SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549


                                   FORM 10-Q


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

            FOR THE QUARTERLY PERIOD ENDED September 30, 2001 or

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


                     Commission file number: 0-20882

                      Standard Management Corporation
            (Exact name of registrant as specified in its charter)


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


10689 North Pennsylvania, Indianapolis, Indiana         46280
  (Address of principal executive offices)            (Zip Code)

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

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

As of October 31, 2001 the Registrant had 7,545,156 of Common
Stock outstanding.






                     STANDARD MANAGEMENT CORPORATION

                                  INDEX


Page Number

Part I.   FINANCIAL INFORMATION:

Item 1.   Financial Statements

          Consolidated Balance Sheets --
          September 30, 2001 (Unaudited) and December 31, 2000
          (Audited)                                              3

          Consolidated Statements of Income --
          For the Three and Nine Months Ended September 30, 2001
          and 2000 (Unaudited)                                   4

          Consolidated Statements of Shareholders' Equity --
          For the Nine Months Ended September 30, 2001 and 2000
          (Unaudited)                                            5

          Consolidated Statements of Cash Flows --
          For the Nine Months Ended September 30, 2001 and 2000
          (Unaudited)                                            6

          Notes to Consolidated Financial Statements (Unaudited)

                                                             7 - 9

Item 2.   Management's Discussion and Analysis of Financial
          Condition and Results of Operations              10 - 24

Item 3.   Quantitative and Qualitative Disclosures about Market
          Risk                                                  24

Part II.  OTHER INFORMATION:

Item 6.   Exhibits and Reports on Form 8-K                      25

          SIGNATURES                                            25







                              PART I -- FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                        CONSOLIDATED BALANCE SHEETS
                           (Dollars in Thousands)


                                          September 30 December 31
                                               2001       2000
                                           (Unaudited)  (Audited)
                ASSETS
Investments:
 Securities available for sale:
  Fixed maturity securities, at fair value
   (amortized cost: $866,856 in 2001 and
   $742,597 in 2000)                        $  870,238   $718,912
  Equity securities, at fair value
   (cost: $532 in 2001 and $538 in 2000)           400        362
 Mortgage loans                                  5,580      4,778
 Policy loans                                   12,919     14,280
 Real estate                                    13,123      8,847
 Other invested assets                             776        776
 Short-term investments                         20,477     12,489
   Total investments                           923,513    760,444
Cash                                            11,121      1,840
Accrued investment income                       13,631     12,298
Amounts due and recoverable from reinsurers     40,845     43,158
Deferred policy acquisition costs              107,635     91,855
Present value of future profits                 20,839     26,343
Goodwill                                         5,208      5,430
Other assets                                    11,517      8,650
Assets held in separate accounts               427,823    520,439

   Total assets                             $1,562,132 $1,470,457

                        LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:

 Insurance policy liabilities               $  997,639 $  837,345
 Accounts payable and accrued expenses           7,342      7,347
 Notes payable                                  20,000     31,500
Deferred federal income taxes                   10,852      4,397
Liabilities related to separate accounts       427,823    520,439
   Total liabilities                         1,463,656  1,401,028


Company-obligated trust preferred securities    20,700         --

Series A convertible redeemable preferred
  stock, par value $100 per share;
 Authorized 130,000;  65,300 shares redeemed
  in 2001, 65,300 issued and outstanding in 2000    --      6,530

Shareholders' Equity:
 Preferred stock, no par value:
  Authorized 870,000 shares; none issued
   and outstanding                                  --         --
 Common stock and additional paid in capital,
  no par value:
  Authorized 20,000,000 shares; issued 9,038,134
   in 2001 and 2000                             63,109     63,019
 Treasury stock, at cost, 1,492,978 shares
  in 2001 and 2000                              (7,589)    (7,589)
 Accumulated other comprehensive loss           (1,179)   (12,008)
 Retained earnings                              23,435     19,477
   Total shareholders' equity                   77,776     62,899
   Total liabilities and
    shareholders' equity                    $1,562,132 $1,470,457

    See accompanying notes to consolidated financial statements.



           STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                     CONSOLIDATED STATEMENTS OF INCOME
       (Unaudited, Dollars in Thousands, Except Per Share Amounts)

                         Three Months Ended      Nine Months Ended
                             September 30           September 30
                          2001        2000       2001       2000
Revenues:
 Premium income         $ 2,563    $ 2,725     $ 7,772    $ 8,127
 Net investment income   15,115     13,019      43,023     37,390
 Call option losses      (3,257)    (1,933)     (6,394)    (4,293)
 Net realized investment
  Losses                 (3,720)      (272)     (3,775)    (2,427)
Policy income             1,810      2,107       5,785      6,120
Separate account fees     2,474      1,486       6,728      3,965
Fee and other income      2,096      1,294       5,556      4,104
   Total revenues        17,081     18,426      58,695     52,986

Benefits and expenses:
 Benefits and claims      1,737      3,971       5,582     11,202
 Interest credited to
  interest-sensitive
  annuities and
  other financial
  products                7,462     5,637      20,315      16,843
 Amortization               403     2,289       6,536       6,508
 Commission expenses      2,522     1,206       6,911       2,009
 Other operating expenses 3,789     2,324      11,716       8,768
 Interest expense and
  financing costs           883       866       2,443       2,554
   Total benefits and
    expenses             16,796    16,293      53,503      47,884

Income before federal
 income taxes and preferred
 stock dividends            285     2,133       5,192       5,102
Federal income tax
 expense (benefit)          (56)      376         916         972

Net income                  341     1,757       4,276       4,130

Preferred stock dividends   (65)     (127)       (318)       (380)
Earnings available to
 common shareholders     $  276   $ 1,630     $ 3,958     $ 3,750

Earnings per share - basic:
 Net income              $  .05   $   .23     $   .57     $   .53
 Preferred stock dividends (.01)     (.02)       (.04)       (.05)
 Earnings available to
  common shareholders    $  .04   $   .21     $   .53     $   .48

Earnings per share - diluted:
 Net income              $  .04   $   .20     $   .52     $   .51
 Preferred stock dividends   --        --          --        (.04)
 Earnings available to
  common shareholders    $  .04   $   .20     $   .52     $   .47

	See accompanying notes to consolidated financial statements.





              STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

               CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                     (Unaudited, Dollars in Thousands)

                         Common
                        stock and            Accumulated
                        additional              other
                         paid-in   Treasury comprehensive Retained
                   Total  capital   stock       income    earnings

Balance at
January 1, 2000  $53,360 $62,152  $(6,802)  $  (16,706)  $ 14,716

Comprehensive
income:
 Net income        4,130                                    4,130
 Other comprehensive
  income:
  Change in
   unrealized gain
   on securities,
   net taxes of
   $801            1,503                         1,503
  Change in foreign
   currency
   translation    (1,117)                       (1,117)
    Other
     comprehensive
     income          386

     Comprehensive
      income       4,516

 Issuance of common
  stock warrants     286     286
 Treasury stock
  acquired          (395)             (395)
 Preferred stock
  Dividends         (380)                                    (380)
Balance at
 September 30,
 2000            $57,387 $62,438  $ (7,197) $   (16,320) $ 18,466

Balance at
 January 1, 2001 $62,899 $63,019  $ (7,589) $   (12,008) $ 19,477




Comprehensive
income:
 Net income        4,276                                    4,276
 Other
  comprehensive
  income:
  Change in
   unrealized gain
   on securities,
   net taxes of
   $5,632         11,067                         11,067
  Change in foreign
   currency
   translation      (238)                          (238)
   Other
    comprehensive
    income        10,829

   Comprehensive
    income        15,105

  Issuance of
   Common stock
   warrants           90      90
  Preferred stock
   dividends        (318)                                    (318)
Balance at
 September 30,
 2001            $77,776 $63,109  $ (7,589) $   (1,179)   $23,435

      See accompanying notes to consolidated financial statements.






               STANDARD MANAGEMENT CORPORATION AND SUBSIDIARIES

                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                      (Unaudited, Dollars in Thousands)

                                               Nine Months Ended
                                                  September 30
                                                2001        2000

Operating Activities
Net income                                    $   4,276 $   4,130
Adjustments to reconcile net income to net
 cash provided by operating activities:
  Amortization of deferred acquisition costs      4,703     4,277
  Deferred acquisition costs                    (27,026)  (25,808)
  Deferred federal income taxes                     896       267
  Depreciation and amortization                   2,409     2,769
  Insurance policy liabilities                   13,824    15,777
  Net realized investment losses                  3,775     2,427
  Accrued investment income                      (1,333)     (149)
  Other                                              82    (1,421)
   Net cash provided by operating activities      1,606     2,269

Investing Activities
 Fixed maturity securities available for sale:
  Purchases                                    (393,792) (189,553)
  Sales                                         200,543   113,125
  Maturities, calls and redemptions              61,979    10,238
 Short-term investments, net                     (7,989)   (1,473)
 Other investments, net                          (2,907)   (4,963)
   Net cash used by investing activities       (142,166)  (72,626)

Financing Activities

Net proceeds from issuance of trust
 preferred securities                            19,318        --
Payments on notes payable                       (11,500)   (3,700)
Redemption of preferred stock                    (6,530)       --
Premiums received on interest-sensitive annuities
 and other financial products credited
 to policyholder account balances, net of
 premiums ceded                                 225,850   143,451
Return of policyholder account balances
 on interest-sensitive annuities and other
 financial products                             (77,069)  (69,785)
Purchase of treasury stock                           --      (395)
Issuance of common stock and warrants                90       286
Dividends on preferred stock                       (318)     (380)
   Net cash provided by financing activities    149,841    69,477

Net increase (decrease) in cash                   9,281      (880)

Cash at beginning of period                       1,840     3,659
Cash at end of period                         $  11,121 $   2,779


      See accompanying notes to consolidated financial statements.

Note 1 -- Basis of Presentation

The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles ("GAAP") for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements.  The
results of operations for the interim periods shown in this report
are not necessarily indicative of the results that may be expected
for the fiscal year.  This is particularly true in the life
insurance industry, where paid life insurance claims or mortality
results in interim periods can vary substantially from such
results over a longer period and the impact of FASB No. 133 can
produce unfavorable or favorable results.  In our opinion, the
information contained in this report reflects all adjustments, of
a normal recurring nature, necessary to fairly present the results
of operations for the interim periods.  Certain amounts from prior
periods have been reclassified to conform to the 2001
presentation.  These reclassifications have no effect on
previously reported shareholders' equity or net income during the
periods presented.

The nature of the insurance business of Standard Management
Corporation and its consolidated subsidiaries ("Standard
Management") requires us to make estimates and assumptions that
affect the amounts reported in the consolidated financial
statements and accompanying notes.  For example, Standard
Management uses significant estimates and assumptions in
calculating deferred policy acquisition costs, present value of
future profits, goodwill, future policy benefits and deferred
federal income taxes. If future experience differs materially from
these estimates and assumptions, our financial statements could
be affected.

In June 1998, the Financial Accounting Standards Board ("FASB")
issued Statement No. 133, "Accounting for Derivative Instruments
and Hedging Activities" ("FASB  No. 133").  FASB No. 133 requires
companies to record derivatives on the balance sheet as assets and
or liabilities measured at fair value.  We adopted FASB No. 133 on
January 1, 2001. The adoption of FASB No. 133 resulted in
increased volatility of certain income and expense
items.   Also refer to "Management's Discussion and Analysis of
Financial Condition and Results of Operations" in Item 2.

In June 2001, the FASB issued Statement  No. 142, "Goodwill and
Other Intangible Assets", effective for fiscal years beginning
after December 15, 2001.  Under the new rules, goodwill will no
longer be amortized but will be subject to annual impairment tests
in accordance with the Statement.  The Company has not completed
the analysis of the impact of the Statement and will perform the
first of  the required impairment tests of goodwill and indefinite
lived intangible assets as of January 1, 2002.

For further information, refer to the consolidated financial
statements and related footnotes included in our Annual Report on
Form 10-K, as amended, for the year ended December 31, 2000.

Note 2 - Trust Preferred Securities

On August 9, 2001, SMAN Capital Trust I (the "Trust"), a wholly-
owned subsidiary of Standard Management, completed a public
offering of $20.7 million of its 10.25% preferred securities which
mature on August 9, 2031, at $10 per preferred security.  The
Trust used the proceeds of this offering to purchase Standard
Management's 10.25% junior subordinated debentures.  Net proceeds
from the sale of the debentures of approximately $19.3 million
were used to redeem our Series A preferred stock of  $6.5 million
and repay $7.3 million of our notes payable (Refer to Note 3).
The remaining proceeds will be used for general corporate
purposes.

The terms of the preferred securities parallel the terms of the
debentures which are the sole assets of the Trust.  The preferred
securities may be redeemed at any time on or after August 9, 2006
at a redemption price of $10 plus accumulated and unpaid
distributions.   If the Trust redeems the preferred securities or
is liquidated and the debentures are not redeemed, debentures will
be distributed to the holders of the preferred securities rather
than cash.  Standard Management guarantees the payments on these
securities to the extent that the Trust has available funds.

The Trust's preferred securities are traded on the NASDAQ National
Market under the symbol "SMANP".






Note 3 -- Notes Payable

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

                               Interest  September 30  December 31
                                 Rate       2001           2000

Borrowings under revolving
 credit agreements             7.28% (1)   $9,000        $20,500
Senior subordinated convertible
 notes                        10.00%       11,000         11,000
                                          $20,000        $31,500

(1)  Current weighted average rate at September 30, 2001.

