SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


                                  FORM 10-Q


[*]        QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                OF THE SECURITIES EXCHANGE ACT OF 1934

           FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1998 or

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


Commission file number: 0-20882

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


           Indiana                                 No. 35-1773567
(State or other jurisdiction            (I.R.S. Employer Identification No.)
of incorporation or organization)

9100 Keystone Crossing, Indianapolis, Indiana           46240
(Address of principal executive offices)             (Zip Code)

                            (317) 574-6200
         (Registrant's telephone number, including area code)

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 [*]  No [  ]

As  of  May  1,  1998,  the  Registrant had 7,103,944 shares of  Common  Stock
outstanding.

<PAGE>
                        STANDARD MANAGEMENT CORPORATION

                                     INDEX

                                                                        PAGE
NUMBER

Part I.    FINANCIAL INFORMATION:

Item 1.    Financial Statements

Consolidated Balance Sheets --
March   31,   1998  (Unaudited)  and  December  31,  1997  (Audited)         3

Consolidated Statements of Income --
For the Three Months  Ended  March  31,  1998  and  1997 (Unaudited)         4

Consolidated Statements of Shareholders' Equity --
For  the  Three  Months  Ended  March  31, 1998 and 1997 (Unaudited)         5

Consolidated Statements of Cash Flows --
For  the  Three  Months Ended March 31, 1998  and  1997  (Unaudited)         6

Notes    to   Consolidated    Financial    Statements    (Unaudited)    7 - 10

Item 2.    Management's  Discussion  and  Analysis  of  Financial 
           Condition and Results of Operation                          11 - 18

Part II.   OTHER INFORMATION:

Item 4.    Submission of Matters to a Vote of Security Holders              19

Item 6.    Exhibits and Reports on Form 8-K                                 19

           SIGNATURES                                                       20
<PAGE>
                        PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                          CONSOLIDATED BALANCE SHEETS
                            (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                         MARCH 31,                   DECEMBER 31,
<S>                                                                                          <C>                          <C>
                                                                                                 1998                         1997
                                                                                        (UNAUDITED)                    (AUDITED)
                                   ASSETS
Investments:
    Securities available for sale:
          Fixed maturity securities, at fair value (amortized cost: $384,795 in 1998
            and $367,372 in 1997)                                                            $389,840                     $372,576
          Equity securities, at fair value (cost: $2,894 in 1998 and $55 in 1997)               2,893                           52
   Mortgage loans on real estate                                                                6,664                          375
   Policy loans                                                                                 9,378                        9,495
   Real estate                                                                                  4,552                        2,163
   Other invested assets                                                                          776                          779
   Short-term investments                                                                      45,944                       13,342
            Total investments                                                                 460,047                      398,782
Cash                                                                                           10,939                        4,165
Accrued investment income                                                                       6,276                        6,512
Amounts due and recoverable from reinsurers                                                    63,557                       61,596
Deferred policy acquisition costs                                                              22,952                       21,435
Present value of future profits                                                                27,558                       20,537
Excess of acquisition cost over net assets acquired                                             4,462                        2,445
Federal income tax recoverable                                                                    780                        1,854
Other assets                                                                                   10,564                        3,602
Assets held in separate accounts                                                              165,339                      148,064
            Total assets                                                                     $772,474                     $668,992
                LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
   Insurance policy liabilities                                                              $505,618                     $439,390
   Accounts payable and accrued expenses                                                        6,177                        6,208
   Obligations under capital lease                                                                 --                          141
   Notes payable                                                                               30,000                       26,000
   Deferred federal income taxes                                                                5,433                        4,488
   Excess of net assets acquired over acquisition cost                                          1,041                        1,388
   Liabilities related to separate accounts                                                   165,339                      148,064
            Total liabilities                                                                 713,608                      625,679
Shareholders' Equity:
   Preferred Stock, no par value:
          Authorized 1,000,000 shares; none issued and outstanding                                 --                           --
   Common Stock, no par value:
          Authorized 20,000,000 shares; issued 7,973,376 in 1998 and 5,752,499 in              55,645                       40,646
1997
   Treasury stock, at cost, 878,959 shares in 1998 and 876,009 shares in 1997                 (4,595)                      (4,572)
(deduction)
   Accumulated other comprehensive income:
          Unrealized gain on securities available for sale                                      2,117                        2,171
          Foreign currency translation adjustment                                               (590)                        (473)
   Retained earnings                                                                            6,289                        5,541
            Total shareholders' equity                                                         58,866                       43,313
Total liabilities and shareholders' equity                                                   $772,474                     $668,992
</TABLE>

See accompanying notes to consolidated financial statements.
<PAGE>
               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

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

<TABLE>
<CAPTION>
                                                                   THREE MONTHS ENDED
<S>                                                    <C>                        <C> 
                                                                        MARCH 31,
                                                       1998                       1997
Revenues:
   Premium income                                      $1,980                     $1,897
   Net investment income                               7,386                      7,298
   Net realized investment gains                       21                         174
   Policy charges                                      1,358                      1,439
   Amortization of excess of net assets acquired over
          acquisition cost                             347                        347
   Fees from separate accounts                         562                        471
   Other income                                        291                        393
          Total revenue                                11,945                     12,019
Benefits and expenses:
   Benefits and claims                                 1,880                      2,389
   Interest credited on interest-sensitive annuities
        and other financial products                   4,219                      3,894
   Salaries and wages                                  1,438                      1,452
   Amortization                                        1,011                      825
   Other operating expenses                            1,594                      1,976
   Interest expense and financing costs                657                        530
          Total benefits and expenses                  10,799                     11,066
Income before federal income taxes and preferred stock 1,146                      953
    dividends
Federal income tax expense                             398                        310
Net income                                             748                        643
Preferred stock dividends                              --                         42
Earnings available to common shareholders              $748                       $601
Earnings per share:
   Net income                                          $.14                       $.13
   Preferred stock dividends                           --                         .01
   Earnings available to common shareholders           $      .14                 $     .12
Earnings per share - assuming dilution:
   Net income                                          $      .13                 $     .11
   Preferred stock dividends                           --                         --
   Earnings available to common shareholders           $.13                       $.11
</TABLE>

