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                       TAX SHARING AGREEMENT                  Exhibit 10.16 (10)

This tax sharing agreement (the "Agreement") is entered into by American
Economy Insurance Company ("AEIC"), a corporation organized under the laws of
the State of Indiana, and American States Insurance Company of Texas ("AST"), a
corporation organized under the laws of the State of Texas, and is effective as
of January 1, 1996.  Lincoln National Corporation ("LNC"), as the ultimate
parent of a group of affiliated corporations filing a consolidated return (the
"LNC Consolidated Group"), is also a party to this Agreement.  This Agreement
applies to federal, state, local, and foreign income taxes, including any
interest and penalties assessed for any such taxes, arising for any taxable
year ("Tax Year") during which AEIC owns any AST stock.  This Agreement
supersedes all prior tax sharing agreements between AEIC and AST or any
subsidiaries of AEIC and AST, except to the extent otherwise noted.   As
described more fully below, the rights and obligations of AEIC and AST depend
upon the amount of AST stock owned by AEIC, and on whether AEIC and AST are
members of an affiliated group that files a consolidated federal income tax
return.

SECTION I.  AST IN CONSOLIDATED GROUP

     A.  Management of Tax Disputes and Tax Computations.  For any Tax Year or
portion of a Tax Year in which AST is a member of the LNC Consolidated Group,
LNC shall be responsible for managing the filing of tax returns and for
determining the appropriate strategy for handling audits and disputes with
taxing authorities.   Additionally, LNC shall be responsible for the final
determination of all computations required under this Agreement.

     B.  Calculation of AST's Tax Liability.  For any Tax Year in which AST is
a member of the LNC Consolidated Group, the LNC Consolidated Group's federal
income tax liability shall be allocated between AST and the remainder of the
LNC Consolidated Group as follows:

            1.  Separate Tax Liability.  Periodic computations shall be made 
of the federal income tax liability of AST, on a hypothetical separate return 
basis ("Separate Tax Liability"), for each Tax Year, or for any part of a Tax 
Year during which AST is included in the LNC Consolidated Group. Computations 
shall be made at  least once per quarter to support the required payments of 
quarterly estimated taxes and shall also be made at the time of the
original and extended due dates for the filing of the federal income tax return
for each Tax Year.  Such Separate Tax Liability shall be calculated as follows:

                   a.  AST shall be treated as a corporation which files a 
federal income tax return separate from the LNC Consolidated Group, except as 
otherwise provided in this Agreement.


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                   b.  For purposes of this calculation, AST shall be treated 
as if it had never been included in the LNC Consolidated Group.

                   c.  Gains and losses on intercompany transactions shall be 
disregarded until such time as they are recognized in the consolidated federal 
income tax return of the LNC Consolidated Group.

                   d.  Income, gain, deductions, credits, and similar items of 
AST described in Treasury Regulation section 1.1552-1(a)(2)(ii) shall generally
be taken into account in the manner specified in that subdivision.

                   e.  To the extent that AST is unable to avail itself of 
special rules applicable only to small corporations, lower tax rates 
applicable to part or all of the income of a single corporation, the exemption 
provided in Internal Revenue Code section 59A (applicable to the environmental 
tax) or any other similar item because it participates in the filing of the 
federal income tax return of the LNC Consolidated Group, AST shall not use
such benefit in calculating its Separate Tax Liability.

                   f.  Income, gain, deductions, credits, and similar items of 
AST shall not be included to the extent attributable to a period commencing
on or after the date that AST ceases to be includible in the LNC Consolidated
Group.

                   g.  For each quarter of a Tax Year that AST has net 
operating losses, net capital losses, tax credits or any other tax benefits
that have not been used to decrease AST's Separate Tax Liability in the current
Tax Year ("Excess Tax Items") that can be used as hypothetical carry back items
against prior hypothetical AST separate return Tax Years ("Carry Back Items"),
AEIC shall reimburse AST for the use of such Carry Back Items at the rate AST
would have been entitled to receive had such Carry Back Items actually been
used in an AST claim for refund.

                   h.  To the extent that Excess Tax Items can ultimately be 
used as hypothetical carry forward items against future hypothetical AST Tax
Years ("Carry Forward Items"), AST shall be entitled to use such Excess Tax
Items to offset future years' income but will be required to reimburse AEIC to
the extent that paragraph 2.c., below, applies.

