SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549

                                    Form 10-K

              [X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934
                 For the fiscal year ended December 31, 1999, or

              [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934
                        For the Transition Period from to

                         Commission File Number 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
 of incorporation or organization)                      Identification Number)

         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
Title of each Class                                   on which registered
-------------------                                  --------------------
      None                                                   None

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

                                                     Name of each exchange
Title of each Class                                   on which registered
-------------------                                  --------------------
      None                                                   None


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. [ ]

The  aggregate  market value of the voting stock held by  non-affiliates  of the
Registrant as of March 27, 2000 was approximately $9,420,696.

As of March 27, 2000,  registrant had issued and outstanding 1,907,989 shares of
Common Stock.

                       DOCUMENTS INCORPORATED BY REFERENCE

Portions of the  definitive  Proxy  Statement for the  Registrant's  2000 Annual
Meeting of Stockholders' are incorporated by reference into Part III hereof.


<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  to  transact  business in
additional  states  during 2000.  During 1999  approximately  40% of the premium
income  of the  Company  was from  business  in force in  Florida,  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% of the assets of Consolidare Enterprises, Inc.
("Consolidare")  which owned  57.4% 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 8% and 23% of the
life  policies  written  by the  Company  in 1999 and 1998,  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  equivalent to the insured's  anticipated  funeral
costs.  This new series  represented 84 % of the life policies  written in 1999.
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:


                        1999                  1998                1997
                        ====                  ====                ====

                              Per-                 Per-                Per-
                   Amount    centage    Amount   centage    Amount   centage
                  -------    -------   -------   ------    -------   -------
Life
Insurance-

Ordinary (1)(2) $8,103,864    92%   $7,602,811     91%   $8,386,972    94%

Individual

Annuities (1)       46,348     1%       90,289      1%       70,809     1%

Life
Insurance-
Group (SGLI)       438,124     5%      460,029      6%      476,455     5%

Other -
Accident &
   Health          205,872     2%      158,882      2%       11,323     0%
                ----------  -----   ----------   ------  ----------   ----

                $8,794,208   100%   $8,312,011    100%   $8,945,559   100%
                ==========  =====   ==========   ======  ==========  =====


                                        2


<PAGE>



(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 1999,  1998, and 1997 premium  income for life  insurance-ordinary
          are net of  reductions  of  $1,236,735,  $1,329,814,  and  $1,517,988,
          respectively, in ceded premium paid to all reinsurers,  including Mega
          Life.

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


                                       1999            1998             1997
                                       ----            ----             ----
Total Net Insurance

 Revenues                         $  6,901,546    $  7,228,227     $  7,643,650

Benefit Costs Paid or
 Provided:

  Amount                          $  4,453,564    $  4,346,820     $  4,431,474
  Ratio to Net Insurance
   Revenue                               64.5%           60.1%            58.0%

Amortization of Deferred Policy
 Acquisition Expenses:
  Amount                          $  3,029,223    $  3,484,689     $  3,542,617
  Ratio to Net Insurance
   Revenue                               43.9%           48.2%            46.3%
General Insurance Expenses:
  Amount                          $  3,261,134    $  4,134,686     $  3,472,255
  Ratio to Net Insurance
   Revenue                               47.3%           57.2%            45.4%

Income (Loss) Before Income
 Taxes:

  Amount                          $    782,126    $   (625,640)    $    249,410
  Ratio to Net Insurance
   Revenue                               11.3%           (8.7%)            3.3%
  Ratio to Total Revenue and
   Investment Income                      6.8%           (5.5%)            2.1%
  Ratio to Equity                         5.0%           (4.0%)            1.5%


                                        3


<PAGE>


The following table provides information about the Company concerning changes in
life insurance in force during the periods indicated  (exclusive of acciden- tal
death benefits):

                                          1999            1998            1997
                                          ----            ----            ----
                                            (In thousands except lapse ratios)
Total life insurance in force at beginning 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
Additions (including re-
insurance assumed):
  Ordinary Whole Life &
   Endowment-Participating          $      --       $      --       $      --
  Ordinary Whole Life &
   Endowment-Non-Participating           66,591          68,935          82,390
  Term                                     --              --              --
  Reinsurance Assumed                    22,402          21,617          19,021
                                    -----------     -----------     -----------

  Total                             $    88,993     $    90,552     $   101,411

Terminations:
  Death                                   2,172     $     1,605     $     2,010
  Lapse and Expiry                       31,418          48,034          57,435
  Surrender                              67,515         132,184         186,654
  Other                                    --                10             152
                                    -----------     -----------     -----------
  Total                             $   101,105     $   181,833     $   246,251

Life Insurance in force at end of period:

  Ordinary Whole Life &
   Endowment-Participating          $       238     $       532     $       381
  Ordinary Whole Life &
   Endowment-Non-Participating          892,962         913,683       1,019,179
  Term                                    3,646           4,799           6,478
  Reinsurance Assumed                   558,571         548,515         532,772
                                    -----------     -----------     -----------

  Total                             $ 1,455,417     $ 1,467,529     $ 1,558,810
                                    -----------     -----------     -----------
Reinsurance Ceded                      (250,691)       (297,913)       (337,901)
                                    -----------     -----------     -----------
Total after Reinsurance Ceded       $ 1,204,726     $ 1,169,616     $ 1,220,909
                                    ===========     ===========     ===========
Lapse Ratio (Reflecting termina-
tion by surrender and lapse;
ordinary life insurance only):              9.1%           17.4%           20.0%


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:


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

1999       $50,221,950       $ 3,924,271       $ 3,909,373          7.78%
1998       $52,227,057       $ 3,599,547       $ 3,587,147          6.87%
1997       $51,094,803       $ 3,568,158       $ 3,545,311          6.94%

(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.


                                        4

<PAGE>



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 937 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
Security National Financial Corporation.  See "Certain Relationships and Related
Transactions" in item 13, Part III of this Report.

Effective January 1, 1999, 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  are now being
furnished to the Company under this Agreement.  The Company will pay to Security
National  $250,000  per  month or $3  million  per  year for the  Administrative
services.

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  $1,886,000.
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,  1999,  the
Company had statutory  capital and surplus of $8,976,516,  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.

         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.

                                        5


<PAGE>



Based on  calculations  using the NAIC  formula as of  December  31,  1999,  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,  Indiana,
Illinois,  Kentucky,  Louisiana,  Michigan,  Missouri, Oklahoma, 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  diversification 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.

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.

                                        6


<PAGE>



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  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 1999, 1998 and 1997  (decrease)/increase in the statutory reserve due to the
implementation of this regulation was approximately $-0-, $(66,820) and $52,400,
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,  preauthorized 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.  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, 1999.

Item 3.  Legal Proceedings.
--------------------------

The Company has been named as a party in an action brought in the Circuit Court,
Eighteenth Judicial District, Seminole County, Florida. The action was commenced
in December 1998 with an amended complaint filed in April 1999. On three

                                        7


<PAGE>



occasions  in the past,  the Company has been  involved in  litigation  with the
plaintiff,  William Thomas.  In the pending  action,  Thomas asserts a claim for
malicious  prosecution and a claim for abuse of process  purportedly arising out
of a prior action involving him and the Company.  In each of the claims,  Thomas
seeks compensatory damages of $1.0 million plus costs of the action.  Thomas has
undertaken formal discovery.  The Company filed a motion for summary judgment on
the claims. On December 28, 1999, the court granted summary judgment in favor of
the Company thereby  dismissing  Thomas' claims with  prejudice.  Thomas filed a
notice of appeal and a memorandum  in support of his appeal  before the District
Court of Appeal of Florida,  Fifth Circuit,  Daytona Beach, Florida for reversal
of the summary judgment. The Company will file a memorandum in opposition to the
appeal and in support  of the  summary  judgment.  Whatever  the  outcome of the
appeal, the Company intends to vigorously defend the action.  Should the summary
judgment  be  reversed  on appeal,  the  Company  will  likely  engage in formal
discovery.

An action was brought  against the Company in July 1999 by Dorothy Ruth Campbell
in the Circuit  Court of Escambia  County,  Alabama.  The action arises out of a
denial of coverage for a policy with  coverage  for $10,000.  The claims are for
breach of contract, bad faith and fraudulent  misrepresentation.  In the action,
Campbell seeks compensatory and punitive damages plus interest.  The Company has
filed its response to the complaint and intends to vigorously defend the matter.

An action  was  brought  against  the  Company in late 1999 by Larry Boyd in the
Circuit  Court of Jefferson  County,  Alabama.  The action  involves the alleged
purchase by Boyd and his deceased sons. The allegations in the complaint include
an alleged  representation  by the  Company  through  its sales  agent that when
Boyd's sons, the insureds,  reached college they would receive monthly  payments
for college. Boyd further contends that he lost the value of his deposits on the
college fund policies,  lost interest,  does not have the college funds promised
to him, and suffered mental anguish and emotional distress. The claims are based
on fraud and misrepresentation and negligence by the Company in hiring, training
and supervising the sales agent.  Boyd seeks  compensatory and punitive damages,
plus costs.  The complaint  was  responded to and discovery is in progress.  The
Company intents to vigorously defend the action.

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 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.

                                     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.


                                  QUARTER ENDED
----------------------------------------------------------------------------
                           1999                            1998
----------------------------------------------------------------------------

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

Common
Shares:

  High   3 13/16  4 7/32  4 3/4    4 30/32   7 1/4   7 5/8   4 1/8   4 1/4
  Low    3 3/4    4 7/32  4 3/4    4 30/32   6 7/8   6 5/8   3 1/2   3 3/4


                                        8


<PAGE>



(b)  Approximate  Number of Holders of Common Stock. There were 1,336 holders of
     record of the Company's Common Stock at December 31, 1999.

(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 2000 pursuant to such regulation is
     approximately $149,000.

                                        9


<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.

