UNITED STATES
                    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, 1996

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

  For the transition period from                to

                  Commission File Number: 0-20882

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


          Indiana                            No. 35-1773567
 (State of incorporation)          (I.R.S. employer identification no.)

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

                          (317) 574-6200
                        (Telephone number)

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, 1996, the Registrant had 4,774,270 shares of Common Stock
outstanding.

                       STANDARD MANAGEMENT CORPORATION
                                    INDEX



PART I.  FINANCIAL INFORMATION:                                    PAGE

Item 1.  Financial Statements

     Consolidated Balance Sheets -
     September 30, 1996 (Unaudited) and December 31, 1995 (Audited)   3

     Consolidated Statements of Operations -
     For the Three Months and Nine Months Ended September 30, 1996 and 1995
(Unaudited)                                                           5

     Consolidated Statements of Shareholders' Equity -
     For the Nine Months Ended September 30, 1996 and 1995 (Unaudited) 6

     Consolidated Statements of Cash Flows -
     For the Nine Months Ended September 30, 1996 and 1995 (Unaudited) 7

     Notes to Consolidated Financial Statements (Unaudited)           9

Item 2.  Management's Discussion and Analysis of Financial Condition and
Results of Operations                                                13

PART II.  OTHER INFORMATION:

Item 5.  Other Information                                           30

Item 6.  Exhibits and Reports on Form 8-K                            31

Signatures                                                           32

Exhibit 11 - Statement Re: Computation of Per Share Earnings -       33
     For the Three Months and Nine Months Ended September 30, 1996 and 1995
(Unaudited)
<PAGE>
                     PART I - FINANCIAL INFORMATION

ITEM 1.  FINANCIAL STATEMENTS

                       STANDARD MANAGEMENT CORPORATION

                         CONSOLIDATED BALANCE SHEETS
                            (DOLLARS IN THOUSANDS)

                                    ASSETS

<TABLE>
<CAPTION>
                                                                       September 30,           December 31,
<S>                                                              <C>                      <C>
                                                                         1996                    1995
                                                                        (Unaudited)              (Audited)
Investments:
  Securities available for sale:
    Fixed maturity securities, at fair value
       (amortized cost: $246,640 in 1996 and $225,643 in 1995)   $241,713                              $232,092
    Equity securities, at fair value (cost: $55 in 1996 and $52  77                       52
    in 1995)
  Mortgage loans on real estate, at unpaid principal balances    3,016                    2,963
  Policy loans, at unpaid principal balances                     7,498                    8,509
  Real estate, at depreciated cost                               547                      556
  Other invested assets                                          957                      1,367
  Short-term investments, at cost, which approximates fair value 12,070                   35,058
       Total investments                                         265,878                  280,597
Cash                                                             4,411                    5,762
Amounts due and recoverable from reinsurers                      65,047                   33,419
Deferred policy acquisition costs                                17,977                   10,054
Present value of future profits, less accumulated amortization
of                                                               15,402                   15,246
  $3,063 in 1996 and $2,803 in 1995
Excess of acquisition cost over net assets acquired, less
  accumulated amortization of $286 in 1996 and $393 in 1995      2,279                    3,175
Deferred federal income taxes                                    66                                           -
Other assets                                                     8,681                    8,640
Assets held in separate accounts                                 126,987                  122,705
       Total assets                                              $506,728                              $479,598
</TABLE>


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

<PAGE>
                      STANDARD MANAGEMENT CORPORATION

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

        LIABILITIES, REDEEMABLE SECURITIES AND SHAREHOLDERS' EQUITY


<TABLE>
<CAPTION>
                                                        September 30,                December 31,
<S>                                                     <C>                         <C>
                                                           1996                         1995
                                                        (UNAUDITED)                   (Audited)
Liabilities:
  Future policy benefits:
     Interest-sensitive annuities and other financial   $244,240                    $212,500
     products
     Traditional life insurance                         79,623                      82,762
        Total future policy benefits                    323,863                     295,262
  Policy claims and other policyholders' benefits and   2,582                       2,572
  funds
                                                        326,445                     297,834
  Accounts payable and accrued expenses                 4,826                       4,880
  Class action litigation and settlement liability      -                           3,000
  Obligations under capital lease                       753                         1,084
  Notes payable                                         5,671                       3,107
  Deferred federal income taxes                         -                           2,583
  Excess of net assets acquired over acquisition cost,
  less
     accumulated amortization of $3,492 in 1996 and     3,122                       4,163
     $2,451 in 1995
  Liabilities related to separate accounts              126,987                     122,705
        Total liabilities                               467,804                     439,356
Class S Cumulative Convertible Redeemable Preferred
Stock,
  par value $10 per share, 11% dividend, redeemable in
  February 2003:
     Authorized 300,000 shares; issued and outstanding
     160,789 shares, redemption value of $10 per share  1,722                       -
     plus accumulated and unpaid dividends
Shareholders' equity:
  Preferred stock, no par value:
     Authorized 700,000 shares; none issued and         -                           -
     outstanding
  Common stock, no par value:
     Authorized 20,000,000 shares; issued 5,752,499
shares                                                  40,997                      39,808
        in 1996 and 5,459,573 shares in 1995
  Treasury stock, at cost, 978,229 shares in 1996 and
     502,025 shares in 1995 (deduction)                 (4,741)                     (2,621)
  Unrealized gain (loss) on securities available for    (1,892)                     2,582
sale
  Foreign currency translation adjustment               717                         1,159
  Retained earnings (deficit)                           2,121                       (686)
        Total shareholders' equity                      37,202                      40,242
        Total liabilities, redeemable securities
          and shareholders' equity                      $506,728                    $479,598
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
                      STANDARD MANAGEMENT CORPORATION

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

<TABLE>
<CAPTION>
                                                              Three Months Ended               Nine Months Ended
                                                                 September 30,                   September 30,
<S>                                                     <C>             <C>             <C>             <C>
                                                             1996            1995            1996            1995
Revenues:
  Premium income                                        $1,289          $1,203          $     8,418     $     3,543
  Net investment income                                 4,979           4,497           14,371          13,677
  Net realized investment gains                         222             172             677             505
  Gain on disposal of subsidiaries                      -               -               886             -
  Policy charges                                        617             541             1,832           1,645
  Amortization of excess of net assets acquired over    347             347             1,041           1,041
acquisition cost
  Management fees and similar income from separate      257             236             1,093           724
accounts
  Administration fee income                             145                          -  682                          -
  Other income                                          113             108             865             257
     Total revenues                                     7,969           7,104           29,865          21,392
Benefits and expenses:
  Class action litigation and settlement costs (credit) -               -               -  (314)
  Benefits and claims                                   1,434           1,362           8,657           4,123
  Interest credited on interest-sensitive annuities and
other                                                   2,641           2,198           7,645           7,325
     financial products
  Salaries and wages                                    1,215           1,117           3,678           3,322
  Amortization                                          564             430             1,723           1,351
  Other operating expenses                              1,263           1,533           5,173           4,473
  Interest expense and financing costs                  153             24            430               77
     Total benefits and expenses                        7,270           6,664         27,306          20,357
Income before federal income taxes, extraordinary gain
on early                                                699             440             2,559           1,035
  redemption of preferred stock and preferred stock
dividends
Federal income tax expense (credit)                     228             (762)           56              (5)
Income before extraordinary gain on early redemption
  of preferred stock and preferred stock dividends      471             445             3,321           979
Extraordinary gain on early redemption of preferred
stock,                                                  233             -               500             -
  net of $- federal income tax
NET INCOME                                              704             445             3,821           979
Preferred stock dividends                               51              -               163             -
Earnings available to common shareholders               $653            $445            $3,658          $979
Earnings per share:
  Income before extraordinary gain on early redemption
of                                                      $.10            $.08            $.65            $.18
     preferred stock and preferred stock dividends
  Extraordinary gain on early redemption of preferred stock .04         -               .09             -
   NET INCOME                                           .14             .08             .74             .18
   Preferred stock dividends                            .01             -               .02             -
  Earnings available to common shareholders             $.13            $.08            $.72            $.18
Weighted average number of shares outstanding:
   Common shares                                        4,774,840       5,209,439       4,835,657       5,257,535
  Common equivalent shares                              165,242         166,956         463,842         90,671
                                                        4,940,082       5,376,395       5,299,499       5,348,206
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                        STANDARD MANAGEMENT CORPORATION

                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
          (UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                                            Nine Months Ended September 30,
<S>                                                <C>               <C>               <C>         <C>         
                                                              Amounts                         Shares
                                                      1996              1995             1996        1995
Common stock:
   Balance, beginning of period                    $39,808           $39,695           5,459,573   5,457,906
      Issuance of common stock                     100               -                 20,000      -
      Issuance of common stock in connection with
         exercise of stock options                 -                 6                 -           1,667
      Issuance of common stock warrants            239               -                 -           -
      5% common stock dividend, plus cash in lieu
      of                                           850               -                 272,926     -
      fractional shares
   Balance, end of period                          40,997            39,701            5,752,499   5,459,573

Treasury stock (at cost):
   Balance, beginning of period                    (2,621)           (2,221)           (502,025)   (418,425)
      Treasury stock acquired                      (2,126)           (395)             (431,026)   (82,600)
      5% common stock dividend                     -                 -                 (46,402)    -
      Reissuance of treasury stock in connection
with                                               6                 -                 1,224       -
         exercises of stock options
   Balance, end of period                          (4,741)           (2,616)           (978,229)   (501,025)

Unrealized gain (loss) on securities:
   Balance, beginning of period                    2,582             (13,411)
      Change in unrealized gain (loss) on
         securities available for sale, net        (4,474)           13,692
   Balance, end of period                          (1,892)           281

Foreign currency translation adjustments:
   Balance, beginning of period                    1,159             546
      Translation adjustments for the period       (442)             804
   Balance, end of period                          717               1,350