See accompanying notes to consolidated financial statements.
<PAGE>
               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                       (UNAUDITED, DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>
                                                                                                     Accumulated
                                                                                                        Other
                                                                  Common           Treasury         Comprehensive       Retained
                                                  Total            Stock             Stock             Income           Earnings
<S>                                             <C>               <C>               <C>              <C>                 <C>
Balance at January 1, 1997                      $39,919           $40,481           $(3,528)         $(55)               $3,021
Comprehensive income, net of tax:
  Net income                                    643               --                --               --                  643
  Other comprehensive income
          Change in unrealized gain (loss) on
          securities available for sale, net    (3,589)           --                --               (3,589)             --
          Change in foreign currency            (108)             --                --               (108)               --
          translation adjustment
            Other comprehensive income          (3,697)
              Comprehensive income              (3,054)
   Reissuance of treasury stock in connection
   with exercise of stock options               4                 --                4                --                  --
   Loss on reissuance of treasury stock         (1)               --                --               --                  (1)
   Preferred stock dividend                     (42)              --                --               --                  (42)
Balance at March 31, 1997                       $36,826           $40,481           $(3,524)         $(3,752)            $3,621
Balance at January 1, 1998                      $43,313           $40,646           $(4,572)         $1,698              $5,541
Comprehensive income, net of tax:
   Net income                                   748               --                --               --                  748
   Other comprehensive income
          Change in unrealized gain (loss) on
          securities available for sale, net    (54)              --                --               (54)                --
          Change in foreign currency            (117)             --                --               (117)               --
          translation adjustment
            Other comprehensive income          (171)
              Comprehensive income              577
   Conversion of preferred stock into Common    4                 4                 --               --                  --
   Stock
   Issuance of Common Stock for Savers Life     14,937            14,937            --               --                  --
   acquisition
   Issuance of Common Stock warrants            30                30                --               --                  --
   Issuance of Common Stock in connection with
          exercise of stock warrants            28                28                --               --                  --
   Treasury stock acquired                      (28)              --                (28)             --                  --
   Reissuance of treasury stock in connection
   with exercise of stock options               5                 --                5                --                  --
          exercise of stock options
Balance at March 31, 1998                       $58,866           $55,645           $(4,595)         $1,527              $6,289
</TABLE>



See accompanying notes to consolidated financial statements.
<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (UNAUDITED, DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                                                  Three Months Ended
<S>                                                                                    <C>                               <C>
                                                                                                       March 31,
                                                                                           1998                               1997
OPERATING ACTIVITIES
Net income                                                                                 $748                               $643
Adjustments to reconcile net income to net cash provided by
operating activities:
   Amortization of deferred policy acquisition costs                                        586                                330
   Policy acquisition costs deferred                                                    (2,069)                            (1,735)
   Deferred federal income taxes                                                            467                                 90
   Depreciation and amortization                                                            252                                303
   Insurance policy liabilities                                                           1,977                                786
   Net realized investment gains                                                           (22)                              (174)
   Accrued investment income                                                                451                              (200)
   Other                                                                                (1,647)                                368
          Net cash provided by operating activities                                         743                                411
FINANCING ACTIVITIES
Borrowings, net of debt issuance costs of $86 in 1998 and $-- in 1997                     3,914                                 --
Repayments on long term debt and obligations under capital lease                          (153)                              (135)
Premiums received on interest-sensitive annuities and other financial
products                                                                                 14,222                             12,068
   credited to policyholder account balances, net of premiums ceded
Return of policyholder account balances on interest-sensitive annuities
and other                                                                               (9,419)                            (5,641)
   financial products, net of premiums ceded
Redemption of redeemable preferred stock                                                     --                                (4)
Reissuance of treasury stock in connection with exercise of stock options                    57                                  4
Purchase of Common Stock for treasury                                                      (28)                                 --
          Net cash provided by financing activities                                       8,593                              6,292
INVESTING ACTIVITIES
Fixed maturity securities available for sale:
   Purchases                                                                           (61,724)                           (45,886)
   Sales                                                                                 43,737                             35,369
   Maturities, calls and redemptions                                                      7,548                              4,422
Short-term investments, net                                                              10,142                            (4,416)
Other investments, net                                                                    (664)                                 40
Purchase of Savers Life Insurance Company, less cash acquired of $518                   (1,601)                                 --
          Net cash used by investing activities                                         (2,562)                           (10,471)
Net increase (decrease) in cash                                                           6,774                            (3,768)
Cash at beginning of period                                                               4,165                              5,113
Cash at end of period                                                                   $10,939                             $1,345
</TABLE>


See accompanying notes to consolidated financial statements.
<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)


NOTE 1 -- BASIS OF PRESENTATION

      The  accompanying  unaudited  consolidated financial statements have been
prepared in accordance with generally  accepted  accounting principles ("GAAP")
for interim financial information and with the instructions  to  Form  10-Q and
Article  10  of  Regulation  S-X.   Accordingly, they do not include all of the
information and footnotes required by  GAAP  for complete financial statements.
The results of operations for the interim periods  shown in this report are not
necessarily indicative of the results that may be expected for the fiscal year.
This  is  particularly  true  in the life insurance industry,  where  mortality
results in interim periods can  vary  substantially  from  such  results over a
longer period.  In the opinion of management, the information contained  herein
reflects  all  adjustments  necessary to make the results of operations for the
interim periods a fair statement  of such operations.  All such adjustments are
of  a  normal  recurring nature.  Certain  amounts  in  the  1997  Consolidated
Financial Statements  and Notes have been reclassified to conform with the 1998
presentation.  These reclassifications  had  no  effect  on previously reported
shareholders' equity or net income during the periods involved.

      The  nature of the insurance business of Standard Management  Corporation
("SMC") and  its  consolidated subsidiaries (the "Company") requires management
to make estimates and  assumptions  that  affect  the  amounts  reported in the
consolidated  financial  statements  and accompanying notes.  For example,  the
Company  uses significant estimates and  assumptions  in  calculating  deferred
policy acquisition  costs,  present  value  of future profits, goodwill, future
policy  benefits  and  deferred  federal  income  taxes.   Such  estimates  and
assumptions could change in the future as more information becomes known, which
could impact the amounts reported and disclosed herein.

      For further information, refer to the consolidated  financial  statements
and footnotes thereto included in the Annual Report on Form 10-K of SMC for the
year ended December 31, 1997.

NOTE 2 -- ACQUISITIONS

      On  March  12,  1998, SMC acquired Savers Life Insurance Company ("Savers
Life"), with Savers Life  surviving  as a wholly-owned subsidiary of SMC.  Each
of the 1,779,908 shares of Savers Life  Common  Stock outstanding was converted
into 1.2 shares of SMC Common Stock plus $1.50.   Each  holder  of  Savers Life
Common  Stock could elect to receive the $1.50 per share portion of the  merger
consideration in the form of additional shares of SMC Common Stock.  SMC issued
approximately  2.2 million shares with a value of approximately $14,937,000 and
paid $2,119,000  in  cash (excluding acquisition costs) to acquire Savers Life.
SMC increased the Amended  and Restated Revolving Line of Credit Agreement with
a bank (the "Amended Credit  Agreement") to an amount of $20,000,000 to finance
the acquisition of Savers Life.

      Savers  Life  underwrites,   markets   and  distributes  annuities,  life
insurance,  and  Medicare supplement health insurance  through  a  sales  force
consisting of approximately  4,000  independent brokers and is licensed to sell
products in North Carolina, South Carolina,  Virginia and Florida.  Savers Life
had  total  assets  of  $72,186,000  at  December  31,  1997  and  revenues  of
$43,047,000 for the year ended December 31, 1997.

