SECURITIES AND EXCHANGE COMMISSION
                            WASHINGTON, D.C. 20549


                                   FORM 8-K


              CURRENT REPORT PURSUANT TO SECTION 13 OR 15(D) OF
                          THE SECURITIES ACT OF 1934



Date of Report (Date of the earliest event reported):  May 22, 1998  (March
12, 1998)




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


          INDIANA             0-20882           NO. 35-1773567
  (State or other           (Commission        (I.R.S. Employer
    jurisdiction           File Number)       Identification No.)
  of incorporation)


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



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


                                N/A
   (Former name or former address, if changed since last report)








<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.

The following financial statements are filed as part of this report:

(a)   Audited Financial Statements of Savers Life Insurance Company:

            Independent Auditor's report

            Balance Sheets as of December 31, 1997 and 1996

            Statements of Stockholders' Equity for the years ended
            December 31, 1997, 1996 and 1995

            Statements of Income for the years ended
            December 31, 1997, 1996 and 1995

            Statements of Cash Flows for the years ended
            December 31, 1997, 1996 and 1995

            Notes to Financial Statements

(b)   Pro Forma Financial Information:

      Standard Management Corporation
      Pro Forma Combined Financial Statements (Unaudited)

            Pro Forma Combined Balance Sheet as of December 31, 1997
            (Unaudited)

            Pro Forma Combined Statement of Operations for the year ended
            December 31, 1997 (Unaudited)

            Notes to Pro Forma Combined Financial Statements (Unaudited)






<PAGE>


Board of Directors and Stockholders
Savers Life Insurance Company
Winston-Salem, North Carolina


INDEPENDENT AUDITOR'S REPORT

We  have  audited  the  accompanying  balance  sheets  of Savers Life Insurance
Company  as  of  December  31,  1997  and 1996, and the related  statements  of
stockholders' equity, income, and cash flows for each of the three years in the
period  ended  December  31,  1997.   These   financial   statements   are  the
responsibility  of  the Company's management.  Our responsibility is to express
an opinion on these financial statements based on our audits.

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

In our opinion, the financial statements referred  to  above present fairly, in
all material respects, the financial position of Savers  Life Insurance Company
as  of  December 31, 1997 and 1996, and the results of its operations  and  its
cash flows  for  each of the three years in the period ended December 31, 1997,
in conformity with generally accepted accounting principles.



D.E. Gatewood and Company


CERTIFIED PUBLIC ACCOUNTANTS

Winston-Salem, North Carolina

February 26, 1998, except for
Note 17, as to which the date
is March 3, 1998


<PAGE>

                   SAVERS LIFE INSURANCE COMPANY
                   WINSTON-SALEM, NORTH CAROLINA

                                BALANCE SHEETS
                          DECEMBER 31, 1997 AND 1996
               (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                    ASSETS

<TABLE>
<CAPTION>
                                                                      1997                              1996
<S>                                                                   <C>                               <C>
Investments:
         Certificates of deposit                                      $25,377                           $30,495
         Debt securities, held for investment,
           at amortized cost (fair value $1,030 and $16,050)          1,037                             17,442
         Debt securities, available for sale, at fair value
           (amortized cost $20,504 and $7,992)                        20,564                            7,585
         Preferred stocks, market (cost $133 and $133)                50                                50
         Common stocks, market (cost $2,507 and $2,737)               3,787                             3,241
         Mortgage loans - secured                                     5,221                             6,760
         Real estate (less accumulated depreciation of $64 and $52)   2,403                             2,414
           TOTAL INVESTMENTS                                          $58,439                           $67,987
Cash and cash equivalents                                             10,721                            6,702
Accrued investment income                                             597                               721
Accounts receivable                                                   140                               55
Refundable income taxes                                               2                                 298
Deferred income taxes                                                 1,397                             1,088
Reinsurance receivables                                               268                               296
Equipment, at cost, less accumulated depreciation of $407 and $407    68                                115
Deferred acquisition cost, net of amortization                        1,284                             3,962
Other assets                                                          5                                 5
           TOTAL ASSETS                                               $72,921                           $81,229
</TABLE>

                        LIABILITIES AND STOCKHOLDERS' EQUITY


<TABLE>
<CAPTION>
Policy Liabilities:
<S>                                                                   <C>                               <C>
      Future policy benefits - annuities                              $45,171                           $47,342
      Future policy benefits - life                                   3,151                             3,267
      Unearned premiums and health benefit reserves                   2,953                             3,808
Claim liability                                                       6,513                             10,455
Accrued expenses                                                      407                               779
            TOTAL LIABILITIES                                         $58,195                           $65,651
Stockholders' Equity:
      Capital stock - no par value-stated value $1 per share:
            20,000,000 shares authorized; Issued and outstanding:     $1,780                            $1,780
            1,779,908 shares
      Additional paid-in capital                                      1,823                             1,823
      Retained earnings:
            Appropriated                                              1,401                             1,365
            Unappropriated                                            8,892                             10,597
      Net unrealized investment gains                                 830                               13
            TOTAL STOCKHOLDERS' EQUITY                                $14,726                           $15,578
            TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                $72,921                           $81,229
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS


<PAGE>

                   SAVERS LIFE INSURANCE COMPANY
                   WINSTON-SALEM, NORTH CAROLINA

                         STATEMENTS OF STOCKHOLDERS' EQUITY
                FOR THE YEARS ENDED DECEMBER 31, 1997, 1996, AND 1995
                               (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                     1997                       1996                       1995
<S>                                                  <C>                        <C>                        <C>
Capital Stock:
         Balance at beginning of year                $1,780                     $3,552                     $3,572
         Change in stated value                      --                         (1,776)                    --
         Capital stock purchased-stated value        --                         --                        (45)
         Stated value of common stock issued         --                         4                          25
         Balance at end of year                      $1,780                     $1,780                     $3,552
Additional Paid-In Capital:
         Balance at beginning of year                $1,823                     $33                        --
         Change in stated value                      --                         1,776                                     --
         Exercise of stock options                   --                         14                         33
         Balance at end of year                      $1,823                     $1,823                     $33
Retained Earnings:
         Appropriated:
           Balance at beginning of year              $1,365                     $823                       $325
           Change in asset valuation reserve         36                         542                        498
           Balance at end of year                    $1,401                     $1,365                     $823
         Unappropriated:
           Balance at beginning of year              $10,597                    $12,830                    $12,468
           Net income (loss)                         (1,669)                    (1,692)                    961
           Capital stock purchased in excess of      --                         --                         (101)
           stated value
           Transfer of asset valuation reserve       (36)                       (541)                      (498)
           Balance at end of year                    $8,892                     $10,597                    $12,830
Net unrealized investment gains (losses):
         Balance at beginning of year                $13                        $12                        $(584)
         Net changes in unrealized capital gains     817                        1                          596
         Balance at end of year                      $830                       $13                        $12
TOTAL STOCKHOLDERS' EQUITY                           $14,726                    $15,578                    $17,250
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


<PAGE>

                   SAVERS LIFE INSURANCE COMPANY
                   WINSTON-SALEM, NORTH CAROLINA

                                STATEMENTS OF INCOME
                FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)



<TABLE>
<CAPTION>
                                                     1997                       1996                       1995
<S>                                                  <C>                        <C>                        <C>
REVENUES:
      Premium considerations -
            Life and health                          $36,058                    $47,855                    $49,946
            Policy charges                           254                        275                        295
      Investment income, net of expenses
            (1997 - $270; 1996 - $266; 1995 - $221)  4,394                      4,569                      4,851
      Fees from Keyport and other income             2,183                      1,041                      1,665
      Realized investment gains                      158                        170                        387
                                                     $43,047                    $53,910                    $57,144
BENEFITS AND EXPENSES:
      Increase (decrease) in future policy
            benefits - life and health               $78                        $(700)                     $(2,069)
      Annuity benefits                               136                        287                        170
      Claims expenses                                29,162                     38,748                     38,748
      Interest credited on interest-sensitive
            annuities and universal life policies    2,472                      2,543                      2,787
      Commissions expenses                           6,492                      8,248                      9,058
      General expenses                               2,940                      3,194                      3,326
      Insurance taxes, licenses and fees
            excluding income taxes                   1,137                      1,391                      1,495
      Decrease in deferred acquisition costs         2,939                      3,057                      2,552
                                                     $45,356                    $56,768                    $56,067
INCOME (LOSS) BEFORE INCOME TAXES                    $(2,309)                   $(2,858)                   $1,077
INCOME TAXES:
      Current                                        $97                        $(86)                      $464
      Deferred                                       (737)                      (1,080)                    (348)
                                                     $(640)                     $(1,166)                   $116
NET INCOME (LOSS)                                    $(1,669)                   $(1,692)                   $961
NET INCOME (LOSS) PER SHARE:
      Net income (loss)                              $      (.94)               $      (.95)               $        .54
      Net income (loss) - assuming dilution          $      (.94)               $      (.95)               $        .53
</TABLE>

THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


<PAGE>

                   SAVERS LIFE INSURANCE COMPANY
                   WINSTON-SALEM, NORTH CAROLINA

                              STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                               (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                         1997                     1996                      1995
<S>                                                      <C>                      <C>                       <C>
OPERATING ACTIVITIES
         Net income (loss)                               $(1,669)                 $(1,692)                  $961
         Adjustments to reconcile net income to net cash
           used by operating activities:
              Amortization of deferred acquisition
                   costs and depreciation                $3,011                   $3,131                    $2,647
              Deferred income taxes                      (737)                    (1,080)                   (348)
              (Gain) loss on sale of fixed assets        6                        (2)                                     --
              Loss on sale of investments                (158)                    (170)                     (387)
              Accrual of bond discount/amortization of   188                      249                       231
              premium
         (Increase) decrease in assets:
           Unincorporated joint venture                  --                       --                        9
           Accrued investment income                     124                      (38)                      86
           Income tax receivables                        296                      (298)                     10
           Reinsurance receivables                       28                       62                        (65)
           Deferred acquisition costs                    (261)                    (342)                     (1,567)
           Other assets                                  --                       (1)                       35
           Accounts receivables                          (85)                     208                       339
         Increase (decrease) in liabilities:
           Policy liabilities                            (2,287)                  (49)                      (1,737)
           Unearned premiums and health benefit reserves (855)                    (864)                     (2,208)
           Claims liability                              (3,942)                  345                       2,114
           Accrued expenses                              (372)                    (53)                      (499)
           Current income tax                            --                       (177)                     177
           TOTAL ADJUSTMENTS                             $(5,044)                 $921                      $(1,163)
              NET CASH USED BY OPERATING ACTIVITIES      $(6,713)                 $(771)                    $(202)
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


<PAGE>

                   SAVERS LIFE INSURANCE COMPANY
                   WINSTON-SALEM, NORTH CAROLINA

                              STATEMENTS OF CASH FLOWS
                FOR THE YEARS ENDED DECEMBER 31, 1997, 1996 AND 1995
                               (DOLLARS IN THOUSANDS)


<TABLE>
<CAPTION>
                                                              1997                    1996                    1995
<S>                                                           <C>                     <C>                     <C>
INVESTING ACTIVITIES
        Purchase of fixed assets                              $(11)                   $(61)                   $(21)
        Sale of fixed assets                                  3                       3                       --
        Sales of fixed maturities available for sale and      19,948                  18,575                  20,119
        equity securities
        Purchase of fixed maturities available for sale and   (15,869)                (19,429)                (17,170)
        equity securities
        Purchase of certificates of deposit                   (40,893)                (47,033)                (38,714)
        Proceeds from matured certificates of deposit         46,011                  40,221                  39,977
        Mortgage loans disbursed                              (6,123)                 (8,085)                 (7,951)
        Principal collected on mortgage loans                 7,234                   8,259                   6,327
        Real estate purchased                                 (20)                    --                      (42)
        Real estate sold                                      452                     --                      --
          Net cash provided (used) by investing activities    $10,732                 $(7,550)                $2,525
FINANCING ACTIVITIES
        Proceeds from exercise of stock options               --                      $18                     $58
        Capital stock purchased                               --                      --                      (146)
          Net cash provided (used) by financing activities    --                      $18                     $(88)
Net increase (decrease) in cash and cash equivalents          $4,019                  $(8,303)                $2,235
Cash and cash equivalents at beginning of year                6,702                   15,005                  12,770
Cash and cash equivalents at end of year                      $10,721                 $6,702                  $15,005
Supplemental disclosures of cash flow information:
        Cash paid during the year for:
          Interest                                            $3                      $9                      $4
          Income taxes                                        $(199)                  $389                    $277
</TABLE>


THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.


<PAGE>

                   SAVERS LIFE INSURANCE COMPANY
                   WINSTON-SALEM, NORTH CAROLINA

                        NOTES TO FINANCIAL STATEMENTS
                              DECEMBER 31, 1997

NOTE 1:     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

      NATURE OF OPERATIONS  -  Savers  Life  Insurance  Company (the "Company")
      provides life, accident and health insurance services  in North Carolina,
      South Carolina, Virginia and Florida.

      The  accompanying  financial  statements  are presented on the  basis  of
      generally accepted accounting principles (GAAP)  which  vary  in  certain
      respects  from  reporting  practices  prescribed  or  permitted  by state
      insurance regulatory authorities and include the following policies:

      INVESTMENTS - Cash on deposit in savings and loan associations and  banks
      (including  certificates  of  deposit) is stated at cost, which is market
      value.  The Company classifies  investments  in  debt  securities  in two
      categories:  held for investment and available for sale.  Debt securities
      which the Company has the positive intent and ability to hold to maturity
      are classified  as held for investment and are carried at amortized cost,
      net of write-downs  for  other  than  temporary  declines in value.  Debt
      securities  which  might  be  sold  prior to maturity are  classified  as
      available for sale and carried at fair value.

      Available for sale debt securities are  written down (as realized losses)
      to fair value as the new cost basis for other  than temporary declines in
      value.  Unrealized gains and losses, related to  available  for sale debt
      securities, are reflected in stockholders' equity.  Unrealized  gains and
      losses  on  common and preferred stocks carried at market value are  also
      reflected in  stockholders'  equity.  Provisions for impairments that are
      other than temporary are included  in  net  realized  capital  gains  and
      losses.  Common and preferred stocks are shown at market value.  Realized
      investment gains and losses are determined by specific identification and
      are presented as a separate component of net income.

      Mortgage  loans are shown at their unpaid balances, net of allowances for
      uncollectible  amounts, and are secured by deeds of trust on real estate.
      Allowances for uncollectible  loans  are  estimates based on management's
      judgment,  but  there  were no allowances for  uncollectible  amounts  at
      December 31, 1997 and 1996.   Mortgage  loan  interest rates are adjusted
      periodically based on the prime lending rate. Interest income on impaired
      loans  is  recognized  when  received.  Two real estate  properties  were
      acquired through foreclosure.   One  of these properties was acquired and
      sold during 1997.  The book value of the  remaining  property at December
      31, 1997 was $45,000.   Investment real estate consisting  of undeveloped
      land held for sale is carried at fair value less estimated selling costs.
      A property held for the production of income and also partially  occupied
      by  the  Company  is  carried at depreciated cost plus capital additions.
      The accumulated depreciation  for  real estate was $64,000 and $52,000 at
      December  31, 1997 and 1996, respectively.   Depreciation  is  calculated
      using the straight-line method based on a useful life of 39 years.

      RECOGNITION  OF INCOME AND RELATED COSTS - Premiums on life insurance are
      reported as revenue  when  due.  Fees on annuities are reported as earned
      when  due.  Expenses are reported  in  a  manner  which  results  in  the
      recognition  of  profits  over  the  life of the contracts.  Benefits and
      expenses are associated with premiums  by  means  of  the  provisions for
      future  policy  benefits,  unearned  premiums and amortization of  policy
      acquisition costs.

      Investment income is accrued and recognized as earned.


      EQUIPMENT   -  Equipment is stated at cost;  depreciation  is  calculated
      using an accelerated  method  for  assets  acquired  after  1980  and the
      straight-line method for assets acquired prior to 1981.  The depreciation
      provision   is  based  on  the  estimated  useful  lives  of  the  assets
      (automobiles - 5 years; office equipment and furniture - 5 to 10 years).

      DEFERRED  POLICY  ACQUISITION  COSTS    -   Certain  costs  of  acquiring
      insurance business are deferred.  These costs, all of which vary with and
      are  primarily  related  to  the  production  of  new  business,  consist
      principally  of commissions, certain expenses of underwriting and issuing
      contracts and certain agency expenses.  Deferred policy acquisition costs
      for traditional  life  business  are  amortized  over  the premium-paying
      periods of the related policies in proportion to the ratio  of the annual
      premium  revenue  to  the  total  anticipated  premium revenue.  Deferred
      policy  acquisition  costs  for  other  lines of business  are  generally
      amortized over the life of the contract or  at  a  constant rate based on
      the estimated gross profits expected to be realized.  These costs and the
      amortization  periods  are  the  estimates  of management  based  on  the
      expected period of benefit from the costs incurred.

      Deferred policy acquisition costs would be written off to the extent that
      it is determined that future policy premiums  and  investment  income  or
      gross profits would not be adequate to cover related losses and expenses.

      Due  to  the  unprofitability of the major medical product line, no costs
      associated with  this  line  were deferred during 1997 and 1996. Deferred
      policy acquisition costs relating  to  the  major  medical  product  line
      remaining  from  prior  years  were  amortized  over  an  18-month period
      beginning  in  1996 and ending June 30, 1997. Deferred acquisition  costs
      relating to Medicare  supplement  policies of a type no longer offered by
      the Company were written off in 1996.

      INCOME TAXES  -  Income tax provisions  are based on earnings reported in
      the financial statements.  Deferred income  taxes  relate  principally to
      the  deferred  acquisition  costs  and  the  liability for future  policy
      benefits.

      CLAIMS PAYABLE  -  The Company establishes provisions  for  claims in the
      process  of  review  and  for  claims  incurred but not reported.   These
      provisions are estimates of the ultimate cost of incurred claims based on
      historical payment patterns using actuarial  techniques.   Claims payable
      were   $6,513,000   and  $10,455,000  at  December  31,  1997  and  1996,
      respectively.