We made a scheduled principal payment of $3.2 million on the
borrowings under revolving credit agreements in March 2001. We
also made unscheduled principal payments of $8.3 million on
borrowings under revolving credit agreements, including $7.3
million from the  proceeds of  our trust preferred securities
offering during the third quarter of 2001. The next scheduled
payment of $1.5 million is due March 2002.


Note 4 -- Net Unrealized Gain (Loss) on Securities Available for
Sale

The balance sheet caption "Accumulated other comprehensive loss"
in shareholders' equity includes net unrealized gain (loss) on
securities available for sale which is summarized as follows (in
thousands):


                                          September 30 December 31
                                              2001         2000
Fair value of securities
 available for sale    			       $   870,638  $  719,274
Amortized cost of securities
 available for sale                           867,388     743,135
Gross unrealized gain (loss) on securities
 available for sale                             3,250     (23,861)
Adjustments for:
 Deferred policy acquisition costs               (702)      5,852
 Present value of future profits                 (466)      3,389
 Deferred federal income tax asset
  (liability)                                    (655)      4,977
  Net unrealized gain (loss) on
  securities available for sale           $     1,427  $   (9,643)





Note 5-- Earnings Per Share

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

                             Three Months Ended  Nine Months Ended
                                September  30       September 30
                              2001       2000     2001        2000
Income:

Net income                 $    341 $    1,757 $   4,276 $   4,130
Preferred stock dividends       (65)      (127)     (318)    (380)
Income available to
 common shareholders for
 basic earnings per share       276      1,630     3,958     3,750

Effect of dilutive securities:
 Interest on subordinated
 convertible debt                --        250        --       750
 Preferred stock dividends       --        126       253        --

Income available to common
 shareholders for diluted
 earnings per share       $     276  $   2,006 $   4,211 $   4,500

Shares:
Weighted average shares
 outstanding for basic
 earnings per share       7,545,156  7,763,906 7,545,156 7,778,073

Effect of dilutive securities:
 Stock options              166,180         --    81,676     8,108
 Stock warrants             218,065         --   133,802       657
 Subordinated convertible
  debt                           --  1,740,038        -- 1,740,038
 Preferred stock                 --    768,236   512,157        --

 Dilutive potential
  common shares             384,245  2,508,274   727,635 1,748,803

Weighted average shares
 outstanding for diluted
 earnings per share       7,929,401 10,272,180 8,272,791 9,526,876






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

General

The following discussion highlights the material factors affecting
the results of operations and the significant changes in balance
sheet items. Notes to the consolidated financial statements
included in this report and the notes to the consolidated
financial statements included in our  Form 10-K, as amended, for
the year ended December 31, 2000 should be read in conjunction
with both sets of consolidated financial statements.  We generally
measure our financial performance by comparing operating income
(net income before net realized investment gains and losses, net
of related costs and amortization) which is not considered a GAAP
measure of performance.

Three and Nine Months Ended September 30, 2001 Compared to Three
and  Nine Months Ended September 30, 2000:

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

                          Three Months Ended  Nine Months Ended
                              September 30      September 30
                          2001          2000  2001       2000
                                   (Dollars in thousands)

Domestic operations         $1,397  $1,708     $4,753  $4,824
International operations       937     696      2,545   1,605

Consolidated operating
 income before income taxes  2,334   2,404      7,298   6,429
Applicable income taxes
 related to operating income   349     427      1,230   1,301

 Consolidated operating income
  after taxes                1,985   1,977      6,068   5,128

Consolidated realized
 investment losses before
 income taxes                2,050     272      2,105   1,327
Applicable income tax benefits
 related to realized
 investment  losses            406      52        313     329
   Consolidated realized
    investment losses
    after tax benefits       1,644     220      1,792     998

   Net income               $  341  $1,757     $4,276  $4,130

Consolidated Results and Analysis


Quarterly analysis:

*  Our net income for the three month period ended September 30,
2001 was $.3 million, or 4 cents per diluted share compared to
$1.8 million or 20 cents per diluted share for the three month
period ending September 30, 2000.

*  Third quarter 2001 net income was unfavorably impacted by 1)
increased net realized investment losses of $1.4 million or 19
cents per diluted share which primarily related to fixed maturity
securities that had a decline in fair value that was considered
other than temporary and losses resulting from an investment in an
internet based business, and 2) $.3 million as a result of FASB
No. 133.  The net impact of FASB No. 133 creates favorable or
unfavorable results depending on fluctuations in interest rates
during the period.  In addition, results were impacted by
increased expense of $.2 million from the trust preferred
offering.

*  Third quarter 2001 net income was favorably impacted by 1)
separate account margin (separate account fees less related
amortization) of $1.6 million compared to $1.2 million and 2)
mortality experience of $1.0 million compared to $1.3 million.

*  Our operating income was $2.0 million for each of the three
month periods ending September 30, 2001 and 2000.

Year-to-date analysis:

*  Our net income for the nine month  period ended September 30,
2001 was $4.3 million or 52 cents per diluted share compared to
$4.1 million or 51 cents per diluted share for the nine month
period ending  September 30, 2000.

*  Net income for the nine month period ending September 30, 2001
was unfavorably impacted by increased net realized investment
losses of $.8 million or 10 cents per diluted share.  These losses
are primarily those discussed in the quarterly analyses on the
previous page.

*  Net income for the nine month period ending September 30, 2000
was favorably impacted by 1) separate account margin (separate
account fees less related amortization) of $4.7 million compared
to $3.0 million, 2) persistency of $1.6 million compared to $2.0
million and 3) mortality experience of $4.4 million compared to
$5.0 million.

*  Our operating income was $6.1 million for the nine month period
ending September 30, 2001, an increase of 18% over the comparable
2000 period.

Operating income  represents net income before net realized
losses, net of related costs and amortization and should be
reviewed in conjunction with net income and cash flow information
included elsewhere in this report.