      The  acquisition  of  Savers Life was accounted for  using  the  purchase
method of accounting and the  consolidated  financial  statements  include  the
results  of Savers Life from March 31, 1998, the effective date of acquisition.
Under purchase  accounting,  SMC  allocated  the total purchase price of Savers
Life  to  the  assets  and  liabilities  acquired,  based   on   a  preliminary
determination  of their values and recorded the excess of total purchase  price
over net assets  acquired  as  goodwill.  SMC may adjust this allocation when a
final determination of fair values  is made.  Any adjustment is not expected to
be material, however.

<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)


NOTE 2 -- ACQUISITIONS (CONTINUED)

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

         Assets acquired:
            Fixed maturity securities            $    7,061
            Equity securities                         2,840
            Mortgage loans on real estate             6,273
            Real estate                               1,750
            Policy loans                                  9
            Short term investments                   42,745
            Cash                                        518  
            Present  value  of future profits         7,400
            Other assets                              7,378
                               Total assets acquired 75,974

         Liabilities assumed:
            Policy reserves                          57,889
            Deferred federal income taxes               516
            Other liabilities                         1,061
               Total   liabilities  assumed          59,466

         Net assets acquired                         16,508
         Excess of acquisition cost over 
           net assets acquired                        2,049
         Total purchase price                     $  18,557

   The following are supplemental unaudited pro forma consolidated  results  of
operations of the Company as if the acquisition of Savers Life and the transfer
of  the  major medical product line from Savers Life to World Insurance Company
("World")  through  a  reinsurance  agreement  whereby  World  assumed, through
coinsurance effective July 1, 1997, 100% of the product line, had  occurred  at
January  1,  1997  presented at the same purchase price, based on estimates and
assumptions considered appropriate (in thousands, except per share amounts).

                                             Three Months Ended
                                                  MARCH 31,
                                               1998      1997
                    Revenues                  $20,802   $21,228
                    Net income                1,158     1,060
                    Earnings per share        .15       .15
                    Earnings per share,
                    assuming dilution         .14       .13


      The  above amounts are based upon certain assumptions and estimates which
the Company believes are reasonable and do not reflect any benefit from savings
which might  be  achieved  from  combined  operations.  The unaudited pro forma
results do not necessarily represent results which would  have  occurred if the
acquisition of Savers Life and the transfer of the major medical  product  line
had  taken  place  on  the  basis assumed above, nor are they indicative of the
results of future combined operations.

<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)


NOTE 3 -- NOTES PAYABLE

      Notes payable of the Company were as follows (in thousands):


<TABLE>
<CAPTION>
                                         Interest            March 31,          December 31,
                                           Rate                1998                 1997
<S>                                       <C>              <C>                 <C>
Borrowings under revolving credit          9.11%{ (1)}     $20,000             $16,000
agreements
Senior subordinated convertible notes        10.00%        10,000              10,000
due 2004
                                                           $30,000             $26,000
</TABLE>
          (1) Current weighted average rate at March 31, 1998.

      In March 1998, SMC had  borrowed an additional $4,000,000 under revolving
credit agreements to purchase Savers Life (SEE NOTE 2).

NOTE 4 -- NET UNREALIZED GAIN ON SECURITIES AVAILABLE FOR SALE

      The  components  of  the  balance   sheet  caption  "Unrealized  gain  on
securities  available  for  sale" in shareholders'  equity  are  summarized  as
follows (in thousands):
<TABLE>
<CAPTION>
                                                                   March 31,                  December 31,
<S>                                                            <C>                         <C>
                                                               1998                        1997
Fair value of securities available for sale                    $392,733                    $372,628
Amortized cost of securities available for sale                387,689                     367,427
Gross unrealized gain on securities available for sale         5,044                       5,201
Adjustments for:
   Deferred policy acquisition costs                           (1,673)                     (1,727)
   Present value of future profits                             (198)                       (209)
   Deferred federal income tax liability                       (1,056)                     (1,094)
         Net unrealized gain on securities available for sale  $2,117                      $2,171
</TABLE>

NOTE 5 -- EARNINGS PER SHARE

  As  of  December  31,  1997,  the  Company  adopted  Statement  of  Financial
Accounting Standards ("SFAS")  No. 128, "Earnings per Share."  All earnings per
share amounts for all periods presented  have  been  restated to conform to the
SFAS No. 128 requirements.  SFAS No. 128 eliminates the presentation of primary
earnings  per  share  and  replaces it with basic earnings  per  share.   Basic
earnings per share differs from primary earnings per share because common stock
equivalents are not considered  in  computing  basic earnings per share.  Fully
diluted  earnings  per  share  are replaced with diluted  earnings  per  share.
Diluted earnings per share is similar  to  fully  diluted  earnings  per share,
except in determining the number of dilutive shares outstanding for options and
warrants,  the  proceeds  that  would  be  received  upon the conversion of all
dilutive  options  and  warrants  are  assumed  to  be used to  repurchase  the
Company's common shares at the average market price of  such  stock  during the
period.  For fully diluted earnings per share, the higher of the average market
price or ending market price was used.

<PAGE>

               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED) (CONTINUED)


NOTE 5 -- EARNINGS PER SHARE (CONTINUED)

  A  reconciliation of the numerator and denominator of the earnings per  share
computation is as follows (dollars in thousands):
<TABLE>
<CAPTION>
                                                                           Three Months Ended
<S>                                                          <C>                          <C>
                                                                                March 31,
                                                             1998                         1997
Numerator:
Net income                                                   $748                         $643
Preferred stock dividends                                    --                           42
Numerator for basic earnings per share -
Income  available  to  common  shareholders                  748                          601
Effect of dilutive securities:
Preferred stock dividends                                    --                           42
Numerator for diluted earnings per share -
Income available to common shareholders after assumed        $748                         $643
conversions

Denominator:
Denominator for basic earnings per share - weighted -average 5,322,065                    5,024,173
shares
Effect of dilutive securities:
 Stock  options                                              269,776                      105,885
 Stock  warrants                                             285,127                      185,461
 Convertible preferred stock                                 --                           393,701
     Dilutive potential common shares                        554,903                      685,047
Denominator for diluted earnings per share - adjusted
weighted-average shares and assumed conversions              5,876,968                    5,709,220
</TABLE>
      The senior  subordinated convertible notes (SEE NOTE 3) were not included
in the computation  of  diluted  earnings per share because the effect would be
antidilutive.