<TABLE>
<CAPTION>
                                                         YEARS ENDED DECEMBER 31,
                                                         ------------------------

                                   1999              1998             1997              1996              1995
                                  ------            ------           ------            ------             -----
<S>                     <C>                <C>                <C>               <C>                <C>

Revenues:
Life insurance
    premiums and
    policy charges      $     6,901,546    $     7,228,227    $     7,643,650   $     7,915,027    $     8,158,938

Net investment
    income                    3,909,373          3,587,147          3,545,311         3,318,627          2,998,875
Realized Gain
    (loss) on
    investments                    --              525,181            506,795           869,502             60,237
Other revenue, net              715,128               --                 --                --                 --
                        ---------------    ---------------    ---------------   ---------------    ---------------
Total Revenue                11,526,047         11,340,555         11,695,756        12,103,156         11,218,050

Benefits, Losses
    & Expenses:

 Insurance living
    benefits                  2,614,754          2,483,197          2,459,638         2,420,021          2,636,851
 Insurance death
    benefits                  1,917,134          1,529,294          1,847,375         1,398,541          1,424,245
 Increase (decrease)
    in policy
    reserves                    (78,324)           334,329            124,461            (5,201)           (12,971)
 Amortization of
    deferred policy
    acquisition
    costs                     3,029,223          3,484,689          3,542,617         3,364,738          3,069,742
 Commissions and
    general
    expenses                  3,261,134          4,134,686          3,472,255         3,336,552          2,825,280
                        ---------------    ---------------    ---------------   ---------------    ---------------

Total expenses               10,743,921         11,966,195         11,446,346        10,514,651          9,943,147
Income (loss)
    before income
    taxes                       782,126           (625,640)           249,410         1,588,505          1,274,903
Income tax expense
    (benefit)                   150,168           (241 907             54,200           196,000            160,000
                        ---------------    ---------------    ---------------   ---------------    ---------------

NET INCOME (LOSS)       $       631,958    $      (383,733)   $       195,210   $     1,392,505    $     1,114,903
                        ===============    ===============    ===============   ===============    ===============

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    $           .33    $          (.20)   $           .10   $           .73    $           .58
                        ---------------    ---------------    ---------------   ---------------    ---------------

Diluted income (loss)
    per common share    $           .33    $          (.20)   $           .10   $           .73    $           .58
                        ---------------    ---------------    ---------------   ---------------    ---------------

Shareholders'
    Equity              $    15,637,320    $    15,912,106    $    16,132,018   $    15,661,588    $    14,826,610
                        ===============    ===============    ===============   ===============    ===============

Shareholders'
    equity per
    common
    share               $          8.20    $          8.34    $          8.45   $          8.20    $          7.77
                        ===============    ===============    ===============   ===============    ===============

Assets                  $    77,208,941    $    81,205,193    $    82,142,465   $    81,809,360    $    81,872,350
                        ---------------    ---------------    ---------------   ---------------    ---------------
Life Insurance:
    Insurance in
    force               $ 1,455,417,000    $ 1,467,529,000    $ 1,558,810,000   $ 1,703,650,000    $ 1,805,756,000
                        ---------------    ---------------    ---------------   ---------------    ---------------
Individual
    insurance
    issued during
    current
    year                $    66,591,000    $    68,935,000    $    82,390,000   $   121,646,000    $   124,222,000
                        ---------------    ---------------    ---------------   ---------------    ---------------
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>

                                                            10


<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 the products are written to a senior market they
are designed to accommodate  adverse health  conditions.  Because of the size of
the policies,  the products are usually  issued with only limited  underwriting.
The  coverage  size  of the  policy  is  roughly  equivalent  to  the  insured's
anticipated funeral costs.

An additional source of income to the Company is investment  income. The Company
invests those funds  deposited by  policyholders  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 an important 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.

Results of Operations

1999 Compared to 1998

Total revenues  increased by $186,000,  or 1.6%, to $11,526,000  for fiscal year
1999 from  $11,340,000  for fiscal year 1998.  Contributing  to this increase in
total revenues was a $322,000  increase in net investment  income and a $715,000
increase in other revenue.

Net insurance revenues decreased by $326,000,  or 4.5%, to $6,902,000 for fiscal
year 1999, from $7,228,000 for fiscal year 1998. This decrease was primarily the
result of a change in the sales mix of the Company's insurance  products.  Since
March 1998,  the sales of the Company's  funeral plan products have been greater
than the universal life  products.  The universal life products were for greater
face  amounts  than the  funeral  plan  products.  Consequently,  the  insurance
revenues from final expense  products were less than those from  universal  life
products.

Net investment  income increased by $322,000,  or 9.0%, to $3,909,000 for fiscal
year 1999 from  $3,587,000  for fiscal year 1998. The increase was primarily due
to a rental  income being paid to the Company from Security  National  Financial
Corporation, the Company's ultimate parent under the terms of the Administrative
Services  Agreement  entered into by the Company on January 1, 1999. See Note 11
to the Notes to Financial  Statements  included in this report.  In addition the
Company was able to increase its yield by investing in mortgage loans.

Realized gains on investments  decreased from $525,000 in fiscal year 1998 to no
gains in fiscal  year  1999.  The gains in 1998 were the  result of the  Company
trading  its  available-for-sale  securities.  The Company did not engage in the
trading of any of its available-for-sale securities in 1999.

                                       11


<PAGE>



Other  revenue  totaled  $715,000 for fiscal year 1999,  as compared to no other
revenue for the same period in 1998.  This amount was the result of a settlement
from  insurance  claims  filed for the  recovery of the costs to litigate a case
against a former officer of the Company.

Benefits and claims  increased by $107,000,  or 2.5%, to  $4,454,000  for fiscal
year 1999, from  $4,347,000 for the comparable  period in 1998. The increase was
primarily due to additional death claims.

The amortization of deferred policy acquisition costs decreased by $456,000,  or
13.1%,  to $3,029,000,  for fiscal year 1999, from $3,485,000 for the comparable
period in 1998. The decrease in  amortization  expenses was primarily due to the
reduction in net insurance revenues.

Operating expenses decreased by $874,000, or 21.1% to $3,261,000 for fiscal year
1999 from  $4,135,000 for the same period in 1998.  This reduction was primarily
due to the lump sum payment to the Company's  former  President in December 1998
in connection with the acquisition of Company's parent company.

1998 Compared to 1997

Total revenues  decreased by $356,000,  or 3.0%, to $11,340,000  for fiscal year
1998, from  $11,696,000  for fiscal year 1997.  Contributing to this decrease in
total revenue was a $416,000 decrease in net insurance revenue.

Net insurance  revenues  decreased  $416,000,  or 5.4%, to $7,228,000 for fiscal
year 1998, from $7,644,000 for fiscal year 1997. This decrease was primarily the
result of a change in the sales mix of the Company's insurance  products.  Since
March 1998,  the sales of the Company's  funeral plan products have been greater
than the universal life  products.  The universal life products were for greater
face  amounts  than the  funeral  plan  products.  Consequently,  the  insurance
revenues from final expense  products were less than those from  universal  life
products.

Net investment  income  increased by $42,000,  or 1.2%, to $3,587,000 for fiscal
year 1998, from $3,545,000 for fiscal year 1997. This increase was primarily the
result of increased yields of the Company's investments.

Realized  gains on  investments  increased  by $18,000 or 3.6% to  $525,000  for
fiscal year 1998, from $507,000 for fiscal year 1997. These gains are the result
of trading the Company's available-for-sale securities.

Benefits and claims decreased by $85,000, or 1.9%, to $4,347,000 for fiscal year
1998,  from  $4,432,000  for the  comparable  period in 1997. The decrease was a
result of lower policyholder benefits for universal life products.

The amortization of deferred policy  acquisition costs decreased by $58,000,  or
1.6%, to $3,485,000,  for fiscal year 1998,  from  $3,543,000 for the comparable
period in 1997. The decrease in  amortization  expenses was primarily due to the
change in net insurance revenues.

Operating  expenses  increased by $663,000,  or 19.1%,  to $4,135,000 for fiscal
year 1998,  from  $3,472,000  for the same  period in 1997.  This  increase  was
primarily  due to the lump sum  payment to the  Company's  former  President  in
December  1998 in  connection  with  the  acquisition  of the  Company's  parent
company.

Liquidity and Capital Resources.
-------------------------------

The  Company  attempts  to  match  the  duration  of  invested  assets  with its
policyholder  liabilities.  The  Company may sell  investments  other than those
held-  to-maturity  in the portfolio to help in this timing;  however,  to date,
that has not been necessary.  The Company purchases short-term  investments on a
temporary  basis to meet the  expectations  of  short-term  requirements  of the
Company's products. The Company's investment philosophy is intended to provide a
rate of return which will persist during the expected  duration of  policyholder
liabilities regardless of future interest rate movements.

The Company's  investment  policy is to invest  predominantly  in fixed maturity
securities,  mortgage loans, and warehouse  mortgage loans on a short-term basis
before selling the loans to investors in accordance  with the  requirements  and
laws governing life insurance companies. Bonds owned by the Company amounted to

                                       12


<PAGE>



$27,930,000  as of December 31, 1999 as compared to  $33,436,000  as of December
31,  1998.  This  represents  59.8%  and 62.4% of the  total  investments  as of
December  31, 1999 and December 31,  1998,  respectively.  Generally,  all bonds
owned  by the  Company  are  rated  by the  National  Association  of  Insurance
Commissioners.  Under this rating  system,  there are nine  categories  used for
rating bonds.  At December 31, 1999,  and at December 31, 1998,  the Company did
not have investments in bonds in rating categories three through nine, which are
considered non-investment grade.

If market conditions were to cause interest rates to change, the market value of
the fixed income portfolio  (approximately  $29.434 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):

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

Change in Market Value      $2.328      $1.120       $(1.042)    $(2.011)

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.

The Company has classified  certain of its fixed income  securities as available
for  sale,  with the  remainder  classified  as held to  maturity.  However,  in
accordance with Company policy, any such securities purchased in the future will
be classified as held to maturity. Business conditions,  however, may develop in
the future  which may  indicate a need for a higher  level of  liquidity  in the
investment  portfolio.  In that event the Company  believes it could sell short-
term investment grade securities before liquidating  higher-yielding longer term
securities.

The Company is subject to risk based capital guidelines established by statutory
regulators  requiring  minimum  capital  levels based on the  perceived  risk of
assets, liabilities,  disintermediation, and business risk. At December 31, 1999
and December 31, 1998, the Company exceeded the regulatory criteria.

Lapse  rates  measure the amount of  insurance  terminated  during a  particular
period. The Company's lapse rate for life insurance in 1999 was 9.1% as compared
to a rate of 17.4% for 1998.

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 an 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.

                                       13


<PAGE>



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

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.

In June 1998,  the  Financial  Accounting  Standards  Board (the "FASB")  issued
Statement No. 133, Accounting for Derivative  Instruments and Hedging Activities
("SFAS 133"),  which the Company is required to adopt January 1, 2000.  SFAS 133
will  require  the  Company to  include  all  derivatives  in the  statement  of
financial position at fair value.  Changes in derivative fair values will either
be recognized in earnings as offsets to the changes in fair value of related

                                       14


<PAGE>



hedged assets, liabilities and firm commitments or, for forecasted transactions,
deferred and  recorded as a component  of equity  until the hedged  transactions
occur and are  recognized  in  earnings.  The  ineffective  portion of a hedging
derivative's  change in fair value will be  immediately  recognized in earnings.
The impact of SFAS 133 on the Company's  financial  statements  will depend on a
variety of factors,  including future  interpretive  guidance from the FASB, the
future level of forecasted and actual foreign currency transactions,  the extent
of the Company's hedging  activities,  the types of hedging instruments used and
the effectiveness of such instruments. However, the Company does not believe the
effect of adopting SFAS 133 will be material to its financial position.

                                       15


<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:

                                                                    Page Number

Independent Auditors' Report............................................16

Balance Sheets-December 31, 1999 & 1998.................................17

Statements of Operations - years ended
December 31, 1999, 1998 and 1997........................................19

Statements of Shareholders' Equity-years
ended December 31, 1999, 1998 and 1997..................................20

Statements of Cash Flows - years ended
December 31, 1999, 1998 and 1997........................................21

Notes to Financial Statements...........................................23

                                       16


<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,  1999  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 1999 financial statements referred to above present fairly,
in all material  respects,  the  financial  position of Southern  Security  Life
Insurance Company as of December 31, 1999, 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.

Tanner + Co.

