SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549
                                     FORM 10-K
[S]
[x] 	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE 
     SECURITIES EXCHANGE ACT OF 1934 [FEE REQUIRED]
     For the fiscal year ended December 31, 1998
                                                                                
                                OR 

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
    	For the transition period from   to       
 
	             	       Commission file number 1-7411

                        ALLCITY INSURANCE COMPANY
          (Exact name of registrant as specified in its charter)

           New York                                   13-2530665
  (State of incorporation)            (I.R.S. Employer Identification Number)

   335 Adams Street, Brooklyn, N.Y.                   11201-3731
(Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code 718-422-4000

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

                                                  Name of each exchange on
Title of each class                                    which registered

                                None
Securities registered pursuant to Section 12(g) of the Act:

                                None                                  			
                          (Title of Class)
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. [x]

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 

The aggregate market value of the voting stock held by nonaffiliates of the 
registrant as of March 15, 1999 was $5,382,128. 
   
The number of shares outstanding of each of the registrant's classes of common 
shares, as of March 15, 1999, was 7,078,625.  

               	DOCUMENTS INCORPORATED BY REFERENCE - None
	
         	Exhibit Index on Page  26         Total number of pages  60

<PAGE>              

TABLE OF CONTENTS


                                Part I
   
           			                                                         Page
Item 1-  Business                                                ........ 1

Item 2-  Properties                                              ........10

Item 3-  Legal Proceedings                                       ........10

Item 4-  Submission of Matters to a Vote of Security Holders     ........10
                             
		 Part II

Item 5-  Market for the Registrant's Common Equity and Related
         Stockholder Matters                                     ....... 11
 
Item 6-  Selected Financial Data                                 .......	11

Item 7-  Management's Discussion and Analysis of Financial  
         Condition and Results of Operations                     .......	13

Item 7A- Quantitative and Qualitative Disclosures about Market Risk ....	17

Item 8-  Financial Statements and Supplementary Data             ....... 18

Item 9-  Changes in and Disagreements with Accountants on 
         Accounting and Financial Disclosure                     ....... 18

                             Part III

Item 10- Directors and Executive Officers of the Registrant      ....... 19

Item 11- Executive Compensation                                  .......	21

Item 12- Security Ownership of Certain Beneficial Owners and     
         Management                                              ....... 23

Item 13- Certain Relationships and Related Transactions          ....... 25

                              Part IV

Item 14- Exhibits, Financial Statement Schedules, and Reports on
         Form 8-K                                                ....... 26 

Signatures                                                       ....... 27



                                     -i-
<PAGE>

                                    PART I
Item 1. 	Business

General

Allcity Insurance Company (the "Registrant", "Allcity" or the "Company") is a 
property and casualty insurer.  Empire Insurance Company ("Empire"), a property
and casualty insurer owns approximately 84.6% of the outstanding common shares
of the Company and 100% of the outstanding common shares of Centurion Insurance
Company ("Centurion"). Empire's common shares are 100% owned and controlled, 
through subsidiaries, by Leucadia National Corporation ("Leucadia").
Additionally, Leucadia indirectly owns an additional 5.3% of the outstanding 
common shares of the Company.  The Company, Empire and Centurion are sometimes
hereinafter collectively referred to as the Group.

The Company operates in the State of New York, primarily in the New York City
metropolitan area, conducting property and casualty insurance underwriting 
activities. The Company's voluntary business is produced through general 
agents, local agents, and insurance brokers, who are compensated for their 
services by payment of commissions on the premiums they generate.  There are 
seven general agents, one of which is owned by Empire, and approximately 379 
local agents and insurance brokers presently acting under agreements with the
Group.  These agents and brokers also represent other competing insurance 
companies.  Empire's wholly owned general agent is its largest producer and 
generated approximately 12% of the Group's total premium volume for the year
ended December 31, 1998.  Substantially all of the Group's policies are 
written for a one-year period. The Group is licensed in New York to write 
most lines of insurance that may be written by a property and casualty 
insurer. The Group specializes in personal and commercial property and 
casualty insurance business.  The Group provides personal automobile and 
homeowners insurance and commercial insurance coverage for vehicles 
(including medallion and radio-controlled livery vehicles), workers'
compensation, multi-family residential real estate, and various other 
business classes.  Empire is also licensed to write insurance in Connecticut,
Massachusetts, Missouri, New Hampshire and New Jersey.  Approximately 4% of the
Group's written premiums are produced from sources outside New York State. The
Group's general agents produced approximately 32% of the Company's premium
revenues for the year ended December 31, 1998.

For the years ended December 31, 1998, 1997 and 1996, net earned premiums for 
the Company were $67.5 million, $80.9 million and $96.1 million, respectively. 
The decline in the net earned premiums is primarily due to the continuing
reduction in the assigned risk business and reductions in certain commercial
lines.  During the year ended December 31, 1998, approximately 57%, 30% and 
13% of net earned premiums were derived from automobile lines, commercial lines
and miscellaneous and personal lines, respectively.

According to A.M. Best & Co. ("Best"), an insurance industry research 
organization, the Group ranked 129th  in total net premium writings among 
property and casualty insurance companies and groups in 1997.  In February 1999,
Standard & Poor's Insurance Rating Services ("S & P") rated the Group (BBB+) 
(Good), based on the Group's claims-paying ability.  In 1998, the Group was
rated (B+) (Very Good) by Best and was assigned an  (A) (Exceptional) financial 
stability rating by Demotech, Inc., an insurance rating agency service.  As with
all ratings, S & P, Best and Demotech, Inc. ratings are subject to change at 
any time.

The Group has acquired blocks of assigned risk business from other insurance
companies (the "service business") relating to private passenger and commercial
automobile insurance.  These contractual arrangements, which are negotiated for
one or two year periods, provide for fees paid to the Group within parameters 
established by the New York State Insurance Department.  In addition, the Group
received a fee for providing administrative services, including claims 
processing, underwriting and collection activities, for the New York Public 
Automobile Pool ("NYPAP") and the Massachusetts Taxi and Limousine Pool.  These
latter arrangements do not involve the assumption of any material underwriting
risk by the Group.  Effective February 28, 1998, the Group ceased serving as a 
servicing carrier for the NYPAP, thereby enabling the Group to concentrate its 
resources on its core non-service businesses and redeploy certain resources 
previously dedicated to the NYPAP.

                                     -1-
<PAGE>

In 1998, a new president and chief executive officer was named at the Group 
and, effective in  1999, the business was reorganized into three divisions: 
the Small Business Division, the Personal Lines and Residual Markets Division
and the Mid-Market Division. Each of these divisions has separate management 
teams responsible for all marketing, sales and underwriting decisions within 
their divisions. The reorganization is designed to provide a greater degree of
accountability for underwriting results and to create a closer relationship 
with agents and customers of the Group.  The Small Business Division will 
primarily focus on commercial package products for small businesses; the
Personal Lines and Residual Market Division will primarily concentrate on
personal automobile and homeowners insurance; and the Mid-Market Division will
focus on commercial auto, commercial package and workers' compensation 
insurance for larger accounts.

On a quarterly basis, the Group reviews and adjusts its estimated loss reserves 
for any changes in trends and actual loss experience.  Included in the Company's
results for 1998 was approximately $12.9 million for reserve strengthening 
related to losses from prior accident years. The Group will continue to evaluate
the adequacy of its loss reserves and record future adjustments to its loss
reserves as appropriate.  Beginning in 1996, the Group has taken certain steps
to improve its operations, including systems enhancements and actions relating
to pricing and improved underwriting and claims handling; these efforts have
continued into 1999. In addition, the Group may initiate additional changes in 
the future.  The Group believes that the results of these efforts taken to date
will not be known for some time, given the nature of the property and casualty 
insurance business and the inherently long period of time involved in settling 
claims. 

Pooling Agreement

All insurance business written by the Company is subject to a pooling agreement 
with Empire under which the Company and Empire effectively operate as one 
company. The pooling agreement and subsequent amendments were approved by the 
New York State Insurance Department.  The Company operates under the same 
general management as Empire and has full use of Empire's personnel, information
technology systems and facilities.  As of December 31, 1998, Empire and its 
subsidiaries had 712 full and part-time employees.  Currently, and for all
periods presented, all premiums, losses, loss adjustment expenses and other 
underwriting expenses are shared on the basis of 70% to Empire and 30% to the
Company.
 
Financial Information Relating to Business Segments

For all periods presented, the Company's operations are presented in the 
following business segments: 

(1)	Automobile lines - includes private passenger and commercial automobile 
bodily injury, property damage, comprehensive and collision insurance coverages.
(2)	Commercial lines - includes commercial multiple peril, workers' 
compensation, other liability, glass, burglary, and inland marine insurance
coverages.
(3)	Miscellaneous and personal lines - includes fire and allied lines and 
homeowners insurance coverages.

                                    -2-
<PAGE>
<TABLE>
The following table presents business segment data, net of reinsurance, for
each of the three years ended December 31, (in thousands, except loss ratio
information): 
<CAPTION>
                                                 Losses 
                       Premiums     Premiums     and LAE       Loss
                       Written       Earned      Incurred      Ratio 
                      <C>         <C>           <C>            <C> 
<S>
1998
Automobile lines       $	31,392    $		38,446     $	35,668        92.8%
Commercial lines         18,281       20,490       28,726       140.2%
Miscellaneous and 
personal lines            8,386        8,576        5,195        60.6%
Total                  $	58,059     $	67,512     $ 69,589       103.1%

1997
Automobile lines       $ 44,484     $	50,677     $	54,186       106.9%
Commercial lines         22,107	      23,289       23,389       100.4%
Miscellaneous and 
personal lines            8,438        6,925        4,470        64.6%
Total                  $	75,029     $	80,891      	82,045       101.4%

1996
Automobile lines       $ 60,162     $	63,558     $	64,699       101.8%
Commercial lines         25,243       27,714       20,685        74.6%
Miscellaneous and 
personal lines            5,606        4,801        2,966        61.8%
Total                  $	91,011     $	96,073     $	88,350        92.0%

</TABLE>
[S]
For further information concerning Business Segments, see Notes 8 and 12 of the
Notes to Consolidated Financial Statements, included elsewhere herein.

Combined Ratios

Set forth below is certain statistical information for the Company prepared in 
accordance with generally accepted accounting principles ("GAAP") and statutory
accounting principles ("SAP"), for the three years ended December 31, 1998.  
The Loss Ratio is the ratio of net incurred losses and loss adjustment 
expenses to net premiums earned.  The Expense Ratio is the ratio of 
underwriting expenses (policy acquisition costs, commissions, and a portion
of administrative, general and other expenses attributable to underwriting 
operations, net of service fee income) to net premiums written, if determined
in accordance with SAP, or to net premiums earned, if determined in accordance
with GAAP.  A Combined Ratio below 100% indicates an underwriting profit and 
a Combined Ratio above 100% indicates an underwriting loss.  The Combined Ratio
does not include the effect of investment income.

                           

                                  -3-
<PAGE>
<TABLE>
<CAPTION>
                                   Years Ended December
                              1998          1997            1996
                            <C>           <C>              <C>
<S>
Loss Ratio: (a)
	GAAP                        103.1%        101.4%           92.0%
	SAP                         103.1%        101.4%           89.3%
	Industry (SAP) (b)            N/A          72.8%           78.4%

Expense Ratio:
	GAAP                         26.3%         17.9%           22.1%
	SAP                          31.3%         17.2%           18.2%
	Industry (SAP) (b)            N/A          28.8%           27.4%

Combined Ratio:  (c) 
 GAAP                        129.4%        119.3%          114.1%
	SAP                         134.4%        118.6%          107.5%
	Industry (SAP) (b)            N/A         101.6%          105.8%
<S>
<FN>
(a)Includes Loss and Loss Adjustment Expenses.

(b)Source:  Best's Aggregates & Averages, Property/Casualty, 1998 Edition.  
Industry Combined Ratios may not be fully comparable as a result of, among 
other things, differences in geographical concentration and in the mix of
property and casualty insurance products.

(c)For 1998, the difference in the accounting treatment for curtailment gains
relating to defined benefit pension plans was the principal reason for the 
difference between the GAAP Combined Ratio and the SAP Combined Ratio.  For 
1996, a change in the statutory accounting treatment for retrospectively rated 
reinsurance agreements was the principal reason for the difference between the 
GAAP Combined Ratio and the SAP Combined Ratio. Additionally, for all three 
years, the difference relates to the accounting for certain costs, which are 
treated differently under SAP and GAAP.  For further information about the 
Company's combined ratios see Item 7, "Management's Discussion and Analysis of
Financial Condition and Results of Operations" of this Report.  
</TABLE>
[S]
Marketing and Distribution
[S]
The Group's marketing and distribution strategy emphasizes profitability rather 
than volume and focuses on the production of its voluntary business through 
seven general agents, one of which is an Empire subsidiary, and approximately 
379 local agents and insurance brokers presently acting under agreements with 
the Group.  

These agents and brokers also represent competing insurance companies.  Subject 
to regulatory approval, the Group utilizes premium rates developed and 
independently filed for all coverages with the exception of workers' 
compensation, for which rates are filed by the New York Compensation Insurance
Rating Board, and assigned risk automobile business, for which rates are filed 
by the New York Automobile Insurance Plan.

Reinsurance

The Company's maximum retained limits for each of the years ended December 31,
1998, 1997 and 1996, on property and casualty lines of insurance and for 
workers' compensation business was $0.3 million and $0.5 million, respectively.
Additionally, the Company has entered into certain excess of loss and 
catastrophe treaties to protect itself against certain losses.  Its retention
of lower level losses under such treaties is $7.5 million for 1999 and 1998, 
$5.0 million for 1997 and $3.0 million for 1996.

Effective January 1, 1997, Empire entered into a quota share reinsurance
agreement with its subsidiary, Centurion.  Under this agreement, Empire will 
assume 50% up to July 1, 1997 and 75% thereafter of the effective period 
premiums and losses of Centurion and grant Centurion a ceding commission.  
Under the pooling agreement, 70% of such business assumed will be retained by 
Empire and 30% will be shared with the Company.

                                      -4-
<PAGE>
Although reinsurance does not legally discharge an insurer from its primary 
liability for the full amount of the policy liability, it does make the 
assuming reinsurer liable to the insurer to the extent of the reinsurance ceded.
The Company's reinsurance has been placed with certain of the largest 
reinsurance companies, including (with their respective Best ratings) General 
Reinsurance Corporation (A++) (superior), American Re-Insurance Company (A++) 
(superior), Partner Re Co., Ltd. (A+) (superior), IPC Re Ltd. (A) (excellent), 
CAT Ltd. (A) (excellent) and Zurich Reinsurance (North America), Inc. (A) 
(excellent). The Company believes its reinsurers to be financially capable of
meeting their respective obligations.  However, to the extent that any
reinsuring company is unable to meet its obligations, the Company would be 
liable for the reinsured risks.  

Investments

Investment activities represent a significant part of the Company's total 
income.  Investments are managed by the Investment Committee of the Board of 
Directors, which consults with outside investment advisors with respect to a
substantial portion of the Company's investment portfolio.

The Company has a diversified investment portfolio primarily consisting of
securities rated "investment grade" by established bond rating agencies or 
issued or guaranteed by the U.S. Government or its agencies.  At December 31,
1998, 1997 and 1996, the average yield of the Company's bond portfolio was 
approximately 5.8%, 5.9% and 6.1%, respectively, and the average maturity of 
the Company's bond portfolio was approximately 3.2 years for 1998 and 3.3 years
for 1997 and 1996.

Tax Sharing Agreement

The Company has been included in the consolidated federal income tax returns of
Leucadia since 1993.  Under the terms of the tax sharing agreement between 
Leucadia and the Company, the Company computes its tax provision on a separate 
return basis and is either charged its share of federal income tax resulting 
from its taxable income or is reimbursed for tax benefits resulting from its
losses.

Government Regulation

The Group, like all insurance companies, is subject to detailed regulation and 
supervision involving the establishment of premium rates, approval of policy 
forms, standards of solvency and minimum requirements of capital and surplus,
which must be maintained in the states in which they transact business.  There 
can be no assurance that such regulatory requirements will not become more 
stringent in the future and have an adverse effect on the Group's operations.  
Insurance companies are required to file detailed annual reports with the 
insurance regulatory agencies in each of the states in which they do business 
and are subject to periodic examination by such agencies.  Increased regulation
of insurance companies at the state level and new regulation at the federal 
level is possible, although the Company cannot predict the nature or extent of 
any such regulation or what impact it would have on the Company's operations.  

The National Association of Insurance Commissioners ("NAIC") has adopted model
laws incorporating the concept of a "risk based capital" ("RBC") requirement
for insurance companies.  Generally, the RBC formula is designed to measure the
adequacy of an insurer's statutory capital in relation to the risks inherent in
its business.  The RBC formula is used by the states as an early warning tool
to identify weakly capitalized companies for the purpose of initiating
regulatory action.  As of December 31, 1998, the Company's RBC ratio exceeded
minimum requirements.

The NAIC also has adopted various ratios for insurance companies which, in 
addition to the RBC ratio, are designed to serve as a tool to assist state 
regulators in discovering potential weakly capitalized companies or companies
with unusual trends. While the Company's operations had certain "other than 
normal" NAIC ratios for the year ended December 31, 1998, the Company believes
that there are no material underlying problems or weaknesses in its operations 
and that it is unlikely that material adverse regulatory action will be taken.

In 1998, the NAIC adopted the Codification of Statutory Accounting Principles 
guidance, which will replace the current Accounting Pratices and Procedures
manual as the NAIC's primary guidance on Statutory accounting.  The NAIC is 
now considering amendments to the Codification guidance that would also be
effective upon implementation.  The NAIC has recommended an effective date of 
January 1, 2001.  The Codification provides guidance for areas where statutory
accounting has been silent and changes current 

                                    -5-
<PAGE>
statutory accounting in some areas.  It is known whether the New York Insurance 
Department will adopt the Codification, and whether the Department will make 
any changes to that guidance.  The Company has not estimated the potential 
effect of the Codification guidance if adopted by the Department.

