SECURITIES AND EXCHANGE COMMISSION
                             Washington, D. C. 20549
                                    FORM 10-K
                                   (Conformed)
(Mark One)
         [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934 (FEE REQUIRED)

For the fiscal year ended December 31, 1998 or

         [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
             EXCHANGE ACT OF 1934 [NO FEE REQUIRED]

Commission File No. 2-35669

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
             (Exact name of registrant as specified in its charter)

              Florida                        59-1231733
       (State or other jurisdiction   (I.R.S. Employer Identification No.)
    of incorporation or organization)

                   755 Rinehart Road, Lake Mary, Florida 32746
               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:(407) 321-7113

         Securities registered pursuant to Section 12(b) of the Act:

                                        Name of each exchange on
             Title of each class             which registered
                   None                           None

           Securities registered pursuant to Section 12(g) of the Act:
                                      None
                                (Title of Class)

         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 the
filing requirements for the past 90 days. X Yes   No

         Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of Company's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-
K or any amendment to this Form 10-K.    X

          The aggregate  market value of the voting stock held by  nonaffiliates
of the Registrant as of March 31, 1999 was approximately $3,047,000.

          As of March 31, 1999,  registrant had issued and outstanding 1,907,989
shares of common stock.






                                        1

<PAGE>



                                     PART I
Item 1.  Business.

         Southern  Security Life  Insurance  Company ("the  Company") is a legal
reserve life insurance company  authorized to transact business in the states of
Alabama,  Florida,  Georgia,  Hawaii, Indiana,  Illinois,  Kentucky,  Louisiana,
Michigan,  Missouri,  Oklahoma,  South  Carolina,  Tennessee  and Texas.  It was
incorporated  under Florida law in 1966 and was licensed and commenced  business
in 1969.  The  Company  obtained  authorization  in the  states of  Indiana  and
Oklahoma  in 1996  and will  continue  the  process  of  seeking  authorization,
directly or through  acquisition,  to transact  business  in  additional  states
during 1999. During 1998  approximately 44% of the premium income of the Company
was from business in force in its state of domicile. The Company's only industry
segment is the ordinary life, accident and health and annuity business.

         Effective December 17, 1998,  Security National  Financial  Corporation
(SNFC),  an SEC  registrant,  acquired 100 percent of the assets of  Consolidare
Enterprises,  Inc.  which owned 57.4  percent of the  outstanding  shares of the
Company.  During March 1999 SNFC  changed  Consolidare's  name to SSLIC  Holding
Company, Inc.

         The Company at present  writes  universal  life  policies  with various
companion  riders  as well as a  traditional  life  product.  In the past it has
written various forms of ordinary life insurance policies and annuity contracts.
The  Company's   accident  and  health  insurance  business  has  never  been  a
significant  portion of the  Company's  business.  It does not  presently  write
industrial life or group life insurance other than through its  participation as
a reinsurer in the Servicemen's Group Life Insurance Program ("SGLI").  In 1996,
the Company  introduced a new whole life product designed to appeal to the final
expense market.

         The Company  introduced  its first  universal  life product in 1986 and
currently has two principal  universal life products in force.  These  universal
life products offer  flexibility to the client as well as tax  advantages,  both
currently and upon the death of the insured. These products allow the Company to
better  compete in the current market  environment.  In excess of 23% and 43% of
the life  policies  written by the Company in 1998 and 1997  respectively,  were
universal life products.

         During 1996, the Company  introduced a new series of products  designed
for the seniors  market.  This new series  targets the needs of senior  citizens
especially  as they plan for  their  final  expenses.  These  new  policies  are
traditional endowment type policies. Because they are written to a senior market
they are designed to accommodate adverse health conditions.  Because of the size
of the  policies  they are usually  issued with only limited  underwriting.  The
coverage size of the policy is roughly

                                        2

<PAGE>



equivalent  to  the  insured's   anticipated  funeral  costs.  This  new  series
represented  77%  of  the  life  policies  written  in  1998.  New  field  sales
representatives are being actively recruited to market the product.

         The Company is continuing  to support its  traditional  universal  life
marketing as well. The Company  established a lead generation  program which has
been coupled with a recruiting  program for new sales agents to help rebuild the
market.  This has  helped  to  increase  opportunities  to  expand  sales of its
universal  life products  which are designed to provide an insurance  program as
well as a savings vehicle through the cash values of the policy.

         The  following  table  provides  information  (on  a  statutory  basis)
concerning  the  amount and  percentage  of premium  income  resulting  from the
principal  lines  of  insurance  written  by  the  Company  during  the  periods
indicated:

<TABLE>
<CAPTION>

                                  1998                            1997                               1996
                                  ====                            ====                               ====

                                      Per-                             Per-                               Per-
                       Amount         centage          Amount          centage            Amount          centage
<S>                <C>              <C>            <C>               <C>              <C>               <C>
Life
Insurance-
Ordinary
(1)(2)              $7,602,811         91%           $8,386,972         94%             $9,225,755           92%

Individual
Annuities
(1)                     90,289          1%               70,809          1%                307,618            3%

Life
Insurance-
Group
(SGLI)                 460,029          6%              476,455          5%                529,554            5%

Other -
Accident &
Health                 158,882          2%               11,323          0%                  1,274            0%
                    ----------        ----           ----------        ----            -----------          ----

                    $8,312,011        100%           $8,945,559        100%            $10,064,201          100%
                    ==========        ====           ==========        ====            ===========          ====
</TABLE>



(1)       A portion of each of the deposit term policies  previously sold by the
          Company represents  ordinary life insurance and the balance represents
          an individual annuity.

(2)       The 1998,  1997, and 1996 premium  income for life  insurance-ordinary
          are net of  reductions  of  $1,329,814,  $1,517,988,  and  $1,773,148,
          respectively, in ceded premium paid to all reinsurers,  including Mega
          Life.



                                        3

<PAGE>



          The  following  table  gives  information  on  a  generally   accepted
accounting  principles basis concerning  operating ratios of the Company for the
periods indicated:
<TABLE>
<CAPTION>

                                                         1998                     1997                     1996
                                                         -----                    ----                     ----

<S>                                              <C>                      <C>                      <C> 
Total Net Insurance
 Revenues                                          $7,228,227               $7,643,650               $7,915,027

Benefit Costs Paid or
 Provided:
  Amount                                           $4,346,820               $4,431,474               $3,813,301
  Ratio to Net Insurance
   Revenue                                              60.1%                    58.0%                    48.2%

Amortization of Deferred Policy
 Acquisition Expenses:
  Amount                                           $3,484,689               $3,542,617               $3,364,738
  Ratio to Net Insurance
   Revenue                                              48.2%                    46.3%                    42.5%

General Insurance Expenses:
  Amount                                           $4,044,686               $3,382,255               $3,246,552
  Ratio to Net Insurance
   Revenue                                              55.9%                    44.3%                      41%

Income (Loss) Before Income
 Taxes:
  Amount                                            $(625,640)                $249,410               $1,588,505
  Ratio to Net Insurance
   Revenue                                              (8.7%)                    3.3%                    20.1%
  Ratio to Total Revenue and
   Investment Income                                    (5.5%)                    2.1%                    13.1%
  Ratio to Equity                                       (4.0%)                    1.5%                    10.1%

</TABLE>





                                        4

<PAGE>



         The following table provides  information about the Company  concerning
changes in life  insurance in force during the periods  indicated  (exclusive of
accidental death benefits):
<TABLE>
<CAPTION>

                                                            1998                  1997                     1996
                                                            ----                  ----                     ----
                                                                    (In thousands except lapse ratios)
<S>                                                   <C>                 <C>                      <C>    
Total life insurance in force at beginning of period:
  Ordinary Whole Life &
   Endowment-Participating                                  $381                  $441                     $584
  Ordinary Whole Life &
   Endowment-Non-Participating                         1,019,179             1,157,624                1,289,250
  Term                                                     6,478                 7,884                    8,371
  Reinsurance Assumed                                    532,772               537,701                  507,552
                                                         -------               -------                  -------

  Total                                               $1,558,810            $1,703,650               $1,805,757

Additions (including re-insurance assumed):
  Ordinary Whole Life &
   Endowment-Participating                               $   -                $    -                   $    -
  Ordinary Whole Life &
   Endowment-Non-Participating                            68,935                82,390                  122,578
  Term                                                       -                     -                        -
  Reinsurance Assumed                                     21,617                19,021                   64,071
                                                         -------               -------                  -------

  Total                                                  $90,552              $101,411                 $186,649

Terminations:
  Death                                                   $1,605                $2,010                   $1,756
  Lapse and Expiry                                        48,034                57,435                   73,919
  Surrender                                              132,184               186,654                  212,801
  Other                                                       10                   152                      280
                                                         -------               -------                    -----
  Total                                                 $181,833              $246,251                 $288,756

Life Insurance in force at end of period:
  Ordinary Whole Life &
   Endowment-Participating                                  $532                  $381                     $441
  Ordinary Whole Life &
   Endowment-Non-Participating                           913,683             1,019,179                1,157,624
  Term                                                     4,799                 6,478                    7,884
  Reinsurance Assumed                                    548,515               532,772                  537,701
                                                         -------               -------                  -------

  Total                                               $1,467,529            $1,558,810               $1,703,650
                                                       ---------            ----------               ----------
Reinsurance Ceded                                       (297,913)             (337,901)                (386,084)
                                                        --------              --------                 --------
Total after Reinsurance Ceded                         $1,169,616            $1,220,909               $1,317,566
                                                       =========            ==========               ==========

Lapse Ratio (Reflecting termina-
tion by surrender and lapse;
ordinary life insurance only):                              17.4%                 20.0%                    20.5%
</TABLE>


                                        5

<PAGE>



     The Company invests and reinvests portions of its funds in securities which
are permitted  investments  under the laws of the State of Florida,  and part of
its  revenue is  derived  from this  source.  Generally,  securities  comprising
permitted   investments  include   obligations  of  Federal,   state  and  local
governments;  corporate  bonds and  preferred  and common  stocks;  real  estate
mortgages and certain leases. The following table summarizes certain information
regarding the Company's investment activities:
<TABLE>
<CAPTION>

                   Average                       Gross                     Net
Fiscal            Investment                   Investment               Investment                Net
Year              Assets (1)                    Income(2)               Income (3)              Yield (4)
-----             ----------                   ----------               ----------              ---------
<S>              <C>                          <C>                      <C>                     <C>

1998              $52,227,057                  $3,599,547               $3,587,147                6.87%

1997              $51,094,803                  $3,565,206               $3,545,311                6.94%

1996              $50,752,712                  $3,508,161               $3,318,627                6.54%
</TABLE>


(1)      Computed by summing the  beginning and ending  investment  balances and
         dividing by 2.

(2)      Excludes investment gains and losses.

(3)      Net of investment expense and before income taxes.

(4)      Computed on an annualized  basis.  Represents  ratio of net  investment
         income to average invested assets.

         The Company  continues its  activities as a qualified  lender under the
Federal Family Educational Loan Program.  Through this program the Company makes
various types of student and parent loans  available.  All student loans made by
the Company are guaranteed by the Federal Government. As it has in the past, the
Company  sells  these  student  loans on a periodic  basis to the  Student  Loan
Marketing Association ("SLMA") thereby keeping these funds liquid.

         The Company  presently  sells its  policies on a general  agency  basis
through a field force  consisting of approximately  676 agents.  All such agents
are  licensed  as agents  of,  and sell for,  the  Company  and are  independent
contractors  who are paid  exclusively  on a  commission  basis for sales of the
Company's policies. Some of the Company's agents are part-time insurance agents.
Most of the Company's  agents are  associated  with  Insuradyne  Corporation,  a
wholly-owned subsidiary of the Company's parent, SSLIC Holding Company, formerly
Consolidare   Enterprises,   Inc.   See  "Certain   Relationships   and  Related
Transactions" in item 13, Part III of this Report.

         The Company presently employs 32 persons, none of whom are covered 
under any collective bargaining agreements.  The Company

                                        6

<PAGE>



feels it has good relations with its employees.

         Section 624.408 of the Florida Statutes requires a stock life insurance
company to  maintain  minimum  surplus on a  statutory  basis at the  greater of
$1,500,000 or four percent (4%) of total  liabilities.  The  Company's  required
statutory  minimum  surplus  calculated  in  accordance  with  this  section  is
approximately  $1,930,000. If the capital and surplus of the Company computed on
such basis should fall below that amount, then the Company's license to transact
insurance  business  in the State of Florida,  the  Company's  most  significant
market,  could be revoked  unless the  deficiency is promptly  corrected.  As of
December 31, 1998 the Company had statutory  capital and surplus of  $8,627,251,
well in excess of the required minimum.

         The Risk-Based  Capital for Life and/or Health  Insurers Model Act (the
"Model Act") was adopted by the National Association of Insurance  Commissioners
(NAIC) in 1992.  The main  purpose  of the  Model  Act is to  provide a tool for
insurance regulators to evaluate the capital resources of insurers as related to
the specific  risks which they have  incurred  and is used to determine  whether
there is a need  for  possible  corrective  action.  The  Model  Act or  similar
regulations may have been or may be enacted by the various states.

         The Model Act provides for four different levels of regulatory  action,
each of which may be triggered if an insurer's  Total  Adjusted  Capital is less
than a corresponding "level" of Risk-Based Capital ("RBC").

         The "Company  Action Level" is triggered if an insurer's Total Adjusted
         Capital  is less than 200% of its  "Authorized  Control  Level RBC" (as
         defined in the Model Act), or less than 250% of its Authorized  Control
         Level RBC and the insurer has a negative  trend  ("the  Company  Action
         Level").  At the  Company  Action  Level,  the  insurer  must  submit a
         comprehensive plan to the regulatory authority of its state of domicile
         which  discusses  proposed  corrective  actions to improve  its capital
         position.

         The  "Regulatory  Action  Level" is  triggered  if an  insurer's  Total
         Adjusted Capital is less than 150% of its Authorized Control Level RBC.
         At the Regulatory Action Level, the regulatory authority will perform a
         special  examination  of the  insurer  and  issue an  order  specifying
         corrective actions that must be followed.

         The  "Authorized  Control  Level" is triggered  if an  insurer's  Total
         Adjusted Capital is less than 100% of its Authorized Control Level RBC,
         and at that level the regulatory  authority is authorized (although not
         mandated) to take regulatory control of the insurer.


                                        7

<PAGE>



         The  "Mandatory  Control  Level" is  triggered  if an  insurer's  Total
         Adjusted Capital is less than 70% of its Authorized  Control level RBC,
         and at that level the regulatory authority must take regulatory control
         of the  insurer.  Regulatory  control  may  lead to  rehabilitation  or
         liquidation of an insurer.

         Based on  calculations  using the NAIC formula as of December 31, 1998,
the Company was well in excess of all four of the control levels listed.

         The  industry  in which the  Company is engaged is highly  competitive.
There are in excess of 850 life insurance companies licensed in Florida, where a
substantial  amount of the Company's  premium income is produced,  and there are
comparable numbers of insurance companies licensed in Alabama,  Georgia, Hawaii,
Illinois, Kentucky, Louisiana, Michigan, Missouri, South Carolina, Tennessee and
Texas.  Many of the  Company's  competitors  have been in  business  for  longer
periods of time, have substantially  greater financial  resources,  larger sales
organizations, and have broader diver sification of risks. A large number of the
Company's competitors engage in business in many states and advertise nationally
while the Company  conducts its business on a regional basis. The Company is not
a  significant  factor in the life  insurance  business  in any state  where the
Company does business.

         The states of Alabama,  Florida,  Georgia, Hawaii,  Illinois,  Indiana,
Kentucky, Louisiana, Michigan, Missouri, Oklahoma, South Carolina, Tennessee and
Texas  require that  insurers  secure and retain a license or a  certificate  of
authority  based on  compliance  with  established  standards  of  solvency  and
demonstration of managerial  competence.  The Company, like other life insurers,
is subject to extensive regulation and supervision by state insurance regulatory
authorities.  Such  regulation  relates  generally  to such  matters  as minimum
capitalization,  the nature of and limitations on investments,  the licensing of
insurers and their agents, deposits of securities for the benefit and protection
of  policyholders,  the  approval of policy  forms and premium  rates,  periodic
examination  of the affairs of insurance  companies,  the  requirement of filing
annual  reports on a specified  form and the provision for various  reserves and
accounting standards.

         The Company  reinsures  or places a portion of its  insured  risks with
other  insurers.  Reinsurance  reduces  the  amount  of  risk  retained  on  any
particular policy and, correspondingly, reduces the risk of loss to the Company,
thus giving it greater financial stability. Reinsurance also enables the Company
to write more  policies and policies in larger  amounts than it would  otherwise
consider prudent. On the other hand,  reinsurance  potentially reduces earnings,
since a portion of the premiums  received must be paid to the insurers  assuming
the reinsured portion of the risk.


                                        8

<PAGE>



         The  Company  currently  cedes  its new  reinsurance  to  Businessmen's
Assurance Company ("BMA") and the Reinsurance Company of Hannover, both of which
are unaffiliated reinsurers.  Under the terms of the reinsurance agreements, the
Company cedes all risks in excess of the Company's current retention limits.

         The Company  currently retains a maximum of $75,000 on any one life and
lesser amounts on substandard risks.

         Reinsurance  for policy  amounts in excess of the  Company's  retention
limits is ceded on a  renewable  term basis,  under  which the amount  reinsured
normally decreases annually by the amount of increase in the policy reserve.  In
addition,  the Company has coinsurance  agreements with several insurers,  under
which premiums are shared based upon the share of the risk assumed.

         The  Company  remains  directly  liable to  policyholders  for the full
amount of all insurance  directly written by it, even though all or a portion of
the risk is  reinsured.  Reinsurers,  however,  are  obligated to reimburse  the
Company  for the  reinsured  portion of any claims  paid.  Consequently,  if any
reinsurer becomes  insolvent or is otherwise unable to make such  reimbursement,
the  Company  would  suffer an  unexpected  loss.  The  Company has no reason to
believe that any of its reinsurers  will be unable to perform their  obligations
under existing reinsurance agreements.

         On  December  31,  1992,   the  Company   entered  into  a  Coinsurance
Reinsurance  Agreement with United Group Insurance  Company  ("UGIC"),  now Mega
Life.  In this  agreement,  UGIC agreed to indemnify  and the Company  agreed to
transfer risk to UGIC in the amount of 18% of all universal  life premium paying
polices  which  were in force on  December  31,  1992.  Mega  Life is an A rated
company with A.M. Best and is an authorized reinsurer in the State of Florida.

         As a result of the 1992  agreement,  the Company  will  continue to pay
reinsurance premiums to Mega Life while receiving ceding commissions.  As a part
of the coinsurance agreement, Mega Life agreed to share in the expenses of death
claims, surrenders, commissions, taxes and the funding of policy loans.

         The Company does not assume any  reinsurance  at the present time other
than its minor  participation in Servicemembers'  Group Life Insurance and other
small blocks of business.