Retained earnings (deficit):
   Balance, beginning of period                    (686)             (1,999)
      Net income                                   3,821             979
       5% common stock dividend, plus cash in lieu
of       fractional shares                         (850)             -
      Loss on reissuance of treasury stock         (1)               -
      Other                                        -                 (4)
      Preferred stock dividend                     (163)             -
   Balance, end of period                          2,121             (1,024)

Total shareholders' equity and common shares       $37,202           $37,692           4,774,270   4,956,881
outstanding
</TABLE>


SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
<PAGE>
                        STANDARD MANAGEMENT CORPORATION

                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                       (Unaudited, Dollars in Thousands)
<TABLE>
<CAPTION>
                                                                     Nine Months Ended
                                                                        SEPTEMBER 30,
<S>                                                    <C>                   <C>
                                                                    1996                  1995
OPERATING ACTIVITIES
Net income                                             $3,821                $979
Adjustments to reconcile net income
   to net cash provided by operating activities:
     Extraordinary gain on early redemption of         (500)                 -
preferred stock
     Amortization of deferred policy acquisition costs 837                   814
     Policy acquisition costs deferred                 (4,519)               (1,102)
     Class action litigation and settlement liability  -                     (637)
     Deferred income taxes                             (343)                 419
     Depreciation and amortization                     308                   (79)
     Change in future policy benefits                  5,995                 2,679
     Net increase (decrease) in policy claims and
          other policyholders' benefits and funds      (228)                 (215)
     Net realized investment gains                     (677)                 (505)
     Decrease (increase) in accrued investment income  (244)                 641
     Other                                             (1,693)               3,350
          NET CASH PROVIDED BY OPERATING ACTIVITIES    2,757                 6,344
FINANCING ACTIVITIES
Issuance of Common Stock                               -                     6
Borrowings under line of credit agreements             2,600                 200
Repayments on short-term borrowings
     and capital lease obligation                      (364)                 (988)
Premiums received on interest-sensitive annuities
     and other financial products credited to
     policyholder account balances, net of premiums    32,153                10,680
ceded
Return of policyholder account balances on
     interest-sensitive annuities and other
     financial products, net of premiums ceded         (12,993)              (13,400)
Redemption of preferred stock                          (941)                 -
Proceeds from common and treasury stock sales          106                   -
Purchase of common stock for treasury                  (2,126)               (395)
          NET CASH PROVIDED (USED) BY FINANCING        18,435                (3,897)
ACTIVITIES
INVESTING ACTIVITIES
Fixed maturity securities available for sale:
     Purchases                                         (136,972)             (143,025)
     Sales                                             94,247                139,856
     Maturities                                        6,381                 2,028
Short-term investments, net                            2,647                 (1,931)
Other investments, net                                 (68)                  (186)
Proceeds from sale of property and equipment under
     capital lease                                     -                     1,396
Proceeds from sale of First International Life
Insurance                                              11,228                -
     Company, less cash transferred to seller of $265
          NET CASH USED BY INVESTING                   (22,537)              (1,862)
ACTIVITIES
Net increase (decrease) in cash                        (1,351)               585
Cash at beginning of period                            5,762                 1,604
Cash at end of period                                  $      4,411          $2,189
</TABLE>

SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.

                      STANDARD MANAGEMENT CORPORATION

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


SUPPLEMENTAL NON-CASH INVESTING AND FINANCING ACTIVITY:

     Effective May 31, 1996, the Company terminated and recaptured a
reinsurance agreement with the acquisition of assets with a fair value of
$5,201 and assumed liabilities with a fair value of $4,953. Cash received
at closing on July 31, 1996 in connection with this transaction was $514.
In the nine months ended September 30, 1996, non-cash dividends on
preferred stock of $163 were accrued and the Company issued common stock
warrants with an aggregate value of $239 for which no cash was received.
<PAGE>
                  STANDARD MANAGEMENT CORPORATION

            NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
    (UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

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.  Such principles  were  applied on a basis consistent
with those reflected in the Standard Management  Corporation ("SMC") Annual
Report on Form 10-K for the year ended December 31, 1995.  However, certain
reclassifications  have  been  made  in  the 1995 financial  statements  to
conform with the 1996 presentation.

     The results of operations for the interim periods shown in this report
are not necessarily indicative of the results  that may be expected for the
fiscal  year.   This is particularly true in the life  insurance  industry,
where mortality results in interim periods can vary substantially from such
results  over  a longer  period.     In  the  opinion  of  management,  the
information contained herein reflects all adjustments necessary to make the
results of operations  for  the  interim  periods  a fair statement of such
operations.  All such adjustments are of a normal recurring nature.

     The preparation of financial statements requires  management  to  make
estimates  and  assumptions  that  affect amounts reported in the financial
statements and accompanying notes.   Such  estimates  and assumptions could
change in the future as more information becomes known,  which could impact
the amounts reported and disclosed herein.

     The  consolidated  financial statements for the three month  and  nine
month periods ended September  30,  1996 include the assets and liabilities
and results of operations of Dixie National  Life Insurance Company ("Dixie
National Life") which was acquired on October 2, 1995.

     For   further   information,  refer  to  the  consolidated   financial
statements and footnotes  thereto included in the SMC Annual Report on Form
10-K for the year ended December 31, 1995.

NOTE 2 - STOCK DIVIDEND

     SMC declared a 5 percent  stock dividend on shares of its common stock
for  shareholders  of record on May  17,  1996  which  was  distributed  to
shareholders on June  21, 1996.  All applicable share and per share amounts
have been retroactively adjusted to reflect this stock dividend.






                  STANDARD MANAGEMENT CORPORATION

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)



NOTE 3 - NOTES PAYABLE

     SMC has outstanding  borrowings  at  September  30, 1996 pursuant to a
Revolving  Line  of  Credit Agreement with a bank (the "Credit  Agreement")
which provides for it  to  borrow  up  to $6,000 in the form of a five-year
reducing revolving loan arrangement, which  may  be extended to seven years
at the discretion of the bank.  At September 30, 1996,  the total principal
balance borrowed under the Credit Agreement was $5,600.   SMC  had borrowed
an additional $2,600 since December 31, 1995 to repurchase its Common Stock
and  Class  S  Cumulative Convertible Redeemable Preferred Stock ("Class  S
Preferred Stock")  and  for  general  corporate purposes.  Borrowings under
this Credit Agreement may be used for contributions to surplus of insurance
subsidiaries, acquisition financing, and  repurchases  of Class S Preferred
Stock and Common Stock of SMC.  Interest on the borrowings under the 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 percent  per  annum,  or  (ii)  a  rate  at  LIBOR plus 3.25
percent.   The  actual weighted average interest rate was 8.89  percent  at
September 30, 1996.   The  debt is also subject to certain restrictions and
covenants considered ordinary  for  this  type of borrowing.  They include,
among others, minimum consolidated equity, positive net income, and minimum
consolidated   statutory   surplus   for   SMC's  insurance   subsidiaries.
Additional  covenants  include  limitations  on   acquisitions,  additional
indebtedness, investments, and mergers, consolidations and sales of assets.
As of September 30, 1996, SMC was in compliance with  all  restrictions and
covenants in the Credit Agreement (SEE NOTE 8).

NOTE 4 - CLASS S PREFERRED STOCK

     In connection with the class action lawsuit settlement  in March 1995,
300,000 shares designated as Class S Preferred Stock, $10.00 per  share par
value,  were  issued  February  8,  1996.   The  Class S Preferred Stock is
redeemable in February 2003, has an 11 percent annual  cumulative  dividend
payable in February 2003, and is convertible into SMC common stock at $7.62
per share until February 1998 and $10.00 per share thereafter.

     SMC  may  voluntarily  redeem  the  Class  S  Preferred Stock prior to
February 2003 at par value plus accumulated and unpaid  dividends.   As  of
September 30, 1996, SMC has repurchased and retired 139,211 shares of Class
S Preferred Stock at a cost of $941 primarily paid through borrowings under
the Credit Agreement.  This repurchase resulted in an extraordinary gain on
early redemption of preferred stock of $233 and $500 for the three and nine
month periods ended September 30, 1996, respectively.
<PAGE>
                  STANDARD MANAGEMENT CORPORATION

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)



NOTE 5 - NET UNREALIZED GAIN (LOSS) ON SECURITIES AVAILABLE FOR SALE

     The components of the balance sheet caption "Unrealized gain (loss) on
securities  available  for  sale" in shareholders' equity are summarized as
follows:
<TABLE>
<CAPTION>
                                                      SEPTEMBER 30,         December 31,
                                                         1996                 1995
<S>                                                   <C>                   <C>
Fair value of securities available for sale           $241,790              $232,144
Amortized cost of securities available for sale       246,695               225,695
               Gross unrealized gain (loss) on        (4,905)               6,449
securities available for sale
Adjustments for:
               Deferred policy acquisition costs      1,860                 (2,380)
               Present value of future profits        155                   (174)
               Deferred federal income tax            996                   (1,311)
recoverable (liability)
               Minority interest                      2                     (2)
                                             Net      $(1,892)              $2,582
unrealized gain (loss) on securities available for
sale
</TABLE>

NOTE 6 - INCOME TAXES

     The effective consolidated  federal  income  tax expense (credit) rate
for SMC and subsidiaries (the "Company") was 33 percent  and  (30)  percent
for  the  three  and  nine months ended September 30, 1996, compared to (1)
percent and 5 percent for  the  three  and  nine months ended September 30,
1995.  The large credit for the nine months ended  September  30,  1996  is
primarily  due  to  tax  benefits  of  $1,420  related to the sale of First
International Life Insurance Company ("First International")  (SEE NOTE 7).
Also,  the  effective  rates  in  1995  are  less  than the statutory rates
primarily because the amortization of excess of net  assets  acquired  over
acquisition  cost  resulting  from  the  acquisition of Standard Management
International is not subject to United States income tax.  The Company also
has received the benefits of a special deduction  available  to  small life
insurance companies and the utilization of operating loss carryforwards  in
1995.   The  benefits  of  the  special  deduction  available to small life
insurance companies is no longer available because consolidated  assets now
exceed $500,000.