Domestic Operations:

                            Three Months Ended   Nine Months Ended
                                September 30       September 30
                             2001         2000    2001       2000
                                     (Dollars in thousands)

Premiums and deposits collected:

 Traditional life          $  2,538  $   2,713 $   7,626  $ 8,098
 Flexible premium
  deferred annuities         49,022     22,737   118,787   68,085
 Single premium immediate
  annuities and other
  deposits                   23,909     10,183    57,540   18,162
 Equity-indexed annuities    16,034     18,554    49,055   56,481
 Universal and interest-
  sensitive life                152        101       468      723

 Subtotal - interest-
  sensitive and other
  financial products         89,117     51,575   225,850  143,451

   Total premiums and
    deposits collected     $ 91,655    $ 54,288 $ 233,476 $151,549

Premium income             $ 2,538    $  2,713 $   7,626 $  8,098
Policy income                1,810       2,107     5,785    6,120
   Total policy
    related income           4,348       4,820    13,411   14,218

Net investment income       14,977      12,912    42,605   37,037
Call option losses          (3,257)     (1,933)   (6,394)  (4,293)
Fee and other income         2,096       1,294     5,556    4,104

  Total revenues (a)        18,164      17,093    55,178   51,066

Benefits and claims          1,727       3,946     5,640   11,229
Interest credited to
 interest-sensitive annuities
 and other financial
 products                    7,462       5,637    20,315   16,843
Amortization                 1,219       1,986     6,188    6,593
Commission expenses          2,547         485     6,865    1,274
Other operating expenses     2,929       2,465     8,974    7,749
Interest expense and
 financing costs               883         866     2,443    2,554

  Total benefits and
   expenses                 16,767      15,385    50,425   46,242

  Operating income before
   income taxes              1,397       1,708     4,753    4,824

Net realized investment
 losses                      2,050         272     2,105    1,327

  Income (loss) before
   income taxes           $   (653)   $  1,436   $ 2,648  $ 3,497

a)  Revenues exclude net realized investment losses, net of
related amortization.

General: The domestic operations segment consists of revenues
earned and expenses incurred from United States operations. Our
products include flexible premium deferred annuities, single
premium immediate annuities, equity-indexed annuities, universal
life products and traditional life products.

The profitability of this segment is primarily a function of its
net spread revenue (the difference between the investment income
earned on our investments less the interest we credit to our
policyholders), persistency of the in-force business, mortality
experience and management of operating expenses.

The following discussion highlights the material factors affecting
the revenue and expense components of the income statement for
domestic  operations.  The quarterly analysis discussion compares
financial data in the three month periods ending September 30,
2001 and 2000, respectively.  The year-to-date analysis compares
financial data in the nine month periods ending September 30,
2001 and 2000, respectively.

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

Quarterly analysis:

*  Premium deposits for the three month period ending September
30, 2001 increased  $37.5 million or 73%, to $89.1 million
compared to the three month period ending September 30, 2000.
Flexible premium deferred annuities increased $26.3 million or
116% to $49.0 million.  Single premium immediate annuities and
other deposits increased $13.7 million or 135%, to $23.9 million.

Year-to-date analysis:

*  Premium deposits for the nine month period ending September 30,
2001 increased  $82.4 million or 57%, to $225.9 million, compared
to the nine month period ending September 30, 2000.  Flexible
premium deferred annuities increased $50.7 million or 74%, to
$118.8 million.  Single premium immediate annuities and other
deposits increased $39.4 million or 217%, to $57.5 million.


Premium deposit increases in the quarterly and year-to-date
periods are due to 1) an expanded geographical presence, 2)
favorable agent retention, 3) enhanced presence in the single
premium immediate annuity market
and 4) the development of an interactive agent website.

Premium income consists of premiums earned from 1) traditional
life products and 2) annuity products that incorporates
significant mortality features.

Quarterly analysis:

*  Premium income for the three month period ending September 30,
2001 decreased by $.2 million or 6%, to $2.5 million compared to
the same three month period ending September 30, 2000.

Year-to-date analysis:

*  Premium income for the nine month period ending September 30,
2001 decreased by $.5 million or 6%, to $7.6 million compared to
the same period in 2000.


The decrease for the quarterly and year-to-date periods is due to
a decline in traditional life renewal premiums from our purchased
blocks of business.  In addition, effective August 2001 the
Company has suspended the active marketing of life products
indefinitely, but continues to manage its inforce business.

Policy income represents 1) mortality charges and administrative
fees earned on universal life products and 2) surrender income
earned as a result of terminated universal life and annuity
policies.

Quarterly analysis:

*  Policy income for the quarter ending September 30, 2001 was
$1.8 million, a decrease of $.3 million compared to the same
quarter ending September 30, 2000.  This decline is primarily due
 to the decline in gross surrenders of $5.9 million  or 26%, to
$16.9 million.

Year-to-date analysis:

*  Policy income for the nine month period ending September 30,
2001 decreased $.3 million to $5.8 million compared to the nine
month period ending September 30, 2000.  This decrease is
primarily due to the decline in gross surrenders of $4.7 million
or 8%, to $56.1 million.

Net investment income includes interest earned on invested assets
and fluctuates with changes in 1) the amount of average invested
assets supporting insurance liabilities and 2) the average yield
earned on those invested assets.

Quarterly analysis:

*  Net investment income for the three month period ending
September 30, 2001 increased by $2.1 million or 16%, to $15.0
million compared to the same period ending September 30, 2000.
Net investment income increased as a result of a $147.0 million or
20% increase in the book value of the weighted average invested
assets for the third quarter period.  Premium deposits of  $89.1
million for the quarter contributed to the increase in the
weighted average invested assets.

*  The net investment yield earned on average invested assets was
7.15% and 7.31% for the three month period ending September 30,
2001 and 2000, respectively.




Year-to-date analysis:

*  Net investment income for the nine month period ended September
30, 2001 increased by $5.6 million or 15%, to $42.6 million
compared to the same period ending September 30, 2000.  Net
investment income increased as a result of a $122.3 million or 17%
increase in the book value of the weighted average invested assets
for the period.  Premium deposits of  $225.9 million are the
primary factor contributing to increased weighted invested assets
for the period.

*  The net investment yield earned on average invested assets was
7.16% and 7.23% for the nine month period ending September 30,
2001 and 2000, respectively.

Investment yields fluctuate from period to period primarily due to
changes in the general interest rate environment.

See also "Call option losses" and "Interest credited to interest
sensitive annuities and other financial products"  for additional
information regarding the impact of  our equity-indexed products.

Call option losses relate to equity-indexed products which are
hedged with call options to limit risk against unusually high
crediting rates from favorable returns in the equity market and
are substantially offset by 1) interest earned on invested assets
supporting equity-indexed products and 2) amounts credited to
policyholder account balances.  The market value of these call
options fluctuate based on the policyholder account balances of
our equity-indexed products and the returns given to these
policyholders which are linked to the performance of the Standard
& Poor's Corporation (S&P) 500 Index.

Quarterly analysis:

*  Call option losses for the third quarter ending September 30,
2001 increased by $1.3 million to $3.3 million compared to the
third quarter ending September 30, 2000.

Year-to-date analysis:

*  Call option losses for the nine month period ending September
30, 2001 increased by $2.1 million to $6.4 million compared to the
same period ending September 30, 2000.

The increase for the quarterly and year-to-date periods was due to
the impact from changes in the market value of our call options as
a result of the decline in the S&P 500 Index and purchasing
additional options to support increased equity-indexed
liabilities.

Fee and other income consists of fee income related to servicing
blocks of business for unaffiliated companies, experience refunds
and unaffiliated commission income.