The Group is a member of state insurance funds, which provide certain protection
to policyholders of insolvent insurers doing business in those states.  Due to 
insolvencies of certain insurers in recent years, the Group has been assessed 
certain amounts which have not been material and are likely to be assessed 
additional amounts by state insurance funds.  The Company believes that it has
provided for all anticipated assessments and that any additional assessments
will not have a material adverse effect on the Company's financial condition or
results of operations.

Competition

The insurance industry is a highly competitive industry, in which many of the
Company's competitors have substantially greater financial resources, larger 
sales forces, more widespread agency and broker relationships, and more 
diversified lines of insurance coverage.  Additionally, certain competitors
market their products with endorsements from affinity groups, while the 
Company's products are unendorsed, which may give such other companies a 
competitive advantage.  Federal administrative, legislative and judicial 
activity may result in changes to federal banking laws that increase the 
ability of  national banks to offer insurance products in direct competition
with the Company.  The Company is unable to determine what effect, if any,
such changes may have on the Company's operations.

The Company believes that property and casualty insurers generally compete on 
the basis of price, customer service, consumer recognition, product design, 
product mix and financial stability.  The industry has historically been 
cyclical in nature, with periods of less intense price competition generating
significant profits, followed by periods of increased price competition
resulting in reduced profitability or loss.  The current cycle of intense 
price competition has continued for a longer period than in the past, suggesting
that the significant infusion of capital into the industry in recent years, 
coupled with larger investment returns, has been, and may continue to be, a 
depressing influence on policy rates.  In addition, the Company is experiencing
increased competition from low cost insurance providers that write personal 
lines business on a direct response basis through direct mail and telemarketing.
The profitability of the property and casualty insurance industry is affected by
many factors, including rate competition, severity and frequency of claims 
(including catastrophe losses), interest rates, state regulation, court 
decisions and judicial climate, all of which are outside of the Company's
control.

Loss and Loss Adjustment Expenses

Liabilities for unpaid losses, which are not discounted (except for certain 
workers' compensation liabilities), and loss adjustment expenses ("LAE") are
determined using case-basis evaluations, statistical analyses and estimates for
salvage and subrogation recoverable and represent estimates of the ultimate
claim costs of all unpaid losses and LAE.  Liabilities include a provision for
losses that have occurred but have not yet been reported.  These estimates are
subject to the effect of trends in future claim severity and frequency 
experience.  Adjustments to such estimates are made from time to time due to
changes in such trends as well as changes in actual loss experience.  These 
adjustments are reflected in current earnings.

The Company relies upon standard actuarial ultimate loss projection techniques
to obtain estimates of liabilities for losses and LAE. These projections include
the extrapolation of both losses paid and incurred by business line and accident
year and implicitly consider the impact of inflation and claims settlement
patterns upon ultimate claim costs based upon historical patterns.  In addition,
methods based upon average loss costs, reported claim counts and pure premiums
are reviewed in order to obtain a range of estimates for setting the reserve 
levels.  For further input, changes in operations in pertinent areas including
underwriting standards, product mix, claims management and legal climate are
periodically reviewed.

                                    -6-
<PAGE>
<TABLE>
In the following table, the liability for losses and LAE of the Company, are 
reconciled for each of the three years ended December 31, 1998.  Included
therein are current year data and prior year development.
<CAPTION>
                           RECONCILIATION OF LIABILITY FOR LOSSES AND LAE


                                         1998        1997        1996
                                      <C>        <C>         <C> 
(In thousands)
<S>
SAP 
liability for losses and LAE, 
net of reinsurance, at beginning of 
the year                               $	145,260  $	143,494   $	142,718


Provision for losses and LAE for 
claims occurring in the current year      56,698     73,741      80,216

Increase in estimated losses and 
LAE 	for claims occurring in 
prior years                               12,891      8,304       8,134
                                          69,589     82,045      88,350

Loss and LAE payments for claims 
occurring during:

	Current year                             19,203     23,804      27,192
	Prior years                              55,875     56,475      60,382
                                          75,078     80,279      87,574
SAP liability for losses and LAE, 
net of reinsurance                       139,771    145,260     143,494

Reinsurance recoverable                  294,461    272,266     262,593

Liability for losses and LAE at the 
end 	of year as reported in the 
financial 	statements (GAAP)           $	434,232  $ 417,526   $ 406,087
</TABLE>
[S]                                        

The table on the following page presents the development of balance sheet
liabilities for 1988 through 1998.  The liability line at the top of the table
indicates the estimated liability, net of reinsurance, for unpaid losses and
LAE recorded at the balance sheet date for each of the indicated years. This 
liability represents the estimated amount of losses and LAE for claims that
were unpaid at each annual balance sheet date, including provision for losses
estimated to have been incurred but not reported to the Company.  The middle
portion of the table shows the re-estimated amount of the previously reported
liability based on experience as of the end of each succeeding year.  As more
information becomes available and claims are settled, the estimated liabilities
are adjusted upward or downward with the effect of decreasing or increasing net
income at the time of adjustment.

The "cumulative redundancy (deficiency)" represents the aggregate change in the
estimates over all prior years.  For example, the initial 1988 liability 
estimate has developed a $3.0 million redundancy over ten years. The effect on
pretax income during the past three years of changes in estimates of the 
liabilities for losses and LAE is shown in the reconciliation table above.

The lower section of the table shows the cumulative amount paid with respect to
the previously recorded liability as of the end of each succeeding year.  For 
example, as of December 31, 1998, the Company had paid $59.6 million of the 
currently estimated $64.1 million of losses and LAE that had been incurred for
the 1988 calendar year, thus an estimated $4.5 million of losses incurred 
for 1988 remain unpaid as of the current balance sheet date.

                                         -7-
<PAGE>
In evaluating this information it should be noted that each amount shown for 
"cumulative redundancy (deficiency)" results includes the effects of all changes
in amounts for prior periods.  For example, the amount of the deficiency related
to losses settled in 1991, but incurred in 1988, will be included in the 
cumulative redundancy or deficiency amount for years 1988, 1989 and 1990. This
table is not intended to and does not present accident or policy year loss and
LAE development data.  Conditions and trends that have affected development of
the liability in the past may not necessarily occur in the future. Accordingly,
it would not be appropriate to extrapolate future redundancies or deficiencies
based on this table.

For further discussion of the Company's loss development experience, see Item 7,
"Management's Discussion and Analysis of Financial Condition and Results of 
Operations" of this Report.


 
                                  -8-                    
<PAGE>
<TABLE>
Analysis of Loss and Loss Adjustment Expenses Development 
(In thousands)
<CAPTION> 
Years ended December 31,
<S >
              1988     1989     1990     1991     1992      1993      1994      1995       1996        1997       1998
             <C>      <C>      <C>      <C>      <C>       <C>       <C>       <C>        <C>         <C>        <C>
              $67,154  $70,567  $75,420  $84,178  $96,712   $106,115  $121,923  $142,718   $143,494    $145,260   $139771
Liability
Re-
estimated
as of:
One year
later          64,411   68,347   74,844   83,987   96,516    103,181   132,189   150,852    151,798     158,152     -     
Two years
later          62,135   65,227   73,538   83,341   97,208    112,176   140,620   160,686    163,378        -        - 
Three years
later          59,859   63,792   73,151   85,197  103,592    118,127   150,434   172,650       -           -        - 
Four years
later          58,606   63,556   74,190   88,928  108,430    124,375   160,542       -         -           -        -
Five years
later          59,131   63,584   76,509   92,035  112,988    132,606      -          -         -           -        -  
Six years
later          59,304   64,962   78,392   95,273  118,446       -         -          -         -           -        - 
Seven years 
later          60,504   65,467   80,040   99,467     -          -         -          -         -           -        -
Eight years 
later          61,363   66,298   83,670     -        -          -         -          -         -           -        - 
Nine years 
later          61,780   68,877     -        -        -          -         -          -         -           -        -
Ten years 
later          64,134     -        -        -        -          -         -          -         -           -        - 
Cumulative 
Redundancy/
(Deficiency)    3,020    1,690   (8,250) (15,289) (21,734)   (26,491)  (38,619)  (29,932)   (19,884)    (12,892)    -

Cumulative 
Amount of 
Liability
Paid Through:
One year 
later         $19,242  $19,744  $23,681  $26,852  $33,903   $ 35,048  $ 45,789  $ 60,382   $ 56,475    $ 55,875     -
Two years 
later          30,362   32,840   38,067   44,989   54,615     59,701    80,911    95,190     94,062        -        -
Three years 
later          39,511   42,271   50,194   59,336   71,653     81,680   105,977   121,900       -           -        -
Four years 
later          45,698   49,803   58,830   69,955   85,689     97,917   124,645      -          -           -        - 
Five years 
later          50,434   54,602   65,025   77,965   95,938    109,083      -         -          -           -        -
Six years 
later          53,433   58,185   69,568   83,886  102,416       -         -         -          -           -        - 
Seven years 
later          55,598   60,953   72,683   88,139     -          -         -         -          -           -        - 
Eight years 
later          57,393   62,737   75,932     -        -          -         -         -          -           -        -
Nine years 
later          58,495   64,409     -        -        -          -         -         -          -           -        -
Ten years 
later          59,591     -        -        -        -          -         -         -          -           -        -  

Gross Liability
- End of year                                     $290,833  $341,599  $399,879   $406,087    $417,526   $434,232
Reinsuranc                                         184,718   219,676   257,161    262,593     272,266    294,461
Net Liability
 - End of year
 as shown above                                   $106,115  $121,923  $142,718   $143,494    $145,260   $139,771

Gross Re-
Estimated 
Liability 
- Latest                                          $397,264  $474,175  $508,601   $500,274    $483,450      -

Re-estimated
Reinsurance 
-  Latest                                          264,658   313,633   335,951    336,896     325,298      -

Net Re
-estimated 
Liability 
- Latest                                          $132,606  $160,542  $172,650   $163,378    $158,152      -
Gross
Cumulative
(Deficiency)                                      $(106,431)$(132,576)$(108,722) $(94,187)   $(65,924)     -
<S>
</TABLE>
                                  -9-
<PAGE>
Item 2. 	Properties

The Group has entered into a twenty year lease aggreement, consisting of 
286,510 square feet, in an office building located at 335 Adams Street in  
Brooklyn, New York, in which Leucadia has an equity interest.  The Group 
received certain incentives from both the City and State of New York in
connection with this lease, which will be recognized over the term of the 
lease.

Empire has subleased 133,140 square feet of the office space to its parent,
Leucadia at the similar terms as in the original lease.

The Group also conducts limited operations from branch offices located in 
Manhattan and Rochester, New York, Boston, Massachusetts and Bedford, New 
Hampshire.  The rental charged to the Company for these facilities is prorated
in accordance with the pooling agreement described in "Pooling Agreement" under
Item 1, herein. 

Item 3. 	Legal Proceedings

The Company is party to legal proceedings that are considered to be either
ordinary, routine litigation or incidental to its business. Based on discussion
with counsel, the Company does not believe that such litigation will have a 
material effect on its financial position, results of operations or cash flows.

Item 4. 	Submission of Matters to a Vote of Security Holders

The following matters were submitted to a vote of shareholders at the Company's
1998 Annual Meeting of Shareholders held on October 19, 1998:      

a) Election Of Directors:                         Number of
                                                  Shares in favor  
[S]
   Class II Directors, term expires 2001:         
[S]
         Martin B. Bernstein                      4,329,299
         Louis V. Siracusano                      4,329,299 
         Lucius Theus                             4,329,299   
         Robert V. Toppi                          4,329,299
[S]
   Class III Directors, term expires 1999:
         James E. Jordan                          4,329,299
         Joseph A. Orlando                        4,329,299 
[S]
   Class I Directors continuing in office:
         Ian M. Cumming                                    
         Thomas E. Mara                               
         Joseph S. Steinberg               
         Daniel G. Stewart
[S]       
   Class III Directors continuing in office:
         Francis M. Colalucci              
         Harry H. Wise                     

b) No other matter was voted upon at the meeting.


                                    -10-
<PAGE>
<TABLE>
                                 PART II
<S>
Item 5.	Market for the Registrant's Common Equity and Related Stockholder 
Matters

(a) Market Information
The Company's common stock trades on The NASDAQ National Stock Market under the 
symbol "ALCI".  The following table sets forth, for the calendar quarters 
indicated, the high and low closing trade price per common share as reported
by the Wall Street Journal and National Association of Securities Dealers, Inc..
<CAPTION>
				 

                                           High       		Low
                                          <C>          <C>
<S>
	1st Quarter 1999                      				$ 8 1/8    		$ 7
	(Through March 15, 1999)

	1st Quarter 1998                  				      7 1/2        6 3/4
	2nd    "            "                    		 9 1/4        7 1/3
	3rd    "            "                  	    8 	          7 
	4th    "            " 					                 8            7

	1st Quarter 1997				                   	    8 1/2        7
	2nd    "            "                 			  11            7 
	3rd    "            "                  			 11 1/4        9 1/4
	4th    "            "               				    9 3/4    	   6 1/2 

</TABLE>
[S]
(b) Holders
The number of shareholders of record of common shares at December 31, 1998 
was 520.
[S]
(c) Dividends
The Company has paid no dividends on its common shares since 1975.  The New York
Insurance Law prohibits New York domiciled property and casualty companies from 
paying dividends except out of earned surplus.  Without the approval of the New 
York State Insurance Department, no New York domestic property/ casualty 
insurer may declare or distribute any dividend to shareholders which, 
together with any dividends declared or distributed by it during the 
preceding twelve months, exceeds the lesser of (1) 10% of surplus to
policyholders as shown by its last statutory annual statement, or (2) one
hundred percent of adjusted net investment income during such period.  At
December 31, 1998, $7,280,000 was available for distribution of dividends.
The Company does not presently anticipate paying dividends in the near future.
[S]
<TABLE>
Item 6. 	Selected Financial Data
<S>
The following selected financial data have been summarized from the Company's
consolidated financial statements and are qualified in their entirety by 
reference to, and should be read in conjunction with, such consolidated 
financial statements and Item 7, "Management Discussion and Analysis of 
Financial Condition and Results of Operations," of this report:
<S>
                                     Year ended December 31,
                         1998      1997       1996       1995      1994
                           (In thousands, except per share amounts)
<CAPTION>
                        <C>       <C>        <C>        <C>       <C>
Total Revenues           $ 92,070  $ 102,624  $	120,790  $	117,892 $	107,286
Net Income/(Loss) (a)    $	   504  $     (83) 	   2,634  $     563 $  	6,901


Basic and Diluted Earnings/(Loss) 
share:
Income/(Loss) (a)        $   0.07  $   (0.01) $    0.37  $    0.08 $    0.97
</TABLE>


                                           -11-
<PAGE>
<TABLE>
Item 6. Selected Financial Data, continued
<S>
a) Net income includes net securities gains (losses), net of applicable tax, 
as follows (in thousands, except per share amounts):
<S>
<CAPTION>

                              		Gains(Losses)	    	Per Share
                               <C>                <C>
<S>
1998	 	                         $ 3,951		          $   0.56
1997		                             (125)		            (0.02)
1996                                735                0.10
1995	                      	       (133)		            (0.02)
1994                         		    (437)              (0.06)
</TABLE>
[S]
<TABLE>

 		            		                          At December 31,			      
                     1998        1997         1996          1995        1994     
                        (In thousands, except ratio information)
<CAPTION>
               <C>          <C>          <C>           <C>         <C>
<S>
Total assets 	 	$ 605,704    $ 640,249    $ 653,730     $ 660,820   $ 582,508
Invested assets   234,039      271,736      272,992       273,548     237,878

Surplus note:
Face value			       7,000        7,000        7,000         7,000       7,000
Acrued Interest     8,300        7,710        7,115         6,524       5,911
Common 
Shareholders'
Equity(a)
                   78,200       78,164       75,658        75,936      63,264
GAAP Combined 
Ratio(b)		          129.4%       119.3%       114.1%       115.4%      102.5%
SAP Combined 
Ratio (b)	     	    134.4%       118.6%       107.5%       107.5%      101.3%
Industry SAP 
Combined 
Ratio (c)    		       N/A        101.6%       105.8%       106.4%      108.4%
Premium to
Surplus Ratio (d)     0.8X         1.1X         1.4X         1.6X        1.7X
<S>
<FN>
(a)Includes unrealized appreciation of approximately $0.5 million in 1998, 
$0.9 million in 1997 and $1.2 million in 1995, and unrealized depreciation of
approximately $1.7 million in 1996 and $10.9 million in 1994, all net of tax,
on investments classified as available for sale.
<S>
(b)For 1998, the difference in the accounting treatment for curtailment gains
relating to defined benefit pension plans was the principal reason for the 
difference between the GAAP Combined Ratio and the SAP Combined Ratio.  For 
1996 and 1995, a change in the statutory accounting treatment for 
retrospectively rated reinsurance agreements was the principal reason for the
difference between the GAAP Combined Ratios and the SAP Combined Ratios. 
Additionally, for 1998, 1997 and 1996, the difference relates to the accounting
for certain costs, which are treated differently under SAP and GAAP. 
<S>
(c)Source:  Best's Aggregates & Averages, Property/Casualty, 1998 Edition.
Industry Combined Ratios may not be fully comparable as a result of, among 
other things, differences in geographical concentration and in the mix of
property and casualty insurance products.
<S>
(d)Premium to Surplus Ratio was calculated by dividing annual statutory net
premiums written by year-end statutory surplus.
</TABLE>
                                       -12-
<PAGE>

Item 7. 	Management's Discussion and Analysis of 
        	Financial Condition and Results of Operations
[S]
The purpose of this section is to discuss and analyze the Company's financial 
condition, liquidity and capital resources and results of operations.  This 
analysis should be read in conjunction with the financial statements and 
related notes which appear in Item 14, "Exhibits, Financial Statement Schedules,
and Reports of Form 8-k" of this Report. 

Liquidity and Capital Resources 

In 1998 and 1997, net cash was used for operations as a result of a decrease in
premiums written and a program to reduce pending claims. 