Salt Lake City, Utah
March 30, 2000

                                       17


<PAGE>



                                     SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                                  Balance Sheets

                                            December 31, 1999 and 1998

Assets                                        1999         1998
------                                       ----          ----
Investments (note 3):
    Fixed maturities held-to-maturity
      (fair value, $3,985,336 and
      $5,064,541 at December 31,
      1999 and 1998, respectively)      $ 3,978,871   $ 4,956,910
    Securities available-for-sale,
      at fair value:
      Fixed maturities (cost of
        $24,789,267 at December 31,
        1999 and $27,671,425 at
        December 31, 1998)               23,951,111    28,479,161
      Equity securities
        (cost, $225,980 and
        $210,370 at December 31,
        1999 and 1998, respectively)        378,440       250,232
    Mortgage loans                        1,497,688          --
    Policy and student loans              8,458,972     8,462,438
    Short-term investments (note 11)      8,595,093    11,434,983
                                        -----------   -----------
                                         46,860,175    53,583,724

Cash and cash equivalents                 4,080,484       682,389
Accrued investment income                   582,908       564,118
Deferred policy acquisition costs
    (note 4)                             12,874,219    13,583,956
Policyholders' account balances on
    deposit with reinsurer (note 7)       7,806,866     8,518,571
Reinsurance receivable (note 7)             373,459       306,258
Receivables:
    Agent balances                        1,215,756       994,493
    Other                                   193,506       351,478
Refundable income taxes                      34,951        34,951
Property and equipment, net,
    at cost (note 5)                      2,435,565     2,585,255
Investment in affiliate at cost             751,052          --
                                        -----------   -----------

                                        $77,208,941   $81,205,193
                                        ===========   ===========




























See accompanying notes to financial statements.

                                       18


<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                           Balance Sheets (continued)

                           December 31, 1999 and 1998



Liabilities and Shareholders' Equity           1999             1998
------------------------------------           ----             ----
Liabilities:
    Policy liabilities and accruals
      (notes 6 and 7):                     $  1,648,976    $  1,727,300
  Future policy benefits:
      Policyholders' account balances        50,377,101      52,520,300
      Unearned revenue                        5,323,954       6,023,399
      Other policy claims and benefits
        payable                                 540,407         540,789
    Other policyholders' funds, dividend
      and endowment accumulations                69,789          64,738
    Funds held related to reinsurance
      treaties (note 7)                       1,475,512       1,419,357
    Note payable to related party
      (note 9)                                1,000,000       1,000,000
    Due to affiliated insurance
      agency (note 11)                          195,785          22,871
    General expenses accrued                    137,884         747,148
    Unearned investment income                  324,750         340,622
    Other liabilities                            63,753          90,489
    Income taxes (note 10)                      413,710         796,074
                                           ------------    ------------

                                             61,571,621      65,293,087
                                           ------------    ------------

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 (loss)                          (476,583)        430,161
    Retained earnings                        10,194,395       9,562,437
                                           ------------    ------------

                                             15,637,320      15,912,106
Commitments and contingencies
    (notes 7 and 14)                               --              --
                                           ------------    ------------

                                           $ 77,208,941    $ 81,205,193
                                           ============    ============

                                       19


<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                            Statements of Operations

                  Years ended December 31, 1999, 1998, and 1997


                                      1999            1998           1997
                                      ----            ----           ----
Revenues:
    Net insurance revenues       $  6,901,546   $  7,228,227    $  7,643,650
    Net investment income
       (notes 3, 8 and 11)          3,909,373      3,587,147       3,545,311
    Realized gain on
      investments (note 3)               --          525,181         506,795
    Other revenue, net                715,128           --              --
                                 ------------   ------------    ------------

                                   11,526,047     11,340,555      11,695,756
                                 ------------   ------------    ------------

Benefits, claims and expenses:

    Benefits and claims             4,453,564      4,346,820       4,431,474
    Amortization of deferred
      policy acquisition
      costs (note 4)                3,029,223      3,484,689       3,542,617
    Operating expenses
     (notes 9 and 11)              3,261,134      4,134,686       3,472,255
                                 ------------   ------------    ------------

                                   10,743,921     11,966,195      11,446,346
                                 ------------   ------------    ------------

     Income(Loss) before

       income taxes                   782,126       (625,640)        249,410

Income tax expense (benefit)
       (note 10)                      150,168       (241,907)         54,200
                                 ------------   ------------    ------------

    Net income(loss)             $    631,958   $   (383,733)   $    195,210
                                 ============   ============    ============

Basic and diluted net
    income (loss) per share
    of common stock (note 12)    $        .33   $       (.20)   $        .10
                                 ============   ============    ============




























See accompanying notes to financial statements.

                                       20


<PAGE>
<TABLE>
<CAPTION>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                       Statements of Shareholders' Equity

                  Years ended December 31, 1999, 1998 and 1997


                                                                                    Accumulated
                                                                      Capital          other
                                        Common           Stock       in excess     comprehensive    Retained
                                       Shares           Amount         of par        income         earnings         Total
                                     ---------        ----------     ---------       ------         --------        -----
<S>                               <C>              <C>            <C>            <C>             <C>

Balances,
    December 31, 1996               1,907,989      $  1,907,989   $  4,011,519   $     (8,880)   $  9,750,960     $15,661,588
                                 ------------      ------------   ------------   ------------    ------------     -----------

Comprehensive Income:
    Net income for the year              --              --             --             --           195,210           195,210
    Unrealized appreciation
        of securities
        available for sale               --              --             --          275,220            --             275,220
                                 ------------    ------------   ------------   ------------    ------------      ------------
Total comprehensive income                                                                                            470,430
                                                                                                                 ------------

Balances,
    December 31, 1997               1,907,989    $  1,907,989   $  4,011,519   $    266,340    $  9,946,170      $ 16,132,018
                                 ------------    ------------   ------------   ------------    ------------      ------------

Comprehensive Income
    (Loss):
    Net loss for
        the year                         --              --             --             --          (383,733)         (383,733)
    Unrealized appreciation of
    securities available
        for sale                         --              --             --          163,821            --             163,821
                                 ------------    ------------   ------------   ------------    ------------      ------------
Total comprehensive loss                                                                                             (219,912)
                                                                                                                 ------------

Balances,
 December 31, 1998                  1,907,989    $  1,907,989   $  4,011,519   $    430,161    $  9,562,437      $ 15,912,106
                                 ------------    ------------   ------------   ------------    ------------      ------------

Comprehensive Income (loss):
    Net gain for the year                --              --             --             --           631,958           631,958
    Unrealized depreciation of
        securities available
        for sale                         --              --             --         (906,744)           --            (906,744)
                                 ------------    ------------   ------------   ------------    ------------      ------------
Total comprehensive loss             (274,786)

Balances,
 December 31, 1999                  1,907,989    $  1,907,989   $  4,011,519   $   (476,583)   $ 10,194,395      $ 15,637,320
                                 ============    ============   ============   ============    ============      ============
</TABLE>





See accompanying notes to financial statements.

                                       21


<PAGE>
<TABLE>
<CAPTION>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                            Statements of Cash Flows

                  Years ended December 31, 1999, 1998 and 1997

                                                         1999           1998            1997
                                                         ----           ----            ----
Cash flows provided by (used in) operating activities:
      <S>                                         <C>            <C>              <C>

      Net income (loss)                           $    631,958    $   (383,733)   $    195,210
      Adjustments to reconcile net
            cash provided by (used in)
            operating activities:
      Depreciation and amortization                    286,514         301,970         232,471
      Net realized (gains) on investments                 --          (525,182)       (506,795)
      Loss on disposal of property,
            plant & equipment                           15,180           2,956             100
      Deferred income taxes                             11,009         175,274         198,100
      Amortization of deferred
            policy acquisition costs                 3,029,223       3,484,689       3,542,617
      Acquisition costs deferred                    (2,084,438)     (1,911,282)     (2,069,778)
      Change in assets and liabilities
            affecting cash provided by
            operations:
            Accrued investment income                  (18,790)         73,342          50,239
            Other invested assets                         --              --            13,100
            Due from affiliated insurance
                  agency                                  --              --            (2,078)
            Accounts receivable                        (63,291)       (344,122)       (105,752)
            Reinsurance receivable                     (67,201)         53,430          20,004
            Other policy claims and
                  future benefits payable              (78,706)        431,409         557,739
            Policyholders' account balances          2,585,204       2,356,804       2,065,521
            Funds held under reinsurance                56,155          79,430         146,561
            Unearned premiums                         (840,474)     (1,160,706)     (1,114,188)
            Dividend and endowment
                  accumulations                          5,051           5,052              90
            Payable to affiliated
                  insurance agent                      172,914         (45,775)         35,235
            Income taxes payable                       139,159            --           (70,164)
            Other liabilities                         (651,872)       (133,376)        (15,373)
                                                  ------------    ------------    ------------

      Net cash provided by operating
            activities                            $  3,127,595    $  2,460,180    $  3,172,859
                                                  ------------    ------------    ------------

Cash flows from (used in) investing activities:
      Purchase of investments:
      Purchase of investments
            held-to-maturity                      $   (477,150)   $       --      $       --
      Purchase of investments
            available-for-sale                            --        (6,180,178)    (32,704,906)
      Purchase of equity securities                   (766,662)       (610,370)     (3,316,249)
      Proceeds from maturity of
            held-to maturity securities              1,446,315       5,536,006       4,488,354
      Proceeds from maturity of
            available-for-sale securities            2,739,662         299,281            --
      Proceeds from sale of available-
            for-sale securities (equity and
            fixed maturity)                               --        10,675,217      29,049,745
      Purchase of mortgage loan                     (1,500,000)           --              --
      Repayment of mortgage loans                        2,312            --              --
      Net change in short-term
            investments                              2,839,890     (11,334,983)      4,439,106
      Net change in policy and
            student loans                                3,466        (517,057)       (629,572)
      Net change in other investments                     --              --             2,178
      Acquisition of property and
            equipment                                     (635)        (71,356)        (35,779)
                                                  ------------    ------------    ------------

      Net cash provided by (used in)
            investing activities                  $  4,287,198    $ (2,203,440)   $  1,292,877
                                                  ------------    ------------    ------------
</TABLE>

                                                            22


<PAGE>
<TABLE>
<CAPTION>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                            Statements of Cash Flows

                  Years ended December 31, 1999, 1998 and 1997

                                                       1999           1998             1997
                                                       ----           ----             ----
<S>                                                <C>             <C>             <C>
Cash flows from financing activities:
      Receipts from universal life and
            certain annuity policies
            credited to policyholder
            account balances                         6,662,558       7,524,375       4,042,137
      Return of policyholder account
            balances on universal life
            and certain annuity policies           (10,679,256)     (9,547,720)     (6,264,935)
                                                  ------------    ------------    ------------
Net cash used in financing
      activities                                  $ (4,016,698)   $ (2,023,345)   $ (2,222,798)
                                                  ------------    ------------    ------------
Increase (decrease) in cash and
      cash equivalents                               3,398,095      (1,766,605)      2,242,938

Cash and cash equivalents at
      beginning of year                           $    682,389    $  2,448,994    $    206,056
                                                  ------------    ------------    ------------
Cash and cash equivalents at
      end of year                                 $  4,080,484    $    682,389    $  2,448,994
                                                  ============    ============    ============
Supplemental schedule of cash flow
      information:
      Interest paid during the
            year                                  $     90,000    $     90,000    $     90,000
                                                  ============    ============    ============
      Income taxes paid during the
            year                                  $       --      $     45,500    $    115,000
                                                  ============    ============    ============

Change in market value adjustments-
investments available-for-sale:
      Fixed maturities                            $ (1,645,893)   $    204,802    $    425,313
      Equity securities                                112,598            (111)         39,973

Change in deferred acquisition
      costs                                            235,048        (294,326)        (55,084)
Change in premium deposit funds                       (141,029)         79,440          26,340
Deferred income tax asset
      (liability)                                      532,532         174,016        (163,500)
Other                                                    --              --             2,178
                                                  ------------    ------------    ------------

Accumulated comprehensive income
Net change in unrealized
      appreciation (depreciation)                 $   (906,744)   $    163,821    $    275,220
                                                  ============    ============    ============
</TABLE>


















See accompanying notes to financial statements.

