AMORTIZATION includes i) amortization  related  to the present value of polices
purchased  from  acquired  insurance  business,  ii) amortization  of  deferred
acquisitions costs related to capitalized costs of  insurance business sold and
iii) amortization of goodwill and organizational costs.

Amortization  in  1999 increased $1.6 million or 33%, to  $6.3  million.   This
increase relates to  additional amortization of deferred acquisition costs, due
to increased business  in  force, and the recognition of additional profits for
the period.  Additional profits  were  recognized  from  i)  the realization of
profits from increased sales of annuity products in recent periods  and ii) the
realization of profits from the purchased insurance business of Savers Life and
Midwestern Life.

Amortization  in  1998  increased  $1.5  million or 46%, to $4.8 million.   The
increase  in  amortization  expense is primarily  related  to  deferred  policy
acquisition costs and is a result  of emerging gross profits from business sold
in recent years, increased surrenders  and  a  corresponding  increase  in  the
amortization  of  costs  related  to purchased insurance business. Amortization
expense of $.5 million related to purchased  insurance  business of Savers Life
and Midwestern Life.

OTHER  OPERATING  EXPENSES  consist  of  general operating expenses,  including
salaries, and commission expenses, net of deferrable amounts.

In 1999 other operating expenses declined  $.8 million or 6%, to $12.4 million.
The  majority  of this decrease relates to efficiencies  achieved  through  the
assimilation  of  the  former  insurance  operations  of  Savers  Life,  Savers
Marketing and Midwestern  Life  including  the  elimination of certain Medicare
supplement expenses in connection with the sale of that business.

In  1998, other operating expenses increased $2.9  million  or  28%,  to  $13.2
million  .  This increase relates to normal operating expenses from Savers Life
and Midwestern Life, including Medicare supplement insurance commissions of $.8
million incurred  from  March  12,  1998,  the acquisition date of Savers Life,
through July 1, 1998, the effective sale date of that business.




<PAGE>
INTEREST EXPENSE AND FINANCING COSTS represent  interest  expense  incurred and
the amortization of related debt issuance costs.

In 1999 interest expense and financing costs increased $.4 million or  15%,  to
$3.4  million  primarily  due to increased average borrowings for the period of
approximately $5.3 million and an increase in the average interest rate for the
period on the revolving line of credit.

Interest expense and financing  costs for 1998 increased $.6 million or 24%, to
$3.0  million, due to increased average  borrowings  for  the  period  of  $6.4
million  primarily  related  to  the acquisitions of Savers Life and Midwestern
Life.  This increase was offset somewhat  by  a  decreased interest rate on the
revolving line of credit.

NET REALIZED INVESTMENT GAINS fluctuate from period  to  period  and arise when
securities are sold in response to changes in the investment environment  which
provide  opportunities  to  maximize return on the investment portfolio without
adversely affecting the quality and overall yield.

Net realized investment gains were $ .1 million for 1999 and $.4 for 1998.




<PAGE>
INTERNATIONAL OPERATIONS:

<TABLE>
<CAPTION>

                                                              1999                       1998                       1997
                                                                                     (Dollars in thousands)
<S>                                                    <C>                <C>     <C>                <C>     <C>

Premiums and deposits collected:
Traditional life                                       $       100                $       95                 $       64
Separate account deposits                                   55,137                    42,536                     21,954

Total premiums and deposits collected                  $    55,237                $   42,631                 $   22,018

Premium income                                         $       100                $       95                 $       64
Net investment income                                          445                       500                        583
Separate account fees                                        3,941                     2,884                      2,084
Amortization of negative goodwill                               --                     1,388                      1,388
Other income                                                    --                       353                         85

      Total revenues                                         4,486                     5,220                      4,204

Benefits and claims                                           (140)                      (40)                       (70)
Amortization                                                 1,158                       658                        187
Other operating expenses                                     2,202                     2,344                      2,367

Total benefits and expenses                                  3,220                     2,962                      2,484

Income before income taxes and extraordinary gain      $     1,266                $    2,258                 $    1,720

Separate account contracts{ (1)}                             3,380                     3,070                      2,329

Separate account liabilities{ (1)}                     $   319,973                $  190,246                 $  148,064
</TABLE>

(1)primarily unit-linked products




<PAGE>
GENERAL:  International  operations   includes  revenues  earned  and  expenses
incurred from abroad, primarily Europe, and includes fees collected on deposits
from  unit-linked  products.   The profitability  for  this  segment  primarily
depends  on  the  amount  of separate  account  assets  under  management,  the
management fee charged on those assets and management of operating expenses.

FEES FROM SEPARATE ACCOUNTS fluctuate in relationship to total separate account
assets and the fees earned on such assets.

During 1999, fees from separate accounts increased $1.1 million or 37%, to $3.9
million.  This increase is primarily due to an increase in the average value of
assets held in separate accounts  of  36%  for  the  period.   Actual  separate
account  assets  increased  $129.7  million  or  68%,  to $320.0 million.   Net
deposits from  SMI's sales of unit-linked products increased  $12.6  million or
30%,  to $55.2 million for the period.   This increase is due to a continuation
of expanded  marketing efforts, which have generated additional sales in Sweden
and Belgium for the period.

During 1998, fees  from  separate accounts increased $.8 million or 38% to $2.9
million.  This increase is primarily due to an increase in the average value of
assets held in separate accounts  of   22%  for  the  period.   Actual separate
account assets increased $42.2 million or 28%, to $190.2 million.  Net deposits
from  SMI's sales of unit-linked products increased $20.6 million  or  94%,  to
$42.5 million.   This  increase is due to marketing efforts that were initiated
in 1997.

NET INVESTMENT INCOME represents  income  earned  on  corporate  assets such as
cash, short-term investments and fixed securities.

Net  investment  income  was  $.4  million  and  $.5  million in 1999 and  1998
respectively, on average invested assets of approximately $11.0 million.

The net yield was 4.06%, 4.74% and 4.99% for 1999, 1998 and 1997, respectively.


AMORTIZATION OF NEGATIVE GOODWILL, which is the amortization of the excess cost
of assets acquired over the purchase price paid for SMI  in  December,  1993 of
$6.9  million has been amortized over 5 years at $1.4 million per year and  was
fully amortized at December 31, 1998.

AMORTIZATION  includes  the amortization of deferred acquisition costs, such as
sales commissions and other costs, directly related to selling new business.

        Amortization increased  $.5  million  in  1999,  to  $1.2  million  and
increased  $.5  million  in  1998,  to $.7 million.  These increases are due to
amortizing deferred acquisition costs associated with increased sales of recent
periods.

OTHER OPERATING EXPENSES consist of recurring  general  operating  expenses and
commission expenses, net of deferred amounts.

Other  operating  expenses  for  the periods presented have remained relatively
stable.   This is a result of effective  expense  management  and  due  to  the
majority of additional expenses incurred for the periods being directly related
to additional sales and are therefore capitalized and amortized.  The number of
separate account  contracts administered increased 10%, to 3380 in 1999 and 32%
to 3070 in 1998.

FOREIGN CURRENCY TRANSLATION:  comparisons  between  1999,  1998  and  1997 are
impacted  by  the strengthening and destrengthening of the U.S. dollar relative
to foreign currencies,  primarily  the  Luxembourg  franc.  The impact of these
translations have not been quantified on individual components.




<PAGE>
LIQUIDITY AND CAPITAL RESOURCES

LIQUIDITY OF STANDARD MANAGEMENT (PARENT COMPANY)

Standard  Management  is a financial services holding company  whose  liquidity
requirements are met through  payments  received  from its subsidiaries.  These
payments  include  i)  interest  on  surplus  debenture,  ii)  dividends,  iii)
management fees and iv) rental income, which are  subject to restrictions under
applicable insurance laws and are used to pay operating  expenses and meet debt
service   obligations.    These  internal  sources  of  liquidity   have   been
supplemented  in  the  past  by  external  sources  such  as  revolving  credit
agreements and long term debt and equity financing in the capital markets.

GENERAL:  On a consolidated GAAP  basis  SMC  reported  net  cash  provided  by
operations  of  $2.9  million  and $.2 million for 1999 and 1998, respectively.
Although  deposits received on SMC's  interest-sensitive  annuities  and  other
financial products  are  not  included in cash flow from operations under GAAP,
such funds are available for use  by  SMC. Cash provided by operations plus net
deposits  received,  less net account balances  returned  to  policyholders  on
interest sensitive annuities and other financial products, resulted in positive
cash flow of $92.6 million  and  $29.2 million for 1999 and 1998, respectively.
Cash generated on a consolidated basis is available to Standard Management only
to the extent that it is generated  at  the  Standard  Management  level  or is
available  through  dividends, interest, management fees or other payments from
subsidiaries.

SMC instituted a program  to  repurchase  its common stock in order to increase
the market value of the stock.  At December  31,  1999,  Standard Management is
authorized to repurchase 964,790 additional shares of SMC  Common  Stock  under
this program.

At  February  29,  2000, Standard Management had "parent company only" cash and
short-term investments  of  $.5  million. These funds are available to Standard
Management  for  general  corporate  purposes.  Standard  Management's  "parent
company only" operating expenses (not  including  interest  expense)  were $4.7
million and $3.1 million for 1999 and 1998, respectively.

In  1998,  the  Company  issued  convertible redeemable preferred stock with  a
stated value of $6.5 million.  Proceeds were used to reduce the borrowings from
the Amended Credit Agreement.  Holders are entitled to receive annual dividends
of $7.75 per share.  Refer to Notes  7  and  10  to  the consolidated financial
statements for additional information.

Standard Management anticipates the available cash from  its  existing  working
capital,  plus  anticipated 2000 dividends, management fees, rental income  and
interest payments  on  its  surplus  debentures  receivable  will  be more than
adequate  to  meet its anticipated "parent company only" cash requirements  for
2000.

INTEREST OF SURPLUS DEBENTURES AND NOTES PAYABLE:

The following are  characteristics  of the Amended Credit Agreement at December
31, 1999:

$24.5 million outstanding balance

Weighted average interest rate of 9.30%

Principal  payments:  $2.8 million due  March  2000,  $4.3  million  thereafter
through March 2005

Subject to certain restrictions and covenants

Interest payments  required in 2000 based on December 31, 1999 balances will be
$2.1 million

The  following  are  characteristics   of  the  subordinated  convertible  debt
agreement at December 31, 1999:

$10.0 million outstanding balance

Interest rate of 10% per annum

$4.4 million due December 2003 and $5.6 million due July 2004.

Interest payments required in 2000 based  on December 31, 1999 balances will be
$1.0 million

Refer  to  Note  5  to  the consolidated financial  statements  for  additional
information

From the funds borrowed by  Standard  Management pursuant to the Amended Credit
Agreement and the subordinated convertible  debt  agreement,  $27.0 million was
loaned  to  Standard  Life  pursuant to Unsecured Surplus Debenture  Agreements
("Surplus Debenture") which requires  Standard  Life to make quarterly interest
payments to Standard Management at a variable corporate  base  rate plus 2% per
annum, and annual principal payments of $1.0 million per year beginning in 2007
and  concluding  in 2033.  The interest and principal payments are  subject  to
quarterly approval  by  the  Indiana  Department  of  Insurance, depending upon
satisfaction of certain financial tests relating to levels  of  Standard Life's
capital  and  surplus  and general approval of the Commissioner of the  Indiana
Department  of Insurance.   Standard  Management  currently  anticipates  these
quarterly approvals  will  be  granted.  Assuming the approvals are granted and
the December 31, 1999 interest rate  of   10.50% continues, Standard Management
will receive interest income of $2.8 million  from  the  Surplus  Debenture  in
2000.

DIVIDENDS   from  Standard  Life  to  Standard  Management  are limited by laws
applicable to insurance companies.  As an Indiana domiciled insurance  company,
Standard  Life  may  pay  a  dividend or distribution from its surplus profits,
without the prior approval of  the  Commissioner  of  the Indiana Department of
Insurance, if the dividend or distribution, together with  all  other dividends
and distributions paid within the preceding twelve months, does not  exceed the
greater of (i) net gain from operations or (ii) 10% of surplus, in each case as
shown  in  its  preceding  annual  statutory  financial  statements.   In 2000,
Standard   Life  can  pay  dividends  of  approximately  $4.4  million  without
regulatory approval.

MANAGEMENT FEES.   Pursuant  to  a management services agreement, Standard Life
paid Standard Management $3.4 million  during 1999 and $2.0 million during 1998
for  certain  management  services  related  to  the  production  of  business,
investment of assets and evaluation of  acquisitions.  Prior to its merger into
Standard Life, Savers Life paid Standard Management $.8 million during 1998 for
certain management services pursuant to a  management  services  agreement.  In
addition,  Dixie  Life  paid  Standard  Life  $.9 million during 1999 and  $1.0
million during 1998 for certain management services  provided.   Both  of these
agreements  provide that they may be modified or terminated by the Indiana  and
Mississippi Departments  of  Insurance  in  the  event of financial hardship of
Standard Life or Dixie Life.

Pursuant to the management services agreement, Premier  Life  (Luxembourg) paid
Standard  Management  $.2 million during 1999 and $.1 million during  1998  for
certain  management,  technical   support   and  administrative  services.  The
agreement provides that it may be modified or  terminated  by  either  Standard
Management or Premier Life (Luxembourg).

EQUIPMENT   RENTAL  FEES.   In  1999  and  1998,  Standard  Management  charged
subsidiaries  $1.0  million  and  $.9  million,  respectively,  for  the use of
equipment owned by Standard Management.

LIQUIDITY OF INSURANCE OPERATIONS

U.S.  INSURANCE  OPERATIONS.   The principal liquidity requirements of Standard
Life  are  its  contractual  obligations   to  policyholders,  dividend,  rent,
management fee and Surplus Debenture payments  to Standard Management and other
operating expenses. The primary source of funding  for  these  obligations  has
been cash flow from premium income, net investment income, investment sales and
maturities  and  sales  of FPDA's and equity indexed products. These sources of
liquidity for Standard Life  significantly  exceed scheduled uses. Liquidity is
also  affected by unscheduled benefit payments  including  death  benefits  and
policy  withdrawals and surrenders. The amount of withdrawals and surrenders is
affected  by  a  variety  of  factors such as renewal interest crediting rates,
interest rates for competing products,  general  economic  conditions, Standard
Life's A.M. Best ratings (currently rated "B+") and events in the industry that
affect policyholders' confidence.

The  policies  and  annuities  issued by Standard Life contain provisions  that
allow policyholders to withdraw  or  surrender  their  policies  under  defined
circumstances. These policies and annuities generally contain provisions  which
apply penalties or otherwise restrict the ability of policyholders to make such
withdrawals  or  surrenders.  Standard  Life closely monitors the surrender and
policy loan activity of its insurance products  and  manages the composition of
its investment portfolios, including liquidity, in light of such activity.

Changes  in interest rates may affect the incidence of  policy  surrenders  and
other  withdrawals.   In   addition  to  the  potential  effect  on  liquidity,
unanticipated  withdrawals  in  a  changing  interest  rate  environment  could
adversely affect earnings if  SMC  were required to sell investments at reduced
values  to  meet  liquidity  demands.  SMC  manages  the  asset  and  liability
portfolios in order to minimize the adverse  earnings effect of changing market
interest rates. SMC seeks assets that have duration  characteristics similar to
the liabilities that they support. SMC also prepares cash  flow projections and
performs cash flow tests under various market interest rate scenarios to assist
in  evaluating liquidity needs and adequacy. SMC's U.S. insurance  subsidiaries
currently  expect  available  liquidity  sources  and  future  cash flows to be
adequate to meet the demand for funds.

Statutory  surplus  is computed according to rules prescribed by the  NAIC,  as
modified by the Indiana  Department  of  Insurance,  or  the state in which the
insurance  subsidiaries do business. Statutory accounting rules  are  different
from GAAP and  are  intended  to  reflect a more conservative perspective. With
respect  to  new  business,  statutory   accounting   practices  require  that:
(i)  acquisition  costs  (primarily  commissions and policy  issue  costs)  and
(ii) reserves for future guaranteed principal  payments  and interest in excess
of statutory rates, be expensed in the year the new business  is written. These
items  cause a reduction in statutory surplus ("surplus strain")  in  the  year
written  for many insurance products. SMC designs its products to minimize such
first-year  losses,  but certain products continue to cause a statutory loss in
the year written. For each product, SMC controls the amount of net new premiums
written to manage the  effect  of  such  surplus strain. SMC's long-term growth
goals  contemplate continued growth in its  insurance  businesses.  To  achieve
these growth  goals,  SMC's  U.S.  insurance subsidiaries will need to increase
statutory surplus. Additional statutory  surplus may be secured through various
sources such as internally generated statutory  earnings, infusions by Standard
Management  with funds generated through debt or equity  offerings  or  mergers
with other life  insurance  companies.  If  additional capital is not available
from one or more of these sources, SMC believes  that  it  could reduce surplus
strain  through  the  use  of  reinsurance  or through reduced writing  of  new
business.

Management believes that the operational cash  flow  of  Standard  Life will be
sufficient  to  meet its anticipated needs for 2000.  As of December 31,  1999,
Standard Life had  statutory  capital  and  surplus  for regulatory purposes of
$43.7  million compared to $43.6 million at December 31,  1998.   As  the  life
insurance  and  annuity  business produced by Standard Life increases, Standard
Life expects to continue to  satisfy statutory capital and surplus requirements
through statutory profits, through  the  continued  reinsurance of a portion of
its  new  business,  and through additional capital contributions  by  Standard
Management. Net cash flow  from  operations  on  a  statutory basis of Standard
Life, after payment of benefits and operating expenses,  was  $91.4 million and
$15.8  million  for  1999 and 1998, respectively. If the need arises  for  cash
which is not readily available, additional liquidity could be obtained from the
sale of invested assets.