At December 31, 1998 and 1997 the yield of the Company's fixed maturities 
portfolio was 5.8% and 5.9%, respectively, with an average maturity of 3.2 and
3.3 years for 1998 and 1997, respectively.  Additionally, the Company maintains
a diversified investment portfolio of securities, of which at December 31, 1998,
approximately 92% of the fixed maturities portfolio was invested in issues of 
the U.S. Government and its agencies with the remainder primarily invested in 
investment grade corporate and industrial issues.  The Company presently 
anticipates reinvesting the majority of proceeds from maturities and investment
income in substantially similiar investments.

The Company maintains cash, short-term and readily marketable securities and 
anticipates that the cash flow from investment income and maturities of 
fixed maturities will be sufficient to satisfy its anticipated cash needs. 
The Company does not presently anticipate paying dividends in the near future
and believes it has sufficient capital to meet its currently anticipated
level of operations.  
[S]
Results of Operations
[S]
For the years ended December 31, 1998, 1997 and 1996, net earned premium 
revenues of the Company were $67.5 million, $80.9 million and $96.1 million,
respectively.  In 1998, the decline in earned premium revenues was primarily
due to a decline in the number of assigned risk automobile pool contracts 
acquired due to competition and the depopulation of the assigned risk 
automobile pools ($7.4 million) and a reduction in certain lines,
principally voluntary commercial automobile ($2.6 million), private passenger
automobile ($1.8 million), commercial package policies ($1.3 million) and 
workers,compensation ($1.1 million), due to tighter underwriting standards,
re-underwriting and increased competition.  In addition, earned premium 
revenues were reduced by $0.6 million for premiums due under retrospectively 
rated reinsurance contracts written for 1995 and prior accident years as the 
Company re-estimated the premium due based upon its current estimate of loss 
ratios for 1995 and prior accident years.

In 1997, earned premium revenues declined primarily due to a depopulation of the
assigned risk pools ($9.5 million) and a reduction in certain commercial lines,
principally voluntary commercial automobile ($3.1 million) and workers' 
compensation ($2.6 million) due to competition, reunderwriting and repricing.
In addition, earned premium revenues were reduced in 1997 by $1.7 million to
record premiums due under retrospectively rated reinsurance contracts written 
for 1995 and prior accident years. The Company re-estimated the premium due
based upon its then current estimate of loss ratios for 1995 and prior accident
years.  Partially offsetting these reductions was an increase in certain
voluntary personal lines, principally private passenger automobile and 
homeowners.


                                       -13-
<PAGE>
<TABLE>
During the three years ended December 31, 1998, the Company earned $3.4 million,
$5.7 million and $6.6 million, respectively, in service fee income from its 
service business.  The decline in service fee income is principally due to the
decline in the number of assigned risk contracts acquired by the Company, pool
depopulation, and its resignation from the NYPAP. 

The Company's combined ratios as determined under GAAP and SAP were as follows:
<CAPTION>

			                                 			Years Ended December 31,			
                                 				1998       		1997       	1996
                                    <C>          <C>         <C>
<S>
	GAAP                            				129.4%	     	119.3%		    114.1%
	SAP		                             		134.4%	     	118.6%    		107.5%

</TABLE>
[S]
The combined ratios of the Company increased in 1998, primarily due to the
reduction in premium volume at a rate greater than the reduction in net 
underwriting and other costs.  In addition, the reduction in servicing fees in
1998 negatively affected the expense ratios.  Included in the Company's results
for 1998, 1997 and 1996 were approximately $12.9 million, $8.3 million and $8.1
million, respectively, for reserve strengthening related to losses from prior 
accident years.

During 1998, the Company reviewed the adequacy of the reserves carried for its
open claims, files, focusing on workers' compensation, commercial auto and other
commercial liability lines of business.  Such reviews are part of the Company's
normal ongoing practice.  Particular emphasis during this review was placed on
reserves carried for the workers' compensation line of business.  As part of 
the review, substantially all open workers' compensation claim files were 
reviewed for every accident year up to and including 1998.  The Company also
conducted a comprehensive review of reserves carried for other commercial 
liability lines of business, in which approximately 28% of the open claim files
were reviewed, with a primary focus on accident years 1995 to 1997.  As a 
result of these reviews, the Company revised its assumptions regarding average
claims costs and probable ultimate losses and, accordingly, reserves were 
strengthened by $3.9 million for workers' compensation and $4.2 million for
other commercial liability lines of business.  Additionally, during 1998 the 
Company reorganized the commercial auto claims department.  As part of this 
realignment, more complex claims files were reviewed by the most experienced
claims examiners and assumptions regarding average claims severity and probable
ultimate losses were revised and reserves were strengthened by $4.2 million for
commercial automobile lines of business.

The 1997 reserve strengthening included approximately $3.3 million for
commercial package lines of business and approximately $2.1 million for
voluntary commercial automobile lines of business.  During 1997, the Company
reviewed the adequacy of the reserves carried for its open claims' files, as 
part of its normal ongoing practice, focusing on the commercial package, 
general liability and commercial automobile lines of business.  As a result
of this review and the continued unfavorable development of prior accident 
years losses, particularly the 1992 through 1994 accident years, the Company
revised its assumptions regarding future increases in average claims severity
and reserves were strengthened.

The 1996 reserve strengthening included approximately $6.0 million for voluntary
commercial automobile lines of business and approximately $2.4 million for 
commercial package lines of business.  Beginning in 1992, the Company entered
into new market segments of the voluntary commercial business, including 
specialty programs for sanitation trucks, gas stations, fuel oil deliveries and
limousines.  Initially, the Company based its loss ratio estimate upon its 
experience with similar lines of business, industry statistics and standard
actuarial ultimate loss projection techniques, which consider expected loss 
ratios.  During 1996, claims began to develop unfavorably and the Company used
such claim development to revise the assumptions that formed the basis of 
actuarial studies and reserves were increased.  With respect to commercial 
package lines, general liability claims for business written in 1992 through
1994 also developed unfavorably.  These claims showed an increased frequency 
of losses as well as an increase in the time between the date the loss 
occurred and when the loss was reported compared to prior experience.  General
liability claims are susceptible to the emergence of losses over an extended 
period of time.
       

                                      -14-
<PAGE>
For the lines of business discussed above, as well as all other property and 
casualty lines of business, the Company employs a variety of standard actuarial
ultimate loss projection techniques, statistical analyses and case-basis 
evaluations to estimate its liability for unpaid losses.  The actuarial 
projections include an extrapolation of both losses paid and incurred by 
business line and accident year and implicitly consider the impact of inflation
and claims settlement patterns upon ultimate claim costs based upon historical
patterns.  These estimates are performed quarterly and consider any changes
in trends and actual loss experience.  Any resulting change in the estimate of 
the liability for unpaid losses, including those discussed above, is reflected 
in current year earnings during the quarter the change in estimate is 
identified.

The reserving process relies on the basic assumption that past experience is an 
appropriate basis for predicting future events.  The probable effects of current
developments, trends and other relevant matters are also considered.  Since the
establishment of loss reserves is affected by many factors, some of which are 
outside the Company's control or affected by future conditions, reserving for 
property and casualty claims is a complex and uncertain process, requiring the
use of informed estimates and judgments.  As additional experience and other 
data become available and are reviewed, the Company's estimates and judgments
may be revised.  While the effect of any such changes in estimates could be 
material to future results of operations, the Company does not expect such
changes to have a material effect on its liquidity or financial condition.

In management's judgment, information currently available has been 
appropriately considered in estimating the Company's loss reserves.  The
Company will continue to evaluate the adequacy of its loss reserves on a 
quarterly basis, incorporating any future changes in trends and actual loss 
experience, and record adjustments to its loss reserves as appropriate.

Investment income has decreased by approximately $1.2 million or 7.5% in 1998 as
compared to a decrease of $0.7 million, or 4.1% in 1997, and an increase of $1.0
million or 6.5% in 1996, primarily as a result of lower invested assets due to a
decrease in premiums written and a program to reduce pending claims during 
1998 and 1997, and higher invested assets resulting from positive cash flows
in 1996.  During 1998, the Company had realized capital gains of $6.1 million
principally from gains recognized on the sale of fixed maturities, primarily
U.S. Treasury Notes.  During 1997, the Company recorded $0.2 million in 
realized capital losses in the normal course of managing its investment 
strategy.  In 1996, the Company realized gains of $1.1 million on the sale of
fixed maturities, primarily U.S. Treasury Notes.

The combination of other underwriting expenses incurred and the amortization of 
deferred policy acquisition costs reflected an increase of approximately $1.0 
million or 4.9% in 1998, a decrease of $7.8 million, or 27.8% in 1997, and an 
increase of $1.7 million, or 6.6% in 1996.  The increase in 1998 was largely 
the result of expenses relating to the move of the Company's executive and 
administrative offices to Brooklyn, New York and higher underwriting costs
relating to surveys and audits of insureds records in connection with the 
Company's reunderwriting efforts offset in part by $2.0 million pension 
curtailment gain.  The decrease in 1997 was primarily the result of lower
operating costs, primarily relating to pension and severance benefits for 
certain employees, and a decrease in the provision for servicing carriers 
expenses in connection with the NYPAP, offset by higher systems costs.  The
increase in 1996 was the result of higher operating costs primarily relating
to pension and severance benefits for certain employees coupled with higher 
systems costs.

Impact of Inflation

The Company, as well as the property and casualty insurance industry in general,
is affected by inflation.  With respect to losses, the Company's claim severity 
is affected by the impact of inflation on the cost of automobile repair parts,
medical costs and lost wages.  The costs of adjusting claims and other 
underwriting expenses have also been affected by inflationary pressures on 
salaries and employee benefits.  The Company receives rate increases based in
part upon its experience as well as the industry's experience.  Accordingly, 
premium increases generally follow the rate of inflation.
 
                                  -15-
<PAGE>
Year 2000 and Information Technology Systems

The Company, as well as most corporations in general, is affected by the 
problems associated with information technology systems and their ability to
correctly capture and process date specific information in connection with 
the year 2000.   The year 2000 issue is the result of computer programs being
written using two digits (rather than four) to define the applicable year.   
Any programs that have time-sensitive software may recognize a date using "00" 
as the year 1900 rather than the year 2000, which could result in 
miscalculations or system failures.  

The Group continues to evaluate its information technology systems to
determine the potential impact of the year 2000.  In 1996, the Group began to 
evaluate its information technology systems and their ability to support future
business needs.  The Group engaged the services of outside consultants who 
recommended various solutions that included a new policy management system.    
This led to a decision to acquire new policy management and accounting systems.
These systems provide enhanced functionality and improved processing for 
underwriting, claims, billing, collection, reinsurance, reporting, and 
accounting and are designed to be year 2000 compliant.  Throughout 1998 and 
1997, the Group sought the assistance of outside consultants who made further
recommendations to ensure compliance, which included upgrades and improvements 
to desktop computers and local applications.   These recommendations would 
also result in improved productivity, increased reliability, and expanded 
functionality.   

The Groups decision in 1996 for system replacement requires the new policy
management system to be functional by October 1998 since renewals for certain 
annual policies expiring on or after January 1, 2000 will begin renewing 
approximately 90 days prior to the policy's effective date.  The new policy 
management system was successfully migrated into production during 1998 for 
all new and renewal business.  Insurance companies need to maintain historical
information concerning premiums, claims, and other related policy information 
for many years.  Currently, the historical database for information maintained
by the Group prior to the migration of the new policy system remains on a 
non-compliant year 2000 "legacy" database.  The Group expects to migrate this
data to its new policy system during the third quarter of 1999.  The Group had
also decided in 1996 to replace its accounting system which was installed 
during the first quarter 1999.  The Group believes the policy management and
accounting systems will support the year 2000 processing capabilities.

Although a significant portion of the Group's current systems are year 2000   
compliant, the Group formed a year 2000 readiness team to further increase the
Group's state of readiness.  The team, which meets regularly,  is developing  
a contingency plan to address any actual failures that may occur thereby      
minimizing any outages in operational functions.  The Group expects to        
complete this plan before the end of the second quarter of 1999.  The team is 
also charged with the responsibility of  monitoring  all  material elements of
compliance including assessment, hardware, software and application           
environments; testing; and correction implementation.                         

The Group has made inquiries of third parties with whom it has material
relationships as to the year 2000 compliance of such third parties.  Many of 
such parties have reported plans to be fully compliant by the end of 1999 and
most have reported substantial progress at the end of 1998.  However, at this
time the Company cannot predict the effect of the year 2000 issue on its 
material third parties or the impact any deficiency in the year 2000 readiness
of such parties could have on the Group.

Through December 1998, expenses incurred by the Group in connection with the 
year 2000 issue (excluding expenses related to the Group's acquisition of new
systems, which was not motivated by the year 2000 concerns) did not exceed 
$100,000.  Based upon current information, the Group does not expect that the
year 2000 issue will have a material effect on its consolidated financial 
position or consolidated results of operations.
 

                                   -16-
<PAGE>
Cautionary Statement for Forward-Looking Information

Statements included in this Report may contain forward-looking statements.  Such
forward-looking statements are made pursuant to the safe-harbor provisions of 
the Private Securities Litigation Reform Act of 1995.  Such statements may 
relate, but are not limited, to projections of revenues, income or loss, 
capital expenditures, fluctuations in insurance reserves, plans for growth and 
future operations (including year 2000 compatibility), competition and 
regulation as well as assumptions relating to the foregoing.  Forward-looking 
statements are inherently subject to risks and uncertainties, many of which 
cannot be predicted or quantified.  When used in this Report, the words 
"estimates", "expects", "anticipates", "believes", "plans", "intends" and
variations of such words and similar expressions are intended to identify 
forward-looking statements that involve risks and uncertainties.  Future 
events and actual results could differ materially from those set forth in, 
contemplated by or underlying the forward-looking statements.  The factors 
that could cause actual results to differ materially from those suggested by
any such statements include, but are not limited to, those discussed or 
identified from time to time in the Company's public filings, including 
general economic and market conditions, changes in domestic laws, regulations
and taxes, changes in competition and pricing environments, regional or 
general changes in asset valuation, the occurrence of significant natural
disasters, the inability to reinsure certain risks economically, the adequacy 
of loss reserves, prevailing interest rate levels, weather related conditions
that may affect the Company's operations, the difficulty in identifying 
hardware and software that may not be year 2000 compliant, the lack of success 
of third parties to adequately address the year 2000 issue, vendor delays and 
technical difficulties affecting the Company's ability to upgrade or replace 
its hardware and/or software for year 2000 compliance, and changes in the
composition of the Company's assets and liabilities through acquisitions or
divestitures.  Undue reliance should not be placed on these forward-looking
statements, which are applicable only as of the date hereof.  The Company 
undertakes no obligation to revise or update these forward-looking statements to
reflect events or circumstances that arise after the date of this Report or to
reflect the occurrence of unanticipated events.

Item 7A.   Quantitative and Qualitative Disclosures about Market Risk

The following includes "forward-looking statements" that involve risk   and 
uncertainties.  Actual results   could differ materially from those projected
in the forward-looking statements.

The Company's market risk arises principally from interest rate risk related to
its investment portfolio.  The Company does not enter into material derivative
financial instrument transactions.

The Company's investment portfolio is primarily classified as available for 
sale, and consequently, is recorded on the balance sheet at fair value with 
unrealized gains and losses reflected in shareholders' equity.  Included in
the Company's investment portfolio are fixed income securities, which comprised
approximately 78% of the Company's total investment portfolio at December 31, 
1998.  These fixed income securities are primarily rated "investment grade" or 
are U.S. governmental agency issued or guaranteed obligations, although limited
investments in "non-rated" or rated less than investment grade securities have 
been made from time to time.  The estimated weighted average remaining life of 
these fixed income securities was approximately 3.2 years at December 31,1998.
The Company's fixed income securities, like all fixed income instruments, are
subject to investment rate risk and will fall in value if market interest rates
increase.  Expected maturities will differ from contractual maturities because 
the borrowers may have the right to call or prepay obligations with or without
call or prepayment penalties.  The Company manages the investment portfolio to
preserve principal, maintain a high level of quality, comply with applicable 
insurance industry laws and regulations and achieve an acceptable rate of 
return.  In addition, the Company considers the duration of its insurance 
reserves in comparison with that of its investments.
 

                                        -17-
<PAGE>
<TABLE>
<S>
                              Expected Maturity Date

           1999    	2000    2001  2002    2003   Thereafter Total   Fair Value
<CAPTION>
           <C>      <C>     <C>   <C>     <C>    <C>        <C>      <C>
Rate 
Sensitive
Assets:
Available 
for Sale
Fixed
Income
Securities:
U.S. 
Government		$26,052	 $36,966 -     $81,028 -      $42,997    $187,043	$187,043
Weighted
Average
Interest
Rate		        5.38%    6.03% -       6.38% -        5.97%    -        -
Other Fixed 
Maturities:
Rated 
Investment
Grade			    $   806  $   604 $860     -    $1,664 $ 6,148    $ 10,082 $ 10,082
Weighted
Average 
Interest
Rate          7.75%    6.50% 7.88%    -     7.14%   7.19%    -        -
Rated
Less
Than
Investment
Grade/Not
Rate				    $   806	 $   802 $746    $814   $1,622   	 -      $4,790	  $4,790
Weighted
Average 
Interest
Rate			       6.63%    6.25% 5.88%   6.75%   6.81%     -      -        -                  -

Held to 
Maturity Fixed
Income 
Securities:
U.S. 
Government       -       -      -    	$502 	   -       -      $502	    $502
Weighted 
Average 
Interest
Rate		           -       -      - 	   6.37%    -       -       -      -
</TABLE>
[S]
Item 8.  Financial Statements and Supplementary Data

See page F1.

Item 9.	Changes in and Disagreements with Accountants on Accounting
	and Financial Disclosure

NONE                        

                                       -18-
<PAGE>

                                    PART III

Item 10. Directors and Executive Officers of the Registrant

Pursuant to the Company's Charter and By-Laws, the Board of Directors of the 
Company consists of 13 members divided into three classes: Class I, Class II
and Class III.  Class I consists of five directors and Class II and III each
consist of four directors.  Joel Berlin resigned from the Boards of the Group
in January 1999 and was replaced by Ms. Carmen M. Rivera in March 1999.  
Ms. Carmen M. Rivera will serve until the 1999 Annual Meeting of Shareholders.
One class of directors is elected in each year for a three-year term.  All of
the directors of the Company are also directors of Empire and Centurion.  