NOTE 7 - DISPOSAL OF SUBSIDIARIES

     On  March  18,  1996,  Standard  Life  Insurance  Company  of  Indiana
("Standard  Life"),  a  wholly-owned subsidiary of SMC, signed a definitive
stock purchase agreement  to  sell  a  duplicate charter in the form of its
wholly-owned subsidiary, First International,  to  Guardian  Insurance  and
Annuity  Co.,  Inc.  ("GIAC"),  a subsidiary of The Guardian Life Insurance
Company  of  America, New York, New  York.   Standard  Life  received  sale
proceeds of $11,493, including $1,500 for the charter and


                  STANDARD MANAGEMENT CORPORATION

      NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  (CONTINUED)



licenses associated  with  First  International  and  $1,800 of reinsurance
ceding commissions.  In addition, First International,  Standard  Life  and
GIAC  have  entered  into a series of reinsurance and other agreements that
include provisions for  Standard  Life  to  continue  to  administer  First
International  policies  in force at the date of sale and retain a majority
of the profits from First  International's business in force at the date of
sale in Standard Life.

     In an unrelated matter,  the  Company  decided  in  February  1996  to
terminate  the  reinsurance agreement between Standard Reinsurance of North
America Ltd. ("Standard  Reinsurance") and Salamandra Joint-Stock Insurance
Company in Ukraine ("Salamandra"), and to not renew the Barbados license of
Standard Reinsurance.  This  resulted  in the write-off of SMC's investment
in  Standard  Reinsurance  and  certain  intangible   assets   of  Standard
Reinsurance amounting to $156.

     The  combined  effect  of the gain on sale of First International  and
related contracts, and the Standard Reinsurance write-offs, was an increase
in  revenues  of $886 and a tax  benefit  of  $1,420,  for  net  income  of
approximately $2,306  or  $.44 per share in the nine months ended September
30, 1996.

NOTE 8 - PENDING ACQUISITION

     On July 18, 1996, Standard  Life  signed  a  definitive stock purchase
agreement to acquire Shelby Life Insurance Company  ("Shelby")  from  Delta
Life  and  Annuity  Company  ("DLAC"),  a life insurance company located in
Memphis, Tennessee.  Under terms of the agreement, SMC will purchase Shelby
for approximately $14,250, plus acquisition  costs,  including  $13,000  in
cash  and  250,000  shares of restricted SMC Common Stock.  In addition, an
extraordinary dividend  of  $3,000  will  be paid to the seller at closing.
Financing for the transaction will be provided  by  senior  debt of $10,000
and the balance in subordinated convertible debt.

     For   GAAP   purposes,   Shelby  had  $109,892  in  total  assets  and
shareholder's equity of $16,407  at  September  30,  1996,  and revenues of
$8,718  and  net  income of $1,301 for the nine months ended September  30,
1996.

     The Shelby acquisition  closed  on  November  8, 1996, effective as of
November 1, 1996.

<PAGE>
ITEM 2.      MANAGEMENT'S   DISCUSSION   AND ANALYSIS OF FINANCIAL CONDITION
             AND RESULTS OF OPERATIONS
             (UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

GENERAL

     The  following  is  an  analysis of the material factors affecting the
results  of  operations  and financial  condition  of  the  Company.   This
analysis should be read in  conjunction  with  the  consolidated  financial
statements  and  notes  thereto  included in this document, as well as  the
Company's Annual Report on Form 10-K for the year ended December 31, 1995.

RESULTS OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

     OPERATING  INCOME.  The income  (loss)  from  operations  (before  net
realized investment  gains) was $342 for the third quarter of 1996, or $.07
per share, compared to  of  $323 for the third quarter of 1995, or $.06 per
share.  The change resulted from  international operations producing income
from operations of $105 compared to a loss from international operations of
$(73)  for  the  third  quarter  of  1996   and  1995,  respectively.   The
international operating gains resulted primarily  from increased management
fees on an increasing separate account base due to  portfolio sales in 1996
and 1995, coupled with a decrease in marketing costs  in 1996 when compared
to  the third quarter of 1995.  The income from operations  in  the  United
States decreased to $237 in 1996 compared to $396 in 1995.  The decline was
attributable  to  an  increase  in  interest  expense  from  borrowings  to
repurchase Common Stock and Class S Preferred Stock and additional costs to
convert  the  operations  and expand the marketing effort in Dixie National
Life.

     PREMIUM INCOME.  Premium  income  is  composed  of premiums, including
renewal premiums, received on ordinary life insurance policies.

     GAAP  premium  income  for the third quarter of 1996  was  $1,289,  an
increase of $86 or 7 percent  from  $1,203  for  the third quarter of 1995.
The inclusion of Dixie National Life's premium income  of  $432  in 1996 in
the  results  of operations for periods after October 2, 1995 is offset  by
the  decline  in   premiums   from  the  cession  of  a  portion  of  First
International's life insurance  business  and  the  regular  policy lapses,
surrenders and expiries in the Company's closed blocks of business.

     The  Company's  new  product  sales are composed primarily of  annuity
products.  Under GAAP, deposits from interest-sensitive annuities and other
financial products are not recorded  as  revenues.   Net  premiums received
from the sales of interest-sensitive annuities and other financial products
(which are not recorded as revenues) were $13,358 compared  to  $3,664  for
the  third  quarter  of  1996  and 1995, respectively.  The increase in net
premium received is partially due  to an increase in gross domestic premium
deposits.  Gross domestic premium deposits received from interest-sensitive
annuities and financial products were  $15,982  for  the three months ended
September 30, 1996 compared to $8,409 for the three months  ended September
30,  1995.   The  increase  is  partially  due  to  an aggressive marketing
campaign  implemented  by Standard Life with increased  crediting  interest
rates.  Also contributing  to  the  increase  in premiums was the continued
development  of  the Company's distribution system.   Since  the  Company's
operating  income is  primarily  a  function  of  its  investment  spreads,
mortality experience,  and operating expenses, a change in premium deposits
in a single period does  not  directly  cause  operating  income to change,
although continued increases or decreases in premiums may affect the growth
rate of total assets on which investment spreads are earned.

     The Company also decreased the quota-share portion of  business  ceded
pursuant to a reinsurance agreement, under which 70 percent of a portion of
Standard  Life's  annuity  business  pursuant to the terms of the agreement
produced after December 31, 1994 was ceded,  to  50 percent at September 1,
1995, which was further decreased to 25 percent effective  April  1,  1996.
Premium  deposits  ceded pursuant to this reinsurance agreement reduced net
premium by $2,625 in the third quarter of 1996 compared to $4,746 in 1995.

     NET INVESTMENT  INCOME.  Net investment income increased to $4,979 for
the third quarter of 1996,  11  percent,  from  $4,497  for  the comparable
period  of 1995.  The increase resulted primarily from an increase  in  the
average annualized  yield  of  the  Company's  investment portfolio to 7.57
percent  from  7.22  percent  for  the  third quarter  of  1996  and  1995,
respectively.

     NET  REALIZED  INVESTMENT  GAINS.   Net   realized   investment  gains
increased $50 or 29 percent to $222 from $172 for the third quarter of 1996
and 1995, respectively.  Net realized gains from trading account securities
was  $23  for the third quarter of 1996 and 1995.  Net realized  investment
gains fluctuate from period to period and arise when securities are sold in
response  to   changes   in   the   investment  environment  which  provide
opportunities  to  maximize  return  on the  investment  portfolio  without
adversely  affecting  the  quality  and overall  yield  of  the  investment
portfolio.  No significant writedowns  on investments were recorded in 1995
or 1996.

     The  net  unrealized  gain  (loss)  on the  Company's  fixed  maturity
portfolio before taxes and other adjustments  was $(4,905) at September 30,
1996 compared to $6,449 at December 31, 1995, reflecting  the  general rise
in interest rates during the quarter which generally caused the  fair value
of fixed maturity securities to decrease.  The gross unrealized losses  and
gains  on  fixed  maturity securities were $(7,242) and $2,337 at September
30, 1996.  In the absence of decreases in interest rates the Company may be
unable to realize gains  on its investment portfolio at the levels of prior
years or could recognize losses from sales of securities prior to maturity.
The change in market value  of  the  Company's fixed maturity securities is
not expected to have a significant effect  on results of operations because
the  Company  has  the present intent and practice  to  hold  most  of  its
available-for-sale fixed  maturity securities to maturity and the Company's
asset/liability management  activity  is designed to monitor and adjust for
the effects of changes in market interest rates.

     POLICY CHARGES.  Policy charges, which  represent the amounts assessed
against policy account balances for the cost of  insurance,  administration
and surrenders,  increased $76 or 14 percent to $617 for the third  quarter
of  1996  compared to $541 for the third quarter of 1995.  The increase  in
policy charges  resulted  from  the  inclusion  of  Dixie  National Life in
operating results for periods after
<PAGE>
October  2,  1995 and an increase in policy surrender charges  on  flexible
premium deferred  annuities  ("FPDAs"),  which offset the absence of policy
charges from the Company's closed blocks of  universal  life business which
were sold to GIAC through a reinsurance contract effective January 1, 1996.

     AMORTIZATION  OF EXCESS OF NET ASSETS ACQUIRED OVER ACQUISITION  COST.
Amortization  of excess  of  net  assets  acquired  over  acquisition  cost
("negative goodwill")  is  recorded  to amortize into earnings the negative
goodwill recorded in connection with the acquisition of Standard Management
International  in 1993.  The negative goodwill  is  being  amortized  on  a
straight-line basis over five years.  Amortization of negative goodwill was
$347 for the third quarter of 1996 and 1995.

     MANAGEMENT FEES AND SIMILAR INCOME FROM SEPARATE ACCOUNTS.  Management
fees and similar  income  is recorded from investment management fee income
recorded  by Standard Management  International  on  its  separate  account
assets and  investment  contracts.  Management fees and similar income from
separate accounts increased  $21 or 9 percent to $257 for the third quarter
of 1996 from $236 for the third  quarter  of  1995.   This  increase is due
primarily  to an increase in the value of assets held in separate  accounts
from $94,301  at December 31, 1994 to $126,987 at September 30, 1996 and to
higher service fees being levied on certain transactions.