Effective January 1, 1999  the  Company  decided to no longer sell new business
through Dixie Life.  All new business will  instead  be  sold  through Standard
Life.  This decision is not expected to have a material effect on operations or
financial condition of the Company.

INTERNATIONAL  OPERATIONS.   SMI  dividends  are  limited  to  its  accumulated
earnings  without  regulatory approval. SMI and Premier Life (Luxembourg)  were
not permitted to pay  dividends  in  1999  and  1998 due to accumulated losses.
Premier Life (Bermuda) paid a dividend of $.8 million  to  SMI  in  1999 and no
dividends in 1998.  SMC does not anticipate dividends from SMI in 2000.


FACTORS THAT MAY AFFECT FUTURE RESULTS

MERGERS,  ACQUISITIONS  AND  CONSOLIDATIONS.   The  U.S. insurance industry  is
experiencing an increasing number of mergers, acquisitions,  consolidations and
sales of certain business lines.  These consolidations are largely  the  result
of the following:

the need to reduce costs of distribution and overhead;
the need to maintain business in force;
increased competition;
regulatory capital requirements; and
technology costs.

SMC expects this trend to continue.

FOREIGN  CURRENCY  RISK.   SMI policyholders invest in assets denominated in  a
wide  range  of currencies.  As  policyholders  are  not  permitted  to  invest
directly in options,  futures  and  derivatives,  their investment and currency
risk is limited to premiums they have paid.  Although policyholders effectively
bear  the  currency  risk,  SMI  could be exposed to currency  fluctuations  if
currencies within the conventional  investment  portfolio  or certain actuarial
reserves  are  mismatched.   In  order  to minimize this risk, SMI  continually
matches  the assets and liabilities of the  portfolio  and  the  reserves.   In
addition,  Premier  Life's  (Luxembourg) shareholder's equity is denominated in
Luxembourg francs.  Premier Life  (Luxembourg)  does  not  hedge  currency risk
because  its  shareholder's  equity  will  remain in Luxembourg francs for  the
foreseeable future, thus, no significant realized  foreign  exchange  gains  or
losses  are  anticipated.   At  December  31,  1999,  there  was  a $.9 million
unrealized loss from foreign currency translation.

EURO CURRENCY.  Effective January 1, 1999, eleven participating European member
union   countries  established  fixed  conversion  rates  between  their  legal
currencies and the Euro.  The legal currencies in those countries will continue
to be used as legal tender through June 30, 2002.  Subsequent to this date, the
legal currencies  will  be  canceled  and Euro bills and coins will be used for
cash transactions in the participating countries.  During this three year dual-
currency environment, conversion rates  between  the  legal  currencies will no
longer   be   computed  directly  between  one  another.   Instead,  a  special
"triangulation"  procedure  must  be  followed  by  first  converting one legal
currency into its euro equivalent and then converting the Euro  equivalent into
the other legal currency.  Although the Company has not initiated  an  analysis
plan for the Euro conversion, SMC does not expect it to have a material  impact
on its operations or financial condition.

POSSIBILITY OF FUTURE DILUTION OF OWNERSHIP AND VOTING POWER.  The SMC Board of
Directors  has  the  authority  to  issue up to .9 million additional shares of
preferred  stock  and 11.0 million additional  shares  of  common  stock.   The
board's authority under  SMC's  charter  typically does not require stockholder
approval unless it is otherwise required for a particular transaction. Although
SMC is not currently involved in any life  insurance  acquisitions, the Company
regularly investigates such opportunities and could issue  additional shares of
SMC common or preferred stock in connection with an acquisition.

UNCERTAINTIES REGARDING INTANGIBLE ASSETS.  Included in SMC's December 31, 1999
financial  statements  are  certain  assets  that  are primarily valued  ,  for
financial statement purposes, on the basis of  management  assumptions.   These
assets include items such as:

deferred acquisition costs;
present value of future profits;
costs in excess of net assets acquired; and
organization and deferred debt issuance costs.

The  value  of  these  assets  reflected in the December 31, 1999 balance sheet
total $104.1 million or 9.1% of SMC's assets. SMC has established procedures to
periodically review the assumptions  used  to  value these assets and determine
the  need  to make adjustments of such values in SMC's  consolidated  financial
statements.   SMC  has  determined  that  the  assumptions  used in the initial
valuation of the assets are consistent with the current operations of SMC as of
December 31, 1999.

REGULATORY   ENVIRONMENT.    Currently,   prescribed   or  permitted  statutory
accounting  principles ("SAP") may vary between states and  between  companies.
The NAIC has  completed the process of codifying SAP to promote standardization
of methods utilized  throughout  the industry. Completion of this project might
result  in  changes  in  statutory accounting  practices  for  SMC's  insurance
subsidiaries; however, it  is  not  expected that such changes would materially
affect SMC's insurance subsidiaries' statutory capital requirements.

FINANCIAL  SERVICES DEREGULATION.  The  United  States  Congress  is  currently
considering  a  number of legislative proposals intended to reduce or eliminate
restrictions  on  affiliations  among  financial  services  organizations.  The
recently passed GLB Act would allow banks to own or affiliate with insurers and
securities firms. An  increased  presence  of  banks  in the life insurance and
annuity  businesses  may  increase  competition in these markets.  The  Company
cannot predict the impact of these proposals on the earnings of the Company.

IMPACT OF YEAR 2000.  In prior years,  the  Company  discussed  the  nature and
progress  of  its  plans  to become Year 2000 ready.  In late 1999, the Company
completed its remediation and  testing  of  systems.   As  a  result  of  those
planning  and  implementation  efforts,  the Company experienced no significant
disruptions  in  mission critical information  technology  and  non-information
technology systems  and  believes  those  systems successfully responded to the
Year  2000 date change.  The company is not  aware  of  any  material  problems
resulting  from  Year  2000  issues,  either  with  its  products, its internal
systems,  or  the  products  and services of third parties.  The  Company  will
continue to monitor its mission critical computer applications and those of its
suppliers and vendors throughout  the  year 2000 to ensure that any latent Year
2000 matters that may arise are addressed promptly.

ITEM 7A.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company seeks to invest available funds  in  a  manner  that  will maximize
shareholder  value  and  fund future obligations to policyholders and  debtors,
subject to appropriate risk  considerations.   Many  of  the Company's products
incorporate  surrender  charges,  market  interest  rate adjustments  or  other
features to encourage persistency.  Approximately 72%  of  the  total insurance
liabilities at December 31, 1999 had surrender penalties or other  restrictions
and approximately 6% are not subject to surrender.

The Company also seeks to maximize the total return on its investments  through
active investment management.  Accordingly, the Company has determined that the
entire  portfolio  of  fixed  maturity  securities  is  available to be sold in
response  to:  i)  changes  in market interest rates; ii) changes  in  relative
values of individual securities  and  asset sectors; iii) changes in prepayment
risks;  iv)  changes  in  credit quality outlook  for  certain  securities;  v)
liquidity needs; and vi) other factors.

Profitability of many of the  Company's  products  is significantly affected by
the  spreads  between  interest  yields on investments and  rates  credited  on
insurance liabilities.  Although substantially  all  credited  rates on annuity
products may be changed annually (subject to minimum guaranteed rates), changes
in  competition  and  other  factors,  including  the  impact  of the level  of
surrenders  and  withdrawals,  may  limit the ability to adjust or to  maintain
crediting rates at levels necessary to avoid narrowing of spreads under certain
market conditions.  As of December 31, 1999, the average yield, computed on the
cost basis of the investment portfolio,  was  7.15%,  and  the average interest
rate credited or accruing to total insurance liabilities was  4.89%,  excluding
guaranteed interest bonuses for the first year of the annuity contract.

Computer  models  were  used to perform simulations of the cash flows generated
from the Company's existing  business  under  various  interest rate scenarios.
These simulations measured the potential gain or loss in fair value of interest
rate-sensitive financial instruments.  With such estimates,  the  Company seeks
to  closely match the duration of assets to the duration of liabilities.   When
the estimated  duration  of  assets  and  liabilities  are similar, exposure to
interest rate risk is minimized because a change in the  value of assets should
be  largely offset by a change in the value of liabilities.   At  December  31,
1999,  the  adjusted  modified duration of fixed maturity securities and short-
term  investments  was  approximately   5.3,  and  the  duration  of  insurance
liabilities was approximately 4.1.

If interest rates were to increase by 10%  from their December 31, 1999 levels,
the Company's fixed maturity securities and  short-term investments (net of the
corresponding  changes in the values of cost of  policies  purchased,  cost  of
policies produced  and  insurance  liabilities)  would decline in fair value by
approximately $7.8 million.

The  calculations  involved in the Company's computer  simulations  incorporate
numerous assumptions,  require  significant  estimates  and assume an immediate
change in interest rates without any management of the investment  portfolio in
reaction to such change.  Consequently, potential changes in the value  of  our
financial  instruments  indicated  by  the simulations will likely be different
from the actual changes experienced under  given  interest  rate scenarios, and
the  differences  may  be  material.   Because  the  Company's investments  and
liabilities  are  actively  managed, actual losses could  be  less  than  those
estimated above.




<PAGE>
ITEM 8.CONSOLIDATED FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements and  supplementary  data required with respect to this
Item 8 are listed in Item 14(a)(1) and included  in  a separate section of this
report.

ITEM  9.CHANGES  IN  AND  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND
FINANCIAL DISCLOSURE

                                     NONE.


                                    PART III

The  Registrant will file a definitive proxy statement pursuant  to  Regulation
14A of  the  Securities  Exchange  Act of 1934 in connection with the Company's
2000 Annual Meeting of Shareholders, (the "Proxy Statement") not later than 120
days after the end of the fiscal year  covered  by  this  report,  and  certain
information  included  therein is incorporated herein by reference.  Only those
sections of the Proxy Statements which specifically address the items set forth
herein are incorporated  by reference.  Such incorporation does not include the
Compensation Committee Report  or  the  Performance Graph included in the Proxy
Statement.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The  information  concerning  SMC's  directors   required   by   this  item  is
incorporated by reference to SMC's Proxy Statement.

The  information concerning SMC's executive officers required by this  Item  is
incorporated  by reference herein to the section in Part I, entitled "Executive
Officers".

The information  regarding  compliance  with  Section  16 of the Securities and
Exchange Act of 1934 is to be set forth in the Proxy Statement  and  is  hereby
incorporated by reference.

ITEM 11.  EXECUTIVE COMPENSATION

The  information  required  by  this Item is incorporated by reference to SMC's
Proxy Statement.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information required by this  Item  is  incorporated  by reference to SMC's
Proxy Statement.

ITEM 13.  CERTAIN RELATIONSHIP AND RELATED TRANSACTIONS

The  information  required by this Item is incorporated by reference  to  SMC's
Proxy Statement.





<PAGE>
                                    PART IV

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

(a)(1) and (2)  The  response  to  this  portion  of  Item 14 is submitted as a
separate section of this report.

(a)(3)  List of Exhibits:

Exhibit
NUMBER   DESCRIPTION OF DOCUMENT

2.1  Amended and Restated Agreement and Plan of Merger dated  as  of  December
9,1997  among  SMC,  SAC  and  Savers  Life  (incorporated  by reference to
SMC's Registration Statement on Form S-4 (Registration No. 333-43023)).

2.2  Stock Purchase Agreement dated as of June 4, 1998 by and  among  SMC  and
MC Equities, Inc.  (incorporated by reference to SMC's Form 8-K (Registration
No. 0-20882)).

2.3  First Amendment to Stock Purchase Agreement dated as of July 1, 1998 by
and among SMC and  MC  Equities,  Inc. (incorporated by reference to SMC's Form
8-K (Registration No. 0-20882)).

2.4  Second Amendment to Stock Purchase Agreement dated  as of July 23, 1998 by
and among SMC and MC Equities, Inc. (incorporated by reference to SMC's Form 8-
K (Registration No. 0-20882)).

2.5  Third Amendment to Stock Purchase Agreement dated as of October 8, 1998 by
and among SMC and MC Equities, Inc. (incorporated by reference to SMC's Form 8-
K (Registration No. 0-20882)).

3.1  Amended and Restated Articles of Incorporation, as amended (incorporated
by reference to SMC's Annual Report on Form 10-K (File No. 0-20882) for the
year ended December 31, 1996).

3.2  Amended and Restated  Bylaws of SMC as amended (incorporated by reference
to SMC's Registration Statement  on  Form S-1 (Registration No. 33-53370) as
filed with the Commission on January 27,  1993  and  to  Exhibit 3 of SMC's
Quarterly Report  on  Form 10-Q (File No. 0-20882) for the quarter  ended
September  30, 1994).

4.1  Form of Senior Note Agreement  Warrant (incorporated by reference to SMC's
Registration Statement on Form S-1 (Registration No. 33-53370)).

4.2  Form  of Oppbridge Partners Warrant (incorporated by  reference  to  SMC's
Registration Statement on Form S-1 (Registration No. 33-53370)).

4.3  Registration  Rights Agreement, dated as of May 3, 1990 among SMC, Howard
T. Cohn and Joseph J.  Piazza  and the first amendment thereto, dated June 4,
1990 (incorporated  by  reference  to  SMC's  Registration  Statement  on  Form
S-1 (Registration No. 33-53370).

4.4  Amended and Restated Registration Rights Agreement  dated  as of April 15,
1997 by and between SMC and Fleet National Bank.

4.5  Form of Fleet National Bank Warrant.

4.6  Form of President's Club Warrant (incorporated by reference to  SMC's
Annual Report on Form 10-K (File No. 0-20882)).

4.7  Registration Rights Agreement dated as of November 8, 1996 by and  between
SMC and Conseco Variable Insurance  Company  (formerly  Great  American Reserve
Insurance  Company)  (incorporated  by reference to SMC's Quarterly  Report  on
Form 10-Q (File No. 0-20882) for the quarter ended September 30, 1996).

4.8  Form of Sand Brothers & Company, Ltd.  Warrant (incorporated by reference
to SMC's Annual Report on Form 10-K (File No. 0-20882) for the year ended
December 31, 1997).

9    Voting Trust Agreement dated as of November 8, 1996 among Delta  Life and
Annuity  Company,  Messrs.  Ronald D. Hunter and Allen O. Jones, Jr., as Voting
Trustees, and SMC (incorporated by reference to SMC's Registration Statement on
Form S-4 (Registration No. 333-35447)).


Exhibit
NUMBER   DESCRIPTION OF DOCUMENT

10.1 Amended Advisory Agreement, dated  as  of  August 1, 1991, between SMC and
Conseco Capital Management, Inc., as amended, April  17,  1995 (incorporated by
reference to SMC's Annual Report on Form 10-K (File No. 0-20882)  for  the year
ended December 31, 1996).

10.2 Third Amended  and  Restated  Employment  Contract  by and between SMC and
Ronald D. Hunter, dated and effective, as amended, July 1,  1999  (incorporated
by reference to SMC's Quarterly Report on Form 10-Q (File No. 0-20882)  for the
quarter ended September 30, 1999).

10.3 Third Amended  and  Restated  Employment  Contract  by and between SMC and
Edward T. Stahl, dated and effective, as amended, July 1, 1999 (incorporated by
reference  to SMC's Quarterly Report on Form 10-Q (File No.  0-20882)  for  the
quarter ended  September 30, 1999).

10.4 Third Amended and  Restated  Employment  contract  by  and between SMC and
Raymond J. Ohlson, dated and effective, as amended, July 1, 1999  (incorporated
by reference to SMC's Quarterly Report on Form 10-Q (File No. 0-20882)  for the
quarter ended September 30, 1999).

10.5 Second Amended  and  Restated  Employment  Contract by and between SMC and
Stephen M. Coons dated and effective, as amended, July 1, 1999 (incorporated by
reference to SMC's Quarterly Report on Form 10-Q  (File  No.  0-20882)  for the
quarter ended September 30, 1999).

10.6 Indemnification Agreement  between  SMC  and Stephen M. Coons and Coons  &
Saint, dated August 1, 1991 (incorporated by reference  to  SMC's  Registration
Statement on Form S-1 (Registration No. 33-53370) as filed with the  Commission
on January 27, 1993).

10.7 Standard Management Corporation Amended and Restated 1992 Stock Option
Plan (incorporated by reference to the Company's Registration Statement on
Form S-4 (Registration  No.  333-35447)  as  filed  with the Commission on
September 11, 1997.)

10.8 Lease by  and  between  Standard  Life  and WRC  Properties,  Inc.,  dated
February 27, 1991 (incorporated by reference to SMC's Registration Statement on
Form  S-1  (Registration  No.  33-53370)  as  filed   with  the  Commission  on
January 27, 1993).

10.9 Management Service Agreement between Standard Life and SMC dated August 1,
1992, as amended on January 1, 1997 and as further amended on January 1, 1999.

10.10 Agreement for Assumption Reinsurance between the National Organization Of
Life and Health Insurance Guaranty Associations and Standard Life,  concerning,
The  Midwest  Life  Insurance  Company  In  Liquidation  effective June 1, 1992
(incorporated  by  reference  to  SMC's  Registration  Statement  on  Form  S-1
(Registration No. 33-53370) as filed with the Commission on January 27, 1993).

10.11 Reinsurance Agreement between Standard Life and Swiss  Re Life and Health
effective  May  1,  1975  (incorporated  by  reference  to  SMC's  Registration
Statement on Form S-1 (Registration No. 33-53370) as filed with the  Commission
on January 27, 1993).

10.12 Reinsurance Agreement  between  Firstmark Standard Life Insurance Company
and  Swiss  Re Life and Health effective  February  1,  1984  (incorporated  by
reference  to   SMC's   Registration   Statement   on  Form  S-1  (Registration
No. 33-53370) as filed with the Commission on January 27, 1993).