Quarterly analysis:

*  Fee income for the quarter ending September 30, 2001 was $2.1
million, an increase of $.8 million when compared to the same
quarter ending  September 30, 2000.  Fee income includes  $1.6
million of unaffiliated commission income from Savers Marketing,
an increase of  $.5 million compared to the same time period for
2000. In addition, we received $.3 million during the third
quarter of 2001 as a result of favorable experience from our
reinsured business.

Year-to-date analysis:

*  For the nine month period ending  September 30, 2001 fee and
other income increased $1.5 million or 35%, to $5.6 million
compared to the nine month period ending September  30, 2000 and
includes unaffiliated commission income from Savers Marketing of
$4.9 million, an increase of $1.2 million.

Benefits and claims  include 1) mortality experience, 2) benefits
from other policies that incorporate significant mortality
features and 3) changes in future policy reserves.  Throughout our
history, we have experienced both periods of higher and lower
benefit claims.  Such volatility is not uncommon in the life
insurance industry and, over extended periods of time, periods of
higher claim experience tend to offset periods of lower claim
experience.

Quarterly analysis:

*  Benefits and claims decreased $2.2 million or 56%, to $1.7
million for the three month period ending September 30, 2001 when
compared to the same period ending September 30, 2000. This
decrease includes the impact  from single premium immediate
annuity reserves of $2.0 million, which are offset by a comparable
increase in commission expenses and premium tax.  During the
third quarter of  2001 we also experienced favorable mortality of
$.3 million.

Year-to-date analysis:

*  Benefits and claims for the nine month period ended September
30, 2001 decreased  $5.6 million to $5.6 million, a decrease of
50% compared to the same period for 2000. This decrease includes
the impact from single premium immediate annuity reserves of $5.5
million, which are offset by a comparable increase in commission
expenses and premium tax.  In addition, we experienced favorable
mortality of  $.6 million compared to the period ending September
30, 2000.

See also "Commission expenses" and "Other operating expenses" for
additional information regarding the impact of our single premium
immediate annuities.

Interest credited to interest sensitive annuities and other
financial products  represents interest credited to insurance
liabilities of the flexible premium deferred annuities, single
premium immediate annuities, equity-indexed annuities,  interest
sensitive and other financial products. This expense fluctuates
with changes in 1)  the average interest-sensitive insurance
liabilities, 2) the average credited rate on those liabilities, 3)
interest earned on invested assets supporting equity-indexed
products, 4) the market value fluctuations of call options and 5)
the impact of FASB No. 133, which is partially offset by
amortization.

Quarterly analysis:

*  During the three months ending  September 30, 2001, interest
credited increased $1.8 million or 32% to $7.5 million and
includes additional interest credited of approximately $1.6
million due to a $163.9 million or 24% increase in average
interest sensitive liabilities and $1.5 million from the impact of
FASB No. 133.  Also, interest credited includes a decrease of $1.3
million from the decline in the market value of call options.

*  The weighted average credited rates for the three month period
ending September 30, 2001 and 2000 were 5.02% and 4.98%,
respectively.

Year-to-date analysis:

*  During the first nine months ending  September 30, 2001,
interest credited increased $3.5 million to $20.3 million, an
increase of 21% compared to the same period for 2000. This
increase includes additional interest credited of approximately
$4.5 million due to a $137.4 million or 21% increase in average
interest sensitive liabilities and $1.0 million from the impact of
FASB No. 133.  Also, interest credited includes a decrease of $2.1
million from the decline in the market value of call options.

*  The weighted average credited rates for the first nine month
period ending September 30, 2001 and 2000, were 5.02% and 4.90%,
respectively.

The increase in the weighted average crediting rates for the three
and nine month periods ending September 30, 2001 is primarily due
to the increased volume of new business which tends to have higher
crediting rates than renewal business.  Sales of interest
sensitive products increased 73% and 57% for the three and nine
month periods ending September 30, 2001, respectively, compared to
the same periods for 2000.

Amortization includes 1) amortization related to the present value
of  policies purchased from acquired insurance business, 2)
amortization of deferred acquisition costs related to capitalized
costs of our insurance business sold, 3) amortization of goodwill
and organizational costs and 4) the impact of FASB No. 133.

Quarterly analysis:

*  During the quarter ending September 30, 2001 amortization
decreased $.8 million to $1.2 million, a decrease of 39% compared
to the same quarter ending September 30, 2000 which  includes
decreased amortization of $1.1 million as a result of  FASB No.
133, $.3 million from the effects of lower surrender income
and $.1 million from persistency.  These factors are partially
offset by $.7 million of amortization related to policies issued
in the prior year.

Year-to-date analysis:

*  During the nine month period ending September 30, 2001
amortization decreased $.4 million compared to the nine month
period ending September 30, 2000 which includes decreased
amortization of $.9 million as a result of FASB No. 133, $.4
million from persistency and $.3 million from the effects of lower
surrender income.  These factors were partially offset by
approximately $1.3 million of amortization for the period related
to policies issued in the prior year.

Commission expenses represent commission expenses, net of
deferrable amounts.

Quarterly analysis:

*  Commission expenses increased $2.1 million to $2.5 million for
the three month period ending September 30, 2001 compared to the
same period ending September 30, 2000 primarily due to increased
single premium immediate annuity sales of $13.7 million.




Year-to-date analysis:

*  During the nine month period ending September 30, 2001
commission expenses increased $5.6 million to $6.6 million
primarily due to increased single premium immediate annuity sales
of  $39.4 million in the first nine months of 2001.

Benefits and claims have been offset by increased commission
expenses related to these sales for the three month and nine month
periods ending September 30, 2001 and 2000, respectively.

Other operating expenses consist of general operating expenses,
including salaries, net of deferrable amounts.

Quarterly analysis:

*  During the third quarter ending September 30, 2001 other
operating expenses increased $.4 million or 19%, to $2.9 million
compared to the third quarter ending September 30, 2000. This
increase was primarily due to additional premium tax of $.3
million due to increased sales of single premium immediate
annuities.

Year-to-date analysis:

* Other operating expenses for the first nine months of 2001
increased $1.2 million to $9.0 million, an increase of 16%
compared to the same period of  2000. The increase is primarily
due to  $.9 million of additional premium tax expense due to
increased sales of single premium immediate annuities.

Benefits and claims have been offset by increased premium taxes
related to these sales for the three month and nine month periods
ending September 30, 2001 and 2000, respectively.

Interest expense and financing costs represents interest expense
incurred and the amortization of related debt issuance costs.

Quarterly analysis:

*  Interest expense and financing costs remained constant at $.9
million for both periods ending September 30, 2001 and 2000,
respectively.

Average borrowings increased $3.3 million in the 2001 period
primarily due to the trust preferred offering.  The
weighted average interest rate for the 2001 period was 10.25%
compared to 11.12% for the 2000 period.




Year-to-date analysis:

*  Interest expense and financing costs for the nine month period
ending September 30, 2001 decreased $.1 million to $2.4  million
compared to the same period for 2000.  Average borrowings declined
$1.1 million in the 2001 period.  The weighted average interest
rate for the 2001 period was 10.54% compared to 10.67% for the
2000 period.