                                       23


<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY
                          Notes to Financial Statements
                        December 31, 1999, 1998 and 1997

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
               61.3% of the Company's voting securities at December 31, 1999.

               Effective  December 17,  1998,  100% 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 61.3% 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 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.

                                       24


<PAGE>



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


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

       (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 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   approximates  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.

               Mortgage  loans  on  real  estate  are  reported  at  the  unpaid
               principal  balances,  adjusted  for  amortization  of  premium or
               accretion of discount, less allowance for possible losses.

               Policy  loans  and  student  loans  are  carried  at  the  unpaid
               principal  balance,  less any amounts deemed to be uncollectible.
               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.

                                       25


<PAGE>



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


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

       (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 three months 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,  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)     Investment in affiliate
               -----------------------
               The Company  holds  investments  in its parent  company's  common
               stock. This reciprocal stockholding is accounted for based on the
               treasury stock approach.  The value of the investment is recorded
               at  cost  and  will  be   classified   as  treasury   stock  upon
               consolidation with its parent company.

       (i)     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.

       (j)     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.

                                       26


<PAGE>



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


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

       (k)     Recognition of premium revenue and related costs
               ------------------------------------------------

               Premiums are recognized as revenue as follows:

               Universal  life policies - premiums  received from  policyholders
               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.

       (l)     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.

        (m)    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.

       (n)     Reclassification
               ----------------
               Certain  amounts   presented  in  the  1998  and  1997  financial
               statements  have  been   reclassified  to  conform  to  the  1999
               presentation.

       (o)     Pending accounting change
               -------------------------
               In June  1998,  the  Financial  Accounting  Standards  Board (the
               "FASB")  issued  Statement  No. 133,  Accounting  for  Derivative
               Instruments  and  Hedging  Activities  ("SFAS  133"),  which  the
               Company is  required  to adopt  January  1,  2000.  SFAS 133 will
               require the Company to include all  derivatives  in the statement
               of financial  position at fair value.  Changes in derivative fair
               values  will either be  recognized  in earnings as offsets to the
               changes in fair value of related hedged assets,  liabilities  and
               firm  commitments or, for forecasted  transactions,  deferred and
               recorded as a component of equity  until the hedged  transactions
               occur and are recognized in earnings.  The ineffective portion of
               a hedging  derivative's  change in fair value will be immediately
               recognized  in earnings.  The impact of SFAS 133 on the Company's
               financial  statements  will  depend  on  a  variety  of  factors,
               including future interpretive  guidance from the FASB, the future
               level

                                       27


<PAGE>



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


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

       (o)     Pending accounting change-continued
               -----------------------------------
               of  forecasted  and actual  foreign  currency  transactions,  the
               extent of the Company's hedging activities,  the types of hedging
               instruments  used  and the  effectiveness  of  such  instruments.
               However, the Company does not believe the effect of adopting SFAS
               133 will be material to its financial position.

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.

     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.

                                       28


<PAGE>



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


2.   Basis of financial statements, continued
     ----------------------------------------

     A  reconciliation  of net income  (loss) for the years ended  December  31,
     1999,  1998 and 1997 and  shareholders'  equity as of December 31, 1999 and
     1998  between  the amounts  reported  on a statutory  basis and the related
     amounts presented on the basis of generally accepted accounting  principles
     is as follows:

<TABLE>
<CAPTION>

                                            Net Income (loss)                   Shareholders'
                                               Years ended                        Equity
                                              December 31,                      December 31,
                                              ------------                    --------------
                             1999           1998            1997           1999            1998
                            ----            ----            ----           ----            ----
<S>                   <C>             <C>             <C>             <C>              <C>

As reported
on a statutory
 basis                $    533,233    $   (486,823)   $     45,398    $  8,976,516    $  8,627,254
                      ------------    ------------    ------------    ------------    ------------
Adjustments:
  Deferred policy
  acquisition
  costs, net              (709,737)     (1,867,733)     (1,472,839)     12,874,219      13,583,956
Future policy
  benefits, un-
  earned premiums
  and policy-
  holders' funds         1,097,132       1,719,926       1,644,330      (6,195,591)     (7,600,310)
 Deferred
  income taxes             382,364         153,626        (198,100)       (413,710)       (796,074)
 Asset valuation
  reserve                     --              --              --           542,585         332,448
 Interest main-
  tenance reserve          (35,191)        231,507         129,109         535,161         570,352
 Non-admitted
  assets                      --              --              --         1,078,348       1,077,595
 Unrealized gains
  -SFAS 115                   --              --              --          (899,956)        847,555
Capital and
  surplus note                --              --              --        (1,000,000)     (1,000,000)
 Other adjustments,
  net                     (635,843)       (134,236)         47,312         139,748         269,330
                      ------------    ------------    ------------    ------------    ------------
 Net difference             98,725         103,090         149,812       6,660,804       7,284,852
                      ------------    ------------    ------------    ------------    ------------

As reported on a
 GAAP basis           $    631,958    $   (383,733)   $    195,210    $ 15,637,320    $ 15,912,106
                      ============    ============    ============    ============    ============
</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 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 2000 without prior approval is
approximately $149,000. 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, 1999.

                                       29


<PAGE>



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


3.   Investments

     (a)     Equity securities and fixed maturities

     Equity securities  consist of $378,440 and $250,232 of common stock at fair
     value at December 31, 1999 and 1998 respectively.

     Unrealized (depreciation)  appreciation in investments in equity securities
     for the years ended December 31, 1999, 1998, and 1997 is $112,598,  $(111),
     and $39,973, respectively.

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

<TABLE>
<CAPTION>

                                                      Gross         Gross        Estimated
                                     Amortized     Unrealized    Unrealized        Fair
                                       Cost           Gains        Losses          Value
                                     ---------     ----------    ----------       ------
<S>                                <C>            <C>             <C>          <C>
December 31, 1999:
     Held-to-maturity:
       U.S. Treasury
       securities and obligations
       of U.S. government
       corporations and
       agencies (guaranteed)        $ 1,007,021   $    15,789   $      --     $ 1,022,810

     Corporate securities             1,977,976         2,151         8,952     1,971,175

     Mortgage-backed
       securities                       993,874        11,355        13,878       991,351
                                    -----------   -----------   -----------   -----------

                                      3,978,871        29,295        22,830     3,985,336
                                    -----------   -----------   -----------   -----------

     Available-for-sale:
       U.S. Treasury
       securities and obligations
       of U.S. government
       corporations and
       agencies (guaranteed)          4,596,187         4,599        21,561     4,579,225

     Corporate securities            20,102,739          --         820,966    19,281,773

     Mortgage-backed
       securities                        90,341          --             228        90,113
                                    -----------   -----------   -----------   -----------

                                     24,789,267         4,599       842,755    23,951,111
                                    -----------   -----------   -----------   -----------

                                    $28,768,138   $    33,894   $   865,585   $27,936,447
                                    ===========   ===========   ===========   ===========
</TABLE>

                                                            30


<PAGE>
<TABLE>
<CAPTION>



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


3.    Investments, continued

      (a)   Equity securities and fixed maturities, continued
            -------------------------------------------------

                                                       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
        corporations 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>

     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,  1999,  1998 and 1997 is  $(1,747,058),  $183,142 and $388,647
     respectively.

     The amortized cost and estimated fair value of fixed maturities at December
     31, 1999 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.

      Fixed maturity securities held-to-maturity:


                               Amortized   Estimated
                                 Cost      Fair value
                             ----------   ----------

Due in 2000                  $1,000,563   $1,002,705
Due in 2001 through 2004      1,507,233    1,522,755
Due in 2005 through 2009        477,201      468,525
Due after 2009                     --           --
                             ----------   ----------

                              2,984,997    2,993,985
Mortgage-backed securities      993,874      991,351
                             ----------   ----------

                             $3,978,871   $3,985,336
                             ==========   ==========


      Fixed maturity securities available-for-sale:


Due in 2000                  $ 1,199,855   $ 1,203,062
Due in 2001 through 2004      12,874,501    12,582,877
Due in 2005 through 2009       9,315,012     8,823,546
Due after 2009                 1,309,558     1,251,513
                             -----------   -----------

                              24,698,926    23,860,998
Mortgage-backed securities        90,341        90,113
                             -----------   -----------
                             $24,789,267   $23,951,111
                             ===========   ===========


                                       31


<PAGE>



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


3.    Investments, continued

      (a)   Equity securities and fixed maturities, continued
            -------------------------------------------------

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

                                     1999           1998           1997
                                  ----------     ----------      -------
Proceeds from sale of
    equity securities           $       --     $  1,405,248   $  2,873,980
                                ------------   ------------   ------------

Proceeds from sale of
    fixed maturities
    available-for-sale          $  2,739,662   $  9,569,250   $ 26,175,765
                                ------------   ------------   ------------

Realized gains (losses) Fixed maturities:

Gross realized gains                   --     $    319,934        278,904
Gross realized (losses)                --             --         (150,045)
Equity securities:
Gross realized gains                   --          205,247        357,731
Gross realized (losses)                --             --             --
                                ------------  ------------   ------------
                               $      --      $    525,181   $    486,590
                               ============   ============   ============

     Certain of the fixed maturity securities  classified as  available-for-sale
     and  held-to-maturity  were called during the year ended December 31, 1999,
     1998 and 1997 resulting in the following realized gains and losses:

                               1999      1998     1997
                               ----      ----     ----
Held-to-maturity:
     Gross realized gains   $  --     $  --     $20,205
Available-for-sale:
     Gross realized gains      --       1,740    21,997
                            -------   -------   -------
                            $  --     $ 1,740   $42,202
                            =======   =======   =======

     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, 1999 and 1998, other than investments  issued or guaranteed
     by the United States government are as follows:

    1999                                      Carrying Amount
    ----                                      ---------------
        Federal Express                         $2,100,000
        Dean Witter Discover                    $3,964,767
        Philip Morris, Inc.                     $5,260,000

    1998
   ------
        Dean Witter Discover                    $4,160,217
        Federal Express                         $2,180,000
        Philip Morris Inc.                      $5,815,000

 (b)   Concentrations of credit risk

     At  December  31,  1999 and 1998,  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 $149,198 and
     $207,006 at December 31, 1999 and 1998, respectively,  which are guaranteed
     by the U.S. government. Subsequent to December 31, 1999, all of these loans
     were sold at their unpaid principal balance.