         For reporting to state  regulatory  authorities the Company is required
to  establish  policy  benefit  and  other  reserves  which  are  calculated  in
accordance with statutory  requirements and standards of actuarial  practice and
established  at amounts  which,  with additions from premiums to be received and
assumed  interest on policy  reserves  compounded  annually,  are believed to be
sufficient  to meet policy  obligations  as they mature.  Life  reserves for the
Company are based upon the Commissioner's 1958 and 1980 Standard

                                        9

<PAGE>



Ordinary Table of Mortality,  with interest on policies  computed at 3, 3-1/2, 4
or 4-1/2%.  Annuity reserves are based on the 1937 Standard Annuity Table,  with
interest on policies computed at 3-1/2 or 4%. Reserves on the annuity portion of
the  Company's  deposit term policies are computed on the  accumulation  method.
Reserves for  universal  life  policies,  which  comprise  most of the Company's
insurance in force, have been valued by the California Method which was approved
by the  Florida  Department  of  Insurance.  Reserves  under this method are the
linear average of the policy  account value and the policy cash surrender  value
(account value less the surrender charge).

         In 1994,  the Florida  Department of Insurance  issued a new regulation
that  required all  companies who are not already using the CRVM method to phase
into that method over a period of five years. As required, the Company has filed
with the Department  its plan to comply with the new regulation and  implemented
the plan beginning  January 1, 1995. This has resolved then pending  discussions
with the Florida Insurance  Department on the Company's  reserving methods.  The
CRVM  reserving  method  applies  only  to  the  Company's  statutory  financial
statements. The 1998, 1997 and 1996 (decrease)/increase in the statutory reserve
due to the  implementation  of  this  regulation  was  approximately  $(66,820),
$52,400 and $158,000 respectively.

         In preparing financial statements in accordance with generally accepted
accounting  principles,  the cost of  insurance,  expense  charges and surrender
charges on universal  life  products  are  recognized  as revenue.  For "Annuity
Contracts"  with flexible terms,  amounts  received from  policyholders  are not
recognized  as revenue  but are  recorded  as  deposits  in a manner  similar to
interest-bearing instruments.  Accumulations on these universal life and annuity
contracts are held as "Policyholders'  Account Balances." For all other policies
(primarily  whole-life)  premiums  are  recorded  as revenue  and  reserves  are
calculated  using the net level premium  method.  Accumulation  values for these
types of policies are held as benefit reserves.  See "Future Policy Benefits" in
Note 1 of the Notes to Financial Statements included in this report.

         The Company  maintains  its own policy  files,  prepares its own policy
forms  (with  the  assistance  of  its  consulting  actuaries),  selects  risks,
calculates  premiums,  prepares  premium  notices,  pre  authorized  checks  and
commission statements, and maintains all of its accounting records.

         The  Company is  not  affected by  Federal,  state or local  provisions
relating to  discharge of materials  into the  environment.  The Company has not
spent a material  amount of money during the last three fiscal years on research
and  development  activities.  The  business of the  Company is not  seasonal in
nature and is not dependent on the sources and  availability  of raw  materials.


                                       10

<PAGE>



The business of the Company is not dependent  upon a  single  customer  or a few
customers,  and no  material  portion of the  Company's  business  is subject to
renegotiation of profits or termination at the election of the Government.


Item 2.  Properties.

         The Company's  corporate  headquarters is located in a two story office
building  in Lake Mary,  Florida,  which is owned by the  Company.  The  Company
occupies the entire second floor of the building.  The remaining  rentable space
is fully leased as of December 31, 1998.


Item 3.  Legal Proceedings.

         The  Company has been named as a party in  connection  with two actions
pending in the Circuit Court of Loundes County, Alabama by Willie May Oliver and
Eugene Oliver,  Jr. in the first action and Eva Mae Howard in the second action.
The complaints filed in these actions against the Company and certain  insurance
agents  assert  claims  for  fraud,  misrepresentation,  and  negligent  hiring,
training  and  supervision  by the Company and seek  compensatory  and  punitive
damages,  interest and costs. The Company believes that there is no basis to the
claims in the complaints and intends to vigorously defend against these actions.

         The Company is also a party in an action  being filed  against PFL Life
Insurance  Company,  AEGON USA and William  Thomas in the Circuit  Court for the
Second Judicial  Circuit in Leon County,  Florida.  This action has been settled
with respect to PFL Life Insurance  Company,  and AEGON USA, and the Company has
dismissed the action with respect to William Thomas.  The court entered an order
in this action finding that the Company and others  participated  in a violation
of the discovery  rules and imposing a fine. The court reserved  judgment on the
amount of the fine until after a verdict.

         The court held a hearing on February 23, 1999 to  determine  the amount
of the fine, if any,  which would be awarded.  The attorneys for William  Thomas
have  requested  that the court  impose a fine of  $150,000  on the  Company and
$50,000 on Ross M. Godmen,  the attorney who was representing the Company at the
time of the alleged discovery  violations.  The court has taken the matter under
advisement and has promised a prompt  decision.  The Company believes that there
is no basis for the court to impose a fine  against  the  Company  in the amount
requested  by the  attorneys  for  Mr.  Thomas  and  has  strongly  opposed  the
imposition of this fine.

         The Company is not a party to any other legal  proceedings  outside the
ordinary course the Company's  business or to any other legal proceedings which,
if adversely determined, would have a

                                       11

<PAGE>



material adverse effect on the Company or its business.


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

         During the fourth  quarter of the Company's  fiscal year, no matter was
submitted to a vote of security holders.





                                       12

<PAGE>



                                     PART II

Item 5.  Market for the Company's Common Stock and Related Stockholder Matters.

         (a) Principal Market and Stock Price. The principal market on which the
Company's  common  stock  is  traded  is the  over-the-counter  market.  Trading
information  with  respect to the  Company's  shares is  available  through  the
National  Association of Securities Dealers Automated  Quotation (NASDAQ) System
under the symbol SSLI.

         The  table  below  presents  the high  and low  market  prices  for the
Company's common stock during the calendar quarters indicated,  as quoted in the
NASDAQ system. The quotations represent prices between dealers in securities and
do not include retail  markups,  markdowns or commissions and do not necessarily
represent actual transactions.
<TABLE>
<CAPTION>

                                  QUARTER ENDED
----------------------------------------------------------------------------
                           1998                         1997
----------------------------------------------------------------------------

          Mar.31  Jun.30  Sep.30  Dec.31    Mar.31  Jun.30  Sep.30  Dec.31

<S>      <C>     <C>     <C>     <C>       <C>     <C>     <C>     <C>
Common
Shares:
  High    7 1/4   7 5/8   4 1/8   4 1/4     7 3/4   9 1/4   8 1/4   8
  Low     6 7/8   6 5/8   3 1/2   3 3/4     7 1/8   7 3/8   7 3/4   6 1/2
</TABLE>

         (b)  Approximate  Number of Holders of Common  Stock.  There were 1,377
holders of record of the Company's Common Stock at December 31, 1998.

         (c) Dividends.  The Company has paid no cash dividends to  stockholders
during the past two years,  and it is not  anticipated  that any cash  dividends
will be paid at any time in the foreseeable  future. The payment of dividends by
the Company is subject to the  regulation of the State of Florida  Department of
Insurance. Under such regulation an insurance company may pay dividends, without
prior approval of the State of Florida Department of Insurance, equal to or less
than the  greater  of (a) 10% of its  accumulated  capital  gains  (losses)  and
accumulated  operating income (losses) (i.e.  unassigned surplus) or (b) certain
net  operating  profits  (losses) and  realized  capital  gains  (losses) of the
Company, as defined in the applicable  insurance  statutes.  In no case can such
dividends  be paid if the  Company  will  have  less  than  115% of the  minimum
required  statutory surplus as to policyholders  after the dividend is paid. The
maximum amount which the Company could pay as a dividend during 1999 pursuant to
such regulation is approximately $114,000.


                                       13

<PAGE>



Item 6.  Selected Financial Data.

         The following table presents selected  financial data (on a GAAP basis)
concerning the Company and its financial results during the periods indicated.



                                       14

<PAGE>

<TABLE>
<CAPTION>


                                                          YEARS ENDED DECEMBER 31,

                                     1998                    1997                   1996                  1995                1994
                                  ----------               ---------            -----------           -----------           --------
<S>                          <C>                      <C>                  <C>                   <C>                  <C>  
Revenues:
Life insurance
    premiums and
    policy charges               $7,228,227              $7,643,650             $7,915,027             $8,158,938         $9,299,789
Net investment
    income                        3,587,147               3,545,311              3,318,627              2,998,875          2,750,771
Realized Gain
    (Loss)on
    investments                     525,181                 506,795                869,502                 60,237             60,732
                                    -------                 -------                 ------                 ------             ------

Total Revenue                    11,340,555              11,695,756             12,103,156             11,218,050         12,111,292

Benefits, Losses
    & Expenses:
 Insurance
    living
    benefits                      2,483,197               2,459,638              2,420,021              2,636,851          2,815,194
 Insurance death
    benefits                      1,529,294               1,847,375              1,398,541              1,424,245          1,300,063
 Increase (decrease)
    in policy
    reserves                        334,329                 124,461                (5,201)               (12,971)           (67,036)
 Amortization of
    deferred policy
    acquisition
    costs                         3,484,689               3,542,617              3,364,738              3,069,742          3,242,706
 Commissions and
    general
    expenses                      4,044,686               3,382,255              3,246,552              2,735,280          3,186,386
 Interest expense
    with related
    party                            90,000                  90,000                 90,000                 90,000             90,000
                                     ------                  ------                 ------                 ------             ------

Total expenses                   11,966,195              11,446,346             10,514,651              9,943,147         10,567,313
                                 ----------              ----------             ----------              ---------         ----------
Income (loss)
    before income
    taxes                          (625,640)                249,410              1,588,505              1,274,903          1,543,979
                                    -------                 -------              ---------              ---------          ---------
Income tax expense
    (benefit)                      (241 907)                 54,200                196,000                160,000            530,000
                                    -------                  ------                -------                -------            -------


NET INCOME (LOSS)                 $(383,733)               $195,210             $1,392,505             $1,114,903         $1,013,979
                                  ==========               ========             ==========             ==========         ==========

Weighted average
  number of
  shares
  outstanding                     1,907,989               1,907,989              1,907,989              1,907,989          1,907,989
                                  ---------               ---------              ---------              ---------          ---------

Basic income (loss)
    per common share                  $(.20)                   $.10                   $.73                   $.58               $.53
                                      -----                    ----                   ----                   ----               ----

Diluted income (loss)
    per common share                  $(.20)                   $.10                   $.73                   $.58               $.53
                                      -----                    ----                   ----                   ----               ----

Shareholders'
  Equity                        $15,912,106             $16,132,018            $15,661,588            $14,826,610        $12,644,525
                                ===========             ===========            ===========            ===========        ===========

Shareholders'
  equity per
  common
  share                               $8.34                   $8.45                  $8.20                  $7.77              $6.63
                                      =====                   =====                  =====                  =====              =====
</TABLE>


                                       15

<PAGE>

<TABLE>
<CAPTION>


                                     1998                  1997                   1996                    1995                1994
                                  ----------          --------------         --------------          -------------          --------

<S>                          <C>                      <C>                  <C>                   <C>                  <C> 
Assets                           $81,205,193             $82,142,465            $81,809,360            $81,872,350       $77,185,070
                                 -----------             -----------            -----------            -----------       -----------

Life Insurance:
  Insurance in
  force                       $1,467,529,000          $1,558,810,000         $1,703,650,000         $1,805,756,000    $2,000,656,000
                              --------------          --------------         --------------         --------------    --------------

Individual
  insurance
  issued during
  current
  year                           $68,935,000             $82,390,000           $121,646,000           $124,222,000      $184,364,000
                                 -----------             -----------           ------------           ------------      ------------

Long term
  obligation                      $1,000,000              $1,000,000             $1,000,000             $1,000,000        $1,000,000
                                  ----------              ----------             ----------             ----------        ----------

Dividends
  declared per
  common share                         $0.00                   $0.00                  $0.00                  $0.00             $0.00
                                       -----                   -----                  -----                  -----             -----
</TABLE>






                                       16

<PAGE>



Item 7. Management's  discussion and analysis of financial condition and results
of operation.

Overview.

         This analysis of the results of operations  and financial  condition of
Southern Security Life should be read in conjunction with the Selected Financial
Data and Financial  Statements and Notes to the Financial Statements included in
this report.

         In recent years the Company has primarily issued two types of insurance
products,  universal  life and final expense  products.  Universal life provides
insurance   coverage  with  flexible  premiums,   within  limits,   which  allow
policyholders  to  accumulate  cash  values.  The  accumulated  cash  values are
credited with  tax-deferred  interest,  as adjusted by the Company on a periodic
basis.  Deducted  from the cash  accumulations  are  administrative  charges and
mortality  costs.  Should a policy  surrender  in its early  years,  the Company
assesses a surrender fee against the cash value  accumulations based on a graded
formula.  Final  expense  products  are  traditional  endowment  type  insurance
policies  written for the senior  market.  Because  they are written to a senior
market they are designed to accommodate  adverse health  conditions.  Because of
the size of the policies they are usually issued with only limited underwriting.
The  coverage  size  of the  policy  is  roughly  equivalent  to  the  insured's
anticipated funeral costs.

         Pursuant to the accounting methods prescribed by Statement of Financial
Accounting  Standards No. 97 (SFAS 97), premiums received from  policyholders on
universal  life  products  are  credited to  policyholder  account  balances and
treated as a liability rather than income. Revenues on such products result from
the  mortality  and  administrative  fees  charged to  policyholder  balances in
addition to  surrender  charges  assessed at the time of  surrender as explained
above.  Such costs of insurance,  expense  charges,  and  surrender  charges are
recognized  as revenue is earned.  In addition,  the Company has adopted  policy
designs with the  characteristic  of having higher  expense  charges  during the
first  policy  year than in  renewal  years.  Under SFAS 97, the excess of these
charges are reported as unearned revenue. The unearned revenue is then amortized
into income over the life of the policy using the same  assumptions  and factors
used  to  amortize   capitalized   acquisition   costs.   Interest  credited  to
policyholder balances is shown as a part of benefit expenses.  Premiums received
from final expense products are treated as revenue when received.

         In accordance with generally accepted  accounting  principles,  certain
costs  directly  associated  with the  issuance of new policies are deferred and
amortized  over the lives of the  policies.  These costs are defined as deferred
policy acquisition costs and are shown in the asset section of the balance sheet
of the Company.

                                       17

<PAGE>



Capitalized  acquisition  costs for  universal  life and  annuity  policies  are
amortized over the life of the business at a constant rate, based on the present
value of the estimated  gross  profits  expected to be realized over the life of
the business.  SFAS 97 requires that estimates of expected gross profits used as
a basis  for  amortization  be  evaluated  on a  regular  basis,  and the  total
amortization  to date be  adjusted  as a charge or credit to  earnings if actual
experience or other evidence suggests that earlier  estimates be revised.  Thus,
variations in the amortization of the deferred policy  acquisition  costs,  from
one period to the next,  are a normal  aspect of the  universal  life  insurance
business and are generally attributed to the recognition of current and emerging
experience in accordance with the principles of SFAS 97.

         Annuity  products,  of which the Company  currently has a minor amount,
are  recorded in similar  fashion to  universal  life  products.  Considerations
received by the Company are credited to the annuity  account  balances which are
shown as a  liability  in the  balance  sheet.  Interest  is  credited  to these
accounts  as well and shown as an  expense  of the  Company.  Income is  derived
primarily from surrender charges on this type product.

         An additional  source of income to the Company is  investment  revenue.
The Company  invests those funds deposited by  policy-holders  of universal life
and annuity products in debt and equity securities in order to earn interest and
dividend  income,  a portion  of which is  credited  back to the  policyholders.
Interest rates and maturities of the Company's  investment portfolio play a part
in determining the interest rates credited to policyholders.

         Product profitability is affected by several different factors, such as
mortality  experience ( actual versus  expected),  interest rate spreads (excess
interest earned over interest credited to policyholders)  and controlling policy
acquisition costs and other costs of operation. The results of any one reporting
period  may be  significantly  affected  by the  level of death  claims or other
policyholder benefits incurred due to the Company's relatively small size.




                                       18

<PAGE>



         The following table sets forth certain percentages reflecting financial
data  and  results  of  operations  (a) for  1998,  1997 and  1996  premium  and
investment revenues and (b) for period to period increases and (decreases).
<TABLE>
<CAPTION>

                                                  Relationships to
                                                   Total Revenues                             Period to Period
                                              Years Ended December 31,                     (Increase or Decrease)
                                       1998          1997         1996                     98-97            97-96
                                      ------        ------       ------                   -------          ------

<S>                                   <C>           <C>          <C>                      <C>              <C> 
Insurance Revenues                       64%           65%          65%                      (5%)             (3%)
Net Investment Income                    32            30           27                        2%               7%
Realized Investment
   Gains                                  4             5            8
                                        ----          ----         ---

   Total Revenues                       100%          100%         100%                      (3%)             (3%)

Benefits and claims                      38%           38%          31%                       2%              16%
Amortization of
   Acquisition costs                     31            30           28                        2%               5%

Other operating
   costs and
   expenses                              36            30           27                       19%               4%
                                        ----          ----         ----

   Total Expenses                       106%           98%          86%                       5%               9%

Income (loss) before
   income taxes                         (6%)            2%          14%                    (351%)            (84%)
Provision for income
   taxes                                (2)             0            2                     (546%)            (72%)
                                        ----           ---         ----

Net Income (Loss)                       (4%)            2%          12%                    (297%)            (86%)
                                        ====           ===         ====
</TABLE>



Results of Operations.

         New business  written was $69 million,  $82 million and $122 million in
face value for 1998,  1997 and 1996,  respectively.  The Company's new market is
known as the final  expense  market.  This  product is a  traditional  endowment
policy designed to help offset the financial  burdens  associated with the death
of a family  member  and  targets  the needs of  senior  citizens.  The  product
represented 77% of the life policies written in 1998. Recruiting new field sales
representatives is directed at this new plan. Policies issued in this market are
of a lesser face value than those of the Universal  Life market.  That being the
case, the face amount of insurance appears to have declined; however, the actual
number of policies issued increased.  The Company issued approximately 2,700 new
policies in 1997 and approximately 3,100 new policies in 1998.


                                       19

<PAGE>



          Net insurance  revenue was $7.2 million in 1998, $7.6 million in 1997,
and $7.9  million in 1996.  While  policy  production  was up for 1998 and 1997,
premium and policy  charges were down due to the type and size of plans  written
in the respective years.

         Several  factors have  combined to create the decline in net  insurance
revenue  in 1998 as  compared  to 1997  and  1996.  Continued  lapsation  in the
universal   life  book  of  business  has   resulted  in  reduced   revenues  in
administrative   and  mortality  fees.  New  production  has  not  increased  as
significantly  as would be needed to offset  policy  lapses and the new  product
currently  being  marketed  has  lower  premiums  due to the  size  of  policies
currently issued as compared to the universal life product. Surrender fee income
in 1998 decreased by approximately $300,000 compared to 1997 due to the decrease
in surrender charges applicable to the Company's older universal life products.