            2.  Excess Tax Items, Generally.

                   a.  To the extent that the LNC Consolidated Group can use 
an Excess Tax Item, which has not otherwise been used as a Carry Back Item, to 
decrease its federal income tax liability for that quarter after taking into
account all similar items from the other affiliated corporations in the LNC
Consolidated Group,



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AEIC shall reimburse AST at an amount equal to the actual decrease in the tax
liability of the LNC Consolidated Group for any Excess Tax Items used,
notwithstanding the fact that AST could not use these Excess Tax Items in
calculating its Separate Tax Liability.

                   b.  To the extent that the Excess Tax Items are not used 
under paragraphs a. or 1.g. above, AST shall be entitled to a reimbursement 
from AEIC if and when such Excess Tax Items actually reduce the LNC 
Consolidated Group's federal income tax payments, or when the LNC Consolidated 
Group actually receives a refund of previously paid taxes, to the extent that 
such refund payment is directly attributable to such Excess Tax Items.

                   c.  To the extent that AST receives a payment from AEIC for 
the actual use of Excess Tax Items pursuant to paragraphs a. or b., above,
AEIC shall be entitled to reimbursement from AST for the full amount of such
payments to the extent that AST may use such Excess Tax Items as Carry Forward
Items.  To the extent that AST has been compensated by AEIC under a prior tax
sharing agreement for an amount which would qualify as an Excess Tax Item under
this Agreement, AEIC shall also be entitled to reimbursement from AST for the
full amount of such prior payments to the extent that AST may use such Excess
Tax Items as Carry Forward Items.

                   d.  Nothing in this entire Section I. shall be interpreted 
to entitle AST to more than a single use of any Excess Tax Items, Carry Back
Items, Carry Forward Items, or any other items which reduce the tax liability
of AST.

            3.  Alternative Minimum Tax Periods.

                   a.  If the LNC Consolidated Group is required to pay 
Alternative Minimum Tax ("AMT") for any taxable quarter, then the AMT
amount shall be divided among all of the corporations in the LNC Consolidated
Group which would have had to pay AMT if their tax liability had been
calculated on a separate return basis. The allocation of AMT shall be in
proportion to the amount of AMT each corporation would have had to pay on a
hypothetical separate return basis.  Any amount of AMT so apportioned to AST
shall be available for use as an AMT credit in calculating AST's Separate Tax
Liability for future taxable periods in which the AMT credit may actually be
used by the LNC Consolidated Group.  This provision also shall apply to the
extent that the LNC Consolidated Group becomes subject to AMT for prior Tax
Years as a result of an IRS audit or other adjustment to the tax liability
payable.

                   b.  If AST would be required to pay AMT based upon the 
calculation of its Separate Tax Liability, but the LNC Consolidated Group is 
not required to pay AMT for that taxable quarter, then AST shall not be 
required to pay the AMT


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amount to AEIC.  Instead, AST shall pay to AEIC an amount equal to its Separate
Tax Liability calculated without regard to the AMT provisions.

            4.  Interest and Penalties.

                   a.  If, after netting interest payable by the LNC 
Consolidated Group against interest payable by the IRS for a given Tax Year, 
the LNC Consolidated Group is required to pay interest to the IRS as a
result of any increase in tax liability for a given Tax Year, such interest
shall be divided among all of the corporations in the LNC Consolidated Group
whose tax liability increased from the initial calculation at the time of the
filing of the LNC consolidated tax return for that Tax Year.  This allocation
shall be made in proportion to the increase in tax liability of AST as compared
to the increase in tax liability of all members of the LNC Consolidated Group.

                   b.  If, after netting interest payable by the LNC 
Consolidated Group against interest payable by the IRS for a given Tax Year, 
the LNC Consolidated Group is entitled to receive interest from the IRS as a 
result of any decrease in tax liability for a given Tax Year, such interest 
shall also be divided among all of the corporations in the LNC Consolidated 
Group whose tax liability decreased from the initial calculation at the time 
of the filing of the LNC consolidated tax return for that Tax Year. This 
allocation shall be made in proportion to the decrease in tax liability of
AST as compared to the decrease in tax liability of all members of the LNC
Consolidated Group.

                   c.  Any tax penalties imposed by a taxing authority shall 
be the responsibility of the corporation whose tax position or tax item caused 
the imposition of such penalties.