Name, Age and Position	     Principal Occupation, Office
	with Company                	and Term of Office              	   
[S]
Robert V. Toppi, 61,		      Principal Occupation - President and Chief  
Director, President         Executive Officer of the Company, Empire and   
and Chief Executive 	       Centurion since August 1998.  Previously, Resident
Officer                     Vice President of the Greater New York district 
                            with Aetna Casualty and Surety Company.  
                            Class II Director since August 1998; 
                            current term expires 2001.              

Martin B. Bernstein, 65,	  	Principal Occupation - President and Director 
Director                    of Ponderosa Fibres of America, Inc.(A pulp
                            manufacturer for paper producers).  
                            Class II Director since February 1988; 
                            current term expires 2001.

Ian M. Cumming, 58,	      		Principal Occupation - Presently and since June 
Director                	   1978, Chairman of the Board and a Director of 
                            Leucadia.  Director of Skywest, Inc. (a Utah-based 
                          	 regional air carrier) since June 1986. 
                        	   Director of MK Gold Company (an international gold
                            mining company) since June 1995.  
                            Class I Director since February 1988; 
                            current term expires 2000.

James E. Jordan, 55,      		Principal Occupation - Financial Consultant,
Director	                   The Jordan Company.  Previously, President
                     					  of the William Penn Co. from 1986 until 1997.		
                        				Class III Director since 1997; 
                            current term expires 1999.

Thomas E. Mara, 53,	      		Principal Occupation - Presently and
Director                  	 since May 1980, Executive Vice President of Leucadia
	                           and Treasurer of Leucadia since January 1993.
                           	Class I Director since October 1994; 
                            current term expires 2000.

Louis V. Siracusano, 52,	 		Principal Occupation - Attorney with
Director                  	 McKenna, Fehringer, Siracusano & Chianese 
                            (a law firm) for over seven years.  
                            Class II Director since 1985; 
                            current term expires 2001.

Joseph A. Orlando, 43,      Principal Occupation - Chief Financial Officer
Director                    of Leucadia since 1996 and Vice President of 
                            Leucadia since 1994.  
                            Class III Director since 1998; 
                            current term expires 1999. 

                                     
                                     -19-
<PAGE>

Name, Age and Position			   Principal Occupation, Office
with Company                and Term of Office	
[S]
Joseph S. Steinberg, 55,			 Principal Occupation - President of Leucadia since
Director, Chairman of the   January 1979 and Director of Leucadia since 
Board                       December 1978.  Director of MK Gold Company  since 
                            June 1995. Director since June 1988 of Jordan 
                            Industries, Inc., a holding company principally 
                            engaged in manufacturing.   Director of  HomeFed 
                            Corporation, a California real estate developer, 
                            since August 1998.  
                            Class I Director since February 1988;
                            current term expires 2000.

Daniel G. Stewart, 80,      Principal Occupation - Independent consulting 
Director                    actuary. Previously, Senior Vice	President of 
                            Mutual Benefit Life Insurance	Company from 1985 
                            to November 1991.  
                            Class I Director since 1980;
                            current term expires 2000.   
 
Lucius Theus, 76,				       Principal Occupation - President, The U.S. 
Director                    Associates (consultants in civic affairs, human
                            resources	and business management) since 1989. 
                            Principal and Director of the Wellness Group, Inc.
                           	(a provider of health promotion programs) since 
                            1989 Corporate Director, Civic Affairs of Allied
                           	Corporation (a diversified industrial company)
                            since 1979. 
                            Class II Director since 1980; 
                            current term expires 2001.
			
Carmen M. Rivera, 52,			    Principal Occupation - Senior Vice President of 
Director & Senior           Small Business Division at Empire since November,
Vice President              1998.  Previously, Select Manager in the  N.Y.C.
                            office at the Travelers Property Casualty 
                            Corporation.  
                            Class I Director since March 1999; 
                            current term expires 1999.                  

Harry H. Wise, 60,		       	Principal Occupation - President and Director,
Director                    H.W. Associates, Inc. (an investment advisory firm).
                            President and Director, Madison Equity Capital Corp.
                            (a sponsor of private investment partnerships).
                            Class III	Director since 1988;
                            current term expires 1999.

Francis M. Colalucci, 54,			Principal Occupation - Executive Vice President,
Director, Executive Vice    Chief Financial Officer and Treasurer of the
President, Chief Financial  Company and Empire since March 1, 1999.
Officer & Treasurer         Senior Vice President, Chief Financial Officer and
                            Treasurer since January 1996.  Previously, Vice 
                            President & Corporate Treasurer of Continental 
                            Corporation (an insurance holding Company) from
                            1991 to January 1996.   
                            Class III Director since October 1996;
                            Current term expires in 1999.

R.  Scott Conant, 48,    			Principal Occupation - Senior Vice President,
Senior Vice President,			   Claims for the Company and Empire since September
Claims 	                    1997.  Previously, Senior Vice President of Home 
                            State Holdings, Inc (an insurance holding company)
                            from August 1996 to September 1997.  Previously, 
                            Manager & Consultant for KPMG Peat Marwick, from 
                            February 1995 to August 1996. 


                                    -20-
<PAGE>
<TABLE>
Item 11.	Executive Compensation

Summary Compensation Table
The following table sets forth certain compensation information for Robert V.
Toppi, currently the Chief Executive Officer of  the Company,  Richard G. Petitt
and Andrew W. Attivissimo who were prior Chief Executive Officers of the 
Company, the only executive officers whose compensation paid, or accrued for,
under the pooling arrangement exceeded $100,000 for the years ended December 31,
1998, 1997 and 1996.
<CAPTION>
							                           Summary Compensation Table
    	             		                          	 			       Long Term
	  	                      	Annual Compensation    	     Compensation	
Name and Principal     	                           	 LTIP       All Other
   Position                 Salary        Bonus   	Payouts 	   Compensation
                 		Year     $             $        $           $          	
                           <C>           <C>      <C>         <C>
<S>
Robert V. Toppi    1998	   (a)           (a)      (a)         (a)
President & C.E.O

Richard G. Petitt	 1997 	   105,969 	      90,000   -   	       6,767 (b)
Chairman, 
President& C.E.O.  1996   	  86,674     	 150,000   -           7,494 (c)

Andrew W. Attivissimo    
President & C.O.O. 1996   	  87,791    	   30,000  69,631(b)   89,397(d)
<S>
<FN>
(a) Mr. Toppi receives no compensation from the Company.  He is compensated 
directly by Leucadia.
(b) Includes Salary Cap Restoration Plan ($2,303), Pension Plan ($3,264), and
Company match of 401(k) Plan ($1,200). 
(c)	Includes Salary Cap Restoration Plan ($2,100), Pension Plan ($4,455) and 
Company match of 401(k) plan ($939). 
(d)	Contributions made to a trust pursuant to the Empire Long Term Incentive
Plan.
</TABLE>
The Company does not directly remunerate directors.  The directors of the 
Company and Empire who are not employees of Empire and the Company were paid
an annual retainer of $5,000.  In addition, eligible directors receive $1,500 
for each joint board meeting attended.  For attendance at a meeting of a 
committee of the joint board, such directors receive $1,500 per meeting.  In
addition, each Chairperson of a committee is entitled to $500 per annum.  All
fees paid to such directors are shared in accordance with the pooling agreement.

In 1998, Mr. Richard G. Petitt retired as Director, Chairman of the 
Board, President and Chief Executive Officer of the Company and the Group.  
He was succeeded by Mr. Toppi who is President and C.E.O. and a director.  
Mr. Steinberg succeeded Mr. Petitt as chairman of the board.

In February 1996, Mr. Patrell retired as Chairman of the Board of Directors 
and Chief Executive Officer of the Company and Empire; he was a Director of 
the Company and the Group before resigning on January 1, 1998.  Upon his 
retirement, Leucadia agreed to pay to Mr. Patrell the amount of $1,000,000 of
which $333,333 was paid by Empire.  Pursuant to the pooling agreement, the 
Company contributed 30% of the compensation paid by Empire to Mr. Patrell. 
Mr. Patrell agreed not to compete against Leucadia or its affiliated entities
for a two year period.

Mr. Attivissimo was employed pursuant to an Employment Agreement, which 
terminated on December 31, 1996.  The Employment Agreement was to continue 
from year to year thereafter unless the period of employment was terminated
at the end of a calendar year by either Mr. Attivissimo or Empire on at least
six months written notice.  In May 1996, Mr. Attivissimo retired from his 
positions as an officer and director of the Company and the Group.  Pursuant 
to the terms of his Employment Agreement, Mr. Attivissimo continued to be paid
his normal salary at the rate of $240,000 per annum through December 31, 1997.
In addition, Mr. Attivissimo received $1,901,000 in a lump sum supplemental 
retirement benefit, $482,375 under Empire's 

                                   -21-
<PAGE>
<TABLE>
Long Term Incentive Plan and title to an automobile having a book value of 
approximately $13,000. Pursuant to the pooling agreement, the Company is 
obligated to pay 30% of the compensation and cost of benefits paid to 
Mr. Attivissimo.

Pension Plan

Pensions for officers and employees of the Company were provided under a 
non contributory defined benefit pension plan "prior plan".  Any employee 
was eligible for membership in the plan on January 1st or July 1st of any 
plan year after which they had completed one full year of service, consisting
of a minimum of 1,000 credited hours with Empire, provided they had attained 
the age of 21 years by or before such date.  Members of the prior plan 
received a basic pension if they worked until their normal retirement date, 
which was the last day of the month in which they attained 65 years of age 
with 5 years of, credited service.  Any member in the active employ of Empire
may have elected early retirement between 55 and 65.  A member electing early
retirement must have had at least 10 years of service. A monthly average of 
total compensation received over the highest 5 consecutive plan or calendar 
years before retirement was taken to compute benefits as follows:

             1.30% of the first $833 per month of average pay, plus 
             1.75% of average pay over $833 per month.                 

The sum of these two credits was multiplied by the years of credited service.
The basic benefit amounts listed in the table below were not subject to any 
deduction for Social Security benefits or other offset amounts. The maximum 
benefit payable under the pension plan was $96,400 per year.  Benefits accrued
under the plan were frozen as of December 31, 1998.  The prior plan was merged 
with the Leucadia plan effective January 1, 1999.

As a result of the curtailment of the pension benefits in 1998,  the Group 
recognized a gain of $6,548,000.  In accordance with the pooling aggreement, 
the Company's share of the curtailment gain is 30%.

The amounts set forth in the following table show estimated annual benefits 
upon retirement to which the Company contributes 30% of such cost through 
the pooling agreement.
<S>
<CAPTION>
	   Highest 						
Five Year Average
 Compensation at                       		Years of Service
  Retirement      10       15       20        2	       30       35  
                 <C>      <C>      <C>       <C>      <C>      <C>
$   10,000       	$ 1,300  $ 1,950  $ 2,600   $ 3,250  $ 3,900  $ 4,550
    25,000      	   3,925    5,888    7,850     9,813   11,775   13,738
    50,000      	   8,300   12,450   16,600    20,750   24,900   29,050
    75,000       	 12,675   19,013   25,350    31,688   38,025   44,363
   100,000       	 17,050   25,575   34,100    42,625   51,150   59,675
   160,000       	 27,500   41,300   55,100    69,000   82,600   96,400
</TABLE>
[S]
Effective January 1, 1999, Empire adopted a non-contributory defined benefit 
contribution plan.  The contributions, ranging from 2% - 16% of employees'
current pension plan compensation, are based on the age and service of the
employee with Empire.  These contributions will accumulate for participants
on a tax-deferred basis.  Participants will have choices to direct the 
investment of their contributions to their accounts.

Salary Cap Restoration Plan

In 1994, Empire established a Salary Cap Restoration Plan ("SCRP") for certain 
corporate officers.  Under the SCRP, Empire provided these officers with an 
additional benefit, to be paid in a lump-sum upon retirement, equal to the 
difference between the actuarially determined lump-sum benefits, as computed 
under the Prior Pension Plan, of the officer's highest five year average 
compensation (not to exceed $320,000, adjusted for the cost-of-living) at 
retirement and the current maximum compensation limit of $160,000. The SCRP
was an unfunded plan.  Along with the defined benefit plan, the benefits under
SCRP were curtailed as of December 31, 1998.


                                   -22-
<PAGE>
Employees' Savings Plan

Empire sponsors an Employees' Savings Plan (the "Savings Plan"), under which 
each eligible employee may defer a portion of their annual compensation, subject
to limitations. Empire contributes a matching amount, subject to certain limits.
In 1996, Empire matched 65% of each participant's deferred contribution up to a
maximum matching contribution of $813.  A participant may also contribute, from 
his after-tax dollars, an amount, not to exceed 10% of his annual compensation.
Effective July 1996, the Savings Plan was amended to allow Empire matching 
contributions equal to 50% of an employee's contributions up to a maximum of 
2.5% of the employee's salary.  Empire's contributions to the Savings Plan were 
$420,000, $438,000, and $524,000 in 1998, 1997 and 1996, respectively. Under the
pooling agreement, the Company is obligated to provide 30% of Empire's 
contributions to the Savings Plan.

Supplemental Retirement Plan

Under Empire's Supplemental Retirement Plan ("SERP"), eligible employees who 
work until their normal retirement date, which, is the last day of the month 
in which such employees attain 65 years of age, are entitled to receive monthly
benefits equal to (a) the difference between (i) one twelfth of a stipulated 
percentage (the "stipulated percentage") of such participant's final average 
compensation (the "base amount") and (ii) the aggregate amount of the monthly
pension and benefit entitlement such participant would receive under Prior 
Plan, Savings Plan and other employee pension benefit plans if such benefits
were paid in the form of an annuity for the life of the participant and fifty
percent of the participant's monthly Social Security benefit, multiplied, 
unless otherwise specified in the SERP, by (b) a fraction, not exceeding one
(the "reduction factor"), the numerator of which is the number of the 
participant's years of service and the denominator of which is five.  Final 
average compensation is the average annual compensation paid during any five
consecutive calendar years during which the participant's compensation was 
highest.  The SERP provides that the minimum benefit payable is equal to the
base amount multiplied by the reduction factor.  Participants remaining in the
employ of the Company after the normal retirement date continue to accrue 
benefits under the SERP.  Early retirement, between age 55 and 65 under the
SERP, is permitted provided the participant electing early retirement has at 
least ten years of service.  Amounts payable under the SERP are paid from the
Trust to Fund Benefits under Certain Unfunded Deferred Compensation Plans of 
the Company, established effective November 1, 1987 (the "Trust Fund").  The 
Trust Fund is subject to the claims of certain creditors of the Company if the
Company becomes insolvent.  The Board of Directors had designated one key 
employee, Andrew W. Attivissimo; to receive benefits under the SERP based on
a maximum stipulated percentage of 60% and a minimum stipulated percentage of
30%.  In 1996, Mr. Attivissimo received a lump sum payment under the SERP of 
$1,901,000.

Item 12. Security Ownership of Certain Beneficial Owners and Management

Security Ownership of Certain Beneficial Owners

The table on the following page sets forth information as of March 15, 1999 as 
to the Common Shares of the Company owned of record and beneficially by each 
person who owns of record, or is known by the Company to own beneficially, 
more than 5% of such Common Shares.

                                    -23-
<PAGE>
<TABLE>
<CAPTION>
           Name and                    	Amount and
           Address of                  	Nature of
           Beneficial                 	Beneficial           		Percent of
           Owner                       	Ownership           		    Class  
                                   <C>                         <C>

    Empire Insurance Company       	5,987,401 Common         	  84.6%
    335 Adams Street               	Shares owned of 
    Brooklyn, N.Y.  11201         	 record

    Baldwin Enterprises, Inc.      	373,607 Common          	    5.3%
    529 East South Temple          	Shares owned of 
    Salt Lake City, Utah 84102     	record

</TABLE>
[S]                                 

As discussed in Item 1, "Business", Leucadia (and certain of its wholly-owned 
subsidiaries) may be deemed a parent of Empire and therefore of the Company as 
a result of its indirect ownership of 100% of the outstanding common stock of 
Empire.

Security Ownership of Management

The following table sets forth information concerning beneficial ownership of 
the Company's common stock and the equity securities of Leucadia by all 
directors and by directors and officers of the Company as a group as of 
December 31, 1998 with respect to the Company's Common Shares and as of 
April 9, 1998 with respect to Leucadia's and Empire's securities.  





                                    -24-

<PAGE>
Each holder shown exercises sole voting and sole investment power of the shares 
shown opposite his or her name.

Name of Beneficial            Amount and Nature of         Percent of
     Owner                    Beneficial Ownership       	   Class 	 
Martin B. Bernstein     	              -		                     -
Francis M. Colalucci 	                 -		                     -
R. Scott Conant  	                     -		                     -
Ian M. Cumming (1)     	               -		                     -
James E. Jordan                       	-		                     -
Thomas E. Mara                        	-		                     -
Joseph A. Orlando	                     -		                     -
Carmen M. Rivera	                      -		                     -
Louis V. Siracusano     	              -		                     -
Joseph S. Steinberg (1) 	              -		                     -
Daniel G. Stewart          	           -	                     	-
Lucius Theus                           -                    			-
Robert V. Toppi                        -                       -
Harry H. Wise   	                      -		                     -
Directors and executive 
Officers as a group 	                  -                     		-
(22 persons) (2)                            			

[S]
(1) Although neither Ian M. Cumming nor Joseph S. Steinberg directly owns any 
shares of common stock of the Company, by virtue of their respective interest 
of approximately 15.5% and 14.2% in Leucadia, each may be deemed to be the 
beneficial owner of a proportionate number of the shares of Common Stock of 
the Company beneficially owned by Leucadia through its 100% ownership of 
Empire.
[S]
(2) Aside from the beneficial ownership described in note 1 to this table, five 
directors and one officer beneficially own common shares of Leucadia, which in 
the aggregate, represent less than 1% of Leucadia's common stock.
[S]
Item 13. Certain Relationships and Related Transactions
[S]
See Item 1 of this report and Notes 1, 3, 8, 9, 10 and 11 of Notes to 
Consolidated Financial Statements for information relating to transactions and 
relationships between the Company and its affiliates.