         The  balance of the decline in 1998,  1997 and 1996  premium and policy
charges is related to the  unlocking,  for  current  and future  experience,  of
unearned revenue.  Unearned revenue essentially represents the excess first year
charges in the policy.  With the advice and assistance of consulting  actuaries,
each year the Company  reviews its current  experience for  mortality,  credited
interest  spreads,  lapses,  surrender  fees and  adjusts  its  amortization  of
deferred  acquisition  costs and unearned revenue to the appropriate  levels for
both the  current  experience  and  anticipated  future  experience.  This is an
ongoing refinement process.

         Increased  investment in debt securities  coupled with reduced expenses
for student loan processing are responsible for the 6.9% net yield in 1998, 6.9%
in 1997 and 6.5% in 1996. No  substantive  changes  occurred in 1998 compared to
previous  years.  The Company  continues to review its investment  strategies to
increase  its  earned  interest  rate.  As a part of this  process of review and
refinement,  the Company sold its entire stock  portfolio just prior to year end
1996.  This  created a  significant  increase  in realized  gains for 1996.  The
resulting  funds were  reinvested  in common stocks and fixed  maturities  which
created an increased yield for the Company in 1998 and 1997.

         Annuity,  death and other benefits  decreased  $85,000 or 2% in 1998 as
compared  to an increase of 16% in 1997.  The  decrease in death  claims in 1998
represent the majority of this reduction.  This expense line is a combination of
several benefit types with death claims, annuity benefits and surrender benefits
comprising the most significant portion of the total line. In 1997 each of these
expenses  increased  with death  claims  representing  the largest  increase.  A
significant  increase or  decrease in death  claims in any given year can have a
marked impact on the results of operations in a small company.


                                       20

<PAGE>



         The amortization of deferred  acquisition costs increased in 1997 by 5%
as compared to a 10% increase in 1996. No substantive change occurred in 1998 as
compared to the previous years. The amortization of deferred  acquisition  costs
is a  continuous  refinement  process  which  relates to current  experience  in
connection  with revenues,  mortality gains and losses,  credited  interest rate
spreads,  expense  charges and  surrender  charges.  The change in the  unearned
revenue  liabilities is also due to unlocking for current and future  experience
based on the results of the changing  experience  encountered  as required under
FAS 97.

         Operating  expenses for the Company  were $4 million,  $3.4 million and
$3.3  million  for 1998,  1997 and 1996,  respectively.  New  products  and lead
programs are responsible for the increased operating costs of 1997 and 1996. The
increase  in 1998 of  $660,000  or 20% was  primarily  attributed  to a lump sum
settlement to the Company's  former  President to fulfil the  obligations of his
employment agreement.

         Effective December 17, 1998, the Company entered into an Administrative
Services Agreement with Security National Financial Corporation ("SNFC").  Under
the terms of the agreement,  SNFC has agreed to provide the Company with certain
defined  administrative and financial services,  including  accounting services,
financial   reports   and   statements,    actuarial,   policyholder   services,
underwriting,  data processing,  legal, building management,  marketing advisory
services  and  investment  services.  In  consideration  for the  services to be
provided by SNFC, the Company shall pay SNFC and administrative  services fee of
$250,000 per month,  provided,  however,  that such fee shall be reduced to zero
for so long as the  capital  and surplus of the Company is less than or equal to
$6,000,000,  unless the  Company  and SNFC  otherwise  agree in writing and such
agreement is approved by the Florida Department of Insurance.

         The administrative services fee may be increased,  beginning on January
1, 2001, to reflect increases in the Consumer Price Index, over the index amount
as of January 1, 2000. The  Administrative  Services  Agreement  shall remain in
effect for an initial  term  expiring  on  December  16,  2003.  The term of the
agreement may be  automatically  extended for  additional  one-year terms unless
either the Company or SNFC shall deliver a written notice on or before September
30, of any year  stating  to the other its  desire not to extend the term of the
agreement.  However,  in no  event  can the  agreement  be  terminated  prior to
December 16,  2003.  It is  anticipated  that the Company will realize a reduced
level of  general  and  administrative  costs in the  future  as a result of the
Administrative Services Agreement.

         Reinsurance  premiums  ceded  for  1998,  1997 and 1996 were (on a GAAP
basis)  $863,436,  $914,071 and $1,030,673  respectively.  Policy  benefits were
reduced due to reinsurance recoveries of $169,892,

                                       21

<PAGE>



$336,068,  and  $206,428  for  1998,  1997 and 1996,  respectively.  Reinsurance
commissions amounted to $252,154, $281,434, and $308,179 for 1998, 1997 and 1996
respectively.  In addition,  under the terms of the  Company's  treaty with Mega
Life (formerly United Group Insurance Company) expenses of $984,356,  $1,111,130
and $956,143 for 1998, 1997 and 1996, respectively.

         Loss,  before income taxes, in 1998 was $625,640  compared to a gain of
$249,410 and  $1,588,505 in 1997 and 1996  respectively.  The 1998 loss resulted
principally from a decrease in net insurance revenue of $415,000 and an increase
in operating expenses related to payment to the Company's former president under
his employment agreement.

         Increased  production  of new policies  also  increased  future  policy
benefits by  $210,000,  these were  offset by a decrease  in annuity,  death and
other benefits of  approximately  $294,000 and  amortization  of deferred policy
acquisition costs of $58,000.


Liquidity and Capital Resources.

         Statement  of  Financial  Accounting  Standards  No. 115 ("SFAS  115"),
"Accounting  for Certain  Investments  in Debt and Equity  Securities"  requires
investments  in all debt  securities  and those equity  securities  with readily
determinable  market  values  to be  classified  into one of  three  categories:
held-to-maturity,  trading or available-for-sale.  Classification of investments
is based upon management's  current intent. Debt securities which management has
a  positive  intent  and  ability  to hold  until  maturity  are  classified  as
securities  held-to-maturity  and are  carried  at  amortized  cost.  Unrealized
holding  gains and losses on securities  held-to-maturity,  are not reflected in
the  financial  statements.  Debt and equity  securities  that are purchased for
short-term resale are classified as trading  securities.  Trading securities are
carried at market value,  with  unrealized  holding gains and losses included in
earnings.  The  Company  has no  trading  securities.  All other debt and equity
securities not included in the above two categories are classified as securities
available-for-sale.  Securities  available-for-sale are carried at market value,
with unrealized holding gains and losses reported in other comprehensive  income
and included in  stockholders'  equity,  net of tax and  adjustments to deferred
acquisition costs. Adoption of this statement had no effect on the income of the
Company.

         The  Company  maintains  invested  assets for  purposes  of  fulfilling
policyholder  obligations  which are often  susceptible  to market  risk.  These
assets and other  financial  instruments  are maintained in accordance  with the
Company's   investment   policy   which  is  designed  to  match   corresponding
policyholder obligations to relative maturities of the invested assets.


                                       22

<PAGE>



         During 1998, economic and financial market conditions had the effect of
depressing  yields on the  company's  portfolio  through  lowering  the yield to
maturity on corporate and other fixed securities.

         If market conditions were to cause interest rates to change, the market
value of the available-for-sale  fixed security portfolio (approximately $28.479
million)  could change by the following  amounts based on the  respective  basis
point  swing  (the  change in market  values  were  calculated  using a modeling
technique):

<TABLE>
<CAPTION>

(in millions of dollars)      -200bps       -100bps       +100bps       +200bps

<S>                           <C>           <C>          <C>           <C>     
Change in Market Value        $3.140        $1.511       $(1.405)      $(2.712)
</TABLE>


         The  Company  has  no  other  financial   instruments  which  would  be
materially susceptible to market risk.

         The Company's insurance operations have historically  provided adequate
positive cash flow enabling the Company to continue to meet operational needs as
well as increase its investment-grade securities to provide ample protection for
policyholders.

         Student loans are a service the Company has historically made available
to the  public as well as an  investment.  While  the  Company  anticipates  the
seasonal  demand for student loan funds and the subsequent sale of such loans to
the Student Loan Marketing  Association (SLMA),  there are times when additional
funds are required to meet demand for student  loans until such time as the sale
thereof to SLMA can be  completed.  In 1997 the Company  renewed its  $5,000,000
line of credit  with SLMA until 2007 in order to meet these  seasonal  borrowing
requirements.  The Company made no draws against this line of credit  throughout
the seasonal period for 1998 or 1997. The Company  anticipates  borrowings to be
made  through  this line of credit  with SLMA if  student  loan  borrowings  are
required for the 1999 seasonal  period.  SLMA offers a more  competitive rate of
interest on such  borrowings  than the  Company has been able to obtain  through
banks.

         The  Company  began a new  association  with USA Group,  CAP Program in
1996,  for the  purpose of making  more  student  loan funds  available  without
increased costs to the Company. This association aided in eliminating borrowings
for 1998 and 1997.

         The  National  Association  of  Insurance  Commissioners,  in  order to
enhance the  regulation  of insurer  solvency,  issued a model law to  implement
risk-based  capital (RBC) requirements for life insurance  companies,  which are
designed to assess capital adequacy.  Pursuant to the model law, insurers having
less statutory  surplus than required by the RBC calculation  will be subject to
varying

                                       23

<PAGE>



degrees of regulatory  action.  At December 31, 1998,  the Company had statutory
surplus well in excess of any RBC action level requirements.

         The  Company  has  fully  leased  all  available  rental  space  in its
principal office building and does not anticipate  further capital  expenditures
to the rental space.

Year 2000

         The  Company  is  currently  completing  its  efforts  to  resolve  the
potential  impact  of the year  2000 on the  processing  of  information  by the
Company's  insurance  systems.  The year 2000  problem is the result of computer
programs  being  written  using two  digits  (rather  than  four) to define  the
applicable year. Any of the company's systems that have time-sensitive  software
may  recognize a date using "00" as the year 1900  rather than year 2000,  which
could result in miscalculations or system failures.

         The Company has substantially  completed  necessary system upgrades and
compliance testing and expects to be entirely complete by September 30, 1999.

         The Company's most  significant  operational  system is currently being
replaced through conversion  pursuant to an Administrative  Services  Agreement.
Under  the  Administrative  Services  Agreement  entered  into  by  the  Company
effective  December 17, 1998,  Security  National  made  available a new LifePro
Administration  system.  Life-Pro  is a  subsidiary  of IBM.  Since May of 1998,
Security  National  has  invested in excess of $1 million to  implement a system
conversion  for  the  Company.  For  further  discussion  on the  Administrative
Services  Agreement,  see the  "Results of  Operations"  section  discussion  on
operating expenses.

         Anticipated  future  costs of  addressing  potential  problems  are not
currently expected to have a material adverse impact on the Company's  financial
position, results of operations or cash flows in future periods. However, if the
Company,  its customers or vendors are unable to resolve such processing  issues
in a timely manner,  it could result in a material  financial  risk.  Management
believes that manual policy and claims  administration could be performed in the
unlikely  event that one or more of its  systems did not  function.  The Company
plans to devote the necessary resources to test and remediate all remaining Year
2000 issues in a timely manner.

         The cost  that has  been  incurred  and  paid in  achieving  Year  2000
compliance is  approximately  $1 million as discussed  above. As of December 31,
1998,  management does not anticipate any other significant costs to be incurred
associated with its year 2000 initiatives.


                                       24

<PAGE>



         The  Private  Securities  Litigation  Reform  Act of 1995  (the  "Act")
provides a "safe harbor" for  forward-looking  statements to encourage companies
to provide  prospective  information  about  their  businesses  without  fear of
litigation so long as those statements are identified as forward-looking and are
accompanied by meaningful  cautionary  statements  identifying important factors
that could cause actual  results to differ  materially  from those  projected in
such  statements.  The company  desires to take  advantage of the "safe  harbor"
provisions of the Act.

         This Annual  Report of Form 10-K contains  forward-looking  statements,
together  with  related  data and  projections,  about the  Company's  projected
financial results and its future plans and strategies.  However,  actual results
and needs of the Company may vary materially from forward-looking statements and
projections  made from time to time by the Company on the basis of  management's
then-current expectations. The business in which the Company is engaged involves
changing and competitive  markets,  which may involve a high degree of risk, and
there can be no assurance that  forward-looking  statements and projections will
prove accurate.

         Factors  that  may  cause  the  Company's   actual  results  to  differ
materially from those contemplated or projected, forecast, estimated or budgeted
in  such  forward  looking   statements  include  among  others,  the  following
possibilities:  (i) heightened  competition,  including the  intensification  of
price  competition,  the entry of new  competitors,  and the introduction of new
products  by new and  existing  competitors;  (ii)  adverse  state  and  federal
legislation or regulation,  including decreases in rates, limitations on premium
levels, increases in minimum capital and reserve requirements,  benefit mandates
and tax treatment of insurance  products;  (iii)  fluctuations in interest rates
causing a reduction of investment  income or increase in interest expense and in
the market value of interest rate sensitive  investment;  (iv) failure to obtain
new customer,  retain  existing  customers or reductions in policies in force by
existing customers; (v) higher service,  administrative,  or general expense due
to the need for additional advertising,  marketing, administrative or management
information systems  expenditures;  (vi) loss or retirement of key executives or
employees;  (vii)  increases in medical  costs;  (viii) changes in the Company's
liquidity due to changes in asset and liability  matching;  (ix) restrictions on
insurance  underwriting based on genetic testing and other criteria; (x) adverse
changes in the ratings obtained by independent rating agencies;  (xi) failure to
maintain adequate reinsurance; (xii) possible claims relating to sales practices
for insurance  products and claim denials and (xiii)  adverse trends in morality
and morbidity.


                                       25

<PAGE>



Item 8.  Financial Statements and Supplementary Data.

The following  financial  statements of Southern Security Life Insurance Company
are included in Part II, Item 8:
<TABLE>
<CAPTION>

                                   Page Number

<S>                                                                   <C>
Independent Auditors' Report............                               27

Balance Sheets-December 31, 1998 & 1997.                               29

Statements of Operations - years ended
December 31, 1998, 1997 and 1996........                               31

Statements of Shareholders' Equity-years
ended December 31, 1998, 1997 and 1996..                               32

Statements of Cash Flows - years ended
December 31, 1998, 1997 and 1996........                               33

Notes to Financial Statements...........                               36
</TABLE>



                                       26

<PAGE>






                         Report of Independent Auditors



Board of Directors & Shareholders
Southern Security Life Insurance Company:

We have  audited  the  accompanying  balance  sheet of  Southern  Security  Life
Insurance  Company  as of  December  31,  1998  and the  related  statements  of
operations,  shareholders'  equity,  and cash flow for the year then  ended.  In
connection with our audit of the financial statements,  we have also audited the
amounts  included  in  the  financial  statement  schedules  as  listed  in  the
accompanying  index under Item 14(a).  These financial  statements and financial
statement  schedules are the  responsibility  of the Company's  management.  Our
responsibility  is to  express  an opinion  on these  financial  statements  and
financial statement schedules based on our audit.

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

In our opinion,  the 1998 financial statements referred to above present fairly,
in all material  respects,  the  financial  position of Southern  Security  Life
Insurance Company as of December 31, 1998, and the results of its operations and
its  cash  flows  for the year  ended  in  conformity  with  generally  accepted
accounting  principles.  Also in our opinion,  the related  financial  statement
schedules,  when considered in relation to the basic financial  statements taken
as a whole, present fairly, in all material respects,  the information set forth
therein.

Ernst & Young LLP

Jacksonville, Florida
March 12, 1999









                                       27

<PAGE>






                          Independent Auditors' Report



Board of Directors & Shareholders
Southern Security Life Insurance Company:

We have  audited  the  accompanying  balance  sheet of  Southern  Security  Life
Insurance  Company as of December  31, 1997 and  related  statements  of income,
shareholders' equity and cash flows for each of the years in the two year period
ended  December  31,  1997.  In  connection  with  our  audit  of the  financial
statements, we have also audited the amounts included in the financial statement
schedules  as listed in the  accompanying  index under Item 14(a)2 as of and for
each of the  years  in the two  year  period  ended  December  31,  1997.  These
financial statements and financial statement schedules are the responsibility of
the Company's  management.  Our responsibility is to express an opinion on these
financial statements and financial statement schedules based on our audits.

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

In our opinion,  the financial  statements  referred to above present fairly, in
all  material  respects,  the  financial  position  of  Southern  Security  Life
Insurance  Company as of December 31, 1997 and the results of its operations and
its cash flows for each of the years in the two-year  period ended  December 31,
1997, in conformity with generally accepted accounting  principles.  Also in our
opinion, the related financial statement schedules,  when considered in relation
to the basic  financial  statements  taken as a whole,  present  fairly,  in all
material respects, the information set forth therein.




