SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                              FORM 10-K

            ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
             OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 1997      Commission File Number 0-5392

                    FIRST COMMONWEALTH CORPORATION
        (Exact Name of Registrant as specified in its charter)

                       5250 South Sixth Street
                 P.O. Box 5147 Springfield, IL 62705
    (Address of principal executive offices, including zip code)

           VIRGINIA                                     54-0832816
(State or other jurisdiction                        (I.R.S. Employer
incorporation or organization)                     Identification No.)

Registrant's telephone number, including area code:  (217) 241-6300

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:

                         Title of each class

                   Common Stock, par value $1 per share

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

Indicate by check mark if disclosure of delinquent filers pursuant to  Item
405  of  Regulation S-K (229.405 of this chapter) is not contained  herein,
and  will  not  be  contained,  to the best of registrant'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. [ ].

At  March 13, 1998, the Registrant had outstanding 54,560 shares of  Common

Stock, par value $1 per share.

DOCUMENTS INCORPORATED BY REFERENCE:  None

Page 1 of 85

<PAGE>

PART I

ITEM 1.  BUSINESS

First Commonwealth Corporation (the "Registrant") was incorporated in 1967,
under  the  laws of the State of Virginia to serve as an insurance  holding
company.   At  December  31,  1997, the parent, significant  majority-owned
subsidiaries  and  affiliates of the Registrant were  as  depicted  on  the
following organizational chart:



United  Trust, Inc. ("UTI") is the ultimate controlling company.  UTI  owns
53%  of  United Trust Group ("UTG") and 41% of United Income, Inc. ("UII").
UII  owns  47%  of  UTG.   UTG  owns 79% of First Commonwealth  Corporation
("FCC") and 100% of Roosevelt Equity Corporation ("REC").  FCC owns 100% of
Universal  Guaranty Life Insurance Company ("UG").  UG owns 100% of  United
Security  Assurance  Company ("USA").  USA owns  84%  of  Appalachian  Life
Insurance  Company ("APPL") and APPL owns 100% of Abraham Lincoln Insurance
Company ("ABE").


                                 2
<PAGE>

The Registrant and its subsidiaries (the "Company") operate principally  in
the  individual  life  insurance business.  The  primary  business  of  the
Company has been the servicing of existing insurance business in force, the
solicitation  of  new  insurance business, and  the  acquisition  of  other
companies in similar lines of business.

First Commonwealth Corporation, ("FCC") was incorporated in August 1967, as
a  Virginia  corporation.   FCC is an intermediate  holding  company,  (See
organizational chart) ultimately controlled by United Trust, Inc., ("UTI").

UTI was incorporated December 14, 1984, as an Illinois corporation.  During
the  next  two  and  a half years, UTI was engaged in an intrastate  public
offering of its securities, raising over $12,000,000 net of offering costs.
In  1986, UTI formed a life insurance subsidiary and by 1987 began  selling
life insurance products.

United  Income,  Inc. ("UII"), an affiliated company, was  incorporated  on
November  2, 1987, as an Ohio corporation.  Between March 1988  and  August
1990,  UII  raised  a total of approximately $15,000,000 in  an  intrastate
public  offering  in  Ohio.   During 1990,  UII  formed  a  life  insurance
subsidiary and began selling life insurance products.

In  December  1989, FCC acquired Universal Guaranty Life Insurance  Company
("UG")  and Alliance Life Insurance Company ("ALLI").  At the time of  this
acquisition  the  Company effectively doubled in size to  $230  million  in
assets.   These  companies also had marketing forces that had  successfully
written new business for the last few years prior to the acquisition.

On  February  20, 1992, UTI and UII, formed a joint venture,  United  Trust
Group,  Inc., ("UTG").  On June 16, 1992, UTI contributed $2.7  million  in
cash,  an  $840,000  promissory note and 100% of the common  stock  of  its
wholly  owned life insurance subsidiary.  UII contributed $7.6  million  in
cash  and  100%  of  its  life  insurance subsidiary  to  UTG.   After  the
contributions  of cash, subsidiaries, and the note, UII owns  47%  and  UTI
owns 53% of UTG.

On  June 16, 1992, UTG acquired 67% of the outstanding common stock of  the
now  dissolved Commonwealth Industries Corporation, ("CIC") for a  purchase
price of $15,567,000.  Following the acquisition UTI controlled eleven life
insurance  subsidiaries.  The Company has taken several steps to streamline
and simplify the corporate structure following the acquisitions.

On  December 28, 1992, Universal Guaranty Life Insurance Company ("UG") was
the  surviving  company of a merger with Roosevelt National Life  Insurance
Company  ("RNLIC"), United Trust Assurance Company ("UTAC"), Cimarron  Life
Insurance   Company  ("CIM")  and  Home  Security  Life  Insurance  Company
("HSLIC").   On June 30, 1993, Alliance Life Insurance Company ("ALLI"),  a
subsidiary of UG, was merged into UG.

On  July  31, 1994, Investors Trust Assurance Company ("ITAC")  was  merged
into Abraham Lincoln Insurance Company ("ABE").

On  August  15,  1995,  the  shareholders of CIC,  Investors  Trust,  Inc.,
("ITI"),  and  Universal   Guaranty  Investment   Company,   ("UGIC"),  all
intermediate  holding companies within the UTI group, voted to  voluntarily
liquidate  each  of  the  companies  and  distribute  the  assets   to  the
shareholders  (consisting  solely  of  common  stock  of  their  respective
subsidiary).   As  a  result the shareholders of the  liquidated  companies
became shareholders of FCC.

                                   3
<PAGE>

The holding companies within the group, UTI, UII, UTG and FCC, are all life
insurance  holding companies.  These companies became members of  the  same
affiliated group through a history of acquisitions in which life  insurance
companies  were  involved.   The  focus of the  holding  companies  is  the
acquisition of other companies in similar lines of business and  management
of  the  insurance subsidiaries.  The companies have no activities  outside
the life insurance focus.

The insurance companies of the group, UG, USA, APPL and ABE, all operate in
the  individual  life  insurance business.   The  primary  focus  of  these
companies  has been the servicing of existing insurance business  in  force
and the solicitation of new insurance business.

On  February 19, 1998, UTI signed a letter of intent with Jesse T. Correll,
whereby   Mr.  Correll  will  personally  or  in  combination  with   other
individuals make an equity investment in UTI over a period of three  years.
Under  the  terms  of the letter of intent Mr. Correll will  buy  2,000,000
authorized but unissued shares of UTI common stock for $15.00 per share and
will also buy 389,715 shares of UTI common stock, representing stock of UTI
and  UII,  that  UTI  purchased during the last  eight  months  in  private
transactions  at the average price UTI paid for such stock, plus  interest,
or  approximately $10.00 per share.  Mr. Correll also will purchase  66,667
shares  of  UTI  common stock and $2,560,000 of face amount of  convertible
bonds  (which  are  due and payable on any change in  control  of  UTI)  in
private transactions, primarily from officers of UTI.

UTI  intends  to use the equity that is being contributed to  expand  their
operations through the acquisition of other life insurance companies.   The
transaction  is subject to negotiation of a definitive purchase  agreement;
completion  of due diligence by Mr. Correll; the receipt of regulatory  and
other   approvals;  and  the  satisfaction  of  certain  conditions.    The
transaction is not expected to be completed before June 30, 1998, and there
can be no assurance that the transaction will be completed.


PRODUCTS

The  Company's portfolio consists of two universal life insurance products.
The primary universal life insurance product is referred to as the "Century
2000".  This product was introduced to the marketing force in 1993 and  has
become  the cornerstone of current marketing.  This product has  a  minimum
face  amount of $25,000 and currently credits 6% interest with a guaranteed
rate  of 4.5%  in the first 20 years and 3% in years 21 and greater.    The
policy  values are subject to a $4.50 monthly policy fee, an administrative
load  and  a  premium load of 6.5% in all years.  The premium  load  is  an
expense  charge  which  is collected through a percentage  charge  to  each
premium  dollar  paid  by  the policyholder.  The administrative  load  and
surrender  charge are based on the issue age, sex and rating class  of  the
policy.  A surrender charge is effective for the first 14 policy years.  In
general, the surrender charge is very high in the first couple of years and
then  declines to zero at the end of 14 years.  Policy loans are  available
at  7% interest in advance.  The policy's accumulated fund will be credited
the guaranteed interest rate in relation to the amount of the policy loan.