10.13 Reinsurance Contract between First International  and Standard Life dated
July  10,  1992 (incorporated by reference to SMC's Registration  Statement  on
Form  S-1  (Registration   No.  33-53370)  as  filed  with  the  Commission  on
January 27, 1993).

10.14 Amended Reinsurance Agreement between Standard Life and Winterthur Life
Re Insurance Company effective January 1, 1995 (incorporated by reference to
SMC's Annual Report on Form 10-K (File  No.  0-20882) for the year ended
December 31, 1996).

10.15 Management Service Agreement between  Premier  Life  (Luxembourg) and SMC
dated  September 30, 1994 (incorporated by reference to SMC's Annual Report  on
Form 10-K (File No. 0-20882) for the year ended December 31, 1994).



Exhibit
NUMBER    DESCRIPTION OF DOCUMENT

10.16 Assignment of  Management  Contract  dated  October 2, 1995 of Management
Contract  dated January 1, 1987 between DNC and Dixie  Life  to  Standard  Life
(incorporated   by  reference  to  SMC's  Annual  Report  on  Form  10-K  (File
No. 0-20882) for the year ended December 31, 1996).

10.17 Automatic Indemnity Reinsurance Agreement between First International and
The Guardian Insurance & Annuity  Company,  Inc. dated and effective January 1,
1996  (incorporated by reference to SMC's Annual  Report  on  Form  10-K  (File
No. 0-20882) for the year ended December 31, 1996).

10.18 Indemnity Retrocession Agreement between The Guardian Insurance & Annuity
Company,  Inc.  and   Standard   Life  dated  and  effective  January  1,  1996
(incorporated  by  reference  to  SMC's   Annual  Report  on  Form  10-K  (File
No. 0-20882) for the year ended December 31, 1996).

10.19 Automatic Indemnity Reinsurance Agreement between The Guardian Insurance
& Annuity Company, Inc. and Standard Life dated and effective January 1,  1996
(incorporated   by  reference  to  SMC's  Annual  Report  on  Form  10-K  (File
No. 0-20882) for the year ended December 31, 1996).

10.20 Administrative Services Agreement between First International and
Standard Life dated and effective  March  18,  1996  (incorporated by reference
to SMC's Annual Report on Form 10-K (File No. 0-20882)  for  the year ended
December 31, 1996).

10.21 Amendment No. 1 to Amended and Restated Revolving Line of Credit
Agreement dated as of March 10, 1998 between SMC and Fleet National Bank
(incorporated by reference to SMC's Quarterly Report on Form 10-Q (File No.
0-20882)).

10.22 Amended and Restated Note Agreement dated as of March 10, 1998 between
SMC and Fleet National Bank in the amount of $20,000,000 (incorporated by
reference to SMC's Quarterly Report on Form 10-Q (File No. 0-20882)).

10.23 Amended and Restated Pledge Agreement dated as of  March  10, 1998
between SMC  and  Fleet  National  Bank  (incorporated by reference to SMC's
Quarterly Report on Form 10-Q (File No. 0-20882)).

10.24 Revised Service Contract Agreement dated  as  of  October  16,  1995  and
effective  January  1,  1995  between  Standard  Life  and  Standard  Marketing
(incorporated   by  reference  to  SMC's  Annual  Report  on  Form  10-K  (File
No. 0-20882) for the year ended December 31, 1996).

10.25 Note Agreement dated  as  of November 8, 1996, as amended and restated on
June 30, 1997, by and between SMC and Conseco Variable Insurance Company in the
amount of $4,371,573 (incorporated  by  reference  to SMC's Quarterly Report on
Form 10-Q (File No. 0-20882) for the quarter ended June 30, 1997).

10.26 Surplus Debenture dated as of November 8, 1996  by  and  between  SMC and
Standard  Life in the amount of $13,000,000 (incorporated by reference to SMC's
Quarterly Report  on  Form  10-Q  (File  No.  0-20882)  for  the  quarter ended
September 30, 1996).

10.27 Portfolio Indemnify Reinsurance Agreement between Dixie Life and  Cologne
Life Reinsurance Company dated and effective December 31, 1997 (incorporated by
reference to SMC's  Annual  Report on Form 10-K (File No. 0-20882) for the year
ended December 31, 1996).

10.28 Note Agreement dated as of  June  30,  1997  between  SMC, Conseco Health
Insurance  Company  (formerly  Capitol  American  Life  Insurance Company)  and
Conseco  Senior  Health  Insurance Company (formerly Transport  Life  Insurance
Company)  in the amount of  $5,628,427  (incorporated  by  reference  to  SMC's
Quarterly Report on Form 10-Q (File No. 0-20882) for the quarter ended June 30,
1997).

10.29 Senior Subordinated Convertible Note dated as of June 30, 1997 between
SMC and Conseco  Health Insurance Company in the amount of $3,628,427
(incorporated by reference to  SMC's Quarterly Report on Form 10-Q (File No.
0-20882) for the quarter ended June 30, 1997).

10.30 Senior Subordinated Convertible Note dated as of June 30, 1997 between
SMC and Conseco Senior  Health  Insurance  Company  in  the  amount  of
$2,000,000 (incorporated by reference to SMC's Quarterly Report on Form 10-Q
(File  No. 0-20882) for the quarter ended June 30, 1997).


Exhibit
NUMBER   DESCRIPTION OF DOCUMENT

10.31 Coinsurance  Agreement  effective as of July 1, 1997 by and between
Savers Life  and  World  Insurance  Company   (incorporated   by  reference  to
SMC's Registration Statement on Form S-4 (Registration No. 333-35447)).

10.32 Amendment I to the Guardian Indemnity Retrocession  Agreement effective
as of  January 1, 1996 by and between The Guardian Insurance and  Annuity
Company and Standard Life (incorporated by reference to SMC's Registration
Statement on Form S-4 (Registration No. 333-35447)).

10.33 Promissory Note  from  Ronald  D. Hunter to SMC in the amount of $775,500
executed October 28, 1997 (incorporated  by reference to SMC's Quarterly Report
on Form 10-Q (File No. 0-20882) for the quarter ended September 30, 1997).

10.34 Reinsurance Agreement  between  Standard   Life   and   Life  Reassurance
Corporation of America effective September 1, 1997.

10.35 Reinsurance Agreement between Standard Life and Business Men's  Assurance
Company of America effective September 1, 1997.

10.36 Management Services Agreement between Savers Life and SMC dated March 11,
1998 (incorporated by reference  to  SMC's  Quarterly Report on Form 10-Q (File
No. 0-20882) for the quarter ended June 30, 1998).

10.37 Indemnity Reinsurance Agreement between Standard  Life and the Mercantile
and  General  Life  Reassurance  Company of America dated March  30,  1998  and
effective June 1, 1997 (incorporated  by reference to SMC's Quarterly Report on
Form 10-Q (File No. 0-20882) for the quarter ended June 30, 1998).

10.38 Certificate of Designations for Series A Convertible Redeemable Preferred
Stock (incorporated by reference to SMC's Quarterly  Report  on Form 10-Q (File
No. 0-20882) for the quarter ended June 30, 1998).

10.39 Quota Share Reinsurance Agreement between Savers Life and the Oxford Life
Insurance  Company  dated  September  24,  1998  and  effective  July  1,  1998
(incorporated by reference to SMC's Quarterly Report on Form 10-Q (File  No. 0-
20882) for the quarter ended September 30, 1998).

10.40 Addendum No.  5  to Reinsurance Agreement between Standard Life Insurance
Company of Indiana and Winterthur  Life  Re  Insurance Company dated August 20,
1998  and  effective  October  1,  1998 (incorporated  by  reference  to  SMC's
Quarterly  Report  on  Form 10-Q (File  No.  0-20882)  for  the  quarter  ended
September 30, 1998).

10.41 Employment Agreement between  Robert  B.  Neal  and  Standard  Management
Corporation  dated  October 2, 1998 and effective October 2, 1998 (incorporated
by reference to SMC's  Quarterly Report on Form 10-Q (File No. 0-20882) for the
quarter ended September 30, 1998).

10.42 Articles of Merger of  Savers  Life  into  Standard  Life effective as of
December 31, 1998 and approved by the Indiana Department of  Insurance December
29, 1998.

10.43 Plan and Agreement of Merger of Savers Life into Standard Life  effective
as of December 31, 1998 dated October 30, 1998.

10.44 Articles of Merger of Midwestern Life into Standard Life effective  as of
December  31, 1998 and approved by the Indiana Department of Insurance December
29, 1998.

10.45 Plan and Agreement  of  Merger  of  Midwestern  Life  into  Standard Life
effective as of December 31, 1998 dated October 30, 1998.

10.46 Amended and Restated note Agreement dated as of September 24, 1998
between SMC and Fleet National Bank in the amount of $26,000,000.

10.47 Amendment No. 2 to Amended and Restated Revolving Line of Credit
Agreement dated as of September 24, 1998 between SMC and Fleet National Bank.


Exhibit
NUMBER    DESCRIPTION OF DOCUMENT

10.48 Amended and Restated Registration Rights Agreement dated as of August 19,
1998 between SMC and Fleet National Bank.

10.49 Amended and  Restated  Pledge  Agreement  dated as of September 23, 1998,
between SMC and Fleet National Bank.

10.50 Warrant to purchase common stock of SMC dated August  19,  1998 entitling
Fleet National Bank to purchase 20,000 shares.

10.51 Guaranty dated  October  1,  1998 made by SMC in favor of Fleet  National
Bank.

10.52 Surplus debenture dated as of December 31,  1998  by  and between SMC and
Standard Life in the amount of $8.0 million.

10.53 Surplus debenture  dated as of December 31, 1998 by and between  SMC  and
Standard Life in the amount of $6.0 million.

10.54 Employment Agreement between  Standard Management Corporation and Paul B.
Pheffer dated and effective July 1, 1999,   (incorporated by reference to SMC's
Quarterly  Report  on  Form  10-Q  (File No. 0-20882)  for  the  quarter  ended
September 30, 1999).

21    List of Subsidiaries of SMC

23.1  Consent of Ernst & Young LLP

23.2  Consent of KPMG Audit

24    Powers of Attorney

27    Financial Data Schedule, which is  submitted  electronically  pursuant to
Regulation S-K to the Securities  and  Exchange Commission for information only
and not filed.


The following is a list of each management  contract  or  compensatory  plan or
arrangement required to be filed as an exhibit to this report.

EXHIBIT
NUMBER

None

(b)  Reports on Form 8-K filed during the fourth quarter of 1999.

No reports on Form 8-K were filed with the Commission in the fourth quarter  of
1999.




<PAGE>
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.

Date: March 29, 2000
STANDARD MANAGEMENT CORPORATION


Ronald D. Hunter
Chairman, President and
Chief Executive Officer

Pursuant  to the requirements of the Securities  Exchange  Act  of  1934,  this
report has  been  signed  below  on  March 29, 2000 by the following persons on
behalf of the Registrant and in the capacities indicated.


Ronald D. Hunter  Chairman, President and Chief Executive Officer
(Principal Executive Officer)

  *
Paul B. Pheffer  Director, Executive Vice President, and
Chief Financial Officer
(Principal Financial Officer)

  *
Gerald R. Hochgesang  Senior Vice President - Finance and Treasurer
(Principal Accounting Officer)

   *
Raymond J. Ohlson  Director

   *
Edward T. Stahl  Director

   *
Stephen M. Coons  Director

   *
Martial R. Knieser  Director

   *
Robert A. Borns  Director

   *
John J. Dillon  Director

   *
Jerry E. Francis  Director

*By: /s/RONALD D. HUNTER
Ronald D. Hunter
Attorney-in-Fact




<PAGE>


                          ANNUAL REPORT ON FORM 10-K

                  ITEM 8, ITEM 14(a)(1) AND (2),(c) AND (d)

                 FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

                         LIST OF FINANCIAL STATEMENTS

                                     and

                        FINANCIAL STATEMENT SCHEDULES

                               CERTAIN EXHIBITS

                        FINANCIAL STATEMENT SCHEDULES

                         Year Ended December 31, 1999

                       STANDARD MANAGEMENT CORPORATION

                            INDIANAPOLIS, INDIANA












<PAGE>
               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

              INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
                       AND FINANCIAL STATEMENT SCHEDULES

 PAGE

AUDITED CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Auditors                                              F-2

Consolidated Balance Sheets as of December 31, 1999 and 1998                F-4

Consolidated Statements of Income for the Years Ended
December 31, 1999, 1998 and 1997                                            F-5

Consolidated Statements of Shareholders' Equity for the Years Ended
December 31, 1999, 1998 and 1997                                            F-6

Consolidated Statements of Cash Flows for the Years Ended
December 31, 1999, 1998 and 1997                                            F-8

Notes to Consolidated Financial Statements                                  F-9

FINANCIAL STATEMENT SCHEDULES

The following consolidated financial statement  schedules  are included in this
report and should be read in
conjunction with the Audited Consolidated Financial Statements.

Schedule II -- Condensed Financial Information of Registrant
(Parent Company) for the Years Ended December 31, 1999, 1998 and 1997      F-29

Schedule IV -- Reinsurance for the Years Ended December 31, 1999, 1998 and 1997
                                                                           F-33

Schedules not listed above have been omitted because they are not applicable or
are  not  required,  or  because  the required information is included  in  the
Audited Consolidated Financial Statements or related Notes.










<PAGE>

                           REPORT OF INDEPENDENT AUDITORS

Shareholders and Board of Directors
Standard Management Corporation

We  have  audited  the accompanying consolidated  balance  sheets  of  Standard
Management Corporation  and  subsidiaries as of December 31, 1999 and 1998, and
the related consolidated statements  of  income,  shareholders' equity and cash
flows for each of the three years in the period ended  December  31,  1999. Our
audits  also included the financial statement schedules listed in the Index  at
Item 14(a).  These financial statements and schedules are the responsibility of
the Company's  management. Our responsibility is to express an opinion on these
financial statements  and  schedules  based on our audits. We did not audit the
consolidated balance sheets at September  30, 1999 and 1998 or the consolidated
statements of operations, shareholder's equity  and  cash  flows  for the three
years  ended September 30, 1999 of Standard Management International  S.A.  and
subsidiaries,  a  wholly  owned  subsidiary  group,  which financial statements
reflect assets totaling approximately 29% and 21% of the Company's consolidated
assets at December 31, 1999 and 1998 and revenues totaling approximately 6%, 8%
and 9% of consolidated revenues for each of the three years in the period ended
December 31, 1999. Those financial statements, which as  explained  in  Note 1,
are included in the Company's consolidated balance sheets at December 31,  1999
and  1998,  and  the Company's consolidated statements of income, shareholders'
equity and cash flows  for each of the three years in the period ended December
31, 1999, were audited by other auditors whose report has been furnished to us,
and our opinion, insofar  as  it  relates  to  the  data  included for Standard
Management International S.A., is based solely on the report of other auditors.

We  conducted  our  audits  in  accordance  with  auditing standards  generally
accepted in the United States. 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 and the report of
other auditors provide a reasonable basis for our opinion.

In our opinion, based on our audits and  the  report  of  other  auditors,  the
financial  statements  referred  to  above  present  fairly,  in  all  material
respects,   the   consolidated   financial   position  of  Standard  Management
Corporation  and  subsidiaries  at  December  31,  1999   and   1998,  and  the
consolidated results of their operations and their cash flows for  each  of the
three  years  in  the  period  ended  December  31,  1999,  in  conformity with
accounting  principles  generally accepted in the United States. Also,  in  our
opinion, the related financial statement schedules, when considered in relation
to the basic financial statements  taken  as  a  whole,  present  fairly in all
material respects the information set forth therein.


Ernst & Young LLP




Indianapolis, Indiana
February 18, 2000







<PAGE>

                           REPORT OF INDEPENDENT AUDITORS

Shareholders and Board of Directors
Standard Management International, S.A.

We  have  audited  the  consolidated  balance  sheets  of  Standard  Management
International S.A. and subsidiaries as of September 30, 1999 and 1998  and  the
related  consolidated  statements  of operations, shareholder's equity and cash
flows for each of the three years in  the period ended September 30, 1999 (none
of which aforementioned financial statements  are separately presented herein).
These consolidated financial statements are the responsibility of the 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 in the United States of America. 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  accounting principles used and
significant estimates made by management, as well  as  evaluating  the  overall
financial  statement  presentation.  We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

In  our  opinion  the financial statements referred to above present fairly, in
all  material  aspects,   the   consolidated  financial  position  of  Standard
Management International S.A. and  subsidiaries  as  at  September 30, 1999 and
1998, and the consolidated results of their operations and their cash flows for
each of the three years in the period ended September 30,  1999  in  conformity
with generally accepted accounting principles in the United States of America.