     ADMINISTRATION   FEE   INCOME.   Administration  fee  income  includes
administration fees related to  administration agreements with GIAC of $145
for the quarter ended September 30,  1996;  there was no such income in the
comparable quarter in 1995.

     OTHER INCOME.  Other income primarily includes reserve adjustments and
experience refunds in connection with the reinsurance  agreement  with GIAC
and  override  commissions received from unaffiliated companies by Standard
Marketing Corporation  ("Standard  Marketing"),  a  wholly-owned subsidiary
which  is a wholesale distributor of life insurance and  annuity  products.
Other income  increased  $5  or  5 percent to $113 for the third quarter of
1996  compared  to  $108  for the comparable  1995  period.   The  increase
resulted  primarily  from  increased   commissions   received  by  Standard
Marketing from the sale of unaffiliated products.

     BENEFITS AND CLAIMS.  Benefits and claims include  life  insurance and
payout annuity benefits paid and changes in policy reserves.  Benefits  and
claims  increased  $72 or 5 percent to $1,434 for the third quarter of 1996
from $1,362 for the third quarter of 1995.  The increase resulted primarily
from  the inclusion  of  Dixie  National  Life's benefits and claims in the
results of operations in 1996. Throughout the  Company's  history,  it  has
experienced  both  periods  of  higher  and  lower  benefit  claims.   Such
volatility  is  not  uncommon  in  the  life  insurance  industry and, over
extended periods of time, periods of higher claims experience  tend  to  be
offset by periods of lower claims experience.

     INTEREST  CREDITED ON INTEREST SENSITIVE ANNUITIES AND OTHER FINANCIAL
PRODUCTS.  Interest  credited  on  interest  sensitive  annuities and other
financial products was $2,641 for the third quarter of 1996, an increase of
$443 or 20 percent from $2,198 for the comparable prior year  period.   The
increase  resulted  primarily  from  the  Company's  increase  of  credited
interest  rates  on  new  annuity  sales  and  the growth in account values
inforce  for FPDAs.  At September 30, 1996, the weighted  average  interest
credited rate  for  Standard  Life's  annuities and other financial product
liabilities was 5.40 percent compared to 5.27 percent at December 31, 1995.
Crediting rates offered on new business  can  be  changed  at  any  time in
response to competition and market interest rates.

     SALARIES  AND  WAGES.   Salaries  and  wages were $1,215 for the third
quarter  of  1996,  an increase of $98 or 9 percent  from  $1,117  for  the
comparable prior year  period.  This fluctuation was caused primarily by an
increase in the number and  average wages of employees in the United States
due  to   the  acquisition of Dixie  National  Life  and  the  increase  in
incentive compensation for the increase in income for the nine months ended
September 30, 1996.

     AMORTIZATION.  Amortization expense includes charges to operations for
the amortization of deferred policy acquisition costs, the present value of
future profits,  the excess of cost over net assets acquired and subsidiary
organization costs.   Amortization  expense increased $134 or 31 percent to
$564 for the third quarter of 1996 from $430 for the third quarter of 1995.
The increase in current year amortization  expense  resulted primarily from
the amortization of present value of future profits for  the acquisition of
Dixie National Life.

     OTHER OPERATING EXPENSES.  Other operating expenses decreased  $270 or
18  percent  to  $1,263  for  the third quarter of 1996 from $1,533 for the
third quarter of 1995.  The decrease  in  other operating expenses resulted
primarily  from  a  decrease  in  marketing expenses  and  a  reduction  in
international expenses, which offset  the  expenses  of Dixie National Life
included in the results for the third quarter of 1996.

     INTEREST EXPENSE AND FINANCING COSTS.  Interest expense  and financing
costs  increased  $129  to $153 in 1996 from $24 in 1995.  The increase  in
interest  expense  and  financing  costs  during  1996  resulted  from  the
borrowings on the Credit  Agreement  related  to  the  repurchase of Common
Stock  and  Class  S  Preferred  Stock.   The borrowings under  the  Credit
Agreement occurred after September 30, 1995.

     FEDERAL INCOME TAXES.  Federal income  tax  expense  (credit) was $228
for  the third quarter of 1996, compared to $(5) for the third  quarter  of
1995.   The  change is primarily due to tax benefits to First International
being recorded  in  1995 from the utilization of tax loss carryforwards for
which no tax benefit  had  previously been recognized.  Also, the effective
rates in 1995 are less than  the  statutory  rates  primarily  because  the
amortization  of  excess  of  net  assets  acquired  over  acquisition cost
resulting from the acquisition of Standard Management International  is not
subject  to  United  States  income tax.  The Company also has received the
benefits of a special deduction available to small life insurance companies
and the utilization of operating  loss carryforwards in 1995.  The benefits
of the special deduction available  to small life insurance companies is no
longer available because consolidated assets now exceed $500,000.

     EXTRAORDINARY   GAIN   ON  EARLY  REDEMPTION   OF   PREFERRED   STOCK.
Extraordinary gains are recorded  on  the  early  redemption of the Class S
Preferred Stock for the amount by which the Company  is  able to repurchase
the Class S Preferred Stock below its book value.  The Company may continue
to  repurchase  these  shares  as  long as the Class S Preferred  Stock  is
selling at a substantial discount to  book  value.   The extraordinary gain
was $233 for the three months ended September 30, 1996  compared to no gain
for the prior comparable period.

NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

     OPERATING  INCOME.   The income from operations (before  net  realized
investment  gains,  gain  on disposal  of  subsidiaries  and  reduction  in
accruals of certain legal expenses)  was  $616  in 1996, or $.14 per share,
compared  to  $294  for  1995,  or  $.05  per share.  The  change  resulted
primarily from international operations producing income from operations of
$440 compared to a loss of $(396) for the nine  months  ended September 30,
1996  and 1995, respectively.  The international operating  gains  resulted
primarily  from increased management fees on an increasing separate account
base due to portfolio sales in 1995 and 1996, and increased value of assets
under management,  coupled  with a decrease in marketing costs in 1996 when
compared  to  1995.   The income  from  operations  in  the  United  States
decreased to $176 in 1996  compared  to  $690  in  1995.   The  decline was
attributable  to  an  increase  in  interest  expense  from  borrowings  to
repurchase Common Stock and Class S Preferred Stock and additional costs to
convert  the  operations  and expand the marketing effort in Dixie National
Life.

     PREMIUM  INCOME.  GAAP  premium  income  for  the  nine  months  ended
September 30, 1996  was  $8,418,  an increase of $4,875 or 138 percent from
$3,543 for the nine months ended September  30,  1995.   This  increase  is
mainly  attributable  to  recapture  of premiums ceded of $4,234 due to the
termination and recapture of a reinsurance  agreement  with National Mutual
Life  Insurance  Company  ("National  Mutual") and the inclusion  of  Dixie
National Life in the results of operations  for  periods  after  October 2,
1995.  These amounts offset the decline in premiums from the cession  of  a
portion  of  First  International's life insurance business and the regular
policy lapses, surrenders  and  expiries  in the Company's closed blocks of
business.

     Net premiums received from the sales of  interest-sensitive  annuities
and  other  financial  products  (which  are not recorded as revenues) were
$32,153 compared to $10,680 for the nine months  ended  September  30, 1996
and 1995, respectively.  The increase in premium deposits is partially  due
to  an increase in gross domestic premium deposits.  Gross domestic premium
deposits  received from interest-sensitive annuities and financial products
were $39,781  for  the  nine  months  ended  September 30, 1996 compared to
$26,641  for the nine months ended September 30,  1995.   The  increase  is
partially  due  to an aggressive marketing campaign implemented by Standard
Life with increased  crediting  interest  rates.   Also contributing to the
increase  in  premiums  was  the  continued  development of  the  Company's
distribution system.

     As previously mentioned, the Company also  decreased  the  quota-share
portion  of  business  ceded  pursuant  to a reinsurance agreement from  70
percent to 50 percent at September 1, 1995,  which was further decreased to
25  percent effective April 1, 1996.  Premium deposits  ceded  pursuant  to
this reinsurance agreement reduced net premium by $7,628 in the nine months
ended September 30, 1996 compared to $15,961 in 1995.

     NET  INVESTMENT  INCOME.   Net  investment  income increased $694 or 5
percent  to  $14,371  for  the nine months ended September  30,  1996  from
$13,677 for the comparable period of 1995.  The increase primarily resulted
from an increase in total invested assets (amortized cost) of approximately
9 percent from 1995 to 1996,  offset by a decline in the average annualized
yield on the Company's invested  assets  to  7.28 percent from 7.36 percent
for the nine months ended September 30, 1996 and  1995,  respectively.  The
decline in yields is primarily due to lower interest rates available on new
investments in 1995.  The continued growth in the Company's  total invested
assets  reflects  increased  sales  of  FPDAs  and  the inclusion of  Dixie
National Life in the results of operations effective  October 2, 1995 which
was   offset   by  the  invested  assets  ceded  in  the  GIAC  reinsurance
transaction.

     NET  REALIZED   INVESTMENT   GAINS.   Net  realized  investment  gains
increased $172 or 34 percent to $677  from  $505  for the nine months ended
September 30, 1996 and 1995, respectively.  Net realized gains from trading
account  securities  increased to $85 from $57 for the  nine  months  ended
September 30, 1996 and  1995,  respectively.  Net realized investment gains
fluctuate from period to period  and  arise  when  securities  are  sold in
response   to   changes   in   the  investment  environment  which  provide
opportunities  to  maximize return  on  the  investment  portfolio  without
adversely affecting  the  quality  and  overall  yield  of  the  investment
portfolio.