      NET INCOME PER SHARE - Earnings per share amounts and earnings per share-
      assuming dilution amounts  are  computed  using certain assumptions about
      issuance of common stock and net income available  to common stockholders
      as follows (dollars in thousands, except per share amounts):

<TABLE>
<CAPTION>
                                                    Net Income                                           Per Share
                                                      (Loss)                     Shares                   Amount
<S>                                             <C>                        <C>                       <C>
1997:
      Basic EPS                                 $(1,669)                   1,779,908                 $     (.94)
      Diluted EPS                               $(1,669)                   1,779,908                 $     (.94)
1996:
      Basic EPS                                 $(1,692)                   1,779,908                 $     (.95)
      Diluted EPS                               $(1,692)                   1,779,908                 $     (.95)
1995:
      Basic EPS                                 $961                       1,779,747                 $       .54
      Effect of Diluted Securities:
          Stock Options                         --                         17,689                    --
      Diluted EPS                               $961                       1,797,436                 $       .53
</TABLE>

      Options to purchase 62,974, 64,299 and 74,748 shares  were outstanding at
      December 31, 1997, 1996 and 1995, respectively.  These  options  were not
      included in the computation of diluted EPS for 1997 and 1996 because they
      would be antidilutive in years with a net loss.

      APPROPRIATED  RETAINED  EARNINGS  -  Appropriated retained earnings  have
      been computed according to  a  statutory formula specified by regulations
      to provide for possible losses on securities.

      USE  OF  ESTIMATES   -   The  preparation  of  financial  statements,  in
      conformity  with  generally  accepted   accounting  principles,  requires
      management  to make estimates and assumptions  that  affect  the  amounts
      reported in the  financial  statements  and  accompanying  notes.  Actual
      results could differ from reported results using those estimates.

      RECLASSIFICATION  -  Certain 1996 and 1995 amounts have been reclassified
      to  conform  with  classifications  in 1997.  The reclassification had no
      effect on net income.



<PAGE>

                   SAVERS LIFE INSURANCE COMPANY
                   WINSTON-SALEM, NORTH CAROLINA

                        NOTES TO FINANCIAL STATEMENTS
                              DECEMBER 31, 1997

      ACCOUNTING CHANGES
      EARNINGS PER SHARE - Effective for the  year ended December 31, 1997, the
      Company adopted Statement of Financial Accounting  Standards  (SFAS)  No.
      128,  which  requires  dual  presentation  of earnings per share amounts.
      Basic earnings per share are calculated using  only  the weighted average
      number  of  shares  of  common  stock outstanding for the year.   Diluted
      earnings per share reflects the potential  dilution  that  could occur if
      options were exercised and resulted in the issuance of common  stock that
      would  share in the earnings of the Company.  Earnings per share  amounts
      were restated for 1996 and 1995 as follows:

<TABLE>
<CAPTION>
                                   Previously Reported                     As Restated
<S>                           <C>           <C>                  <C>               <C>
                                 Primary     Fully Diluted           Basic            Diluted
                                   EPS            EPS                 EPS               EPS
      1996                    $  (.94)      $   (.94)            $  (.95)          $  (.95)
      1995                    $    .53      $     .53            $    .54          $    .53
</TABLE>

      ACCOUNTING  BY  CREDITORS  FOR  IMPAIRMENT OF A LOAN  -  As of January 1,
      1995, the Company adopted SFAS No.  114,  "Accounting  by  Creditors  for
      Impairment  of  a  Loan",  and SFAS No. 118, "Accounting by Creditors for
      Impairment of a Loan - Income Recognition and Disclosure".  In accordance
      with these standards, a loan  is  considered impaired when it is probable
      that the Company will be unable to  collect  amounts due according to the
      contractual terms of the loan agreement.  For  impaired loans, a specific
      impairment reserve would be established for the  difference  between  the
      recorded  investment  in  the  mortgage  loan  and  the fair value of the
      collateral. Adoption of these standards had no impact on 1995 net income.

      ACCOUNTING  FOR  CERTAIN  INVESTMENTS  IN DEBT AND EQUITY  SECURITIES   -
      Effective for the year ended December 31,  1994, the Company adopted SFAS
      No.  115,  "Accounting  for  Certain  Investments   in  Debt  and  Equity
      Securities",  which requires the classification of debt  securities  into
      three  categories   and   equity  securities  into  two  categories.  The
      cumulative effect of this change increased the carrying value of bonds by
      $11,000 at January 1, 1994,   thus  increasing  stockholders'  equity  by
      $11,000.

NOTE 2:     POLICY LIABILITIES

      The  Company  markets  life, accident and health, single premium deferred
      and immediate annuity policies.   The  single  premium  deferred  annuity
      permits  the  policyholder  to  make  additional  premium payments to the
      Company.  The amount of such additional premium payments may be varied at
      the  policyholder's  discretion,  but  may  not be less  than  $0.5,  and
      premiums  may  be  withdrawn  upon  request as provided  in  the  annuity
      contract.   The  actual  interest  rate  guaranteed  by  the  Company  is
      determined by the Company's directors at the  beginning  of  each  policy
      year.   The  Company guarantees that the rate for future contract periods
      will not be less than as stated in the annuity contract.

      Liabilities for  future policy benefits on life insurance are provided on
      the  net  level  premium  valuation  method  based  on  estimated  future
      investment yield and  mortality  with interest rates ranging from 4.2% to
      5.0%.  Mortality  assumptions  are  drawn  from  the  1980  Commissioners
      Standard  Ordinary  Mortality  tables,  and   there   are  no  withdrawal
      assumptions  used  in  computing  the  future  policy  benefits  on  life
      insurance.   Since  the  reserves  are  based on estimates, the  ultimate
      liability may be more or less than such reserves.  The effects of changes
      in such estimated reserves are included in the results  of  operations in
      the period in which the estimates are changed.



<PAGE>

                   SAVERS LIFE INSURANCE COMPANY
                   WINSTON-SALEM, NORTH CAROLINA

                         NOTES TO FINANCIAL STATEMENTS
                               DECEMBER 31, 1997

NOTE 3:     INCOME TAXES

      Income tax expense (benefit) consists of (in thousands):
<TABLE>
<CAPTION>
                                                       1997                       1996                       1995
<S>                                                    <C>                        <C>                        <C>
Current taxes (benefits):
      Income - federal taxes                           $70                        $(115)                     $398
      Realized capital gains                           27                         29                         66
                                                       $97                        $(86)                      $464
Deferred taxes (benefits):
      Income - federal taxes                           (737)                      (1,080)                    (348)
            TOTAL                                      $(640)                     $(1,166)                   $116
</TABLE>

      The  tax effects of temporary differences that give rise to deferred  tax
      assets and deferred tax liabilities are presented below (in thousands):

<TABLE>
<CAPTION>
                                                        1997                           1996
<S>                                                     <C>                            <C>
Deferred tax assets:
      Net unrealized capital losses                     $--                            $469
      AMT tax credit carryovers                         435                            411
      Deferred policy acquisition costs                 2,400                          1,567
            Total gross assets                          $2,835                         $2,447
            Less valuation allowance                    435                            881
                 Assets net of valuation                $2,400                         $1,566
Deferred tax liabilities:
      Insurance reserves                                $575                           $478
      Net unrealized capital gains                      428                            --
            Total liabilities                           $1,003                         $478
Net deferred tax asset                                  $1,397                         $1,088
</TABLE>

      Net unrealized  capital  gains  and losses are presented in stockholders'
      equity net of deferred taxes.  Due  to  the uncertainty of future capital
      gains,  valuation  allowances  were  established  of  $-0-  and  $469,000
      December 31, 1997 and 1996, respectively.  Valuation allowances have also
      been established for AMT tax credit carryovers in the amounts of $435,000
      and  $411,000  for  the  years  ended  December   31,   1997   and  1996,
      respectively.   These  allowances  for the AMT tax credit carryovers  are
      estimates and have been established  because  management  believes  it is
      uncertain  that  the  AMT  tax  credits,  which  apply  only  against the
      Company's regular tax liability, can be utilized in the future.

      The  effective  income tax rate for 1997, 1996 and 1995 was approximately
      20%.  These amounts  vary  from  those  computed  by applying the current
      federal  income  tax  rate  of  34% to income before income  taxes.   The
      principal differences result from  special  life  insurance  company  tax
      deductions and the federal surtax exemption.

      For years beginning after December 31, 1983, the Tax Reform Act passed by
      Congress changed the tax laws concerning life insurance companies.  Under
      the  new law, certain timing differences relating to deferred taxes cease
      to exist.



<PAGE>

                   SAVERS LIFE INSURANCE COMPANY
                   WINSTON-SALEM, NORTH CAROLINA

                        NOTES TO FINANCIAL STATEMENTS
                              DECEMBER 31, 1997

      As required  by  the  Revenue  Reconciliation  Act  of  1990, the Company
      changed  its  method  of reporting policy acquisition costs  for  federal
      income tax purposes.  The 1990 Act required that the deduction for policy
      acquisition costs be determined based on prescribed percentages of annual
      net premiums, and spreads the deduction over a five-year period.

      Prior to January 1, 1984,  life  insurance  companies  were  taxed on the
      lesser  of taxable investment income or gain from operations (as  defined
      by the Internal  Revenue  Code)  plus  one-half of any excess of the gain
      from operations over taxable investment  income.   One-half of the excess
      of gain from operations over taxable investment income,  an  amount which
      is not currently subject to taxation, plus special deductions  allowed in
      computing the gain from operations, was set aside in a special memorandum
      tax account designated "policyholders' surplus account."