NOTE 6 -- RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

      As  of January 1, 1998, the Company  adopted  SFAS  No.  130,  "Reporting
Comprehensive  Income."   SFAS  No. 130 establishes new rules for the reporting
and display of comprehensive income  and  its components; however, the adoption
of  SFAS No. 130 had no impact on the Company's  net  income  or  shareholders'
equity.   SFAS  No.  130  requires  unrealized gains or losses on the Company's
securities  available for sale and foreign  currency  translation  adjustments,
which prior to adoption were reported separately in shareholders' equity, to be
included in other  comprehensive  income.  Prior year financial statements have
been reclassified to conform to the  requirements  of SFAS No. 130.  During the
first quarter of 1998 and 1997, total comprehensive income amounted to $576,000
and $(3,054,000).

      In June 1997, the Financial Accounting Standards  Board  ("FASB")  issued
SFAS  No.  131,  "Disclosures  about  Segments  of  an  Enterprise  and Related
Information."   SFAS  No.  131 supersedes SFAS No. 14 "Financial Reporting  for
Segments  of  a Business Enterprise"  and  defines  financial  and  descriptive
information about  a  company's  operating  segments that is to be disclosed in
financial  statements.   SFAS  No. 131 is effective  for  financial  statements
issued for fiscal years beginning  after  December 15, 1997 and will be adopted
by the Company in 1998.  Currently, the Company  considers  its  life insurance
operations to be its only material operating segment.  The Company  is  in  the
process  of  defining  additional  business  segments and developing allocation
methods to assess their performance.  Once the process is completed, additional
disclosures will be provided in accordance with SFAS No. 131.
<PAGE>

         STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                        ___________________

ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION

GENERAL

                                  The  following   discussion   highlights  the
material  factors  affecting  the  results  of  operations  and the significant
changes in balance sheet items of the Company on a consolidated  basis  for the
periods listed as well as the Company's liquidable and capital resources.  This
discussion  should  be  read  in  conjunction  with  the consolidated financial
statements  and  notes  thereto  included  in this document,  as  well  as  the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.

RESULTS OF OPERATION

THREE MONTHS ENDED MARCH 31, 1998 AND 1997

                                  OPERATING INCOME.  The income from operations
(before net realized investment gains) was $734,000  for  the  first quarter of
1998,  an increase of $206,000 or 39%, compared to $528,000 for the  comparable
period in  1997.   The  increase  resulted  primarily  from increased operating
earnings from domestic operations of $113,000 to $287,000 for the first quarter
of  1998  compared  to $174,000 for the first quarter of 1997.   The  increased
domestic operating gains  resulted  primarily from decreased operating expenses
and favorable mortality experience during the first quarter of 1998.

                                  PREMIUM  INCOME.   Premium income is composed
of  premiums, including renewal premiums, received on ordinary  life  insurance
policies.   The  Company's  new product sales are composed primarily of annuity
products.  Under GAAP, deposits  from  interest-sensitive  annuities  and other
financial  products are not recorded as revenues.  GAAP premium income for  the
first quarter  of  1998  was  $1,980,000,  an  increase  of  $83,000 or 4% from
$1,897,000 for the first quarter of 1997.

                                  Net domestic premium deposits  received  from
the  sales  of interest-sensitive annuities and other financial products (which
are not recorded  as revenues) were $14,222,000 compared to $12,068,000 for the
first quarter of 1998  and 1997, respectively.  Gross domestic premium deposits
received  from  interest-sensitive   annuities   and  financial  products  were
$17,159,000 for the first quarter of 1998 compared to $14,230,000 for the first
quarter of 1997.  Annuity sales increased in 1998  due  to  the introduction of
new  competitive  products and an increase in the agency base achieved  through
the recruitment of  high volume agents and larger managing general agencies and
continued  expansion  of   geographical   concentration   into  such  areas  as
California.  Since the Company's operating income is primarily  a  function  of
its  investment  spreads,  persistency  of annuity in force business, mortality
experience, and operating expenses, a change  in  annuity premium deposits in a
single  period  does not directly cause operating income  to  change,  although
continued increases or decreases in annuity premiums may affect the growth rate
of total assets on which investment spreads are earned.

                                  NET INVESTMENT INCOME.  Net investment income
increased $88,000  or  1%  to  $7,386,000  for  the  first quarter of 1998 from
$7,298,000 for the comparable period of 1997.  The increase  primarily resulted
from  an increase in total invested assets (amortized cost) from  December  31,
1996 to  March  31,  1998,  which  offset  a  decrease  in the weighted average
annualized yield of the Company's investment portfolio (exclusive  of  realized
and  unrealized gains and losses) to 7.53% from 7.69% for the first quarter  of
1998 and  1997,  respectively.   As  of March 31, 1998, yields available on new
investments were declining.

                                  NET  REALIZED INVESTMENT GAINS.  Net realized
investment gains decreased $153,000 or 88%  to  $21,000  from  $174,000 for the
first  quarter  of 1998 and 1997, respectively.  Net realized investment  gains
fluctuate from period  to period and arise when securities are sold in response
to  changes  in  the investment  environment  which  provide  opportunities  to
maximize return on  the  investment  portfolio  without adversely affecting the
quality  and  overall  yield  of  the  investment portfolio.   The  pretax  net
unrealized gain on the Company's securities  available  for sale was $5,044,000
at March 31, 1998.  In the absence of decreases in interest  rates, the Company
may  be unable to realize gains on its investment portfolio at  the  levels  of
prior  years  or  could  recognize  losses  from  sales  of securities prior to
maturity.   The  change  in  market  value  of  the  Company's  fixed  maturity
securities  is  not  expected  to  have  a  significant  effect  on results  of
operations because the Company has the present intent and practice to hold most
of its available-for-sale fixed maturity securities to maturity, the  Company's
asset/liability  management activity is designed to monitor and adjust for  the
effects of changes  in  market  interest  rates  and  the Company's focus is to
manage its net spread revenue.

                                  POLICY   CHARGES.   Policy   charges,   which
represent the amounts assessed against policyholder  account  balances  for the
cost  of insurance, policy administration and surrenders, decreased $81,000  or
6% to $1,358,000  for  the first quarter of 1998 compared to $1,439,000 for the
first quarter of 1997.   The decrease in policy charges resulted primarily from
a reduction in policy surrender charges on certain deferred annuity products in
1998 when compared to 1997.

                                  FEES   FROM  SEPARATE  ACCOUNTS.   Fees  from
separate accounts consist of the investment  management fees earned by Standard
Management  International  on  its  separate  account   assets  and  investment
contracts.  Management fees and similar income from separate accounts increased
$91,000 or 19% to $562,000 for the first quarter of 1998  from $471,000 for the
first  quarter of 1997.  The increase is due primarily to an  increase  in  the
value of  assets  held  in  separate accounts from $128,546,000 at December 31,
1996 to $165,339,000 at March 31, 1998.  Net deposits from sales of unit-linked
products by Standard Management  International  were  $7,686,000 and $4,752,000
for the first quarter of 1998 and 1997, respectively.   Such  income fluctuates
in relationship to total separate account assets and the return  earned on such
assets.