                                       32

<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, 1999,  1998,
            and 1997 consists of the following:

                             1999         1998         1997
                         ----------   ----------   ----------
Interest:
Fixed maturities         $2,123,671   $2,633,888   $2,918,006
Policy and student
     loans                  579,774      489,991      401,621
Short-term
     investments            859,699      474,949      232,342
Mortgage loans               25,759         --           --
Rental income               319,758         --           --

Dividends on equity
     securities common
     stock, including
      mutual fund            15,610          719       16,189
                         ----------   ----------   ----------
                          3,924,271    3,599,547    3,568,158
Less investment

     expenses                14,898       12,400       22,847
                         ----------   ----------   ----------
                         $3,909,373   $3,587,147   $3,545,311
                         ==========   ==========   ==========

 (d) Investments on deposit

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


                    1999          1998         1997
                  ----------   ----------   ----------
Florida          $1,708,530   $1,718,097   $1,727,034
Alabama             100,702      101,170      100,000
South Carolina      302,106      303,511      304,816
Georgia             251,755      252,926      254,013
Indiana             199,855      199,578      199,317
                 ----------   ----------   ----------

                 $2,562,948   $2,575,282   $2,585,180
                 ==========   ==========   ==========

     Certain of these assets,  totaling  approximately  $850,000 for each of the
     years ended  December  31,  1999 and 1998,  are  restricted  for the future
     benefit of policyholders in a particular state.

4.    Deferred policy acquisition costs
      ---------------------------------

     Deferred  policy  acquisition  costs at December  31,  1999,  1998 and 1997
     consist of the following:


                                           1999          1998           1997
                                           ----          ----           ----
Deferred policy acquisition
     costs at beginning
     of year                         $ 13,583,956  $ 15,451,689    $ 16,979,612
Policy acquisition costs deferred:

Commissions                             1,223,187     1,053,953       1,204,604
Underwriting & issue costs                440,200       429,600         450,800
Other                                     421,051       427,729         414,374
Change in unrealized
     appreciation

     (depreciation)                       235,048      (294,326)        (55,084)
                                     ------------  ------------    ------------
                                        2,319,486     1,616,956       2,014,694
Amortization of
     deferred policy

     acquisition costs                 (3,029,223)   (3,484,689)     (3,542,617)
                                     ------------  ------------    ------------
Deferred policy
     acquisition costs
     at end of year                  $ 12,874,219  $ 13,583,956    $ 15,451,689
                                     ============  ============    ============

                                       33


<PAGE>



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


5.    Property and equipment

      Property and equipment consists of the following:

                                 December 31,  December 31,
                                    1999          1998
                               ------------    -----------
Land                            $  982,027   $  982,027
Building and improvements        2,205,795    2,198,468
Furniture and equipment            993,198    1,068,995
                                ----------   ----------
                                 4,181,020    4,249,490
Less accumulated depreciation    1,745,455    1,664,235
                                ----------   ----------
                                $2,435,565   $2,585,255
                                ==========   ==========

     Depreciation  expense for the years ended December 31, 1999,  1998 and 1997
     totaled $135,145, $153,348, and $145,912, respectively.

6.   Future policy benefits
     ----------------------
     At  December  31,  1999 and 1998,  future  policy  benefits,  exclusive  of
     universal life and flexible term annuities consist of the following:


                          December 31,   December 31,
                             1999           1998
                         -----------     -----------
Life insurance            $1,334,887   $1,370,360
Annuities                    304,414      298,456
Accident & health
  insurance                    9,675       58,484
                          ----------   ----------
Total life & health

 future policy benefits   $1,648,976   $1,727,300
                          ==========   ==========

      Life insurance in-force aggregated  approximately $1.2 billion at December
      31, 1999, and 1998.  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 1996-1999,  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%.

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 of the assuming companies.

      As of December 31, 1999,  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

                                       34


<PAGE>



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


7.    Reinsurance, continued
      ----------------------
      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  $424,255,  $415,080,  and  $432,486  included  in
      reinsurance  premiums ceded, and received recoveries of $162,871,  $88,457
      and $131,449  included in annuity,  death and other benefits for the years
      ended December 31, 1999, 1998 and 1997, 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, 1999,  1998 and 1997,  the Company ceded
      premiums  to  MEGA  of  $424,592,   $448,355  and  $481,585,  included  in
      reinsurance  ceded,  and received  recoveries  of  $576,194,  $469,307 and
      $503,159, included in annuity, death and other benefits, respectively. The
      funds held related to  reinsurance  treaties of $1,475,512  and $1,419,357
      represent the 18% share of policy loans ceded to the reinsurer at December
      31, 1999 and 1998, respectively.

8.    Notes payable
      -------------
      As of  December  31,  1999,  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  bears  interest at a variable  rate per
      annum payable monthly and expires on September 18, 2007.

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, 1999,  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 1999, 1998 and 1997 aggregated $90,000,  $90,000, and
      $90,000 respectively.

10.   Income  taxes
      -------------
      The  Company's  income tax  liability at December 31 is summarized as
      follows:

                                  1999              1998
                                  ----              ----
               Current          $139,160          $   --
               Deferred          274,550           796,074
                                --------         ---------
               Total            $413,710          $796,074
                                ========          ========

                                       35


<PAGE>


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


10.    Income taxes, continued
       -----------------------
       Total  income  taxes  including  taxes  on the  change  in the  value  of
       investments for the years ended December 31, 1999, 1998, and 1997 were as
       follows:

                            1999        1998         1997
                            ----        ----         ----

Tax expense (benefit)
  in operations         $ 150,168    $(241,907)   $  54,200
Tax on unrealized
  appreciation
  (depreciation) of

  investments            (532,532)    (174,016)     163,500
                        ---------    ---------    ---------
                        $(382,364)   $(415 923)   $ 217,700
                        =========    =========    =========

     Income tax expense  (benefit) for the years ended  December 31, 1999,  1998
     and 1997 is summarized as follows:


               1999          1998        1997
               ----          ----        ----
Current:
Federal     $ 123,268    $   9,329    $(142,870)
State          15,891        1,207       (1,030)
            ---------    ---------    ---------
              139,159       10,536     (143,900)
            ---------    ---------    ---------
Deferred:
 Federal        9,693     (215,838)     169,100
 State          1,316      (36,605)      29,000
            ---------    ---------    ---------
               11,009     (252,443)     198,100
            ---------    ---------    ---------
            $ 150,168    $(241,907)   $  54,200
            =========    =========    =========

     Income tax expense  (benefit) for the years ended  December 31, 1999,  1998
     and 1997 differs from "expected" tax (computed by applying the U.S. federal
     income tax rate to pretax income as a result of the following:


                                        1999         1998         1997
                                     ---------    ---------    ---------
Computed "expected" tax expense
   (benefit)                         $ 265,923    $(212,718)   $  84,800
Increase (reduction) in income
   taxes resulting from:
     Small life insurance
          company deduction           (139,195)     (12,390)     (76,000)
     Changes in the valuation
          allowance for deferred
          tax assets, allocated to
          income tax expense            17,590      (17,950)      11,100
   (Over) under accrual of
     prior year expense                   --           --          6,100
   State taxes, net of federal
     income tax benefit                  5,850        1,207       18,200
   Other, net                             --            (56)      10,000
                                     ---------    ---------    ---------
                                     $ 150,168    $(241,907)   $  54,200
                                     =========    =========    =========

     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;

                                       36


<PAGE>



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


10.      Income taxes, continued

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

At  December  31,  1999,  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 1999, 1998 and 1997, AMT
exceeded  regular  tax by  $27,338,  $156,820,  and  $11,100,  respectively.  At
December 31, 1999,  the AMT tax credit  available to reduce  future  regular tax
totaled $235,190.

The tax effect of temporary  differences that give rise to significant  portions
of the deferred tax assets and deferred tax liabilities at December 31, 1999 and
1998 are presented below:


                                          1999           1998
                                      -----------    -----------
Deferred tax assets:
Unearned revenue, due to deferral of
  "front-end" fee                      $ 1,950,587    $ 2,266,605
Policy liabilities and accruals,
   principally due to adjustments
   to reserves for tax purposes          1,804,230      2,090,315
Deferred policy acquisition costs
  related to unrealized appreciation
  (depreciation)                          (126,830)        59,420

Alternative minimum tax credit
   carry forwards                          235,190        252,780
                                       -----------    -----------

Total gross deferred tax assets          3,863,177      4,669,120
Less valuation allowance                  (235,190)      (252,780)
                                       -----------    -----------

Net deferred tax assets                  3,627,987      4,416,340
                                       -----------    -----------

Deferred tax liabilities:
Deferred policy acquisition costs       (3,908,348)    (4,263,587)
Other                                     (252,011)      (629,892)
Unrealized (appreciation)
depreciation of securities                 257,822       (318,935)
                                       -----------    -----------

Total gross deferred tax liabilities    (3,902,537)    (5,212,414)
                                       -----------    -----------

Net deferred tax (liability)           $  (274,550)   $  (796,074)
                                       ===========    ===========

The net change in the total valuation allowance for the years ended December 31,
1999 and 1998 was a decrease  of $17,590  and  $156,820,  respectively.  The net
change in the total valuation allowance for the year ended December 31, 1997 was
an increase of $11,100.

                                       37


<PAGE>



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


10.     Income taxes, continued
        -----------------------
        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 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, 1999.

11.     Related party transactions
        --------------------------
        The Company's general agent, Insuradyne  Corporation,  is a wholly-owned
        subsidiary of Security National Financial Corporation.  The balances due
        to an affiliated  insurance agency reflected in the accompanying balance
        sheets  principally  represent earned commission due to Insuradyne.  The
        Company incurred commission expense to Insuradyne  aggregating $175,409,
        $252,955 and $323,303,  in 1999,  1998,  and 1997,  respectively.  These
        amounts are included as components  of  acquisition  costs  deferred and
        related  amortization.  Insuradyne incurred  insurance-related  expenses
        aggregating  $495,  $33,374,   and  $25,604  in  1999,  1998  and  1997,
        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 are now being furnished to the Company under the Agreement.  The
        Company pays to Security  National  $250,000 per month or $3 million per
        year for the administrative services and Agency Agreement.

        On December  28, 1998 the Company  entered  into a Loan  Funding and Fee
        Agreement and Agency Agreement (the  "Agreement") with Security National
        Mortgage Company ("SNMC"), a subsidiary of Security National.  Under the
        terms of the  Agreement,  SNMC  assigns  their  interest in  residential
        mortgage  loans that have been pre-sold to third party  investors to the
        Company.  The Company purchases these loans and holds them as short-term
        investments  until  it  receives  the  proceeds  from  the  third  party
        investors. The Company receives fee income from SNMC based upon how long
        the loans were  outstanding.  At December  31, 1999 and 1998 the Company
        had   outstanding   loan   purchases  of  $8,595,093   and   $3,941,020,
        respectively. Included in investment income is $457,861 and $534 for the
        years ended December 31, 1999 and 1998, respectively.

        The Company  received for the year ended December 31, 1999,  $219,684 as
        rental income from Security  National for a lease of office space in the
        Company's  building  under  the  terms  of the  Administrative  Services
        Agreement.

        The Company  received for the year ended December 31, 1999,  $230,639 in
        interest  income from Security  National for  short-term  loans of which
        none were outstanding as of December 31, 1999.