      The  accumulated  amount of income subject to current taxation, less  the
      tax thereon, was set  aside  in  another  special  memorandum tax account
      designated  "stockholders' surplus account."  At December  31,  1997  and
      1996, respectively,  the  Company,  on  a  tax  basis,  had  balances  of
      $18,000,000  and  $17,845,000  in  its  stockholders' surplus account and
      $72,000 in its policyholders' surplus account for both years.

NOTE 4:     STATUTORY ACCOUNTING RECONCILIATION

      Following are reconciliations of net earnings and stockholders' equity on
      the statutory basis to the GAAP basis (in thousands):

<TABLE>
<CAPTION>
                                                        1997                    1996                  1995
<S>                                                     <C>                     <C>                   <C>
Net losses - statutory basis                            $(38)                   $(582)                $(639)
Decrease in deferred acquisition costs                  (2,678)                 (2,715)               (985)
Adjustment to claim liabilities                         --                      (250)                 --
Adjustment to health reserves                           270                     717                   2,125
Adjustment to health premiums                           65                      19                    (84)
Interest Maintenance Reserve                            (25)                    39                    196
Deferred income taxes                                   737                     1,080                 348
            NET INCOME (LOSS) - GAAP BASIS              $(1,669)                $(1,692)              $961
Stockholders' equity - statutory basis                  $7,134                  $6,340                $6,934
Additions:
    Deferred acquisition costs                          1,284                   3,962                 6,677
   Deferred income taxes                                1,397                   1,088                 2
   Non-admitted assets                                  43                      69                    51
   Adjustment to health reserves                        1,986                   1,716                 1,249
   Asset valuation reserve                              1,401                   1,364                 823
   Interest Maintenance Reserve                         1,421                   1,446                 1,406
   Unrealized gains (losses) on marketable securities   60                      (407)                 108
      STOCKHOLDERS' EQUITY - GAAP BASIS                 $14,726                 $15,578               $17,250
</TABLE>

      Under applicable laws and regulations, cash dividends to stockholders are
      limited to the extent of statutory operating profits and realized capital
      gains.

      The  Company  files  financial  statements prepared  in  accordance  with
      statutory  accounting  practices  prescribed  or  permitted  by  domestic
      insurance  regulatory authorities.   The  principal  differences  between
      statutory financial  statements  and  financial  statements  prepared  in
      accordance  with  GAAP  are  that  statutory  financial statements do not
      reflect deferred policy acquisition costs and deferred income taxes, most
      bonds  are  carried  at  amortized  cost  and  reinsurance   assets   and
      liabilities  are  presented  net  of  reinsurance.   The Company's use of
      permitted  statutory  accounting  practices does not have  a  significant
      impact on statutory surplus.



<PAGE>

                   SAVERS LIFE INSURANCE COMPANY
                   WINSTON-SALEM, NORTH CAROLINA

                        NOTES TO FINANCIAL STATEMENTS
                              DECEMBER 31, 1997

      Statutory capital and surplus are subject to certain restrictions imposed
      by  state insurance departments as to  minimum  levels  and  payments  of
      dividends.   The  minimum  levels  of capital and surplus required by the
      North  Carolina  Department of Insurance  are  $1,200,000  and  $300,000,
      respectively.  The  Company  may  pay dividends without prior approval of
      the North Carolina Department of Insurance if the dividends and all other
      dividends and distributions within  the  past twelve months do not exceed
      the  lesser  of  statutory  basis  net gain from  operations  or  10%  of
      statutory capital and surplus.  Due to the Company's statutory net losses
      in 1997, 1996 and 1995, no dividends are allowed to be paid without prior
      approval of the North Carolina Department of Insurance.

NOTE 5:     CAPITAL STRUCTURE AND STOCKHOLDERS' EQUITY

      At December 31, 1997 the Company has  1,779,908  shares  of no par common
      stock issued and outstanding.  Common shares are voting and dividends are
      paid at the discretion of the Board of Directors.

      The Company purchased -0-, -0- and 22,457 shares of its own capital stock
      in 1997, 1996 and 1995, respectively, reducing the outstanding shares. On
      August 26, 1996, the Board of Directors adopted a resolution changing the
      stated  value  of the Company's stock from $2.00 per share to  $1.00  per
      share. The resolution  resulted  in  the  reduction  of the capital stock
      account  by $1,776,000 and the increase of the gross paid-in  surplus  by
      $1,776,000 in 1996.

NOTE 6:     STOCK OPTIONS

      On February  25,  1982, the Company's Board of Directors amended the 1980
      employee incentive  stock  option  plan  to qualify as an incentive stock
      option  plan for all key employees, under which  189,000  shares  of  the
      Company's authorized but unissued common stock were reserved for possible
      issuance.   The  grant  to any one individual could not exceed 20% of the
      shares covered by the plan.  The option price is the greater of $1.00 per
      share or the fair market value on the date of grant, as determined by the
      Board of Directors.  Options  expired  ten  years  after  the grant date.
      This plan expired January 21, 1990.

      On  April  25,  1984,  the  Company's stockholders approved an additional
      employee incentive stock option  plan  under  which  75,600 shares of the
      Company's  common  stock  were  reserved  for issuance to key  employees.
      Options under this plan expire ten years after  the  date  the  option is
      granted.   This  plan  expired  April  24,  1994.   On  May 22, 1995, the
      Company's stockholders approved an additional incentive stock option plan
      under which 50,000 shares of the Company's common stock were reserved for
      issuance  to  key  employees.  Options under this plan expire  ten  years
      after the date the option is granted.  This plan expires March 5, 2005.

      Under the plans, as  originally  issued,  options could be exercised over
      the option period in the following amounts:   none during the first year,
      twenty-five percent of the total shares in the  second  year  and twenty-
      five  percent of the total in each of the following three years,  and  in
      any year  prior  to  expiration an amount equal to options exercisable in
      prior years but unexercised.  However,  the  Company's Board of Directors
      adopted  a  resolution  on  December  22, 1996, whereby  all  outstanding
      options to purchase shares of the Company's common stock were declared to
      be fully vested as of that date.  Certain  options  would have expired on
      August  18,  1997  unless  sooner  exercised.   The  Company's  Board  of
      Directors amended the terms under which these options  were  granted  and
      extended their expiration date to March 31, 1998.

      The  option  price is equal to the fair market value on the date of grant
      for all plan options  outstanding December 31, 1997, as  follows (dollars
      in thousands, except per share):
                                              Number of
<TABLE>
<CAPTION>
            DATE OF GRANT                         SHARES               PRICE  TOTAL
            <S>                           <C>                <C>          <C> 

            August 19, 1987                6,600            $  5.33     $   35
            November 22, 1988             12,600               5.00         63
            November 28, 1989              9,375               4.80         45
            May 24, 1991                  10,000               5.20         52
            March 15, 1993                 8,749               5.60         49
            August 18, 1995               15,650               6.50        102
                                         $62,974               $346

</TABLE>
      The following is a summary of plan options outstanding at December 31,
      1997, all of which are exercisable:


                                                              Weighted
                                Actual and                     Average
                                 Weighted                     Remaining
                                  Average                    Contractual
<TABLE>
<CAPTION>
                          EXERCISE PRICE     NUMBER             LIFE
                            <C>               <C>              <C> 
                            $ 5.33            6,600            .25 years
                              5.00           12,600            .89 years
                              4.80            9,375           1.91 years
                              5.20           10,000           3.40 years
                              5.60            8,749           5.20 years
                              6.50           15,650           7.63 years

</TABLE>
      In addition to the plan options, 37,500 nonqualified options were granted
      to the owner of an insurance agency in 1992. At the end of 1997, 5,000 of
      these options had been exercised, and 32,500 were exercisable at an
      option price of $5.60 per share. The total option price was $182,000, and
      the fair market value was $329,000.

      The Company is a party  to  an  Agreement  and  Plan of Merger subject to
      approval  by  the  Company's stockholders, the stockholders  of  Standard
      Management Corporation  (SMC), the North Carolina Department of Insurance
      and other regulatory authorities.   The  Company's stockholders will have
      the opportunity to consider the Merger Agreement  at a special meeting to
      be  held  in March, 1998.  If the Merger Agreement is  approved  and  the
      merger  becomes   effective,   each  stock  option  that  is  outstanding
      immediately prior to the effective  time will be converted into the right
      to receive cash in an amount equal to  the  difference between 1.2  times
      the average trading price of SMC stock plus $1.50  per  option  share and
      the  per  share  exercise  price for such stock option.  At December  31,
      1997, the amount of the payment would be $294,000.