     GAIN  ON  DISPOSAL  OF  SUBSIDIARIES.   On March 18, 1996, the Company
completed   the  sale  of  a  duplicate  charter  associated   with   First
International  to  GIAC.   The  Company  received sale proceeds of $11,493,
including  $1,500  for  the  charter  and licenses  associated  with  First
International and $1,800 of reinsurance  ceding  commissions.  In addition,
First International, Standard Life and GIAC have entered  into  a series of
reinsurance and other agreements that include provisions for Standard  Life
to administer First International policies in force at the date of sale.

     In  an  unrelated  matter,  the  Company  decided  in February 1996 to
terminate  the  reinsurance  agreement  between  Standard  Reinsurance  and
Salamandra, and to not renew the Barbados license of Standard  Reinsurance.
This  resulted in the write-off of SMC's investment in Standard Reinsurance
and certain intangible assets of Standard Reinsurance amounting to $156.

     The  combined  effect  of  the  pre-tax  gain  on  the  sale  of First
International  and  related  contracts, and the Standard Reinsurance write-
offs, was $886 in the first quarter of 1996.

     POLICY CHARGES.  Policy charges increased $187 or 11 percent to $1,832
for the nine months ended September  30,  1996  compared  to $1,645 for the
nine  months  ended  September  30,  1995.  The increase in policy  charges
resulted from an increase in policy surrender  charges  on  FPDAs  and  the
inclusion  of  Dixie  National  Life in operating results for periods after
October  2,  1995 which offset the  absence  of  policy  charges  from  the
Company's closed  blocks of universal life business which were sold to GIAC
through a reinsurance contract effective January 1, 1996.

     AMORTIZATION OF  EXCESS  OF NET ASSETS ACQUIRED OVER ACQUISITION COST.
Amortization  of  excess  of  net assets  acquired  over  acquisition  cost
("negative goodwill") is recorded  to  amortize  into earnings the negative
goodwill recorded in connection with the acquisition of Standard Management
International  in  1993.   The negative goodwill is being  amortized  on  a
straight-line basis over five years.  Amortization of negative goodwill was
$1,041 for the nine months ended September 30, 1996 and  1995.

<PAGE>
     MANAGEMENT FEES AND SIMILAR INCOME FROM SEPARATE ACCOUNTS.  Management
fees and similar income from separate accounts increased $369 or 51 percent
to $1,093 for the nine months  ended  September  30, 1996 from $724 for the
nine months ended September 30, 1995.  This increase is due primarily to an
increase in the value of assets held in separate accounts  from  $94,301 at
December  31, 1994 to $126,987 at September 30, 1996 and to higher  service
fees being  levied  on  certain  transactions.   Net deposits from sales of
unit-linked products by Standard Management International  were  $9,159 and
$25,764   for   the   nine  months  ended  September  30,  1996  and  1995,
respectively.

     ADMINISTRATION  FEE   INCOME.    Administration  fee  income  includes
administration fees of $307 and other income  related  to  reinsurance  and
administration  agreements  with  GIAC  and  administration  fees  of  $375
collected  in  connection  with  the  terminated and recaptured reinsurance
agreement  with  National  Mutual.   The  administration  fee  income  from
National Mutual primarily related to services  provided in prior years; the
income was not previously recorded due to uncertainty as to its collection.
The   National   Mutual   fee  income  will  not  recur  in   the   future.
Administration fee income was  $682 for the nine months ended September 30,
1996; there was no such income for the comparable 1995 period.

     OTHER INCOME.  Other income  increased $608 or 237 percent to $865 for
the  nine  months  ended  September 30,  1996  compared  to  $257  for  the
comparable 1995 period.  The  increase  resulted primarily from the reserve
and  experience  refund  adjustments  in connection  with  the  reinsurance
agreement  with  GIAC  and  increased  commissions   received  by  Standard
Marketing from the sale of unaffiliated products.

     CLASS ACTION LITIGATION AND SETTLEMENT COSTS.  Class action litigation
and  settlement  costs  were  recorded  to reflect the estimated  costs  of
litigation and settlement of the shareholder class action lawsuit, based on
the terms of the settlement agreement and  assumptions  as  to  the  future
estimated legal and other costs to settle the lawsuit, which was settled in
March  1995,  and  to  register  the  Class  S  Preferred  Stock  which was
distributed  to  the  class  participants in February 1996.  There were  no
class action litigation and settlement  expenses  in  the nine months ended
September 30, 1996 and 1995.  However, with the signing  of  the Settlement
Agreement with the 22 persons who previously excluded themselves  from  the
class and the reevaluation of the future estimated legal and other costs to
settle  the lawsuit, SMC recorded a reduction of $314 in the second quarter
of 1995 in  the  estimated  future costs to settle the lawsuit and register
the Class S Preferred Stock.

     BENEFITS AND CLAIMS.  Benefits  and  claims  increased  $4,534  or 110
percent  to $8,657 for the nine months ended September 30, 1996 from $4,123
for the nine  months  ended  September  30,  1995.   The increase  resulted
primarily from an increase in reserves of $4,234 related to the termination
and recapture of a reinsurance agreement with National Mutual, and slightly
higher  life  insurance  benefit  claims due to adverse claims  experience.
Throughout the Company's history, it has experienced both periods of higher
and lower benefit claims.  Such volatility  is  not  uncommon  in  the life
insurance  industry  and,  over extended periods of time, periods of higher
claims experience tend to be offset by periods of lower claims experience.

<PAGE>
     INTEREST CREDITED ON INTEREST  SENSITIVE ANNUITIES AND OTHER FINANCIAL
PRODUCTS.   Interest credited on interest  sensitive  annuities  and  other
financial products was $7,645 for the nine months ended September 30, 1996,
an increase of  $320 or 4 percent from $7,325 for the comparable prior year
period.  The increase  resulted  primarily  from  the Company's increase of
credited  interest  rates  on new annuity sales and the  increases  in  the
growth in policy reserves for  FPDAs.   At September 30, 1996, the weighted
average  interest credited rate for Standard  Life's  annuities  and  other
financial  product liabilities was 5.40 percent compared to 5.27 percent at
December 31, 1995.

     SALARIES  AND  WAGES.   Salaries  and  wages  were $3,678 for the nine
months ended September 30, 1996, an increase of $356  or  11  percent  from
$3,322  for  the comparable prior year period.  This fluctuation was caused
primarily by an  increase  in  the number and average wages of employees in
the United States due to the acquisition  of  Dixie  National  Life and the
increase in incentive compensation for the increase in income for  the nine
months ended September 30, 1996.

     AMORTIZATION.   Amortization  expense increased $372 or 28 percent  to
$1,723 for the nine months ended September  30,  1996  from  $1,351 for the
nine  months  ended  September  30,  1995.   The  increase in current  year
amortization  expense  resulted  primarily from increased  amortization  of
deferred acquisition costs as gross  profits  from  business sold in recent
years  began  to  emerge,  increased  surrenders  and  their  corresponding
increase in the amortization of deferred acquisition costs,  and  from  the
amortization  of  present  value  of  future profits for the acquisition of
Dixie National Life.  These items more  than offset reduced amortization of
excess of cost over net assets acquired and present value of future profits
due to the sale of First International.

     OTHER OPERATING EXPENSES.  Other operating  expenses increased $700 or
16  percent  to $5,173 for the nine months ended September  30,  1996  from
$4,473 for the nine months ended September 30, 1995.  The increase in other
operating expenses  resulted  primarily from the expenses of Dixie National
Life included in the results for  the  nine months ended September 30, 1996
and the increased expenses related to potential acquisitions.

     INTEREST EXPENSE AND FINANCING COSTS.   Interest expense and financing
costs  increased  $353 or 458 percent to $430 for  the  nine  months  ended
September 30, 1996  from  $77 for the nine months ended September 30, 1995.
The increase in interest expense  and  financing costs during 1996 resulted
primarily  from  the borrowings on the Credit  Agreement.   The  borrowings
under the Credit Agreement occurred after September 30, 1995.

     FEDERAL INCOME  TAXES.  Federal income tax expense (credit) was $(762)
for the nine months ended  September 30, 1996, compared to $56 for the nine
months ended September 30, 1995.  The large credit in 1996 is primarily due
to tax benefits related to the  sale  of  First  International.   Also, the
effective rates in 1995 are less than the statutory rates primarily because
the  amortization  of  excess of net assets acquired over acquisition  cost
resulting from the acquisition  of Standard Management International is not
subject to United States income tax.   The  Company  also  has received the
benefits of a special deduction available to small life insurance companies
and the utilization of operating loss carryforwards in 1995.   The benefits
of the special deduction available to small life insurance companies  is no
longer available because consolidated assets now exceed $500,000.

     EXTRAORDINARY   GAIN   ON   EARLY   REDEMPTION   OF  PREFERRED  STOCK.
Extraordinary gains are recorded on the early redemption  of  the  Class  S
Preferred  Stock  for the amount by which the Company is able to repurchase
the Class S Preferred  Stock  below  its  book  value.   The  Company  will
continue  to repurchase these shares as long as the Class S Preferred Stock
is selling at a substantial discount to book value.  The extraordinary gain
was $500 for  the  nine months ended September 30, 1996 compared to no gain
for the prior comparable period.

LIQUIDITY AND CAPITAL RESOURCES

     SMC is an insurance  holding  company.   The liquidity requirements of
SMC  are  met  primarily from management fees, equipment  rental  fees  and
payments for other  charges  and dividends received from SMC's subsidiaries
as well as SMC working capital.  These are SMC's primary source of funds to
pay operating expenses and meet  debt  service obligations.  The payment of
dividends and management and other fees  by Standard Life to SMC is subject
to  restrictions  under  the  insurance laws of  Indiana,  Standard  Life's
jurisdiction of domicile.  These  internal  sources  of liquidity have been
supplemented in the past by external sources such as lines  of  credit  and
revolving  credit agreements and long-term debt and equity financing in the
capital markets.

     The Company reported on a consolidated GAAP basis net cash provided by
operations of  $2,757  and  $6,344  for the nine months ended September 30,
1996 and 1995, respectively.  Although  deposits  received on the Company's
interest-sensitive annuities and other financial products  are not included
in cash flow from operations under GAAP, such funds are available  for  use
by  the  Company.   Cash provided by operations plus net deposits received,
less net account balances  returned  to policyholders on interest sensitive
annuities and other financial products,  resulted  in positive cash flow of
$21,917 and $3,624 for the nine months ended September  30,  1996 and 1995,
respectively.