                                   -25-

<PAGE>

                                 PART IV


Item 14. Exhibits, Financial Statement Schedules, and Reports on Form 8-K

(a) Financial Statements and Schedule

1.  The following Financial Statements of Allcity Insurance Company are included
    in item 8:

	Report of Independent Accountants
	Consolidated Balance Sheets as of December 31, 1998 and 1997.
	Consolidated Statements of Operations for the years ended December 31, 1998,
 1997 and 1996.
 Consolidated Statements of Changes in Shareholders' Equity for the  years
 ended 	December 31, 1998, 1997 and 1996.
	Consolidated Statements of Cash Flows for the years ended December 31,1998, 
 1997 and 1996.
	Notes to Consolidated Financial Statements.
 
2.  The information for Schedules I, IV and V required to be filed pursuant to 
      Regulation S-X, Article 7 is contained in the Notes to Consolidated 
      Financial Statements and, therefore, these schedules have been omitted.
      The information required by Schedules III and IV of Article 7 is combined
      in Schedule VI - Supplemental Insurance Information Concerning Property/
      Casualty Insurance Operations.  All other required schedules are not 
      applicable.

      Schedule IV - Supplemental Insurance Information Concerning Property/ 
      Casualty Insurance Operations for the years ended December 31, 1998, 
      1997 and 1996.

3.  The exhibits required by Item 601 of Regulation S-K have been filed 
      herewith, see attached Exhibit Index.

(b) Reports on Form 8-K.

    During the quarter ended December 31, 1998, there were no reports on
    Form 8-K filed for the Company.

(c) Exhibits Required by Item 601 of Regulation S-K.

    See attached Exhibit Index.

(d) Financial Statements Required by Regulation S-X.

    See Item 14(a).


                                  -26-
<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.

                         ALLCITY INSURANCE COMPANY
					  	 
March 30, 1999                           By:/s/ Francis M. Colalucci      
                                            Francis M. Colalucci
                                            Director, Executive Vice President,
                                            C.F.O. & Treasurer
     
Pursuant to the requirements of the Securities Exchange Act of 1934, this 
reporthas been signed below by the following persons on behalf of the registrant
and in the capacities indicated and on the date set forth above.

/s/ Robert V. Toppi                       		/s/ Francis M. Colalucci   
Robert V. Toppi                      	      Francis M. Colalucci
Director, President & C.E.O.               	Director, Executive Vice President,
                                           	C.F.O. & Treasurer


/s/ Joseph S. Steinberg                     /s/	Martin B. Bernstein         	 
Joseph S. Steinberg                        	Martin B. Bernstein 
Director, Chairman of the Board            	Director

									
/s/ Louis V. Siracusano                  	  /s/ Harry H. Wise              		 
Louis V. Siracusano                        	Harry H. Wise
Director                                   	Director


					
/s/ Daniel G. Stewart                       /s/ Thomas E. Mara
Daniel G. Stewart                          	Thomas E. Mara
Director                                  	 Director


			
/s/ Ian M. Cumming                          /s/ James E. Jordan   		
Ian M. Cumming                             	James E. Jordan 
Director                                	   Director



/s/ Lucius Theus                         	  /s/	Carmen M. Rivera  		  
Lucius Theus                               	Carmen M. Rivera
Director                                   	Director, Senior Vice President



/s/ Joseph A. Orlando
Joseph A. Orlando                    	
Director                  	

                                       -27-
<PAGE>

EXHIBIT INDEX


The following designated exhibits, as indicated below, are either filed 
herewith (if indicated by an asterisk) or have heretofore been filed with the 
Securities and Exchange Commission under the Securities Act of 1933 or the 
Securities Exchange Act of 1934 and are incorporated herein by reference to
such filings.  Reference is made to Item 8 of this Form 10-K for a listing of
certain financial information and statements incorporated by reference herein.
[S]
Exhibit Number       Description of Document
[S]
       3             	Corporate charter, as amended, and by-laws, as 
                     	amended, of the Company (Incorporated by reference 
                    	 to Exhibit 3 of the Company's Annual Report on Form
                     	10-K for the year ended December 31, 1994).

       10(a)         	Pooling Agreement, as amended through March 31,
                     	1992 between Empire and the Company (Incorporated by 
                     	reference to Exhibit 10(a)-20 of the Company's Form 
                     	8 Amendment No. 1 of its annual Report for the year 
                     	ended December 31, 1981). 

       10(c)         	Centurion Agreement, made effective as of
                     	August 21, 1987 by and between Empire and the
                     	Company, and Centurion.  (Incorporated by reference
                     	to Exhibit 10(e) of the Company's Annual Report on
                     	Form 10-K for the year ended December 31, 1987). 

       10(d)         	Empire Mutual Executive Deferred Compensation Plan
                     	dated November 17, 1987.  (Incorporated by reference
                     	to Exhibit 10(f) of the Company's Annual Report on 
                     	Form 10-K for the year ended December 31, 1987).

       10(e)         	Empire Mutual Insurance Company Supplemental 
                     	Retirement Plan dated November 17, 1987.
                     	(Incorporated by reference to Exhibit 10(g) of the
                     	Company's Annual Report on Form 10-K for  the year
                     	ended December 31, 1987).
       
  
                                        -28-            
<PAGE>
       
Exhibit Number        Description of Document

       10(f)          Tax Allocation Agreement dated February 28, 1989 among 
                      the Company, PHLCORP, Empire, Centurion, Empire Livery 
                      Services, Inc., Executroll Services Corporation, and
                      Empall Agency Incorporated.  (Incorporated by reference
                      to Exhibit 10(m) of the Company's Annual Report on Form
                      10-K for the year ended December 31, 1988). 

       10(g)          Employment Agreement made as of January 1, 1993 Empire 
                      and Andrew W. Attivissimo. 	(Incorporated by reference 
                      to Exhibit 10(g) of the 10-K for the year ended 
                      December 31, 1992).
   
       10(h)	 	       Empire Insurance Company Salary Cap Restoration Plan dated
                      May 26, 1994. (Incorporated by reference to Exhibit 10(i) 
                      of the Company's Annual Report on Form 10-K for the 
                      December 31, 1994).

       10(i)		        Quota Share Reinsurance Agreement between Empire Insurance
                      Company and Centurion Insurance Company (Incorporated by 
                      reference to Exhibit 10(i) of the company's Annual Report
                      on Form 10-K for the year ended December 31, 1997).

       10(j)		        Lease agreement dated June 27, 1996 between Empire 
                      Insurance Company and Brooklyn Renaissance Plaza L.L.C., 
                      as Landlord, BRPII L.L.C as sub-landlord (Incorporated by
                      reference to Exhibit 10(a) of the company's quarterly 
                      report on Form 10-Q for the quarter ended March 31, 1997).

       27*		         	Financial Data Schedule



                                  -29-
<PAGE>

ITEM 8.  Financial Statements and Financial Statement Schedule 

                                                         										     Page
The following financial information is submitted herein:
											 
Report of Independent Accountants						                                 F2
Consolidated Balance Sheets as of December 31, 1998 and 1997           	F3
Consolidated Statements of Operations for the years  
ended December 31, 1998, 1997 and 1996                                		F4
Consolidated Statements of Changes in Shareholders' Equity 
for the years ended December 31, 1998, 1997 and 1996                   	F5
Consolidated Statements of Cash Flows for the years ende	
December 31, 1998, 1997 and 1996                                       	F6
Notes to Consolidated Financial Statements.                     		      F7-F28


Financial Statement Schedule:

Schedule VI- Supplemental Insurance Information 			
Concerning Property/Casualty Insurance Operations for the
years ended December 31, 1998, 1997 and 1996                          		F29






                                      -F1-
<PAGE>
                     REPORT OF INDEPENDENT ACCOUNTANTS
[S]
February 18, 1999
[S]
To the Board of Directors and
Shareholders of Allcity Insurance Company:
[S]
In our opinion, the consolidated financial statements listed in the index 
appearing under item 14(a) (1) (2) of this Form 10-K, present fairly, in all 
all material respects, the financial position of Allcity Insurance Company and
Subsidiary as of December 31, 1998 and 1997, and the results of their operations
and their cash flows for each of the three years in the period ended December 
31, 1998, in conformity with generally accepted accounting principles.  In 
addition, in our opinion, the financial statement schedule listed in the index
appearing under item 14(a) (1) (2) of this Form 10-K, present fairly in all 
respects, the information set forth therein when read in conjunction with the
related consolidated financial statements.  These financial statements and 
financial statement schedule are the responsibility of the Company's
management; our responsibility is to express an opinion on these financial 
statements and financial statements schedule based on our audits.  We conducted 
our audits of these statements in accordance with generally accepted auditing
standards which require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material 
misstatements.  An audit includes examining on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the 
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation.  We believe that our
audits provide a reasonable basis for the opinion expressed above.
[S]
[S]


                         PRICEWATERHOUSECOOPERS LLP
[S]
New York, New York


                                      -F2-
<PAGE>
<TABLE>
CONSOLIDATED BALANCE SHEETS
ALLCITY INSURANCE COMPANY AND SUBSIDIARY
(In thousands, except share and per share amounts)
<CAPTION>
 								                                            December 31,
 ASSET                                             1998        1997 
                                                  <C>         <C> 
<S>
   Investments:
   Fixed maturities
	  Available for sale (amortized cost of
   $181,214 in 1998 and $268,091 in 1997) 	        $181,729	   $269,055
   Held to maturity (fair value	
   of $502 in 1998 and $497 in 1997)                		  502	        485
   Equity securities available for sale                 176	        447
   Short-term              			                       20,186	      1,749
  	Other Invested Assets                             31,446           -                                                         
   TOTAL INVESTMENTS                                234,039     271,736
 <S>
   Cash                             	                   390       2,863
   Agents' balances, less allowance for
   doubtful accounts ($1,817 in 1998 and
   $1,561 in 1997)                    				           10,015      13,109
   Accrued investment income		                      		3,662       2,942
   Reinsurance balances receivable                  295,994     273,280
   Prepaid reinsurance premiums                      37,691      55,074
   Deferred policy acquisition costs                  5,365       7,079
   Deferred tax benefit                              11,101      11,462
   Due from affiliates                				            3,010          - 
   Other assets	                           					      4,437       2,704
   TOTAL ASSETS                                	   $605,704    $640,249
<S>
LIABILITIES 
   Unpaid losses					                          	   $382,109    $361,341
   Unpaid loss adjustment expenses             	     52,123      56,185
   Unearned premiums                                 63,972      90,807
   Drafts payable                                    	3,912       4,983
   Due to affiliates                                     -       14,427
   Unearned service fee income               			      2,240       4,539
   Reserve for servicing carrier claim expenses      	1,730      	3,701
   Reinsurance balances payable		              	     	  885       4,825
   Other liabilities                                 	5,233       6,567
   Surplus note                             				     15,300      14,710
   TOTAL LIABILITIES                                527,504     562,085
<S>
SHAREHOLDERS' EQUITY
   Common stock, $1 par value: 7,368,420
   shares authorized; 7,078,625 shares issued
   and outstanding in 1998 and 1997                  	7,079       7,079
   Additional paid-in capital                         9,331       9,331
   Accumulated other comprehensive income net of 
   deferred taxes of $242 and $494 in 1998 and
   1997, respectively 	        	                        449         917
   Retained earnings                                 61,341      60,837                   
TOTAL SHAREHOLDERS' EQUITY                           78,200      78,164
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY         $605,704    $640,249
<S>
<FN>
See Notes to Consolidated Financial Statements.                    
</TABLE>
 
                                     -F3-
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF OPERATIONS
ALLCITY INSURANCE COMPANY AND SUBSIDIARY
(In thousands, except share
and per share amounts)
<CAPTION>
                                             Year  Ended December  31, 

                                         1998     1997     1996 
                                          <C>       <C>       <C>
<S>
REVENUES
   Premiums earned                         $67,512   $80,891   $96,073
   Net investment income                    14,523    15,694    16,358
   Service fee income                        3,389     5,696     6,608
   Net securities gains and(losses)          6,079      (192)    1,130
   Other income            			                 567       535       621
                               	  	   				  92,070   102,624   120,790
                                       
LOSSES AND EXPENSES
   Losses                                   62,282    68,901    76,387
   Loss adjustment expenses        		    	   7,307    13,144    11,963
   Other underwriting expenses, less
   deferrals of $11,697 in 1998, $14,616
   in 1997 and $15,333 in 1996               7,705     4,886    11,681
   Amortization of deferred policy  
   acquisition costs                 	   	  13,411    15,245    16,204
   Interest on surplus note                    591       595       591
                                    	       91,296   102,771   116,826
 
INCOME/(LOSS) BEFORE FEDERAL INCOME TAX        774      (147)    3,964
                                             
FEDERAL INCOME TAXES                        
    Current (benefit)/expense                 (343)     (227)    2,501
    Deferred expense/(benefit)                 613       163	   (1,171)
                                       	       270       (64)    1,330
             NET INCOME/(LOSS)             $   504   $   (83)  $ 2,634	

Per share data, based on 7,078,625 
Average shares outstanding in 1998,
1997 and 1996                         
BASIC and DILUTED EARNINGS/(LOSS)PER SHARE $  0.07   $ (0.01)  $  0.37   
<S>
<FN>  
See Notes to Consolidated Financial Statements.
</TABLE>

                                    -F4-
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
ALLCITY INSURANCE COMPANY AND SUBSIDIARY
(In thousands)
<CAPTION>
                                SHAREHOLDERS' EQUITY	
	 
                                                        	    Total
                                              	Additional    Share-                                                      
        		Common Stock	 Paid-In 	Comprehensive  Retained	    holders'
          Shares Amount	Capital		   Income       Earnings 	         
         <C>    <C>    <C>      <C>            <C>          <C>
Equity
Balance 
at
January 
1,1996    $7,079 $7,079 $9,331		 $1,240         $58,286 	    $75,936
<S>
Comprehensive Income:
<S>
Net income 
for the year	                            				     2,634	       2,634
<S>										
Net change 
in unrealized
(loss) on
investments
(net of 
deferred 
benefit
of $1,567)                       (2,912)         	            (2,912)
<S>
Comprehensive
Income/(loss)                    	           	          	       (278)
Balance at 
December 
31, 1996   7,079  7,079  9,331   (1,672)         60,920       75,658
<S>
Net loss
for the 
year                                          		    (83)         (83)
<S>
Net change
in unrealized
gain on 
investments 
(net of 
deferred 
taxes of
$1,394)			                        2,589                    		  2,589
<S>
Comprehensive 
Income           	           	    		 	                         2,506
<S>
Balance as
of December
31, 1997   7,079  7,079	  9,331	     917          60,837      78,164
<S>
Comprehensive Income: 
<S>
Net income
for the year              			                       504          504
<S>
Unrealized
holding gain 
arising during
the period 
(net of deferred 
tax of $767)					                 1,425                        1,425
<S>
Less reclassification
of net securities
gains included in 
net income (net
of deferred tax 
of $1,019)	                      (1,893)                      (1,893)
<S>
Comprehensive Income                                              36 
<S>
Balance as 
of December 
31, 1998  $7,079 $7,079	$9,331   $  449	        $61,341			   $78,200
<S>
</TABLE>
    
                                       -F5-
[S]
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
ALLCITY INSURANCE COMPANY AND SUBSIDIARY
(In thousands)                        
<CAPTION>
                                                Year  Ended December 31, 
                              	 				    	  	   1998       1997      1996
                                               <C>        <C>       <C>
NET CASH FLOWS FROM OPERATING ACTIVITIES  
Net income/(loss)                         			 		$   504    $   (83)  $ 2,634
  Adjustments to reconcile net income/(loss)
  to net cash(used for)/provided by operating
  activities: 
   Provision for deferred tax benefits         	    613        163    (1,171) 
   Amortization of deferred policy 
   acquisition costs                         			 13,411     15,245    16,204
   Provision for doubtful accounts             	    256        198       270
   Net securities(gains) and losses              (6,079)       192    (1,130)
   Policy acquisition costs incurred 
   and deferred                               		(11,697)   (14,616)  (15,333)
   Net change in:
   Agents' balances                            	  2,838      4,507     3,071
   Reinsurance balances receivable             	(22,714)    (9,121)   (6,544)
   Prepaid reinsurance premiums                	 17,383     14,987     9,224
   Unpaid losses and loss adjustment expenses  	 16,706     11,439     6,208
   Unearned premiums                           	(26,835)   (20,850)  (14,285)
   Drafts payable                              	 (1,071)      (729)      868
   Due to and (from) affiliates                	(17,437)       195    (3,633)
   Unearned service fees                       	 (2,299)      (922)      352
   Reserve for service carrier claims expenses 	 (1,971)    (4,342)    1,133
   Reinsurance balances payable                  (3,940)       (62)    1,411
   Other                                         (2,526)      (413)    2,907

 NET CASH (USED FOR)/PROVIDED BY 
 OPERATING ACTIVITIES			                		      (44,858)    (4,212)    2,186

 NET CASH FLOWS FROM INVESTING ACTIVITIES
  Available for Sale:
  Acquisition of fixed maturities              (246,375)  (147,423) (172,010)
  Acquisition of other invested assets          (31,446)        -         -  
  Proceeds from sale of fixed maturities        323,177    120,272   140,862
  Proceeds from maturities of fixed 
  maturities                                   	 15,466     13,301    36,767
  Net change in short-term investments         	(18,437)    18,693    (8,845)
 NET CASH PROVIDED BY/(USED FOR) INVESTING
  ACTIVITIES                                   	 42,385      4,843    (3,226)
          
 NET(DECREASE)/INCREASE IN CASH                	 (2,473)       631    (1,040)
  Cash at beginning of year     	                 2,863      2,232     3,272
  Cash at the end of year                      	$   390    $ 2,863   $ 2,232	

  Cash paid for federal income taxes            $ 2,242    $ 1,428   $ 3,686	
<S>
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
                                         -F6-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
ALLCITY INSURANCE COMPANY AND SUBSIDIARY
[S]
NOTE 1-ORGANIZATION
[S]
Allcity Insurance Company ("Allcity" or the "Company") is a property and 
casualty insurer and includes the results of its subsidiary, Empall Agency, 
Inc. ("Empall").  Empire Insurance Company ("Empire"), a property and casualty
insurer owns approximately 84.6% of the outstanding common shares of the Company
and 100% of the outstanding common shares of Centurion Insurance Company
("Centurion").  Empire's common shares are 100% owned and controlled, through 
subsidiaries, by Leucadia National Corporation ("Leucadia").  Additionally, 
Leucadia indirectly owns an additional 5.3% of the outstanding common shares
of the Company.  The Company, Empire and Centurion are sometimes hereinafter 
collectively referred to as the Group.