Luxembourg City, Luxembourg



February 18, 2000
KPMG Audit







<PAGE>
                     STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                                CONSOLIDATED BALANCE SHEETS
                     (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
                                                                                                  December 31

                                                                                        1999                             1998

                             ASSETS

Investments:
<S>                                                                                <C>                              <C>

  Securities available for sale:
     Fixed maturity securities, at fair value (amortized cost: $646,284 in 1999    $       606,907                  $       551,312
     and $547,115 in 1998)
     Equity securities, at fair value (cost: $565 in 1999 and $1,498 in 1998)                  378                            1,316
  Mortgage loans on real estate                                                              8,131                            8,578
  Policy loans                                                                              14,033                           15,019
  Real estate                                                                                3,233                            3,435
  Other invested assets                                                                        845                              837
  Short-term investments                                                                    14,976                           11,626
          Total investments                                                                648,503                          592,123
Cash                                                                                         3,659                           13,591
Accrued investment income                                                                   11,105                            9,563
Amounts due and recoverable from reinsurers                                                 58,230                           76,897
Deferred acquisition costs                                                                  67,811                           32,946
Present value of future profits                                                             30,688                           28,793
Goodwill                                                                                     5,636                            5,886
Other assets                                                                                 5,372                            6,105
Assets held in separate accounts                                                           319,973                          190,246

Total assets                                                                        $    1,150,977                   $      956,150


LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Insurance policy liabilities                                                      $      727,189                   $      638,435
  Accounts payable and accrued expenses                                                      9,076                           12,277
  Notes payable                                                                             34,500                           35,000
  Deferred federal income taxes                                                                349                            7,620
  Liabilities related to separate accounts                                                 319,973                          190,246
     Total liabilities                                                                   1,091,087                          883,578


Series A convertible redeemable preferred stock, par value $100 per share:
  Authorized 130,000; 65,300 issued and outstanding in 1999 and 1998                         6,530                            6,530

Shareholders' Equity:
  Preferred stock, no par value:
     Authorized 870,000 shares; none issued and outstanding                                     --                               --
  Common stock, no par value:
     Authorized 20,000,000 shares; issued 9,038,134 in 1999 and 8,802,313 in 1998           62,152                           60,586
  Treasury stock, at cost, 1,252,978 shares in 1999 and 1,160,854 shares in 1998            (6,802)                          (6,220)
  Accumulated other comprehensive income:
     Unrealized gain (loss) on securities available for sale, net taxes (benefits) of      (15,859)                           1,660
       $(8,196) in 1999 and $765 in 1998
     Unrealized gain on other investments, net taxes of $8 in 1999 and $12 in 1998              15                               23
     Foreign currency translation adjustment                                                  (862)                               4
  Retained earnings                                                                         14,716                            9,989
          Total shareholders' equity                                                        53,360                           66,042
          Total liabilities and shareholders' equity                               $     1,150,977                  $       956,150
</TABLE>

               See accompanying notes to consolidated financial statements.




<PAGE>
               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                       CONSOLIDATED STATEMENTS OF INCOME
               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                                           Year Ended December 31

                                                                   1999                       1998                       1997
<S>                                                          <C>               <C>      <C>               <C>      <C>

Revenues:
  Premium income                                             $          13,090          $          14,479          $          7,100
  Net investment income                                                 44,821                     34,221                    29,197
  Net realized investment gains                                             78                        353                       396
  Policy income                                                          6,826                      6,529                     5,512
  Negative goodwill amortization                                            --                      1,388                     1,388
  Separate account fees                                                  3,941                      2,884                     2,084
  Fee and other income                                                   4,207                      3,421                     1,178
          Total revenues                                                72,963                     63,275                    46,855


Benefits and expenses:
  Benefits and claims                                                   14,376                     13,270                     8,840
  Interest credited to interest-sensitive annuities and other
     financial products                                                 25,728                     19,775                    16,281
  Amortization                                                           7,471                      5,413                     3,435
  Other operating expenses                                              14,605                     15,551                    12,656
  Interest expense and financing costs                                   3,385                      2,955                     2,381
          Total benefits and expenses                                   65,565                     56,964                    43,593

Income before federal income taxes and preferred                         7,398                      6,311                     3,262
  stock dividends
Federal income tax expense                                               2,126                      1,630                       617

Net income                                                               5,272                      4,681                     2,645
Preferred stock dividends                                                  506                        180                        97
Earnings available to common shareholders                    $           4,766          $           4,501          $          2,548

Earnings per share - basic:
  Net income                                                 $             .69          $             .68          $            .54
  Preferred stock dividends                                                .07                        .03                       .02
  Earnings available to common shareholders                  $             .62          $             .65          $            .52


Earnings per common share - diluted:
  Net income                                                 $             .65          $             .62          $            .48
  Preferred stock dividends                                                .05                        .02                       .01
  Earnings available to common shareholders                  $             .60          $             .60          $            .47
</TABLE>

               See accompanying notes to consolidated financial statements.








               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                      Accumulated
                                                                                                         other
                                                                  Common           Treasury          comprehensive        Retained
                                                 Total             stock             stock              income            earnings
<S>                                           <C>               <C>              <C>                 <C>                  <C>
Balance at January 1, 1997                    $   39,919        $  40,481        $     (3,528)       $    (55)            $  3,021

Comprehensive income:
  Net income                                       2,645                                                                     2,645
  Other comprehensive income:
     Change in unrealized gain on securities,
       net taxes of $1,503                         2,917                                                2,917
     Change in foreign currency                   (1,164)                                              (1,164)
       Other comprehensive income                  1,753
         Comprehensive income                      4,398
Issuance of common stock warrants                    165              165
Treasury stock acquired                           (1,079)                              (1,079)
Reissuance of treasury stock in connection
  with exercise of stock options                      35                                   35
Loss on reissuance of treasury stock                 (28)                                                                      (28)
Preferred stock dividends                            (97)                                                                      (97)
Balance at December 31, 1997                      43,313           40,646              (4,572)           1,698               5,541

Comprehensive income:
  Net income                                       4,681                                                                     4,681
  Other comprehensive income:
     Change in unrealized gain (loss) on
       securities, net taxes (benefits) of $(251)   (488)                                                 (488)
     Change in foreign currency                      477                                                   477
       Other comprehensive income                    (11)

         Comprehensive income                      4,670

Issuance of common stock for Savers Life          15,024          15,024
  acquisition
Issuance of common stock for Midwestern Life
  acquisition                                      4,614           4,614
Issuance of common stock warrants                     64              64
Issuance of common stock in connection with
  exercise of stock warrants                         233             234                                                        (1)
Treasury stock acquired                           (1,702)                             (1,702)
Conversion of preferred stock into common              4               4
  stock
Reissuance of treasury stock in connection
  with exercise of stock options                       2                                  54                                   (52)
Preferred stock dividends                           (180)                                                                     (180)
Balance at December 31, 1998                  $   66,042       $  60,586        $     (6,220)            $ 1,687     $9,989
</TABLE>


                         (continued on following page)

         See accompanying notes to consolidated financial statements.

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

          CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (CONTINUED)
                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                      Accumulated
                                                                                                         other
                                                                  Common           Treasury          comprehensive        Retained
                                                 Total             stock             stock              income            earnings
<S>                                          <C>              <C>               <C>                   <C>               <C>
Balance December 31, 1998 (carried forward   $     66,042     $     60,586      $    (6,220)          $ 1,687            $     9,989
from prior page)

Comprehensive income:
  Net income                                        5,272                                                                      5,272
  Other comprehensive income:
     Change in unrealized gain (loss) on
       securities, net taxes (benefits)           (17,527)                                            (17,527)
       of $(8,961)
     Change in foreign currency                      (866)                                               (866)
       Other comprehensive income                 (18,393)

         Comprehensive income (loss)              (13,121)

Issuance of common stock warrants                   1,566            1,566
Treasury stock acquired                              (582)                             (582)
Exercise of stock options                             (39)                                                                     (39)
Preferred stock dividends                            (506)                                                                    (506)
Balance at December 31, 1999                 $     53,360         $ 62,152          $(6,802)         $(16,706)         $    14,716
</TABLE>
          See accompanying notes to consolidated financial statements


<PAGE>
               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                             Year Ended December 31
                                                                         1999                      1998                 1997
<S>                                                                 <C>                   <C>                     <C>

OPERATING ACTIVITIES
Net income                                                          $    5,272            $         4,681         $     2,645
Adjustments to reconcile net income to net cash provided by
operating activities:
  Amortization of deferred acquisition costs                             4,580                      2,658               1,456
  Deferral of acquisition costs                                        (27,818)                   (13,542)             (7,005)
  Deferred federal income taxes                                          2,005                        957               1,187
  Depreciation and amortization                                          3,889                      1,209               1,085
  Insurance policy liabilities                                          14,530                      6,400               9,441
  Net realized investment gains                                            (78)                      (353)               (396)
  Accrued investment income                                             (1,541)                    (1,451)               (314)
  Other                                                                  2,014                       (352)               (403)
     Net cash provided by operating activities                           2,853                        207               7,696

INVESTING ACTIVITIES
Fixed maturity securities available for sale:
  Purchases                                                           (236,969)                  (261,744)           (205,976)
  Sales                                                                116,511                    162,503             161,891
  Maturities, calls and redemptions                                     19,006                     32,570              28,380
Short-term investments, net                                             (3,350)                    44,460              (4,925)
Other investments, net                                                   2,270                        320              (2,186)
Purchase of Savers Life Insurance Company, less cash acquired of $518       --                    (18,039)                 --
Purchase of Midwestern National Life Insurance Company of Ohio,
  less cash acquired of $1,026                                              --                    (13,104)                 --
     Net cash used by investing activities                            (102,532)                   (53,034)            (22,816)

FINANCING ACTIVITIES
Issuance of common stock, net                                               --                     19,638                  --
Borrowings, net of debt issuance costs of  $206 and $70 in 1998
  and 1997, respectively                                                   300                     11,794               5,558
Repayments on long-term debt and obligations under capital lease          (800)                    (3,141)               (543)
Premiums received on interest-sensitive annuities and other
  financial products credited
  to policyholder account balances, net of premiums ceded              165,750                     81,858              49,362
Return of policyholder account balances on interest-sensitive
  annuities and other financial products                               (75,981)                   (52,934)            (37,477)
Issuance of Series A redeemable preferred stock                             --                      6,389                  --
Redemption of preferred stock                                               --                         --              (1,855)
Proceeds from common and treasury stock sales                               --                        234                 138
Issuance of common stock and warrants                                    1,566                        297                 165
Purchase of common stock for treasury                                     (582)                    (1,702)             (1,079)
Dividends on preferred stock                                              (506)                      (180)                (97)
     Net cash provided by financing activities                          89,747                     62,253              14,172
Net increase (decrease) in cash                                         (9,932)                     9,426                (948)
Cash at beginning of  year                                              13,591                      4,165               5,113
Cash at end of year                                                 $    3,659            $        13,591       $       4,165
</TABLE>

                    SEE    ACCOMPANYING   NOTES   TO   CONSOLIDATED   FINANCIAL
STATEMENTS.




<PAGE>

                  STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                     NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                               DECEMBER 31, 1999


1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

ORGANIZATION

Standard Management Corporation  ("Standard  Management")  is  an international
financial services holding company, which directly and through its subsidiaries
i)  acquires  and  manages  in  force life insurance and annuity business,  ii)
issues and distributes life insurance  and  annuity  products,  and iii) offers
unit-linked assurance products through its international subsidiaries.

Standard  Management's  active  subsidiaries  at  December  31,  1999  include:
(i)  Standard  Life  Insurance  Company  of  Indiana  ("Standard Life") and its
subsidiary, Dixie National Life Insurance Company ("Dixie Life"), (ii) Standard
Management  International,  S.A.  and  its subsidiaries ("SMI"),  Premier  Life
(Luxembourg) S.A. ("Premier Life (Luxembourg)") and Premier Life (Bermuda) Ltd.
("Premier  Life (Bermuda)"), (iii) Standard  Marketing  Corporation  ("Standard
Marketing") and (iv) Savers Marketing Corporation ("Savers Marketing").

BASIS OF PRESENTATION

The accompanying  consolidated  financial statements of Standard Management and
its subsidiaries (the "Company" or "SMC") have been prepared in conformity with
generally accepted accounting principles  ("GAAP")  and include the accounts of
the  Company  since acquisition or organization.  All significant  intercompany
balances and transactions have been eliminated.

The fiscal year  end  for  SMI  is September 30. To facilitate reporting on the
consolidated level, the fiscal year  end  for  SMI  was  not  changed  and  the
consolidated   balance   sheets   and  statements  of  operations  for  SMI  at
September 30, 1999 and 1998 and for each of the three years in the period ended
September 30, 1999, are included in  the  Company's consolidated balance sheets
at December 31, 1999 and 1998 and for each  of  the  three  years in the period
ended December 31, 1999.

USE OF ESTIMATES

The  nature of the Company's insurance businesses requires management  to  make
estimates  and assumptions that affect the amounts reported in the consolidated
financial statements  and  accompanying  notes.  Such estimates and assumptions
could  change  in  the future as more information becomes  known,  which  could
impact the amounts disclosed in this report.

INVESTMENTS

The Company classifies  its  fixed  maturity and equity securities as available
for sale and, accordingly, such securities  are  carried  at  fair value. Fixed
maturity securities include bonds and redeemable preferred stocks.  Changes  in
fair values of securities available for sale, after adjustment for the costs of
policies  produced,  costs of policies purchased and deferred income taxes, are
reported as unrealized  gains  or  losses directly in shareholders' equity and,
accordingly, have no effect on net income.  The  costs of policies produced and
costs  of  policies  purchased adjustments to the unrealized  gains  or  losses
represent valuation adjustments  or  reinstatements  of these assets that would
have  been  required as a charge or credit to operations  had  such  unrealized
amounts been realized.

The cost of fixed  maturity securities is adjusted for amortization of premiums
and discounts. The amortization  is  provided  on  a  constant  effective yield
method  over  the  life  of  the  securities  and is included in net investment
income.

Mortgage-backed  and  other  collateralized  securities,  classified  as  fixed
maturity  securities  in  the  consolidated  balance   sheets,   are  comprised
principally of obligations backed by an agency of the United States  government
(although  generally  not  by  the  full  faith and credit of the United States
government). The Company has reduced the risk  normally  associated  with these
investments by primarily investing in highly rated securities and in those that
provide  more predictable prepayment patterns. The income from these securities
is recognized using a constant effective yield based on anticipated prepayments
and the estimated  economic  life  of  the  securities. When actual prepayments
differ significantly from anticipated prepayments,  the  income  recognized  is
adjusted  currently  to  match  that  which  would  have  been recorded had the
effective  yield  been  applied  since  the  acquisition of the security.  This
adjustment is included in net investment income.




<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


Mortgage loans on real estate and policy loans  are carried at unpaid principal
balances and are generally collateralized. Real estate  investments,  which the
Company  has  the  intent to hold for the production of income, are carried  at
cost, less accumulated  depreciation.  Short-term  investments  are  carried at
amortized cost, which approximates fair value.

NET REALIZED INVESTMENT GAINS OR LOSSES

Net  realized  investment  gains  and  losses are calculated using the specific
identification method and included in the  consolidated  statements  of income.
If  the  values  of  investments  decline  below  their amortized cost and this
decline is considered to be other than temporary, the  amortized  cost of these
investments is reduced to net realizable value and the reduction is recorded as
a realized loss.

FUTURE POLICY BENEFITS

Liabilities  for  future  policy  benefits for deferred annuities and universal
life policies are equal to full account  value that accrues to the policyholder
(cumulative premiums less certain charges,  plus  interest credited) with rates
ranging from 3.0% to 12.3% in 1999 and 3.0% to 11% in 1998.

Future policy benefits for traditional life insurance  contracts  are  computed
using  the  net level premium method on the basis of assumed investment yields,
mortality and  withdrawals which were appropriate at the time the policies were
issued. Assumed investment yields are based on interest rates ranging from 6.2%
to 7.5%. Mortality  is  based  upon  various  actuarial tables, principally the
1965-1970  Select  and  Ultimate  Table. Withdrawals  are  based  upon  Company
experience and vary by issue age, type of coverage, and duration.

RECOGNITION OF INSURANCE POLICY REVENUE AND RELATED BENEFITS AND EXPENSES

Revenue for interest-sensitive annuity contracts consists of policy charges for
surrenders and investment income earned.  Premiums  received  for these annuity
contracts are reflected as premium deposits and are not recorded  as  revenues.
Expenses  related  to these annuities include interest credited to policyholder
account balances. Revenue  for  universal  life  insurance policies consists of
policy  charges  for  the  cost  of  insurance, policy administration  charges,
surrender charges and investment income  earned  during  the  period.  Expenses
related  to  universal  life policies include interest credited to policyholder
account balances and death  benefits incurred in excess of policyholder account
balances.

Traditional life insurance and  immediate  annuity  premiums  are recognized as
premium  revenue  when  due  over  the  premium paying period of the  policies.
Benefits are charged to expense in the period  when claims are incurred and are
associated with related premiums through changes  in reserves for future policy
benefits which results in the recognition of profit  over  the  premium  paying
period of the policies.

REINSURANCE

Premiums,  annuity  policy  charges, benefits and claims, interest credited and
amortization expense are reported  net  of  reinsurance ceded and are accounted
for  on  a  basis consistent with those used in  accounting  for  the  original
policies issued and the terms of the reinsurance contracts.

SEPARATE ACCOUNTS

The majority  of the balance represents i) unit-linked business, where benefits
on surrender and  maturity  are  not  guaranteed,  and ii) investment contracts
which pay fixed benefits to the policyholder and have  minimal  mortality risk.
Separate  accounts  generally  represent funds maintained in accounts  to  meet
specific investment objectives of  policyholders  who bear the investment risk.
The Company records the related liabilities at amounts  equal to the underlying
assets.  Investment income and investment gains and losses  accrue  directly to
such  policyholders.  The  assets  of  each account are segregated and are  not
subject  to  claims  that  arise out of any  other  business  of  the  Company.
Deposits, net investment income  and  realized  gains  and  losses  on separate
accounts assets are not reflected in the consolidated statements of income.






<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)


FOREIGN CURRENCY TRANSLATION

The Company's foreign subsidiaries' balance sheets and statements of income are
translated  at the year end exchange rates and average exchange rates  for  the
year, respectively.  The  resulting unrealized gain or loss adjustment from the
translation to U.S. dollars  is  recorded  in  the foreign currency translation
adjustment as a separate component of accumulated  other  comprehensive income.
Foreign exchange gains or losses relating to policyholders'  funds  in separate
accounts are allocated to the relevant separate account.

INCOME TAXES

Deferred tax assets and liabilities are recognized for the estimated 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
in effect for the year  in which those temporary differences are expected to be
recovered or settled. The  effect  on  deferred tax assets and liabilities of a
change in tax rates is recognized in income  in  the period in which the change
is enacted.