Net realized investment losses, net of related amortization
fluctuate from period to period and generally arise when
securities are sold in response to changes in the investment
environment.   Realized investment losses can affect the timing of
the amortization of deferred acquisition costs and the
amortization of the present value of future profits.


Quarterly analysis:

*  Net realized investment losses, net of related costs and
amortization for the third quarter ending September 30, 2001 were
$2.1 million, which was reduced by $1.6 million of deferred
acquisition cost amortization.

Year-to-date analysis:

*  Net realized investment losses, net of related costs and
amortization were $2.1 million and $1.3 million  for the nine
month period ending September 30, 2001 and 2000, respectively.
These amounts were reduced by $1.6 million and $1.1 million of
deferred acquisition cost amortization for the September 30,
2001 and  2000, respectively.

Net realized losses for the three month periods ending September
30, 2001 and 2000, respectively , and the nine month periods
ending September 30,  2001 and 2000, respectively, primarily
relate to fixed maturity securities that have a decline in fair
value considered other than temporary.  In addition, losses for
the 2001 periods included the write-off of an investment in an
internet based business.  The Company maintains a high quality
investment portfolio with 96% of its fixed maturities being
classified as investment grade securities at September 30, 2001.




International Operations:

                          Three Months Ended Nine Months Ended
                              September 30      September 30
                           2001         2000  2001        2000
                                    (Dollars in thousands)

Premiums and deposits collected:

 Traditional life        $    25    $    12  $   146    $      29
 Separate account
  deposits                 8,047     37,051   61,888      129,284

   Total premiums and
    deposits collected   $ 8,072    $37,063  $62,034    $ 129,313

Premium income           $    25    $    12  $   146    $      29
Net investment income        138        107      418          353
Separate account fees      2,474      1,486    6,728        3,965

   Total revenues          2,637      1,605    7,292        4,347

Benefits and claims            9         25      (59)         (27)
Amortization                 853        303    2,017        1,015
Commission expenses          (25)       (68)      46            9
Other operating expenses     863        649    2,743        1,745

   Total benefits and
    expenses               1,700        909    4,747        2,742

   Income before
    income taxes         $   937    $   696  $ 2,545    $   1,605

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

The following discussion highlights the material factors affecting
the revenue and expense components of the income statement for
international operations.  The quarterly analysis discussion
compares financial data in the three month periods ending
September 30, 2001 and 2000, respectively.  The year-to-date
analysis compares financial data in the nine month periods ending
September 30, 2001 and 2000, respectively.

Net investment income represents income earned on corporate assets
such as cash and short-term investments. Standard Management
International is required to hold a certain level of cash and
short-term investments in order to comply with local insurance
laws.

Quarterly analysis:

*  Net investment income was $.1 million for each of the three
month periods ending September 30, 2001 and 2000, respectively.
Corporate assets averaged $12.5 million and $10.3 million for the
third quarter of 2001 and 2000, respectively.

*  The net investment yields earned on average invested assets
were 4.41% and 4.17% for the third quarter ending September 30,
2001 and 2000, respectively.

Year-to-date analysis:

*  Net investment income was  $.4 million  for each of the nine
month periods ending September 30, 2001 and 2000, respectively.
Corporate assets averaged $13.1 million and $10.7 million for the
nine months ending September 30, 2001 and 2000, respectively.

*  The net investment yields earned on average invested assets
were 4.27% and 4.37% for the nine months ending September 30, 2001
and 2000, respectively.

Fees from separate accounts represent the net fees earned on the
various unit-linked products sold.  The fees fluctuate in
relationship to total separate account assets and the fees earned
on those assets.  Fees include initial set up fees on certain
products and annual recurring fees on almost all products.

Quarterly analysis:

*  Fees from separate accounts for the three month period ending
September 30, 2001 increased $1.0 million or 66%, to $2.5 million
compared to the same period ending September 30, 2000.   Fees
were favorably  impacted by $.5 million due to changes in the
value of  foreign currencies relative to the U.S. dollar.
Excluding the impact of foreign currencies, fees increased  $.5
million or 33% to $2.0 million. Average separate account assets
decreased $81.2 million, to $437.8 million in the third quarter
2001 compared to the 2000 period.  Separate account deposits for
the same period ending September 30, 2001 were $8.1 million
compared to $37.1 million  for the three month period ending
September 30, 2000 due primarily to the volatility in the
worldwide equity markets in recent months.

Year-to-date analysis:

*  Fees from separate accounts in the first nine months of  2001
increased $2.8 million or 70%, to $6.7 million compared to the
same period for  2000.  Actual separate account assets for the
first nine months of 2001 decreased $101.8 million or 19%, to
$428.0 million.  Fees were favorably impacted by $.5 million due
to changes in the value of  foreign currencies relative to the
U.S. dollar.  Excluding the impact of foreign currencies, fees
increased $2.3 million or 63%, to $6.2 million. Average separate
account assets decreased $6.3 million, to $473.0 million for the
nine month period ending September 30, 2001 compared to the 2000
period. Separate account deposits for the first nine months of
2001 were $61.9 million compared to $129.3 million for the
comparable 2000 period reflecting the unfavorable impact of
volatile worldwide equity markets.

Fees increased despite the decline in separate account assets due
to 1)a higher percentage of sales from our non-deferrable premium
fee products and 2) the effect of separate account policyholders
that pay fixed fees which do not change as a result of market
value fluctuations.

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

Quarterly analysis:

*  Amortization for the quarter ending  September 30, 2001
increased  $.5 million  to $.9 million compared to the same
quarter ending September 30, 2000.   This increase is related to
the unfavorable impact of  $.5 million from changes in the value
of foreign currencies relative to the U.S. dollar.

Year-to-date analysis:

*  Amortization for the nine month period ending September 30,
2001 increased $1.0 million to $2.0 million compared to the nine
month period ending September 30, 2000.  This increase is
primarily related to the unfavorable impact of  $.5 million from
changes in the value of foreign currencies relative to the U.S.
dollar.

Commission expenses represent commission expenses, net of
deferrable amounts.

Quarterly analysis:

*  Commission expenses for the three month period ending September
30, 2001 were less than $.1 million.

Year-to-date analysis:

*  Commission expenses were less than  $.1 million for the nine
month period ending September 30, 2001 and  September 30, 2000,
respectively.

Other operating expenses consist of general operating expenses,
including salaries, net of deferred amounts.

Quarterly analysis:

*  Other operating expenses for the quarter ending September 30,
2001 increased $.2 million  to $.9 million compared to the same
quarter for 2000 primarily as a result of increased management
fees paid to Standard Management.