The property and casualty insurance business written by Empire and Allcity is 
subject to a pooling agreement under which premiums, losses, loss adjustment 
expenses and other underwriting expenses are shared on the basis of 70% to 
Empire and 30% to Allcity.  The pooling percentages have been changed from time
to time and may be changed in the future subject to New York State Insurance 
Department approval.  Allcity has no employees of its own.  Empire provides
administrative services and 30% of the related expenses are allocated to 
Allcity.

The Company's three business segments and principal lines of business are (1)
automobile (private passenger and commercial), (2) commercial (commercial 
multi-peril, workers' compensation and other liability) and (3) miscellaneous 
and personal (fire, allied and homeowners) insurance coverage. Based on the 
Company's 1998 net earned premiums, approximately 57%, 30% and 13% of such 
premiums were for the automobile, commercial and miscellaneous and personal 
lines of business, respectively. The Company markets its products primarily 
to individuals, retail establishments, restaurants, livery and taxicab owners,
and several types of service contractors. A portion of the Company's and 
Empire's automobile business, both private passenger and commercial, is assigned
risk business acquired through contractual arrangements with other insurance 
companies, some of which are competitors. These contractual arrangements, which
are negotiated for one or two year periods, provide for fees paid to the Group 
within parameters established by the New York State Insurance Department.  In
addition, the Group received a fee for providing administrative services, 
including claims processing, underwriting and collection activities, for the
New York Public Automobile Pool ("NYPAP") and the Massachusetts Taxi and 
Limousine Pool.  These latter arrangements do not involve the assumption of 
any material underwriting risk by the Group.  Effective February 28, 1998, 
the Group ceased serving as a servicing carrier for the NYPAP, thereby 
enabling the Group to concentrate its resources on its core non-service 
businesses and redeploy certain resources previously dedicated to the NYPAP.
Under the pooling arrangement, the Company assumes 30% of the fees and costs 
of these arrangements.
[S]
                                      -F7-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED 
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 1--ORGANIZATION-CONTINUED

The Company and Empire are licensed to transact insurance in the State of New 
York with Empire being additionally licensed in Connecticut, Massachusetts, 
Missouri, New Hampshire and New Jersey. Based on 1998 direct premiums written,
approximately 4% of the property and casualty business written by the Company
and Empire was from sources outside New York State.

The Company and Empire distribute their products through seven general agents,
one of which is an Empire subsidiary, and independent agents and brokers. 
Empire's wholly-owned general agent is its largest producer and generated
approximately 12% of its total earned premium volume for the year ended
December 31, 1998.

The consolidated financial statements include the accounts of the Company and
its wholly-owned subsidiary, Empall.  The preparation of financial statements 
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at the 
date of the financial statements and the reported amounts of revenues and 
expenses during the reporting period.  Actual results could differ from those
estimates.

NOTE 2- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Investments: Fixed maturities are designated as either (i) "held to maturity"
and carried at amortized cost, (ii) "trading" and carried at estimated market
value, which is based on quoted market prices, with differences between cost 
and estimated fair value reflected in results of operations or (iii) "available
for sale" and carried at estimated fair value with differences between cost and
estimated fair value being reflected as accumulated other comprehensive income,
net of deferred income tax effects.  Equity securities are designated as 
available for sale and carried at estimated fair values with differences 
between cost and estimated fair value reflected as accumulated other 
comprehensive income, net of deferred income tax.  Other invested assets are
designated as trading securities.  Short-term investments are carried at cost
which approximate fair value.

At December 31, 1998 and 1997, investments in fixed maturities on deposit with
the New York State Insurance Department, which the Company has the intent and 
ability to hold to maturity, are classified as "Investments held to maturity".
All other investments in fixed maturities and equity securities at those dates
are classified as "Investments available for sale" and stated at estimated fair
market value.  Net unrealized appreciation (depreciation) on investments 
available for sale (net of deferred tax/(benefit)) is included as accumulated
other comprehensive income.

Investment income is reported when earned.

Net securities gains or losses on the sale of investments are determined on a
specific identification basis and are included in revenues.  Investments with
an impairment in value considered to be other than temporary are written down
to estimated net realizable value.


                                      -F8-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED 
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 2--ACCOUNTING POLICIES-CONTINUED

Unearned Premiums: Unearned premiums have been calculated predominantly using 
he daily pro rata method for the business processed on the Point system for new
and renewed business recorded in 1998.  All other premiums have been calculated
using the monthly pro rata method.

Unpaid Losses and Loss Adjustment Expenses: Liabilities for unpaid losses, which
are not discounted (except for certain workers' compensation liabilities), and
loss adjustment expenses ("LAE") are determined using case-basis evaluations, 
statistical analyses and estimates for salvage and subrogation recoverable and
represent estimates of the ultimate claim costs of all unpaid losses and LAE.  
Liabilities include a provision for losses that have occurred but have not yet 
been reported.  These estimates are subject to the effect of trends in future 
claim severity and frequency experience.  Adjustments to such estimates are made
from time to time due to changes in such trends as well as changes in actual 
loss experience. These adjustments are reflected in current earnings.

Reinsurance: Unpaid losses, unpaid loss adjustment expenses and unearned 
premiums are stated gross of reinsurance ceded.  Premiums written and earned,
losses and LAE paid and incurred, and other underwriting expenses are stated 
net of reinsurance ceded.

Pension Cost: Empire funds actuarially determined pension costs as currently
accrued; 30% of such pension costs are allocated to Allcity.

Policy Acquisition Costs: Policy acquisition costs such as commissions, premium
taxes and certain other underwriting expenses are deferred and amortized ratably
over the terms of the related policies.  Deferred policy acquisition costs are 
limited to their net realizable value after consideration of investment income 
on the related premium. If recoverability of such costs from future premiums and
related investment income is not anticipated, the amounts not considered 
recoverable are charged to operations.

Participating Policies: Participating business on workers' compensation lines
constitutes approximately 4.9% of the Company's policies in force and net 
premiums written.  Amounts transferred to the participating policyholders'
funds are determined by means of specific identification based upon premium
volume and loss experience.  The amount of dividends to be paid to 
participating policyholders is approved quarterly by the Board of Directors. The
amount of policyholders' dividends recorded on participating policies was 
$78,000, $315,000 and $946,000, in 1998, 1997 and 1996, respectively.  Unpaid
dividends to participating policyholders are included as a liability in the 
consolidated balance sheets.

Servicing Arrangements: Service fee income from assigned risk business acquired
through contractual arrangements with other insurance companies is recognized 
as revenue and earned over the life of the covered policies on a monthly
pro-rata method. 
[S]
                                       -F9-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED 
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 2--ACCOUNTING POLICIES-CONTINUED

Service fee income for the administrative services, including underwriting, 
policy issuance, premium collection and claims services, provided to the 
NYPAP is recorded as a reduction to other underwriting and loss adjustment
expenses and is earned over the life of the policies issued.  The premiums 
and losses processed by the Company on behalf of the NYPAP, which are not 
reflected in the consolidated financial statements for the years ended 
December 31, are as follows (in thousands):
<CAPTION>
                             	  	      1998	      1997       1996    
                                   <C>        <C>        <C>
<S>
Premiums Earned              	   	  $  4,091	  $ 29,076   $ 59,158
Losses Incurred            	          23,543	    50,745     76,939
Unpaid Losses                         70,469     98,150    119,223
</TABLE>
[S]
The premiums, losses and expenses of the business for which the Company provides
administrative services are reflected on the financial statements of those 
insurance companies, including the Company, in New York State which are 
required to participate in the NYPAP.  In its role as a servicing carrier, the
Company is liable only for the loss adjustment expenses which are reflected as
a reserve for servicing carrier claim expense and are determined using case  
basis evaluations and statistical analyses.

Federal Income Taxes: The Company uses the liability method in providing for 
income taxes.  Under the liability method, deferred income taxes are provided 
at the enacted tax rates for differences between the financial statements 
carrying amounts and tax bases of assets and liabilities and for carryforwards.
A valuation allowance is provided if deferred tax assets are not considered more
likely than not to be realized.

Earnings Per Share: Earnings per share ("EPS") are based on the weighted average
number of common shares outstanding.  There were no outstanding common stock 
equivalents during 1998, 1997 and 1996 and therefore, basic and diluted EPS 
are the same.

New Pronouncements: As of January 1, 1998 the Company adopted Statement of 
Financial Accounting Standards No. 130, Reporting Comprehensive Income.  This 
statement establishes standards for the reporting and disclosure of 
comprehensive income and its components (revenues, expenses, gains and 
losses) in the consolidated financial statements.  SFAS No. 130 requires that
all items required to be recognized under accounting standards as components 
of comprehensive income be reported in a financial statement that is displayed 
with the same prominence as other financial statements.  The purpose of 
reporting comprehensive income is to report the change in equity of a 
business enterprise for the period from transactions and other events and 
circumstances from nonowner sources.  It includes all changes in equity during
a period except those resulting from investments by owners and distributions to
owners. These items include unrealized appreciation (depreciation) of 
investments, which is currently reported as other accumulated comprehensive
income in the balance sheet.

                                     -F10-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED 
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 2--ACCOUNTING POLICIES-CONTINUED 

As of January 1, 1998 the Company adopted Statement of Financial Accounting
Standards No. 131, "Disclosures about Segments of an Enterprise and Related 
Information" ("SFAS No. 131").  This statement requires that companies report 
certain information about their operating segments in the financial statements
including information about the products and services from which revenues are 
derived, the geographic areas of operations, and information about major 
customers.  In connection with the adoption of SFAS No. 131, the Company has
identified three reportable segments:1) automobile lines; 2) commercial lines;
and 3) miscellaneous and personal lines.  The operating segments were 
determined based on the way management allocates resources and assesses 
performance. 

Statement of Financial Accounting Standards No. 132, "Employers' Disclosures
about Pensions and Other Postretirement Benefits" ("SFAS No. 132") was issued
in February, 1998 and requires the following additional disclosures for 
employers' pensions and other retiree benefits:

(1) A reconciliation of beginning and ending balances of the benefit obligation.
(2) A reconciliation of the fair value of the plan assets.  
(3) The effect of a one percentage point decrease in the assumed health care 
    cost trend rates on 
     a)the aggregate of the service and interest cost components of 
       net periodic post retirement health care benefit cost and
     b)the accumulated post retirement benefit obligation for health care
       benefits.

SFAS No. 132 does not have any effect on the financial position or results of
operations of the Company.
 
In January, 1998, the Accounting Standards Executive Committee of the American
Institute of Certified Public Accountants issued Statement of Position 97-3, 
"Accounting by Insurance and Other Enterprises for Insurance-Related 
Assessments" ("SOP 97-3"), which is effective for fiscal years beginning 
after December 15, 1998, and provides guidance for determining when an 
insurance company should recognize a liability for guaranty-fund and other
insurance related assessments and how to measure that liability.  The 
financial position and operating results of the Company is not expected to be
materially affected by this statement.

Statement of Financial Accounting Standards No. 133, "Accounting for Derivative 
Instruments and Hedging Activities" ("SFAS No. 133") was issued in June 1998 and
requires that all derivative financial instruments be recognized as either 
assets or liabilities in the statement of financial position.  SFAS No. 133 
will be effective for fiscal years beginning after June 15, 1999, with initial
application as of the beginning of the first quarter of the fiscal year.  The 
Company is currently evaluating the impact to its financial statements. 

                                -F11-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 2--ACCOUNTING POLICIES-CONTINUED 

Presentation: Certain prior year amounts have been reclassified to conform with
the 1998 presentation.

NOTE 3--SURPLUS NOTE

The Company issued a surplus note to Empire in 1980.  The surplus note provides,
among other things, for interest to be accrued on the principal of the note 
based on a bank's prime rate at the end of the calendar quarter.  Neither the 
principal amount of the surplus note nor the accrued interest may be paid, in 
whole or in part, without the consent of the Superintendent of Insurance of the 
State of New York ("Superintendent") and must be repaid, in whole or in part, 
when so ordered by the Superintendent.

NOTE 4-INVESTMENTS

Investment income by source is summarized as follows:                 
<CAPTION>
<S> 
                                  					 	  	 Year Ended December 31, 
                                             1998     1997     1996     
                              			     				      (In thousands)
                                            <C>      <C>      <C>  
<S>
Investment income:
    Fixed maturities                         $12,702  $15,627  $15,955
    Other invested Assets    			               1,445       -        -
    Short-term investments                   	   715     	385      742
                                              14,862   16,012   16,697
         Less: Investment expenses               339      318      339
             NET INVESTMENT INCOME           $14,523  $15,694  $16,358
</TABLE>
[S]
<TABLE>
 Investments at December 31, 1998 are summarized as follows: 
<CAPTION>
          
                                                           Esti-
           		                           Gross Unrealized   mated
                              Amortized  Appre-  Depre-    Fair     
                                Cost    ciation  ciation   Value     
                             <C>       <C>      <C>       <C>       
                                           (In thousands)
<S>
Available for sale:
U.S. Treasury securities
  and obligations of U.S. 
  government agencies         $145,061  $  365   $ 284     $145,142  
Mortgage-backed 
securities                      21,302     413      -        21,715    
Foreign governments                909      26      -           935    
All other corporate bond        13,942     206     211       13,937    
Total Fixed Maturities	        181,214   1,010     495      181,729   
Equity securities                   -      176      -           176   
    TOTAL INVESTMENTS                                               
    AVAILABLE FOR SALE         181,214   1,186     495      181,905 

Held to maturity:
U.S. Treasury securities           502      -       -           502       
      TOTAL INVESTMENTS  
      HELD TO MATURITY             502      -       -           502       
      Short-term                20,186      -       -        20,186    
      Other invested assets     31,446      -       -        31,446    

TOTAL INVESTMENTS             $233,348  $1,186    $495     $234,039  
</TABLE>

                                            -F12-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 4--INVESTMENTS CONTINUED

Investments at December 31, 1997 are summarized as follows:    
<CAPTION>

                                             									  
                                     Gross   Unrealized  Estimated
                          Amortized  Appre-  Depre-      Fair      
                             Cost    ciation ciation     Value   
                          <C>       <C>     <C>         <C>      
                                     (In thousands)
<S>
Available for sale:
U.S. Treasury securities
and obligations of U.S. 
government agencies        $218,088  $1,327  $  596      $218,819 
Mortgage-backed 
securities                   29,437     298     113        29,622    
Foreign governments          15,143     121      77        15,187    
All other corporate bonds     5,423       7       3         5,427    
Total Fixed Maturities	     268,091   1,753     789       269,055   
Equity securities                -      447      -            447   
   TOTAL INVESTMENTS 
   AVAILABLE FOR SALE       268,091   2,200     789       269,502   
Held to maturity:
U.S. Treasury securities        485      12      -            497       
   TOTAL INVESTMENTS 
   HELD TO MATURITY             485      12      -            497        

Short-term                    1,749      -       -          1,749  
TOTAL INVESTMENTS          $270,325  $2,212  $  789      $271,748  
</TABLE>
[S]
<TABLE>
The amortized cost and estimated fair values of fixed maturities (including
short term securities) at December 31, 1998 are shown as follows 
(in thousands):            
<S>
<CAPTION>
<S>
						                                    Amortized      Fair
                                             Cost        Value	   
                                             <C>         <C>
<S>
Investments available for sale:              
Due in one year or less                       $ 27,620    $ 27,663
Due after one year through five years          121,586     121,562
Due after five years through ten years          30,892      30,975
              Sub total                        180,098     180,200
Mortgage-backed securities	           	         21,302      21,715
              Sub total			                     201,400     201,915
Investments held to maturity:
Due after one year through five years              502         502
              TOTAL                           $201,902    $202,417
</TABLE>
[S]
Expected maturities will differ from contractual maturities because borrowers 
may have the right to call or prepay obligations with or without call or 
prepayment penalties.

The Company sold certain fixed maturities during 1998, 1997 and 1996 and
realized gross gains of $6,227,000, $216,000 and $1,354,000, respectively. 
Realized gross losses of $91,000, $298,000 and $224,000 were realized on 
these sales in 1998, 1997 and 1996, respectively, before income taxes.  In
1997, the Company realized a gross gain of $129,000 before taxes, from the 
conversion of a portion of stock received from a trade organization 
membership, Insurance Services Offices, into a stock company.
  

                                            -F13-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 4--INVESTMENTS CONTINUED

The changes in unrealized appreciation/(depreciation) on investments available 
for sale in fixed maturities were $(720,000) and $3,983,000 for the years ended
December 31, 1998 and 1997, respectively, before income taxes.

As of December 31, 1998 and 1997, a security with an amortized cost of 
approximately $502,000 and 485,000, respectively, was on deposit with the New
York State Insurance Department.

During 1998 and 1997, the Company sold call options on certain U.S. Treasury 
Notes and recognized investment losses of $57,000 and $239,000, respectively.