NOTE 7:     INVESTMENTS

      Debt securities at December 31 were as follows (in thousands)

<TABLE>
<CAPTION>
                                                                Gross                Gross
                                         Amortized           Unrealized           Unrealized            Fair
                                           Cost                 Gains               Losses              Value
<S>                                   <C>                  <C>                  <C>                 <C>
1997
Held for investment:
    U.S. Treasury securities and
     obligations of U.S. government
     agencies and corporations        $1,037               $--                  $7                  $1,030
Available for sale:
  U.S. Treasury securities and
     obligations of U.S. government
     agencies and corporations        $16,564              $88                  $28                 $16,624
  Other corporate securities          3,940                --                   --                  3,940
  Total available for sale            $20,504              $88                  $28                 $20,564
TOTAL DEBT SECURITIES                 $21,541              $88                  $35                 $21,594
    
                                                               Gross                Gross
                                         Amortized           Unrealized           Unrealized            Fair
                                           Cost                 Gains               Losses              Value
1996
Held for investment:
  U.S. Treasury securities and
     obligations of U.S. government
     agencies and corporations        $17,442              $10                  $1,402              $16,050
Available for sale:
  U.S. Treasury securities and
     obligations of U.S. government
     agencies and corporations        $7,388               $4                   $422                $6,970
  Other corporate securities          604                  11                   --                  615
  Total available for sale            $7,992               $15                  $422                $7,585
TOTAL DEBT SECURITIES                 $25,434              $25                  $1,824              $23,635
</TABLE>

  The  amortized  cost  and estimated  market  value  of  debt  securities,  by
  contractual maturity at  December  31,  1997, are shown below (in thousands).
  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.

<TABLE>
<CAPTION>
                                                        Amortized             Estimated
                                                          COST              MARKET VALUE

         <S>                                             <C>                  <C>>
         Due in one year or less                         $    82              $   82
         Due after one year through five years               503                 507
         Due after five years through ten years               55                  55
         Due after ten years                              20,901              20,950
                                                         $21,541             $21,594

</TABLE>
      Investments in "available for sale equity securities" were as follows (in
      thousands):

                                              Gross        Gross
<TABLE>
<CAPTION>
                                              Unrealized       Unrealized  Fair
                                      COST       GAINS          LOSSES    VALUE

         <S>                         <C>        <C>             <C>       <C>
         1997
         Equity securities           $2,640     $1,402          $205      $3,837

         1996
         Equity securities           $2,870       $655          $234      $3,291




<PAGE>

                   SAVERS LIFE INSURANCE COMPANY
                   WINSTON-SALEM, NORTH CAROLINA

                        NOTES TO FINANCIAL STATEMENTS
                              DECEMBER 31, 1997

  The  changes during 1997 in amounts affecting net unrealized gains and losses
  included in the separate component of stockholders' equity are as follows (in
  thousands)


</TABLE>
<TABLE>
<CAPTION>
                                                                     Net Unrealized Gains (Losses)
<S>                                                   <C>                           <C>                          <C>
                                                       Debt                      Equity                    Total
Net unrealized gains (losses) on securities
  available for sale as of January 1, 1997           $(408)                      421                       $13
Changes during the year ended December 31,
                                     1997:
         Transfer of securities previously
                                       classified        27                      --                        27
                                       as held
                                       to
                                       maturity
Increase in stated amount of securities                 441                      777                       1,218
Subtotal                                                $60                      $1,198                    $1,258
Deferred federal income taxes                           $20                      $408                      $428
Net unrealized gains on securities
     available for sale as of December 31, 1997         $40                      $790                      $830
</TABLE>

   Various  bonds with a par value of $16,000,000 amortized cost of $16,423,000
   and fair value  of  $16,450,000  which were previously classified as held to
   maturity, were transferred into the  available  for  sale  category in 1997.
   Included in these amounts are bonds with par value, cost and  fair  value of
   $1,000,000  which were called at par.  All of the bonds were transferred  in
   anticipation  of  the  merger  with  SMC  and  the necessity to maintain the
   combined enterprises interest rate position.

NOTE 8:  REINSURANCE

   As part of its ongoing business, the Company seeks  to limit its exposure to
   losses  by  ceding reinsurance to other insurance enterprises  under  excess
   coverage and  coinsurance contracts. The Company retains a maximum of $20 of
   coverage per individual life contract.

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

   Reinsurance  contracts  do  not relieve the Company from its  obligation  to
   policyholders. Failure of reinsurers to honor their obligations could result
   in  losses  to the Company; consequently,  allowances  are  established  for
   amounts deemed  uncollectible. The Company evaluates the financial condition
   of its reinsurers  and  monitors  concentrations of credit risk arising from
   similar geographic regions, activities  or  economic  characteristics of the
   reinsurers to minimize its exposure to significant losses  from  reinsurers'
   insolvencies.

   The  effect of reinsurance on premiums written and earned is as follows  (in
thousands):

<TABLE>
<CAPTION>
                                            1997                      1996                     1995
<S>                                         <C>                       <C>                      <C>
Direct premiums and amounts assessed
    against policyholders                   $40,515                   $48,968                  $51,207
Reinsurance assumed                                        --                       --                       --
Reinsurance ceded                           4,456                     1,113                    1,261
    Net premiums and amounts earned         $36,059                   $47,855                  $49,946
</TABLE>


NOTE 9:    EMPLOYEE RETIREMENT PLAN

    During  1988,  the  Company  initiated a 401(k) Profit Sharing Plan for the
    benefit of eligible employees  and  their  beneficiaries.Employees who have
    completed  one year of service and have reached  their  21st  birthday  are
    eligible under  the  plan.  Participants are entitled to 100% benefits upon
    retirement or death.   If participants are terminated, they are entitled to
    receive the vested percentage of their account balance.

    Participants may defer up to 15% of their compensation annually, subject to
    dollar  limits set by law.   The  Company  matches  the  employees'  salary
    reduction  100%.   In  applying  the  matching  contribution,  only  salary
    reductions  up  to  5%  of base compensation are considered.  The Company's
    funding policy is to contribute  annually  no  more than the maximum amount
    that  can  be  deducted  for federal income tax purposes.   The  amount  of
    expense for contributions  to  the 401(k) plan for the years 1997, 1996 and
    1995 was $43,000, $39,000 and $39,000  respectively.   At December 31, 1997
    (the most recent actuarial valuation date), the plan's accumulated  benefit
    obligation was $508,000 including vested benefits of $496,000 and the  fair
    market value of plan assets was $508,000.

NOTE 10:   CONCENTRATIONS OF CREDIT RISK

    The  Company  is required by SFAS No. 105, "Disclosure of Information About
    Financial Instruments With Off-Balance-Sheet Risk and Financial Instruments
    With Concentrations of Credit Risk", to disclose significant concentrations
    of  credit  risk   regardless  of  the  degree  of  such  risk.   Financial
    instruments that potentially subject the Company to concentration of credit
    risk  consist primarily  of  cash,  cash  equivalents  and  mortgage  loans
    receivable.  Since the Company's inception, it has been management's policy
    to place its cash on deposit and certificates of deposit with a diversified
    group of high credit quality financial institutions.  At December 31, 1997,
    the Company  had  accounts  with approximately 200 such institutions with a
    higher concentration of institutions  in North Carolina and South Carolina.
    Although, as of December 31, 1997, there  were  amounts  in  some  of those
    financial institutions that exceed the insured deposit coverage, management
    does  not  believe  any  significant  credit risk relating to cash deposits
    exists as of December 31, 1997.

    Mortgage loans consist of long-term notes  secured  by real estate in North
    Carolina and South Carolina and construction loans to  several construction
    companies  located mainly in the Piedmont of North Carolina.   The  Company
    had long term  notes  of  approximately $999,000 and $1,331,000 at December
    31, 1997 and 1996, respectively.   The  Company  had  construction loans of
    approximately  $4,222,000  and $5,424,000 at December 31,  1997  and  1996,
    respectively.  Construction  loans  that  exceed  1%  of  total assets were
    $1,547,000 and $2,130,000 at December 31, 1997 and 1996, respectively.   To
    reduce  credit  risk,  all construction loans are monitored on a continuing
    basis,  secured by the property  being  built  and  limited  to  a  maximum
    percentage of the fair market value.

NOTE 11:   OPERATING LEASES


    The Company  is  the  lessor of a portion of its home office building under
    operating leases expiring  in  various  years  through  2000.   The  leased
    property  (including  land)  has  a  carrying  value  of  $1,285,000 net of
    accumulated depreciation of $76,000.  These leases have been  accounted for
    under  the operating method, which recognizes the lease revenue  as  earned
    over the life of the lease.


    Minimum  future  rentals  to  be  received  on  non-cancelable leases as of
    December 31, 1997, for each of the next five years and in the aggregate are
    (in thousands):

            YEAR ENDING 12/31                          AMOUNT
                 1998                                   $76
                 1999                                    47
                 2000                                    18
                 2001                                    --
                 2002                                    --
                 Thereafter                              --
          TOTAL MINIMUM FUTURE RENTALS                  $141

NOTE 12:    LIABILITY FOR UNPAID CLAIMS

      Activity in the liability for unpaid claims is  summarized as follows (in
      thousands):

<TABLE>
<CAPTION>
                                                1997                       1996                      1995
<S>                                             <C>                        <C>                       <C>
Beginning of year                               $10,455                    $10,110                   $7,996
Reinsurance recoverable                         42                         99                        30
                                                $10,413                    $10,011                   $7,966
Claims incurred                                 $35,605                    $43,204                   $44,063
Claims paid (net of reinsurance)                39,505                     42,802                    42,018
                                                $(3,900)                   $402                      $2,045
Balance at December 31                          $6,513                     $10,413                   $10,011
Plus reinsurance receivables                    --                         42                        99
                                                $6,513                     $10,455                   $10,110
</TABLE>

      During 1995, the Company changed its estimate of health claims liability.
      This change was the result of management's underestimation  of  the major
      medical  claims  backlog.  The effect of this change was to decrease  net
      income before taxes  for  1995  by  $1,951,000 ($1.09 per share).  During
      1996, the Company changed its estimate  of health claims liability.  This
      change in estimate was the result of an accumulation of claims due to the
      pending  changes  with  certain  preferred provider  organizations.   The
      effect of this change was to decrease net income before taxes for 1996 by
      $1,197,000 ($0.67 per share).