Year-to-date analysis:

*  Other operating expenses for the nine month period ending
September 30, 2001 increased $1.0 million to $2.7 million when
compared to the nine month period ending September 30, 2000. This
increase relates primarily to increased 1) management fees paid to
Standard Management and 2) professional fees.

Foreign currency translation.   Comparisons between the periods
ending September 30, 2001 and September 30, 2000 are impacted by
the strengthening and weakening of the U.S. dollar relative to
foreign currencies, primarily the Luxembourg franc. The impact of
these translations has been quantified on fees from separate
accounts and amortization.


Liquidity and Capital Resources

Liquidity of Standard Management (Parent Company)

Standard Management is a financial services holding company whose
liquidity requirements are met through payments received from its
subsidiaries.  These payments include 1) interest on surplus
debentures, 2) dividends, 3) management fees, 4) rental income and
5) allocation of taxes through a tax sharing agreement, all of
which are subject to restrictions under applicable insurance
laws and are used to pay operating expenses and meet debt service
obligations.  These internal sources of liquidity have been
supplemented in the past by external sources such as revolving
credit agreements and long-term debt and equity financing in the
capital markets.

General:  On a consolidated basis Standard Management reported net
cash provided by operations of  $1.6 million for the nine month
period ending September 30, 2001.  Although deposits received on
Standard Management's interest-sensitive annuities and other
financial products are not included in cash flow from operations
under GAAP, these funds are available for use by Standard
Management.  Cash provided by operations plus net deposits
received, less net account balances returned to policyholders on
interest sensitive annuities and other financial products,
resulted in cash flow of $150.4 million for the nine month period
ending September 30, 2001. Cash generated on a consolidated basis
is available to Standard Management only to the extent that it is
generated at the Standard Management level or is available
through dividends, interest, management fees or other payments
from subsidiaries.

In 1993, Standard Management instituted a program to repurchase
its common stock.  At September 30, 2001 Standard Management can
repurchase 724,790 shares of Standard Management common stock
remaining under this program.


At October 31, 2001, Standard Management had "parent company only"
cash and short-term investments of $5.8 million.  These funds are
available to Standard Management for general corporate purposes.
Standard Management's "parent company only" operating expenses,
not including interest expense, were  $4.5 million and $4.8
million for 2000 and 1999, respectively.

We anticipate that  available cash from our existing working
capital, plus anticipated 2001 dividends, management fees, rental
income and interest payments on our surplus debentures receivable
will be more than adequate to meet our anticipated parent company
cash requirements for 2001.

Notes Payable Interest:

The following are characteristics of our amended credit agreement
at September 30, 2001:

*  outstanding balance of  $9.0 million;

*  weighted average interest rate of 7.28%;

*  principal payments:  $1.5 million due March 2002 and $2.5
   million due annually thereafter through March 2005;

*  subject to certain restrictions and financial and other
   covenants;

*  interest payments required in 2001 based on current balances
   will be $1.2 million.


The following are characteristics of our subordinated debt
agreement at September 30, 2001:


*  outstanding balance of $11.0 million;

*  interest rate is greater of 1) 10% per annum or 2) six-month
   London Inter-Bank Offered Rate ("LIBOR") plus 1.5%;

*  due October 2007;

*  interest payments required in 2001 based on current balances
   will be $1.1 million.


Trust Preferred Securities:  On August 9, 2001, the Trust
completed  a public offering of $20.7 million of its 10.25%
preferred securities.  The Trust used the proceeds of this
offering to purchase Standard Management's 10.25% junior
subordinated debentures.  Net proceeds from the sale of the
debentures of approximately $19.3 million were used to redeem our
Series A preferred stock  of $6.5 million and repay $7.3 million
of our notes payable. The remaining proceeds will be used for
general corporate purposes.

The following are characteristics of our trust preferred
securities agreement at September 30, 2001:

*  outstanding balance of $20.7 million;

*  annual distribution rate of  10.25%: distributions may be
   deferred up to 20 quarters or 5 years;

*  matures August 9, 2031;

*  may be redeemed on or after August 9, 2006 at $10 per share
   plus accumulated and unpaid distributions;

*  distributions required in 2001 based on current balances
   will be $.8 million;

*  distributions are classified as interest expense.

Surplus Debentures.  Standard Management loaned $27.0 million to
Standard Life Insurance Company of Indiana ("Standard Life")
pursuant to unsecured surplus debenture agreements ("Surplus
Debentures") which requires Standard Life to make quarterly
interest payments to Standard Management at a variable corporate
base rate plus 2% per annum, and annual principal payments of $1.0
million per year beginning in 2007 and concluding in 2033.  The
interest and principal payments are subject to quarterly approval
by the Indiana Department of Insurance ("IDOI"), depending upon
satisfaction of certain financial tests relating to levels of
Standard Life's capital and surplus and general approval of the
Commissioner of the IDOI. Standard Management currently
anticipates these quarterly approvals will be granted.  Assuming
the approvals are granted and the September 30, 2001 interest rate
of  8.50% continues, Standard Management will receive interest
income of $2.5 million from the surplus debentures in 2001.

Dividends paid from Standard Life to Standard Management are
limited by laws applicable to insurance companies.  As an Indiana
domiciled insurance company, Standard Life may pay a dividend or
distribution from its surplus profits, without the prior approval
of the Commissioner of the IDOI, if the dividend or distribution,
together with all other dividends and distributions paid within
the preceding twelve months, does not exceed the greater of 1) net
gain from operations or 2) 10% of surplus, in each case as shown
in its preceding annual statutory financial statements.  Standard
Life paid a dividend of $1.6 million in the first quarter of 2001
and has the ability to pay an additional $2.8 million in 2001
without regulatory approval.  Also, Savers Marketing paid Standard
Management a $.5 million dividend in the third quarter of 2001.

Management Fees.  Pursuant to a management services agreement,
Standard Life paid Standard Management $2.7 million for the first
nine months of 2001 for certain management services related to the
production of business, investment of assets and evaluation of
acquisitions.  In addition, Dixie National Life Insurance Company
("Dixie Life") paid Standard Life $.9 million during the first
nine months of  2001 for certain management services provided.
Both of these agreements provide that they may be modified or
terminated by the applicable Departments of Insurance in the event
of financial hardship of either Standard Life or Dixie Life.

Pursuant to a management services agreement, Premier Life
(Luxembourg) S.A.  paid Standard Management $.9 million during the
first nine months of 2001 for certain management, technical
support and administrative services. The agreement provides that
it may be modified or terminated by either Standard Management or
Premier Life (Luxembourg) S.A.

Equipment Rental Fees.  During the first nine months of 2001,
Standard Management charged subsidiaries $.8 million for the use
of equipment owned by Standard Management.

Tax Sharing Agreement.  Effective January 1, 2000 Standard
Management entered into a tax sharing agreement with Savers
Marketing Corporation and Standard Management International S.A.
("Standard Management International") that allocates the
consolidated federal income tax liability.  During the first nine
months of 2001, Savers Marketing and Standard Management
International paid Standard Management $.5 million and $.8
million, respectively, in accordance with this agreement.