KPMG LLP

Orlando, Florida
April 3, 1998


                                       28

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                 Balance Sheets

                           December 31, 1998 and 1997
<TABLE>
<CAPTION>

    Assets                                             1998                 1997       
    ------                                             ----                 ----                                    
                                                                                       
<S>                                                <C>                  <C>                                         
Investments (note 3):                                                                  
    Fixed maturities held-to-maturity                                                  
      (fair value, $ 5,064,541 and                                                     
      $10,631,003 at December 31,                                                      
      1998 and 1997, respectively)                  $4,956,910           $10,501,712                                
    Securities available-for-sale,                                                     
      at fair value:                                                                   
      Fixed maturities (cost of                                                        
        $27,671,425 at December 31,                                                    
        1998 and $30,880,390 at                                                        
        December 31, 1997)                          28,479,161            31,483,324                                
      Equity securities (cost, $210,370                                                
        and $800,000 at December 31,                                                   
        1998 and 1997, respectively)                   250,232               839,973                                
    Policy and student loans                         8,462,438             7,945,381                                
    Short-term investments                          11,434,983               100,000                                
                                                    ----------            ----------                                   
                                                                                       
                                                    53,583,724            50,870,390                                
                                                                                       
Cash and cash equivalents                              682,389             2,448,994                                
Accrued investment income                              564,118               637,460                                
Deferred policy acquisition costs                                                      
    (note 4)                                        13,583,956            15,451,689                                
Policyholders' account balances on                                                     
    deposit with reinsurer (note 7)                  8,518,571             8,667,241                                
Reinsurance receivable (note 7)                        306,258               359,688                                
Receivables:                                                                           
    Agent balances                                     994,493               590,368                                
    Other                                              351,478               324,752                                
    Refundable income taxes                             34,951               121,680                                
Property and equipment, net,                                                           
    at cost (note 5)                                 2,585,255             2,670,203                                
                                                   -----------           -----------                                    
                                                                                       
                                                   $81,205,193           $82,142,465                                
                                                   ===========           ===========                                
</TABLE> 
                                                   




                 See accompanying notes to financial statements


                                       29

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                           Balance Sheets (continued)

                           December 31, 1998 and 1997


<TABLE>
<CAPTION>
<S>                                                 <C>                  <C> 
    Liabilities and Shareholders' Equity                1998                   1997                                 
    ------------------------------------                ----                   ----                                 
                                                                                        
Liabilities:                                                                            
    Policy liabilities and accruals                                                     
      (notes 6 and 7):                              $1,727,300            $1,409,031                                
  Future policy benefits:                                                               
      Policyholders' account balances               52,520,300            52,335,511                                
      Unearned revenue                               6,023,399             7,108,662                                
      Other policy claims and benefits                                                  
        payable                                        540,789               427,649                                
    Other policyholders' funds, dividend                                                
      and endowment accumulations                       64,738                59,686                                
    Funds held related to reinsurance                                                   
      treaties (note 7)                              1,419,357             1,339,927                                
    Note payable to related party                                                       
      (note 9)                                       1,000,000             1,000,000                                
    Due to affiliated insurance                                                         
      agency (note 11)                                  22,871                68,646                                
  General expenses accrued                             747,148               897,627                                
  Unearned investment income                           340,622               313,018                                
    Other liabilities                                   90,489               100,990                                
    Deferred income taxes (note 10)                    796,074               949,700                                
                                                     ---------               -------                                
                                                                                        
                                                                                        
                                                    65,293,087            66,010,447                                
                                                    ----------            ----------                                
                                                                                        
Shareholders' equity (notes 2,3 and 12):                                                
    Common stock, $1 par, authorized                                                    
      3,000,000 shares; issued and out-                                                 
      standing, 1,907,989 shares                     1,907,989             1,907,989                                
    Capital in excess of par                         4,011,519             4,011,519                                
    Accumulated other comprehensive income             430,161               266,340                                
    Retained earnings                                9,562,437             9,946,170                                
                                                    ----------             ---------                                
                                                                                        
                                                    15,912,106            16,132,018                                
Commitments and contingencies                                                           
    (notes 7 and 14)                                      -                     -                                   
                                                      --------             ------                                   
                                                                                        
                                                   $81,205,193           $82,142,465                                
                                                   ===========           ===========                                
</TABLE>                                                  
                                                   




                                       30

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                            Statements of Operations

                  Years ended December 31, 1998, 1997, and 1996

<TABLE>
<CAPTION>

                                                 1998                1997                  1996 
                                                 ----                ----                  ----                             
<S>                                        <C>                 <C>                  <C>
Revenues:                                                                                                    
                                                                                                             
    Net insurance revenues                   $7,228,227          $7,643,650            $7,915,027                           
    Net investment income                                                                                    
      (notes 3 and 8)                         3,587,147           3,545,311             3,318,627                           
    Realized gain on                                                                                         
      investments (note 3)                      525,181             506,795               869,502                           
                                               --------             -------               -------                           
                                                                                                             
                                             11,340,555          11,695,756            12,103,156                           
                                             ----------          ----------            ----------                           
                                                                                                             
                                                                                                             
Benefits, claims and expenses:                                                                               
                                                                                                             
    Benefits and claims                       4,346,820           4,431,474             3,813,361                           
    Amortization of deferred                                                                                 
      policy acquisition                                                                                     
      costs (note 4)                          3,484,689           3,542,617             3,364,738                           
    Operating expenses                                                                                       
      (note 11)                               4,044,686           3,382,255             3,246,552                           
    Interest expense with                                                                                    
      related party (note 9)                     90,000              90,000                90,000                           
                                                 ------              ------                ------                           
                                                                                                             
                                             11,966,195          11,446,346            10,514,651                           
                                             ----------          ----------            ----------                           
                                                                                                             
     Income(Loss) before income taxes          (625,640)            249,410             1,588,505                           
                                                                                                             
Income tax expense (benefit)                                                                                 
       (note 10)                              ( 241,907)             54,200               196,000                           
                                               --------             -------               -------                           
                                                                                                             
    Net income(loss)                          $(383,733)           $195,210            $1,392,505                           
                                              =========            ========            ==========                           
                                                                                                             
Basic net income(loss) per share of                                                                          
    common stock                                  $(.20)               $.10                  $.73                           
                                                  =====                ====                  ====                           
                                                                                                             
Diluted net income per share of                                                                              
 common stock                                     $(.20)               $.10                  $.73                           
                                                  =====                ====                  ====                           
</TABLE>
                                                                             
                                         


                See accompanying notes to financialn statements.



                                       31

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                       Statements of Shareholders' Equity

                  Years ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>

                                                                                                   Accumulated
                                                                            Capital                  other
                                                         Common stock      in excess             comprehensive            Retained
                                     Shares             Amount               of par                  income               earnings
<S>                             <C>                 <C>                  <C>                    <C>                    <C>
Balances,
 December 31,
 1995                              1,907,989          $1,907,989          $4,011,519                 $548,647           $8,358,455
                                   ---------          ----------          ----------                  -------           ----------


Net income for
 the year                               -                   -                   -                     -                  1,392,505
Unrealized depre-
 ciation of
 securities avail-
 able for sale                          -                   -                   -                    (557,527)                -
                                     -------             -------             -------                 --------              ----
Balances,
 December 31,
 1996                              1,907,989          $1,907,989          $4,011,519                  $(8,880)          $9,750,960
                                   ---------          ----------          ----------                  -------           ----------


Net income for
 the year                               -                   -                   -                         -                195,210
Unrealized apprecia-
 tion of securities
 available for sale                     -                   -                   -                     275,220                 -
                                     -------             -------             -------                  -------              ----
Balances,
 December 31,
 1997                              1,907,989          $1,907,989          $4,011,519                 $266,340           $9,946,170
                                   =========          ==========          ==========                 ========           ==========


Net loss for
 the year                               -                   -                   -                        -               (383,733)
Unrealized appre-
 ciation of
 securities avail-
 able for sale                          -                   -                   -                     163,821                 -
                                     -------             -------             -------                 --------             -----
Balances,
 December 31,
 1998                              1,907,989          $1,907,989          $4,011,519                 $430,161           $9,562,437
                                   -========          ----------          ----------                 --------           ----------
</TABLE>






                 See accompanying notes to financial statements.

                                       32

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                            Statements of Cash Flows

                  Years ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>

                                                                            1998                   1997                   1996
                                                                            ----                   ----                   ----


<S>                                                                   <C>                   <C>                    <C>
Cash flows provided by (used in) operating activities:
  Net income (loss)                                                      $(383,733)              $195,210            $1,392,505
  Adjustments to reconcile net cash
    provided by (used in) operating
    activities:
    Depreciation and amortization                                          301,970                232,471               169,681
    Net realized (gains) on
      investments                                                         (525,182)              (506,795)             (869,502)
    Loss on disposal of property,
      plant & equipment                                                      2,956                    100                   124
    Deferred income taxes                                                  175,274                198,100                16,900
    Amortization of deferred
      policy acquisition costs                                           3,484,689              3,542,617             3,364,738
    Acquisition costs deferred                                          (1,911,282)            (2,069,778)           (2,018,043)
    Change in assets and liabilities
      affecting cash provided by
      operations:
        Accrued investment income                                           73,342                 50,239               (48,890)
        Other invested assets                                                 -                    13,100                  -
        Due from affiliated insurance
          agency                                                              -                    (2,078)                 -
        Accounts receivable                                               (344,122)              (105,752)             (265,682)
        Reinsurance receivable                                              53,430                 20,004               134,649
        Other policy claims and
          future benefits payable                                          431,409                557,739                36,488
        Policyholders' account balances                                  2,356,804              2,065,521             2,332,863
        Funds held under reinsurance                                        79,430                146,561               215,950
        Unearned premiums                                               (1,160,706)            (1,114,188)             (962,941)
        Dividend and endowment
          accumulations                                                      5,052                     90                 2,152
        Payable to affiliated insurance
          agent                                                            (45,775)                35,235              (209,957)
        Income taxes payable                                                  -                   (70,164)               53,814
        Other liabilities                                                 (133,376)              ( 15,373)             (134,983)
                                                                          --------               --------              --------

    Net cash provided by operating
        activities                                                      $2,460,180             $3,172,859            $3,209,866
                                                                        ----------             ----------            ----------
</TABLE>

                                   (continued)


                                       33

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                      Statements of Cash Flows (continued)

                  Years ended December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>
                                                                            1998                     1997                   1996
                                                                            ----                     ----                   ----
<S>                                                                <C>                    <C>                      <C>
Cash flowsfrom (used in) investing activities:
  Purchase of investments:
  Purchase of investments held-to-maturity                                   $-                     $-              $(1,965,240)
  Purchase of investments available-
    for-sale                                                            (6,180,178)           (32,704,906)           (8,085,785)
  Purchase of equity securities                                           (610,370)            (3,316,249)                 -
  Proceeds from maturity of held-to-
    maturity securities                                                  5,536,006              4,488,354             2,165,750

  Proceeds from maturity of available-
    for-sale securities                                                    299,281                   -                  635,533
  Proceeds from sale of available-for-
    sale securities (equity and fixed
    maturity)                                                           10,675,217             29,049,745             6,367,780
  Net change in short-term investments                                 (11,334,983)             4,439,106            (3,040,006)
  Net change in policy and student loans                                  (517,057)              (629,572)            2,655,845
  Net change in other investments                                             -                     2,178                 7,605
  Acquisition of property and equipment                                    (71,356)               (35,779)             ( 60,559)
                                                                           -------                -------              --------

   Net cash provided by (used in)
      investing activities                                             $(2,203,440)            $1,292,877           $(1,319,077)
                                                                       -----------             -----------          -----------

Cash flows from financing activities:
   Receipts from universal life and
     certain annuity policies credited
     to policyholder account balances                                    7,524,375              4,042,137             5,213,760
   Return of policyholder account
     balances on universal life and
     certain annuity policies                                           (9,547,720)            (6,264,935)           (5,904,692)
   Proceeds from short-term borrowings                                                               -                2,500,000
   Repayment of short-term borrowings                                                                -               (3,900,553)
                                                                        ----------             ----------            ----------

Net cash provided by (used in)
   financing activities                                                $(2,023,345)           $(2,222,798)          $(2,091,485)
                                                                       ------------           -----------           -----------

Increase (decrease) in cash and
   cash equivalents                                                     (1,766,605)             2,242,938              (200,696)

Cash and cash equivalents at
   beginning of year                                                    $2,448,994               $206,056              $406,752
                                                                        ----------               --------              --------

Cash and cash equivalents at
   end of year                                                            $682,389             $2,448,994              $206,056
                                                                          ========             ==========              ========
</TABLE>

                                       34

<PAGE>




                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                      Statements of Cash Flows (continued)

                  Years ended December 31, 1998, 1997 and 1996


<TABLE>
<CAPTION>
                                                                            1998                   1997                  1996
                                                                            ----                   ----                  ----

<S>                                                                   <C>                     <C>                    <C>
Supplemental schedule of cash flow information:
   Interest paid during the year                                           $90,000                $90,000              $102,094
                                                                            ======                =======               =======

   Income taxes paid during the year                                       $45,500               $115,000              $130,500
                                                                            ======               ========              ========

Change in market value adjustments-investments available-for-sale:
  Fixed maturities                                                        $204,802               $425,313             $(557,065)
  Equity securities                                                           (111)                39,973              (418,345)

Change in deferred acquisition costs                                      (294,326)               (55,084)              181,196
Change in premium deposit funds                                             79,440                 26,340               (95,241)
Deferred income tax asset (liability)                                     (153,626)              (163,500)              333,800
Other                                                                         -                     2,178                (1,872)
                                                                           -------                 ------                ------

Accumulated comprehensive income
Net change in unrealized appreciation
 (depreciation)                                                          $(163,821)              $275,220             $(557,527)
                                                                           =======               ========             =========
</TABLE>







                 See accompanying notes to financial statements.



                                       35

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                          Notes to Financial Statements
                        December 31, 1998, 1997 and 1996


1.     Nature of business and summary of significant accounting policies:

       (a)     Nature of business

               The primary business of Southern  Security Life Insurance Company
               (the  "Company") is the issuance of long duration  universal life
               insurance  contracts.  The majority of the Company's  business is
               conducted in the states of Florida (44%), Georgia (10%) and Texas
               (15%).  None of the remaining  eleven states in which the Company
               is  licensed  to  conduct  business  account  for over 10% of the
               Company's total business.

               Prior to  December  17,  1998,  certain  executive  officers  and
               directors of the Company were  shareholders of  approximately  60
               percent of the shares of SSLIC Holding Company,  Inc.,  (formerly
               Consolidare Enterprises,  Inc.). SSLIC Holding Company, Inc. owns
               57.4 percent of the Company's voting
               securities at December 31, 1998.

               Effective  December 17, 1998,  100 percent of the common stock of
               SSLIC  Holding  Company,  Inc. was acquired by Security  National
               Financial  Corporation ("SNFC").  Accordingly,  from December 17,
               1998, the Company is a 57.4 percent owned, indirect subsidiary of
               SNFC.

               The  following is a  description  of the most  significant  risks
               facing life and health  insurers  and how the  Company  mitigates
               those risks:

               Legal/regulatory  risk is the risk that  changes  in the legal or
               regulatory  environment in which an insurer  operates will create
               additional expenses not anticipated by the insurer in pricing its
               products.  That is,  regulatory  initiatives  designed  to reduce
               insurer  profits,   new  legal  theories  or  insurance   company
               insolvencies  through  guaranty fund assessments may create costs
               for  the  insurer  beyond  those  recorded  in  the  consolidated
               financial  statements.  The Company  seeks to mitigate  this risk
               through geographic marketing of their insurance products.

               Credit risk is the risk that issuers of  securities  owned by the
               Company will default or that other parties, including reinsurers,
               which owe the Company money,  will not pay. The Company  attempts
               to mitigate  this risk by adhering to a  conservative  investment
               strategy, by maintaining sound

                                       36

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


1.     Nature of business and summary of significant accounting policies,
       continued

       (a)     Nature of business

               reinsurance and by providing for any amounts deemed
               uncollectible.

               Interest  rate risk is the risk that  interest  rates will change
               and cause a decrease  in the value of an  insurer's  investments.
               This  change  in  rates  may  cause  certain   interest-sensitive
               products to become uncompetitive, may cause disintermediation, or
               may cause the Company to not achieve its target interest  margins
               between interest earned on invested assets and interest  required
               to be  credited to  policyholder  account  balances.  The Company
               mitigates  this risk by  charging  fees for  nonconformance  with
               certain  policy  provisions,  by offering  products that transfer
               this risk to the  purchaser,  and/or by  attempting  to match the
               maturity  schedule of its assets with the expected payouts of its
               liabilities. To the extent that liabilities come due more quickly
               than assets mature, an insurer would have to sell assets prior to
               maturity and potentially recognize a gain or loss.

       (b)     Basis of financial statements

               The  financial  statements  have  been  prepared  on the basis of
               generally accepted  accounting  principles  ("GAAP"),  which vary
               from  reporting  practices  prescribed or permitted by regulatory
               authorities.

               The  accompanying  financial  statements have been prepared using
               the  historic  cost basis of  accounting  and do not  reflect any
               adjustments  related to allocation  of the purchase  price of the
               Company's  parent,   SSLIC  Holding  (Formerly   Consolidare)  by
               Security National Financial
               Corporation at December 17, 1998.

       (c)     Use of estimates

               In preparing the financial statements,  management is required to
               make estimates and assumptions  that affect the reported  amounts
               of  assets  and   liabilities.   Actual   results   could  differ
               significantly from those estimates.

               The estimates susceptible to significant change are those


                                       37

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


1.     Nature of business and summary of significant accounting policies,
       continued


               used in determining  the liability for future policy benefits and
               claims,  deferred  income taxes and deferred  policy  acquisition
               costs.  Although some variability is inherent in these estimates,
               management believes that the amounts provided are adequate.

       (d)     Investments

               Investments in all debt  securities  and those equity  securities
               with readily  determinable  market values are classified into one
               of    three    categories:    held-to-maturity,     trading    or
               available-for-sale.  Classification  of investments is based upon
               management's current intent. Debt securities which management has
               a  positive  intent  and  ability  to  hold  until  maturity  are
               classified  as  securities  held-to-maturity  and are  carried at
               amortized cost. Unrealized holding gains and losses on securities
               held-to-maturity  are not reflected in the financial  statements.
               Debt and equity  securities  that are  purchased  for  short-term
               resale  would  be  classified  as  trading  securities.   Trading
               securities  would  be  carried  at fair  value,  with  unrealized
               holding gains and losses included in earnings; the Company has no
               securities  classified as trading securities.  All other debt and
               equity  securities  not included in the above two  categories are
               classified   as   securities    available-for-sale.    Securities
               available-for-sale  are  carried at fair value,  with  unrealized
               holding   gains  and  losses   reported  in   accumulated   other
               comprehensive  income which is included in  stockholders'  equity
               after   adjustment   for  deferred   income  taxes  and  deferred
               acquisition costs related to universal life products.

               The   Company's   carrying   value   for   investments   in   the
               held-to-maturity and available-for-sale  categories is reduced to
               its estimated  realizable  value if a decline in the market value
               is deemed  other than  temporary.  Such  reductions  in  carrying
               values are recognized as realized losses and charged to income.

               Interest  on  fixed  maturities  and  short-term  investments  is
               recognized  to  income as it  accrues  on the  principal  amounts
               outstanding  adjusted for  amortization of premiums and discounts
               computed by the scientific method which approx-
 
                                      38
<PAGE>

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


1.     Nature of business and summary of significant accounting policies,
       continued

       (d)     Investments

               imates the effective  yield method.  Realized gains and losses on
               disposition of investments  are included in net income.  The cost
               of investments sold is determined on the specific  identification
               method.  Dividends  are  recorded  as income  on the  ex-dividend
               dates.

               Policy  loans  and  student  loans  are  carried  at  the  unpaid
               principal balance,  less any amounts deemed to be uncol-lectible.
               The  Company's  policy  is that  policy  loans  are not  made for
               amounts  in excess  of the cash  surrender  value of the  related
               policy. Accordingly, policy loans are fully collateralized by the
               related  liability  for future  policy  benefits for  traditional
               insurance policies and by the policyholders'  account balance for
               interest sensitive policies.

       (e)     Cash and cash equivalents

               For  purposes  of the  statements  of  cash  flows,  the  Company
               considers all highly liquid debt  instruments  purchased  with an
               original maturity of one month or less to be cash equivalents.

       (f)     Deferred policy acquisition costs

               The  costs of  acquiring  new  business,  net of the  effects  of
               reinsurance,   principally  commissions  and  those  home  office
               expenses that tend to vary with and are primarily  related to the
               production  of new  business,  have been  deferred  to the extent
               recoverable   from  future  profit   margins.   Deferred   policy
               acquisition  costs  applicable to  traditional  life policies are
               being  amortized  over the  premium-paying  period of the related
               policies in a manner that will charge each year's  operations  in
               direct  proportion to the estimated premium revenue over the life
               of the  policies.  Premium  revenue  estimates are made using the
               same interest,  mortality and withdrawal  assumptions as are used
               for computing liabilities for future policy benefits. Acquisition
               costs relating to universal life policies are being  amortized in
               relation to the incidence of expected gross profits over the life
               of the  policies.  Gross  profits for  universal  life  contracts
               consist of revenue  representing  policy  charges for the cost of
               insurance,

                                       39

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes To Financial Statements (continued)


1.     Nature of business and summary of significant accounting
       policies, continued

               administration  of  the  contracts  and  surrender  charges  plus
               investment   income  less  expenses  for  interest   credited  to
               policyholder account balances, policy administrative expenses and
               expected benefit  payments in excess of policy account  balances.
               Deferred  policy  acquisition  costs are  adjusted to reflect the
               impact  of  unrealized   gains  and  losses  on  fixed   maturity
               securities available for sale.