NOTE 13:     ESTIMATED FAIR VALUE OF FINANCIAL INSTRUMENTS

      The carrying values and estimated  fair values of the Company's financial
      instruments at December 31, 1997 and 1996 were as follows (in thousands):
<TABLE>
<CAPTION>
                                        1997                  1996
<S>                                     <C>                   <C>                <C>                   <C>
                                       Carrying              Estimated          Carrying             Estimated
                                        Value                Fair Value           Value              Fair Value
Assets:
     Cash and cash equivalents
        (including short-term           $10,721               $10,721            $6,702              $6,702
    investments)
    Certificates of deposit              25,377                25,377             30,496              30,496
    Debt securities                      21,601                21,594             25,027              23,634
    Equity securities                     3,837                 3,837              3,291               3,291
    Mortgage loans                        5,221                 5,221              6,760               6,760
Liabilities:
    Future policy benefits - annuities   45,171                45,291             47,342              47,466
</TABLE>

      Fair  value estimates are made at a specific  point  in  time,  based  on
      available   market   information   and   judgments  about  the  financial
      instrument, such as estimates of timing and  amount  of  expected  future
      cash  flows.   Such estimates do not reflect any premium or discount that
      could result from  offering  for  sale  at  one time the Company's entire
      holdings of a particular financial instrument,  nor  do they consider the
      tax  impact  of the realization of unrealized gains or losses.   In  some
      cases, the fair  value estimates cannot be substantiated by comparison to
      independent markets, nor can the disclosed value be realized in immediate
      settlement of the instrument.



<PAGE>

                   SAVERS LIFE INSURANCE COMPANY
                   WINSTON-SALEM, NORTH CAROLINA

                        NOTES TO FINANCIAL STATEMENTS
                              DECEMBER 31, 1997

      The following valuation  methods and assumptions were used by the Company
      in estimating the fair value of the above financial instruments:

      SHORT-TERM INSTRUMENTS - Fair values are based on quoted market prices or
      dealer quotations.  Where  quoted  market prices or dealer quotations are
      not  available,  the carrying amounts  reported  in  the  balance  sheets
      approximate fair value.   Short-term  instruments have a maturity date of
      three months or less.

      CERTIFICATES OF DEPOSIT - Fair values are  based  on  purchase  price  of
      certificates  and  prevailing  rates  of  interest.   The certificates of
      deposit typically have very short maturity periods (six  months  or less)
      or  variable  interest  rates.   Fair values are approximated by carrying
      values due to the short-term nature of the instruments.

      DEBT AND EQUITY SECURITIES - Fair  values  are  based  on  quoted  market
      prices  or  dealer  quotations.   Where  quoted  market  prices or dealer
      quotations are not available, fair values are estimated by  using  quoted
      market prices for similar securities or discounted cash flow methods.

      MORTGAGE  LOANS  -  Fair  values  are  estimated  by discounting expected
      mortgage  loan  cash flows at market rates, which reflect  the  rates  at
      which similar loans  would  be  made  to  similar  borrowers.   The rates
      reflect  management's  assessment of the credit quality and the remaining
      duration of the loans.  The loans have variable interest rates, which are
      linked to the prime rate.   Estimated  fair values for mortgage loans are
      not materially different from carrying value.

      FUTURE POLICY BENEFITS - ANNUITIES - The  majority  of  these  investment
      contract  liabilities  are  made  up  of  deferred  annuity policies with
      adjustable interest rates.  All deferred policies have guaranteed minimum
      rates of interest, but the guaranteed rates are lower than current market
      rates.   Because of the short-term adjustability of the  interest  rates,
      fair value  is  approximated  by  carrying  value for deferred annuities.
      Other contract deposit funds, which make up about  7% of these investment
      contract liabilities, are immediate annuities, which  pay a fixed monthly
      amount for a fixed period.  Fair value of these liabilities  is estimated
      by  discounting  cash flows at interest rates currently being offered  by
      the Company for similar contracts.

NOTE 14:    COMMITMENTS AND CONTINGENT LIABILITIES

      COMMITMENTS - Commitments to extend credit are legally binding agreements
      to lend monies at  a  specified interest rate and within a specified time
      period. Risk arises from  the  potential  inability of parties to perform
      under the terms of the contracts and from interest rate fluctuations. The
      Company's  exposure  to  credit  risk  is reduced  by  the  existence  of
      conditions within the commitment agreements that release the Company from
      its obligations in the event of a material  adverse change in the counter
      party's financial condition. At December 31,  1997  and 1996, the Company
      had $6,459,000 and $7,491,000, respectively, in total  construction  loan
      commitments  to  general  contractors. At December 31, 1997 and 1996, the
      Company had outstanding loan  commitments of approximately $2,053,000 and
      $2,067,000, respectively.

      LITIGATION - The Company is continuously involved in a number of lawsuits
      arising,  for the most part, in  the  ordinary  course  of  its  business
      operations.   The  Company is usually defending claims brought against it
      relating  to  policy  coverage  and  exclusions.   The  Company  has  not
      established a provision  for losses relating to several lawsuits in which
      the Company is a defendant.   The total amount of damages sought in these
      lawsuits is approximately $255,000.   The Company estimated its liability
      in  these suits at $89,000 which has been  accrued  as  claim  liability.
      While the ultimate outcome of the litigation cannot be determined at this
      time,  management  believes  that there is only a remote possibility that
      this litigation will result in  judgments for additional amounts material
      to the financial condition of the  Company.  Materiality is calculated as
      5% of pre-tax gain or loss.



<PAGE>

                   SAVERS LIFE INSURANCE COMPANY
                   WINSTON-SALEM, NORTH CAROLINA

                        NOTES TO FINANCIAL STATEMENTS
                              DECEMBER 31, 1997

NOTE 15:    PENDING MERGER

      The Company is a party to an Amended  and  Restated Agreement and Plan of
      Merger, dated December 9, 1997, pursuant to which, subject to approval by
      the Company's stockholders, the stockholders  of  SMC, the North Carolina
      Department  of  Insurance and other regulatory authorities,  the  Company
      will become a wholly-owned  subsidiary of Standard Management Corporation
      ("SMC") an Indiana insurance  holding  company.   The  Company's Board Of
      Directors  has  unanimously  approved  the  Merger  Agreement   and   has
      recommended  that  the  Company's  stockholders  approve  it at a special
      meeting to be held in March of 1998.  If the Merger Agreement is approved
      and  the  merger becomes effective, stockholders of the Company  will  be
      entitled to  receive  $1.50  cash  and 1.2 shares of SMC common stock for
      each share of the Company's common stock  owned by them immediately prior
      to effectiveness of the merger.  Stockholders  may elect to receive stock
      in lieu of cash portion of the merger consideration.

NOTE 16:    SAVERS MARKETING CORPORATION

      On April 1, 1997, the Company filed Articles of  Incorporation  with  the
      Secretary  of  the  State of North Carolina to form a wholly-owned entity
      "Savers Marketing Corporation", a North Carolina corporation.

      The purposes of the corporation  are:  (I)  to  market life, accident and
      health insurance and sell annuities; (ii) acquire,  own,  improve, lease,
      mortgage,  encumber,  pledge  and otherwise invest and deal in  real  and
      personal property of every sort,  kind  and  description;  and,  (iii) to
      engage  in  any  lawful  act  or  activity for which a corporation may be
      organized under Chapter 55 of the General Statutes of North Carolina.

      Savers Marketing Corporation is authorized  to  issue  100,000  shares of
      common  stock  with a par value of $1.00 per share.  The Corporation  had
      issued and outstanding  1,000  shares for a capital of $1,000 at December
      31, 1997.  Savers Marketing Corporation has, from inception, been dormant
      and not an operating company.  Accordingly,  this  corporation is carried
      on the financial statements of the Company as an investment  with  a cost
      of $1,000 which is its fair market value at December 31, 1997.

NOTE 17:    SUBSEQUENT EVENTS

      At a special meeting on March 3, 1998, the shareholders of the Company 
      approved the merger as discussed in Note 15.




<PAGE>

                  STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                  UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS


      The  following unaudited pro forma combined statements of operations  for
the year ended  December 31, 1997 are presented as if the transfer of the major
medical product line  from  Savers  Life  Insurance Company  ("Savers Life") to
World  Insurance  Company ("World") through a  coinsurance  agreement,  whereby
World assumed, through  coinsurance effective July 1, 1997, 100% of the product
line,  and  (ii)  the  acquisition   of  Savers  Life  by  Standard  Management
Corporation  ("SMC")  had  occurred  as of  January  1,  1997.   The  following
unaudited pro forma combined balance sheet  as  of  December  31,  1997,  gives
effect to the acquisition of Savers Life by SMC as if it had occurred as of the
balance sheet date.