Standard Life and Dixie Life filed a consolidated  return  for 1998 and plan to
file  a  consolidated  return  for  1999.   SMC  and  other  U.S. non-insurance
subsidiaries are taxed as regular corporations and file a consolidated  return.
SMC  and its U.S. non-insurance subsidiaries were eligible to consolidate  with
Standard  Life  for income tax purposes beginning in 1996, but do not currently
plan to do so.

SMI is incorporated  as a holding company in the Grand Duchy of Luxembourg and,
accordingly, is not currently  subject  to taxation on income or capital gains.
SMI is subject to an annual capital tax which  is  calculated  on  the  nominal
value  of the statutory shareholder's equity at an annual rate of .20%. Premier
Life (Luxembourg)  is  a  normal  commercial  taxable company and is subject to
income tax at regular corporate rates (statutory corporate rate of 37.45%), and
annual capital taxes amounting to approximately 0.5% of its net equity. Premier
Life (Bermuda) is exempt from taxation on income until March 2016 pursuant to a
decree from the Minister of Finance in Bermuda.  To the extent that such income
is taxable under U.S. law, such income will be included  in  SMC's consolidated
return.

DEFERRED ACQUISITION COSTS

Costs  relating  to the production of new business  (primarily commissions  and
certain costs of marketing,  policy issuance and underwriting) are deferred and
included in the deferred acquisition  cost  asset to the extent that such costs
are  recoverable  from future related policy revenues.  For  interest-sensitive
annuities  and other  financial  products,  deferred  acquisition  costs,  with
interest, are  amortized  over  the  lives  of  the  policies and products in a
constant relationship to the present value of estimated  future  gross profits,
discounted  using  the  interest rate credited to the policy. Traditional  life
insurance  deferred  acquisition   costs   are   being   amortized   over   the
premium-paying period of the related policies using assumptions consistent with
those used in computing policy benefit reserves.

The  Company  reviews  the recoverability of the carrying value of the deferred
acquisition  costs  each  year.  For  interest-sensitive  annuities  and  other
financial products, the Company  considers  estimated  future  gross profits in
determining  whether  the  carrying  value is appropriate; for other  insurance
products, the Company considers estimated  future  premiums.  In all cases, the
Company  considers  expected  mortality,  interest earned and crediting  rates,
persistency  and  expenses.  Amortization  is  adjusted   retrospectively   for
interest-sensitive  annuities  and  other  financial products when estimates of
future gross profits to be realized are revised.

PRESENT VALUE OF FUTURE PROFITS

Present value of future profits are recorded in connection with acquisitions of
insurance companies or a block of policies.  The  initial value is based on the
actuarially determined present value of the projected future gross profits from
the in-force business acquired. In selecting the interest rate to calculate the
discounted  present value of the projected future gross  profits,  the  Company
uses the risk  rate  of  return believed to best reflect the characteristics of
the  purchased  policies, taking  into  account  the  relative  risks  of  such
policies, the cost  of  funds  to  acquire  the business and other factors. The
value of in force insurance purchased is amortized  on  a  constant yield basis
over  its  estimated  life  from the date of acquisition in proportion  to  the
emergence  of  profits  or  the expected  premium  pattern  over  a  period  of
approximately 20 years.




<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



1.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

For acquisitions the Company  made  on or before November 19, 1992, the Company
amortizes the asset with interest at  the  same discount rate used to determine
the present value of future profits at the date  of  purchase. For acquisitions
after  November 19, 1992, the Company amortizes the asset  using  the  interest
rate credited to the underlying policies.

GOODWILL

The excess  of  the  cost to acquire purchased companies over the fair value of
net assets acquired ("goodwill")  is  being  amortized on a straight-line basis
over periods that generally correspond with the benefits expected to be derived
from the acquisitions, usually 20 to 40 years. Accumulated amortization was $.9
million  and  $.6  million at December 31, 1999 and  1998,  respectively.   The
Company  continually  monitors  the  goodwill  based  on  estimates  of  future
earnings.  If it determines that goodwill has been impaired, the carrying value
is reduced with a corresponding charge to expense.

NEGATIVE GOODWILL

The excess of  the  net  assets  acquired  over  the  cost to acquire purchased
companies  ("negative  goodwill"),  after reducing the basis  in  property  and
equipment and other noncurrent assets to zero, was amortized into earnings on a
straight-line  basis  over a five year  period.  Negative  goodwill  was  fully
amortized at December 31, 1998.

STOCK OPTIONS

The Company recognizes compensation expense for its stock option plan using the
intrinsic value method  of  accounting.  Under the terms of the intrinsic value
method, compensation cost is the excess, if  any, of the quoted market price of
the stock at the grant date, or other measurement  date,  over  the  amount  an
employee must pay to acquire the stock. Under the Company's stock option plans,
no  expense is recognized since the exercise price equals or exceeds the market
price at the measurement date.

RECLASSIFICATIONS

Certain  amounts  in  the  1998  and 1997 consolidated financial statements and
notes  have been reclassified to conform  with  the  1999  presentation.  These
reclassifications  had no effect on previously reported shareholders' equity or
net income in the periods presented.

2.ACQUISITIONS

On March 12, 1998, SMC  acquired Savers Life Insurance Company ("Savers Life").
Each of the 1.8 million shares  of  Savers  Life  Common  Stock outstanding was
converted  into  1.2  shares of SMC Common Stock plus $1.50.   Each  holder  of
Savers Life Common Stock  could elect to receive the $1.50 per share portion of
the merger consideration in  the form of additional shares of SMC Common Stock.
SMC issued approximately 2.2 million shares with a value of approximately $14.9
million and paid $2.2 million in cash and $1.5 million in acquisition costs for
an aggregate purchase price of  $18.6  million  to  acquire  Savers  Life.  SMC
increased  the  Amended  and  Restated Revolving Line of Credit Agreement  (the
"Amended Credit Agreement") to  $20.0  million  to  finance  the acquisition of
Savers Life.

On October 30, 1998, SMC acquired Midwestern National Life Insurance Company of
Ohio  ("Midwestern  Life").  SMC issued .7 million shares of its  common  stock
valued at $4.6 million, increased its bank debt by $6.0 million on restructured
terms by increasing the  Amended  Credit  Agreement  to $26.0 million, and paid
$2.9  million  in cash and $.6 million of acquisition costs  for  an  aggregate
purchase price of $14.1 million to acquire Midwestern Life.

The acquisitions  of  Savers  Life and Midwestern Life were accounted for using
the purchase method of accounting and accordingly, SMC's consolidated financial
statements include the results of operations of the acquired companies from the
effective dates of their respective  acquisitions.   Under purchase accounting,
SMC allocated the total purchase price of the assets
and liabilities acquired, based on a determination of  their  fair  values  and
recorded  the  excess of acquisition cost over net assets acquired as goodwill,
which will be amortized on a straight line basis over 30 years and 20 years for
Savers Life and  Midwestern  Life,  respectively.   SMC  merged Savers Life and
Midwestern Life into Standard Life effective December 31,  1998,  with Standard
Life as the surviving entity.




<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



2.ACQUISITIONS (CONTINUED)

The  following  schedule  summarizes  the  assets  acquired and the liabilities
assumed with the Savers Life and Midwestern Life acquisitions  described  above
(in thousands):

                                        Savers        Midwestern
                                         Life            Life
Assets acquired:
  Fixed maturity securities           $    7,055      $   99,243
  Equity securities                        2,840             174
  Mortgage loans on real estate            6,273             223
  Real estate                              1,639              --
  Policy loans                                 9           6,480
  Short term investments                  42,745              --
  Cash                                       518           1,026
  Present value of future profits          5,960           6,050
  Other assets                             7,944           9,671
      Total assets acquired               74,983         122,867

Liabilities assumed:
  Policy reserves                         58,680         100,497
  Deferred federal income taxes               --           2,124
  Other liabilities                        1,386           6,141
     Total liabilities assumed            60,066         108,762

Net assets acquired                       14,917          14,105
Goodwill                                   3,640              25
Total purchase price                   $  18,557       $  14,130


The  following  are  supplemental  unaudited  pro forma consolidated results of
operations of the Company as if the acquisitions  of Savers Life and Midwestern
Life had occurred on January 1, 1997.  The following  amounts  are  based  upon
certain assumptions and estimates which the Company believes are reasonable and
do  not  reflect any benefit from savings which might be achieved from combined
operations.   The  amounts  are  not  necessarily  indicative of the results of
operations had these transactions occurred on January  1,  1997, or the results
of future operations (in thousands, except per share amounts):


                                              YEAR ENDED DECEMBER 31

                                                 1998         1997

Revenues                                        $80,710      $95,883
Earnings available to common shareholders         2,657        3,842

Earnings per share                                  .34          .49
Earnings per share, assuming dilution               .32          .46









<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



3.INVESTMENTS

The amortized cost, gross unrealized gains and losses and estimated  fair value
of securities available for sale are as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                  December 31, 1999

                                                                               Gross                  Gross
                                                     Amortized              Unrealized             Unrealized                Fair
                                                       Cost                    Gains                 Losses                  Value
<S>                                            <C>                              <C>                 <C>                   <C>

Securities available for sale:
  Fixed maturity securities:
    United States Treasury securities and      $       20,455                   $   7               $    517              $  19,945
      obligations of United States government
      agencies
    Obligations of states and political                 3,997                      50                     87                  3,960
      subdivisions
    Foreign government securities                       3,489                      50                    274                  3,265
    Utilities                                          29,068                      --                  2,284                 26,784
    Corporate bonds                                   479,332                     308                 32,658                446,982
    Mortgaged-backed securities                       104,413                      70                  3,629                100,854
    Redeemable preferred stock                          5,530                      --                    413                  5,117
      Total fixed maturity securities                 646,284                     485                 39,862                606,907
Equity securities                                         565                       6                    193                    378
  Total securities available for sale         $       646,849                   $ 491               $ 40,055              $ 607,285

                                                                                  December 31, 1998
                                                                               Gross                  Gross
                                                     Amortized              Unrealized             Unrealized                Fair
                                                       Cost                    Gains                 Losses                  Value

Securities available for sale:
  Fixed maturity securities:
    United States Treasury securities and
      obligations of United States government
      agencies                                $        34,635                   $ 606               $     53              $  35,188
    Obligations of states and political
      Subdivisions                                      3,337                     141                     --                  3,478
    Foreign government securities                      46,872                     616                  4,541                 42,947
    Utilities                                          23,316                     662                     74                 23,904
    Corporate bonds                                   366,348                  10,965                  4,498                372,815
    Mortgaged-backed securities                        66,721                     716                    312                 67,125
    Redeemable preferred stock                          5,886                       8                     39                  5,855
      Total fixed maturity securities                 547,115                  13,714                  9,517                551,312
  Equity securities                                     1,498                       9                    191                  1,316
    Total securities available for sale        $      548,613                 $13,723               $  9,708              $ 552,628
</TABLE>

The  estimated  fair  values  for fixed maturity securities are based on quoted
market prices, where available.  For  fixed  maturity  securities  not actively
traded,  fair  values  are  estimated  using  values  obtained from independent
pricing services, or by discounting expected future cash  flows using a current
market rate applicable to the coupon rate, credit rating, and  maturity  of the
investments.




<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



3.INVESTMENTS (CONTINUED)


The  amortized  cost  and  estimated fair value of fixed maturity securities at
December 31, 1999 by contractual  maturity  are  shown  below  (in  thousands).
Actual maturities will differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or prepayment
penalties  and  because  most  mortgage-backed  securities provide for periodic
payments throughout their lives.

                                              Amortized          Fair
                                                 Cost            Value

Due in one year or less                      $    5,586       $    5,555
Due after one year through five years           114,932          111,880
Due after five years through ten years          214,114          201,317
Due after ten years                             201,709          182,184
  Subtotal                                      536,341          500,936
Redeemable preferred stock                        5,530            5,117
Mortgage-backed securities                      104,413          100,854
  Total fixed maturity securities            $  646,284       $  606,907

The Company maintains a highly-diversified investment  portfolio  with  limited
concentration  of  financial  instruments  in  any  given  region,  industry or
economic  characteristic. At December 31, 1999, the Company held no investments
in any entity  in excess of 10% of shareholders' equity other than asset-backed
securities and investments  issued  or  guaranteed  by the U.S. government or a
U.S.  government  agency,  all  of  which  were classified  as  fixed  maturity
securities available for sale.

Net investment income was attributable to the following (in thousands):

<TABLE>
<CAPTION>
                                                                                    Year Ended December 31

                                                            1999                        1998                        1997
<S>                                                    <C>                         <C>                          <C>

Fixed maturity securities                              $         40,432            $         30,484             $        26,832
Common stocks                                                       419                          46                          --
Mortgage loans on real estate                                       947                         679                         123
Policy loans                                                        960                         654                         618
Real estate                                                          33                         135                          58
Short-term investments and other                                  2,602                       2,932                       2,098
  Gross investment income                                        45,393                      34,930                      29,729
Less: investment expenses                                           572                         709                         532
  Net investment income                                $         44,821            $         34,221             $        29,197

Net realized investment gains arose from the following (in thousands):

                                                                                    Year Ended December 31

                                                            1999                        1998                        1997

Fixed maturity securities available for sale:
  Gross realized gains                                 $          2,000            $          2,570             $         2,209
  Gross realized losses                                           1,430                       2,074                       1,695
    Net                                                             570                         496                         514
Real estate                                                           9                          --                          26
Other losses                                                       (501)                       (143)                       (144)
  Net realized investment gains                        $             78            $            353             $           396
</TABLE>


3.INVESTMENTS (CONTINUED)

Life insurance companies are required to maintain  certain  amounts  of  assets
with state or other regulatory authorities. At December 31, 1999 fixed maturity
securities  of $11.8 million and cash and short-term investments of $.7 million
were held on deposit by various state regulatory authorities in compliance with
statutory regulations.  Additionally,  fixed maturity securities of $.3 million
and short-term investments of $4.5 million of SMI were held by a custodian bank
approved  by  the  Luxembourg  regulatory  authorities  to  comply  with  local
insurance laws.

Comprehensive  income  excludes  net realized investment  gains  (after  income
taxes) of $.4 million in 1999 and $.3 million in 1998.

4.DEFERRED ACQUISITION COSTS AND PRESENT VALUE OF FUTURE PROFITS

The activity related to the deferred acquisition costs is summarized as follows
(in thousands):

<TABLE>
<CAPTION>
                                                                                    Year Ended December 31

                                                            1999                        1998                        1997
<S>                                                  <C>                          <C>                        <C>
Balance, beginning of year                           $           32,946           $          21,435          $           18,309
  Additions                                                      27,817                      14,200                       7,192
  Amortization                                                   (4,580)                     (3,316)                     (1,643)
  Adjustment relating to net unrealized (gain) loss
    on securities available for sale                             11,628                         627                      (2,423)
Balance, end of year                                 $           67,811           $          32,946          $           21,435

The activity related to the present  value  of  future profits is summarized as
follows (in thousands):

                                                                                    Year Ended December 31
                                                            1999                        1998                        1997
Balance, beginning of year                           $           28,793           $          20,537          $           23,806
  Amounts and adjustments related to acquisitions                  (949)                     10,401                      (1,374)
     and disposals
  Interest accreted on unamortized balance                        3,890                       4,223                       3,178
  Gross amortization during the year                             (6,517)                     (6,088)                     (4,844)
  Adjustments relating to net unrealized (gain) loss
    on securities available for sale                              5,471                        (280)                       (229)
Balance, end of year                                 $           30,688           $          28,793          $           20,537
</TABLE>

The percentages of future expected net amortization of the beginning balance of
the present value of future profits, before the effect  of net unrealized gains
and losses, will be between 8% and 10% in each of the years  2000 through 2004.
Future  net  amortization  is based on the present value of future  profits  at
December 31, 1999 and current  assumptions  as to future events on all policies
in force.

The  discount  rate  used  to calculate the present  value  of  future  profits
reflected in the Company's consolidated  balance  sheets  at December 31, 1999,
ranged  from 7.5% to 18%. The Company used discount rates of  13%  and  15%  to
calculate the present value of future profits of the Savers Life and Midwestern
Life acquisitions, respectively.






<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



5.NOTES PAYABLE

Notes payable were as follows (in thousands):



                                             Interest          December 31
                                               Rate          1999      1998

Borrowings under revolving credit agreements  9.30%{(1)}  $ 24,500  $ 25,000
Senior subordinated convertible notes        10.00%         10,000    10,000
                                                          $ 34,500  $ 35,000

    (1)Current weighted average rate at December 31, 1999.

BORROWINGS UNDER REVOLVING CREDIT AGREEMENTS

Standard Management has outstanding borrowings at December 31, 1999 pursuant to
the Amended Credit Agreement that provides for it to borrow up to $26.0 million
in the form  of  a  seven-year  reducing  revolving  loan arrangement. Standard
Management  has agreed to pay a non-use fee of .50% per  annum  on  the  unused
portion of the  commitment.  In connection with the original and Amended Credit
Agreement, SMC issued warrants  to the bank to purchase 93,500 shares of Common
Stock.  Borrowings  under  the  Amended   Credit  Agreement  may  be  used  for
contributions to surplus of insurance subsidiaries,  acquisition  financing and
repurchases of Common Stock. The debt is secured by a Pledge Agreement  of  all
of  the  issued  and  outstanding  shares  of Common stock of Standard Life and
Standard  Marketing.  Interest  on  the borrowings  under  the  Amended  Credit
Agreement is determined, at the option of SMC, to be: (i) a fluctuating rate of
interest to the corporate base rate announced by the bank periodically, plus 1%
per annum, or (ii) a rate at LIBOR plus 3.25%.  The repayment schedule includes
$2.8 million due March 2000 and $4.3  million  each  year  thereafter  to March
2005.   Indebtedness incurred under the Amended Credit Agreement is subject  to
certain restrictions  and  covenants  including,  among  other  things, certain
minimum  financial  ratios, minimum consolidated equity requirements  for  SMC,
positive net income,  minimum  statutory surplus requirements for the Company's
insurance  subsidiaries and certain  limitations  on  acquisitions,  additional
indebtedness, investments, mergers, consolidations and sales of assets.