                                       38


<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:

                                             1999          1998           1997
                                             ----          ----           ----
Numerator for basic and diluted
  earnings per share:
      Net income (loss)                $   631,958   $  (383,733)   $   195,210
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     1,907,989      1,908,203
Basic earnings per share                      $.33        $(0.20)         $0.10
Diluted earnings per share                    $.33        $(0.20)         $0.10


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 1999 under this plan. The Company  incurred  expenses of
        approximately  $5,010  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.

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.

                                       39


<PAGE>



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


14.     Disclosures about fair value of financial instruments, continued
        ----------------------------------------------------------------

        The following  table  presents the carrying  amounts and estimated  fair
        values of financial  instruments held at December 31, 1999 and 1998. The
        fair  value  of a  financial  instrument  is the  amount  at  which  the
        instrument could be exchanged in a current  transaction  between willing
        parties.

                                        1999                      1998
                               ----------------------         --------------
                               Carrying     Estimated      Carrying   Estimated
                                amount     fair value       amount   fair value
                               --------    ----------      --------  ----------
Financial assets:
Fixed maturities
   held-to-maturity
   (see note 3)             $ 3,978,871   $ 3,985,336   $ 4,956,910 $ 5,064,541
Fixed maturities
   available-for-
   sale (see note 3)         23,951,111    23,951,111    28,479,161  28,479,161
Equity securities

   available-for-sale           378,440       378,440       250,232     250,232
Mortgage loans                1,497,688     1,497,688          --          --
Policy and student loans      8,328,847     8,328,847     8,462,438   8,462,438
Short-term investments        8,595,093     8,595,093    11,434,983  11,434,983
Cash and cash equivalents     4,013,401     4,013,401       682,389     682,389

Financial liabilities:
Policy liabilities-
   policyholders'
   account balances         $50,377,101   $46,586,173   $52,520,300 $46,755,788

15.     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.

                                       40


<PAGE>



                                                                 Schedule I

                       SOUTHERN SECURITY LIFE INSURANCE COMPANY
                       Summary of Investments Other Than
                         Investments in Related Parties

                                December 31, 1999
<TABLE>
<CAPTION>

                                                   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   $ 1,007,021   $ 1,022,810   $ 1,007,021
   Public utilities                                 500,000       500,010       500,000       500,010
   Industrial and miscellaneous                   1,500,000     1,477,966     1,471,175     1,477,966
   Special revenue and special assessment
       of agencies and authorities of
       governments and political subdivisions     1,001,852       993,874       991,351       993,874
                                                -----------   -----------   -----------   -----------

   Total fixed maturities held for investment     4,001,852     3,978,871     3,985,336     3,978,871
                                                -----------   -----------   -----------   -----------

Fixed maturities available-for-sale:
   U.S. Government and government
       agencies and authorities                   4,550,000     4,596,188     4,579,225     4,579,225
  Public utilities                                  655,000       687,540       666,528       666,528
   Industrial and miscellaneous                  18,860,000    19,415,199    18,615,245    18,615,245
   Special revenue and special assessment
       of agencies and authorities of
       governments and political subdivisions        90,338        90,341        90,113        90,113
                                                -----------   -----------   -----------   -----------

   Total fixed maturities available for sale     24,155,338    24,789,268    23,951,111    23,951,111
                                                -----------   -----------   -----------   -----------

                                                 28,157,190    28,768,139    27,936,447    27,929,982
                                                                            ===========   ===========
Equity securities:
   Common, including investments
       in mutual fund                                11,524       225,980       378,440       378,440
                                                                            ===========   ===========

Mortgage loans                                    1,497,688     1,497,688

Policy loans                                      8,179,649     8,179,649

Student loans                                       149,198       149,198

Short-term investments                            8,595,093     8,595,093

Other invested assets                                  --            --
                                                                            -----------   -----------
   Total investments                            $47,415,747   $46,730,050
                                                                            ===========   ===========
</TABLE>

See accompanying auditors' report.

                                                            41


<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                             Financial Data Schedule

             For the periods ending December 31, 1999, 1998 and 1997


                                      December 31,  December 31,   December 31,
                                         1999          1998           1997
                                     -----------    -----------     --------
Fixed maturities held for sale      $ 23,951,111   $ 28,479,161    $ 31,843,324
Fixed maturities held to
  maturity (carrying value)            3,978,871      4,956,910      10,501,712
Fixed maturities held to
  maturity (market value)              3,985,336      5,064,541      10,631,003
Investment in equity
  securities                             378,440        250,232         839,973
Mortgage loans on real estate          1,497,688           --              --
Investment in real estate                   --             --              --
Total investments                     46,730,050     53,583,724      50,870,390
Cash and cash equivalents              4,080,484        682,389       2,448,994
Reinsurance recoverable on
  paid losses                            373,459        306,258         359,688
Deferred policy acquisition costs     12,874,219     13,583,956      15,451,689
Total assets                          77,208,941     81,205,193      82,142,465
Policy liabilities-future
  benefits, losses, claims             1,648,976      1,727,300       1,409,031
Policy liabilities-unearned
  premiums                             5,323,954      6,023,399       7,108,662
Policy liabilities-other claims
  and benefits                           540,407        540,789         427,649
Other policyholder funds                  69,789         64,738          59,686
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                 77,208,941     81,205,193      82,142,465
Premiums                               6,901,546      7,228,227       7,643,650
Net investment income                  3,909,373      3,587,147       3,545,311
Realized investment gains
  and losses                                --          525,181         506,795
Other income                             715,128           --              --
Benefits, claims, losses
  and settlement expenses              4,453,564      4,012,491       4,307,013
Underwriting acquisition and
insurance expenses-
  amortization of deferred
  policy acquisition costs             3,029,223      3,484,689       3,542,617

Underwriting acquisitions and

  insurance expense other           $  3,261,134   $  4,134,686    $  3,472,255
Income or (loss) before taxes            782,126       (625,640)        249,410
Income tax expense                       150,168       (241,907)         54,200
Income (Loss) continuing
  operations                             631,958       (383,733)        195,210
Discontinued operations                     --             --              --
Extraordinary items                         --             --              --
Cumulative effect-changes in
  accounting principals                     --             --              --
Net income (loss)                        631,958   $   (383,733)   $    195,210

Earnings per share - basic          $        .33   $       (.20)   $        .10
Earnings per share - diluted        $        .33   $       (.20)   $        .10


                                       42


<PAGE>
<TABLE>
<CAPTION>



                                                               Schedule III

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                       Supplementary Insurance Information

                        December 31, 1999, 1998 and 1997


                              Future policy                              Other
                Deferred       benefits,       Policy-                 policy
                 policy       losses claims   holders'                claims &                        Net
               acquisition     and loss        account    Unearned     benefits       Premium      investment
                   cost        expenses     balances      premiums      payable       revenue        income
               -----------  -------------   --------      --------     --------       -------        ------
<S>           <C>             <C>          <C>           <C>           <C>           <C>           <C>
1999 Life
  and
  annuities   $12,874,219     1,648,976    50,377,101     5,323,954       540,407     6,901,546     3,909,373
              ===========   ===========   ===========   ===========   ===========   ===========   ===========

1998 Life
  and
  annuities   $13,583,956     1,727,300    52,520,300     6,023,399       540,789     7,228,227     3,587,147
              ===========   ===========   ===========   ===========   ===========   ===========   ===========

1997 Life
  and
  annuities   $15,451,689     1,409,031    52,335,511     7,108,662       427,649     7,643,650     3,545,311
              ===========   ===========   ===========   ===========   ===========   ===========   ===========

</TABLE>
See accompanying auditors' report.

                                       43


<PAGE>


                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                       Supplementary Insurance Information

                        December 31, 1999, 1998 and 1997


                    Benefits          Amortization
                    claims            of deferred
                   losses &             policy                   Other
                  settlement          acquisition             operating
                  expenses              costs                  expenses
                 --------             -----------              --------
1999 Life
  and
  annuities     4,453,564                 3,029,223            3,261,134
              ===========               ===========          ===========

1998 Life
  and
  annuities     4,346,820                 3,484,689            4,134,686
              ===========               ===========          ===========

1997 Life
  and
  annuities     4,431,474                 3,542,617            3,472,255
              ===========               ===========          ===========


<TABLE>
<CAPTION>

                                                                Schedule IV

                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                   Reinsurance

                        December 31, 1999, 1998 and 1
                                                                                                         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, 1999:
   Life insurance in force         $  896,846,000      250,691,000      558,571,000    1,204,726,000             46%
                                   ==============   ==============   ==============   ==============   ==============

   Premiums:
     Life insurance                $    7,126,938          984,550          537,797        6,680,185              8%
     Accident & health insurance          236,536           15,175             --            221,361             --
                                   --------------   --------------   --------------   --------------   ==============

   Total Premiums                  $    7,363,474          999,725          537,797        6,901,546              8%
                                   ==============   ==============   ==============   ==============   ==============

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%
                                   ==============   ==============   ==============   ==============   ==============

</TABLE>
                                       44


<PAGE>



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

Southern Security Life, (the "Company") retained Tanner + Co. as its independent
auditors and replaced Ernst & Young LLP effective  December 1, 1999. 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 or
Ernst & Young 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 and Ernst & Young,  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 and
Ernst and  Young,  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 8-K,  which  was filed  with the  Securities  and  Exchange
Commission on December 21, 1999.  Reference is made to current  reports on Forms
8-K dated December 21, 1999.

                                    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 and G. Robert Quist are the sons of
George R. Quist. The following table sets forth certain information with respect
to the directors and executive officers of the Company.

                               Director
Name                    Age      Since         Position(s) with the Company
----                    ---    --------        ----------------------------
George R. Quist          79   December 1998   Chairman of the Board, President
                                              and Chief Executive Officer

William C. Sargent       71   December 1998   Senior Vice President, Secretary
                                              and Director

Scott M. Quist           46   December 1998   First Vice President, General
                                              Counsel, Treasurer and Director

Charles L. Crittenden    80   December 1998   Director

Sherman B. Lowe          85   December 1998   Director

R.A.F. McCormick         86   December 1998   Director

H. Craig Moody           46   December 1998   Director

Norman G. Wilbur         61   December 1998   Director

Robert G. Hunter         40   December 1998   Director

G. Robert Quist          48   April 1999      Director

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.

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

George R. Quist,  age 79, 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.

                                       45


<PAGE>



William C.  Sargent,  age 71, 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 46,  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  treasurer  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 80, 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 85, 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 Ranches, a general partnership.

R.A.F.  McCormick,  age 86, 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 46, 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 61, 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 40,  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.

G. Robert  Quist,  age 48, has served as President  of Big Willow Water  Company
from 1987 to the  present  time.  He has  served on the  Board of  Directors  of
Associated Investors Company of Hawaii, has served on the Board of Directors and
is Secretary/Treasurer of the Utah Cemetery Association.

                                       46


<PAGE>



Executive Officers

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

Name                           Age           Title
-------                      ------         -------
George R. Quist (1)            79     Chairman of the Board, President and
                                      Chief Executive Officer

William C. Sargent             71     Senior Vice President and Secretary

Scott M. Quist (1)             46     First Vice President, General Counsel and
                                      Treasurer

(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 1999 or 1998.