                                  OTHER   INCOME.    Other   income   decreased
$102,000  or 26% to $291,000 for the first quarter of 1998 compared to $393,000
for  the  comparable   1997  period.   The  decrease  resulted  primarily  from
reductions in experience  rating  refund  adjustments  related  to  reinsurance
agreements.

                                  BENEFIT  AND  CLAIMS.   Benefits  and  claims
include  life  insurance and payout annuity benefits paid and changes in policy
reserves.  Benefits  and claims decreased $509,000 or 21% to $1,880,000 for the
first quarter of 1998  from  $2,389,000  for  the  first  quarter of 1997.  The
decrease in benefits and claims resulted from a reduction in net life insurance
claim  expense.   Throughout  the  Company's  history, it has experienced  both
periods of higher and lower benefit claims.  Such volatility is not uncommon in
the life insurance industry and, over extended  periods  of  time,  periods  of
higher  claims  experience  tend  to  be  offset  by  periods  of  lower claims
experience.

                                  INTEREST   CREDITED   ON   INTEREST-SENSITIVE
ANNUITIES    AND    OTHER    FINANCIAL    PRODUCTS.    Interest   credited   on
interest-sensitive annuities and other financial  products  was  $4,219,000 for
the  first  quarter of 1998, an increase of $325,000 or 8% from $3,894,000  for
the comparable  prior  year  period.   The increase resulted primarily from the
increases  in annuity policy reserves from  sales.   At  March  31,  1998,  the
weighted average  interest credited rate for Standard Life's currently marketed
annuities and other  financial  product liabilities was 5.39% compared to 5.42%
at March 31, 1997.

                                  AMORTIZATION.  Amortization expense primarily
includes  charges  to  operations  for  the  amortization  of  deferred  policy
acquisition costs, the present value  of  future profits and the excess of cost
over net assets acquired.  Amortization expense  increased  $186,000  or 23% to
$1,011,000 for the first quarter of 1998 from $825,000 for the first quarter of
1997.   The  increase  in  current year amortization expense resulted primarily
from increased amortization  of  deferred  policy  acquisition  costs  as gross
profits  from  business  sold  in  recent  years  began to emerge and increased
surrenders  and their corresponding increase in the  amortization  of  deferred
policy acquisition costs.

                                  OTHER  OPERATING  EXPENSES.   Other operating
expenses decreased $382,000 or 19% to $1,594,000 for the first quarter  of 1998
from $1,976,000 for the first quarter of 1997.  The decrease in other operating
expenses  resulted  primarily  from eliminating in 1998 the additional cost  to
convert  the  operations  in  the  Shelby   Life   block  and  a  reduction  in
international operating expenses.

                                  INTEREST   EXPENSE   AND   FINANCING   COSTS.
Interest expense and financing costs increased $127,000  or  24% to $657,000 in
the  first  quarter  of 1998 from $530,000 in the first quarter of  1997.   The
increase in interest expense  and  financing  costs  during  1998 resulted from
additional borrowings of $5,600,000 in June 1997 and $4,000,000 in March 1998.

LIQUIDITY AND CAPITAL RESOURCES

                                  SMC  is  an international financial  services
holding company.  The liquidity requirements  of  SMC  are  met  primarily from
management  fees,  equipment  rental  fees  and payments for other charges  and
dividends and interest on Surplus Debentures  received  from SMC's subsidiaries
as well as SMC's working capital.  These are SMC's primary  source  of funds to
pay  operating  expenses  and  meet  debt service obligations.  The payment  of
dividends and interest on Surplus Debentures  and  management and other fees by
Standard Life Insurance Company of Indiana ("Standard  Life") to SMC is subject
to   restrictions  under  the  insurance  laws  of  Indiana,  Standard   Life's
jurisdiction  of  domicile.   Dixie  National  Life  Insurance  Company ("Dixie
National  Life") is a subsidiary of Standard Life.  Accordingly, any  dividends
paid by Dixie  National  Life  to  Standard  Life  may  be  paid to SMC only if
Standard  Life is entitled to pay dividends to SMC.  The payment  of  dividends
and management  fees by Savers Life to SMC is subject to restrictions under the
insurance laws of  North  Carolina,  Savers  Life's  jurisdiction  of domicile.
These  internal  sources  of  liquidity  have been supplemented in the past  by
external sources such as lines of credit and  revolving  credit  agreements and
long-term debt and equity financing in the capital markets.

                                  The  Company reported on a consolidated  GAAP
basis net cash provided by operations of  $7,764,000  and  $1,726,000  for  the
years  ended  December  31,  1997  and  1996,  respectively.  Although deposits
received  on  the Company's interest-sensitive annuities  and  other  financial
products are not  included  in cash flow from operations under GAAP, such funds
are available for use by the  Company.  Cash  provided  by  operations plus net
deposits  received,  less  net  account  balances returned to policyholders  on
interest-sensitive annuities and other financial products, resulted in positive
cash flow of $19,649,5000 and $26,717,000 for the years ended December 31, 1997
and 1996, respectively.  Cash generated on a consolidated basis is available to
SMC only to the extent that it is generated at SMC level or is available to SMC
through  dividends,  interest,  management  fees   or   other   payments   from
subsidiaries.

                                  In  April  1993,  SMC instituted a program to
repurchase Common Stock from time to time.  The purpose of the stock repurchase
program is to enhance shareholder value.  SMC had repurchased  1,138,356 shares
of  Common Stock for $5,854,000 as of April 30, 1998.  At April 30,  1998,  SMC
was authorized to purchase an additional 361,644 shares under this program.

                                  At  April  30,  1998, SMC had "parent company
only" cash and short-term investments of $1,933,000.  These funds are available
to SMC for general corporate purposes.  SMC's "parent  company  only" operating
expenses  (not  including interest expense) were $3,420,000 and $3,470,000  for
the years ended December 31, 1997 and 1996, respectively.

                                  Pursuant to the management services agreement
with SMC, Standard  Life  paid  SMC  a  monthly  fee of $167,000 (annual fee of
$2,000,000) during 1997 and the first quarter of 1998  for  certain  management
services  related  to  the  production  of  business,  investment of assets and
evaluation of acquisitions.  Pursuant to the management services agreement with
Standard Life, Dixie National Life paid monthly payments of $83,000 (annual fee
of $1,000,000) to Standard Life in 1997 and the first quarter of 1998.  Both of
these agreements provide that they may be modified or terminated by the Indiana
and Mississippi department of insurance in the event of  financial  hardship of
Standard Life or Dixie National Life.