               The Company has performed tests concerning the  recoverability of
               deferred acquisition costs. These methods include those typically
               used by many companies in the life insurance  industry.  Further,
               the Company  conducts a sensitivity  analysis of its  assumptions
               that are used to  estimate  the future  expected  gross  profits,
               which management has used to determine the future  recoverability
               of the deferred acquisition costs.

       (g)     Depreciation

               Depreciation is being provided on the  straight-line  method over
               the estimated useful lives of the assets.

       (h)     Future policy benefits

               The  liability for future policy  benefits for  traditional  life
               policies  has been  provided on a net level  premium  basis based
               upon  estimated  investment  yields,  withdrawals,  mortality and
               other  assumptions that were appropriate at the time the policies
               were issued.  Such estimates are based upon industry data and the
               Company's  past  experience  as adjusted to provide for  possible
               adverse deviation from the estimates.

       (i)     Policyholder account balance

               Insurance  reserves for universal  life  policies are  determined
               following the retrospective  deposit method and consist of policy
               values that accrue to the benefit of the policyholder,  unreduced
               by surrender charges.

       (j)     Recognition of premium revenue and related costs

               Premiums are recognized as revenue as follows:

               Universal life policies - premiums received from policy-

                                       40

<PAGE>

 



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


1.     Nature of business and summary of significant accounting policies,
       continued

               holders  are  reported as  deposits.  Cost of  insurance,  policy
               administration  and surrender  charges which are charged  against
               the   policyholder   account  balance  during  the  period,   are
               recognized  as revenue as earned.  Amounts  assessed  against the
               policyholder  account balance that represent  compensation to the
               Company  for  services  to be  provided  in  future  periods  are
               reported as unearned  revenue and  recognized in income using the
               same assumptions and factors used to amortize  acquisition  costs
               capitalized.

               Annuity  contracts with flexible  terms - premiums  received from
               policyholders are reported as deposits.

               All other  policies  -  recognized  as revenue  over the  premium
               paying period.

       (k)     Income taxes

               Deferred tax assets and liabilities are recognized for the future
               tax   consequences   attributable  to  differences   between  the
               financial  statement  carrying  amounts  of  existing  assets and
               liabilities and their  respective tax bases.  Deferred tax assets
               and  liabilities are measured using enacted tax rates expected to
               apply to  taxable  income in the years in which  those  temporary
               differences  are expected to be recovered or settled.  The effect
               on deferred tax assets and  liabilities  of a change in tax rates
               is recognized in income in the period that includes the enactment
               date.

       (l)     Earnings per share

               In 1997, the Financial Accounting Standards Board issued
               Statement No. 128, Earnings per Share.  Statement No. 128
               replaced the calculation of primary and fully diluted
               earnings per share with basic and diluted earnings per
               share.  Unlike primary earnings per share, basic earnings
               per share excludes any dilutive effects of options,
               warrants and convertible securities.  Diluted earnings per
               share is very similar to the previously reported fully
               diluted earnings per share.  All earnings per share amounts
               for all periods presented are restated to conform to
               Statement No. 128 requirements.




                                       41

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


1.     Nature of business and summary of significant accounting policies,
       continued

       (m)     Reclassification

               Certain amounts  presented in the 1996 financial  statements have
               been restated to conform to the 1997 and 1998 presentation.


2.     Basis of financial statements

       The more significant  generally accepted accounting principles applied in
       the  preparation of financial  statements that differ from life insurance
       statutory  accounting  practices  prescribed  or permitted by  regulatory
       authorities (which are primarily designed to demonstrate solvency) are as
       follows:

       a.      Costs of acquiring  new  business  are  deferred  and  amortized,
               rather than being charged to operations as incurred.

       b.      The liability for future policy benefits and expenses is based on
               conservative   estimates   of  expected   mortality,   morbidity,
               interest,  withdrawals  and  future  maintenance  and  settlement
               expenses,  rather  than on  statutory  rates  for  mortality  and
               interest.

       c.      The liability for  policyholder  funds  associated with universal
               life and certain annuity contracts are based on the provisions of
               Statement of Financial  Accounting  Standards  Statement  No. 97,
               rather than on the statutory rates for mortality and interest.

       d.      Investments  in  securities  are  reported as  described  in Note
               1.(d),  rather than in accordance with valuations  established by
               the National  Association  of Insurance  Commissioners  ("NAIC").
               Pursuant to NAIC valuations,  bonds eligible for amortization are
               reported at  amortized  value;  other  securities  are carried at
               values prescribed by or deemed acceptable by NAIC.

       e.      Deferred income taxes,  if applicable,  are recognized for future
               tax   consequences   attributable  to  differences   between  the
               financial  statement  carrying  amounts  of  existing  assets and
               liabilities and their respective tax bases.




                                       42

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


2.     Basis of financial statements, continued


       f.      The statutory  liabilities  for the asset  valuation  reserve and
               interest  maintenance  reserve  have  not  been  provided  in the
               financial statements.

       g.      Certain   assets,   principally   receivables   from  agents  and
               equipment,  are  reported  as assets  rather  than being  charged
               directly to surplus.

       h.      Costs  attributable  to the public  offering of the common shares
               have been  reclassified  from  accumulated  surplus to capital in
               excess of par.

       i.      Realized  gains or losses on the sale or maturity of  investments
               are  included in the  statement of income and not recorded net of
               taxes and amounts transferred to the interest maintenance reserve
               as required by statutory accounting practices.

       j.      Certain proceeds from a note payable (note 9) that are treated as
               shareholders'  equity for  statutory  purposes  are  treated as a
               liability under generally accepted accounting principles.

       k.      Reinsurance  assets and liabilities are reported on a gross basis
               rather  than  shown on a net  basis  as  permitted  by  statutory
               accounting practices.

       A  reconciliation  of net income (loss) for the years ended  December 31,
       1998, 1997 and 1996 and shareholders'  equity as of December 31, 1998 and
       1997  between the amounts  reported on a statutory  basis and the related
       amounts  presented  on  the  basis  of  generally   accepted   accounting
       principles is as follows:


                                       43

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


2.     Basis of financial statements, continued
<TABLE>
<CAPTION>

                                                                                               Shareholders'
                                                 Net income (loss)                                equity
                                             Years ended December 31,                        December 31, 1998
                                             ------------------------                       -------------------
                                        1998             1997             1996               1998                1997
                                        ----             ----             ----               ----                ----
<S>                               <C>                 <C>           <C>                <C>                <C>   
As reported
 on a statutory
 
 basis                            $(486,823)          $45,398       $1,022,183         $8,627,254          $9,316,923
                                   --------          --------       ----------         ----------           ---------
Adjustments:
  Deferred policy
  acquisition
  costs, net                     (1,867,733)       (1,472,839)      (1,346,695)        13,583,956          15,451,689

Future policy
  benefits, un-
  earned premiums
  and policy-
  holders' funds                  1,719,926         1,644,330        1,626,090         (7,600,310)         (8,915,443)

 Deferred
  income taxes                      153,626          (198,100)         (16,900)          (796,074)           (949,700)

 Asset valuation
  reserve                              -                 -                -               332,448             465,452

 Interest main-
  tenance reserve                   231,507           129,109          (18,221)           570,352             338,845
 Non-admitted
  assets                               -                 -                -             1,077,595             698,024
 Unrealized gains
  -SFAS 115                            -                 -                -               847,555             602,934
Capital and
  surplus note                         -                 -                -            (1,000,000)         (1,000,000)
 Other adjustments,
  net                              (134,236)           47,312          126,048            269,330             123,294
                                   --------           -------          -------            -------             -------
 Net difference                    (103,090)          149,812          370,322          7,284,852           6,815,095
                                    --------          -------          -------          ---------           ---------

As reported on a
 GAAP basis                       $(383,733)         $195,210       $1,392,505        $15,912,106         $16,132,018
                                   ========          ========       ==========        ===========         ===========
</TABLE>


          Under  applicable  laws and  regulations,  the  Company is required to
          maintain minimum surplus as to policyholders, determined in accordance
          with regulatory accounting practices, in the




                                       44

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


2.     Basis of financial statements, continued

            aggregate amount of approximately $1,900,000.

            The payment of dividends by the Company is subject to the regulation
            of the State of Florida Department of Insurance.
                The  Insurance  Commissioner's  approval is not  required if the
                dividend is equal to or less than the greater of: (a) 10% of the
                Company's surplus as to policyholders' derived from realized net
                operating  profits  on its  business  and net  realized  capital
                gains;  or (b) the Company's  entire net  operating  profits and
                realized  net  capital  gains  derived  during  the  immediately
                preceding  calendar year, if the Company will have surplus as to
                policyholders equal to or exceeding 115% of the minimum required
                statutory  surplus as to  policyholders  after the  dividend  is
                declared and paid. As a result of such restrictions, the maximum
                dividend  which may be paid by the Company  during 1999  without
                prior  approval is  approximately  $114,000.  Accordingly,  GAAP
                excess  earnings  over a statutory  basis are not  available for
                dividends.

       The Risk-Based  Capital ("RBC") for Life and/or Health Insurers Model Act
       (the "Model  Act") was adopted by the National  Association  of Insurance
       Commissioners  (NAIC) in 1992.  The main  purpose  of the Model Act is to
       provide a tool for  insurance  regulators  to  evaluate  the  capital  of
       insurers.  Based on calculations using the appropriate NAIC formula,  the
       Company exceeded the RBC requirements at December 31, 1998.


3.     Investments

       (a)     Equity securities and fixed maturities

       Equity  securities  consist of $250,232  and  $839,973 of common stock at
       fair value at December 31, 1998 and 1997 respectively.

       Unrealized   (depreciation)   appreciation   in   investments  in  equity
       securities  for the years ended  December  31,  1998,  1997,  and 1996 is
       $(111), $39,973, and $0, respectively.

       The  amortized  cost and  estimated  fair values of  investments  in debt
       securities are as follows:







                                       45

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


3.     Investments, continued

       (a)     Equity securities and fixed maturities

<TABLE>
<CAPTION>
                                                                        Gross             Gross          Estimated
                                                     Amortized       Unrealized        Unrealized           Fair
                                                       Cost             Gains            Losses            Value
<S>                                                 <C>              <C>             <C>             <C>  
December 31, 1998:
     Held-to-maturity:
       U.S. Treasury
         securities and
         obligations of U.S.
         government corpora-
         tions and agencies
     
         (guaranteed)                               $1,011,702          $58,298         $  -            $1,070,000

     Corporate securities                            2,758,387           49,333            -             2,807,720
     Mortgage-backed
       securities                                    1,186,821             -               -             1,186,821
                                                     ---------          -------          ------          ---------

                                                     4,956,910          107,631            -             5,064,541
                                                     ---------          -------          ------          ---------

     Available-for-sale:
       U.S. Treasury
         securities and
         obligations of U.S.
         government corporations
         and agencies (guaranteed)                   5,124,079          185,044            -             5,309,123

     Corporate securities                           22,547,346          622,692            -            23,170,038

                                                    27,671,425          807,736            -            28,479,161
                                                    ----------          -------          ------         ----------

                                                   $32,628,335         $915,367          $ -           $33,543,702
                                                   ===========         ========          ======        ===========


</TABLE>












                                       46

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)



3.     Investments, continued

       (a)     Equity securities and fixed maturities
<TABLE>
<CAPTION>

                                                                        Gross             Gross          Estimated
                                                     Amortized       Unrealized        Unrealized           Fair
                                                       Cost             Gains            Losses            Value
<S>                                                 <C>              <C>             <C>             <C>  
December 31, 1997:
     Held-to-maturity:
       U.S. Treasury
         securities and
         obligations of U.S.
         government corpora-
         tions and agencies
         (guaranteed)                               $2,516,052          $53,948         $  -            $2,570,000

     Corporate securities                            6,715,402           79,620          4,277           6,790,745

     Mortgage-backed
       securities                                    1,270,258             -               -             1,270,258
                                                     ---------          -------          ------          ---------

                                                    10,501,712          133,568           4,277         10,631,003
                                                    ----------          -------           -----         ----------

     Available-for-sale:
       U.S. Treasury
         securities and
         obligations of U.S.
         government corporations
         and agencies (guaranteed)                   9,301,191          173,517            -             9,474,708

     Corporate securities                           21,481,892          429,907            -            21,911,799

     Mortgage-backed
       securities                                       97,307             -                490             96,817
                                                       -------          -------           -----            -------

                                                    30,880,390          603,424             490         31,483,324
                                                    ----------          -------            ----         ----------

                                                   $41,382,102         $736,992          $4,767        $42,114,327
                                                   ===========         ========          ======        ===========

</TABLE>









                                       47

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


3.     Investments, continued

       (a)       Equity securities and fixed maturities

                 Fair    values    reflected    in    available-for-sale     and
                 held-to-maturity  categories  are based on NAIC values,  versus
                 values  associated  with normal market  pricing  services.  The
                 estimated difference for both categories was immaterial for all
                 years presented.

                 Unrealized appreciation  (depreciation) of fixed maturities for
                 years  ending  December  31,  1998,  1997 and 1996 is $183,141,
                 $388,847 and $($720,253) respectively.

                 The amortized cost and estimated fair value of fixed maturities
                 at December 31, 1998 by  contractual  maturity,  are summarized
                 below.   Expected   maturities  will  differ  from  contractual
                 maturities  because  borrowers  may have  the  right to call or
                 prepay   obligations   with  or  without  call  or   prepayment
                 penalties.
<TABLE>
<CAPTION>

          Fixed maturity securities held-to-maturity:

                                                             Amortized              Estimated                      
                                                                Cost                Fair value                     
<S>                                                         <C>                    <C>                            
             Due in one year or less                         $1,252,720             $1,252,720                     
             Due after one year through five years            2,517,369              2,625,000                     
             Due after five years through                                                        
                ten years                                          -                      -                        
             Due after ten years                                   -                      -                        
                                                              ---------              ---------                        
                                                                                                 
                                                              3,770,088              3,877,720                     
             Mortgage-backed securities                       1,186,821              1,186,821                     
                                                              ---------              ---------                     
                                                                                                 
                                                             $4,956,910             $5,064,541                     
                                                             ==========             ==========                     
                                                                                                 
                                                                                                 
           Fixed maturity securities available-for-sale:                                         
                                                                                                 
            Due in one year or less                         $ 2,336,683             $2,353,300                     
            Due after one year through five years           $11,386,693             11,719,256                     
            Due after five years through ten years           12,625,234             13,069,440                     
            Due after ten years                               1,322,815              1,337,165                     
                                                              ---------              ---------                     
                                                                                                 
                                                             27,671,425             28,479,161                     
            Mortgage-backed securities                             -                      -                        
                                                             ----------             ----------                        
                                                            $27,671,425            $28,479,161                     
                                                            ===========            ===========                     
</TABLE>
                                                       
                                       48

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


3.     Investments, continued

       (a)     Equity securities and fixed maturities

               Proceeds from the sale of equity  securities and fixed maturities
               available for sale and the related  realized gains and losses are
               summarized as follows:
<TABLE>
<CAPTION>

                                               1998                 1997                 1996                          
                                            ----------           ----------           -------                          
<S>                                      <C>                  <C>                  <C>       
         Proceeds from sale of 
          equity securities                $1,405,248           $2,873,980           $2,885,010                        
                                           ----------           ----------           ----------                        
                                                                                                       
                                                                                                       
         Proceeds from sale of                                                                         
          fixed maturities                                                                             
           available-for-sale              $9,569,250          $26,175,765           $3,482,770                        
                                           ----------          -----------           ----------                        
                                                                                                       
         Realized gains (losses)                                                                       
         Fixed maturities:                                                                             
          Gross realized gains               $319,934              278,904               15,013                        
          Gross realized (losses)                -                (150,045)            ( 18,881)                       
         Equity securities:                                                                            
          Gross realized gains                205,247              357,731              930,919                        
          Gross realized (losses)                -                    -                 (57,620)                       
                                              --------             -------              -------                        
                                                                                                       
                                                                                                       
                                             $525,181             $486,590             $869,431                        
                                              =======             ========             ========                        
                                                                                                       
</TABLE>
                                       
         Certain   of   the   fixed    maturity    securities    classified   as
         available-for-sale  and  held-to-maturity  were called  during the year
         ended  December 31,  1998,  1997 and 1996  resulting  in the  following
         realized gains and losses:
<TABLE>
<CAPTION>

                                              1998                 1997                  1996                     
                                              ----                 ----                  ----                     
<S>                                         <C>                 <C>                       <C> 
         Held-to-maturity:                                                                    
                    
           Gross realized gains             $    0              $20,205                   $71                     
         Available-for-sale:                                                                  
           Gross realized gains              1,740               21,997                    -                      
                                            ------              -------                   ---                      
                                            $1,740              $42,202                   $71                     
                                            ======              =======                   ===                     
                                         


</TABLE>





                                       49

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)

3.     Investments, continued

       (a)        Equity securities and fixed maturities

                  Investments,  aggregated  by  issuer,  in  excess  of  10%  of
                  shareholders'  equity (before net unrealized  gains and losses
                  on  available-for-sale  securities)  at December  31, 1998 and
                  1997,  other  than  investments  issued or  guaranteed  by the
                  United States government are as follows:
<TABLE>
<CAPTION>

                  1998                          Carrying Amount                                          
<S>                                               <C>                                                    
                  Federal Express                 $2,180,000                                             
                  Dean Witter Discover             4,160,217                                             
                  Philip Morris, Inc.              5,815,000                                             
                                                                 
                  1997                                           
                  Dean Witter Discover            $2,114,643                                             
                  Federal Express                  2,260,000                                             
                  Lehman Brothers Inc.             2,080,000                                             
                  Philip Morris Inc.               3,535,000                                             
</TABLE>
                                                                 
                                               
       (b)        Concentrations of credit risk

                  At December  31,  1998 and 1997,  the Company did not hold any
                  unrated   or   less-than-investment   grade   corporate   debt
                  securities.   The  Company  also  invests  in  subsidized  and
                  unsubsidized  student loans totaling  $207,006 and $244,361 at
                  December 31, 1998 and 1997, respectively, which are guaranteed
                  by the U.S.  government.  Subsequent to December 31, 1998, all
                  of these loans were sold at their unpaid principal balance.


                                       50

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


3.     Investments, continued

       (c)     Investment income

               Net  investment  income for the years ended  December  31,  1998,
               1997, and 1996 consists of the following:
<TABLE>
<CAPTION>

                                                            1998              1997             1996                         
                                                            ----              ----             ----                         
<S>                                                   <C>               <C>              <C>     
             Interest:                                                                                       
                           
              Fixed maturities                        $2,633,888        $2,918,006       $2,581,198                         
              Policy and student loans                   489,991           401,621          526,820                         
              Short-term investments                     474,949           232,342          280,158                         
                                                                                                             
             Dividends on equity securities                                                                  
               common stock, including mutual                                                                
               fund                                          719            16,189           31,245                         
                                                          ------            ------           ------                         
                                                                                                             
                                                       3,599,547         3,568,158        3,419,421                         
             Less investment expenses                     12,400            22,847          100,794                         
                                                          ------           -------          -------                         
                                                                                                             
                                                      $3,587,147        $3,545,311       $3,318,627                         
                                                       =========        ==========       ==========                         
                                                                                                             
</TABLE>
                                                   
          (d) Investments on deposit

                 In order to comply with statutory regulations, investments were
                 on deposit with the Insurance  Departments of certain states as
                 follows:
<TABLE>
<CAPTION>

                                                 1998                      1997                    1996
                                                 ----                      ----                    ----
<S>                                          <C>                        <C>                     <C>       
               Florida                       $1,718,097                 $1,727,034              $1,718,751
               Alabama                          101,170                    100,000                 100,000
               South Carolina                   303,511                    304,816                 306,028
               Georgia                          252,926                    254,013                 255,024
               Indiana                          199,578                    199,317                 199,752
                                                -------                    -------                 -------

                                             $2,575,282                 $2,585,180              $2,579,555
                                              =========                 ==========              ==========
</TABLE>

                 Certain of these assets,  totaling  approximately  $850,000 for
                 each of the  years  ended  December  31,  1998  and  1997,  are
                 restricted  for  the  future  benefit  of  policyholders  in  a
                 particular state.