Each  of  the  directors  are  board  members  of  Security  National  Financial
Corporation (the ultimate parent of the Company) with the exception of G. Robert
Quist,  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.

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:
<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE

                                                                                       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(#)       ($)            $
-----------------------------------------------------------------------------------------------------------------------------------
President
and Chief
Executive
Officer
<S>                       <C>    <C>              <C>       <C>               <C>             <C>         <C>            <C>

George R. Quist(5)        1999    $0              $0        $0                $0              N/A         N/A            N/A

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

Executive Vice
President

David C. Thompson(5)      1999    $0              $0        $0                $0              N/A         N/A            N/A

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

     (1)    New officers appointed 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.
</TABLE>

                                       47


<PAGE>







Item 11.  Executive compensation, continued
-------------------------------------------
            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.

     (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.

     (5)  Effective  January 1, 1999, 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 are now being  furnished  to the
          Company under this  Agreement.  The Company pays to Security  National
          $250,000  per  month or $3  million  per  year for the  Administrative
          services.

    (b) Perquisites.  Executive officers of the Company who are employees of the
    Company   are   covered   under  a  group  life,   group   disability,   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 or 1999.

    (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.

Item 12. Security ownership of certain beneficial owners and management.
------------------------------------------------------------------------
The  following  table sets forth,  as of December  31,  1999,  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:

                                                        Number of Shares
          Title                                          and Nature of
           of            Name and Address of             Beneficial     Percent
          Class           Beneficial Owner               Ownership     of Class
         -------   ------------------------------------  -----------   --------
         Common   SSLIC Holding Company Inc., formerly

         Shares   Consolidare Enterprises, Inc.            1,170,195      61.3%
                  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

                                       48


<PAGE>



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 1999, gross  commissions in
the amount of $175,409  were earned by Insuradyne  Corporation.  At December 31,
1999, the Company owes $195,785 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, 1999.

The Company  continues  to be indebted  to its  parent,  SNFC,  in the amount of
$1,000,000,  pursuant to a  promissory  note dated  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  services 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 an additional one-year term 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.  SSLIC
Holding Company,  a wholly owned subsidiary of Security  National Life Insurance
Company,  owns 61.3% 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.

On December 28, 1998 the Company  entered into a Loan Funding and Fee  Agreement
and Agency Agreement (the  "Agreement")  with Security National Mortgage Company
("SNMC"),  a subsidiary of SNFC.  Under the terms of the Agreement  SNMC assigns
their  interest in  residential  mortgage loans that have been pre-sold to third
party investors to the Company. The Company purchases these loans and holds them
as short-term  investments  until it receives the proceeds from the  third-party
investors.  The  Company  receives  fee income from SNMC based upon how long the
loans  were  outstanding.  At  December  31,  1999  and  1998  the  Company  had
outstanding loan purchases of $8,595,093 and $3,941,020  respectively.  Included
in investment  income is $457,861 and $534 for the years ended December 31, 1999
and 1998, respectively.

The Company  received for the year ended  December 31, 1999,  $219,684 as rental
income from SNFC for a lease of office space in the Company's building under the
terms of the Administrative Services Agreement.

The Company received for the year ended December 31, 1999,  $230,639 in interest
income  from SNFC for  short-term  loans of which  none were  outstanding  as of
December 31, 1999.

                                       49


<PAGE>





                                     PART IV

Item 14. Financial statements, exhibits filed and reports on Form 10-K.

                                                                     Page Number
                                                                     -----------
         (a)      1.       See item 8
                           ----------

                  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.........................................41

                           Financial Data Schedule.........................42

                           Schedule III - Supplementary Insurance

                           Information.....................................43

                           Schedule IV - Reinsurance.......................44

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.

                                       50


<PAGE>



3.       Exhibits

      Exhibit     Document

         No.

          3.      Articles of Incorporation, as amended, and Bylaws, as amended,
                  dated  September  1994,  incorporated  by  reference  from the
                  Annual Report on Form 10-K for fiscal year ended  December 31,
                  1994.

          10.A    Revolving  Financing  Agreement  between  the  Company and the
                  Student Loan Marketing Association,  dated September 19, 1996,
                  incorporated  by reference from Annual Report on Form 10-K for
                  fiscal year ended December 31, 1997.

          10.B    Reinsurance  Agreement  between the  Company and United  Group
                  Insurance  Company,  dated December 31, 1992  incorporated  by
                  reference  from  Annual  Report on Form 10-K for  fiscal  year
                  ended December 31, 1992.

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

          10.D    Administrative  Services  Agreement  between  the  Company and
                  Security  National  Financial  Corporation  dated December 17,
                  1998,  incorporated  by reference  from Annual  Report on Form
                  10-K for fiscal year ended December 31, 1998.

          10.E    Agency  Agreement  between the Company and  Security  National
                  Mortgage Company dated December 28, 1998.

          10.F    Loan  Funding  and  Fee  Agreement  between  the  Company  and
                  Security National Mortgage Company dated December 28, 1998.

          11.     Statement Re Computation of Net Income per common share

          27.     Financial Data Schedule

b)        Reports on Form 8-K
          -------------------

          On December 21, 1999, the Company filed a report on Form 8-K regarding
          the engagement of Tanner + Co. as its independent  auditors to replace
          Ernst & Young LLP.

                                       51


<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: March 30, 2000          By: George R. Quist
                                   ---------------
                                   George R. Quist
                                   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:

Signature                        Title                             Date
---------                        -----                             ----
George R. Quist            Chairman of the                    March 30, 2000
                           Board, President and
                           Chief Executive Officer
                           and (Principal Executive
                           Officer)

Scott M. Quist             First Vice President,              March 30, 2000
                           General Counsel, and
                           Treasurer and Director
                           (Principal Financial and
                           Accounting Officer)

William C. Sargent         Senior Vice President,             March 30, 2000
                           Secretary and Director

Charles L. Crittenden      Director                           March 30, 2000

Sherman B. Lowe            Director                           March 30, 2000

R.A.F. McCormick           Director                           March 30, 2000

H. Craig Moody             Director                           March 30, 2000

Norman G. Wilbur           Director                           March 30, 2000

Robert G. Hunter           Director                           March 30, 2000

G. Robert Quist            Director                           March 30, 2000

                                       52


<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                   EXHIBIT 11

                            COMPUTATION OF NET INCOME

                                PER COMMON SHARE



                          1999                   1998                 1997
                       ----------             ---------           --------

Weighted Average

Shares Outstanding     1,907,989           1,907,989            1,907,989
Net Income (Loss)        631,958         $  (383,733)         $   195,210
Per Share Amount             .33         $      (.20)         $       .10


                                       53


<PAGE>



                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                   EXHIBIT 10E

                                AGENCY AGREEMENT

                                       54


<PAGE>



                                AGENCY AGREEMENT

      THIS AGENCY  AGREEMENT  (the  "Agreement")  was made and entered into this
25th day of December  1998,  by and between  Southern  Security  Life  Insurance
Company a Florida  corporation  (the "Company") and Security  National  Mortgage
Company,  a Utah  corporation  (the  "Agent").  The  Company  and Agent are also
referred to herein, individually, as "party" and collectively, as "parties".

                                    RECITALS

      WHEREAS,  the Company  invests  funds in short-term  mortgage  instruments
which meet the  standards  of the Federal  National  Mortgage  Association,  the
Federal  Home  Loan  Mortgage   Corporation  and  Government  National  Mortgage
Association  (hereinafter  referred to individually  as a "Qualifying  Loan" and
collectively as "Qualifying Loans");

      WHEREAS,  Agent underwrites and originates Qualifying Loans which it sells
to third party institutional or private investors;

      WHEREAS,  the  Company  has  agreed,  at  its  sole  discretion,  to  fund
Qualifying Loans pursuant to a Loan Funding and Fee Agreement dated December 28,
1998,  by  and  between  Agent  and  the  Company   (hereinafter   the  "Funding
Agreement");

      WHEREAS,  Agent has acted as the Company's  agent since December 28, 1998,
in connection  with Qualifying Loan  transactions  pursuant to an  understanding
between  the Company and Agent in which  Agent is  authorized  to take  physical
possession of the  Promissory  Notes (the  "Promissory  Notes")  executed by the
borrower  or  borrowers  in  such  transactions  following  the  closing  of the
Qualifying  Loans, and deliver the Promissory Notes from title companies closing
Qualifying  Loan  transactions  to the  Company  and  subsequently  deliver  the
Promissory Notes from the Company to the Agent's  executive offices for purposes
of assembling  and  completing  the  Qualifying  Loan  documents,  including the
Promissory Note, to send to third party institutional or private investors;

      WHEREAS,  the Company and Agent  desire to  memorialize  in writing  their
understanding regarding their agency relationship;

      NOW  THEREFORE,  in  consideration  of the mutual  promises and agreements
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:

      1.  Appointment  of Agent.  The Company  hereby  ratifies and approves the
authorization  of  Agent  to serve as  Agent  for the  Company  effective  as of
December 28, 1998, in accordance with the instructions  hereinafter set forth in
this  Agreement,  and Agent hereby  ratifies and approves its acceptance of such
appointment effective as of December 28, 1998.

      2. Assignment of Qualifying  Loans. For each Qualifying Loan  underwritten
and  originated by Agent which is funded by the Company  pursuant to the Funding
Agreement,  Agent does hereby  ratify and approve its  assignment to the Company
effective as of December 28, 1998,  upon  execution by the borrower or borrowers
in a Qualifying Loan  transaction,  of all its right,  title and interest in the
Promissory  Notes  executed by the borrower or  borrowers  in such  transaction,
which Promissory Notes shall be payable to Agent or its assignees.

      3. Duties of Agent.  Following the closing of each Qualifying  Loan, Agent
hereby  ratifies  and  approves  its  agreement  as of December 28, 1998 to take
physical  possession  of the  Promissory  Notes  on  behalf  of and for the sole
benefit of the Company  and to hold,  transfer or convey such Notes as from time
to time directed by the Company or its successors or assigns,  including but not
limited to, the delivery of the Promissory  Notes from the title company closing
a Qualifying Loan transaction to the Company and the subsequent  delivery of the
Promissory Notes from the Company to the Agent's  executive offices for purposes
of  assembling  and  compiling  the  Qualifying  Loan  documents,  including the
Promissory  Notes, to be sent to third party  institutional or private investors
purchasing the Qualifying Loans.

                                       55


<PAGE>



     4.   Governing  Law.  This  Agreement  shall be governed and  construed and
enforced  in accordance  with the laws of the State of Utah.

      5.  Amendments;  Waiver.  This  Agreement  may not be  amended,  modified,
superseded or cancelled,  nor may any of the terms, covenants,  representations,
warranties,  conditions  or  agreements  herein be  waived,  except by a written
instrument  executed by the party  against  whom such  amendment,  modification,
supersedure,  cancellation  or waiver is  charged.  The failure of either of the
parties  at any time or times to require  performance  of any  provision  hereof
shall in no manner  effect  the right at a later time to  enforce  the same.  No
waiver by either of the parties of any condition,  or of any breach of any term,
covenant,  representation,  warranty,  condition, or agreement contained herein,
shall be deemed to be or shall be construed to be a waiver or continuing  waiver
or any such condition or breach or a waiver of any condition or of the breach of
any other term,  covenant,  representation,  warranty,  condition  or  agreement
hereof.