SMI has an unused  line  of  credit  of  $1.6  million,  with  no borrowings in
connection with this line of credit in 1999 or 1998.

SENIOR SUBORDINATED CONVERTIBLE NOTES

Standard  Management has outstanding borrowings under subordinated  convertible
notes (collectively,  the  "Notes") of $4.4 million which is due December 2003,
unless previously converted,  and requires interest payments in cash on January
1 and July 1 of each year at 10%  per  annum and $5.6 million which is due July
2004 unless previously converted, and also  requires  interest payments in cash
on  January  1  and  July  1  of  each  year at 10% per annum.  The  Notes  are
convertible at any time at the option of  the noteholders into SMC Common Stock
at the rate of $5.747 per share. The Notes  may  be prepaid in whole or in part
at the option of Standard Management commencing on  July  1, 2000 at redemption
prices  equal  to  105%  of  the principal amount (plus accrued  interest)  and
declining to 102% of the principal amount plus accrued interest.  The Notes may
be prepaid prior to July 1, 2000  at  a  redemption  price equal to 101% of the
principal amount (plus accrued interest) under certain  limited  circumstances.
The  Notes  are  subject  to  certain  restrictions and covenants substantially
similar to those in the Amended Credit Agreement.

INTEREST PAID

Cash paid for interest was $3.4 million,  $2.7  million,  and  $1.5  million in
1999, 1998 and 1997, respectively.




<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



6.INCOME TAXES

The components of the federal income tax expense (benefit), applicable  to pre-
tax income before extraordinary gains, were as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                    Year Ended December 31

                                                            1999                        1998                        1997
<S>                                                  <C>                              <C>                      <C>

Current taxes (benefit)                              $        151                     $         673            $          (570)
Deferred taxes                                              1,975                               957                      1,187
                                                     $      2,126                     $       1,630            $           617
</TABLE>

The  effective tax rate on pre-tax income is lower than the statutory corporate
federal income tax rate as follows (in thousands):

<TABLE>
<CAPTION>
                                                                                         Year Ended December 31

                                                                1999                     1998                      1997
<S>                                                          <C>                      <C>                       <C>

Federal income tax expense at statutory rates (34%)          $       2,515            $       2,146             $       1,109
Nonrecognition of losses in SMC consolidated return and in
  foreign subsidiaries                                                  --                       --                       314
Operating income in SMC consolidated return offset by NOL             (219)                     (83)                       --
  carryforwards
Amortization of negative goodwill                                       --                     (472)                     (472)
Tax benefits from capital loss carryforwards not                        --                       --                      (200)
  previously recognized
Other items, net                                                      (170)                      39                      (134)
    Federal income tax expense (benefit)                     $       2,126            $       1,630             $         617
Effective tax rate                                                      29%                      26%                       19%
</TABLE>

The Company  recovered  $.4  million,  $1.7 million and $1.3 million in federal
income  taxes in 1999, 1998 and 1997, respectively,  and  paid  federal  income
taxes of  $.1  million,  $.7  million  and  $.2 million in 1999, 1998 and 1997,
respectively.

Deferred  income  taxes reflect the net tax effects  of  temporary  differences
between the carrying  amounts of assets and liabilities for financial reporting
purposes and the amounts  used  for  tax return purposes. Significant temporary
differences included in the Company's  deferred tax assets (liabilities) are as
follows (in thousands):

<TABLE>
<CAPTION>
                                                                                                 December 31

                                                                            1999                                 1998
<S>                                                                      <C>                                    <C>

Deferred income tax assets:
  Future policy benefits                                                 $    15,867                            $  12,338
  Unrealized loss on securities available for sale                            12,037                                   --
  Capital and net operating loss carryforwards                                 5,659                                5,556
  Other-net                                                                    1,435                                1,567
    Gross deferred tax assets                                                 34,998                               19,461
  Valuation allowance for deferred tax assets                                 (7,858)                              (9,023)
    Deferred income tax assets, net of valuation allowance                    27,140                               10,438
Deferred income tax liabilities:
  Unrealized gain on securities available for sale                                --                               (2,514)
  Present value of future profits                                            (10,435)                              (9,791)
  Deferred policy acquisition costs                                          (17,054)                              (5,753)
    Total deferred income tax liabilities                                    (27,489)                             (18,058)
  Net deferred income tax liabilities                                    $      (349)                           $  (7,620)
</TABLE>




<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



6.INCOME TAXES (CONTINUED)

The Company is required to establish a "valuation allowance" for any portion of
its  deferred  tax assets which are unlikely  to  be  realized.  The  valuation
allowance for deferred  tax  assets  includes  $.6 million at December 31, 1999
with respect to corporate income tax loss carryforwards  of Standard Management
International,  S.A.  which,  if recognized in the future, will  result  in  an
addition to negative goodwill and  be  amortized into income over its remaining
life. The valuation allowance for deferred  tax assets includes $1.8 million at
December  31,  1999  with  respect  to  deferred tax  assets  at  the  date  of
acquisition and net tax operating loss carry  forwards of Dixie Life and Shelby
Life which, if recognized in the future, will result in a reduction to goodwill
and  be  amortized into income over its remaining  life  by  reducing  goodwill
amortization expense.

As of December  31, 1999, Standard Management and its noninsurance subsidiaries
had consolidated net operating loss carryforwards of approximately $9.4 million
for  tax  return  purposes   which   expire  from  2005  through  2018.   These
carryforwards will only be available to  reduce  the taxable income of Standard
Management.  At December 31, 1999, the Standard Life  consolidated  return  had
net  operating loss carryforwards of approximately $5.3 million which expire in
2010 and  2019.   These  carryforwards  will  only  be  available to reduce the
taxable income of the Standard Life consolidated return.  At December 31, 1999,
Premier   Life   (Luxembourg)  had  accumulated  corporate  income   tax   loss
carryforwards of approximately  $1.6  million,  all  of  which  may  be carried
forward indefinitely.

7.SHAREHOLDERS EQUITY

REDEEMABLE PREFERRED STOCK

Shareholders have authorized 1,000,000 shares of Preferred Stock. Other  terms,
including preferences, voting and conversion rights, may be established by  the
Board of Directors.

In  1998,  130,000  shares of the authorized preferred stock were designated as
Series A convertible  redeemable  preferred stock ("Series A preferred stock").
The Company issued 65,300 shares with  a stated value of $6.5 million ($100 per
share) in 1998.  The following, among other  things, are characteristics of the
Series A preferred stock:

The holders are entitled to cumulative annual  dividends  of  $7.75  per  share
(payable quarterly).

Conversion  into  11.767  shares  of  SMC  common  stock  per share of Series A
preferred stock.

Redeemable on July 1, 2003.

Redemption by the Company may occur at 105% of stated value  beginning  July 1,
1999 and decreasing 1% per year to 100% at July 1, 2003.

There are no voting rights attached to these shares.

COMMON STOCK

The Company repurchased 92,124, 308,465, and 154,903 shares of Common Stock for
$.6   million,  $1.7  million,  and  $1.1  million  in  1999,  1998  and  1997,
respectively  under  its  stock  repurchase program.  At December 31, 1999, the
Company was authorized to purchase  an  additional  964,790  shares  under this
program.

The following table represents outstanding warrants to purchase Common Stock as
of December 31, 1999:

                                                    Exercise     Warrants
ISSUE DATE            EXPIRATION DATE                Price     Outstanding

November 1995           November 2002               4.5238        31,500
July 1996               July 2003                   4.3750        30,000
April 1997              April 2004                  5.1250        12,000
July 1997               July 2000                   5.7500        50,000
September 1997          September 2000              7.5000        15,000
February 1998           August 2000                 8.2500        50,000
June 1998               June 2001                   7.5000        25,000
October 1998            October 2001                8.0000        75,000
October 1998            October 2001                7.1250        20,000
January 1999            December 2000               7.0000        15,000
January 1999            January 2002                6.6250        89,750
                                                                 413,250




<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



7.SHAREHOLDERS EQUITY (CONTINUED)

CHANGES IN SHARES OF COMMON STOCK AND TREASURY STOCK

The  following  table  represents  changes in the number of common and treasury
shares as of December 31:

<TABLE>
<CAPTION>
                                                            1999                      1998                     1997
<S>                                                       <C>                       <C>                       <C>
Common Stock:
  Balance, beginning of year                               8,802,313                 5,752,499                5,752,499
    Issuance of common stock                                 235,821                 3,049,814                       --
  Balance, end of year                                     9,038,134                 8,802,313                5,752,499
Treasury Stock:
  Balance, beginning of year                              (1,160,854)                 (876,009)                (728,229)
    Treasury stock acquired                                  (92,124)                 (308,465)                (154,903)
    Reissuance of treasury stock in connection                    --                    23,620                    7,123
      with exercise of stock options
  Balance, end of year                                    (1,252,978)               (1,160,854)                (876,009)
</TABLE>


UNREALIZED GAIN ON SECURITIES

The components of the balance sheet  caption  "Unrealized  gain  on  securities
available  for  sale"  in  shareholders'  equity are summarized as follows  (in
thousands):

<TABLE>
<CAPTION>
                                                                                                 December 31

                                                                                  1999                                 1998
<S>                                                                         <C>                                 <C>

Fair value of securities available for sale                                 $    607,285                        $    552,628
Amortized cost of securities available for sale                                  646,849                             548,613
  Gross unrealized gain (loss) on securities available for sale                  (39,564)                              4,015
Adjustments for:
  Deferred acquisition costs                                                      10,527                              (1,101)
  Present value of future profits                                                  4,982                                (489)
  Deferred federal income taxes                                                    8,196                                (765)
    Net unrealized gain (loss) on securities available for sale             $    (15,859)                       $      1,660
</TABLE>

8.STOCK OPTION PLAN

SMC has a non-qualified Stock Option Plan (the  "Plan")  under  which 2,500,000
shares  of  Common Stock are reserved for grants of stock options to  employees
and directors.  The  purchase price per share specified in any Plan option must
be at least equal to the  fair  market value of common stock at the grant date.
Options generally become exercisable  over  a three-year period and have a term
of 10 years. The Plan is administered by the Board of Directors and officers of
SMC. The terms of the options, including the  number of shares and the exercise
price, are subject to the sole discretion of the  Board  of Directors.  A total
of 88,118 shares are available for future issuance for the  Plan as of December
31, 1999.

The  provisions  of   SFAS No. 123, "Accounting for Stock-Based  Compensation",
allows companies to either expense the estimated fair value of stock options or
to continue their current  practice  and  disclose the pro forma effects on net
income and earnings per share had the fair  value of the options been expensed.
The Company has elected to continue its practice  of  recognizing  compensation
expense  for its Plan using the intrinsic value based method of accounting  and
to provide  the  required pro forma information.  Had compensation cost for the
Plan been determined based on the fair value at the grant date for awards under
the Plan consistent  with  the  provisions  of  SFAS No. 123, the Company's pro
forma net income and pro forma earnings per share would have been the following
(in thousands, except per share amounts):




8.STOCK OPTION PLAN (CONTINUED)


<TABLE>
<CAPTION>
                                                                       Year Ended December 31
                                              1999            1998            1997
<S>                                       <C>               <C>             <C>

Net income                                $   3,640         $   3,094       $    624
Earnings per share                              .41               .43            .11
Earnings per share, assuming dilution           .41               .43            .11
</TABLE>

The fair value of each option grant is estimated on the date of grant using the
Black-Scholes   option-valuation  model  with  the  following  weighted-average
assumptions :

<TABLE>
<CAPTION>

                                           1999                      1998                    1997
<S>                                       <C>                       <C>                     <C>
Risk-free interest rates                    5.6%                      5.6%                    5.7%
Volatility factors                          .59                       .55                     .37
Weighted average expected life            7 years                   7 years                 7 years
</TABLE>


The Black-Scholes  option  valuation  model was developed for use in estimating
the fair value of traded options which  have  no  vesting  restrictions and are
fully transferable.  In addition, option valuation models require  the input of
highly  subjective  assumptions  including the expected stock price volatility.
Because the Company's employee stock options have characteristics significantly
different  from those of traded options,  and  because  changes  in  subjective
assumptions  can  materially  affect  the  fair value estimate, in management's
opinion, the existing models do not provide  a  reliable  single measure of the
fair value of its employee stock options.  Because SFAS No.  123  is  effective
only  for  awards  granted  after  January  1,  1995, the pro forma disclosures
provided may not be representative of the effects  on  reported  net income for
future years.

A  summary  of the Company's stock option activity and related information  for
the years ended December 31, 1999, 1998 and 1997 is as follows:

<TABLE>
<CAPTION>
                                           1999
                                                                              1998                             1997

                                                  Weighted-                          Weighted-                      Weighted-
                                                   Average                            Average                        Average
                                                  Exercise                           Exercise                       Exercise
                                                    Price                              Price                          Price
                                 Shares                              Shares                           Shares
<S>                             <C>              <C>                <C>             <C>            <C>              <C>

Options outstanding, beginning   1,891,287       $      6.15         1,916,820      $     6.08      1,446,169       $    5.98
of year
Exercised                          (19,163)             4.45           (97,988)           5.23        (17,300)           4.52
Granted                            633,300              6.15            79,950            6.94        685,000            6.29
Expired or forfeited               (93,542)             7.91            (7,495)           6.75       (197,049)           4.30
Options outstanding, end of      2,411,882              6.10         1,891,287            6.15      1,916,820            6.08
year
Options exercisable, end of      1,973,799                           1,664,153                      1,467,185
year
Weighted-average fair value of
options                         $     3.94                          $     4.42                     $     3.10
granted during the year
</TABLE>





<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



8.STOCK OPTION PLAN (CONTINUED)

Information with  respect  to stock options outstanding at December 31, 1999 is
as follows:

<TABLE>
<CAPTION>

                                  Options Outstanding                  Options Exercisable

                                     Weighted-       Weighted-                     Weighted-
  Range of                            Average         Average                       Average
  Exercise            Number         Remaining       Exercise         Number       Exercise
   Prices           Outstanding     Contractual        Price        Exercisable      Price
                                       Life
                                      (years)
<S>                   <C>                     <C>        <C>         <C>              <C>

    $3-5                334,550               6          $4.42         334,550        $4.42
     5-7              1,603,283               8           6.08       1,173,533         6.05
     7-9                456,199               6           7.28         447,866         7.27
    9-11                 17,850               4           9.43          17,850         9.43
                      2,411,882                                      1,973,799
</TABLE>

9.REINSURANCE

The Company's insurance subsidiaries  have  entered into reinsurance agreements
with non-affiliated companies to limit the net  loss  arising from large risks,
maintain  their  exposure  to  loss  within  capital  resources,   and  provide
additional  capacity  for  future growth.  The maximum amount of life insurance
retained on any one life ranges  from $30,000 to $150,000.  Amounts of standard
risk in excess of that limit are reinsured.

Reinsurance premiums ceded to other  insurers were $25.3 million, $17.0 million
and $4.8 million in 1999, 1998 and 1997,  respectively.   Reinsurance ceded has
reduced benefits and claims incurred by $2.7 million, $10.5  million  and  $5.4
million in 1999, 1998 and 1997, respectively.  A contingent liability exists to
the extent any of the reinsuring companies are unable to meet their obligations
under  the  reinsurance agreements.  To minimize exposure to significant losses
from reinsurance insolvencies, the Company evaluates the financial condition of
its reinsurers  and monitors concentrations of credit risk arising from similar
geographic regions,  activities  or economic characteristics of the reinsurers.
Based on its periodic reviews of these  companies,  the  Company  believes  the
assuming  companies  are  able  to  honor all contractual commitments under the
reinsurance agreements.

At December 31, 1999 the Company's largest  annuity  reinsurer,  which is rated
"A"  (Excellent)  by  A.M. Best, represented $28.5 million, or 60.5%  of  total
reinsurance recoverable  and  $.1  million  of  premium  deposits  ceded.  From
January 1, 1996 to March 31, 1996, approximately 50% of Standard Life's annuity
business was ceded.  Effective April 1, 1996, Standard Life reduced  the amount
ceded  to  25%  and  effective October 1, 1998, discontinued ceding its annuity
business.

On July 1, 1998, Savers  Life's Medicare supplement business was sold to Oxford
Life  Insurance Company ("Oxford  Life")  through  a  quota  share  reinsurance
agreement.   Under  the  terms  of  the  reinsurance  agreement,  Standard Life
administered  the  Medicare  supplement  business  through October 1, 1999  and
received administration fee income.  Effective December 31, 1998, Standard Life
replaced  Savers  Life  as  a party to this reinsurance  agreement  and  became
responsible  for  the  administration  of  the  Medicare  supplement  business.
Effective December 1, 1999,  the  assumption  of  the  business was effected by
Oxford Life.

10.RELATED PARTY TRANSACTIONS

On October 28, 1997, SMC made an interest-free loan to an  officer and director
of  SMC,  in  the  amount of $778,000, representing a new loan in  the  sum  of
$438,000 and the consolidation  of  an existing loan.  The principal balance of
the loan was $778,000 at December 31,  1999  and 1998.  Repayment is due within
10 days of the officer's voluntary termination  or resignation as an officer of
SMC.   In  the  event  of a termination of the officer's  employment  with  SMC
following a change in control, the loan is deemed to be forgiven.

On September 2, 1998, SMC  made  a  loan to a director of SMC, in the amount of
$120,000 with an interest rate of prime  plus 5%.  The principal balance of the
loan  was  $61,700  at December 31, 1999 and  1998.   The  director  has  since
resigned.