The second universal life product referred to as the "UL90A", has a minimum
face amount of $25,000.  The administrative load is based on the issue age,
sex and rating class of the policy.  Policy fees vary from $1 per month  in
the  first  year to $4 per month in the second and third years and  $3  per
month each year thereafter.  The UL90A currently credits 5.5% interest with
a  4.5%  guaranteed  interest  rate.  Partial  withdrawals,  subject  to  a
remaining minimum $500 cash surrender value and a $25 fee, are allowed once
a year after the first duration.  Policy loans are available at 7% interest
in  advance.  The policy's accumulated fund will be credited the guaranteed
interest   rate  in  relation to the amount of the policy  loan.  Surrender
charges  are based on a percentage of target premium starting at  120%  for
years 1-5 then grading downward to zero in year 15.  This policy contains a
guaranteed  interest  credit  bonus for the long-term  policyholder.   From
years 10 through 20, additional interest bonuses are earned with a total in
the  twentieth  year of 1.375%.  The bonus is calculated  from  the  policy
issue date and is contractually guaranteed.

                                 4
<PAGE>

The  Company's  actual  experience  for earned  interest,  persistency  and
mortality  vary from the assumptions applied to pricing and for determining
premiums.  Accordingly, differences between the Company's actual experience
and  those assumptions applied may impact the profitability of the Company.
The  minimum interest spread between earned and credited rates is 1% on the
"Century  2000"  universal life insurance product.   The  Company  monitors
investment  yields, and when necessary adjusts credited interest  rates  on
its  insurance  products to preserve targeted interest  spreads.   Credited
rates  are  reviewed  and  established by the Board  of  Directors  of  the
respective life insurance subsidiaries.

The premium rates are competitive with other insurers doing business in the
states in which the Company is marketing its products.

The  Company  markets  other  products, none of  which  is  significant  to
operations.  The Company has a variety of policies in force different  from
those  which  are  currently being marketed.  Universal life  and  interest
sensitive  whole  life  business  account  for  approximately  46%  of  the
insurance  in  force.   Approximately 29% of  the  insurance  in  force  is
participating  business.  The Company's average persistency  rate  for  its
policies in force for 1997 and 1996 has been 89.4% and 87.9%, respectively.
The Company does not anticipate any material fluctuations in these rates in
the future that may result from competition.

Interest-sensitive life insurance products have characteristics similar  to
annuities with respect to the crediting of a current rate of interest at or
above  a  guaranteed  minimum  rate and the use  of  surrender  charges  to
discourage  premature withdrawal of cash values. Universal  life  insurance
policies  also  involve variable premium charges against the policyholder's
account  balance  for  the  cost of insurance and administrative  expenses.
Interest-sensitive  whole  life  products generally  have  fixed  premiums.
Interest-sensitive life insurance products are designed with a  combination
of  front-end  loads,  periodic variable charges,  and  back-end  loads  or
surrender  charges. Traditional life insurance products have  premiums  and
benefits  predetermined at issue; the premiums are set at levels  that  are
designed  to  exceed expected policyholder benefits and  Company  expenses.
Participating business is traditional life insurance with the added feature
of  an  annual  return of a portion of the premium paid by the policyholder
through  a  policyholder dividend.  This dividend is set  annually  by  the
Board   of   Directors  of  each  insurance  company  and   is   completely
discretionary.


MARKETING

The  Company  markets  its products through separate  and  distinct  agency
forces.  The Company has approximately 45 captive agents who actively write
new  business,  and  15  independent agents  who  primarily  service  their
existing  customers.  No individual sales agent accounted for over  10%  of
the  Company's premium volume in 1997.  The Company's sales agents  do  not
have the power to bind the Company.

Marketing    is  based  on  referral  network  of  community   leaders  and
shareholders of UII and UTI.  Recruiting of sales agents is also  based  on
the  same referral network.  The industry has experienced a downward  trend
in the total number of  agents who sell insurance products, and competition
for  the  top  sales producers has intensified.  As this trend  appears  to
continue,  the  recruiting focus of the Company  has  been  on  introducing
quality individuals to the insurance industry through an extensive internal
training  program.   The Company feels this approach is  conducive  to  the
mutual success of our new recruits and the Company as these recruits market
our products in a professional, company structured manner.

New  sales  are  marketed by UG and USA through their agency  forces  using
contemporary   sales  approaches  with  personal  computer   illustrations.
Current marketing efforts are primarily focused on the Midwest region.

USA is licensed in Illinois, Indiana and Ohio.  During 1997, Ohio accounted
for 99% of USA's direct premiums collected.

                                5
<PAGE>

ABE  is  licensed  in  Alabama, Arizona, Illinois, Indiana,  Louisiana  and
Missouri.   During 1997, Illinois and Indiana accounted for  46%  and  32%,
respectively of ABE's direct premiums collected.

APPL   is  licensed  in  Alabama,  Arizona,  Arkansas,  Colorado,  Georgia,
Illinois,   Indiana,   Kansas,  Kentucky,  Louisiana,  Missouri,   Montana,
Nebraska,  Ohio,  Oklahoma, Pennsylvania, Tennessee, Utah,  Virginia,  West
Virginia  and  Wyoming.  During 1997, West Virginia accounted  for  95%  of
APPL's direct premiums collected.

UG  is licensed in Alabama, Arizona, Arkansas, Colorado, Delaware, Florida,
Georgia,  Idaho,  Illinois,  Indiana, Iowa,  Kansas,  Kentucky,  Louisiana,
Massachusetts,   Michigan,  Minnesota,  Mississippi,   Missouri,   Montana,
Nebraska, Nevada, New Mexico, North Carolina, North Dakota, Ohio, Oklahoma,
Oregon,  Pennsylvania,  Rhode  Island,  South  Carolina,   South    Dakota,
Tennessee,  Texas, Utah, Virginia, Washington, West Virginia and Wisconsin.
During  1997,  Illinois accounted for 33%, and Ohio accounted  for  14%  of
direct  premiums collected.  No other state accounted for more than  7%  of
direct premiums collected in 1997.

In  1997 $38,471,452 of total direct premium was written by USA, ABE,  APPL
and  UG.   Ohio  accounted for 35% , Illinois accounted for 21%,  and  West
Virginia accounted for 10% of total direct premiums collected.

New  business production has decreased 15% from 1995 to 1996 and  43%  from
1996  to  1997.   Several  factors have had a  significant  impact  on  new
business   production.   Over  the  last  two  years  there  has  been  the
possibility  of  a  change in control of UTI.  In  September  of  1996,  an
agreement  was reached effecting a change in control of UTI to an unrelated
party.   The transaction did not materialize.  At this writing negotiations
are  progressing with a different unrelated party for change in control  of
UTI.   Please  refer to the Notes to the Consolidated Financial  Statements
for  additional  information.  The possible changes  in  control,  and  the
uncertainty  surrounding  each potential event,  have  hurt  the  insurance
Companies'  ability  to attract and maintain sales  agents.   In  addition,
increased    competition   for  consumer  dollars   from   other  financial
institutions,  product Illustration guideline changes  by  State  Insurance
Departments,  and a decrease in the total number of insurance sales  agents
in the industry, have all had an impact, given the relatively small size of
the Company.

Management recognizes the aforementioned challenges and is responding.  The
potential  change  in control of the Company is progressing,  bringing  the
possibility  for  future  growth,  efforts  are  being  made  to  introduce
additional  products,  and  the  recruitment  of  quality  individuals  for
intensive  sales  training,  are directed at  reversing  current  marketing
trends.


UNDERWRITING

The  underwriting procedures of the insurance subsidiaries are  established
by   management.  Insurance policies are issued by the Company  based  upon
underwriting  practices established for each market in  which  the  Company
operates.   Most policies are individually underwritten.  Applications  for
insurance are reviewed to determine additional information required to make
an  underwriting decision, which depends on the amount of insurance applied
for  and  the  applicant's age and medical history.  Additional information
may  include  inspection  reports, medical  examinations,  statements  from
doctors  who  have treated the applicant in the past and, where  indicated,
special  medical  tests.   After reviewing the information  collected,  the
Company  either issues the policy as applied for or with an  extra  premium
charge   because  of  unfavorable  factors  or  rejects  the   application.
Substandard  risks  may  be  referred to reinsurers  for  full  or  partial
reinsurance of the substandard risk.


The Company's insurance subsidiaries require blood samples to be drawn with
individual  insurance applications for coverage over $45,000  (age  46  and
above) or $95,000 (ages 16-45).  Blood samples are tested for a wide  range
of  chemical  values  and are screened for antibodies  to  the  HIV  virus.
Applications  also  contain questions permitted by law  regarding  the  HIV
virus which must be answered by the proposed insureds.

                                  6
<PAGE>

RESERVES

The  applicable  insurance  laws  under which  the  insurance  subsidiaries
operate  require  that  each insurance company report  policy  reserves  as
liabilities  to  meet future obligations on the policies in  force.   These
reserves are the amounts which, with the additional premiums to be received
and  interest  thereon compounded annually at certain  assumed  rates,  are
calculated in accordance with applicable law to be sufficient to  meet  the
various policy and contract obligations as they mature.  These laws specify
that  the reserves shall not be less than reserves calculated using certain
mortality tables and interest rates.