NOTE 5--STATUTORY INFORMATION

The following is a reconciliation of net (loss)/income and surplus as reported
on a statutory basis to net income /(loss) and shareholders' equity as 
determined in conformity with generally accepted accounting principles ("GAAP
Basis") (in thousands):                 
<CAPTION>
<S>
                                               Years Ended December 31, 
                                               1998      1997     1996
                                            <C>        <C>     <C>
<S>
Statutory net (loss)/income                  $  (50)    $ 505   $7,233 
Add (deduct):    
  Change in deferred policy acquisition
    costs                                    (1,714)     (628)    (871)
  Change in allowances for doubtful 
    accounts                                   (256)     (198)    (270)
  Policyholders' dividends                       90	       60     (450)
  Retrospectively rated reinsurance contracts     -         -   (3,365)
  Pension plan curtailment gain               1,964         -        -  
  Capitalized systems development costs       1,440       600
  Other postretirement benefits                 210       276     (176)
  Deferred tax (expense)/benefit               (613)     (163)   1,171
  Interest on surplus note                     (591)     (595)    (591)
  Other                                          24        60      (47)
                         	GAAP Basis         $  504     $ (83)  $2,634
</TABLE>


                                      -F14-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 5--STATUTORY INFORMATION -CONTINUED
<CAPTION>
                 		              		                DECEMBER 31,
         	    		          	                 1998              1997
                                           <C>               <C>
                                                  (In thousands)
<S>
Statutory Shareholders' Equity and Surplus  $72,701           $70,088
 Add (deduct):
  Deferred policy acquisition costs           5,365	    	       7,079
  Nonadmitted assets, less allowance 
    for doubtful accounts                     1,919             1,984
  Capitalized systems development costs       2,040            			600
  Provision for unauthorized reinsurance        205               108
  Policyholders' dividends                     (300) 	           (390)  
  Excess of statutory reserves over  
    statement reserves                            - 	           1,143  
  Deferred tax benefit                       11,101            11,462
  Other postretirement benefits                (257)             (467)
  Net unrealized appreciation
    on investments                       	      515               964
  Surplus note                              (15,300)          (14,710) 
  Other                                         211               303
                           GAAP Basis      $ 78,200           $78,164
</TABLE>
[S]
The Company has paid no dividends on its common shares since 1975.  The New York
Insurance Law prohibits New York domiciled property and casualty companies from 
paying dividends except out of earned surplus.  Without the approval of the New 
York State Insurance Department, no New York domestic property/casualty insurer
may declare or distribute any dividend to shareholders which, together with any 
dividends declared or distributed by it during the preceeding twelve months, 
exceeds the lessor of (1) 10% of surplus to policyholders as shown by its 
last statutory annual statement or (2) one hundred percent of adjusted net 
investment income during such period.  At December 31, 1998 $7,280,000 was 
available for distribution of dividends.  The Company does not presently 
anticipate paying dividends in the near future.

In 1998, the NAIC adopted the Codification of Statutory Accounting Principles
guidance, which will replace the current Accounting Pratices and Procedures 
manual as the NAIC's primary guidance on statutory accounting.  The NAIC is 
now considering amendments to the Codification guidance that would also be 
effective upon implementation.  The NAIC has recommended an effective date of
January 1, 2001.  The Codification provides guidance for areas where statutory
accounting has been silent and changes current statutory accounting in some
areas.  It is known whether the New York Insurance Department will adopt the
Codification, and whether the Department will make any changes to that guidance.
The Company has not estimated the potential effect of the Codification guidance
if adopted by the Department.
                                  -F15-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  -- CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 6--AGENTS' BALANCES                          

Activity affecting the allowance for uncollectible agents' balances for the
years ended December 31, 1996, 1997 and 1998 is summarized as follows
(in thousands):
<CAPTION>
<S>      
                                                     <C>
           Balance at January 1,1996                  $1,093
           Provision                                   2,089
           Charge-offs, net of recoveries             (1,819)

           Balance at December 31,1996                 1,363
           Provision                                   1,470
           Charge-offs, net of recoveries             (1,272)

           Balance at December 31,1997                 1,561
     	     Provision                                   1,362
	          Charge-offs, net of recoveries             (1,106)

     	     Balance at December 31,1998                $1,817
</TABLE>
[S]
NOTE 7-UNPAID LOSSES AND LAE               
[S]
The Company has relied upon standard actuarial ultimate loss projection 
techniques to obtain estimates of liabilities for losses and LAE.  These
projections include the extrapolation of both losses paid and incurred by
business line and accident year and implicitly consider the impact of inflation 
and claims settlement patterns upon ultimate claim costs based upon historical 
patterns.  In addition, methods based upon average loss costs, reported claim 
counts and pure premiums are reviewed in order to obtain a range of estimates 
for setting the reserve levels.  For further input, changes in operations in 
pertinent areas including underwriting standards, product mix, claims 
management and legal climate are periodically reviewed.

                                    -F16-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  -- CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 7--UNPAID LOSSES AND LAE - CONTINUED

In the following table, the liability for losses and LAE are reconciled for the
three years ended December 31, 1998, 1997 and 1996. Included therein are current
year data and prior year development.
<CAPTION>

	         RECONCILIATION OF LIABILITY FOR LOSSES AND LAE
  
                                         1998       1997       1996 
                                        <C>        <C>        <C>
(In thousands)
<S>
SAP liability for losses and LAE,                    
net, of reinsurance,
beginning of year                        $145,260   $143,494   $142,718

Provision for losses and LAE for
claims occurring in the current year       56,698     73,741     80,216
Increase in estimated losses and LAE
for claims occurring in prior years        12,891      8,304      8,134
                                           69,589     82,045     88,350

Loss and LAE payments for claims
occurring during:
    The current year                       19,203     23,804     27,192
    Prior years                            55,875     56,475     60,382
    
                                           75,078     80,279     87,574


SAP liability for losses and LAE, 
net of reinsurance                        139,771    145,260    143,494
    
Reinsurance recoverable                   294,461    272,266    262,593

Liability for losses and LAE 
  at end of year as reported in 
  financial statements (GAAP)            $434,232   $417,526   $406,087

</TABLE>
[S]
Based upon actuarial studies conducted during 1998, 1997 and 1996 the Company 
strengthened reserves for losses from prior accident years by approximately
$12.9 million in 1998 primarily related to commercial liability, commercial
auto and workers' compensation lines, by approximately $8.3 million in 
1997, primarily related to commercial package and voluntary commercial 
automobile lines of business and by approximately $8.1 million in 1996, 
primarily related to commercial package and voluntary commercial automobile
lines of business.
[S]
The Company has purchased annuities with various life insurance companies for
number of settled claims.  The claimants have been designated as payees;
however, the Company has a contingent liability of approximately $3.4 million
which represents the aggregate amount of settlements with the claimants, in
the event of the failure of the various life insurance companies to perform.


                                       -F17-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 8--REINSURANCE
 
The Company has obtained reinsurance coverage to reduce its risk of and exposure
to large insurance claims and catastrophes.  The Company retained $0.5 million
on workers' compensation and $0.3 million for property and casualty lines for 
all three years.  The Company also uses reinsurance to protect itself against
certain catastrophic losses. Its retention of lower level losses under such 
treaties is $7.5 million for 1999 and 1998, $5.0 million for 1997 and $3.0 
million for 1996.  Due to the geographic concentration of its business, the 
Company believes hurricanes, windstorms and civil disturbances are its most 
significant exposure to catastrophic losses. Computer modeling programs 
provided by independent consultants are used to estimate exposure to such 
losses. The Company believes it presently has sufficient catastrophe 
reinsurance protection.

Although reinsurance does not legally discharge an insurer from its primary
liability for the full amount of the policy liability, it does make the 
assuming reinsurer liable to the insurer to the extent of the reinsurance
ceded. The majority of the Company's reinsurance has been placed with certain
of the largest reinsurance companies, including (with their A. M. Best ratings)
General Reinsurance Corporation (A++) (superior), American Re-Insurance Company
(A++) (superior), Partner Re Co., Ltd. (A+)(superior), IPC Re Ltd. (A) 
(excellent), CAT Ltd. (A)(excellent) and Zurich Reinsurance (North America),
Inc. (A)(excellent). The Company believes its reinsurers to be financially 
capable of meeting their respective obligations.  However, to the extent that
any reinsuring company is unable to meet its obligations, the Company would 
be liable for the reinsured risks.  The Company has established reserves, 
which the Company believes are adequate, for any non-recoverable reinsurance.

Effective January 1, 1997, Empire entered into a quota share reinsurance 
agreement with its subsidiary, Centurion.  Under this agreement, 
Empire will assume 50% up to July 1, 1997 and 75% thereafter of the effective
period premiums and losses of Centurion and grant Centurion a ceding 
commission.  Under the pooling agreement, 70% of such business assumed will be
retained by Empire and 30% will be shared with the Company.

Assets and insurance reserves at December 31, 1998 and 1997 (including 
$333.7 million and $328.4 million, respectively, which represent 
reinsured amounts principally arising from the intercompany pooling 
agreement with Empire) are as follows (in thousands):				
<S>
<CAPTION>
<S>
                                               Ceded to			
                          				  		     Empire      Others   Total
                                      <C>         <C>      <C>
<S>
As of December 31, 1998
Prepaid reinsurance premiums           $ 37,477    $   214  $ 37,691
Reinsurance balances receivable on:
  Paid losses                                -       1,534     1,534
  Unpaid losses                         217,958     39,633   257,591
  Unpaid loss adjustment expenses        32,235      4,634    36,869
</TABLE>
                                  -F18-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STAEMENTS -- CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY
NOTE 8 - REINSURANCE -- CONTINUED
<CAPTION>
<S>
						                                        Ceded to			
               		     		  		           Empire     Others     Total
                                      <C>         <C>      <C>
As of December 31, 1997
Prepaid reinsurance premiums           $ 54,476    $   598  $ 55,074
Reinsurance balances receivable on:
  Paid losses			                             -       1,014     1,014
  Unpaid losses                         204,023     32,758   236,781
  Unpaid loss adjustment expenses        31,671      3,814    35,485
</TABLE>
[S]
<TABLE>
An analysis of reinsurance premiums, losses, LAE and commissions for the years
ended December 31, 1998, 1997 and 1996 are summarized as follows
(in thousands):
<S>
<CAPTION>
                    Direct    Assumed         Ceded              Net	
                              Empire   Others Empire    Others
1998
                   <C>       <C>       <C>   <C>       <C>      <C>
Premiums earned     $142,065  $ 67,512  $100  $135,419  $ 6,746  $67,512
Losses incurred      173,235    62,282   409   155,446   18,198   62,282
LAE incurred          17,202     7,307    74    15,963    1,313    7,307
Commissions incurred  15,886     8,438    10    14,795    1,101    8,438
 
Premiums written     117,449    58,059    48   111,135    6,362   58,059
Losses paid          146,208    62,323   655   135,539   11,324   62,323
LAE paid              15,576    12,755    74    15,157      493   12,755 
Unearned premiums(a)  53,720    26,281    33    53,539      214   26,281
Unpaid losses(a)     349,699   124,518 1,303   311,369   39,633  124,518
Unpaid LAE(a)         50,685    15,253    -     46,051    4,634   15,253

1997
Premiums earned     $191,175  $ 80,891 $ 142  $178,488  $12,829  $80,891
Losses incurred      170,395    68,901   195   155,122   15,468   68,901
LAE incurred          16,345    13,144    62    15,489      918   13,144
Commissions incurred  22,121    10,666     4    20,271    1,854   10,666
 
Premiums written     169,911    75,029    81   157,359   12,633   75,029
Losses paid          161,192    68,512   634   150,628   11,198   68,512
LAE paid              13,368    11,767    62    13,090      340   11,767 
Unearned premiums(a)  78,336    35,733    85    77,823      598   35,733
Unpaid losses(a)     322,671   124,559 1,548   291,461   32,758  124,559
Unpaid LAE(a)         49,058    20,700    -     45,244    3,814   20,700

1996      
Premiums earned     $235,467  $ 96,073  $277  $222,909  $12,835  $96,073
Losses incurred      182,132    76,387   209   170,630   11,711   76,387
LAE incurred          13,827    11,963    72    11,679    2,220   11,963
Commissions incurred  25,556    10,987     8    23,259    2,305   10,987

Premiums written     222,467    91,011   200   210,068   12,599   91,011
Losses paid          177,454    75,938   728   170,948    7,234   75,938
LAE paid              12,843    11,636    72    12,321      593   11,636
<S>
</TABLE>
(a) Amounts as reflected in the consolidated balance sheet can be derived
[S]

                                      -F19-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 8--REINSURANCE-CONTINUED

by adding together amounts for direct and assumed and subtracting from this sum
30% of the amount ceded to Empire.  The Company remains primarily liable for 
amounts ceded to reinsurers for unpaid losses, LAE and unearned premiums to 
the extent that the assuming reinsuring companies are unable to meet their 
obligations.

An analysis of the effect of reinsurance on premiums by business segment for the
years ended December 31, 1998, 1997 and 1996 are summarized as follows
(in thousands):                                  	    							              
<CAPTION>
                                                                Percentage
                                  Assumed    Ceded              of Amount 
                        Direct     from        to        Net     Assumed
                        Amount    Empire(a) Empire(b)   Amount    to Net
                     <C>         <C>       <C>        <C>        <C>
<S>
1998
Premiums written:             
   Automobile lines   $ 49,028    $31,439   $ 49,076   $31,391    100.2%
   Commercial lines     56,979     18,282     56,979    18,282    100.0%
   Miscellaneous and    
   personal lines       11,442      8,386     11,442     8,386    100.0%
              Total   $117,449    $58,107   $117,497   $58,059
1997
Premiums written:             
   Automobile lines   $ 85,701    $44,565    $85,782   $44,484    100.2%
   Commercial lines     73,455     22,107     73,455    22,107    100.0%
   Miscellaneous and 
   personal lines       10,755      8,438     10,755     8,438    100.0%
              Total   $169,911    $75,110   $169,992   $75,029   
1996
Premiums written:             
   Automobile lines   $131,542    $60,362   $131,742   $60,162    100.3%
   Commercial lines     80,758     25,243     80,758    25,243    100.0%
   Miscellaneous and    
   personal lines       10,167      5,606     10,167     5,606    100.0%
              Total   $222,467    $91,211   $222,667   $91,011          
<S>
<FN>
 (a)Includes $48, $81 and $200 assumed from non-affiliates in 1998, 1997
    and 1996, respectively, before the effects of the pooling agreement
    described in Note 1.
 (b)Includes $6,362, $12,633 and, $12,599 ceded to non affiliates
    in 1998, 1997 and 1996, respectively, before the effects of the
    pooling agreement described in Note 1.
<S>
</TABLE>
[S]
NOTE 9--FEDERAL INCOME TAXES                                                  
                                                                              
The Company has been included in the consolidated federal income tax returns o
Leucadia since 1993.  Under the terms of the tax sharing agreement, members   
compute their tax provision on a separate return basis and are either charged 
their share of federal income tax resulting from their taxable income or are  
reimbursed for the tax benefits resulting from losses. As of December 31, 1998
and 1997, the Company's liability to affiliates for income taxes was $5,533,00
and $8,125,000, respectively.                                                 


                                 -F20-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 9--FEDERAL INCOME TAXES -- CONTINUED

The principal components of the deferred tax asset at December 31, 1998 and 1997
were as follows (in thousands):
<S>
<CAPTION>
                                                 1998      1997
                                              <C>       <C>
<S>
  Unpaid loss and loss adjustment                
    expense reserves                           $7,365	   $7,576
  Unearned premiums                             1,840	    2,501
  Employee benefits and compensation              791	    1,221
  Interest accrued on surplus note              2,905	    2,698
  Allowance for doubtful accounts                 636       547
  Deferred policy acquisition costs            (1,878)   (2,478)
  Unrealized appreciation on investments	      	 (242)     (494)
  Investment in Ramius LLP                        459        -
  Capitalized system development costs           (714)     (210)
  Other, net                                      (61)      101
                   Total                      $11,101	  $11,462
</TABLE>
[S]
The Company believes that it is more likely than not that the deferred tax asset
at December 31, 1998 will be fully realized based on the availability of taxable
income.

For the years 1998, 1997 and 1996, the difference between the "expected"
statutory federal income tax applicable to continuing operations and the
actual income tax expense are as follows:
<TABLE>
<CAPTION>

                       					      1998        1997      1996
                                 <C>         <C>       <C>
<S>
Expected federal income tax       $ 271       $  (51)   $1,388
Other                 		    		       (1)         (13)      (58)
Actual federal income tax         $ 270       $  (64)   $1,330
</TABLE>
[S]
NOTE 10--PENSION PLAN AND POSTRETIREMENT BENEFITS 
[S]
Empire had a trusteed non-contributory defined benefit pension plan covering
substantially all employees.  The benefits were based on years of credited 
service and the employees' highest compensation during any five consecutive
plan or calendar years before retirement.  Empire's policy was to fund pension
costs on a current basis using an aggregate method.


                                       -F21-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 10--PENSION PLAN AND POSTRETIREMENT BENEFITS -- CONTINUED

The following tables set forth certain information relating to Empire's 
non-contributory defined benefit pension plan (in thousands):
<CAPTION>
<S>
								     	      
            			                            						    December 31,	   
                                              	     1998     1997      
                                                   <C>      <C>
<S>
Reconciliation of the benefit obligation

Projected Benefit Obligation at beginning of year	  $27,765  $26,927
Service Cost                    					        		       1,794    1,628
Interest Cost				                     			             1,906    1,985
Actuarial loss          		           					              323    1,733
Benefits paid	           					                 	     (2,521)  (4,508)
Curtailment gain 							                              (7,231)      -	
Projected Benefit Obligation at end of yea	          $22,036  $27,765

Reconciliation of the fair value of plan assets

Fair value of plan assets at beginning of year   		  $25,152  $25,700
Actual return on plan assets	                  				    1,637    2,838
Employer contributions	                       					      925    1,122
Benefits paid   		                          	  				   (2,521)  (4,508)
Fair value of plan assets at end of year		   	       $25,193  $25,152

Funded Status

Actuarial present value of benefit obligation:
  Accumulated benefit obligation, including vested
  benefits of $21,188 in 1998 and $19,355 in 1997	   $22,036  $20,763 

Projected benefit obligation for services
rendered to date                                     (22,036) (27,765) 
Plan assets at fair value (primarily bonds and
stocks)                                           	   25,193   25,152 
   
                    PROJECTED BENEFIT OBLIGATION
               LESS THAN(IN EXCESS OF)PLAN ASSETS      3,157   (2,613)     
Unrecognized prior service cost                           82       98
Unrecognized net gain from past experience
different from that assumed and effects of 
Changes in assumptions 	                       				     (340)    (103)  
Unrecognized net obligation at transition date		         258      386    
                   PREPAID PENSION/(ACCRUED)    	    $ 3,157  $(2,232) 
</TABLE>
 


                                       -F22-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 10--PENSION PLAN AND POSTRETIREMENT BENEFITS --CONTINUED 
<CAPTION>
<S>

Components of net pension cost:
                                              Years Ended December 31,
                                      								   1998     1997     1996
                                                <C>      <C>      <C>
<S>
Service cost-benefits earned during the period   $1,794   $1,628   $1,862 
Interest cost on projected benefit obligation     1,906    1,985    2,098   
Actual return on plan assets                     (1,637)  (2,838)  (2,120) 
Deferred (loss) gain on plan assets                (124)   1,039      556 
Net amortization and deferral                       145      145      298 
  
                    NET PERIODIC PENSION COST    $2,084   $1,959   $2,694 
 
Discount rate				                                 6.75%     7.0%     7.5%
Rate of Increase in future compensation		           N/A     5.0%     5.0%
Long-term rate of return on plan assets           7.50%     7.0%     7.0%
</TABLE>
[S]

Benefits accrued under the plan were frozen as of December 31, 1998.  The
prior plan was merged with the Leucadia plan effective January 1, 1999.