            5.  Payments.  Payments between AEIC and AST shall be made as 
follows:

                   a.  Within five days following the due date of the 
quarterly estimated federal income tax payment for the LNC Consolidated
Group, AST shall pay to AEIC the full amount (if any) of its Separate Tax
Liability for that taxable quarter.  Also, to the extent that an Excess Tax
Item can be used to reduce the amount of the estimated federal income tax
payment for the LNC Consolidated Group in a given tax quarter, AEIC shall
reimburse AST for the use of that item within five days following the due date
of such quarterly payment.  Likewise, to the extent that AST can use an




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Excess Tax Item for which it has received payment from AEIC pursuant to Section
I.B.2., above, as a Carry Forward Item, AST shall reimburse AEIC for such
amounts as described in Section I.B.2.c., above, within five days of the
quarter in which it may use the Carry Forward Item.

                   b.  Within five days following the last date for filing a 
request for an  extension to file the annual federal income tax return, an
adjusting payment shall be made between AEIC and AST which is equal to the
difference between the quarterly payments made pursuant to paragraph a. above,
and the estimated annual Separate Tax Liability of AST.

                   c.  Within 45 days after the filing of the annual federal 
income tax return of the LNC Consolidated Group, adjusting payments shall
be made between AEIC and AST to the extent of any difference between the
payments made pursuant to paragraph a. or b. above, and the annual Separate Tax
Liability of AST.  In the event that an Excess Tax Item cannot be used to
offset the federal income tax liability of the LNC Consolidated Group for the
current Tax Year, but AST can use such an item as a Carry Back Item, then the
reimbursement by AEIC to AST contemplated in Section I.B.1.g., above, shall
also be made within 45 days after the filing of the annual federal income tax
return of the LNC Consolidated Group.

                   d.  Within 45 days of a settlement of any IRS audit dispute,
adjusting payments shall be made between AEIC and AST as necessary as a
result of such settlement.  AST will be adequately indemnified and held
harmless in the event the IRS levies upon AST's assets for penalty, interest,
or unpaid taxes in excess of the amount paid in accordance with this Agreement.

                   e.  LNC shall be responsible for making all required federal
income tax payments for the LNC Consolidated Group.

            6.  Information.  If any information relevant to making any 
calculation covered by this Agreement is particularly within the knowledge or 
possession of AST or any subsidiary of AST, AST shall promptly provide such 
information to LNC and shall also provide any supporting schedules, data or 
details which LNC may reasonably request.

            7.  State Taxes.  To the extent that any state tax system permits or
requires that the tax liability of affiliated corporations be computed on a
consolidated, affiliated, unitary or combined basis ("Combined Return Basis")
and AST files on a


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Combined Return Basis with one or more other corporations in the LNC
Consolidated Group, AST's state tax liability shall be calculated and allocated
in a manner comparable to that provided in Section I of this Agreement.



SECTION II.  AST NOT CONSOLIDATED

     A.  Responsibility for Tax Returns and Tax Payments.  For any period in
which AEIC owns any stock of AST, but AST is not included in the LNC
Consolidated Group, AST shall be responsible for filing all federal, state,
local, and foreign tax returns relevant to it and shall also be responsible for
paying any such taxes payable by it.  Furthermore, any federal, state, local,
or foreign tax liabilities which are not calculated on a consolidated basis
with part or all of the LNC Consolidated Group shall be the responsibility of
the entity incurring such liability even if AST is filing as part of the LNC
Consolidated Group for federal income tax purposes.

     B.  Management of Tax Disputes and Tax Computations.  For any Tax Year or
portion of a Tax Year in which AEIC owns sufficient AST stock to result in AEIC
and AST being treated as a consolidated group for financial statement reporting
purposes, AEIC shall be consulted prior to determining the strategy for
handling audits and disputes with taxing authorities, including, but not
limited to, whether or not to appeal or litigate one or more issues and any
proposed settlements of issues.

     C.  Carry Over Attributes from Consolidated Periods.

            1.  General Carry Over Provisions.  To the extent that AST carries 
forward tax attributes for which it has already received compensation from AEIC
pursuant to the terms of Section I. above, AST shall reimburse AEIC for the
previous payment by AEIC to AST, at the time of the deconsolidation of AEIC and
AST.  To the extent that AST has paid AEIC for a Separate Tax Liability for
which it remains liable after leaving the LNC Consolidated Group, AEIC shall
reimburse AST for the previous payment by AST to AEIC at the time of the
deconsolidation of AEIC and AST.  Similarly, to the extent that the ultimate
amount of tax paid differs from the amount of tax liability initially
calculated for any given Tax Year in which AST was included in the LNC
Consolidated Group, AEIC or AST, as the case may be, shall be required to pay
and entitled to receive amounts sufficient to compensate for this difference.


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            2.  AMT Credits.  In the event that AST leaves the LNC 
Consolidated Group, the amount of AMT credit which it shall be allowed to 
carry over without any obligation to reimburse AEIC shall not exceed the 
amount allocated pursuant to Section I.B.3, above.  AEIC shall be reimbursed by
AST to the extent that any AMT credit actually carried over exceeds the amounts
calculated in Section I.B.3., at the time of the deconsolidation.  Also, AST
shall be reimbursed by AEIC to the extent that it is permitted to carry over
less than the amount calculated in Section I.B.3.