The  liabilities  for  traditional life insurance and accident  and  health
insurance  policy  benefits are computed using a net level  method.   These
liabilities  include  assumptions  as  to  investment  yields,   mortality,
withdrawals,   and   other  assumptions  based  on   the   life   insurance
subsidiaries'  experience  adjusted to reflect anticipated  trends  and  to
include provisions for possible unfavorable deviations.  The Company  makes
these  assumptions at the time the contract is issued or, in  the  case  of
contracts acquired by purchase, at the purchase date.  Benefit reserves for
traditional  life  insurance policies include certain deferred  profits  on
limited-payment  policies  that are being recognized  in  income  over  the
policy  term.   Policy benefit claims are charged to expense in the  period
that the claims are incurred.  Current mortality rate assumptions are based
on  1975-80  select and ultimate tables.  Withdrawal rate  assumptions  are
based  upon  Linton  B or Linton C, which are industry  standard  actuarial
tables for forecasting assumed policy lapse rates.

Benefit  reserves for universal life insurance and interest sensitive  life
insurance  products are computed under a retrospective deposit  method  and
represent  policy  account  balances before applicable  surrender  charges.
Policy  benefits  and  claims that are charged to expense  include  benefit
claims  in  excess of related policy account balances.  Interest  crediting
rates for universal life and interest sensitive products range from 5.0% to
6.0% in each of the years 1997, 1996 and 1995.
Reinsurance

As  is  customary  in  the  insurance  industry,  the  Company's  insurance
subsidiaries cede insurance to other insurance companies under  reinsurance
agreements.  Reinsurance agreements are intended to limit a life  insurer's
maximum  loss on a large or unusually hazardous risk or to obtain a greater
diversification of risk.  The ceding insurance company remains contingently
liable  with respect to ceded insurance should any reinsurer be  unable  to
meet  the obligations assumed by it, however it is the practice of insurers
to  reduce  their financial statement liabilities to the extent  that  they
have  been  reinsured with other insurance companies.  The Company  sets  a
limit  on  the amount of insurance retained on the life of any one  person.
The  Company will not retain more than $125,000, including accidental death
benefits, on any one life.  At December 31, 1997, the Company had insurance
in  force of $3.692 billion of which approximately $1.022 billion was ceded
to reinsurers.

The  Company's  reinsured  business is ceded to numerous  reinsurers.   The
Company  believes the assuming companies are able to honor all  contractual
commitments,  based  on the Company's periodic reviews of  their  financial
statements,  insurance  industry  reports  and  reports  filed  with  state
insurance departments.

Currently,  the Company is utilizing reinsurance agreements  with  Business
Men's  Assurance Company, ("BMA") and Life Reassurance Corporation,  ("LIFE
RE") for new business.  BMA and LIFE RE each hold an "A+" (Superior) rating
from  A.M.  Best,  an industry rating company.  The reinsurance  agreements
were effective December 1, 1993, and cover all new business of the Company.
The agreements are a yearly renewable term ("YRT") treaty where the Company
cedes  amounts above its retention limit of $100,000 with a minimum cession
of $25,000.

One of the Company's insurance subsidiaries (UG) entered into a coinsurance
agreement with First International Life Insurance Company ("FILIC")  as  of
September  30, 1996.  Under the terms of the agreement, UG ceded  to  FILIC
substantially  all  of its paid-up life insurance policies.   Paid-up  life
insurance  generally refers to non-premium paying life insurance  policies.
A.M. Best assigned FILIC a Financial Performance Rating (FPR) of 7 (Strong)
on a scale of 1 to 9.  A.M. Best assigned a Best's Rating of A++ (Superior)
to  The Guardian Life Insurance Company of America ("Guardian"), parent  of

                                 7
<PAGE>

FILIC,   based  on  the  consolidated  financial  condition  and  operating
performance of the company and its life/health subsidiaries.  During  1997,
FILIC  changed  its  name to Park Avenue Life Insurance Company  ("PALIC").
The  agreement with PALIC accounts for approximately 65% of the reinsurance
receivables as of December 31, 1997.

The  Company  does not have any short-duration reinsurance contracts.   The
effect  of  the Company's long-duration reinsurance contracts  on  premiums
earned in 1997, 1996 and 1995 was as follows:

                                    Shown in thousands
                              1997         1996           1995
                            Premiums      Premiums       Premiums
                             Earned        Earned         Earned

            Direct           $33,374       $35,891       $38,482
            Assumed                0             0             0
            Ceded             (4,735)       (4,947)       (5,383)
            Net premiums     $28,639       $30,944       $33,099


INVESTMENTS

The  Company  retains  the services of a registered investment  advisor  to
assist  the Company in managing its investment portfolio.  The Company  may
modify  its present investment strategy at any time, provided its  strategy
continues  to  be  in  compliance with the limitations of  state  insurance
department regulations.

Investment  income represents a significant portion of the Company's  total
income.   Investments are subject to applicable state  insurance  laws  and
regulations  which  limit  the concentration  of  investments  in  any  one
category  or  class  and further limit the investment in  any  one  issuer.
Generally,  these  limitations are imposed as  a  percentage  of  statutory
assets or percentage of statutory capital and surplus of each company.

The following table reflects net investment income by type of investment.

                                                 December 31,
                                1997       1996     1995
Fixed maturities and fixed
  maturities held for sale        $12,736,865 $13,396,431 $13,292,552
Equity securities                      87,211      88,661      52,445
Mortgage loans                        802,123   1,047,461   1,257,189
Real estate                           745,502     794,844     975,080
Policy loans                          976,064   1,121,538   1,041,900
Short-term investments                 70,624      18,399      21,295
Other                                 658,008     664,795     620,728
Total consolidated
 investment income                 16,076,397  17,132,129  17,261,189
Investment expenses                (1,198,061) (1,222,903) (1,761,438)
Consolidated net
 investment income                $14,878,336 $15,909,226 $15,499,751

At December 31, 1997, the Company had a total of $5,797,000 of investments,
comprised of $3,848,000 in real estate and $1,949,000 in equity securities,
which did not produce income during 1997.

                                     8
<PAGE>

The  following table summarizes the Company's fixed maturities distribution
at December 31, 1997 and 1996 by ratings category as issued by Standard and
Poor's, a leading ratings analyst.


                            Fixed Maturities
                    Rating                % of Portfolio
                                          1997       1996

              Investment Grade
              AAA                          31%         30%
              AA                           14%         13%
              A                            46%         46%
              BBB                           9%         10%
              Below investment grade        0%          1%
                                          100%        100%


The  following  table summarizes the Company's fixed maturities  and  fixed
maturities held for sale by major classification.


                                                   Carrying Value
                          19971996
     U.S. government and
       government agencies               $ 29,475,484    $ 29,744,995
     States, municipalities and
        political subdivisions             22,775,429      14,527,351
     Collateralized mortgage
      obligations                          11,093,926      13,246,780
     Public utilities                      48,051,649      51,913,970
     Corporate                             70,921,182      72,063,931
                                         $182,317,670    $181,497,027


The  following  table  shows the composition and average  maturity  of  the
Company's investment portfolio at December 31, 1997.

                                   Carrying      Average       Average
Investments                         Value        Maturity       Yield

Fixed maturities and fixed
  maturities held for sale      $182,317,670     4 years          7.00%
Equity securities                  3,001,744     not applicable   3.64%
Mortgage loans                     9,469,444     10 years         7.83%
Investment real estate            11,485,276     not applicable   6.49%
Policy loans                      14,207,189     not applicable   6.81%
Short-term investments             1,773,531     330 days         6.50%
Total Investments               $222,254,854                      7.26%


At  December 31, 1997, fixed maturities and fixed maturities held for  sale
have  a  market  value of $186,451,000.  Fixed maturities  are  carried  at
amortized  cost.   Management has the ability  and  intent  to  hold  these
securities  until maturity. Fixed maturities held for sale are  carried  at
market.

                                    9
<PAGE>

The  Company  holds  approximately $1,774,000  in  short-term  investments.
Management  monitors  its investment maturities and  in  their  opinion  is
sufficient  to  meet the Company's cash requirements.  Fixed maturities  of
$15,023,000  mature  in one year and $118,850,000 mature  in  two  to  five
years.

The  Company  holds  approximately  $9,469,000  in  mortgage  loans,  which
represents  3% of the total assets.  All mortgage loans are first  position
loans.   Before a new loan is issued, the applicant is subject  to  certain
criteria set forth by Company management to ensure quality control.   These
criteria  include,  but  are  not limited to,  a  credit  report,  personal
financial  information  such as outstanding debt, sources  of  income,  and
personal  equity.   Loans issued are limited to no more  than  80%  of  the
appraised  value  of  the property and must be first position  against  the
collateral.