                                  A  management services agreement between  SMC
and Savers Life was approved by the North  Carolina  Department of Insurance on
March 11, 1998.  The management services agreement calls  for  the  payment  of
$83,000 per month by Savers Life to SMC for financial and regulatory reporting,
investment of assets and the production of business.  SMC has agreed to receive
no fee, nor shall Savers Life have an obligation to pay, unless the capital and
surplus  of Savers Life is $7,000,000 after the acquisition of Savers Life.  In
addition, as a condition of the acquisition of Savers Life, SMC entered into an
agreement with the North Carolina Department of Insurance to maintain statutory
capital and  surplus  of  Savers  Life  of  at least $6,000,000.  The amount of
capital and surplus of Savers Life at March 31, 1998 was $6,548,000.

                                  Pursuant to the management services agreement
with  SMC,  Premier Life (Luxembourg), a wholly-owned  subsidiary  of  Standard
Management International,  paid  SMC  a  management  fee of $25,000 per quarter
during  1997  and  the  first  quarter  of  1998  for  certain  management  and
administrative services.  The agreement provides that it  may  be  modified  or
terminated by either SMC or Premier Life (Luxembourg).

                                  At  April  1, 1995, SMC sold its property and
equipment  to  an unaffiliated leasing/financing  company  for  $1,396,000  and
subsequently entered into a capital lease obligation whereby SMC pays a monthly
rental amount of  $45,000.   SMC  charges a monthly equipment rental fee to its
subsidiaries  for  this  equipment and  additional  equipment  purchased  after
April  1,  1995.   The  amount   of  the  rental  income  received  from  SMC's
subsidiaries was $262,000 and $1,145,000  for  the three months ended March 31,
1998 and year ended December 31, 1997, respectively.

                                  The Amended Credit  Agreement  permits SMC to
borrow  up  to $20,000,000 in the form of a seven-year reducing revolving  loan
arrangement.   SMC  has  agreed  to  pay a non-use fee of .50% per annum on the
unused portion of the commitment.  In  connection with the original and Amended
Credit Agreement, SMC issued warrants to  the bank to purchase 73,500 shares of
Common Stock.  Borrowing under the Amended  Credit  Agreement  may  be used for
contributions to surplus of insurance subsidiaries, acquisition financing,  and
repurchases  of Common Stock.  The debt is secured by a Pledge Agreement of all
of the issued  and  outstanding  shares  of  common  stock of Standard Life and
Standard  Marketing.   Interest  on  the  borrowing  under the  Amended  Credit
Agreement is determined, at the option of SMC, to be: (i) a fluctuating rate of
interest based on the corporate base rate announced by  the  bank  from time to
time  plus 1% per annum, or (ii) a rate at LIBOR plus 3.25%.  Annual  principal
repayments  of  $3,333,000  begin  in  March  2000  and conclude in March 2005.
Indebtedness incurred under the Amended Credit Agreement  is subject to certain
restrictions  and  covenants  including,  among  other things, certain  minimum
financial  ratios,  minimum statutory surplus requirements  for  the  insurance
subsidiaries, minimum  consolidated  equity  requirements  for  SMC and certain
investment  and  indebtedness  limitations.   At  March  31, 1998, SMC  was  in
compliance with all restrictions and covenants in the Amended Credit Agreement.
At  March  31,  1998,  SMC  had borrowed $20,000,000 under the  Amended  Credit
Agreement at a weighted average interest rate of 9.11%.

                                  In  connection with the acquisition of Shelby
Life, the Company borrowed $4,000,000 from  an  insurance company pursuant to a
subordinated convertible debt agreement which was  due  in  December  2003.  At
June 30, 1997, this subordinated convertible debt agreement was amended  at the
principal  amount  of  $4,372,000  which  is  due  July  2004 unless previously
converted, and requires interest payments in cash on January  1  and  July 1 of
each  year  at  10%  per  annum.   At  June  30,  1997, the Company borrowed an
additional   $5,628,000   from  an  insurance  company  pursuant   to   another
subordinated convertible debt  agreement  (collectively,  the "Notes") which is
due  July 2004 unless previously converted, and requires interest  payments  in
cash on  January 1 and July 1 of each year at 10% per annum.  Proceeds from the
additional  borrowings  were  used  for  contributions  to surplus of insurance
subsidiaries  of  $2,400,000,  redemption  of  Class  S  Preferred   Stock   of
approximately  $1,840,000 and the balance for other general corporate purposes.
The Notes are convertible  at  any  time  at  the option of the noteholder into
Common Stock at the rate of $5.747 per share.   The  Notes  may  be  prepaid in
whole  or  in  part at the option of the Company commencing on July 1, 2000  at
redemption prices equal to 102% of the principal amount (plus accrued interest)
and declining to  101%  of  the  principal amount (plus accrued interest).  The
Notes may be prepaid prior to July  1, 2000 at a redemption price equal to 101%
of  the  principal  amount  (plus  accrued   interest)  under  certain  limited
circumstances.  The subordinated convertible debt  agreements contain terms and
financial  covenants  substantially  similar  to those in  the  Amended  Credit
Agreement.

                                  Assuming the  current level of debt under the
Amended Credit Agreement and current interest rates at March 31, 1998 (weighted
average rate of 9.11%) SMC annual debt service in  1998  would be approximately
$2,700,000  in  interest paid.  In addition, the Company has  1998  obligations
under a capital lease of $151,000.

                                  From  the  funds  borrowed by SMC pursuant to
the Amended Credit Agreement and the subordinated convertible  debt agreements,
$13,000,000  was  loaned  to  Standard  Life  pursuant to an Unsecured  Surplus
Debenture Agreement (a "Surplus Debenture") which  requires  Standard  Life  to
make quarterly interest payments to SMC at a variable corporate base rate (8.5%
at  March  31,  1998)  plus  2%  per  annum,  and  annual principal payments of
$1,000,000 per year beginning in 2007 and concluding in 2019.  The interest and
principal payments are subject to quarterly approval  by the Indiana Department
of Insurance, depending upon satisfaction of certain financial  tests  relating
to  levels  of Standard Life's capital and surplus and general approval of  the
Commissioner of the Indiana Department of Insurance.  SMC currently anticipates
these quarterly  approvals will be granted.  Assuming the approvals are granted
and the March 31,  1998  interest  rate  of  10.5%  continues in 1998, SMC will
receive interest income of $1,365,000 from its Surplus Debenture receivable for
1998.

                                  Dividends  from  Standard  Life  to  SMC  are
limited by laws applicable to insurance companies.   As  an  Indiana  domiciled
insurance  company,  Standard Life may pay a dividend or distribution from  its
surplus profits, without  the prior approval of the Commissioner of the Indiana
Department of Insurance, if  the  dividend  or  distribution, together with all
other dividends and distributions paid within the preceding twelve months, does
not exceed the greater of (i) net gain from operations  or (ii) 10% of surplus,
in  each case as shown in its preceding annual statutory financial  statements.
Also,  regulatory  approval  is  required  when  dividends  to  be  paid exceed
unassigned  statutory surplus.  For the year ended December 31, 1997,  Standard
Life reported  statutory net gain from operations before realized capital gains
of $2,374,000 and  statutory  surplus of $25,923,000, which includes unassigned
surplus of $1,693,000.  Standard  Life  paid  dividends  of $1,600,000 in 1997.
During  1998,  Standard  Life  can  pay  dividends of approximately  $2,500,000
without regulatory approval.