      6. Headings,  Construction. The captions and headings contained herein are
for  convenience and reference only, and shall not in any way affect the meaning
or  interpretation  of this  Agreement.  Notwithstanding  any  rule or  maxim or
construction  to the contrary,  any ambiguity or  uncertainty  in this Agreement
shall not be construed  against  either of the parties based upon  authorship or
any of the provisions hereof.

      7. Notices. Any notice pursuant to this Agreement to be given or made by a
party to or on the other  party shall be  sufficiently  given or made if sent by
first class mail, postage prepaid,  addressed (until another address is filed in
writing by a party with the other party) as follows:

      The Company:

      Scott M. Quist, Esq., First Vice President
      Southern Security Life Insurance Company
      5300 South 360 West, Suite 250
      Salt Lake City, Utah 84123

      The Agent:

      Mr. J. Lynn Beckstead, Jr., President
      Security National Mortgage Company
      5300 South 360 West, Suite 150
      Salt Lake City, Utah 84123

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8. Counterparts. This Agreement may be executed by facsimile and may be executed
in one or more counterparts,  each of which shall be deemed an original, and all
of which, when take together, shall constitute one and the same instrument.

9. Successors and Assigns. This Agreement shall be binding on all successors and
assigns of the parties.

WITNESS  WHEREOF,  the parties have caused this Agreement to be duly executed as
of the day and year first above written.

                                           SECURITY NATIONAL
                                           MORTGAGE COMPANY




                                           By: J. Lynn Beckstead, Jr.
                                           Its: President




                                           SOUTHERN SECURITY LIFE
                                           INSURANCE COMPANY



                                           By: David M. Thompson
                                           Its:  Vice President

                                       57


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                    SOUTHERN SECURITY LIFE INSURANCE COMPANY

                                   EXHIBIT 10F

                         LOAN FUNDING AND FEE AGREEMENT

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                         LOAN FUNDING AND FEE AGREEMENT

      This Loan Funding and Fee Agreement  (this "Funding and Fee Agreement") is
entered  into as of the  28th  day of  December,  1998 by and  between  Southern
Security Life Insurance  Company ("SSL") and Security  National Mortgage Company
(as "SNM") with reference to the following facts:

          SNM,  in  their  normal  course  of  business,   enters  into  certain
          agreements  ("Forward  Commitments") with third party institutional or
          private  investors  to sell  packages  of loans that are  underwritten
          pursuant to the  guidelines  of certain  agencies,  including  but not
          limited to the Federal National Mortgage Association, the Federal Home
          Loan  Mortgage   Corporation  and  the  Government  National  Mortgage
          Association ("Qualifying Loans").

          SNM then  underwrites  and originates  Qualifying  Loans that meet the
          terms and  conditions  of the Forward  Commitments.  These  individual
          loans  must  be  funded   prior  to   delivery   to  the   third-party
          institutional investors.

          SSL desires to invest its funds in  short-term  instruments  that meet
          the standards of Qualifying Loans.

      NOW  THEREFORE,  in  consideration  of the mutual  promises and agreements
contained  in this  Funding  and Fee  Agreement  and  other  good  and  valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

      1. Loan  Funding.  SSL agrees to fund,  at its sole  discretion,  proposed
individual  loan  transactions  that,  when funded,  would be  Qualifying  Loans
meeting  the terms and  conditions  of a validly  existing  Forward  Commitment,
subject to the terms of this Funding and Fee Agreement.

      2. Required  Documentation.  In order for an individual loan to be
considered by SSL for funding, the following documentation must be submitted:

          (i)  a copy of each HUD Closing  Statement for each Qualifying Loan to
               be funded;

          (ii) a copy of the Purchase Certificate,  or similar document,  from a
               third-party  investor,  evidencing  that  the  proposed  loan  is
               subject to a valid Forward Commitment; and

          (iii) a copy of the Approved Underwriter's Worksheet.

      3.  Assignment  of  Interests.  In the event  that SSL  agrees to fund any
Qualifying  Loan, SNM hereby agrees to assign all of its rights,  privileges and
interest in and to each individual  Qualifying  Loan and its rights,  privileges
and interests in and to the Forward  Commitment the  Qualifying  Loan is subject
to.  SNM agrees to take all steps  reasonably  requested  by SSL to perfect  the
assignments  made under this  paragraph,  including  but not  limited to, at the
discretion of SSL the execution of a Uniform Commercial Code Financing Statement
and written notification to each party of any Forward Commitment.

4. Payments Under Forward  Commitments.  SNM agrees to instruct the  third-party
investor under a Forward  Commitment  fulfilled with Qualifying  Loans funded by
SSL to wire the purchase price directly to SSL.

      5. Fee. A fee,  (the  "Fee"),  in an amount  equal to the Key Bank of Utah
Prime Rate plus one percent (1%) will be charged to SSL on the principal balance
of any  Qualifying  Loan  funded  by SSL.  In the  event  Key Bank of Utah,  for
whatever reason, discontinues to publish or otherwise make known its Prime Rate,
the Fee shall  accrue at a rate equal to the First  Security  Bank of Utah Prime
Rate.  In the event  First  Security  Bank of Utah  discontinues  to purchase or
otherwise  make know its Prime Rate, the Fee shall accrue at a rate equal to the
Zions First National Bank of Utah Prime Rate.

      6. Net Proceeds. SSL will take the amount received from the investor under
an assigned Forward  Commitment and deduct from it the combined total of the Fee
described in paragraph 5 above and the principal  balance of the Qualifying Loan
previously  funded.  The  balance  remaining,  or Net  Proceeds,  will  then  be
forwarded to SNM. In the event that Net  Proceeds  from any  transaction  is not
equal to or greater than the Fee charged for that transaction,  SSL shall deduct
any balance due from any other transaction  subject to the terms of this Fee and
Funding  Agreement.  In the event no other  transactions are available to handle
any such shortfall,  SNM shall pay such shortfall upon receipt of written demand
from SSL.

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7.   Addresses.  Any communications  between the parties or notices provided for
     in this  Funding  and Fee  Agreement  may be given by mailing  them,  first
     class, postage prepaid, as follows:

     Southern Security Life                     Security National
     Insurance Company:                         Mortgage Company:

     Scott M. Quist, Esq., First Vice President Mr. J. Lynn Beckstead, President
     Security National Life Insurance Company   Security National Mortgage Co.
     5300 South 360 West, Suite 250             5300 South 360 West, Suite 150
     Salt Lake City, Utah 84123                 Salt Lake City, Utah 84123

or to such other  address as either  party may  indicate to the other in writing
after the date of this Funding and Fee Agreement.

      8. Assignment.  This Funding and Fee Agreement shall bind and inure to the
benefit of the parties and their  respective  successors and assigns;  provided,
however,  that SNM shall not assign this Funding and Fee Agreement or any of the
rights,  duties,  or  obligations  of SNM under this  Funding and Fee  Agreement
without the prior written consent of SSL.

      9. Delay or Omission.  No delay or omission to exercise any right,  power,
or remedy accruing to SSL on any breach or default of SSL under this Funding and
Fee Agreement shall impair any such right, power, or remedy of SSL, nor shall it
be construed to be a waiver of any such breach or default, or an acquiescence in
such breach or default,  or waiver of or  acquiescence  in any similar breach or
default occurring later; nor shall any waiver of any single breach or default be
considered  a waiver of any other prior or  subsequent  breach or  default.  Any
waiver, permit, consent, or approval of any kind by SSL of any breach or default
under this Funding and Fee  Agreement,  or any waiver by SSL or any provision or
condition  of this  Funding  Fee  Agreement,  must be in  writing  and  shall be
effective  only to the  extent  specifically  set  forth  in that  writing.  All
remedies,  either  under this  Funding and Fee  Agreement or by law or otherwise
afforded to SSL shall be cumulative and not alternative.

      10.  Attorneys  Fees. In the event of any legal action or suit in relation
to this Funding and Fee  Agreement or any note or other  instrument or agreement
required  under this Funding and Fee  Agreement,  or in the event SSL incurs any
legal expense in  protecting  its rights under this Funding and Fee Agreement in
any legal proceeding, SNM, in addition to all other sums which SNM may be called
on to pay,  will pay to SSL the amount of such legal  expense  and will,  if SSL
prevails in such action pay to SSL a reasonable sum for its attorney's  fees and
all other costs and expenses.

      11. Legal Representation.  SNM and SSL both have had the opportunity to be
represented by legal counsel in connection with the  negotiation,  execution and
delivery of this Funding and Fee Agreement,  and such legal counsel have had the
opportunity  to review this Funding and Fee  Agreement  and have it explained to
them.  As a result,  the wording of this  Funding and Fee  Agreement  and of the
instruments  or  documents  relating  thereto  is not to be  strictly  construed
against either party but be fairly interpreted as the agreement of the parties.

      12.  Further   Assurances.   SNM  agrees  to  execute  all  documents  and
instruments  and to take all other actions as may  specifically  be provided for
herein or as may be required in order to consummate the purposes of this Funding
and  Fee  Agreement.   SNM  shall  diligently  and  in  good  faith  pursue  the
satisfaction  of all  conditions  and  contingencies  in  this  Funding  and Fee
Agreement.

      13. Third Parties.  Except as  specifically  set forth herein or in any of
the loan documents,  no third party shall be benefitted by any of the provisions
of this Funding and Fee Agreement, nor shall any such third party have the right
to rely in any manner upon any of the terms hereof,  and none of the  covenants,
representations, warranties or agreements herein contained shall run in favor or
any third party not specifically referenced herein.

      14. Time is of the Essence.  Time is of the essence for the performance of
all obligations  and the  satisfaction of all conditions of this Funding and Fee
Agreement.  The parties  intend that all time periods  specified in this Funding
and Fee Agreement shall be strictly applied,  without any extension  (whether or
not material) unless specifically agreed to in writing by all parties.

      15.  Entire  Agreement.  This  Funding  and Fee  Agreement,  and the other
documents executed in connection herewith,  contain or expressly  incorporate by
reference  the entire  agreement  of the  parties  with  respect to the  matters
contemplated  herein and  supersede all prior  negotiations  with respect to the
subject matter hereof.

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16.   Counterparts.   This  Funding  and  Fee   Agreement  may  be  executed  in
counterparts,  each of  which  shall be  deemed  an  original,  and all of which
together shall constitute one and the same instrument. However, this Funding and
Fee  Agreement  shall not be binding on any party until it has been executed and
delivered by SNM to SSL.

      17. Choice of Law.  This Funding and Fee  Agreement  shall be governed by,
and construed and enforced in accordance with, the laws of the State of Utah. In
any action brought under or arising out of this Funding and Fee  Agreement,  the
parties consent to jurisdiction or any competent Court within the County of Salt
Lake, State of Utah and consent to service of process by any means authorized by
Utah law.

      IN WITNESS  WHEREOF,  the parties to this Funding and Fee  Agreement  have
executed this Funding Agreement by their duly authorized officers as of December
28, 1998.

                                     Security National Mortgage Company

                                     By:  J. Lynn Beckstead, Jr.
                                     Its:    President





                                     Southern Security Life Insurance Company

                                     By:     David M. Thompson
                                     Its:    Vice President

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