     SMC's  "parent  company only" operating expenses (not including  class
action litigation and  settlement  costs  and interest expense) were $2,369
and  $2,007  for  the  nine  months  ended September  30,  1996  and  1995,
respectively.

     In April 1993, SMC instituted a program to repurchase its Common Stock
from  time  to  time.   The purpose of the stock repurchase program  is  to
enhance shareholder value.   The  Company has repurchased 979,453 shares of
its Common Stock for $4,747 as of September  30,  1996.   At  September 30,
1996,  the  Company is authorized to purchase an additional 521,771  shares
under this program.   The  Company implemented a policy to issue shares for
the  exercise  of stock options  from  treasury  stock.   The  Company  has
reissued 1,224 shares  in  1996  under  this  program at a cost of $6.  The
repurchases in 1996 have been paid through additional  borrowings under the
Credit Agreement.

<PAGE>
     In February 1996, SMC instituted a program to repurchase  from time to
time up to 300,000 shares of its Class S Preferred Stock in the open market
or  privately  negotiated  transactions.   As of October 31, 1996, SMC  has
repurchased and retired 139,211 shares of its  Class  S Preferred Stock for
$941.

     On May 1, 1996, the Board of Directors declared a  stock dividend of 5
percent on shares of its common stock for shareholders of record on May 17,
1996.   The  stock  dividend  was  distributed  on  June  21,  1996,   with
shareholders  receiving  shares  of common stock equivalent to 5 percent of
common shares owned as of May 17,  1996  and cash equivalent for fractional
shares.  The number of shares issued pursuant  to  this action was 272,926,
plus cash in lieu of fractional shares.

     At October 31, 1996, SMC had "parent company only" cash and short-term
investments  of  $1,077.   These  funds are available to  the  Company  for
general corporate purposes including  repayment  of  debt  outstanding  and
additional capital infusions into Standard Life.

     Pursuant  to the management services agreement with SMC, Standard Life
paid SMC a monthly  fee of $150 during 1996 and 1995 for certain management
services related to the  production  of  business, investment of assets and
evaluation of acquisitions.  The agreement  was  approved  by  the  Indiana
Department of Insurance with the stipulation that Dixie National Life would
pay  an  annual  fee  of  at  least  $1,500  to  Standard Life during 1996.
Management  service  agreements between Standard Life  and  Dixie  National
Life, have been approved  by  the Mississippi Department of Insurance which
call  for  the  payment of fees of  $1,524  during  1996.   Both  of  these
agreements  provide  that  they  may  be  modified  or  terminated  by  the
department of insurance in the event of financial hardship of Standard Life
or Dixie National  Life.  The management service agreement between Standard
Life and Dixie National  Life currently requires a monthly payment of $100.
The management service agreement  between  SMC  and  Standard Life for 1997
will be renegotiated before the end of 1996 and submitted  for  approval to
the Indiana Department of Insurance.

     Pursuant  to the management services agreement with SMC, Premier  Life
(Luxembourg) paid  SMC  a management fee of $25 per quarter during 1996 and
1995 for certain management  and  administrative  services.   The agreement
provides  that  it  may be modified or terminated by either SMC or  Premier
Life (Luxembourg).

     At  April  1,  1995,   SMC  sold  its  property  and  equipment  to  a
leasing/financing  company for  $1,396  and  subsequently  entered  into  a
capital lease obligation  whereby  SMC pays a monthly rental amount of $45.
SMC charges a monthly equipment rental fee to its subsidiaries of $77.

     In July 1996, SMC announced that  Standard Life signed an agreement to
purchase  Shelby  from  DLAC for approximately  $14,250,  plus  acquisition
costs, including $13,000  in  cash  and  250,000  shares  of restricted SMC
Common Stock.  The purchase of Shelby closed on November 8, 1996 and Shelby
was merged into Standard Life on that date.  Financing for  the transaction
was  provided  by  senior  debt  of $10,000 and the balance in subordinated
convertible debt.  The Company's original  Credit  Agreement  was  combined
with  the  new  senior  debt  in  a  new  credit agreement ("Amended Credit
Agreement"), the terms of which are substantially  the same as the original
Credit Agreement's terms.

     The Amended Credit Agreement provides for SMC to  borrow up to $16,000
in the form of a seven-year reducing revolving loan arrangement.   SMC  has
agreed  to pay a non-use fee of .50 percent per annum on the unused portion
of the commitment.   In  connection  with  the  original and Amended Credit
Agreement, SMC issued warrants to the bank to purchase 60,000 shares of SMC
Common Stock.  Borrowings under the Amended Credit  Agreement  may  be used
for   contributions  to  surplus  of  insurance  subsidiaries,  acquisition
financing,  and  repurchases  of Class S Preferred and Common Stock of SMC.
The  debt  is secured by a Pledge  Agreement  of  all  of  the  issued  and
outstanding shares of common stock of Standard Life and Standard Marketing.
Interest on the borrowings under the 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 percent per annum,
or (ii) a rate at LIBOR plus 3.25 percent.  No principal repayments will be
required until November  1998.   Indebtedness  incurred  under  the  Credit
Agreement is subject to certain restrictions and covenants including, among
other  things,  certain minimum financial ratios, minimum statutory surplus
requirements for  the  insurance  subsidiaries, minimum consolidated equity
requirements  for  the  Company  and certain  investment  and  indebtedness
limitations.  As of September 30,  1996, the Company was in compliance with
all restrictions and covenants in the  Credit  Agreement.   At  November 8,
1996,  SMC  had  borrowed  $15,700  under  the Amended Credit Agreement  at
interest rates ranging from 8.875 percent to 9.25 percent.

     In connection with the acquisition of Shelby, SMC borrowed $4,000 from
an unaffiliated insurance company pursuant to  a  subordinated  convertible
debt  agreement  which  is  due  in  December,  2003  and requires interest
payments in cash at 12 percent per annum, or, if SMC chooses,  in  non-cash
additional  subordinated  convertible  debt  notes  at 14 percent per annum
until   December  31,  2000.   The  subordinated  convertible   notes   are
convertible  into  SMC  Common Stock at the rate of $6.00 per share through
November  1997,  and $5.75  per  share  thereafter.   SMC  may  prepay  the
subordinated convertible  debt with not less than thirty days notice at any
time.   The subordinated convertible  debt  agreement  contains  terms  and
financial  covenants  substantially  similar to those in the Amended Credit
Agreement.

     Assuming  the  continuation  of  current  debt level under the Amended 
Credit  Agreement  ($15,700) and  current  interest rates (weighted average 
rate of 9.1425 percent)  and  assuming  SMC  elects  the  non-cash interest 
payment option under the subordinated convertible debt, annual debt service
in  1997 would be  approximately  $1,435  in  interest  paid on the Amended 
Credit  Agreement.  In  addition, SMC will also pay $539 in rental payments 
relating to a capital lease obligation in 1997.

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

     Dividends from Standard Life to SMC are limited  by laws applicable to
insurance companies.  As an Indiana domiciled insurance  company,  Standard
Life  may  pay a dividend or distribution from its surplus profits, without
the prior approval  of  the  Indiana  Commissioner  of  Insurance,  if  the
dividend   or   distribution,   together   with  all  other  dividends  and
distributions paid within the preceding twelve  months, does not exceed the
greater of (i) net gain from operations or (ii) 10  percent  of surplus, in
each case as shown in its preceding annual statutory financial  statements.
For the year ended December 31, 1995, Standard Life reported statutory  net
gain  from  operations  of  $124  and statutory surplus of $10,186.  During
1996,  Standard  Life  can  pay  dividends  of  $1,019  without  regulatory
approval; Standard Life must notify  the  Indiana regulatory authorities of
their  intent  to  pay dividends at least thirty  days  prior  to  payment.
Regulatory approval  will  be  required for additional dividend payments in
excess of this amount by Standard  Life  during  1996.   On  June 20, 1996,
Standard  Life  paid  an ordinary dividend on $1,000 to SMC which  was  not
disapproved  by the Indiana  Department  of  Insurance.   Also,  regulatory
approval is required  when  dividends to be paid exceed unassigned surplus.
At September 30, 1996, unassigned  surplus  (deficit)  was $(1,512).  Until
unassigned surplus returns to a positive amount, all future  dividends will
require regulatory approval.

     SMC anticipates the available cash from its existing working  capital,
plus  anticipated  1996  dividends,  management  fees,  rental  income  and
interest  payments  on  its Surplus Debentures receivable will be more than
adequate to meet its anticipated  "parent  company  only" cash requirements
for 1996.

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

     INVESTMENTS.  Investment  activities  are  an  integral  part  of  the
Company's   business;   investment   income   of  the  Company's  insurance
subsidiaries is an important part of its total  revenues.  Profitability is
significantly  affected  by  spreads  between rates credited  on  insurance
liabilities  and  interest  yield on invested  assets.   Substantially  all
credited rates on FPDAs may be  changed at least annually.  As of September
30, 1996, the average interest rate  credited  on  the  Company's interest-
sensitive  liability portfolio, excluding liabilities related  to  separate
accounts, was  approximately  5.40  percent  per annum, and the average net
yield of the Company's investment portfolio for the quarter ended September
30, 1996 was 7.57 percent for a spread of 2.17  percent  at  September  30,
1996,  compared  to  1.79  percent  at  September  30,  1995.  Increases or
decreases  in interest rates could increase or decrease the  interest  rate
spread between  investment  yields and interest rates credited on insurance
liabilities, which in turn could have a beneficial or adverse effect on the
future profitability of the Company.   Sales  of  fixed maturity securities
that result in investment gains may also tend to decrease  future  interest
yields  from the portfolio.  State insurance laws and regulations prescribe
the types of permitted investments and limit their concentration in certain
classes of investments.