                                  As  a  North   Carolina  domiciled  insurance
company, Savers Life may pay a dividend or distribution  from  its  capital and
surplus,  without  the  prior  approval  of the North Carolina Commissioner  of
Insurance, if the dividend or distribution  together  with  all other dividends
and distributions paid within the preceding twelve months, does  not exceed the
lesser of (i) net gain from operations or (ii) 10% of capital and  surplus,  in
each  case  as  shown  in  its preceding annual statutory financial statements.
Savers Life was not allowed  to  pay  a  dividend in 1996 or 1997 without prior
North Carolina Department of Insurance approval due to its statutory net losses
in 1995 and 1996.  Savers Life will not be  permitted  to pay dividends in 1998
without such approval.

                                  SMC anticipates the available  cash  from its
existing  working  capital,  plus  anticipated 1998 dividends, management fees,
rental income and interest payments on its Surplus Debenture receivable will be
more  than  adequate  to  meet  its  anticipated  "parent  company  only"  cash
requirements for 1998.

                                  SMC  has a note receivable of $2,858,000 from
an affiliate and a note payable of $2,858,000  to  a different affiliate.  This
note receivable and note payable are eliminated in the  consolidated  financial
statements.

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

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

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

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

                                  Commencing January  1,  1995,  Standard  Life
began  to  reinsure  a  portion  of  its  annuity  business.   This reinsurance
agreement  has allowed the Company to write volumes of business that  it  would
not otherwise  have  been able to write due to regulatory restrictions based on
its ratio of surplus to  liabilities as determined by regulatory authorities in
the State of Florida.  By  reinsuring  a  portion  of the annuity business, the
liability growth is slowed, thereby avoiding the erosion of surplus that occurs
in  periods  of  increasing  sales.   If  the  Company's ratio  of  surplus  to
liabilities falls below 4%, the State of Florida  could  prohibit  the  Company
from  writing  new  business  in  Florida.   Standard  Life's  largest  annuity
reinsurer  at  March  31,  1998, Winterthur, is rated "A" ("Excellent") by A.M.
Best.  From January 1, 1995 to August 31, 1995, approximately 70% of certain of
Standard Life's annuity business  produced  was ceded.  Standard Life decreased
the quota-share portion of business ceded to  50%  at  September  1,  1995  and
further  reduced  it to 25% effective April 1, 1996 to reflect the reduced need
for additional capital and increase current earnings potential.  This reduction
was possible since  the  surplus strain experienced by Standard Life was not as
great as originally anticipated  as  a  result  of lower than expected sales in
1995  and  the  increase  in  surplus  resulting  from  the   sale   of   First
International.   In  addition,  Standard  Life's ability to retain business was
further  increased by the capital contribution  of  $2,400,000  in  the  second
quarter of  1997.   Winterthur limits dividends and other transfers by Standard
Life to SMC in certain circumstances.

                                  Management  believes  that  operational  cash
flow  of  Standard  Life  will  be sufficient to meet its anticipated needs for
1998.  As of March 31, 1998, Standard  Life  had  statutory capital and surplus
for regulatory purposes of $26,630,000 compared to  $25,923,000 at December 31,
1997.  Standard Life produced statutory net gain from  operations  of  $388,000
and  $2,374,000  for  the  three months ended March 31, 1998 and the year ended
December 31, 1997, respectively.   SMC  contributed $2,400,000 to Standard Life
in the second quarter of 1997 to facilitate growth in new premiums written.  As
the life insurance and annuity business produced  by  Standard  Life  and Dixie
National Life increases, Standard Life expects to continue to satisfy statutory
capital  and  surplus  requirements  through  statutory  profits,  through  the
continued  reinsurance of a portion of its new business, and through additional
capital contributions  by  SMC.   Net  cash flow from operations on a statutory
basis of Standard Life, after payment of  benefits  and operating expenses, was
$19,588,000  and  $17,921,000  for  the  years  ended  December  31,  1997  and
December  31, 1996, respectively.  If the need arises for  cash  which  is  not
readily available,  additional  liquidity  could  be  obtained from the sale of
invested assets.

                                  State insurance regulatory authorities impose
minimum risk-based capital ("RBC") requirements on insurance  enterprises  that
were  developed  by  the  NAIC.  The formulas for determining the amount of RBC
specify various weighting factors  that  are  applied  to financial balances or
various levels of activity based on the perceived degree  of  risk.  Regulatory
compliance  is  determined  by  a  ratio  (the "RBC Ratio") of the enterprise's
regulatory total adjusted capital, as defined  by  the  NAIC, to its authorized
control level RBC, as defined by the NAIC. Enterprises below  specific  trigger
points  or  ratios are classified within certain levels, each of which requires
specified corrective  action.   The  RBC  Ratio  for  Standard  Life  and Dixie
National Life were in excess of 400% of the minimum RBC requirements and Savers
Life  was  in  excess  of  300%;  accordingly,  the  subsidiaries  meet the RBC
requirements.

                                  Standard  Life's acquisition of Shelby  Life,
and merger of Shelby Life into Standard Life,  effective  November  1,  1996 is
anticipated  to  have  a  positive effect on Standard Life's liquidity and cash
flows.  Shelby Life ceased  writing  new  business  effective November 1, 1996,
thus reducing the surplus strain normally associated  with  the issuance of new
policies.   The  anticipated  profits from Shelby Life's book of  business  are
expected to exceed the related  interest expense connected with the $13,000,000
of  Surplus  Debentures  issued  by  Standard   Life  in  connection  with  the
acquisition of Shelby Life.

                                  SMC's acquisition of Savers Life at March 12,
1998  is  anticipated to have a positive effect on  SMC's  liquidity  and  cash
flows.  SMC  anticipates  that  existing  working capital, unused proceeds from
borrowings under the Amended Credit Agreement  and  management  fees  by Savers
Life will be adequate to cover debt service on the additional borrowings  under
the Amended Credit Agreement through 1998.

                                  INTERNATIONAL  OPERATIONS.   The consolidated
balance  sheet  of the Company at March 31, 1998, includes a $1,041,000  credit
representing the  negative  goodwill  on  the  purchase  of Standard Management
International which will be amortized into future earnings.   This amortization
is a non-cash credit to the Company statements of operations.

                                  Standard  Management International  dividends
are limited to its accumulated earnings without  regulatory approval.  Standard
Management International and Premier Life (Luxembourg)  were  not  permitted to
pay  dividends  in 1997 due to accumulated losses.  Premier Life (Bermuda)  did
not pay dividends  in  1997.   SMC does not anticipate any dividends from these
companies in 1998.