The  Company  has  $298,000 of mortgage loans, net  of  a  $10,000  reserve
allowance,  which are in default and in the process of foreclosure.   These
loans  represent approximately 3% of the total portfolio.  The Company  has
one  loan that totals approximately $3,404 which is under a repayment plan.
Letters  are sent to each mortgagee when the loan becomes 30 days  or  more
delinquent.  Loans  90  days  or more delinquent  are  placed  on  a   non-
performing  status and classified as delinquent loans.  Reserves  for  loan
losses  are established based on management's analysis of the loan balances
compared  to  the expected realizable value should foreclosure take  place.
Loans  are placed on a non-accrual status based on a quarterly analysis  of
the likelihood of repayment.  All delinquent and troubled loans held by the
Company  are  loans which were held in portfolios by acquired companies  at
the time of acquisition.  Management believes the current internal controls
surrounding,  the  mortgage  loan  selection  process  provide  a   quality
portfolio  with  minimal  risk  of foreclosure  and/or  negative  financial
impact.

The  Company  has  in place a monitoring system to provide management  with
information  regarding  potential troubled loans.  Management  is  provided
with  a  monthly listing of loans that are 30 days or more past  due  along
with  a  brief  description of what steps are being taken  to  resolve  the
delinquency.  Quarterly, coinciding with external financial reporting,  the
Company  determines  how each delinquent loan should  be  classified.   All
loans  90  days  or  more  past  due are classified  as  delinquent.   Each
delinquent loan is reviewed to determine the classification and status  the
loan  should  be  given.   Interest accruals  are  analyzed  based  on  the
likelihood of repayment.  In no event will interest continue to accrue when
accrued  interest  along  with the outstanding principal  exceeds  the  net
realizable value of the property.  The Company does not utilize a specified
number of days delinquent to cause an automatic non-accrual status.

The mortgage loan reserve is established and adjusted based on management's
quarterly analysis of the portfolio and any deterioration in value  of  the
underlying  property  which would reduce the net realizable  value  of  the
property below its current carrying value.

In  addition, the Company also monitors that current and adequate insurance
on  the  properties  is being maintained.  The Company  requires  proof  of
insurance on each loan and further requires to be shown as a lienholder  on
the  policy  so  that  any change in coverage status  is  reported  to  the
Company.   Proof  of  payment of real estate taxes  is  another  monitoring
technique  utilized  by  the  Company.  Management  believes  a  change  in
insurance status or non-payment of real estate taxes is an indicator that a
loan  is  potentially  troubled.   Correspondence  with  the  mortgagee  is
performed to determine the reasons for either of these events occurring.

The following table shows a distribution of mortgage loans by type.

                Mortgage Loans         Amount           % of Total
                FHA/VA              $   536,443              5%
                Commercial            1,565,643             17%
                Residential           7,367,358             78%


                                     10
<PAGE>

The  following  table shows a geographic distribution of the mortgage  loan
portfolio and real estate held.

                                      Mortgage      Real
                                       Loans       Estate

                      New Mexico           3%         0%
                      Illinois            10%        55%
                      Kansas              13%         0%
                      Louisiana           15%        14%
                      Mississippi          0%        20%
                      Missouri             2%         1%
                      North Carolina       7%         6%
                      Oklahoma             5%         1%
                      Virginia             4%         0%
                      West Virginia       38%         2%
                      Other                3%         1%
                      Total              100%       100%


The following table summarizes delinquent mortgage loan holdings.

      Delinquent
      31 Days or More                  1997          1996           1995
     Non-accrual status             $        0    $        0     $       0
     Other                             308,000       613,000       628,000
     Reserve on delinquent loans       (10,000)      (10,000)      (10,000)
     Total Delinquent               $  298,000    $  603,000     $ 618,000
     Interest income foregone
      (Delinquent loans)            $   29,000    $   29,000     $  16,000

     In Process of Restructuring    $        0    $        0     $       0
     Restructuring on other
       than market terms                     0             0             0
     Other potential problem
       loans                                 0             0             0
     Total Problem Loans            $        0    $        0     $       0
     Interest income foregone
       (Restructured loans)         $        0    $        0     $       0

See Item 2, Properties, for description of real estate holdings.

                                   11
<PAGE>

COMPETITION

The  insurance business is a highly competitive industry and  there  are  a
number  of other companies, both stock and mutual, doing business in  areas
where  the Company operates.  Many of these competing insurers are  larger,
have  more  diversified  lines  of insurance coverage,  have  substantially
greater  financial resources and have a greater number  of  agents.   Other
significant competitive factors include policyholder benefits,  service  to
policyholders, and premium rates.

The insurance industry is a mature industry.  In recent years, the industry
has  experienced  virtually no growth in life insurance sales,  though  the
aging  population has increased the demand for retirement savings products.
The  products offered (see Products) are similar to those offered by  other
major companies.  The product features are regulated by the states and  are
subject to extensive competition among major insurance organizations.   The
Company  believes a strong service commitment to policyholders,  efficiency
and  flexibility of operations, timely service to the agency force and  the
expertise of its key executives help minimize the competitive pressures  of
the insurance industry.

The industry has experienced a downward trend in the total number of agents
who  sell  insurance products, and competition for the top sales  producers
has  intensified.  As this trend appears to continue, the recruiting  focus
of the Company has been on introducing quality individuals to the insurance
industry through an extensive internal training program.  The Company feels
this  approach is conducive to the mutual success of our new  recruits  and
the  Company  as  these  recruits market our products  in  a  professional,
company structured manner.


GOVERNMENT REGULATION

The Company's insurance subsidiaries are assessed contributions by life and
health   guaranty   associations  in  almost  all   states   to   indemnify
policyholders  of  failed companies.  In several  states  the  company  may
reduce  premium taxes paid to recover a portion of assessments paid to  the
states'  guaranty fund association.  This right of "offset" may come  under
review by the various states, and the company cannot predict whether and to
what extent legislative initiatives may affect this right to offset.  Also,
some  state  guaranty associations have adjusted the basis  by  which  they
assess  the  cost  of  insolvencies to individual companies.   The  company
believes  that  its  reserve  for  future  guaranty  fund  assessments   is
sufficient to provide for assessments related to known insolvencies.   This
reserve  is based upon management's current expectation of the availability
of  this  right  of  offset, known insolvencies  and  state  guaranty  fund
assessment  bases.  However, changes in the basis whereby  assessments  are
charged  to  individual companies and changes in the  availability  of  the
right  to  offset assessments against premium tax payments could materially
affect the company's results.

Currently,  the Company's insurance subsidiaries are subject to  government
regulation  in  each  of the states in which they conduct  business.   Such
regulation  is  vested in state agencies having broad administrative  power
dealing with all aspects of the insurance business, including the power to:
(i)  grant  and  revoke licenses to transact business;  (ii)  regulate  and
supervise  trade  practices and market conduct;  (iii)  establish  guaranty
associations; (iv)  license  agents;  (v)  approve  policy   forms;    (vi)
approve  premium rates for some lines of business;  (vii) establish reserve
requirements;  (viii) prescribe the form and content of required  financial
statements and reports;  (ix) determine the reasonableness and adequacy  of
statutory  capital and surplus; and  (x) regulate the type  and  amount  of
permitted  investments.  Insurance regulation is concerned  primarily  with
the  protection of policyholders.  The Company cannot predict the  form  of
any  future proposals or regulation.  The Company's insurance subsidiaries,
USA,  UG,  APPL  and ABE are domiciled in the states of  Ohio,  Ohio,  West
Virginia and Illinois, respectively.

The  insurance regulatory framework continues to be scrutinized by  various
states,  the  federal government and the National Association of  Insurance
Commissioners  ("NAIC").   The  NAIC is  an  association  whose  membership
consists  of the insurance commissioners or their designees of the  various
states.   The  NAIC  has  no  direct regulatory  authority  over  insurance
companies,  however  its primary purpose is to provide  a  more  consistent
method  of  regulation  and  reporting  from  state  to  state.   This   is
accomplished  through  the  issuance of model  regulations,  which  can  be
adopted  by individual states unmodified, modified to meet the state's  own
needs or requirements, or dismissed entirely.