      The  unaudited pro forma combined financial statements do not purport  to
represent what SMC and subsidiaries (the "Company") balance sheet or results of
operations actually  would  have  been  had  the  transfer of the major medical
product line from Savers Life to World through a coinsurance agreement, whereby
World assumed, through coinsurance effective July 1,  1997, 100% of the product
line, and the acquisition of Savers Life by SMC in fact  occurred  on the dates
indicated,  or  to project the Company's balance sheet or results of operations
for any future date  or  period.   The  unaudited  pro forma combined financial
statements  should be read in conjunction with the accompanying  notes  thereto
and the separate  historical  consolidated  financial statements of the Company
and Savers Life as of and for the year ended December 31, 1997.

      The  pro  forma  adjustments  and  combined   amounts  are  provided  for
informational purposes only, the Company's  consolidated  financial  statements
reflect the effects of the acquisition of Savers Life by SMC only from the date
such  transaction  occurred.  The acquisition of Savers Life occurred on  March
12, 1998, with an effective  date  of  March 31, 1998.  Savers Life transferred
the major medical product line of Savers  Life  to  World through a coinsurance
agreement,  under which World assumed, through coinsurance  effective  July  1,
1997, 100% of the product line.  Savers Life ceased writing any new business in
this product  line  on  June 30, 1997. In October  1997, all of the policies in
this product line were transferred  to  World  as  direct insurance policies of
World.   The pro forma adjustments are applied to the  historical  consolidated
financial  statements  of  the  Company  and  Savers  Life  to  account for the
acquisition  of  Savers Life by SMC under the purchase method of accounting  in
accordance with APB  No.  16.   Under  this  method  of  accounting,  the total
purchase cost has been allocated to Savers Life's assets and liabilities  based
on  their  estimated  relative  fair  values.  These allocations are subject to
valuations as of the date of the transaction  based  on  appraisals  and  other
studies,  which are not yet completed.  Accordingly, the final allocations will
be different from the amounts reflected herein.  Any purchase price adjustments
will be made  within one year from the acquisition date and are not expected to
be material to the unaudited pro forma combined financial statements taken as a
whole.  The unaudited pro forma combined financial statements, however, reflect
management's best estimate based on currently available information.


<PAGE>


                  STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES
                  UNAUDITED PRO FORMA COMBINED STATEMENT OF INCOME
                            YEAR ENDED DECEMBER 31, 1997
                  (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>

                                                                        PRO FORMA
                                                                       ADJUSTMENTS
                                                                       RELATED TO
                                                                        TRANSFER          SAVERS          PRO FORMA
                                                                           OF               LIFE         ADJUSTMENTS
                                        HISTORICAL FINANCIAL              MAJOR            AFTER          RELATING
                                             STATEMENTS                  MEDICAL        TRANSFER OF        TO THE
                                                        SAVERS           PRODUCT       MAJOR MEDICAL       SAVERS         PRO FORMA
                                         SMC             LIFE           LINE (1)       PRODUCT LINE         LIFE          COMBINED
                                                                                                         ACQUISITION
                                      (Audited)        (Audited)
<S>                                 <C>               <C>              <C>             <C>               <C>             <C>
Revenues:
  Premium income                    $7,100            $36,058          $(8,039)        $28,019           $      --       $35,119
  Net investment income             29,516            4,394            (300)           4,094                    78 (2)   33,688
  Net realized investment gains     396               158              (7)             151                      --       547
  Policy charges                    5,512             254              --              254                      --       5,766
  Amortization of excess of net
  assets                            1,388             --               --              --                       --       1,388
    acquired over acquisition cost
  Fees from separate accounts       1,779             --               --              --                       --       1,779
  Other income                      1,178             2,183            (626)           1,557                    --       2,735
      Total revenues                46,869            43,047           (8,972)         34,075                   78       81,022
Benefits and expenses:
  Benefits and claims               9,098             29,376           (7,657)         21,719                   --       30,817
  Interest credited on interest-
  sensitive                         16,281            2,472             --             2,472                    --       18,753
    annuities and other financial
    products
  Amortization                      3,248             2,939            (2,399)         540                      (540)(3) 4,125 
                                                                                                                877  (3)       
  Other operating expenses          12,599            10,569           (2,985)         7,584                    --       20,183
  Interest expense and financing    2,381             --               --              --                       370  (4) 2,751
  costs
      Total benefits and expenses   43,607            45,356           (13,041)        32,315                   707      76,629
Income (loss) before federal income
taxes                               3,262             (2,309)          4,069           1,760                    (629)    4,393
and preferred stock dividends
Federal income tax expense (credit) 617               (640)            1,383           743                      (196)(5) 1,164
Net income (loss)                   $2,645            $(1,669)         $2,686          $1,017                   $(433)   $3,229
Net income per share                $      .54                                                                           $     .45
Weighted average common shares      4,948,302                                                              2,225,720  (6)  7,174,022
outstanding
</TABLE>

See accompanying notes to unaudited pro forma combined financial statements.



<PAGE>

                  STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                     UNAUDITED PRO FORMA COMBINED BALANCE SHEET
                                  DECEMBER 31, 1997
                               (DOLLARS IN THOUSANDS)

<TABLE>
<CAPTION>



                                                                                            PRO FORMA
                                                 HISTORICAL FINANCIAL                      ADJUSTMENTS
                                                      STATEMENTS                           RELATING TO
                                                                                               THE
<S>                                    <C>                       <C>                       <C>                     <C>
                                                                     SAVERS                SAVERS LIFE              PRO FORMA
                                             SMC                      LIFE                 ACQUISITION              COMBINED
ASSETS                                    (Audited)                 (Audited)
Investments:
       Securities available for sale:
    Fixed maturity securities          $372,576                  $20,614                    $1,037     (7)          $394,220
                                                                                            (7)        (8)
    Equity securities                  52                        3,787                       --                     3,839
  Fixed maturity securities held to    --                        1,037                      (1,037)    (7)              --
  maturity
  Mortgage loans on real estate        375                       5,221                       --                     5,596
  Policy loans                         9,495                     --                          --                     9,495
  Real estate                          2,163                     2,403                       --                     4,566
  Other invested assets                779                       --                          --                     779
  Short-term investments               13,342                    25,377                      --                     38,719
      Total investments                398,782                   58,439                      (7)                    457,214
Cash                                   4,165                     10,721                      1,204     (9)          16,090
Accrued investment income              6,512                     597                         --                     7,109
Amounts due and recoverable from       61,596                    268                         --                     61,864
reinsurers
Deferred policy acquisition costs      21,435                    1,284                       (1,284)   (10)         21,435
Present value of future profits        20,537                    --                          7,400     (11)         27,937
Excess of acquisition cost over net
assets                                 2,445                     --                          1,610     (12)         4,055
  acquired
Deferred federal income taxes          --                        1,397                       (1,397)   (16)         --
Other assets                           5,456                     215                         (962)     (13)         4,709
Assets held in separate accounts       148,064                   --                           --                    148,064
        Total assets                   $668,992                  $72,921                     $6,564                 $748,477
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
  Insurance policy liabilities         $439,390                  $57,788                     $--                    $497,178
  Accountspayable and accrued         6,208                      407                         1,134     (14)         7,749
  expenses
  Obligations under capital lease      141                       --                          --                     141
  Notes payable                        26,000                    --                          4,000     (15)         30,000
  Deferred federal income taxes        4,488                     --                          1,103     (16)         5,591
  Excess of net assets acquired over
     acquisition cost                  1,388                     --                          --                     1,388
  Liabilities related to separate      148,064                   --                          --                     148,064
  accounts
        Total liabilities              625,679                   58,195                      6,237                  690,111
Shareholders' equity:
  Common stock                         40,646                    3,603                       (3,603)   (17)         55,699
                                                                                             15,053    (18)
  Treasury stock (deduction)           (4,572)                   --                          --                     (4,572)
  Unrealized gain  on securities
     available for sale                2,171                     830                         (830)                   2,171
  Foreign currency translation         (473)                     --                          --                     (473)
  adjustment
  Retained earnings                    5,541                     10,293                      (10,293)                5,541
        Total shareholders' equity     43,313                    14,726                      327                     58,366
        Total liabilities and          $668,992                  $72,921                     $6,564                  $748,477
        shareholders' equity
</TABLE>
See accompanying notes to unaudited pro forma combined financial statements.



                  STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

             NOTES TO UNAUDITED PRO FORMA COMBINED FINANCIAL STATEMENTS


PRO FORMA ADJUSTMENTS


TRANSACTIONS RELATING  TO  THE  TRANSFER  OF  THE MAJOR MEDICAL PRODUCT LINE OF
SAVERS LIFE

      Savers Life and World agreed to the transfer of the major medical product
line  of Savers Life to World through a coinsurance  agreement,  whereby  World
assumed,  through coinsurance effective July 1, 1997, 100% of the product line.
Savers Life  ceased  writing  any new business in this product line on June 30,
1997.  For the period from July  1,  1997  to September 30, 1997, the premiums,
claims, commissions and premium taxes were direct  business  of Savers Life and
subsequently ceded 100% to World.  Savers Life was paid $50,000  per  month  to
administer  this block of business between July 1, 1997 and September 30, 1997.
This coinsurance  agreement was in effect from July 1, 1997 until September 30,
1997 to allow World  the  time  needed  to  develop a system to administer this
block of business on a direct basis.  In October  1997,  all of the policies in
this  product  line were transferred to World as direct insurance  policies  of
World.  Savers Life  has  agreed  to  share  in  the  claims experience of this
product line for the period from July 1, 1997 through December  31, 1997 to the
extent that the loss ratio for such period does not equal 75%.  The  loss ratio
is  calculated  by  dividing  incurred claims by earned premiums.  If the  loss
ratio for the period is greater  than  75%,  Savers  Life  will  be required to
reimburse  World in cash for 50% of the amount by which the actual  loss  ratio
exceeds 75%.   If the loss ratio for the period is less than 75%, World will be
required to reimburse  Savers  Life  in cash for 50% of the amount by which the
actual loss ratio is less than 75%.  As  a  result of the agreement with World,
Savers Life wrote off all remaining deferred  acquisition costs associated with
the major medical product line, resulting in a $1,752,000 charge against income
in  the  second quarter of 1997.  In September 1997,  Savers  Life  transferred
assets $4,850,000 and liabilities of $4,928,000 to World.