                                  Due  to  the  nature  of unit-linked products
issued  by  Standard  Management  International, which represent  over  90%  of
Standard Management International portfolio's assets, the investment risk rests
with the policyholder.  Investment  risk  for Standard Management International
exists where Standard Management International  makes investment decisions with
respect  to  the  remaining traditional business and  for  the  assets  backing
certain actuarial and  regulatory  reserves.   The investments underlying these
liabilities  mostly  represent  short-term  investments   and   fixed  maturity
securities.   These  short-term  investments and fixed maturity securities  are
normally bought and/or disposed of only on the advice of independent consulting
actuaries who perform an annual analysis  comparing  anticipated  cash flows on
the insurance portfolio with the cash flows from the fixed maturity securities.
Any resulting material mismatches are then covered by adjusting the  securities
in the investment portfolio as appropriate.

FACTORS THAT MAY AFFECT FUTURE RESULTS

                                  MERGERS,   ACQUISITIONS  AND  CONSOLIDATIONS.
The U.S. insurance industry has experienced an  increasing  number  of mergers,
acquisitions,  consolidations  and  sales  of  certain  business  lines.  These
consolidations  have been driven by a need to reduce costs of distribution  and
overhead and maintain  business in force.  Additionally, increased competition,
regulatory capital requirements  and  technology costs have also contributed to
the  level of consolidation in the industry.   These  forces  are  expected  to
continue as is the level of industry consolidation.

                                  FOREIGN  CURRENCY  RISK.  Standard Management
International policyholders invest in assets denominated  in  a  wide  range of
currencies.  Policyholders effectively bear the currency risk, if any, as these
investments   are   matched   by  policyholder  separate  account  liabilities.
Therefore, their investment and  currency risk is limited to premiums they have
paid.  Policyholders are not permitted to invest directly into options, futures
and  derivatives.   Standard  Management  International  could  be  exposed  to
currency  fluctuations  if  currencies   within   the  conventional  investment
portfolio  or  certain  actuarial  reserves  are mismatched.   The  assets  and
liabilities  of  this portfolio and the reserves  are  continually  matched  by
Standard Management  International  and at regular intervals by the independent
actuary.   In  addition,  Premier  Life (Luxembourg)  shareholders'  equity  is
denominated in Luxembourg francs.  Premier Life (Luxembourg) does not hedge its
translation risk because its shareholders'  equity  will  remain  in Luxembourg
francs for the foreseeable future and no significant realized foreign  exchange
gains or losses are anticipated.

                                  UNCERTAINTIES  REGARDING  INTANGIBLE  ASSETS.
Included in the Company's financial statements as of March 31, 1998 are certain
assets that are valued for financial statement purposes primarily on the  basis
of  assumptions  established by the Company's management.  These assets include
deferred acquisition costs, present value of future profits, costs in excess of
net assets acquired  and  organization  and  deferred debt issuance costs.  The
total  value  of  these  assets reflected in the March  31,  1998  consolidated
balance sheet aggregated $54,457,000  or  7%  of  the  Company's  assets.   The
Company  has  established  procedures  to  periodically  review the assumptions
utilized to value these assets and determine the need to make  any  adjustments
in such values in the Company's consolidated financial statements.  The Company
has determined that the assumptions utilized in the initial valuation  of these
assets are consistent with the operations of the Company as of March 31, 1998.

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

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

                                  SAFE  HARBOR  PROVISIONS.   All   statements,
trend  analyses,  and  other information contained in this Quarterly Report  on
Form 10-Q or any document  incorporated by reference herein relative to markets
for the Company's products and  trends in the Company's operations or financial
results, as well as other statements  including  words  such  as  "anticipate,"
"believe,"  "plan,""estimate,""expect,""intend," and other similar expressions,
constitute forward-looking  statements  under the Private Securities Litigation
Reform Act of 1995.  These forward-looking  statements are subject to known and
unknown risks, uncertainties and other factors  which  may cause actual results
to  be  materially  different  from  those contemplated by the  forward-looking
statements.  Such factors include, among  other  things:   (1) general economic
conditions and other factors, including prevailing interest  rate levels, stock
market performance and health care inflation, which may affect  the  ability of
the Company to sell its products, the market value of the Company's investments
and  the  lapse  rate  and  profitability  of  the  Company's policies; (2) the
Company's ability to achieve anticipated levels of operational  efficiencies at
recently acquired companies, as well as through other cost-saving  initiatives;
(3)  customer  response  to  new  products, distribution channels and marketing
initiatives; (4) mortality, morbidity,  usage of health care services and other
factors which may affect the profitability of the Company's insurance products;
(5) changes in the Federal income tax laws  and regulation which may affect the
relative  tax  advantages  of some of the Company's  products;  (6)  increasing
competition in the sale of the  Company's  products;  (7) regulatory changes or
actions, including those relating to regulation of financial services affecting
(among  other  things)  bank  sales  and  underwriting  of insurance  products,
regulation  of  the sale, underwriting and pricing of insurance  products,  and
health care regulation  affecting  the  Company's supplemental health insurance
products; (8) the availability and terms  of  future  acquisitions; and (9) the
risk  factors  or  uncertainties  listed  from  time to time  in  any  document
incorporated by reference herein.
<PAGE>

         STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                        ___________________

                          PART II.  OTHER INFORMATION


ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS

                                  At   the   Company's   Special   Meeting   of
Stockholders held on March 3, 1998, the following proposal was approved:

<TABLE>
<CAPTION>
                                                                    Shares                Shares
                                           Shares For               Against             Abstaining
<S>                                         <C>                     <C>                   <C>
Approve the issuance of Common Stock in
connection with the acquisition by SMC of
Savers Life Insurance Company               2,844,250               126,294               6,658
</TABLE>

      A total of 2,977,202 shares were present  in  person  or  by proxy at the
Special Meeting of Stockholders.

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

(a)  EXHIBITS

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

(b)  REPORTS ON FORM 8-K

      A report on Form 8-K dated March 25, 1998, was filed  with the Commission
to  report under Items 2 and 7 the acquisition of Savers Life  effective  March
12, 1998.
<PAGE>

         STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                        ___________________

                                  SIGNATURES

      Pursuant  to the requirements 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.


Dated: May 14, 1998


                                             STANDARD MANAGEMENT CORPORATION
                                                      (Registrant)

                                            By:     RONALD D. HUNTER
                                            Ronald D. Hunter
                                            Chairman  of the  Board,  President
                                            and
                                            Chief Executive Officer
                                            (Principal Executive Officer)

                                            By:   GERALD R. HOCHGESANG
                                            Gerald R. Hochgesang
                                            Senior Vice President
                                            (Chief Accounting Officer)