                                  12
<PAGE>

Most  states  also  have insurance holding company statutes  which  require
registration  and periodic reporting by insurance companies  controlled  by
other  corporations licensed to transact business within  their  respective
jurisdictions.  The insurance subsidiaries are subject to such  legislation
and  registered as controlled insurers in those jurisdictions in which such
registration is required.  Statutes vary from state to state but  typically
require  periodic disclosure concerning the corporation that  controls  the
registered insurers and all subsidiaries of such corporation.  In addition,
prior notice to, or approval by, the state insurance commission of material
intercorporate  transfers  of  assets, reinsurance  agreements,  management
agreements  (see  Note  9  of  the  Notes  to  the  Consolidated  Financial
Statements),  and  payment of dividends (see Note 2 of  the  Notes  to  the
Consolidated  Financial Statements) in excess of specified amounts  by  the
insurance subsidiary within the holding company system are required.

Each year the NAIC calculates financial ratio results (commonly referred to
as  IRIS  ratios) for each company.  These ratios compare various financial
information pertaining to the statutory balance sheet and income statement.
The  results are then compared to pre-established normal ranges  determined
by  the  NAIC.  Results outside the range typically require explanation  to
the domiciliary insurance department.

At  year end 1997, the insurance companies had one ratio outside the normal
range.  The ratio is related to the decrease in premium income.  The  ratio
fell  outside  the normal range the last three years.  The  cause  for  the
decrease in premium income is related to the possible change in control  of
UTI over the last two years to two different parties.  At year end 1996  it
was  announced that UTI was to be acquired by an unrelated party,  but  the
sale  did  not  materialize.  At this writing negotiations are  progressing
with  a different unrelated party for the change in control of UTI.  Please
refer  to the Notes to the Consolidated Financial Statements for additional
information.  The possible changes in control over the last two years  have
hurt  the  insurance companies' ability to recruit new agents.  The  active
agents were apprehensive due to uncertainties in relation to the change  in
control of UTI.  In recent years, the industry experienced a decline in the
total number of agents selling insurance products and therefore competition
has  increased  for  quality agents.  Accordingly, new business  production
decreased significantly over the last two years.

A life insurance company's statutory capital is computed according to rules
prescribed by the National Association of Insurance Commissioners ("NAIC"),
as  modified  by  the  insurance company's state  of  domicile.   Statutory
accounting   rules   are  different  from  generally  accepted   accounting
principles  and are intended to reflect a more conservative  view  by,  for
example,  requiring immediate expensing of policy acquisition  costs.   The
achievement  of  long-term  growth will require  growth  in  the  statutory
capital  of  the  Company's insurance subsidiaries.  The  subsidiaries  may
secure  additional  statutory  capital through  various  sources,  such  as
internally  generated  statutory earnings or equity  contributions  by  the
Company from funds generated through debt or equity offerings.

The  NAIC's risk-based capital requirements require insurance companies  to
calculate  and report information under a risk-based capital formula.   The
risk-based  capital formula measures the adequacy of statutory capital  and
surplus  in  relation  to  investment and insurance  risks  such  as  asset
quality,  mortality and morbidity, asset and liability matching  and  other
business factors.  The RBC formula is used by state insurance regulators as
an early warning tool to identify, for the purpose of initiating regulatory
action,  insurance companies that potentially are inadequately capitalized.
In  addition, the formula defines new minimum capital standards  that  will
supplement  the  current system of low fixed minimum  capital  and  surplus
requirements    on  a  state-by-state  basis.   Regulatory   compliance  is
determined by a ratio of the insurance company's regulatory total  adjusted
capital,  as defined by the NAIC, to its authorized control level  RBC,  as
defined by the NAIC.  Insurance companies below specific trigger points  or
ratios  are  classified  within  certain levels,  each  of  which  requires
specific corrective action.

                                 13
<PAGE>

The levels and ratios are as follows:

                                   Ratio  of  Total Adjusted  Capital  to
                                        Authorized Control Level RBC
       Regulatory Event                    (Less Than or Equal to)
  Company action level                                2*
  Regulatory action level                             1.5
  Authorized control level                            1
  Mandatory control level                             0.7

  * Or, 2.5 with negative trend.

At  December 31, 1997, each of the insurance subsidiaries has a Ratio  that
is  in  excess  of  3,  which  is  300% of the  authorized  control  level;
accordingly the insurance subsidiaries meet the RBC requirements.

The NAIC, in conjunction with state regulators, has been reviewing existing
insurance  laws and regulations.  A committee of the NAIC proposed  changes
in  the  regulations  governing insurance company investments  and  holding
company  investments in subsidiaries and affiliates which were  adopted  by
the  NAIC as model laws in 1996.  The Company does not presently anticipate
any material adverse change in its business as a result of these changes.

Legislative and regulatory initiatives regarding changes in the  regulation
of  banks and other financial services businesses and restructuring of  the
federal income tax system could, if adopted and depending on the form  they
take,  have  an  adverse impact on the company by altering the  competitive
environment  for its products.  The outcome and timing of any such  changes
cannot  be  anticipated  at  this time, but the company  will  continue  to
monitor  developments in order to respond to any opportunities or increased
competition that may occur.

The  NAIC  has  recently released the Life Illustration  Model  Regulation.
Many  states have adopted the regulation effective January 1,  1997.   This
regulation requires products which contain non-guaranteed elements, such as
universal  life  and  interest  sensitive  life,  to  comply  with  certain
actuarially  established tests.  These tests are intended to target  future
performance  and profitability of a product under various  scenarios.   The
regulation does not prevent a company from selling a product that does  not
meet  the  various  tests.  The only implication is the way  in  which  the
product  is  marketed to the consumer.  A product that does  not  pass  the
tests  uses  guaranteed  assumptions rather  than  current  assumptions  in
presenting  future  product  performance  to  the  consumer.   The  Company
conducts an ongoing thorough review of its sales and marketing process  and
continues to emphasize its compliance efforts.

A  task  force of the NAIC is currently undertaking a project to  codify  a
comprehensive set of statutory insurance accounting rules and  regulations.
This  project is not expected to be completed earlier than 1999.   Specific
recommendations  have  been set forth in papers  issued  by  the  NAIC  for
industry  review.  The Company is monitoring the process, but the potential
impact of any changes in insurance accounting standards is not yet known.


EMPLOYEES

There are approximately 90 persons who are employed by the Company and  its
affiliates.

                                  14
<PAGE>

ITEM 2.  PROPERTIES

The  following  table  shows  a breakout of property,  net  of  accumulated
depreciation,  owned  and occupied by the Company and the  distribution  of
real estate by type.

  Property owned                  Amount       % of Total
  Home Office                  $ 2,560,242        18%
  Investment real estate
  Commercial                   $ 4,355,450        31%
  Residential development      $ 5,405,282        39%
  Foreclosed real estate       $ 1,724,544        12%
                               $11,485,276        82%

  Grand total                  $14,045,518        100%

Total  investment real estate holdings represent approximately  3%  of  the
total  assets of the Company net of accumulated depreciation of  $1,550,268
and $1,453,275 at year end 1997 and 1996 respectively.  The Company owns an
office complex in Springfield, Illinois, which houses the primary insurance
operations.  The office buildings contain 57,000 square feet of office  and
warehouse  space.  The properties are carried at approximately  $2,649,359.
In  addition,  an  insurance  subsidiary owns a  home  office  building  in
Huntington,  West  Virginia.  The building has 15,000 square  feet  and  is
carried  at $165,882.  The facilities occupied by the Company are  adequate
relative to the Company's present operations.

Commercial  property consists primarily of former home office buildings  of
acquired companies no longer used in the operations of the Company.   These
properties  are leased to various unaffiliated companies and organizations.
Residential  development  property  is primarily  located  in  Springfield,
Illinois,  and entails several developments, each targeted for a  different
segment  of the population.  These targets include a development  primarily
for  the  first  time  home  buyer,  an upscale  development  for  existing
homeowners looking for a larger home, and duplex condominiums for those who
desire  maintenance free exteriors and surroundings.  The Company's primary
focus  is  on  the  development and sale of lots, with an  occasional  home
construction to help stimulate interest.

Springfield  is  the  State Capital of Illinois.   The  City's  economy  is
service  oriented with the main employers being the State of Illinois,  two
major area hospitals and two large insurance companies.  This provides  for
a  very  stable economy not as dramatically affected by economic conditions
in other parts of the United States.

Foreclosed  property is carried at the unpaid loan principal  balance  plus
accrued   interest  on  the  loan  and  other  costs  associated  with  the
foreclosure  process.  The carrying value of foreclosed property  does  not
exceedmanagement's   estimate  of   net  realizable  value.    Management's
estimate  of  net  realizable value is based on significant  internal  real
estate  experience,  local  market experience, independent  appraisals  and
evaluation of existing comparable property sales.


ITEM 3.  LEGAL PROCEEDINGS

The  Company  and its subsidiaries are named as defendants in a  number  of
legal  actions arising primarily from claims made under insurance policies.
Those   actions   have  been  considered  in  establishing  the   Company's
liabilities.  Management and its legal counsel are of the opinion that  the
settlement of those actions will not have a material adverse effect on  the
Company's financial position or results of operations.