As a result of the curtailment of the pension benefits in 1998, the Group 
recognized a gain of $6,548,000. In accordance with the pooling agreement,
the Company's share of prepaid pension/accrued and net periodic pension
cost is 30% of the amounts reflected above.

Effective January 1, 1999, Empire adopted a defined contribution plan.  The
contributions, ranging from 2% - 16% of employee's current pension eligible
compensation, are based on age and service life of the employees of Empire.
These contributions will accumulate for participants on a tax deferred basis.
Participants will have choices to direct the investment of the contribution
to their accounts.

Empire provides certain health care and life insurance benefits for retired 
employees.  During 1996, Empire amended the eligibility requirement to only 
those employees who had at least ten years of service and were at least 50 
years of age as of October 1, 1996.  Prior to this amendment, substantially
all of Empire's employees were eligible for such benefits if they reached 
normal or early retirement age while still working for Empire. As a result
of this amendment, the accumulated postretirement benefit obligation was 
reduced by approximately $7,602,000, which is being amortized over three years.
Those benefits are provided through an insurance company whose premiums are 
based on the cost of benefits paid during the year. 



                                     -F23-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 10--PENSION PLAN AND POSTRETIREMENT BENEFITS --CONTINUED 

The following table sets forth certain information relating to Empire's unfunded
substantive plan for postretirement benefits (in thousands):
<CAPTION>

                                           	   1998          1997     
                                              <C>           <C>
Reconciliation of the benefit obligation
Accumulated postretirement obligation
at beginning of year	                     				 $4,729        $4,574
Service cost                	 					                29            23
Interest cost	     					                          370           330
Actuarial loss	                            			    770            31
Benefits paid                           						   (324)         (229)
Accumulated postretirement obligation at 
end of year		                            			 	 $5,574        $4,729

Funded Status
Actuarial present value of accumulated
postretirement benefit obligation:
Retirees                                  	  	$(4,022)      $(3,538)
Fully eligible active plan participants      	 (1,074)	        (544)
Other active plan participants               	   (478)         (647)
                                             	 (5,574)       (4,729)
Unrecognized net gain from past 
experience different from that assumed
and effects of changes in assumptions          (1,634)       (4,938)
      
    ACCRUED POSTRETIREMENT BENEFITS COST      $(7,208)     $ (9,667)
</TABLE>
[S]
<TABLE>
<CAPTION>
Components of net postretirement benefits

                             	 			    	    			   1998      1997      1996
                                                <C>       <C>       <C>
<S>
Service cost--benefits earned during the period  $   29    $  23     $  309
Interest cost on projected benefit obligation       370      330        970
Amortization of curtailment gain                 (2,533)  (3,168)        -
Net amortization and deferral		 	                    -       (19)        -
PERIODIC POSTRETIREMENT BENEFITS (INCOME)
COST  	 				                                   	$(2,134) $(2,834)    $1,279  
</TABLE>

                                            

                                    -F24-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 10--PENSION PLAN AND POSTRETIREMENT BENEFITS -- CONTINUED

In accordance with the pooling agreement, the Company's share of accrued 
postretirement benefit cost and net periodic postretirement benefit (income)
cost is 30% of the amounts reflected above and is included in other 
liabilities.  In determining the accumulated postretirement benefit 
obligation at December 31, 1998 and 1997, Empire utilized discount rates of
6.75% and 7.0%, respectively. The assumed health care cost trend rates used
in measuring the accumulated postretirement benefit obligation were 8% for 
1998 declining to an ultimate rate of 6% by 2000.  If the health care cost
trend rates were increased by 1%, the accumulated postretirement benefit 
obligation as of December 31, 1998 would have increased y approximately 
$350,000, before the effects of the pooling agreement.  If the health care
cost trend rates were decreased by 1%, the accumulated postretirement benefit
obligation as of December 31, 1998 would have decreased by approximately 
$297,000 before the effect of the pooling agreement.  The effect of a 1% 
increase and decrease in the estimated aggregate of service and interest 
cost for 1998, 1997 and 1996 would be immaterial.

In 1987, Empire established a Supplemental Retirement Plan ("SERP") for certain
senior officers.  Under the SERP, Empire makes contributions to a trust account
for the benefit of eligible senior officers.  Eligible officers will receive 
benefits determined in accordance with the formulas and other provisions of 
the SERP agreement based on prior salary.  As a result of the retirement of a
former president, Empire expensed $1,073,000 during 1996.  Pursuant to the 
pooling agreement the Company is obligated to contribute 30% of the payments
made under the SERP.

In 1994, Empire established a Salary Cap Restoration Plan ("SCRP") for certain
corporate officers.  Under the SCRP, Empire will provide these officers with 
an additional benefit, to be paid in a lump-sum upon retirement, equal to the
difference between the actuarially determined lump-sum benefits, as computed 
under the Pension Plan, of the officer's highest five year average compensation
(not to exceed $320,000) at retirement and the current maximum compensation 
limit of $160,000.  The SCRP is an unfunded plan.  In 1998, 1997, and 1996 
Empire expensed $74,000, $17,000 and $90,000, respectively.  Along with the 
defined benefit plan, the benefits under SCRP were curtailed as of December 31,
1998.  Under the pooling arrangement, the Company is obligated to pay 30% of 
the cost of the SCRP.



                                  -F25-
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 10--PENSION PLAN AND POSTRETIREMENT BENEFITS -- CONTINUED

Empire sponsors an Employees' Savings Plan (the "Savings Plan"), under which
each eligible employee may defer a portion of their annual compensation, 
subject to limitations. Empire contributes a matching amount, subject to 
certain limits.  In 1996, Empire matched 65% of each participant's deferral
contribution up to a maximum matching contribution of $813.  A participant may 
also contribute, from after-tax dollars, an amount, not to exceed 10% of annual
compensation.  Effective July 1996, the Savings Plan was amended to allow Empire
matching contributions equal to 50% of an employee's contributions up to a 
maximum of 2.5% of the employee's salary.  Empire's contributions to the 
Savings Plan were $420,000, $438,000 and $524,000 in 1998, 1997 and 1996, 
respectively. Under the pooling arrangement, the Company is obligated to 
provide 30% of Empire's contributions under the Savings Plan.

NOTE 11--LEASES

The Group has entered into a twenty year lease agreement, consisting of 286,510
square feet, in an office building located at 335 Adams Street in Brooklyn, New
York, in which Leucadia has an equity interest.  The Group received certain 
incentives from both the City and State of New York in connection with this 
lease, which will be recognized over the term of the lease.

Empire has subleased 133,140 square feet of the office space to its parent,
Leucadia at the similar terms as in the original lease.  

Empire has guaranteed the payment of lease rent by its wholly-owned subsidiary
Gould Dente Agency ("Gould").  Gould relocated its offices to the new office 
building  with Empire.  In accordance with the guarantee, in 1998, $2.0 million
of a $2.3 million liability for lease abandonment costs established by Empire in
1997 was reversed upon release by the landlord from its obligation.  Under the
pooling agreement, the Company is obligated for 30% of this transaction.



                                  -F26-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-CONTINUED

ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 11--LEASES--CONTINUED

Future minimum rentals, which exclude escalation amounts, on non-cancelable 
leases in the aggregate for each of the next five years and thereafter are as
follows (in thousands): 
<CAPTION>

                                                                 
                                       					Lease		      Sublease   Net
                                           <C>          <C>        <C>
                                     1999   $   4,906    $ 2,280    $ 2,626
                                			  2000       4,906      2,280      2,626
     	                               2001       4,906      2,280      2,626
                                     2002       4,906      2,280      2,626
                                	    2003       5,029      2,337      2,692
                               Thereafter      97,035     45,092     51,943
                                    Total    $121,688    $56,549    $65,139
</TABLE>
[S]
Rental expense for the Group for the years 1998, 1997 and 1996 was $3.3 million,
$3.3 million and $3.2 million, respectively. The Company is obligated to pay 30%
of these rental charges in accordance with the pooling agreement.

NOTE 12--BUSINESS SEGMENTS
<TABLE>
Allcity operates in three business segments--automobile lines, commercial lines
and miscellaneous and personal lines. Results by business segment for each 
year ended December 31, 1998, 1997 and 1996 are summarized as follows 
(in thousands):
<S>
<CAPTION>
<S>
                                            Premiums  Underwriting
1998                                          Earned    Gain(Loss)
                                             <C>       <C>
<S>  
Automobile lines                              $38,446   $  (5,922)
Commercial lines                               20,490     (14,536) 
Miscellaneous and personal lines                8,576         654
         TOTAL FROM UNDERWRITING              $67,512     (19,804) 
Net investment income, net securities gains
other income and interest on surplus note                  20,578
         INCOME BEFORE FEDERAL INCOME TAXES               $   774

1997                                             
Automobile lines                              $50,677     $(8,015)
Commercial lines                               23,289      (7,842)
Miscellaneous and personal lines                6,925         268
          TOTAL FROM UNDERWRITING             $80,891     (15,589)
Net investment income, net securities losses,                   
  other income and interest on surplus note                15,442 
         (LOSS) BEFORE FEDERAL INCOME TAXES               $  (147)

1996                                              
Automobile lines                              $63,558    $(10,822)
Commercial lines                               27,714      (2,998) 
Miscellaneous and personal lines                4,801         266
          TOTAL FROM UNDERWRITING             $96,073     (13,554) 
Net investment income, net securities gains,
other income and interest on surplus note                  17,518
         INCOME BEFORE FEDERAL INCOME TAXES               $ 3,964
</TABLE>


                                 -F27-
<PAGE>
<TABLE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS--CONTINUED
ALLCITY INSURANCE COMPANY AND SUBSIDIARY

NOTE 12--BUSINESS SEGMENTS-CONTINUED

Direct investment portfolios are not maintained for each segment and, 
accordingly, allocation of assets to each segment is not performed. 

Seven general agents, one of which is an Empire subsidiary, produced 
approximately 32%, 28%, and 23% of Allcity's premiums for the years ended
December 31, 1998, 1997 and 1996, respectively. All of Allcity's business is
conducted in the State of New York. 

NOTE 13--FAIR VALUE OF FINANCIAL INSTRUMENTS

The Company's only material financial instruments are investments for which 
the fair values are disclosed in Note 4, and the surplus note and short-term
investments, for which the carrying amount approximates fair value.

NOTE 14 -- LITIGATION

The Company is party to legal proceedings that are considered to be either
ordinary, routine litigation or incidental to its business.  Based on 
discussion with Counsel, the Company does not believe that such litigation
will have a material effect on its financial position, results of operations or
cash flows.

NOTE 15 -- RELATED PARTIES

See Notes 1, 3, 8, 9, 10 and 11 regarding Allcity's relationships with 
the Group and Leucadia.

NOTE 16--SUMMARY OF UNAUDITED QUARTERLY RESULTS OF OPERATIONS

The following is a summary of unaudited quarterly results of operations 
for 1998, 1997 and 1996 (in thousands, except per share amounts):
<CAPTION>
				                                          1998			
                               1st     2nd      3rd       4th 
                              <C>     <C>      <C>       <C>

Total Revenues                 $24,168 $22,029  $21,998   $ 23,875
Net Income/(Loss)                  110    (851)     (10)     1,255
Basic and Diluted
Earnings/(Loss) Per Share         0.02   (0.12)   (0.01)      0.18

                                                 1997			
                                   1st     2nd      3rd       4th	

Total Revenues                 $28,108 $26,560   25,826   $ 22,130
Net Income/(Loss) 	          	     856    (162)      49       (826) 
Basic and Diluted
Earnings/(Loss) Per Share         0.12   (0.02)    0.01      (0.12) 

                                                 1996			
                                   1st     2nd      3rd       4th	

Total Revenues                 $30,884 $30,714  $30,600   $ 28,592
Net Income                         556     497      780        801
Basic and Diluted
Earnings Per Share                0.08    0.07     0.11       0.11
<S>
</TABLE>

                                       -F28-
<PAGE>
<TABLE>
ALLCITY INSURANCE COMPANY
SCHEDULE VI - SUPPLEMENTAL INSURANCE INFORMATION
CONCERNING PROPERTY - CASUALTY INSURANCE OPERATIONS
(Thousands of dollars)
<CAPTION>
<S>
COL. A      COL. B      COL. C      COL. D*     COL. E   COL. F   COL. G     COL. H                 
           <C>          <C>        <C>           <C>       <C>       <C>     <C>         <C>                                       
                        Reserves                                              Claims and Claim           
                        for Unpaid                                            Adjustment Expenses  
            Deferred    Claims      Discount                                  Incurred related to  
            Policy      and Claim   if any                        Net         (1)       (2)          
            Acquisition Adjustment  Deducted in Unearned Earned   Investment  Current    Prior       
Segment     Costs       Expenses    Column C(a) Premiums Premiums Income (b)  Year       Years       
Year Ended 12/31/98:
Automobile   
lines       $2,222       $180,716     -           $27,700   $38,446   $7,613  $37,703     $(2,035)
Commercial 
lines        2,143        240,732      307         28,110    20,490    6,087   14,108      14,618   
Miscellaneous
and personal
lines        1,000         12,784      -            8,162     8,576      823    4,887         308

            $5,365       $434,232     $307        $63,972   $67,512   $14,523 $56,698     $12,891  

<S>
Year Ended 12/31/97:
Automobile 
lines       $3,339       $205,353     -           $46,780    $50,677  $ 8,881 $53,995     $   191 
Commercial
lines        2,577        203,383      123         35,827     23,289    6,072  15,907       7,482
Miscellaneous
and personal
lines        1,163          8,790     -             8,200      6,925      741   3,839         631

            $7,079       $417,526    $ 123        $90,807    $80,891  $15,694 $73,741     $ 8,304 
<S>
Year Ended 12/31/96:
Automobile
lines       $4,318       $206,706     -           $66,050    $63,558  $ 9,561 $58,256     $ 6,443   
Commercial
lines        2,654        194,000      104         39,090     27,714    6,370  19,251       1,434 
Miscellaneous
and personal 
lines          735          5,381     -             6,517      4,801      427   2,709         257 

            $7,707       $406,087    $ 104        $111,657   $96,073  $16,358 $80,216     $ 8,134 
<S>
<FN>
<S>
(a) Liabilities for losses for certain long - term disability payments under
wokers' compensation insurance are discounted  at a maximum of 6%. The 
liabilities discounted are deemed insignificant and do not have a material
effect on reported income.
<S>
(b) Allocations of Net Investment Income and Other Operating Expenses are
based on a number of assumptions and estimates and results would change if
different methods were applied. Other Operating Expenses are reflected net of
service fee income.
<S>
*Information required by Schedule III - Supplementary Insurance Information has
been incorporated within this schedule.
</TABLE>
[S]

                                   -F29-
<PAGE>
<TABLE>
ALLCITY INSURANCE COMPANY
SCHEDULE VI - SUPPLEMENTAL INSURANCE INFORMATION - CONTINUED
CONCERNING PROPERTY - CASUALTY INSURANCE OPERATIONS
(Thousands of dollars)
<CAPTION>
<S>
COL. A               COL. I           COL. J           COL.  K         COL. L*
                    <C>              <C>              <C>             <C>
                     Amortization                                      Paid
                     of Deferred                                       Claims
                     Policy           Other                            and Claim
                     Acquisition      Operating        Premiums        Adjustment
Segment              Costs            Expenses (b)     Written         Expenses
<S>
Year Ended 12/31/98:
Automobile lines     $ 6,635           $ 2,064         $31,391         $50,767
Commercial lines       4,624             1,678          18,282          21,396
Miscellaneous and
personal lines         2,152               574           8,386           2,915
                     $13,411           $ 4,316         $58,059         $75,078
<S>
Year Ended 12/31/97:
Automobile lines     $ 8,371           $(3,864)        $44,484         $54,649
Commercial lines       5,118             2,619          22,107          22,580
Miscellaneous and
personal lines         1,756               435           8,438           3,050
                     $15,245            $ (810)        $75,029         $80,279
<S>
Year Ended 12/31/96:
Automobile lines     $ 9,854            $ (180)        $60,162         $62,446
Commercial lines       5,293             4,742          25,243          22,483
Miscellaneous and
personal lines         1,057               511           5,606           2,645
                     $16,204            $5,073         $91,011         $87,574
<S>
<FN>
<S>   
(a) Liabilities for losses for certain long - term disability payments under
wokers' compensation insurance are discounted  at a maximum of 6%. The 
liabilities discounted are deemed insignificant and do not have a material
effect on reported income.
<S>
(b) Allocations of Net Investment Income and Other Operating Expenses are
based on a number of assumptions and estimates and results would change if
different methods were applied. Other Operating Expenses are reflected net of
service fee income.
<S>
*Information required by Schedule III - Supplementary Insurance Information has
been incorporated within this schedule.
</TABLE>
[S]
                                      -F29 Continued-

<PAGE>