SMC entered into a covenant  not to compete agreement with a former officer and
director in February 1997, effective  July  1,  1996,  the  date his employment
agreement terminated. In accordance with the covenant not to compete agreement,
the officer and director received payments of $100,000, $125,000  and  $275,000
in 1999, 1998 and 1997 respectively.

10.RELATED PARTY TRANSACTIONS (CONTINUED)

In  1998,  certain  officers  and  directors  purchased  31,000 shares, or $3.1
million of the Series A preferred stock as described in Note  7.   These shares
were  purchased  in connection with a loan agreement of $2.6 million which  the
Company has guaranteed.

11.COMMITMENTS AND CONTINGENCIES

LEASE COMMITMENTS

The Company rents  office  and  storage  space  under  noncancellable operating
leases. The Company incurred rent expense for operating leases of $1.1 million,
$1.0 million, and $.9 million in 1999, 1998 and 1997, respectively. Pursuant to
the terms of a lease agreement effective June 1, 1991, Standard Life has agreed
to lease office space for a ten year period. After the initial  ten  year lease
period,  Standard  Life may continue to lease the premises on a month to  month
basis at a rental of 125% of the prevailing market rate for the leased premises
in effect at that time.

Future required minimum  rental  payments,  by year and in the aggregate, under
operating leases as of December 31, 1999, are as follows (in thousands):

2000                         $   1,126
2001                               722
2002                               222
2003                               192
2004                               124
Thereafter                         124
Total minimum lease payments $   2,510


EMPLOYMENT AGREEMENTS

Certain officers are employed pursuant to executive  employment agreements that
create  certain  liabilities  in the event of the termination  of  the  covered
executives following a change in  control  of the Company. The commitment under
these agreements is approximately three times  their  current  annual salaries.
Additionally,  following  termination  from  the  Company  due  to a change  in
control, each executive is entitled to receive a lump sum payment  equal to all
unexercised  stock  options  granted  multiplied by the highest per share  fair
market value during the six month period  ending  on  the  date of termination.
There were unexercised options outstanding to these executives to buy 1,852,880
shares at December 31, 1999.


12.LITIGATION

An officer and director of SMC resigned effective April 15,  1997.  On June 19,
1997, this former officer commenced an action in the Superior  Court  of Marion
County, Indiana against SMC claiming that his employment agreement contained  a
provision  to  the  effect that, following a termination of his employment with
SMC under certain circumstances,  he  would  be  entitled  to  receive  certain
benefits.   This  former  officer has asserted to SMC that he is entitled to  a
lump  sum termination payment  of  $1.7  million  and  liquidated  damages  not
exceeding  $3.3  million by virtue of his voluntarily leaving SMC's employment.
SMC disputes those  claims.  SMC filed its Answer and Counterclaim on September
11, 1997.  SMC's investigation  since the action was filed revealed a basis for
the termination of employment of  the  former  officer  for  cause  relative to
after-acquired  evidence.  On October 14, 1997, the Board of Directors  of  SMC
terminated the former  officer  for  cause  effective  March  15,  1997.   Such
termination will also be argued by SMC as  a  complete  defense  to  all claims
asserted by the former officer.  The ultimate  outcome  of  the  action  cannot
presently  be  determined.   Accordingly,  no provision for any liability  that
may result has been made in the consolidated financial  statements.  Management
believes   that  the  conclusion  of  such litigation will not have  a material
adverse effect  on  SMC's  consolidated financial condition.

In addition, the Company is involved in various legal proceedings in the normal
course  of  business. In most cases,  such  proceedings  involve  claims  under
insurance policies  or  other  contracts  of the Company. The outcomes of these
legal proceedings are not expected to have  a  material  adverse  effect on the
consolidated  financial position, liquidity or future results of operations  of
the Company based  on the Company's current understanding of the relevant facts
and law.




<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)





13.STATUTORY ACCOUNTING INFORMATION OF SUBSIDIARIES

The  Company's U.S. life  insurance  subsidiaries  maintain  their  records  in
conformity with statutory accounting practices prescribed or permitted by state
insurance  regulatory  authorities.  Statutory  accounting  practices differ in
certain  respects from GAAP. In consolidation, adjustments have  been  made  to
conform the Company's domestic subsidiaries' accounts with GAAP.

The Company's  U.S.  life  insurance  subsidiaries  had  consolidated statutory
capital and surplus of $43.7 million and $43.6 million at December 31, 1999 and
1998,  respectively,  after elimination of subsidiaries intercompany  accounts.
Consolidated net income  of  the  Company's  life  insurance  subsidiaries on a
statutory  basis, after elimination of subsidiaries intercompany  accounts  was
$.9 million,  $1.7  million,  and $1.8 million for the years ended December 31,
1999,  1998  and 1997, respectively.  Minimum  statutory  capital  and  surplus
required by the Indiana Insurance Code was $.5 million as of December 31, 1999.

"Prescribed" statutory  accounting  practices include a variety of publications
of the National Association of Insurance  Commissioners  ("NAIC"),  as  well as
state   laws,   regulations,  and  general  administrative  rules.  "Permitted"
statutory accounting  practices encompass all accounting practices that are not
prescribed; such practices  may  differ  from  state  to state, may differ from
company to company within a state and may change in the  future.  In  1998, the
NAIC  adopted  codified statutory accounting practices, the result of which  is
expected to constitute  the  only  source  of "prescribed" statutory accounting
practices. Accordingly, that project, which is expected to be adopted by states
with an implementation date of January 1, 2001,  will  likely  change,  to some
extent, prescribed statutory accounting practices, and may result in changes to
the  accounting  practices  that  insurance  enterprises  use  to prepare their
statutory financial statements.

Standard  Life  strengthened  policy  reserves by $.7 million in 1999  and  $.3
million in 1998 pursuant to the statutory  Actuarial  Guideline  33.   Standard
Life  received permission from the Indiana Department of Insurance Commissioner
to grade  in  the  remaining effect of Actuarial Guideline 33 over three years.
This permitted accounting  practice  increased statutory surplus by $.3 million
at December 31, 1999.

From the funds borrowed by SMC pursuant to the Amended Credit Agreement and the
subordinated  convertible  debt agreement,  $27.0  million  ($13.0  million  at
December 31, 1997) was loaned to Standard Life pursuant to an Unsecured Surplus
Debenture Agreement ("Surplus  Debenture") which requires Standard Life to make
quarterly interest payments to SMC  at  a  variable corporate base rate plus 2%
per annum, and annual principal payments of  $1.0 million per year beginning in
2007 and concluding in 2033. As required by state  regulatory  authorities, the
balance of the surplus debenture at December 31, 1999 and 1998 of $27.0 million
is classified as a part of capital and surplus of Standard Life.  The  interest
and  principal  payments  are  subject  to  quarterly  approval  by the Indiana
Department of Insurance, depending upon satisfaction of certain financial tests
relating to levels of Standard Life's capital and surplus and general  approval
of the Commissioner of the Indiana Department of Insurance.

SMC's  ability  to pay operating expenses and meet debt service obligations  is
partially dependent  upon  the amount of dividends received from Standard Life.
Standard Life's ability to pay cash dividends to SMC is, in turn, restricted by
law or subject to approval by  the insurance regulatory authorities of Indiana.
Dividends  are  permitted based on,  among  other  things,  the  level  of  the
preceding year statutory  surplus  and  net income.  In 1997 Standard Life paid
dividends of $1.6 million to SMC. During  2000, Standard Life can pay dividends
of $4.4 million without regulatory approval;  Standard  Life  must  notify  the
Indiana regulatory authorities of the intent to pay dividends at least ten days
prior to payment.

State  insurance  regulatory  authorities  impose  minimum  risk-based  capital
requirements  on  insurance  enterprises  that  were developed by the NAIC. The
formulas  for  determining  the amount of risk-based  capital  ("RBC")  specify
various weighting factors that  are  applied  to  financial balances or various
levels of activity based on the perceived degree of  investment  and  insurance
risks.  Regulatory  compliance  is  determined by a ratio (the "Ratio") of  the
enterprise's regulatory total adjusted  capital, as defined by the NAIC, to its
authorized  control  level  RBC, as defined  by  the  NAIC.  Enterprises  below
specific trigger points or ratios are classified within certain levels, each of
which requires specified corrective  action.   At  December  31,  1999, the RBC
Ratios of Standard Life and Dixie Life were both at least two and a  half times
greater than the levels at which company action is required.

The  statutory  capital  and  surplus  for  Premier  Life (Luxembourg) was $6.9
million and $6.8 million at fiscal years ended 1999 and 1998, respectively, and
minimum capital and surplus under local insurance regulations  was $2.6 million
and  $2.9  million  at  fiscal  years  ended 1999 and 1998, respectively.   The
statutory capital and surplus for Premier  Life  (Bermuda) was $2.2 million and
$2.1  million at fiscal years ended 1999 and 1998,  respectively,  and  minimum
capital and surplus under local insurance regulations was $.3 million at fiscal
years ended  1999  and  1998.  SMI  dividends  are  limited  to its accumulated
earnings  without  regulatory approval. SMI and Premier Life (Luxembourg)  were
not permitted to pay  dividends  under  Luxembourg  law in 1999 and 1998 due to
accumulated losses.






<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



14.OPERATIONS BY BUSINESS SEGMENT

In 1998, the Company adopted SFAS No. 131, "Disclosures  about  Segments  of an
Enterprise  and  Related  Information". Under this new pronouncement, effective
for financial statements issued  for  fiscal years beginning after December 15,
1997, a company must provide disclosures  about  operating segments on the same
basis  it uses internally to evaluate the performance  of  its  operations  and
allocate  its  resources.   The  Company identified the following two operating
segments which are the primary components of its business.

DOMESTIC OPERATIONS includes revenues  earned and expenses incurred from United
States operations and includes deposits  and/or  income  from  annuity products
(primarily  FPDA's),  equity  indexed  products,  universal  life products  and
traditional  life  products.   The  profitability  for  this segment  primarily
depends  on  the investment spread earned (annuities and universal  life),  the
persistency of the in-force business, claim experience and expense management.

INTERNATIONAL  OPERATIONS  includes  revenues earned and expenses incurred from
abroad, primarily Europe, and includes  fees  collected  on deposits from unit-
linked products.  The profitability for this segment primarily  depends  on the
amount  of separate account assets under management, the management fee charged
on those assets and expense management.

The accounting  policies  of  the  segments are the same as described in Note 1
(Summary   of  Significant  Accounting  Policies).    The   following   segment
presentation  contains  the same operating data and results the Company uses to
evaluate the performance  of  the  business  and  provides  reconciliations  to
consolidated totals (in thousands):




<TABLE>
<CAPTION>
                                                                                    Year Ended December 31

                                                          1999                        1998                        1997
<S>                                                <C>                         <C>                         <C>

Revenues:
  Domestic                                         $           68,477          $           58,055          $           42,651
  International                                                 4,486                       5,220                       4,204
    Consolidated Revenues                          $           72,963          $           63,275          $           46,855

Net Investment Income:
  Domestic                                         $           44,376          $           33,721          $           28,614
  International                                                   445                         500                         583
    Consolidated Net Investment Income             $           44,821          $           34,221          $           29,197
Interest Credited to Interest Sensitive Annuities
  and Other Financial Products (All Domestic)      $           25,728          $           19,775          $           16,281

Pre-tax Income:
  Domestic                                         $            6,132          $            4,053          $            1,542
  International                                                 1,266                       2,258                       1,720
    Consolidated Pre-tax Income                    $            7,398          $            6,311          $            3,262

Assets:
  Domestic                                         $          811,653          $          750,683          $          508,476
  International                                               339,324                     205,467                     160,516
    Consolidated Assets                            $        1,150,977          $          956,150          $          668,992
</TABLE>

15.DERIVATIVE FINANCIAL INSTRUMENTS

In  May  1998,  Standard  Life  began offering  equity-indexed annuity products
which provide a base rate of return  with  a  higher potential return linked to
the performance of a broad-based equity index.   The  Company  buys  Standard &
Poor's  500  Index  Call  Options (the "S&P 500 Call Options") in an effort  to
hedge potential increases to  policyholder benefits resulting from increases in
the S&P 500 Index to which the product's return is linked.  The cost of the S&P
500 Call Options is included in  the  pricing  of  the  equity-indexed  annuity
products.   The changes in the values of the S&P 500 Call Options are reflected
in net investment  income  and fluctuate in relation to changes in policyholder
account  balances  for  these  annuities.   Premiums  paid  to  purchase  these
instruments are deferred and amortized over their term.
15.DERIVATIVE FINANCIAL INSTRUMENTS (CONTINUED)

Net investment income includes $1.2  million  and $.6 million in 1999 and 1998,
respectively, related to changes in the fair value of the S&P 500 Call Options.
Such  investment  income  was  substantially  offset  by  amounts  credited  to
policyholder account balances.  The fair value  of the S&P 500 Call Options was
$5.3 million and $1.8 million at December 31, 1999 and 1998, respectively.

If the counterparts of the aforementioned financial  instruments  do  not  meet
their  obligations,  the  Company  may  have  to recognize a loss.  The Company
limits its exposure to such a loss by diversifying among several counterparties
believed  to be strong and creditworthy.  At December  31,  1999,  all  of  the
counterparties were rated "A" or higher by Standard & Poor's.


16.FAIR VALUE OF FINANCIAL INSTRUMENTS

The following  discussion  outlines  the  methods  and  assumptions used by the
Company in estimating its fair value disclosures for its  financial  instrument
assets  and  liabilities.  Because fair values for all balance sheet items  are
not required to  be disclosed pursuant to SFAS No. 107, "Disclosures about Fair
Values of Financial  Instruments",  the  aggregate fair value amounts presented
herein  do  not  necessarily represent the underlying  value  of  the  Company;
likewise, care should  be exercised in deriving conclusions about the Company's
business or financial condition  based  on the fair value information presented
herein.

FIXED MATURITY SECURITIES: Fair values for  fixed maturity securities are based
on  quoted  market  prices  from broker-dealers,  where  available.  For  fixed
maturity securities not actively traded, fair values are estimated using values
obtained  from  independent pricing  services,  or,  in  the  case  of  private
placements, are estimated  by  discounting the expected future cash flows using
current market rates applicable  to the coupon rate, credit rating and maturity
of the investments.


EQUITY SECURITIES: The fair values  for  equity  securities  are  based  on the
quoted market prices.

DERIVATIVE  SECURITIES: The fair values for derivative securities are based  on
internal methods developed by our investment advisor.

MORTGAGE LOANS  AND  POLICY LOANS: The estimated fair values for mortgage loans
and policy loans are estimated using discounted cash flow analyses and interest
rates currently being  offered  for  similar  loans  to  borrowers with similar
credit ratings.

ASSETS AND LIABILITIES HELD IN SEPARATE ACCOUNTS: Fair values  for  the  assets
held  in  separate  accounts  are  determined from broker-dealers or valuations
supplied by internationally recognized  statistical  rating  organizations. The
separate   account   liability   represents   the   Company's  obligations   to
policyholders and approximates fair value.

INSURANCE LIABILITIES FOR INVESTMENT CONTRACTS: Fair  values  for the Company's
liabilities  under  investment-type  insurance  contracts  are estimated  using
discounted  cash  flow  calculations,  based on interest rates currently  being
offered for similar contracts with maturities  consistent  with those remaining
contracts  being  valued.  The  estimated  fair  value  of the liabilities  for
investment contracts was approximately equal to its carrying  value at December
31,  1999 and 1998.  This is due to i) credited rates on the vast  majority  of
account  balances  approximating  current rates paid on similar investments and
ii) rates not generally being guaranteed beyond one year.



INSURANCE LIABILITIES FOR NON-INVESTMENT  CONTRACTS: Fair value disclosures for
the  Company's  reserves  for insurance contracts  other  than  investment-type
contracts are not required  and  have  not  been  determined  by  the  Company.
However,  the  Company  closely monitors the level of its insurance liabilities
and the fair value of reserves  under  all  insurance  contracts are taken into
consideration in the Company's overall management of interest rate risk.

NOTES  PAYABLE:  The  Company  believes  the  fair value of its  variable  rate
long-term debt was equal to its carrying value  at  December 31, 1999 and 1998.
The  Company  negotiated  the terms of its Amended Credit  Agreement  with  its
lenders  in November 1996. Those  negotiations  were  based  on  the  financial
condition  of  the  Company  and  market conditions at that time. The financial
condition of the Company has not changed  significantly since the negotiations,
and although market conditions have changed,  the  Company pays a variable rate
of interest on the debt which reflects the change in  market  conditions.   The
fair  value  of  the  subordinated  convertible  debt is based on quoted market
prices for the amount of shares convertible.

The carrying amount of all other financial instruments  approximates their fair
values.




<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



FAIR VALUE OF FINANCIAL INSTRUMENTS (CONTINUED)

The fair value of the Company's financial instruments is  shown  below  using a
summarized version of the Company's assets and liabilities at December 31, 1999
and  1998  (in thousands).  Refer to Note 3 for additional information relating
to the fair value of investments.