     The  Company  balances  the  duration  of its invested assets with the
expected duration of benefit payments arising  from  insurance liabilities.
At September 30, 1996, the adjusted modified duration  of  fixed maturities
and  short-term  investments for its U.S. insurance subsidiaries  was  5.65
years, compared to 5.4 years as of December 31, 1995.

     The Company's  investment  strategy  is guided by strategic objectives
established by the Investment Committee of  the  Board  of  Directors.  The
Company's major investment objectives are: (i) to ensure adequate safety of
investments and to protect and enhance capital; (ii) to maximize  after-tax
return   on  investments;  (iii)  to  match  the  anticipated  duration  of
investments  with  the anticipated duration of policy liabilities; and (iv)
to provide sufficient  liquidity  to  meet  cash  requirements with minimum
sacrifice of investment yield.  Consistent with its  strategy,  the Company
invests  primarily  in  securities of the U.S. government and its agencies,
investment grade utility  and  corporate debt securities and collateralized
mortgage obligations ("CMOs").   At  September  30,  1996, approximately 94
percent of the book value of the Company's fixed maturity  investments  was
investment  grade.   From  time  to time when opportunities arise, however,
below investment grade securities  may  be  purchased.   Protection against
default  risk  is a primary consideration.  The Company has  determined  it
will not invest  more  than  7  percent  of  its  bond  portfolio  in below
investment grade securities.

     The Company engages Conseco Capital Management Inc. ("CCM"), a  wholly
owned  subsidiary of Conseco, Inc., to manage the Company's invested assets
in its United  States  life  insurance  subsidiaries  (other  than mortgage
loans, policy loans, real estate and other invested assets), subject to the
direction of the Company's investment committee.  A quarterly fee  equal to
 .035 percent of the total market value of the assets under management as of
the  end  of  each  quarter  is  paid  to  CCM  for its investment advisory
services.

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

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

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


     Statutory  surplus is computed according to rules  prescribed  by  the
National Association  of  Insurance  Commissioners ("NAIC"), as modified by
the Indiana Department of Insurance, or  the  state  in which the insurance
subsidiaries do business.  Statutory accounting rules  are  different  from
GAAP  and  are  intended  to  reflect a more conservative perspective.  The
Company's  long-term  growth goals  contemplate  continued  growth  in  its
insurance businesses.   To  achieve  these growth goals, Standard Life will
need to increase statutory surplus.  Additional  statutory  surplus  may be
secured  through  various  sources  such  as internally generated statutory
earnings,  equity  sales,  infusions by the Company  with  funds  generated
through debt or equity offerings  or  mergers  with  other  life  insurance
companies.   With  respect  to new business, statutory accounting practices
require that: (i) acquisition costs and (ii) reserves for future guaranteed
principal payments and interest  in  excess of statutory rates, be expensed
in the year the new business is written.   These  items  cause  a statutory
loss ("surplus strain") from many insurance products in the year  they  are
issued.   The  Company  designs  its  products  to minimize such first-year
losses, but certain products continue to cause a statutory loss in the year
written.  For each product, the Company controls  the  amount  of  net  new
premiums  written  in  order to manage the effect of such statutory surplus
strain.

     During the first nine months of 1996, the Company produced a statutory
net income of $2,953.  As  a result, SMC has not made capital contributions
to Standard Life during 1996  in  order  to  maintain  adequate  levels  of
statutory  capital  and  surplus.   In  March  1996, Standard Life sold its
subsidiary,  First  International, and realized an  increase  in  statutory
capital and surplus of  approximately $4,951 from the statutory gain on the
sale and related reinsurance transactions.

     Commencing January 1, 1995, the Company began to reinsure a portion of
its annuity business.   The  primary  purposes of the reinsurance agreement
are to limit the net loss arising from  large risks, maintain the Company's
exposure to loss within capital resources,  and provide additional capacity
for future growth.  Furthermore, these reinsurance  agreements have allowed
Standard Life to write volumes of business that it would not otherwise have
been able to write due to regulatory restrictions based  on  the  amount of
its statutory capital and surplus.  The Company's largest annuity reinsurer
at September 30, 1996, Winterthur Life Re Insurance Company ("Winterthur"),
is rated "A" (Excellent) by A.M. Best.  From January 1, 1995 to August  31,
1995  approximately  70  percent  of  certain  of  Standard  Life's annuity
business produced was ceded.  The Company decreased the quota-share portion
of business ceded to 50 percent at September 1, 1995 and further reduced it
to  25  percent  effective  April  1, 1996 to reflect the reduced need  for
additional  capital and increase current  earnings  potential.   Winterthur
limits dividends  and other transfers by Standard Life to SMC or affiliated
companies in certain circumstances.

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

     Management  believes  that operational cash flow of Standard Life will
be sufficient to meet its anticipated  needs for 1996.  As of September 30,
1996,  Standard  Life  had statutory capital  and  surplus  for  regulatory
purposes of $14,656 compared  to $12,877 at December 31, 1995.  As the life
insurance and annuity business produced by Standard Life and Dixie National
Life increases, Standard Life expects  to  continue  to  satisfy  statutory
capital  and  surplus  requirements through statutory profits, through  the
continued reinsurance of  a  portion  of  its  new  business,  and  through
additional capital contributions by the Company.  During 1996, SMC has  not
made  any  capital  contributions  to  Standard  Life.   Net cash flow from
operations on a statutory basis of Standard Life, after payment of benefits
and  operating expenses, was $30,042 and $4,263 for the nine  months  ended
September  30, 1996 and year ended December 31, 1995, respectively.  If the
need arises  for  cash which is not readily available, additional liquidity
could be obtained from the sale of invested assets.
     Standard Life's  acquisition  of  Shelby,  and  merger  of Shelby into
Standard Life, effective November 1, 1996 is anticipated to have a positive
effect  on  Standard  Life's  liquidity and cash flows.  Shelby will  cease
writing  new  business  effective  November  1,  1996,  thus  reducing  the
statutory strain normally  associated  with  the  issuance of new policies.
The  anticipated  profits from Shelby's book of business  are  expected  to
exceed the related  interest  expense connected with the $13,000 of Surplus
Debentures issued by Standard Life  in  connection  with the acquisition of
Shelby.  The statutory net income of Shelby was $1,661  for  the year ended
December 31, 1995 and $692 for the nine months ended September 30, 1996.

     INTERNATIONAL  OPERATIONS.   The  balance  sheet  of  the  Company  at
September 30, 1996, includes a $3,122 credit representing the excess of net
assets   acquired  over  acquisition  cost  on  the  purchase  of  Standard
Management  International  which  will  be  amortized into future earnings.
This  amortization  is  a  non-cash  credit  to the  Company  statement  of
operations.

     Standard Management International may pay  dividends  from accumulated
earnings without regulatory approval.    Premier Life (Bermuda) did not pay
dividends in 1995 and 1994.  Standard Management International  and Premier
Life (Luxembourg) were not permitted to pay dividends in 1995 and  1994 due
to accumulated losses.

     Due   to  the  nature  of  unit-linked  products  issued  by  Standard
Management International,  which  represent over 95 percent of the Standard
Management International portfolio,  the  investment  risk  rests  with the
policyholder.  Investment risk for Standard Management International exists
where  Standard  Management  International  makes investment decisions with
respect to the remaining traditional business  and  for  the assets backing
certain  actuarial  and  regulatory  reserves.  The investments  underlying
these  liabilities  mostly  represent  short-term   investments  and  fixed
maturity  securities.   These  short-term  investments and  fixed  maturity
securities are normally only bought and/or disposed  of  on  the  advice of
independent  consulting  actuaries who perform an annual exercise comparing
anticipated cash flows on  the insurance portfolio with the cash flows from
the fixed maturity securities.  Any resulting material mis-matches are then
covered by buying and/or selling the securities as appropriate.



FACTORS THAT MAY AFFECT FUTURE RESULTS

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

     FOREIGN    CURRENCY    RISK.     Standard   Management   International
policyholders invest in assets denominated  in  a wide range of currencies.
Policyholders  effectively  bear  the  currency  risk,  if  any,  as  these
investments  are  matched  by  policyholder  separate account  liabilities.
Therefore, their investment and currency risk  is  limited to premiums they
have  paid.   Policyholders  are  not  permitted  to invest  directly  into
options, futures and derivatives.  Standard Management  International could
be exposed to currency fluctuations if currencies within  the  conventional
investment  portfolio  or  certain actuarial reserves are mismatched.   The
assets and liabilities of this  portfolio  and the reserves are continually
matched by the company and at regular intervals by the independent actuary.
In   addition,   Premier  Life  (Luxembourg)'s  shareholder's   equity   is
denominated in Luxembourg francs.  Premier Life (Luxembourg) does not hedge
it's translation risk,  but this is currently being reviewed to protect SMC
against  currency  fluctuations.   At  September  30,  1996,  there  is  an
unrealized gain from foreign currency translation adjustment of $717.

     UNCERTAINTIES REGARDING  INTANGIBLE ASSETS.  Included in the Company's
financial statements as of September  30,  1996 are certain assets that are
valued  for  financial  statement  purposes  primarily   on  the  basis  of
assumptions established by the Company's management.  These  assets include
deferred  acquisition  costs,  present  value  of future profits, costs  in
excess of net assets acquired and organization and  deferred  debt issuance
costs.  The total value of these assets reflected in the September 30, 1996
consolidated  balance sheet aggregated $32,706 or 6 percent of its  assets.
The  Company  has   established   procedures  to  periodically  review  the
assumptions utilized to value these  assets  and determine the need to make
any  adjustments  in  such values in the Company's  consolidated  financial
statements.  The Company  has  determined  that the assumptions utilized in
the  initial  valuation  of these assets are consistent  with  the  current
operations of the Company  as of September 30, 1996.  In February 1996, the
Company decided to terminate  the operations of Standard Reinsurance, which
resulted in the write-off of SMC's  investment  in Standard Reinsurance and
certain intangible assets in the third quarter of 1996 amounting to $156.