                                       51

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


4.     Deferred policy acquisition costs

       Deferred  policy  acquisition  costs at December 31, 1998,  1997 and 1996
       consist of the following:
<TABLE>
<CAPTION>

                                                  1998                 1997             1996                           
                                                  ----                 ----             ----                           
<S>                                          <C>                  <C>               <C>
         Deferred policy acquisition                                                                   
         costs at beginning of year           $15,451,689          $16,979,612       $18,145,111                       
                                                                                                       
         Policy acquisition costs                                                                      
          deferred:                                                                                    
           Commissions                          1,053,953            1,204,604         1,030,875                       
           Underwriting & issue costs             429,600              450,800           652,868                       
           Other                                  427,729              414,374           334,300                       
           Change in unrealized                                                                        
            appreciation (depreciation)          (294,326)             (55,084)          181,196                       
                                                 --------              -------        ----------                       
                                                1,616,956            2,014,694         2,199,239                       
                                                                                                       
         Amortization of deferred                                                                      
           policy acquisition costs            (3,484,689)          (3,542,617)       (3,364,738)                      
                                               ----------           ----------        ----------                       
                                                                                                       
         Deferred policy acquisition                                                                   
           costs at end of year               $13,583,956          $15,451,689       $16,979,612                       
                                              ===========          ===========       ===========                       
                                                                                                       
</TABLE>
                                                                                
5.     Property and equipment                

       Property and equipment consists of the following:
<TABLE>
<CAPTION>

                                                December 31,               December 31,                        
                                                    1998                       1997                            
<S>                                            <C>                        <C>                               
             Land                                 $982,027                   $982,027                          
             Building and improvements           2,198,468                  2,169,975                          
             Furniture and equipment             1,068,995                  1,057,586                          
                                                 ---------                  ---------                          
                                                 4,249,490                  4,209,588                          
             Less accumulated depreciation       1,664,235                  1,539,385                          
                                                 ---------                  ---------                          
                                                $2,585,255                 $2,670,203                          
                                                 =========                  =========                          
                                                                                            
</TABLE>
                                                                            
             Depreciation  expense for the years ended  December 31, 1998,  1997
             and 1996 totaled $153,348, $145,912, and $151,950, respectively.


6.           Future policy benefits

             At December 31, 1998 and 1997, future policy benefits, exclusive of
             universal life and flexible term annuities

                                       52

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


6.     Future policy benefits, continued

       consist of the following:
<TABLE>
<CAPTION>

                                          December 31,              December 31,                                       
                                              1998                      1997                                           
                                                                                          
<S>                                       <C>                       <C>                                                
           Life insurance                 $1,370,360                $1,103,462                                         
           Annuities                         298,456                   295,525                                         
           Accident & health                                                              
             insurance                        58,484                    10,044                                         
                                              ------                     -----                                         
           Total life & health                                                            
            future policy benefits        $1,727,300                $1,409,031                                         
                                           =========                   =======                                         
</TABLE>
                                        

         Life insurance in-force aggregated  approximately $1.2 billion and $1.2
         billion at December 31, 1998, and 1997, respectively.

         Mortality  and  withdrawal  assumptions  are based  upon the  Company's
         experience  and  actuarial  judgment  with an  allowance  for  possible
         unfavorable deviations from the expected experience.

         The  mortality  tables used in  calculating  benefit  reserves  for non
         universal  life  contracts are the 1965-1970  Basic Select and Ultimate
         for males and the 1980 U.S.  Population  mortality  table  modified for
         company expected experience.

         For  non-universal  life  policies  written  during 1983 through  1988,
         interest  rates used are 8.0 percent for policy years one through five,
         decreasing by .1 percent per year for policy years six through  twenty,
         to 6.5 percent for policy years twenty-one and thereafter.  For certain
         non universal  life contracts  written in 1996-1998,  interest rates of
         6.75% level have been assumed.  For non-universal life policies written
         in 1982 and prior,  interest rates vary, depending on policy type, from
         7 percent  for all  policy  years to 6  percent  for  policy  years one
         through five and 5 percent for years six and thereafter.  For universal
         life policies  written since 1988, the interest rate used is a credited
         rate  generally  based  upon  the  Company's  investment  yield  less 1
         percent.


7.       Reinsurance

         The  Company  routinely  cedes  and,  to  a  limited  extent,   assumes
         reinsurance to limit its exposure to loss on any single insured.  Ceded
         insurance is treated as a risk and liability

                                       53

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


7.       Reinsurance, continued

         of the assuming companies.  As of December 31, 1998, ordinary insurance
         coverage in excess of $75,000 is  reinsured;  however for some policies
         previously issued,  the first $30,000,  $40,000 or $50,000 was retained
         and the excess ceded. The retention limit for some substandard risks is
         less than $75,000.  Reinsured risks would give rise to liability to the
         Company in the event that the  reinsuring  company  were unable to meet
         its  obligations  under the  reinsurance  agreement  in  force,  as the
         Company  remains   primarily   liable  for  such   obligations.   Under
         reinsurance agreements exclusive of the MEGA agreement discussed below,
         the Company  has ceded  premium of  $415,080,  $432,486,  and  $448,327
         included in  reinsurance  premiums  ceded,  and received  recoveries of
         $88,457,  $131,449  and $608,355  included in annuity,  death and other
         benefits  for the  years  ended  December  31,  1998,  1997  and  1996,
         respectively.

         On December 31, 1992, the Company entered into a reinsurance  agreement
         with The MEGA Life and Health Insurance Company ("MEGA"), ceding an 18%
         share of all universal life policies in force at December 31, 1992 as a
         measure to manage  the future  needs of the  Company.  The  reinsurance
         agreement is a co-insurance  treaty  entitling the assuming  company to
         18% of all future  premiums,  while making them  responsible for 18% of
         all  future  claims  and  policyholder  loans  relating  to  the  ceded
         policies.  In addition,  the Company  receives  certain  commission and
         expense reimbursements.

        For the years ended December 31, 1998,  1997 and 1996, the Company ceded
        premiums  to  MEGA of  $448,355,  $481,585  and  $582,346,  included  in
        reinsurance  ceded,  and received  recoveries of $469,307,  $503,159 and
        $367,295,  included in annuity, death and other benefits,  respectively.
        The funds  held  related  to  reinsurance  treaties  of  $1,419,357  and
        $1,339,927  represent  the  18%  share  of  policy  loans  ceded  to the
        reinsurer at December 31, 1998 and 1997, respectively.


8.      Notes payable

        As of  December  31,  1998,  the Company had an unused line of credit of
        $5,000,000 which is secured by student loans equaling 115% of the unpaid
        principal balance. The facility




                                       54

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


8.     Notes payable, continued

       bears  interest at a variable rate per annum payable  monthly and expires
       on September 18, 2007.

       Interest  expense  relating to these notes payable during the years ended
       December  31,   1998,   1997  and  1996  totaled  $0,  $0,  and  $12,094,
       respectively and is included in net investment income.


9.     Note payable to related party

       A note  payable to a related  party  consists of amounts due on demand to
       Security  National  Financial  Corporation.   The  note's  proceeds  were
       obtained in December 1988 and the note qualifies as shareholders'  equity
       for statutory  accounting  purposes in accordance with Section 628.401 of
       the Florida  Statutes.  At December 31, 1998,  the note bears interest at
       9.0% percent (payable  monthly);  principal  repayment is contingent upon
       the Company  maintaining  statutory  surplus in excess of $1,900,000  and
       obtaining  approval in advance by the Florida  Department  of  Insurance.
       Interest  expense  relating  to the  balance  of the note  payable to the
       related party during 1998, 1997 and 1996 aggregated $90,000, $90,000, and
       $90,000 respectively.








              














                                       55

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


10.     Income taxes

        Total  income  taxes  including  taxes  on the  change  in the  value of
        investments  for the years ended December 31, 1998,  1997, and 1996 were
        as follows:
<TABLE>
<CAPTION>


                                       1998                   1997                1996                                 
                                       ----                   ----                ----                                 
<S>                                <C>                      <C>                 <C>          
         Tax expense (benefit)  
           in operations           $(241,907)               $54,200             $196,000                               
         Tax on unrealized                                                                     
           appreciation                                                                        
           (depreciation) of                                                                   
           investments                98,316                160,700                 (675)                              
                                      ------                -------                 ----                               
                                   $(143 591)              $214,900             $195,325                               
                                   =========               ========             ========                               
</TABLE>
                                                                             
                                 
         Income tax expense  (benefit)  for the years ended  December  31, 1998,
         1997 and 1996 is summarized as follows:

<TABLE>
<CAPTION>

                               1998                  1997                  1996                       
                               ----                -------               ------                       
<S>                        <C>                   <C>                    <C>   
         Current:  
          Federal          $   9,329             $(142,870)             $167,700                    
          State                1,207                (1,030)               11,400                    
                               -----                 ------               ------                    
                                                                                   
                              10,536              (143,900)              179,100                    
                              ------               -------              --------                    
         Deferred:                                                                 
          Federal           (215,838)              169,100                14,450                    
          State              (36,605)               29,000                 2,450                    
                              ------                ------                 -----                    
                                                                                   
                            (252,443)              198,100                16,900                    
                             -------               -------                ------                    
                                                                                   
                           $(241,907)              $54,200              $196,000                    
                             =======               =======              ========                    
                         
</TABLE>


                                       56

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


10.      Income taxes, continued

         Income tax expense  (benefit)  for the years ended  December  31, 1998,
         1997 and 1996 differs  from  "expected"  tax  (computed by applying the
         U.S.  federal  income  tax rate to  pretax  income  as a result  of the
         following:
<TABLE>
<CAPTION>

                                                 1998                  1997             1996                            
                                               --------              --------         ------                            
<S>                                         <C>                    <C>              <C>
                                                                                                    
         Computed "expected" tax expense                                                            
          (benefit)                          $(212,718)              $84,800         $540,100                           
         Increase (reduction) in income                                                             
          taxes resulting from:                                                                     
           Small life insurance                                                                     
             company deduction                 (12,390)             ( 76,000)        (346,000)                          
           Changes in the valuation                                                                 
             allowance for deferred                                                                 
             tax assets, allocated to                                                               
             income tax expense                (17,950)               11,100           64,900                           
           (Over) under accrual of                                                                  
             prior year expense                   -                    6,100          (82,000)                          
           State taxes, net of federal                                                              
             income tax benefit                  1,207                18,200            9,000                           
           Other, net                              (56)               10,000           10,000                           
                                                ------                ------            -----                           
                                                                                                    
                                             $(241 907)              $54,200         $196,000                           
                                               =======                ======          =======                           
                                           
</TABLE>

         Under tax laws in effect prior to 1984,  a portion of a life  insurance
         company's  gain  from  operations  was  not  currently  taxed  but  was
         accumulated  in a  memorandum  "Policyholders'  Surplus  Account." As a
         result of the Tax Reform Act of 1984, the balance of the Policyholders'
         Surplus  Account  has  been  frozen  as of  December  31,  1983  and no
         additional  amounts  will  be  accumulated  in this  account.  However,
         distributions  from the account  will  continue  to be taxed,  as under
         previous law, if any of the following conditions occur:

         a.    The Policyholders' Surplus exceeds a prescribed maximum,
               or;

         b.    Distributions,   other   than  stock   dividends,   are  made  to
               shareholders in excess of  Shareholders'  Surplus,  as defined by
               prior law, or;

         c.    The entity  ceases to qualify for  taxation  as a life  insurance
               company, or;

                                       57

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


10.      Income taxes, continued

         d.    the tax deferred status of the Policyholder's  Surplus Account is
               modified by future tax legislation.

         At December 31, 1998, the balance of the Policyholders' Surplus account
         aggregated   approximately  $236,000.  The  Company  has  not  recorded
         deferred income taxes totaling  approximately  $80,000 relating to this
         amount as it has no plan to  distribute  the amounts in  Policyholders'
         Surplus in the foreseeable future.

        The Tax Reform Act of 1986  enacted a new  separate  parallel tax system
        referred to as the Alternative Minimum Tax (AMT) system. AMT is based on
        a flat rate applied to a broader tax base. It is  calculated  separately
        from the regular  federal  income tax and the higher of the two taxes is
        paid. The excess of the AMT over regular tax is a tax credit,  which can
        be carried  forward  indefinitely  to reduce regular tax  liabilities of
        future  years.  In 1998,  1997 and 1996,  AMT  exceeded  regular  tax by
        $156,820, $11,100, and $64,900,  respectively. At December 31, 1998, the
        AMT tax credit available to reduce future regular tax totaled $252,780.

        The  principal   elements  of  deferred  income  taxes  consist  of  the
        following:
<TABLE>
<CAPTION>
                                                    1998              1997               1996                      
                                                  --------         ---------          -------                      
                                                                                                
<S>                                             <C>               <C>               <C>                            
         Deferred policy acquisition costs      $(603,225)        $(467,000)        $(431,500)                     
         Future policy benefits                   408,384           694,000           532,000                      
         Other                                    (57,602)          (28,900)          (83,600)                     
                                                  -------          --------            ------                      
                                                $(252,443)         $198,100           $16,900                      
                                                  =======          ========           =======                      
                                             
</TABLE>

         The tax effect of temporary  differences  that give rise to significant
         portions of the deferred tax assets and  deferred  tax  liabilities  at
         December 31, 1998 and 1997 are presented below:











                                       58

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


10.     Income taxes, continued

<TABLE>
<CAPTION>

                                                                 1998                   1997                           
                                                              ----------             -------                           
                                                                                                      
<S>                                                         <C>                   <C>
         Deferred tax assets:                                                                         
         Unearned revenue, due to deferral of                                                         
           "front-end" fee                                    $2,266,605             $2,760,000                        
         Policy liabilities and accruals,                                                             
            principally due to adjustments                                                            
            to reserves for tax purposes                       2,090,315              1,540,000                        
         Deferred policy acquisition costs                                                            
           related to unrealized appreciation                                                         
           (depreciation)                                         59,420                 81,200                        
         Other                                                      -                   120,000                        
                                                                                                      
         Alternative minimum tax credit                                                               
            carry forwards                                       252,780                409,600                        
                                                                 -------                -------                        
                                                                                                      
         Total gross deferred tax assets                       4,669,120              4,910,800                        
         Less valuation allowance                               (252,780)              (409,600)                       
                                                                --------               --------                        
                                                                                                      
         Net deferred tax assets                               4,416,340              4,501,200                        
                                                               ---------              ---------                        
                                                                                                      
         Deferred tax liabilities:                                                                    
          Deferred policy acquisition costs                   (4,263,587)            (5,178,000)                       
         Other                                                  (629,892)               (31,000)                       
         Unrealized appreciation of securities                  (318,935)              (241,900)                       
                                                                --------               --------                        
                                                                                                      
         Total gross deferred tax liabilities                 (5,212,414)            (5,450,900)                       
                                                              ----------              ---------                        
                                                                                                      
         Net deferred tax (liability)                          $(796,074)             $(949,700)                       
                                                                ========              =========                        
</TABLE>
                                                  
          The net  change in the total  valuation  allowance  for the year ended
          December  31, 1998 was a decrease of  $156,820.  The net change in the
          total  valuation  allowance for the years ended December 31, 1997, and
          1996 was an increase of $11,100 and $64,900, respectively.

          In assessing  the  realizability  of deferred  tax assets,  management
          considers  whether it is more likely than not that some portion or all
          of the  deferred  tax  assets  will  not  be  realized.  The  ultimate
          realization of deferred tax assets is dependent upon the generation of
          future  taxable  income  during the periods in which  those  temporary
          differences  become  deductible.  Management  considers  the scheduled
          reversal of deferred tax liabilities, projected future taxable income,
          and tax planning strategies in making this assessment. Based upon

                                       59

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


10.     Income taxes, continued

        the level of  historical  taxable  income  and  projections  for  future
        taxable  income  over the  periods  which the  deferred  tax  assets are
        deductible,  management  believes it is more likely than not the Company
        will realize the benefits of these  deductible  differences,  net of the
        existing valuation allowances at December 31, 1998.

11.     Related party transactions

        The Company's general agent, Insuradyne  Corporation,  is a wholly-owned
        subsidiary  of SSLIC Holding  Company,  Inc.,  which owns  approximately
        fifty-seven  percent  (57%)  of the  Company's  outstanding  stock.  The
        balances due to/from an  affiliated  insurance  agency  reflected in the
        accompanying  balance sheets principally  represent unearned  commission
        advances paid to Insuradyne.  The Company incurred commission expense to
        Insuradyne  aggregating $252,955,  $323,303 and $344,904, in 1998, 1997,
        and 1996,  respectively.  These  amounts are included as  components  of
        acquisition costs deferred and related amortization. Insuradyne incurred
        insurance-related  expenses aggregating $33,374, $25,604, and $31,703 in
        1998, 1997 and 1996, respectively.

        Effective  December 31, 1998, the Company entered into an Administrative
        Services  Agreement with its ultimate parent Security National Financial
        Corporation  (Security National).  Under the terms of the Administrative
        Services  Agreement,  all of the Company's employees became employees of
        Security National.  Administrative functions previously performed by the
        Company will now be furnished to the Company  under the  Agreement.  The
        Company will pay to Security  National  $250,000 per month or $3 million
        per year for the administrative services.














                                       60

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


12.     Earnings per share

        The  following  table sets forth the  computation  of basic and  diluted
        earnings per share:
<TABLE>
<CAPTION>

                                                                   1998               1997                1996
                                                                   ----               ----                ----
<S>                                                          <C>                  <C>               <C>       
        Numerator for basic and diluted Earnings per share:
              Net income (loss)                              $(383,733)           $195,210          $1,392,505

        Denominator:
              Denominator for basic
                earnings per share
                weighted average shares                      1,907,989           1,907,989           1,907,989

              Effective dilutive
                securities:
                Agent stock options                                -                 1,214                -

        Dilutive potential common shares                           -                 1,214                -
        Denominator for diluted earnings
                per share weighted average
                shares and assumed
                conversions                                   1,907,989          1,908,203           1,907,989
        Basic earnings per share                              $(0.20)                $0.10               $0.73
        Diluted earnings per share                            $(0.20)                $0.10               $0.73

</TABLE>

13.     Agents' incentive stock bonus plan

        The  Company  has an  incentive  bonus plan for agents  that was adopted
        January  1,  1995 by the  Company's  Board of  Directors  and  effective
        through  December 31, 2001.  Agents that qualify under the plan have the
        option  to  purchase  shares of common  stock.  The  number of shares of
        common  stock is  determined  on the date of the award as the  number of
        whole shares equal to the award based on the  applicable  stock price on
        December 31 of the year the agent has qualified for the bonus.  For each
        share  of  common  stock  purchased  by  the  agent,  the  Company  will
        concurrently award an equivalent number of shares to the agent.