ITEM 4.  SUBMISSION OF MATTERS OF A VOTE OF SECURITY HOLDERS
None

                                  15
<PAGE>

                               PART II
ITEM  5.   MARKET  FOR COMPANY'S COMMON STOCK AND RELATED SECURITY  HOLDERS
           MATTERS


                        FCC STOCK INFORMATION


The   Company's common stock is traded in the over-the-counter market.  The
following  table shows the high and low bid quotations for  each  quarterly
period during the past two years as reported by Dean Witter Reynolds, Inc.,
a  market  maker  in  such  stock.  Such quotations represent  inter-dealer
quotations  and do not include retail markup or markdown or commission  nor
do they represent actual sales.  Trading in this stock is very limited.

                                               BID
            PERIOD                      LOW          HIGH

            1997
            First quarter            40 13/32       40 13/32
            Second quarter           29 11/16       60
            Third quarter            60             110
            Fourth quarter          110             112

                                               BID
            PERIOD                      LOW          HIGH
            1996
            First quarter            50             50
            Second quarter           25             76
            Third  quarter           25 19/32       59 13/64
            Fourth  quarter          50             50


The Company did not pay any dividends during 1997 or 1996.  Limitations  on
shareholders  dividends  are  described in Note  2  of  the  Notes  to  the
Consolidated Financial Statements.

On  May 13, 1997, FCC effected a 1 for 400 reverse stock split.  Owners  of
fractional shares received a cash payment on the basis of $.25 for each old
share.   Prior  period numbers have been restated to  give  effect  of  the
reverse stock split.


Number of Common Shareholders as of March 13, 1998 is 3,837.

                                  16
<PAGE>


ITEM 6.  SELECTED FINANCIAL DATA

                              FINANCIAL HIGHLIGHTS
                     (000's omitted, except per share data)
                           1997        1996      1995       1994       1993
Premium income
 net of reinsurance     $  28,639  $  30,944  $ 33,099   $  35,024  $  33,097
Total  revenues         $  43,354  $  46,538  $  48,365  $  49,261  $  47,185
Net  loss               $  (1,845) $  (3,032) $  (1,452) $  (1,775) $  (3,343)
Net  loss  per share    $  (32.65) $  (50.60) $  (24.00) $  (29.17) $  (54.93)
Total assets            $ 332,572  $ 336,639  $ 334,058  $ 331,410  $ 326,390
Total long term debt    $  18,242  $  19,000  $  20,623  $  21,529  $  23,535
Dividends paid per share     NONE       NONE       NONE       NONE       NONE

                                       17
<PAGE>


ITEM 7.MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF  FINANCIAL  CONDITION  AND
       RESULTS OF OPERATIONS

The  purpose  of  this  section is to discuss  and  analyze  the  Company's
consolidated  results of operations, financial condition and liquidity  and
capital  resources.  This analysis should be read in conjunction  with  the
consolidated financial statements and related notes which appear  elsewhere
in  this  report.  The Company reports financial results on a  consolidated
basis.   The consolidated financial statements include the accounts of  FCC
and its subsidiaries at December 31, 1997.

RESULTS OF OPERATIONS

1997 COMPARED TO 1996

(a)    REVENUES

Premiums  and policy fee revenues, net of reinsurance premiums  and  policy
fees,  decreased  7%  when comparing 1997 to 1996.  The  Company  currently
writes  little new traditional business, consequently, traditional premiums
will  decrease  as  the amount of traditional business in-force  decreases.
Collected premiums on universal life and interest sensitive products is not
reflected  in  premiums  and  policy revenues  because  Generally  Accepted

Accounting  Procedures ("GAAP") requires that premiums collected  on  these
types  of  products be treated as deposit liabilities rather than  revenue.
Unless  the  Company  acquires a block of in-force  business  or  marketing
changes its focus to traditional business, premium revenue will continue to
decline.

Another  cause  for  the decrease in premium revenues  is  related  to  the
potential change in control of UTI over the last two years to two different
parties.   During September of 1996, it was announced that control  of  UTI
would  pass  to  an  unrelated party, but the change  in  control  did  not
materialize.   At  this  writing,  negotiations  are  progressing  with   a
different  unrelated party for the change in control of UTI.  Please  refer
to  the  Notes  to  the  Consolidated Financial Statements  for  additional
information.   The possible changes and resulting uncertainties  have  hurt
the insurance companies' ability to recruit and maintain sales agents.

New  business production decreased significantly over the last  two  years.
New business production decreased 43% or $3,935,000 when comparing 1997  to
1996.  In recent years, the insurance industry as a whole has experienced a
decline  in  the  total  number  of agents  who  sell  insurance  products,
therefore competition has intensified for top producing sales agents.   The
relatively small size of our companies, and the resulting limitations, have
made it challenging to compete in this area.

A  positive  impact  on premium income is the improvement  of  persistency.
Persistency is a measure of insurance in force retained in relation to  the
previous year.  The Companies' average persistency rate for all policies in
force   for  1997  and  1996  has  been  approximately  89.4%  and   87.9%,
respectively.

Net   investment  income  decreased 6% when comparing  1997  to 1996.   The
decrease  relates  to the decrease in invested assets  from  a  coinsurance
agreement.    The  Company's  insurance  subsidiary  UG  entered   into   a
coinsurance  agreement  with  First International  Life  Insurance  Company
("FILIC"),  an  unrelated party, as of September 30,  1996.   During  1997,
FILIC  changed  its  name to Park Avenue Life Insurance Company  ("PALIC").
Under  the terms of the agreement, UG ceded to FILIC substantially  all  of
its  paid-up  life  insurance policies.  Paid-up life  insurance  generally
refers  to non-premium paying life insurance policies.  At closing  of  the
transaction,  UG  received a coinsurance credit of $28,318,000  for  policy
liabilities  covered under the agreement.  UG transferred assets  equal  to
the  credit  received.  This transfer included policy loans  of  $2,855,000
associated  with  policies under the agreement and a net cash  transfer  of
$19,088,000,  after deducting the ceding commission due UG  of  $6,375,000.
To  provide  the  cash required to be transferred under the agreement,  the
Company sold $18,737,000 of fixed maturity investments.

                                18
<PAGE>

The overall investment yields for 1997, 1996 and 1995, are 7.26%, 7.33% and
7.18%,  respectively.  Since 1995, investment yield  improved  due  to  the
fixed  maturity  investments.  Cash generated from the sales  of  universal
life  insurance products, has been invested primarily in our fixed maturity
portfolio.

The  Company's investments are generally managed to match related insurance
and  policyholder  liabilities.  The comparison of investment  return  with
insurance  or  investment product crediting rates establishes  an  interest
spread.   The minimum interest spread between earned and credited rates  is
1%  on the "Century 2000" universal life insurance product, which currently
is  the  Company's primary sales product.  The Company monitors  investment
yields, and when necessary adjusts credited interest rates on its insurance
products  to  preserve  targeted interest spreads.   It  is  expected  that
monitoring of the interest spreads by management will provide the necessary
margin to adequately provide for associated costs on the insurance policies
the Company currently has in force and will write in the future.

Realized  investment losses were $269,000 and $411,000 in  1997  and  1996,
respectively.  The Company sold two foreclosed real estate properties  that
resulted in approximately $357,000 in realized losses in 1996.  The Company
had  other  gains and losses during the period that comprised the remaining
amount reported but were immaterial in nature on an individual basis.


(b)    EXPENSES

Life  benefits,  net of reinsurance benefits and claims, decreased  20%  in
1997  as  compared to 1996.  The decrease in premium revenues  resulted  in
lower  benefit  reserve  increases  in  1997.   In  addition,  policyholder
benefits decreased due to a decrease in death benefit claims of $162,000.

In  1994,  UG  became aware that certain new insurance business  was  being
solicited by certain agents and issued to individuals considered to be  not
insurable  by Company standards.  These non-standard policies  had  a  face
amount  of $22,700,000 and represented 1/2 of 1% of the insurance  in-force
in  1994.   Management's  initial analysis indicated  that  expected  death
claims  on  the  business in-force was adequate in  relation  to  mortality
assumptions   inherent   in   the  calculation   of   statutory   reserves.
Nevertheless,  management determined it was in the  best  interest  of  the
Company  to  repurchase as many of the non-standard policies  as  possible.
Through  December 31, 1996, the Company spent approximately $7,099,000  for
the  settlement  of  non-standard policies and for  the  legal  defense  of
related litigation.  In relation to settlement of non-standard policies the
Company incurred life benefit costs of $3,307,000, and $720,000 in 1996 and
1995,  respectively.   The Company incurred legal  costs  of  $906,000  and
$687,000 in 1996 and 1995, respectively.  All policies associated with this
issue  have  been  settled  as of December 31,  1996.   Therefore,  expense
reductions for 1997 would follow.