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

<PAGE>
     ACCOUNTING  PRONOUNCEMENTS.   Effective  January  1, 1996, the Company
adopted SFAS No. 123, "Accounting for Stock-Based Compensation."   SFAS No.
123  requires expanded disclosures of stock-based compensation arrangements
with employees  and  encourages, but does not require, compensation cost to
be measured based on the  fair  value  of  the  equity instruments awarded.
Companies  are  permitted,  however,  to  continue  to   apply   Accounting
Principles  Board (APB) Opinion No. 25, which recognizes compensation  cost
based on the intrinsic value of the equity instrument awarded.  The Company
will continue  to  apply APB Opinion No. 25 to its stock-based compensation
awards to employees  and directors and will disclose the required pro forma
effect on net income and  earnings  per share in its consolidated financial
statements for the year ended December 31, 1996.

     SAFE HARBOR PROVISIONS.  Forward-looking  statements in this Quarterly
Report on Form 10-Q are made pursuant to the "safe  harbor"  provisions  of
the  Private  Securities  Litigation Reform Act of 1995.  There are certain
important factors that could  cause results to differ materially from those
anticipated by some of the statements  made above.  Investors are cautioned
that  all forward-looking statements involve  risks  and  uncertainty.   In
addition to the factors discussed above, among the other factors that could
cause actual  results  to  differ  materially  are the following:  economic
environment,   interest  rate  changes,  product  development,   regulatory
changes,  the results  of  financing  efforts,  acquisitions  completed  or
attempted,  the Company's accounting policies, and competition.  Additional
information  concerning  those  and  other  factors  is  contained  in  the
Company's Securities  and  Exchange  Commission  filings, including but not
limited to the Annual Report on Form 10-K, copies  of  which  are available
from the Company without charge.


<PAGE>
                    PART II - OTHER INFORMATION

ITEM 5.                                     OTHER INFORMATION

     Pursuant  to  SEC  rules,  the  following  discloses  the  information
required  to  be  disclosed on Form 8-K with respect to the acquisition  of
Shelby and merger into Standard Life on November 8, 1996.

    (a) See Note 8 of Notes to Consolidated Financial Statements on page 12
        of this Form 10-Q for a description of the acquisition of Shelby and
        merger into Standard Life on November 8, 1996.

    (b) The following financial statements are filed pursuant to SEC  rules
        on Form 8-K:

        Financial Statements of Shelby:

        SMC has found it to be impractical to complete as of the date  of  
        this Form 10-Q filing the audited financial statements of
        Shelby required by Item 7(a) of Form 8-K.  SMC will file the 
        required financial statements as soon as they are available but
        in no event later than January 13, 1997.

        Pro Forma Financial Information:

        SMC has found it to be impractical to complete as of the
        date of this  Form 10-Q the preparation and filing of the pro forma
        financial information  required  by  Item  7(b)  of Form 8-K as the
        audited  financial statements of Shelby required by  Item  7(a)  of
        Form 8-K are  currently  being  prepared.  SMC will file
        the required pro forma financial  data  as  soon as it is available
        but in no event later than January 13, 1997.


<PAGE>
ITEM  6.             EXHIBITS AND REPORTS ON FORM 8-K.

(a)                   EXHIBITS

EXHIBIT 4.4          Amended  and  Restated Registration Rights Agreement  
                     dated  as  of November 8, 1996 by and between SMC and 
                     Fleet National Bank.

EXHIBIT 4.5          Form of Fleet National Bank Warrant.

EXHIBIT 4.7          Registration Rights  Agreement  dated as of 
                     November 8, 1996 by and between SMC and Great American 
                     Reserve  Insurance  Company  ("Great American Reserve").

EXHIBIT 10.17        Second  Amendment to Promissory Note from Ramesh H. Bhat 
                     to SMC  in the amount  of  $43 executed October 8, 1996 
                     and due December 15, 1996.

EXHIBIT 10.28        Amended and Restated Revolving Line of Credit Agreement 
                     dated as of November 8, 1996 between SMC and Fleet 
                     National Bank.

EXHIBIT 10.29        Note Agreement dated  as  of November 8, 1996 between 
                     SMC and Fleet National Bank in the amount of $16,000.

EXHIBIT 10.30        Amended and Restated Pledge  Agreement dated as of 
                     November 8, 1996 between SMC and Fleet National Bank.

EXHIBIT 10.32        Note Agreement dated as of November  8, 1996 by and 
                     between SMC and Great American Reserve in the amount of 
                     $4,000.

EXHIBIT 10.33        Senior Subordinated Convertible Note dated  as  of 
                     November 8, 1996 by  and  between SMC and Great American
                     Reserve in the amount of $4,000.

EXHIBIT 10.34        Surplus Debenture  dated  as of November 8, 1996 by and 
                     between SMC and Standard Life in the amount of $13,000.

EXHIBIT 11           Statement regarding computation of per share earnings.

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

(b)                  REPORTS ON FORM 8-K

The Company filed a Current Report on Form 8-K dated August 1, 1996 with 
the  Commission to  report  under Item 5 the signing of the Stock Purchase 
Agreement to purchase  Shelby.



                                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, 1996

                                            STANDARD MANAGEMENT CORPORATION
                                            (Registrant)




                                 By:/s/ RONALD D. HUNTER
                                    Ronald D. Hunter
                                    Chairman of the Board, President and
                                    Chief Executive Officer



                                 By:/s/ JOHN J. QUINN
                                    John J. Quinn
                                    Executive Vice President, Treasurer and
                                    Chief Financial Officer
                                    (Authorized Officer and Principal Financial
                                    Officer)



















                                                                     EXHIBIT 11

                    STANDARD MANAGEMENT CORPORATION

         STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
      (UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)


<TABLE>
<CAPTION>
                                                        Three Months Ended                 Nine Months Ended
                                                            SEPTEMBER 30,                    SEPTEMBER 30,
<S>                                              <C>              <C>              <C>              <C>
                                                   1996            1995{ (2)}        1996           1995{ (2)}
PRIMARY
Weighted average common shares outstanding       4,774,840        5,209,439        4,685,406        5,257,535
5 percent common stock dividend                  -                -                150,251          -
Common equivalent shares related to:
   Stock warrants at average market price        135,381          155,770          98,643           86,030
   Stock options at average market price         29,861           11,186           16,659           4,641
   Net issuable shares for modified treasury
   stock 
    method (after assumed buyback of 20 percent  -                -                348,540          -
of
     outstanding stock options and warrants)
WEIGHTED AVERAGE PRIMARY SHARES OUTSTANDING      4,940,082        5,376,395        5,299,499        5,348,206
Income before extraordinary gain on early
redemption of                                    $471             $445             $3,321           $979
   preferred stock and preferred stock dividends
as reported
Reduction in interest expense and increase in
short-term                                       -                -                131              -
   investment income for modified treasury stock
method                                           471              445              3,452            979
Extraordinary gain on early redemption of        233              -                500              -
preferred stock
Net income (as adjusted)                         704              445              3,952            979
Preferred stock dividends as reported            (51)             -                (163)            -
Preferred stock dividends reduction for modified
stock                                            -                -                46               -
   method
Earnings available to common shareholders (as    $653             $445             $3,835           $979
adjusted)
Earnings Per Share:
    Income before extraordinary gain on early
redemption of                                    0.10             0.08             0.65             0.18
     preferred stock and preferred stock
dividends
   Extraordinary gain on early redemption of
preferred                                        0.04             -                0.09             -
     stock
    NET INCOME                                   0.14             0.08             0.74             0.18
   Preferred stock dividend                      (0.01)           -                (0.02)           -
Earnings available to common shareholders        $0.13            $0.08            $0.72            $0.18
<PAGE>
                               EXHIBIT 11


      STANDARD MANAGEMENT CORPORATION

STATEMENT REGARDING COMPUTATION OF PER SHARE EARNINGS
(UNAUDITED, DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

                                                        Three Months Ended                 Nine Months Ended
                                                            SEPTEMBER 30,                     SEPTEMBER 30,
                                                             1996       1995{ (2)}             1996      1995{ (2)}
FULLY DILUTED{ (1)}
Weighted average primary shares outstanding      4,940,082        5,376,395        5,299,499        5,348,206
Incremental common equivalent shares:
   Related to options and warrants using the
   period-end                                    75,786           -                33,097           36,147
   market price, if higher than average market
   price
WEIGHTED AVERAGE FULLY DILUTED SHARES            5,015,868        5,376,395        5,332,596        5,384,353
OUTSTANDING
Income before extraordinary gain on early
redemption of                                    $471             $445             $3,321           $979
   preferred stock and preferred stock dividends
as reported
Reduction in interest expense and increase in
short-term                                       -                -                125              -
   investment income for modified treasury stock
method                                           471              445              3,446            979
Extraordinary gain on early redemption of        233              -                500              -
preferred stock
Net income (as adjusted)                         704              445              3,946            979
Preferred stock dividends as reported            (51)             -                (163)            -
Preferred stock dividends reduction for modified
stock                                            -                -                46               -
   method
Earnings available to common shareholders (as    $653             $445             $3,829           $979
adjusted)
Earnings Per Share:
    Income before extraordinary gain on early
redemption of                                    0.10             0.08             0.65             0.18
     preferred stock and preferred stock
dividends
   Extraordinary gain on early redemption of
preferred                                        0.04             -                0.09             -
     stock
    NET INCOME                                   0.14             0.08             0.74             0.18
   Preferred stock dividend                      (0.01)           -                (0.02)           -
Earnings available to common shareholders        $0.13            $0.08            $0.72            $0.18
</TABLE>


(1)   This calculation is submitted in accordance with the Securities Exchange
      Act of 1934 Release No. 9083 although not required by footnote 2 to
      paragraph 14 of APB Opinion No. 15 because it results in dilution of less
      than 3 percent.

(2)   Share amounts have been retroactively adjusted for the effect of the 5
      percent stock dividend distributed on June 21, 1996, to shareholders of
      record on May 17, 1996.





                                  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.