            3.  Prior Consolidation Impacts.  Neither LNC nor any member of 
the LNC Consolidated Group shall be liable for any payment to AST should the 
amount of tax that AST pays in any such later year on a separate return basis 
or as a member of another consolidated group be increased as a result of AST 
having been a member of the LNC Consolidated Group.

            4.  Elections Impacting Prior Consolidated Periods.  In the event 
that AST wishes to make an election for tax purposes which may adversely 
affect tax positions taken by the LNC Consolidated Group during Tax Years
when it was a member of the LNC Consolidated Group, AST shall submit to LNC a
written request for permission to make such an election.  LNC shall not
unreasonably withhold such written permission to make a tax election which may
be beneficial to AST after it leaves the LNC Consolidated Group.  AST shall, as
a condition of receiving written permission to make the tax election, reimburse
LNC for any and all additional tax costs incurred by the LNC Consolidated Group
in connection with permitting such an election to be made.



SECTION III. GENERAL ITEMS

     A.  Interaction with Prior Tax Periods.

            1.  Tax Payments for Prior Periods.  To the extent that the tax 
liability initially allocated to AST for a prior tax period is subsequently 
redetermined, as a result of filing an amended return, the outcome of an IRS
examination, the retroactive application of a new tax law or tax regulation, or
other similar modifying action or item, AST shall pay AEIC for any such
increases to AST's tax liability and is also entitled to receive a payment from
AEIC for any decreases in tax liability attributable to AST.




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            2.  Prior Tax Payments.  To the extent that AST paid to AEIC an 
amount for its share of the LNC Consolidated Group's federal income tax 
liability or to the extent that it pays an amount pursuant to paragraph 1. 
above, AST shall be entitled to consider the amount of such prior payments 
when determining whether or not Carry Back Items may be used to offset tax 
payments for prior years.

            3.  Interest and Penalties for Prior Periods.  Any interest and 
penalties payable by any member of the LNC Consolidated Group relating to Tax 
Years prior to this Agreement shall be subject to the terms of Section I.B.4 
to the extent that they become payable after the effective date of this 
Agreement.

     B.  Filing Relevant Items.  AST agrees to file any elections, consents,
and other documents and take any other actions which may be necessary or
appropriate to carry out the purposes of this Agreement.

     C.  Inclusion of AST Subsidiaries.  If AST owns, acquires or creates any
subsidiary corporation which is an includible corporation as that term is
defined in IRC section 1504, such subsidiary corporation shall be subject to
this Agreement.  AST shall treat each such subsidiary corporation as if AST has
an identical tax sharing Agreement to this Agreement between itself and the
subsidiary corporation, unless AST and such subsidiary have entered into a
separate tax sharing Agreement which has been approved in writing by LNC.

     D.  Applicability to Succeeding Entities.  This Agreement shall be binding
on any successor of the parties to this Agreement, including but not limited to
any successor of LNC, AEIC or AST, to the same extent as if the successor had
been an original party to this Agreement.

     E.  Provision of Items to Defend Tax Positions.  Both AEIC and AST agree
to cooperate in supplying information reasonably requested by the other party
in order to make any computations required under this Agreement and for the
purpose of defending tax examinations, including appeals and litigation.

     F.  Maintenance of Books and Records.  AEIC and AST agree to maintain
internal accounting books and records for themselves and each of their
subsidiaries in a manner consistent with U.S. generally accepted accounting
principles and relevant statutory accounting principles.  Furthermore, AEIC and
AST agree to account for any



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intercompany transactions entered into by them or any of their subsidiaries and
to make such information available to the other party for tax purposes both
when such transactions are entered into and when such intercompany transactions
become currently taxable.

     G.  Governing Law.  This Agreement shall be governed by and interpreted in
accordance with the laws of the State of Indiana and no state court other than
the courts of the State of Indiana shall have jurisdiction over disputes
between the parties concerning the validity, performance, interpretation or
construction of this Agreement.



     LINCOLN NATIONAL CORPORATION


Date: 11-19-96           By /s/ Richard C. Vaughan
                            ----------------------------------------------------
                            Richard C. Vaughan
                            Executive Vice President and Chief Financial Officer



                         AMERICAN ECONOMY INSURANCE COMPANY


Date:11-22-96            By /s/ Todd R. Stephenson
                            ----------------------------------------------------
                            Todd R. Stephenson
                            Senior Vice President and Treasurer



                         AMERICAN STATES INSURANCE COMPANY OF TEXAS


Date: 10/15/96           By /s/ Thomas R. Kaehr
                            ----------------------------------------------------
                            Thomas R. Kaehr
                            Vice President




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