Commissions and amortization of deferred policy acquisition costs decreased
14%  in  1997  compared to 1996.  The decrease is due primarily  due  to  a
reduction in commissions paid.  Commissions decreased 19% in 1997  compared
to 1996. The decrease in commissions was due to the decline in new business
production.   There is a direct relationship between premium  revenues  and
commission expense.  First year premium production decreased 43% and  first
year  commissions decreased 33% when comparing 1997 to 1996.   Amortization
of deferred policy acquisition costs decreased 7% in 1997 compared to 1996.
Management  would  expect commissions and amortization of  deferred  policy
acquisition costs to decrease in the future if premium revenues continue to
decline.

Amortization  of cost of insurance acquired decreased 28% in 1997  compared
to  1996.   Cost of insurance acquired is amortized in relation to expected
future  profits,  including  direct  charge-offs  for  any  excess  of  the
unamortized asset over the projected future profits.  The Company  did  not
have  any  charge-offs  during the periods covered  by  this  report.   The
decrease  in amortization during the current period is a normal fluctuation
due  to  the  expected future profits.  Amortization of cost  of  insurance
acquired  is  particularly sensitive to changes in persistency  of  certain
blocks  of  insurance in-force.  The improvement of persistency during  the
year  had  a positive impact on amortization of cost of insurance acquired.
Persistency is a measure of insurance in force retained in relation to  the
previous year.  The Company's average persistency rate for all policies  in
force  for  1997  and  1996  has  been  approximately  89.4%  and    87.9%,
respectively.

                                     19
<PAGE>

Operating expenses decreased 20% in 1997 compared to 1996.  The decrease in
operating  expenses is directly related to settlement of certain litigation
in  December of 1996.  The Company incurred legal costs of $0, $906,000 and
$687,000 in 1997, 1996 and 1995, respectively in relation to the settlement
of the non-standard insurance policies.

Interest expense decreased 5% in 1997 compared to 1996.  Since December 31,
1996,  notes payable decreased approximately $758,000.  Average outstanding
indebtedness was $18,621,000 with an average cost of 8.66% in 1997 compared
to  average outstanding indebtedness of $19,812,000 with an average cost of
8.58% in 1996.  In March 1997, the base interest rate for most of the notes
payable  increased a quarter of a point. The base rate is  defined  as  the
floating daily, variable rate of interest determined and announced by First
of  America Bank.  Please refer to Note 10 "Notes Payable" in the Notes  to
the Consolidated Financial Statements for more information.

(c)    NET LOSS

The Company had a net loss of $1,845,000 in 1997 compared to a net loss  of
$3,032,000 in 1996.  The improvement is directly related to the decrease in
life  benefits  and operating expenses primarily associated with  the  1996
settlement  and  other  related costs of the  non-standard  life  insurance
policies.


1996 COMPARED TOo 1995

(a)    REVENUES

Premium  and policy fee revenues, net of reinsurance premium, decreased  7%
when  comparing 1996 to 1995.  The decrease in premium income is  primarily
attributed  to  a  15%  decrease in new business production.   The  Company
changed its marketing strategy from traditional life insurance products  to
universal  life insurance products.  Universal life and interest  sensitive
products  contribute  only  the  risk charge  to  premium  income,  however
traditional  insurance products contribute all monies received  to  premium
income.   The  Company changed its marketing strategy to remain competitive
based on consumer demand.

In  addition, the Company changed its focus from primarily a broker  agency
distribution  system to a captive agent system.  Business  written  by  the
broker  agency  force, in recent years, did not meet Company  expectations.
With the change in focus of distribution systems, most of the broker agents
were  terminated.   The change in distribution systems effectively  reduced
the  total  number  of agents representing and producing business  for  the
Company.   Broker  agents sell insurance and related products  for  several
companies.  Captive agents sell for only one company.

A  positive  impact  on premium income is the improvement  of  persistency.
Persistency is a measure of insurance in force retained in relation to  the
previous year.  The Companies' average persistency rate for all policies in
force   for   1996  and  1995  has  been  approximately  87.9%  and   87.3%
respectively.

Net   investment  income  increased 3% when comparing  1996  to 1995.   The
overall  investment  yields  for  1996  and  1995  are  7.33%  and   7.18%,
respectively.  The consistent improvement in investment yield is  primarily
attributed to fixed maturity investments.  Cash generated from the sales of
universal life insurance products, has been invested primarily in our fixed
investment portfolio.

The  Company's investments are generally managed to match related insurance
and  policyholder  liabilities.  The comparison of investment  return  with
insurance  or  investment product crediting rates establishes  an  interest
spread.   The minimum interest spread between earned and credited rates  is
1%  on the "Century 2000" universal life insurance product, which currently
is  the  Company's primary sales product.  The Company monitors  investment
yields, and when necessary adjusts credited interest rates on its insurance
products  to  preserve  targeted interest spreads.   It  is  expected  that
monitoring of the interest spreads by management will provide the necessary
margin to adequately provide for associated costs on the insurance policies
the Company currently has in force and will write in the future.

                               20
<PAGE>

Realized  investment losses were $411,000 and $349,000 in  1996  and  1995,
respectively.  The Company sold two foreclosed real estate properties  that
resulted in approximately $357,000 in realized losses in 1996.  The Company
had  other  gains and losses during the period that comprised the remaining
amount reported but were immaterial in nature on an individual basis.


(b)    EXPENSES

Life  benefits,  net  of  reinsurance benefits and  claims,  increased  13%
compared  to  1995.   The increase in life benefits  is  due  primarily  to
settlement expenses discussed in the following paragraph:

In  1994,  UG  became aware that certain new insurance business  was  being
solicited by certain agents and issued to individuals considered to be  not
insurable  by Company standards.  These non-standard policies  had  a  face
amount  of $22,700,000 and represented 1/2 of 1% of the insurance  in-force
in  1994.   Management's  initial analysis indicated  that  expected  death
claims  on  the  business in-force was adequate in  relation  to  mortality
assumptions inherent   in   the  calculation   of   statutory   reserves.

Nevertheless,  management determined it was in the  best  interest  of  the
Company  to  repurchase as many of the non-standard policies  as  possible.
Through  December 31, 1996, the Company spent approximately $7,099,000  for
the  settlement  of  non-standard policies and for  the  legal  defense  of
related litigation.  In relation to settlement of non-standard policies the
Company incurred life benefits of $3,307,000 and $720,000 in 1996 and 1995,
respectively.  The Company incurred legal costs of $906,000 and $687,000 in
1996  and 1995, respectively.  All the policies associated with this  issue
have  been  settled as of December 31, 1996.  The Company has approximately
$3,742,000  of  insurance  in-force and $1,871,000  of  reserves  from  the
issuance  of  paid-up  life insurance policies for  settlement  of  matters
related  to  the original non-standard policies.  Management  believes  the
reserves are adequate in relation to expected mortality on this block of in
force.

Commissions and amortization of deferred policy acquisition costs decreased
8%  in  1996  compared  to 1995.  The decrease is  due  to  a  decrease  in
commissions expense.  Commissions decreased 15% in 1996 compared  to  1995.
The  decrease  in  commissions  was due to  the  decline  in  new  business
production.  There is a direct relationship between premium  revenues   and
commission expenses.  First year premium production decreased 15% and first
year  commissions decreased 32% when comparing 1996 to 1995.   Amortization
of deferred policy acquisition costs decreased 3% in 1996 compared to 1995.
Management   expects  commissions  and  amortization  of  deferred   policy
acquisition costs to decrease in the future if premium revenues continue to
decline.

Amortization  of cost of insurance acquired decreased 12% in 1996  compared
to  1995.   Cost of insurance acquired is amortized in relation to expected
future  profits,  including  direct  charge-offs  for  any  excess  of  the
unamortized asset over the projected future profits.  The Company  did  not
have  any  charge-offs  during the periods covered  by  this  report.   The
decrease  in amortization during the current period is a normal fluctuation
due  to  the  expected future profits.  Amortization of cost  of  insurance
acquired  is  particularly sensitive to changes in persistency  of  certain
blocks of insurance in-force.

Operating  expenses  increased 9% in 1996 compared to  1995.   The  primary
factor  that caused the increase in operating expenses is directly  related
to   increased  legal  costs and reserves established for  litigation.  The
legal costs are due to the settlement of non-standard insurance policies as
was  discussed in the review of life benefits.  The Company incurred  legal
costs  of  $906,000 and $687,000 in 1996 and 1995, respectively in relation
to the settlement of the non-standard insurance policies.