<TABLE>
<CAPTION>
                                                                                     December 31

                                                            1999                                          1998

                                               Fair                  Carrying                 Fair                 Carrying
                                               Value                  Amount                  Value                 Amount
<S>                                         <C>                     <C>                     <C>                    <C>
Assets:

  Investments:
    Securities available for sale:
      Fixed maturity securities             $       606,907         $       606,907         $      551,312         $      551,312
      Equity securities                                 378                     378                  1,316                  1,316
    Mortgage loans on real estate                     8,392                   8,131                  8,856                  8,578
    Policy loans                                     13,357                  14,033                 14,295                 15,019
    Other invested assets                               845                     845                    837                    837
    Short-term investments                           14,976                  14,976                 11,626                 11,626
  Cash                                                3,659                   3,659                 13,591                 13,591
  Assets held in separate accounts                  319,973                 319,973                190,246                190,246

Liabilities:
  Insurance liabilities for investment              595,388                 595,388                506,749                506,749
    contracts
  Notes payable                                      34,500                  34,500                 37,180                 35,000
  Liabilities related to separate accounts          319,973                 319,973                190,246                190,246
</TABLE>


17.EARNINGS PER SHARE

A reconciliation  of  income  and  shares  used  to calculate basic and diluted
earnings per share is as follows (dollars in thousands):

<TABLE>
<CAPTION>
                                                                 1999                     1998                       1997
<S>                                                         <C>                        <C>                    <C>
INCOME:
  Net Income                                                $        5,272             $     4,681            $      2,645
  Preferred stock dividends                                           (506)                   (180)                    (97)
  Income available to common shareholders for basic earnings         4,766                   4,501                   2,548
    per share
  Effect of dilutive securities:
    Preferred stock dividends                                           --                     180                      97
    Interest on subordinated convertible debt                        1,000                   1,000                      --
  Income  available  to common shareholders for diluted     $        5,766             $     5,681            $      2,645
    earnings per share

SHARES:
  Weighted average shares outstanding for basic earnings         7,583,086               6,846,335               4,948,302
    per share
  Effect of dilutive securities:
    Stock options                                                  136,656                 263,636                 182,615
    Stock warrants                                                  93,951                 211,989                 230,285
    Class S convertible preferred stock                                 --                      --                 230,015
    Subordinated convertible debt                                1,740,038               1,740,038                      --
    Series A convertible preferred stock                                --                 301,765                      --
    Dilutive potential common shares                             1,970,645               2,517,428                 642,915

  Weighted average shares outstanding for diluted                9,553,731               9,363,763               5,591,217
    earnings per share
</TABLE>

18.QUARTERLY FINANCIAL DATA  (IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


Earnings  per  common and common equivalent share for each quarter are computed
independently of  earnings  per  share  for  the  year. Due to the transactions
affecting the weighted average number of shares outstanding in each quarter and
due to the uneven distribution of earnings during the  year,  the  sum  of  the
quarterly earnings per share may not equal the earnings per share for the year.


<TABLE>
<CAPTION>

                                                                                    1999 Quarters

                                               First                  Second                  Third                 Fourth
<S>                                      <C>                      <C>                    <C>                    <C>

Total revenues                           $         16,941         $        17,341        $        16,770        $        21,911
Components of net income:
  Operating income                       $          1,275         $         1,397                  1,468        $         1,081
  Net realized investment gains (losses)               22                       4                   (164)                   189

  Net income                             $          1,297         $         1,401        $         1,304        $         1,270

Net income per common share              $            .17         $           .19        $           .17        $           .17
Net income per common share, assuming    $            .16         $           .17        $           .16        $           .16
  dilution

                                                                                    1998 Quarters

                                               First                  Second                  Third                 Fourth

Total revenues                           $         11,676         $        19,815        $        13,987        $        17,469

Components of net income:
  Operating income                       $            734         $         1,276        $         1,120        $         1,317
  Net realized investment gains                        14                      17                     18                    185

  Net income                             $            748         $         1,293        $         1,138        $         1,502

Net income per common share              $            .14         $           .18        $           .16        $           .20
Net income per common share, assuming
dilution                                 $            .13         $           .16        $           .15        $           .17
</TABLE>

Reporting the results of insurance operations on a quarterly basis requires the
use of numerous estimates throughout the year, primarily in the computation  of
reserves,  amortization  of deferred policy acquisition costs and present value
of future profits, and the effective rate for income taxes. It is the Company's
practice to review estimates at the end of each quarter and, if necessary, make
appropriate adjustments, with  the effect of such adjustments being reported in
current operations. Only at year-end is the Company able to assess the accuracy
of  its previous quarterly estimates.  The  Company's  fourth  quarter  results
include  the  effect  of  the  difference between previous estimates and actual
year-end results. Therefore, the  results  of  an  interim  period  may  not be
indicative of the results of the entire year.







<PAGE>





         SCHEDULE II -- CONDENSED FINANCIAL INFORMATION OF REGISTRANT

                        STANDARD MANAGEMENT CORPORATION
                               (PARENT COMPANY)

                           CONDENSED BALANCE SHEETS
               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

<TABLE>
<CAPTION>

                                                                                                      December 31

                                                                                      1999                             1998
ASSETS

Investments:
<S>                                                                               <C>                               <C>
  Investment in subsidiaries                                                      $      64,120                     $    76,237
  Surplus debenture due from Standard Life                                               27,000                          27,000
  Fixed maturity securities, at fair value (amortized cost: $680 in 1999 and                680                             900
    $900 in 1998)
  Equity securities available for sale, at fair value (amortized cost: $35 in                35                              28
    1999 and $20 in 1998)
  Real estate                                                                               124                             122
  Notes receivable from officers and directors                                              845                             837
     Total investments                                                                   92,804                         105,124
Cash                                                                                        641                             940
Property and equipment, less accumulated depreciation of  $1,033 in 1999                  1,097                             862
  and $642 in 1998
Note receivable from affiliate                                                            2,858                           2,858
Amounts receivable from subsidiaries                                                      2,654                           2,338
Other assets                                                                              1,485                           1,228
     Total assets                                                                  $    101,539                      $  113,350

LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
  Notes payable                                                                    $     34,500                     $    35,000
  Note payable to affiliate                                                               2,858                           2,858
  Amounts due to subsidiaries                                                             2,134                             850
  Other liabilities                                                                       2,157                           2,070
     Total liabilities                                                                   41,649                          40,778


Class A convertible redeemable preferred stock, par value $100 per share;
  Authorized 130,000; 65,300 issued and outstanding shares in 1999 and 1998               6,530                           6,530


Shareholders' Equity:
  Preferred stock, no par value:
    Authorized 870,000 shares; none issued and outstanding                                   --                              --
  Common stock and additional paid-in capital, no par value:
    Authorized 20,000,000 shares; issued 9,038,134 in 1999 and 8,802,313 in              62,152                          60,586
      1998
  Treasury stock, at cost, 1,252,978 shares in 1999 and 1,160,854 shares in              (6,802)                         (6,220)
      1998.
  Accumulated other comprehensive income:
    Unrealized gain (loss) on securities of subsidiaries                                (15,844)                          1,683
    Foreign currency translation adjustment of subsidiaries                                (862)                              4
  Retained earnings                                                                      14,716                           9,989
     Total shareholders' equity                                                          53,360                          66,042
     Total liabilities and shareholders' equity                                     $   101,539                       $ 113,350
</TABLE>

              See accompanying notes to condensed financial statements.







    SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT - CONTINUED

                        STANDARD MANAGEMENT CORPORATION
                               (PARENT COMPANY)

                        CONDENSED STATEMENTS OF INCOME
                            (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                    Year Ended December 31

                                                          1999                          1998                        1997
<S>                                                 <C>                          <C>                          <C>

Revenues:
  Net investment loss                               $     (23)                   $      (26)                  $             --
  Interest income from subsidiaries                     2,837                         1,709                              1,519
  Net realized investment losses                         (250)                         (100)                                --
  Other income                                            149                           118                                154
  Rental income from subsidiaries                       1,040                           995                              1,145
  Management fees from subsidiaries                     3,575                         2,850                              2,100
    Total revenues                                      7,328                         5,546                              4,918


Expenses:
  Other operating expenses                              4,763                         3,134                              3,420
  Interest expense and financing costs                  3,380                         2,850                              2,367
  Interest expense on note payable to affiliate           142                           160                                162
    Total expenses                                      8,285                         6,144                              5,949

Loss before federal income taxes, equity in
  earnings of consolidated subsidiaries, and preferred
  stock dividends                                        (957)                         (598)                            (1,031)
Federal income tax expense (benefit)                     (417)                           30                                (76)

Loss before equity in earnings of consolidated
  subsidiaries, and preferred stock dividends            (540)                         (628)                              (955)
Equity in earnings of consolidated subsidiaries         5,812                         5,309                              3,600
Income before preferred stock dividends                 5,272                         4,681                              2,645

Preferred stock dividends                                 506                           180                                 97
Earnings available to common shareholders             $ 4,766               $         4,501                     $        2,548
</TABLE>



              See accompanying notes to condensed financial statements.






<PAGE>




    SCHEDULE II - CONDENSED FINANCIAL INFORMATION OF REGISTRANT -(CONTINUED)

                        STANDARD MANAGEMENT CORPORATION
                               (PARENT COMPANY)

                      CONDENSED STATEMENTS OF CASH FLOWS
                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                      Year Ended December 31

                                                              1999                       1998                       1997
<S>                                                     <C>                          <C>                       <C>


OPERATING ACTIVITIES
Net income                                               $        5,272              $       4,681             $        2,645
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
  Amortization of deferred debt issuance costs                      216                         97                         71
  Depreciation and amortization                                     429                        439                        646
  Equity in earnings of subsidiaries                             (5,812)                    (5,309)                    (3,600)
  Accrued interest payable                                         (203)                       197                        435
  Other liabilities                                                  --                        (38)                        79
  Dividend from Standard Life                                        --                         --                      1,600
  Other                                                             733                       (570)                       138
    Net cash provided (used) by operating activities                635                       (503)                     2,014

INVESTING ACTIVITIES

Investments, net                                                    (46)                    (1,685)                    (1,035)
Purchase of property and equipment, net                            (866)                      (385)                      (439)
Capital contribution to Standard Life                                --                         --                     (2,400)
Purchase of Savers Life, less cash acquired
  of $518                                                            --                    (18,039)                        --
Purchase of Midwestern Life, less cash acquired of $1,026            --                    (13,104)                        --
    Net cash used by investing activities                          (912)                   (33,213)                    (3,874)

FINANCING ACTIVITIES
Issuance of common stock, net                                        --                     19,638                         --
Borrowings, net of debt issuance costs of $206 and $70
  in 1998 and 1997, respectively                                    300                     11,794                      5,558
Repayments on long-term debt and obligations under                 (800)                    (3,141)                      (543)
  capital lease
Issuance of convertible preferred stock, net of
  issuance costs of $141 in 1998                                     --                      6,389                         --
Redemption of redeemable preferred stock                             --                         --                     (1,855)
Proceeds from common and treasury stock sales                        --                        234                        138
Issuance of common stock and warrants                             1,566                        297                        165
Purchase of common stock for treasury                              (582)                    (1,702)                    (1,079)
Dividends on preferred stock                                       (506)                      (180)                       (97)
    Net cash provided (used) by financing activities                (22)                    33,329                      2,287
Net increase (decrease) in cash                                    (299)                      (387)                       427
Cash at beginning of year                                           940                      1,327                        900
Cash at end of year                                      $          641            $           940               $      1,327
</TABLE>

              See accompanying notes to condensed financial statements.





<PAGE>




       SCHEDULE II--CONDENSED FINANCIAL INFORMATION OF REGISTRANT (CONTINUED)

                        STANDARD MANAGEMENT CORPORATION
                               (PARENT COMPANY)

                    NOTES TO CONDENSED FINANCIAL STATEMENTS

                               DECEMBER 31, 1999


1.BASIS OF PRESENTATION

For  purposes  of  these  condensed  financial  statements, Standard Management
Corporation ("SMC") carries its investments in subsidiaries at cost plus equity
in undistributed earnings of subsidiaries since date of acquisition. Net income
of  its  subsidiaries  is  included in income using the  equity  method.  These
condensed  financial statements  should  be  read  in  conjunction  with  SMC's
consolidated financial statements included elsewhere in this document.


2.DIVIDENDS FROM SUBSIDIARIES

SMC received a cash dividend from subsidiaries of  $1.6 million in 1997.







<PAGE>



                          SCHEDULE IV -- REINSURANCE

                        STANDARD MANAGEMENT CORPORATION

                 YEARS ENDED DECEMBER 31, 1999, 1998 AND 1997
                            (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>

                                                                                                                  Percentage
                                                          Ceded to            Assumed                              of Amount
                                        Gross               Other           from Other                              Assumed
                                       Amount             Companies          Companies         Net Amount           to Net
<S>                                 <C>                 <C>                <C>                <C>                       <C>


YEAR ENDED DECEMBER 31, 1999
Life insurance in force             $  2,204,688        $    996,217       $      --          $  1,208,471              0.00%

Premiums:
  Life insurance and annuities      $     19,393        $      6,908       $      --          $     12,485
  Accident and health insurance           18,710              18,365              --                   345
  Supplementary contract and other           260                  --              --                   260
    funds on deposit
      Total premiums                $     38,363        $     25,273       $      --          $     13,090


YEAR ENDED DECEMBER 31, 1998
Life insurance in force             $  2,520,340        $  1,231,533       $     217          $  1,289,024              0.02%

Premiums:
  Life insurance and annuities      $     13,160        $      4,705       $      --          $      8,455
  Accident and health insurance           18,333              12,341              --                 5,992
  Supplementary contract and other
    funds on deposit                          32                  --              --                    32
      Total premiums                $     31,525        $     17,046       $      --          $     14,479


YEAR ENDED DECEMBER 31, 1997
Life insurance in force             $  2,447,782        $  1,269,848       $     237          $  1,178,171              0.02%

Premiums:
  Life insurance and annuities      $     11,735        $      4,821       $      --          $      6,914
  Accident and health insurance               17                  --              --                    17
  Supplementary contract and other
    funds on deposit                         169                  --              --                   169
      Total premiums                $     11,921        $      4,821       $      --          $      7,100
</TABLE>






<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



EXHIBIT 21

                   SUBSIDIARIES OF STANDARD MANAGEMENT CORPORATION



                                                                  STATE
                                          PERCENTAGE OF       OR COUNTRY IN
NAME OF SUBSIDIARY                         OUTSTANDING       WHICH ORGANIZED

Standard Life Insurance Company of Indiana     100%             Indiana
Dixie National Life Insurance Company         99.4%             Mississippi
Standard Marketing Corporation                 100%             Indiana
Savers Marketing Corporation                   100%             North Carolina
Standard Marketing International, Ltd.         100%             Bermuda
Standard Management International S.A.         100%             Luxembourg
Premier Life (Luxembourg) S.A.                 100%             Luxembourg
Premier Life (Bermuda) Limited                 100%             Bermuda
Standard Development, LLC                      100%             Indiana








<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



                                                                        EXHIBIT
23.1


                           CONSENT OF INDEPENDENT AUDITORS


We consent to  the  incorporation  by  reference  in the Registration Statement
(Form  S-8 No. 33-92906) pertaining to the Second Amended  and  Restated  Stock
Option Plan  of  Standard  Management  Corporation,  the Registration Statement
(Form S-8 No. 333-41119) pertaining to the Amended and  Restated  Stock  Option
Plan of Standard Management Corporation and the Registration Statement (Form S-
8  No.  333-41117)  pertaining  to  the Standard Management Corporation Savings
Plan, of our report dated February 18,  2000,  with respect to the consolidated
financial  statements  and schedules of  Standard  Management  Corporation  and
subsidiaries included in  the  Annual  Report  (Form  10-K)  for the year ended
December 31, 1999.

Ernst & Young LLP



Indianapolis, Indiana
March 29, 2000










<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)



                                                                        EXHIBIT
23.2


                           CONSENT OF INDEPENDENT AUDITORS

We  consent  to  the  incorporation by reference in the Registration  Statement
(Form S-8 No. 33-92906)  pertaining  to  the  Second Amended and Restated Stock
Option  Plan  of Standard Management Corporation,  the  Registration  Statement
(Form S-8 No. 333-41119)  pertaining  to  the Amended and Restated Stock Option
Plan of Standard Management Corporation and the Registration Statement (Form S-
8  No.  333-41117) pertaining to the Standard  Management  Corporation  Savings
Plan, of  our  report dated February 18, 2000, with respect to the consolidated
financial  statements   of   Standard   Management   International  S.  A.  and
subsidiaries  included  in the Annual Report (Form 10-K)  for  the  year  ended
December 31, 1999 of Standard Management Corporation.

KPMG Audit

Luxembourg
March 29, 2000


























<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)




EXHIBIT 24

                                  POWER OF ATTORNEY


KNOW ALL MEN BY THESE PRESENTS,  that  each  of  the  undersigned persons whose
signature  appear  immediately  below,  does  hereby  constitute   and  appoint
Ronald  D. Hunter and Stephen M. Coons, each with full power to act alone,  his
true and lawful attorney-in-fact and agent, with full power of substitution and
resubstitution,  for  him  and  in  his  name,  place and stead, in any and all
capacities, to sign on behalf of the undersigned  an Annual Report on Form 10-K
("Form  10-K")  under  the Securities Exchange Act of  1934,  as  amended  (the
"Exchange Act"), granting  unto  said attorney-in-fact and agent full power and
authority  to  do  and perform each and  every  act  and  thing  requisite  and
necessary to be done,  as  fully to all intents and purposes as the undersigned
might or could do in person,  hereby  ratifying  and  confirming  all that said
attorneys-in-fact and agent, or his substitute lawfully do or cause  to be done
by virtue hereof.

IN WITNESS WHEREOF, I have hereunto set my hand this 29th day of March, 2000.




/S/ RONALD D. HUNTER                     /S/ PAUL B. PHEFFER
Ronald D. Hunter                         Paul B. Pheffer


/S/ GERALD R. HOCHGESANG                 /S/ RAYMOND J. OHLSON
Gerald R. Hochgesang                     Raymond J. Ohlson


/S/ EDWARD T. STAHL                      /S/ STEPHEN M. COONS
Edward T. Stahl                          Stephen M. Coons


/S/ MARTIAL R. KNIESER                   /S/ ROBERT A. BORNS
Martial R. Knieser                       Robert A. Borns


/S/ JOHN J. DILLON                       /S/ JERRY E. FRANCIS
John J. Dillon                           Jerry E. Francis