        Awards  were  granted  in 1998 under this  plan.  The  Company  incurred
        expenses of  approximately  $6,500  relating to the  Company's  matching
        number of shares.  If the agent, does not purchase the shares within the
        designated period,  then the agent forfeits their rights to purchase the
        shares of common  stock as well as the  matching  number of shares to be
        contributed by the Company.

                                       61

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


14.     Disclosures about fair value of financial instruments

        Statement of Financial Accounting Standards No. 107 Disclosures
        About Fair Value of Financial Instruments (SFAS 107) requires
        the Company to disclose estimated fair value information.  The
        following methods and assumptions were used by the Company in
        estimating fair values of financial instruments as disclosed
        herein:

        Cash and cash equivalents, short-term investments and policy and student
        loans:  The  carrying  amount  reported in the  balance  sheet for these
        instruments approximate their fair value.

        Investment  securities  available-for-sale  and  held-to-maturity:  Fair
        value for fixed maturity and equity securities is based on quoted market
        prices at the reporting date for those or similar investments.

        Policyholders'  account  balances:  The  fair  values  for  policyholder
        account balances are based on their approximate surrender values.

        The following  table  presents the carrying  amounts and estimated  fair
        values of financial  instruments held at December 31, 1998 and 1997. The
        fair  value  of a  financial  instrument  is the  amount  at  which  the
        instrument could be exchanged in a current  transaction  between willing
        parties.





              


                                       62

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)



14.       Disclosures about fair value of financial instruments,
          continued
<TABLE>
<CAPTION>

                                                                1998                               1997
                                                        ----------------------                 ------------
                                                Carrying        Estimated              Carrying        Estimated
                                                 amount         fair value              amount         fair value
<S>                                          <C>               <C>                 <C>               <C>
          Financial assets:
          Fixed maturities
             held-to-maturity
             (see note 3)                     $4,956,910        $5,064,541          $10,501,712       $10,631,003
          Fixed maturities
             available-for-
             sale (see note 3)                28,479,161        28,479,161           31,483,324        31,483,324
          Equity securities
             available-for-sale                  250,232           250,232              839,973           839,973
          Policy and student
             loans                             8,462,438         8,462,438            7,945,381         7,945,381
          Short-term invest-
             ments                            11,434,983        11,434,983              100,000           100,000
          Cash and cash
             equivalents                         682,389           682,389            2,448,994         2,448,994

          Financial liabilities:
          Policy liabilities-
             policyholders'
             account balances                $52,520,300       $46,755,788          $52,335,511       $46,514,475

</TABLE>

15.       Comprehensive income

          Other   comprehensive   income,  as  reflected  in  the  Statement  of
          Shareholders'  Equity,  for the year ended  December  31,  1998 was as
          follows:

<TABLE>
<CAPTION>
                                       Before Tax               Tax Expense/            Net of Tax                    
                                         Amount                   (Benefit)               Amount                      
<S>                                      <C>                        <C>                   <C>                   
Net unrealized investment gains                                                                      
on available-for-sale securities         $525,448                   $197,726              $327,722                    
                                                                                                     
Less: reclassification adjustment                                                                    
for gains realized in net earnings        262,788                     98,887               163,901                    
                                          -------                     ------               -------                    
                                                                                                     
Other comprehensive income               $262,660                    $98,839              $163,821                    
</TABLE>
                                      
          Including the above other  comprehensive  income,  total comprehensive
          loss for 1998 was $212,912.

                                       63

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                    Notes to Financial Statements (continued)


16. Legal proceedings:

          Lawsuits  against the Company have arisen in the normal  course of the
          Company's  business.  However,  contingent  liabilities  arising  from
          litigation and other matters are not  considered  material in relation
          to the financial position of the Company.

          To the best of the Company's knowledge, it has no potential or pending
          contingent  liabilities  that  might  be  material  to  the  Company's
          financial  condition,  results of operations or liquidity  pursuant to
          product and environmental liabilities.

















                                       64

<PAGE>

<TABLE>
<CAPTION>

                                                                                                                        Schedule I
                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
        Summary of Investments Other Than Investments in Related Parties
                                December 31, 1998


                                                                    Number of
                                                                    shares or                                   Amount at   
                                                              units-principal                                  which shown  
                                                                   amounts of                         Fair       in the     
Type of investment                                             bonds or notes           Cost         value   balance sheet  
<S>                                                           <C>                <C>            <C>          <C>        
Fixed maturities held-for-investment:                                                                                       
   U.S. Government and government agencies and authorities          1,000,000     $1,035,937     1,070,000       1,011,702  
   Public utilities                                                   500,000        521,230       515,000         503,391  
   Industrial and miscellaneous                                     2,448,168      2,457,567     2,471,776       2,434,052  
   Special revenue and special assessment of agencies and                                                                   
      authorities of governments and political                                                                              
     subdivisions                                                   1,000,000      1,014,063     1,007,765       1,007,765  
                                                                    ---------      ---------     ---------       ---------  
                                                                                                                            
   Total fixed maturities                                           4,948,168      5,028,797     5,064,541       4,956,910  
                                                                   ----------     ----------    ----------      ----------  
                                                                                                                            
Fixed maturities available-for-sale:                                                                                        
   U.S. Government and government agencies and authorities          5,050,000      5,154,256     5,309,123       5,309,123  
  Public utilities                                                    655,000        705,047       733,600         733,600  
   Industrial and miscellaneous                                    21,190,000     22,022,017    22,436,438      22,436,438  
   Special revenue and special assessment of agencies and                                                                   
     authorities of governments and political                                                                               
     subdivisions                                                        -              -             -               -     
                                                                      -------        -------       -------         ----     
                                                                                                                            
Total fixed maturities                                             26,895,000     27,881,320    28,479,161      28,479,161  
                                                                   ----------     ----------    ----------      ----------  
                                                                                                                            
                                                                   31,843,168     32,910,117    33,543,702      33,436,071  
                                                                   ==========     ----------    ==========      ----------  
                                                                                                                            
Equity securities:                                                                                                          
   Common, including investments in mutual fund                        11,046        210,370       250,232         250,232  
                                                                       ======        -------       =======         -------  
                                                                                                                            
Policy loans                                                                       8,255,432                     8,255,432  
                                                                                   ---------                     ---------  
                                                                                                                            
Student loans                                                                        207,006                       207,006  
                                                                                     -------                       -------  
                                                                                                                            
Short-term investments                                                            11,434,983                    11,434,983  
                                                                                  ----------                    ----------  
                                                                                                                            
Other invested assets                                                                   -                             -     
                                                                                      ------                        ---     
                                                                                                                            
   Total investments                                                             $53,017,908                   $53,583,724  
                                                                                 ==========                    ==========
</TABLE>
                       See accompanying auditors' report.


                                       65

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                             Financial Data Schedule

             For the periods ending December 31, 1998, 1997 and 1996

<TABLE>
<CAPTION>

                                                          December 31,               December 31,             December 31,
                                                              1998                       1997                     1996
<S>                                                       <C>                        <C>                       <C>        
Fixed maturities held for sale                            $28,479,161                $31,843,324               $24,276,239
Fixed maturities held to
  maturity (carrying value)                                 4,956,910                 10,501,712                14,974,962
Fixed maturities held to
  maturity (market value)                                   5,064,541                 10,631,003                15,140,919
  Investment in equity
  securities                                                  250,232                    839,973                      -
Mortgage loans on real estate                                    -                          -                         -
Investment in real estate                                        -                          -                         -
Total investments                                          53,583,724                 50,870,390                51,319,216
Cash and cash equivalents                                     682,389                  2,448,994                   206,056
Reinsurance recoverable on
  paid losses                                                 306,258                    359,688                   379,692
Deferred policy acquisition costs                          13,583,956                 15,451,689                16,979,612
Total assets                                               81,319,288                 82,142,465                81,809,360
Policy liabilities-future
  benefits, losses, claims                                  1,727,300                  1,409,031                   985,720
Policy liabilities-unearned
  premiums                                                  6,023,399                  7,108,662                 8,249,190
Policy liabilities-other claims
  and benefits                                                540,789                    427,649                   293,221
Other policyholder funds                                       64,738                     59,686                    59,596
Notes payable, bonds, mortgages,
  and similar debt                                          1,000,000                  1,000,000                 1,000,000
Preferred stocks mandatory
  Redemption                                                     -                           -                        -
Preferred stocks non-
  mandatory redemption                                           -                           -                        -
Common stock                                                1,907,989                  1,907,989                 1,907,989
Other stockholders equity                                   4,011,519                  4,011,519                 4,011,519
Total liabilities and
  stockholders equity                                      81,319,288                 82,142,465                81,809,360
Premiums                                                    7,228,227                  7,643,650                 7,915,019
Net investment income                                       3,587,147                  3,545,311                 3,318,627
Realized investment gains
  and losses                                                  525,181                    506,795                   869,502
Other income                                                     -                           -                        -
Benefits, claims, losses
  and settlement expenses                                   4,012,491                  4,307,013                 3,812,463
Underwriting acquisition and
insurance expenses-
  amortization of deferred
  policy acquisition costs                                  3,484,689                  3,542,617                 3,364,738
</TABLE>

                                       66

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                       Financial Data Schedule, continued



<TABLE>
<CAPTION>

                                                          December 31,               December 31,             December 31,
                                                             1998                        1997                     1996
<S>                                                       <C>                        <C>                       <C>
Underwriting acquisitions and
  insurance expense other                                  $4,044,686                 $3,382,255                $3,246,552
Income or (loss) before taxes                                (625,640)                   249,410                 1,588,505
Income tax expense                                           (241,907)                    54,200                   196,000
Income (Loss) continuing
  operations                                                 (383,733)                   195,210                 1,392,505
Discontinued operations                                          -                           -                        -
Extraordinary items                                              -                           -                        -
Cumulative effect-changes in
  accounting principals                                          -                           -                        -
Net income (loss)                                           $(383,733)                  $195,210                $1,392,505

Earnings per share - basic                                      $(.20)                      $.10                      $.73
Earnings per share - diluted                                    $(.20)                      $.10                      $.73

</TABLE>
















                                       67

<PAGE>


<TABLE>
<CAPTION>
                                                                                                                     Schedule III

                                            SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                               Supplementary Insurance Information

                                                December 31, 1998, 1997 and 1996



                             Future policy                            Other                         Benefits Amortization  
                   Deferred    benefits,      Policy-                policy                           claims  of deferred
                     policy  losses claims   holders'              claims &                  Net    losses &       policy     Other
                acquisition     and loss      account   Unearned   benefits   Premium investment  settlement  acquisition operating
                    cost        expenses     balances   premiums    payable   revenue     income    expenses        costs  expenses
                -----------  -------------   --------   --------   --------   -------     ------    --------        -----  --------
<S>             <C>          <C>           <C>         <C>        <C>       <C>       <C>        <C>         <C>          <C>
                                                                                                                                   
1998 Life                                                                                                                          
  and                                                                                                                              
  annuities     $13,583,956    1,727,300   52,520,300   6,023,399  540,789  7,228,227  3,587,147  4,346,820    3,484,689  4,044,686
                ===========    =========   ==========   =========  =======  =========  =========  =========    =========  =========
                                                                                                                                   
1997 Life                                                                                                                          
  and                                                                                                                              
  annuities     $15,451,689    1,409,031   52,335,511   7,108,662  427,649  7,643,650  3,545,311  4,431,474    3,542,617  3,382,255
                ===========    =========   ==========   =========  =======  =========  =========  =========    =========  =========
                                                                                                                                   
1996 Life                                                                                                                          
  and                                                                                                                              
  annuities     $16,979,612      985,720   52,347,996   8,249,190  293,221  7,915,019  3,318,627  3,813,361    3,364,738  3,246,552
                ===========      =======   ==========   =========  =======  =========  =========  =========    =========  =========
                                                                                                           
</TABLE>
                             




                       See accompanying auditors' report.






                                       68

<PAGE>


<TABLE>
<CAPTION>
                                                                                                                       Schedule IV
                                       SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                                      Reinsurance

                                           December 31, 1998, 1997 and 1996



                                                                                                                    Percentage 
                                                        Ceded to            Assumed                                  of amount
                                                          other           from other                                  assumed 
                                     Direct amount      companies          companies             Net amount           to net  
                                                                                                                             
                                                                                                                               
<S>                                 <C>               <C>               <C>                   <C>                   <C>         
December 31, 1998:                                                                                                             
   Life insurance in force            $919,014,000    297,913,000        548,515,000          1,169,616,000                47%   
                                      ============    ===========        ===========          =============                ===   
                                                                                                                                
   Premiums:                                                                                                                     
     Life insurance                      7,366,153        863,436            566,628              7,069,345                 8%  
     Accident & health insurance           158,882           -                  -                   158,882                  -   
                                           -------          -----              -----                -------                  -   
                                                                                                                                 
   Total Premiums                       $7,525,035        863,436            566,628              7,228,227                 8%   
                                        ==========        =======            =======              =========                 ==   
                                                                                                                                 
December 31, 1997:                                                                                                               
   Life insurance in force          $1,026,038,000    337,901,000        532,772,000          1,220,909,000                44%   
                                    ==============    ===========        ===========          =============                ===   
                                                                                                                                 
   Premiums:                                                                                                                     
     Life insurance                      8,055,672        914,071            490,726              7,632,327               6.4%   
     Accident & health insurance            11,323           -                  -                    11,323                 -    
                                            ------          -----              -----                 ------                 -    
                                                                                                                                 
   Total Premiums                       $8,066,995        914,071            490,726              7,643,650               6.4%   
                                        ==========        =======            =======              =========               ====   
                                                                                                                                 
December 31, 1996:                                                                                                               
   Life insurance in force          $1,165,948,000    386,084,000        537,743,000          1,317,607,000                41%   
                                    ==============    ===========        ===========          =============                ===   
                                                                                                                                 
   Premiums:                                                                                                                     
     Life insurance                      8,415,790      1,030,673            528,636              7,913,753               6.7%   
     Accident & health insurance             1,274           -                  -                     1,274                  -   
                                             -----        -------            -------                  -----                  -   
                                                                                                                                 
   Total Premiums                       $8,417,064      1,030,673            528,636              7,915,027               6.7%   
                                        ==========      =========            =======              =========               ====   
                                                                                                                                 
                                                                                                                                 
</TABLE>                                             




                                       69

<PAGE>





Item 9.  Change in and disagreements on accounting and financial disclosure.

       Southern Security Life (the "Company")  retained Ernst & Young LLP as its
independent  auditors and replaced KPMG Peat Marwick LLP effective  February 21,
1999.  No report of KPMG Peat  Marwick LLP on the  financial  statements  of the
Company  for  either of the past two years  contained  an  adverse  opinion,  or
disclaimer  of opinion,  or was qualified or modified as to  uncertainty,  audit
scope, or accounting  principles.  Since the engagement of KPMG Peat Marwick LLP
for the  Company's  two  most  recent  fiscal  years  and  through  the  date of
replacement,  there were no  disagreements  between  the  Company  and KPMG Peat
Marwick  LLP on any matter of  accounting  principles  or  practices,  financial
statement disclosure,  or auditing scope or procedure. The change in independent
accountants  was approved by the Company's Board of Directors and disclosed in a
Form 8K, which was filed with the Securities and Exchange Commission on February
26, 1999.  Reference is made to current  reports on Forms 8-K dated February 26,
1999.


































                                       70

<PAGE>



                                    PART III

Item 10.  Directors and executive officers of the Company.

The Company's Board of Directors  consists of nine persons,  six of whom are not
employees of the Company.  There is no family relationship  between or among any
of the directors,  except that Scott M. Quist is the son of George R. Quist. The
following table sets forth certain information with respect to the directors and
executive officers of the Company.
<TABLE>
<CAPTION>

                                                 Director
Name                                  Age          Since                   Position(s) with the Company

<S>                                  <C>        <C>                       <C>                       
George R. Quist                       78         December 1998             Chairman of the Board, President
                                                                           and Chief Executive Officer

William C. Sargent                    70         December 1998             Senior Vice President, Secretary
                                                                           and Director

Scott M. Quist                        45         December 1998             First Vice President, General
                                                                           Counsel, Treasurer and Director

Charles L. Crittenden                 79         December 1998             Director

Sherman B. Lowe                       84         December 1998             Director

R.A.F. McCormick                      85         December 1998             Director

H. Craig Moody                        45         December 1998             Director

Norman G. Wilbur                      60         December 1998             Director

Robert G. Hunter                      39         December 1998             Director
</TABLE>

Committees of the Board of Directors  include an executive  committee,  on which
George Quist, Scott Quist, Sargent and Moody serve; an audit committee, on which
Crittenden,  Lowe,  Moody,  and Wilbur serve; and a compensation  committee,  on
which Crittenden, Lowe and George Quist serve.



                                       71

<PAGE>



The  following  is a  description  of the  business  experience  of  each of the
directors.

George R. Quist,  age 78, has been  Chairman of the Board,  President  and Chief
Executive Officer of the Company since December 1998. Mr. Quist is also Chairman
of the  Board,  President  and Chief  Executive  Officer  of  Security  National
Financial  Corporation  and has served in this position since October 1979. From
1960 to 1964, he was Executive Vice President and Treasurer of Pacific  Guardian
Life Insurance Company. From 1946 to 1960, he was an agent, District Manager and
Associate General Agent for various insurance  companies.  Mr. Quist also served
from  1981  to  1982  as the  President  of The  National  Association  of  Life
Companies, a trade association of 642 life insurance companies, and from 1982 to
1983 as its Chairman of the Board.

William C.  Sargent,  age 70, has been Senior Vice  President,  Secretary  and a
director  since  December  1998.  Mr.  Sargent is also  Senior  Vice  President,
Secretary  and a director of Security  National  Financial  Corporation  and has
served in this position since  February 1980.  Prior to 1980, he was employed by
Security National as a salesman and agency superintendent.

Scott M.  Quist,  age 45,  has  been  General  Counsel,  First  Vice  President,
Treasurer  and a director  since  December  1998.  Mr.  Quist is also First Vice
President,  General  Counsel,  Treasurer  and a director  of  Security  National
Financial  Corporation and has served in this position since May 1986. From 1980
to 1982, Mr. Quist was a tax specialist with Peat, Marwick,  Mitchell, & Co., in
Dallas, Texas. From 1986 to 1991, he was a treasure and director of The National
Association of Life Companies,  a trade  association of 642 insurance  companies
until its merger with the American Council of Life Companies. Mr. Quist has been
a member of the Board of Governors of the Forum 500 Section  (representing small
insurance  companies) of the American  Council of Life Insurance.  Mr. Quist has
also served as regional  director of Key Bank of Utah since  November  1993. Mr.
Quist is  currently a director and Vice  President  of the National  Alliance of
Life Companies, a trade association of over 200 life companies.