Liquidity of Insurance Operations

U.S. Insurance Operations.  The principal liquidity requirements
of Standard Life are its contractual obligations to policyholders,
dividend, rent, management fee and surplus debenture payments to
Standard Management and other operating expenses. The primary
source of funding for these obligations has been cash flow from
premium income, net investment income, investment sales and
maturities and sales of flexible premium deferred annuities and
equity-indexed products. These sources of liquidity for Standard
Life significantly exceed scheduled uses. Liquidity is also
affected by unscheduled benefit payments including death benefits,
policy withdrawals and surrenders. The amount of withdrawals and
surrenders is affected by a variety of factors such as renewal
interest crediting rates, interest rates for competing products,
general economic conditions, Standard Life's A.M. Best rating and
events in the industry that affect policyholders' confidence. In
April 2001, Standard Life received a rating upgrade from A.M. Best
to B++, or "very good" category.  As rationale for the rating
upgrade, A.M. Best noted Standard Life's continued business
growth, improved operating results during 2000 and increased fee
income received from administration.

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

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

Statutory surplus is computed according to rules prescribed by the
National Association of Insurance Commissioners as modified by the
IDOI, or the state in which our insurance subsidiaries do
business. Statutory accounting rules are different from GAAP and
are intended to reflect a more conservative perspective. With
respect to new business, statutory accounting practices require
that:
1) acquisition costs (primarily commissions and policy issue
costs) and 2) reserves for future guaranteed principal payments
and interest in excess of statutory rates, be expensed in the year
the new business is written. These items cause a reduction in
statutory surplus or surplus strain in the year written for many
insurance products. Standard Management designs its products to
minimize such first-year losses, but certain products continue to
cause a statutory loss in the year written. For each product,
Standard Management controls the amount of net new premiums
written to manage the effect of such surplus strain. Standard
Management's long-term growth goals contemplate continued growth
in its insurance businesses. To achieve these growth goals,
Standard Management's U.S.  insurance subsidiaries will need to
increase statutory surplus. Additional statutory surplus may be
secured through various sources such as internally generated
statutory earnings, infusions by Standard Management with funds
generated through debt or equity offerings, or mergers with other
life insurance companies. If additional capital is not available
from one or more of these sources, Standard Management believes
that it could reduce surplus strain through the use of reinsurance
or through reduced writing of new business.

Management believes that the operational cash flow of Standard
Life will be sufficient to meet its anticipated needs for 2001.
As of  September 30, 2001, Standard Life had statutory capital and
surplus for regulatory purposes of $41.3 million.  As the life
insurance and annuity business produced by Standard Life
increases, Standard Life expects to satisfy statutory capital and
surplus requirements through statutory profits and through
additional capital contributions by Standard Management.  Net cash
flow from operations on a statutory basis of  Standard Life, after
payment of benefits and operating expenses, was  $149.2 million
for the nine months ended September 30, 2001 and $95.4 million for
2000.  If the need arises for cash, which is not readily
available, additional liquidity could be obtained from the sale of
invested assets.

International Operations.  The amount of dividends that may be
paid by Standard Management International without regulatory
approval is limited to its accumulated earnings.  Standard
Management does not anticipate receiving dividends from Standard
Management International in 2001.


Forward-looking Statements

All statements, trend analyses, and other information contained in
this quarterly report on Form 10-Q or any document incorporated by
reference herein relative to markets for our products and trends
in our operations or financial results, as well as other
statements including words such as "anticipate,"  "believe,"
"plan," "estimate," "expect," "intend," and other similar
expressions, constitute forward-looking statements under the
Private Securities Litigation Reform Act of 1995.  These forward-
looking statements are subject to known and unknown risks,
uncertainties and other factors which may cause actual results to
be materially different from those contemplated by the forward-
looking statements.  Such factors include, but are not limited to:

*  general economic conditions and other factors, including
prevailing interest rate levels, stock market performance which
may affect the ability to sell our products, the market value of
our investments and the lapse rate and profitability of our
policies;

*  our ability to achieve anticipated levels of operational
efficiencies at recently acquired companies, as well as through
other cost-saving initiatives;

*  customer response to new products, distribution channels and
marketing initiatives;

*  mortality, morbidity and other factors which may affect the
profitability of our insurance products;

*  changes in the Federal income tax laws and regulation which may
affect the relative tax advantages of some of  our  products;

*  increasing competition in the sale of our products;

*  regulatory changes or actions, including those relating to
regulation of financial services affecting bank sales and
underwriting of insurance products, regulation of the sale,
underwriting and pricing of insurance products;

*  the availability and terms of future acquisitions; and

*  the risk factors or uncertainties listed from time to time in
any document incorporated by reference herein.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISK

Our market risks and the way they are managed are summarized in
our discussion and analysis of financial condition and results of
operations as included in our Annual Report on Form 10-K, as
amended, for the year ended December 31, 2000. There have been no
material changes in 2001 to these risks or the management of
other risks.





                          PART II.  OTHER INFORMATION

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

(a)  Exhibits

  Exhibit 4.1  Form of Amended and Restated Trust Agreement of
               SMAN Capital Trust I among Standard Management,
               Bankers Trust Company and Bankers Trust (Delaware).
               (Incorporated by reference to Standard Management
               Registration Statement on Form S-1 (Registration
               No. 333-60886)).

  Exhibit 4.2  Form of Junior Subordinated Indenture between
               Standard Management and Bankers Trust Company.
               (Incorporated by reference to Standard Management
               Registration Statement on Form S-1 (Registration
               No. 333-60886)).

  Exhibit 4.3  Form Junior Subordinated Debenture.  (Incorporated
               by reference to Standard Management Registration
               Statement on Form S-1 (Registration No. 333-
               60886)).

  Exhibit 4.4  Form of Preferred Securities Guarantee Agreement
               between Standard Management and Bankers Trust
               Company.  (Incorporated by reference to Standard
               Management Registration Statement on Form S-1
               (Registration No. 333-60886)).


(b) Reports on Form 8-K

  The following current reports on Form 8-K have been filed by the
Company during the three months ended September 30, 2001:

  August 9, 2001  Press release announcing Standard Management had
                  completed a public offering of 1,800,000
                  preferred securities of SMAN Capital Trust I
                  ("SMANP"), a subsidiary of Standard Management,
                  at $10.00 per preferred security.  In addition,
                  270,000 shares were purchased by the
                  underwriters to cover over-allotments.  The sale
                  of the preferred securities, including over-
                  allotments resulted in gross proceeds to
                  Standard Management of $20.7 million.





                            SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned thereunto duly authorized.


Dated:  November 14, 2001


                                  STANDARD MANAGEMENT CORPORATION
                                           (Registrant)

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

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