      (1)   The  selected  pro forma combined statement of operations financial
            data is adjusted  to  eliminate  the  results of operations for the
            major medical product line to give effect  to  the  transfer of the
            major medical product line as of January 1, 1997.

TRANSACTIONS RELATING TO THE SAVERS LIFE ACQUISITION

      In the acquisition of Savers Life, each share of Savers Life Common Stock
held  immediately  prior  to  March  12, 1998 (1,779,908 shares of Savers  Life
Common Stock) were converted into 1.2  shares  of  SMC Common Stock plus $1.50.
Each holder of Savers Life Common Stock had the election  to  receive the $1.50
per  share  portion  of  the  merger  consideration in cash or in the  form  of
additional shares of SMC Common Stock.  1,412,980 holders of Savers Life Common
Stock elected to receive 1.50 per share  cash consideration in lieu of electing
to receive shares of SMC Common Stock.  SMC  issued  2,225,720  shares  of  SMC
Common  Stock  with a value of approximately $15,023,000 and paid $2,027,000 in
cash to acquire Savers Life

      In addition,  SMC  is expected to incur costs relating to the acquisition
of Savers Life (including  legal,  accounting  and other fees) of approximately
$1,500,000.

      The  cost  to acquire Savers Life is allocated  as  follows  (amounts  in
thousands):

    Book value of net assets acquired on March 12, 1998         $14,726
    Costs incurred by Savers Life prior to March 12, 1998       (1,395)
                                                                 13,331
 
           Increase (decrease) in Savers Life net asset value to reflect
           estimated fair value and asset reclassifications at March 12, 1998

     Fixed maturity securities available for sale                 1,030
     Fixed maturity securities held to maturity                  (1,037)
     Present value of future profits (related to acquisition)     7,400
     Deferred policy acquisition costs (historical)              (1,284)
     Goodwill (related to acquisition)                            1,610
     Deferred federal income taxes                               (2,500)
           Total estimated fair value adjustm                     5,219
                Total cost to acquire Savers Life               $ 18,550



      Adjustments  to  the  pro  forma combined statement of operations to give
effect to the acquisition of Savers  Life  as of January 1, 1997 are summarized
below.

      (2)   Net investment income is increased for the investment income earned
            on the amount of borrowings pursuant  to  an Amended Revolving Line
            of  Credit Agreement with a bank (the "Amended  Credit  Agreement")
            that  exceed  the  cash  payment  to  Savers Life stockholders that
            increase existing working capital.

      (3)   Amortization of deferred acquisition costs  recorded by Savers Life
            prior  to the purchase has been eliminated and  replaced  with  the
            amortization of the present value of the future profits as a result
            of the transaction.   The amount of present value of future profits
            resulting from the transaction  is  being  amortized  on a constant
            yield  basis over the estimated life of insurance in force  at  the
            date of  acquisition in proportion to the emergence of profits over
            a period of  20  years,  except for the Medicare supplement product
            line which is being amortized  over  a  period  of  10  years, with
            interest  equal  to  the  interest  rate credited to the underlying
            policies.  No future value has been assigned  to  the major medical
            product line.  Amortization of goodwill acquired in the transaction
            is recognized over a 30-year period on a straight-line basis.

      (4)   Interest  expense and financing costs is increased to  reflect  the
            increase in  borrowings  under  the  Amended  Credit  Agreement and
            amortization  of deferred debt issuance costs associated  with  the
            purchase of Savers Life.

      (5)   Federal income  tax expense has been adjusted to reflect the income
            tax effects of the  pro  forma adjustments, based on SMC's tax rate
            of 34 percent.

      (6)   Weighted average common shares outstanding are increased to reflect
            the SMC Common Stock shares  issued  in  the  acquisition of Savers
            Life.

      Adjustments to the pro forma combined balance sheet to give effect to the
acquisition of Savers Life as of December 31, 1997, are summarized below.

      (7)   Held to maturity securities have been reclassified as available for
            sale securities at the purchase date consistent  with the intention
            of new management.

      (8))  Savers  Life's  fixed  maturity  securities  held  to maturity  are
            restated to estimated fair value.

      (9)   Amount  is  proceeds  from  borrowings  under  the  Amended  Credit
            Agreement  less payments made to Savers Life shareholders  for  the
            purchase of  Savers  Life and less certain costs incurred by Savers
            Life in connection with  the  acquisition  of  Savers Life prior to
            closing.

      (10)  Deferred  policy  acquisition  costs  of  Savers  Life   have  been
            eliminated under purchase accounting.

      (11)  Present value of future profits for business has been recorded  for
            existing  insurance acquired with the purchase of Savers Life.  The
            15 percent  discount  rate used to determine such value is the rate
            of return required by SMC to invest in the business being acquired.
            In determining such rate  of  return,  the  following  factors  are
            considered:

            <circle>The  magnitude  of  the  risks  associated with each of the
                  actuarial assumptions used in determining  the  expected cash
                  flows.

            <circle>Cost of capital available to fund the acquisition.

            <circle>The   perceived   likelihood   of   changes   in  insurance
                  regulations and tax laws.

            <circle>Complexity of the acquired company.

            <circle>Prices  paid  (i.e.,  discount  rates  used  in determining
                  valuations) on similar blocks of business sold recently.



<PAGE>

            The value allocated to the cost of policies purchased is based on a
            preliminary valuation; accordingly, this allocation may be adjusted
            upon   final   determination   of   such   value.   Expected  gross
            amortization of such value using current assumptions  and accretion
            of  interest based on an interest rate equal to the liability  rate
            (such  rate  averages  6  percent)  for  each  of  the years in the
            five-year period ending December 31,  2002, are as follows:

               YEAR ENDING           BEGINNING         NET           ENDING
              DECEMBER 31,            BALANCE     AMORTIZATION       BALANCE

                1998                  $7,400         $823           $6,577
                1999                   6,577          720            5,857
                2000                   5,857          630            5,227
                2001                   5,227          552            4,675
                2002                   4,675          485            4,190

      (12)  Goodwill acquired in the purchase of Savers Life is recognized.

      (13)  Other  assets  have  been increased for the deferred debt  issuance
            costs of the commitment fees paid for the borrowings on the Amended
            Credit Agreement and decreased  for  acquisition costs incurred and
            capitalized by SMC associated with the transaction.

      (14)  Accounts  payable  have  been  increased  due  to  the  accrual  of
            estimated acquisition costs associated with the transaction.

      (15)  Notes  payable  are increased to reflect the  increased  borrowings
            under the Amended  Credit  Agreement  for the acquisition of Savers
            Life.  The Amended Credit Agreement provides  for  SMC to borrow up
            to $20,000,000 in the form of a seven year reducing  revolving loan
            arrangement.   Interest on the borrowings under the Amended  Credit
            Agreement is determined,  at  the  option  of  SMC,  to  be:  (i) a
            fluctuating  rate  of interest to the corporate base rate announced
            by the bank from time  to time plus 1% per annum, or (ii) a rate at
            LIBOR  plus  3.25%.   At  December   31,  1997,  SMC  had  borrowed
            $16,000,000  under  the  Amended  Credit Agreement  at  a  weighted
            average interest rate of 9.069%.  SMC  increased  borrowings  under
            the  Amended Credit Agreement by $4,000,000 for the acquisition  of
            Savers Life at an interest rate of 8.969%.

      (16)  Deferred  tax  liabilities  have  been  recorded, primarily for the
            actuarially  determined  present  value  of  future   profits  from
            existing  insurance,  and the reclassification of the deferred  tax
            assets of Savers Life as deferred tax liabilities.

      (17)  The  Savers  Life  historical   shareholders'  equity  and  related
            weighted  average common shares outstanding  are  eliminated  under
            purchase accounting.

      (18)  Common stock  has been increased to reflect the issuance of the SMC
            Common Stock in  the acquisition of Savers Life and the issuance of
            SMC  Common  Stock warrants  to  a  bank  in  connection  with  the
            increased line of credit on the Amended Credit Agreement.


<PAGE>

                                     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 hereunto duly authorized.


                                    STANDARD MANAGEMENT CORPORATION
                                                   (Registrant)


Date:  MAY 22, 1998                 By:   /S/ RONALD D. HUNTER
                                          Ronald D. Hunter
                                          Chairman of the Board, President and
                                          Chief Executive Officer