Charles L. Crittenden, age 79, has been a director of the Company since December
1998.  Mr.  Crittenden  is  also  a  director  of  Security  National  Financial
Corporation  and has served in this position since October 1979. Mr.  Crittenden
has been sole  stockholder of Crittenden Paint & Glass Company since 1958. He is
also an owner of Crittenden  Enterprises,  a real estate development company and
Chairman of the Board of Linco, Inc.

Sherman B. Lowe, age 84, has been a director of the Company since December 1998.
Mr. Lowe is also a director of Security National  Financial  Corporation and has
served in this position since October 1979. Mr. Lowe was formerly  President and
Manager of Lowe's Pharmacy for over 30 years. He is now retired.  He is an owner
of Burton-Lowe

                                       72

<PAGE>



Ranches, a general partnership.

R.A.F.  McCormick,  age 85, has been a director  of the Company  since  December
1998.  Mr.  McCormick  is  also  a  director  of  Security  National   Financial
Corporation  and has served in this  position  since  October 1979. He is a past
Vice President of Sales for Cloverclub Foods. He is now retired.

H. Craig Moody,  age 45, has been a director of the Company since December 1998.
Mr. Moody is also a director of Security National Financial  Corporation and has
served in this  position  since  September  1995.  Mr. Moody is owner of Moody &
Associates,  a  political  consulting  and real estate  company.  He is a former
Speaker and House Majority Leader of the House of  Representatives  of the State
of Utah.

Norman G.  Wilbur,  age 60, has been a director  of the Company  since  December
1998. Mr. Wilbur is also a director of Security National  Financial  Corporation
and has served in this  position  since  October 1998. Mr Wilbur worked for J.C.
Penny's regional offices in budget and analysis.  His final position was Manager
of Planning and Reporting  for J.C.  Penney's  stores.  After 36 years with J.C.
Penny's,  he took an option of an early retirement in 1997. Mr. Wilbur is a past
board member of a homeless organization in Plano, Texas.

Robert G.  Hunter,  M.D.,  age 39,  has been a  director  of the  Company  since
December  1998.  Dr.  Hunter is also a director of Security  National  Financial
Corporation  and has served in this position  since October 1998.  Dr. Hunter is
currently a practicing  physician in private  practice.  Dr. Hunter  created the
State  Wide  E.N.T.  Organization  (Rocky  Mountain  E.N.T.,  Inc.)  where he is
currently  a member of the  Executive  Committee.  He is  Chairman of Surgery at
Cottonwood  Hospital,  a delegate to the Utah Medical Association and a delegate
representing Utah to the American Medical  Association,  and a member of several
medical advisory boards.


Executive Officers

The following table sets forth certain information with respect to the executive
officers of the Company (the business biographies set forth above):
<TABLE>
<CAPTION>

Name                        Age           Title
<S>                         <C>           <C>                                               
George R. Quist (1)         78            Chairman of the Board, President and
                                          Chief Executive Officer

William C. Sargent          70            Senior vice President and Secretary

Scott M. Quist (1)          45            First Vice President, General Counsel
                                          and Treasurer
</TABLE>


                                       73

<PAGE>



(1) George R. Quist is the father of Scott M. Quist.


The Board of Directors  of the Company has a written  procedure  which  requires
disclosure to the Board of any material  interest or any affiliation on the part
of any of its officers, directors or employees which is in conflict or may be in
conflict with the interests of the Company.

No director,  officer or 5% stockholder of the Company or its  subsidiaries,  or
any  affiliate  thereof  has  had  any  transactions  with  the  Company  or its
subsidiaries during 1998 or 1997.

Each  of  the  directors  are  board  members  of  Security  National  Financial
Corporation  (the  ultimate  parent of the Company)  which has a class of equity
securities  registered under the Securities Exchange Act of 1934, as amended. In
addition,  Scott  M.  Quist is a  regional  director  of Key  Bank of Utah.  All
directors  of  the  Company  hold  office  until  the  next  annual  meeting  of
stockholders,  until their successors have been elected and qualified,  or until
their earlier resignation or removal.



                                       74

<PAGE>



Item 11.  Executive compensation.

   (a)  Summary  compensation.  The  following  summary  compensation  table  is
provided with respect to the Company's Chief Executive Officer and its Executive
Vice  President,  who  constitute  all of the executive  officers of the Company
whose total annual salary and bonus exceed $100,000:

                           SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>

                                                                              Long Term Compensation

                                     Annual Compensation                   Awards          Awards      |Payouts   |
                                                                         |                             |          |
   (a)                 (b)       (c)          (d)          (e)           |     (f)          (g)        |  (h)     |    (i)
                                                                         |                             |          |
                                                          Other          |   Restricted   Securities   |          |All other
Name and                                                  Annual         |     Stock      Underlying   |  LTIP    |  Compen-
Principal                                              Compensation      |     Awards     Options/     | Payouts  |  sation
Position              Year     Salary ($)   Bonus ($)      ($)           |      ($)       SARs(#)      |   ($)    |    ($)
                                                                         |                             |          |
<S>                  <C>       <C>          <C>        <C>                <C>            <C>            <C>        <C>   
President                                                                |                             |          |
and Chief                                                                |                             |          |
Executive                                                                |                             |          |
Officer                                                                  |                             |          |
                                                                         |                             |          |
George R. Quist(1)    1998     $0            $0        $0                |     $0         N/A          |  N/A     |    N/A
                                                                         |                             |          |
George Pihakis        1998     $244,800      $0        $13,625(2)        |     $0         N/A          |  N/A     |  $1,050,000 (3)
                                                                         |                             |          |
George Pihakis        1997     $244,800      $0        $11,674(2)        |     $0         N/A          |  N/A     |    N/A
                                                                         |                             |          |
George Pihakis        1996     $244,800      $0        $11,374(2)        |     $0         N/A          |  N/A     |    N/A
                                                                         |                             |          |
                                                                         |                             |          |
                                                                         |                             |          |
                                                                         |                             |          |
Executive Vice                                                           |                             |          |
President                                                                |                             |          |
                                                                         |                             |          |
David C. Thompson     1998     $121,275      $0        $13,313(4)        |     $0         N/A          |  N/A     |    N/A
                                                                         |                             |          |
David C. Thompson     1997     $121,275      $0        $14,043(4)        |     $0         N/A          |  N/A     |    N/A
                                                                         |                             |          |
David C. Thompson     1996     $121,275      $0        $13,685(4)        |     $0         N/A          |  N/A     |    N/A
                                                                         |                             |          |
                                                                         |                             |          |
</TABLE>
(1)  New officers appointd in December 1998 did not receive any  compensation in
     1998.

(2)  During 1998 this amount  included  $6,350 paid in the form of a  director's
     fee,  and  $7,275  paid in the form of a car  allowance.  During  1997 this
     amount  included  $6,600 paid in the form of a director's fee, $550 paid in
     the form of an  executive  committee  fee, and $4,524 paid in the form of a
     car allowance.  During 1996 this amount included $6,300 paid in the form of
     a  director's  fee,  $550 paid in the form of an executive  committee  fee,
     $4,524 paid in the form of a car allowance.


                                       75

<PAGE>


(3)  Payment of lump sum settlement under Executive Compensation Agreement.  See
     "Item 11 Executive compensation (e) Employee contracts."

(4)  During 1998 this amount  included  $6,350 paid in the form of a  director's
     fee,$6,000  paid in the form of a car allowance,  and $963 paid in the form
     of dues at a social club used  exclusively  for business  purposes.  During
     1997 this amount included $6,600 paid in the form of a director's fee, $550
     paid in the form of an executive  committee fee, $6,000 paid in the form of
     a car  allowance,  and $893 paid in the form of dues at a social  club used
     exclusively for business purposes.  During 1996 this amount included $6,300
     paid in the form of a director's fee, $550 paid in the form of an executive
     committee fee, $6,000 paid in the form of a car allowance, and $835 paid in
     the form of dues at a social club used exclusively for business purposes.

  (b)Prerequisites.  Executive  officers of the Company who are employees of the
     Company  are  covered   under  a  group  life,   group   dis-ability,   and
     hospitalization  plan that does not  discriminate  in favor of officers and
     that is generally available to all salaried employees. The Company does not
     have a pension,  retirement  or other  deferred  compensation  plan, or any
     other similar arrangement.

  (c)Director's fees and other fees.  Directors of the Company prior to December
     17,  1998  received  a  director's  fee of $6,600  per year for  serving as
     director of the Company. Each director of the Company also received the sum
     of $275 for each committee meeting  attended,  if such committee meeting is
     not in conjunction  with a meeting of the Company's Board of Directors held
     at the same time and place. New directors  elected in December 1998 did not
     receive any compensation in 1998.

  (d)Compensation committee interlocks and insider participation.  The Executive
     Committee of the Company's Board of Directors makes  recommendation  to the
     Board of Directors  concerning the compensation of the Company's  executive
     officers.  Subsequently,  the Board of Directors  makes all final decisions
     concerning such compensation.

  (e)Employee  contracts.  As  part  of the  acquisition  by  Security  National
     Financial  Corporation (SNFC) on December 17, 1998 of SSLIC Holding Company
     (formerly  Consolidare  Enterprises,  Inc.), SNFC caused the Company to pay
     $1,050,000 to George Pihakis,  President and Chief Executive Officer of the
     Company  prior  to  closing,  as a lump  sum  settlement  of the  executive
     compensation agreement between the Company and Mr. Pihakis.


                                       76

<PAGE>



Item 12.  Security ownership of certain beneficial owners and management.

     (a) The following  table sets forth,  as of December 31, 1998,  information
with respect to the only persons known by the Company to be the beneficial owner
of more than 5% of the Company's outstanding voting securities:
<TABLE>
<CAPTION>

                                                                     Number of Shares
Title                                                                 and Nature of
 of               Name and Address of                                    Beneficial                   Percent
Class             Beneficial Owner                                        Ownership                  of Class

<S>              <C>                                                <C>                             <C>

Common            SSLIC Holding Company Inc., formerly
Shares            Consolidare Enterprises, Inc.                           1,095,496                    57.4%
                  c/o Security National Life Ins. Co.     Direct
                  5300 S 360 W, Suite 200 Salt Lake City, UT 84123

Common            Capital Indemnity Corp.,                                  151,871                     8.0%
Shares            George A. Fait                                            Direct
                  4610 University Ave, Madison, WI

</TABLE>


Item 13.  Certain relationships and related transactions.

         Insuradyne Corporation,  a wholly-owned subsidiary of Security National
Financial  Corporation,  serves as general agent for the Company,  pursuant to a
general  agency  agreement,  which is  terminable  by either  party with 30 days
notice.  In such  capacity,  Insuradyne  receives a commission on the first year
commissionable  premium on certain of the Company's  policies as well as a small
renewal  commission on certain other  policies.  In accordance  with the Florida
Insurance Code, a copy of the Company's General Agency Agreement with Insuradyne
Corporation was filed with and approved by the Florida  Department of Insurance.
Management  of the  Company  believes  that  the  terms  of its  General  Agency
Agreement  with  Insuradyne are as favorable to the Company as terms which could
be obtained from independent  third parties.  During 1998, gross com missions in
the amount of $252,955  were earned by Insuradyne  Corporation.  At December 31,
1998, the Company owes $22,871 to Insuradyne as a result of  commissions  earned
by Insuradyne but for which Insuradyne has not yet requested payment.

         No director or officer of the Company or any associates of any director
or officer of the Company was indebted to the Company at December 31, 1998.

         The Company continues to be indebted to its parent, SNFC, in the amount
of $1,000,000, pursuant to a promissory note dated

                                       77

<PAGE>



December 1988,  which bears interest at the annual rate of interest equal to the
prime rate (as  hereinafter  defined) plus 2%, with such interest rate not to be
less than 9% nor in excess of 11%. For purposes of this promissory  note,  prime
rate is defined to mean the prime rate as announced by Compass Bank, Birmingham,
Alabama,  from time to time,  as its prime rate (which  interest  rate is only a
bench mark, is purely  discretionary  and is not  necessarily the best or lowest
rate charged borrowing customers).  This promissory note is due on demand and is
payable  out of capital  surplus in excess of  $1,900,000,  pursuant  to Florida
Statutes  ss.628.401 (1990).  Interest and principal can only be repaid upon the
express written approval of the Florida Department of Insurance.

         The Company entered into  an  Administrative  Services  Agreement dated
December 17 1998 with SNFC. Under the terms of the agreement, SNFC has agreed to
provide the Company with certain defined  administrative and financial services,
underwriting,  data processing,  legal, building management,  marketing advisory
services  and  investment  services.  In  consideration  for the  services to be
provided by SNFC,  the Company shall pay SNFC an  administrative  service fee of
$250,000  per month,  which  may be increased,  beginning on January 1, 2001, to
reflect  increases in Consumer Price Index,  over the index amount as of January
1, 2000.

         The  Administrative  Services  Agreement  shall remain in effect for an
initial term expiring on December 16, 2003.  However,  the term of the agreement
may be  automatically  extended for  additional  on-year term unless  either the
Company of SNFC shall deliver a written notice on or before  September 30 of any
year  stating to the other its  desire not to extend the term of the  agreement.
SSLIC  Holding  Company,  a wholly owned  subsidiary  of Security  National Life
Insurance  Company,  owns 57.4% of the outstanding shares of common stock of the
Company.  Security  National Life Insurance Company is a wholly owned subsidiary
of SNFC.  In  addition,  George  R.  Quist,  the  Company's  President  and Chef
Executive Officer is the President and Chief Executive Officer of SNFC; Scott M.
Quist, the Company's First Vice President,  General Counsel and Treasurer is the
First Vice  President,  General  Counsel and  Treasurer of SNFC;  and William C.
Sargent,  the Company's  Senior Vice  President and Secretary is the Senior Vice
President  and  Secretary of SNFC.  Finally,  the  directors of the Company also
serve as the directors of SNFC. See Item 7. Management's Discussion and Analysis
of Financial Condition and Results of Operation.



                                       78

<PAGE>



                                     PART IV


Item 14.  Financial statements, exhibits filed and reports on Form 10-K.
<TABLE>
<CAPTION>
                                                                                                     Page Number
<S>               <C>      <C>                                                                      <C>
         (a)      1.       See item 8
                                                                                                        26


                  2.       Supplemental Schedules.

                           Required   Financial  Data  -  for  the  years  ended
                           December 31, 1998, 1997 and 1996 included in Part II,
                           Item 8:

                           Schedule I - Summary of Investments -
                           Other than Investments in Related
                           Parties.................................                                     65

                           Financial Data Schedule.................                                     66

                           Schedule III - Supplementary Insurance
                           Information.............................                                     68

                           Schedule IV - Reinsurance...............                                     69
</TABLE>


         Schedules  other than those listed above have been omitted because they
are not  applicable  or because  the  required  information  is  included in the
financial statements and notes thereto or in Item 7 -Management's Discussion and
Analysis of Financial Condition
and Results of Operations.


                                       79

<PAGE>



3.       Exhibits
<TABLE>
<CAPTION>

         Exhibit No.       Document                                                                  Page Number

<S>                       <C>                                  
                   3.      Articles of Incorporation, as
                           amended, and By-Laws, as amended
                           (without exhibits) dated September 1994,
                           incorporated by reference herein from
                           From Exhibit 3(1) of the Annual Report of
                           the Company filed on Form 10-K for the
                           fiscal year ended December 31, 1994.....

                  10.A     Executive Compensation Agree-
                           ment between the Company and
                           George Pihakis (without exhibits)
                           incorporated by reference herein
                           from Exhibit 10(B) of the Annual
                           Report of the Company filed on
                           Form 10-K for the fiscal year
                           ended December 31, 1984.................

                  10.B     Revolving Financing Agreement between
                           the Company and the Student Loan
                           Marketing Association, dated as of
                           September 19, 1996......................

                  10.C     Reinsurance Agreement between the
                           Company and United Group Insurance
                           Company, dated as of December 31, 1992
                           incorporated by reference herein from
                           Exhibit 10(B) of the Annual Report of the
                           Company filed on Form 10-K for the fiscal
                           year ended December 31, 1992............

                  10.D     Agency Agreement between the Company and
                           Insuradyne Corporation incorporated by
                           reference herein from Exhibit 10(C)of
                           the Annual Report of the Company filed
                           on Form 10-K for the fiscal year ended
                           December 31, 1993.......................

                  10.E     Administrative Services Agreement between
                           the Company and Security National Financial
                           Corporation dated December 17, 1998.....                                     83

                  11.      Statement Re Computation of Net Income per
                           common share............................                                     84

                  21.      Definitive proxy materials for the
                           Annual Meeting of Shareholders held
                           July 18, 1998...........................                                     85

</TABLE>

                                       80

<PAGE>



3.       Exhibits

         Exhibit No.       Document           Page Number


(b)      Reports on Form 8-K

                           Change in principal auditor filed
                           effective February 26, 1999.............






                                       81

<PAGE>



Pursuant to the  requirements of Section 13 or 15(d) of the Securities  Exchange
Act of 1934,  the Company has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY


Dated: April 6, 1999                       By:___________________________
                                               Chairman of the Board, President
                                               and Chief Executive Officer

Pursuant to the requirements of the Securities  Exchange Act of 1934 as amended,
this report has been signed by the following persons in counterpart on behalf of
the Company on the dates indicated:
<TABLE>
<CAPTION>

Signature                                 Title                                           Date
---------                                 -----                                           ----
<S>                                      <C>                                             <C> 
George R. Quist                           Chairman of the                                 April 6, 1999
                                          Board, President and
                                          Chief Executive Officer
                                          and (Principal Executive
                                          Officer)

Scott M. Quist                            First Vice President,                           April 6, 1999
                                          General Counsel, and
                                          Treasurer and Director
                                          (Principal Financial and
                                          Accounting Officer)

William C. Sargent                        Senior Vice President,                          April 6, 1999
                                          Secretary and Director

Charles L. Crittenden                     Director                                        April 6, 1999

Sherman B. Lowe                           Director                                        April 6, 1999

R.A.F. McCormick                          Director                                        April 6, 1999

H. Craig Moody                            Director                                        April 6, 1999

Norman G. Wilbur                          Director                                        April 6, 1999

Robert G. Hunter                          Director                                        April 6, 1999

</TABLE>






                                       82

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                  EXHIBIT 10.E

                    ADMINISTRATIVE SERVICES AGREEMENT BETWEEN
             THE COMPANY AND SECURITY NATIONAL FINANCIAL CORPORATION

                             DATED DECEMBER 17, 1998


                                       83

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                   EXHIBIT 11

                            COMPUTATION OF NET INCOME

                                PER COMMON SHARE

<TABLE>
<CAPTION>


                            1998             1997            1996
                         ----------       ---------        --------
<S>                     <C>              <C>              <C>
Weighted Average
Shares Outstanding       1,907,989        1,907,989         1,907,989

Net Income (Loss)        $(383,733)        $195,210        $1,392,505

Per Share Amount             $(.20)            $.10              $.73
</TABLE>





                                       84

<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                   EXHIBIT 21

                DEFINITIVE PROXY MATERIALS FOR THE ANNUAL MEETING

                                  July 18, 1998



                                       85

<PAGE>