Interest  expense decreased 11% in 1996 compared to 1995.   Since  December
31,  1995,  notes  payable  decreased  approximately  $1,623,000  that  has
directly  attributed  to  the  decrease in interest  expense  during  1996.
Interest  expense was also reduced, as a result of the refinancing  of  the
senior  debt  under which the new interest rate is more favorable.   Please
refer to Note 10 "Notes Payable" of the Notes to the Consolidated Financial
Statements for more information on this matter.

                               21
<PAGE>

(c)    NET LOSS

The Company had a net loss of $3,032,000 in 1996 compared to a net loss  of
$1,452,000 in 1995.  The net loss in 1996 is attributed to the increase  in
life   benefits  net  of  reinsurance  and  operating  expenses   primarily
associated with settlement and other related costs of the non-standard life
insurance policies.


FINANCIAL CONDITION

(a)  ASSETS

Investments  are  the  largest asset group of the Company.   The  Company's
insurance  subsidiaries are regulated by insurance statutes and regulations
as  to  the  type of investments that they are permitted to  make  and  the
amount of funds that may be used for any one type of investment.  In  light
of  these  statutes  and  regulations,  and  the  Company's  business   and
investment strategy, the Company generally seeks to invest in United States
government and government agency securities and corporate securities  rated
investment grade by established nationally recognized rating organizations.

The  liabilities are predominantly long-term in nature and  therefore,  the
Company  invests in long-term fixed maturity investments that are  reported
in  the financial statements at their amortized cost.  The Company has  the
ability and intent to hold these investments to maturity; consequently, the
Company  does  not  expect  to  realize any  significant  loss  from  these
investments.  The Company does not own any derivative investments or  "junk
bonds".   As  of  December 31, 1997, the carrying value of  fixed  maturity
securities  in  default as to principal or interest was immaterial  in  the
context  of  consolidated assets or shareholders' equity.  The Company  has
identified securities it may sell and classified them as "investments  held
for  sale".  Investments held for sale are carried at market, with  changes
in market value charged directly to shareholders' equity.

The  following table summarizes the Company's fixed maturities distribution
at December 31, 1997 and 1996 by ratings category as issued by Standard and
Poor's, a leading ratings analyst.

                                   Fixed Maturities
                 Rating                   % of Portfolio
                                         1997        1996
            Investment Grade
              AAA                         31%          30%
              AA                          14%          13%
              A                           46%          46%
              BBB                          9%          10%
            Below investment grade         0%           1%
                                         100%         100%

Mortgage  loans decreased 14% in 1997 as compared to 1996.  The Company  is
not  actively seeking new mortgage loans, and the decrease is due to  early
pay-offs from mortgagee's seeking refinancing at lower interest rates.  All
mortgage  loans held by the Company are first position loans.  The  Company
has  $298,227 in mortgage loans, net of a $10,000 reserve allowance,  which
are  in  default  and  in  the  process  of  foreclosure,  this  represents
approximately 3% of the total portfolio.

                                  22
<PAGE>

Investment  real  estate and real estate acquired in satisfaction  of  debt
decreased  slightly  in  1997  compared to 1996.   Investment  real  estate
holdings  represent approximately 3% of the total assets  of  the  Company.
Total   investment real  estate  is  separated  into  three   categories:
Commercial 38%, Residential Development 47% and Foreclosed Properties 15%.

Policy  loans  decreased 2% in 1997 compared to 1996.  Industry  experience
for  policy  loans  indicates  few policy loans  are  ever  repaid  by  the
policyholder  other than through termination of the policy.   Policy  loans
are  systematically  reviewed  to ensure that  no  individual  policy  loan
exceeds  the  underlying  cash  value of the  policy.   Policy  loans  will
generally  increase due to new loans and interest compounding  on  existing
policy loans.

Deferred  policy acquisition costs decreased 8% in 1997 compared  to  1996.
Deferred  policy  acquisition costs, which vary  with,  and  are  primarily
related  to  producing  new business, are referred  to  as   ("DAC").   DAC
consists primarily of commissions and certain costs of policy issuance  and
underwriting, net of fees charged to the policy in excess of ultimate  fees
charged.   To  the extent these costs are recoverable from future  profits,
the Company defers these costs and amortizes them with interest in relation
to  the  present  value  of  expected gross  profits  from  the  contracts,
discounted using the interest rate credited by the policy.  The Company had
$586,000  in  policy  acquisition  costs  deferred,  $827,000  in  interest
accretion  and  $2,829,636 in amortization in 1997.  The  Company  did  not
recognize any impairment during the period.

Cost  of  insurance  acquired decreased 6% in 1997 compared  to  1996.   At
December   31,  1997,  cost  of  insurance  acquired  was  $18,654,506  and
amortization totaled $1,231,988 for the year.  When an insurance company is
acquired, the Company assigns a portion of its cost to the right to receive
future  cash  flows from insurance contracts existing at the  date  of  the
acquisition.   The  cost of policies purchased represents  the  actuarially
determined  present  value  of the projected future  cash  flows  from  the
acquired  policies.  Cost of Insurance Acquired is amortized with  interest
in  relation  to expected future profits, including direct charge-offs  for
any excess of the unamortized asset over the projected future profits.


(b)  LIABILITIES

Total   liabilities decreased slightly in 1997 compared to  1996.  However,
future  policy  benefits  which represented 85%  of  total  liabilities  at
December 31, 1997, increased slightly in 1997.

Policy claims and benefits payable decreased 35% in 1997 compared to  1996.
There  is no single event that caused this item to decrease.  Policy claims
vary from year to year and therefore, fluctuations in this liability are to
be expected and are not considered unusual by management.

Other  policyholder  funds decreased 12% in 1997  compared  to  1996.   The
decrease can be attributed to a decrease in premium deposit funds.  Premium
deposit  funds  are funds deposited by the policyholder with the  insurance
company to accumulate interest and pay future policy premiums.  The  change
in   marketing  from  traditional  insurance  products  to  universal  life
insurance products is the primary reason for the decrease.  Universal  life
insurance  products  do  not  have premium  deposit  funds.   All  premiums
received  from universal life insurance policyholders are credited  to  the
life insurance policy and are reflected in future policy benefits.

Dividend and endowment accumulations increased 8% in 1997 compared to 1996.
The  increase  is  attributed to the significant  amount  of  participating
business the Company has in force.  Over 52% of all dividends paid were put
on   deposit  with  the  Company to accumulate  with  interest.  Management
expects  this liability to increase in the future.Income taxes payable  and
deferred  income  taxes payable increased 9% in 1997  compared   to   1996.
The   change   in   deferred  income  taxes  payable   is  attributable  to
temporary  differences  between  Generally Accepted  Accounting  Principles
("GAAP")  and tax basis accounting.  Federal  income  taxes  are  discussed
in   more  detail  in Note 3 of the  Notes  to  the  Consolidated Financial
Statements.

                                23
<PAGE>

Notes  payable decreased approximately $758,000 in 1997 compared  to  1996.
The  Company's  senior debt has scheduled principal payments of  $1,000,000
due in May of each year beginning in 1997, with a final payment due May  8,
2005.   On  November  8, 1997, the Company prepaid the May  1998  principal
payment.   In November 1997 FCC borrowed $1,000,000 from UTI to  facilitate
the  prepayment of the May 1998 principal payment due on the  senior  debt.
The  subordinated debt provides for principal payments equal to  1/20th  of
the principal balance due with each interest installment beginning December
16,  1997,  with  a  final payment due June 16, 2002.  In  June  1997,  the
Company  refinanced a $204,267 subordinated 10-year note as a  subordinated
20-year  note  bearing  interest at the  rate  of  8.75%  per  annum.   The
Company's  long-term debt is discussed in more detail in  Note  10  of  the
Notes to the Financial Statements.


(c)  SHAREHOLDERS' EQUITY

Total  shareholders'  equity decreased 6% in 1997 compared  to  1996.   The
decrease  in  shareholders' equity is primarily due  to  the  net  loss  of
1,845,062  in 1997.  To a lesser extent shareholders' equity decreased  due
to  the  reverse stock split.  On May 13, 1997, FCC effected a  1  for  400
reverse  stock  split.  Fractional shares received a cash  payment  on  the
basis  of $.25 for each old share.  FCC maintained a significant number  of
shareholder  accounts with less than $100 of market value  of  stock.   The
reverse stock split enabled these smaller shareholders to receive cash  for
their  shares  without  incurring broker costs and will  save  the  Company
administrative costs associated with maintaining these small accounts.


LIQUIDITY AND CAPITAL RESOURCES

The  Company has three principal needs for cash - the insurance  companies'
contractual obligations to policyholders, the payment of operating expenses
and  the servicing of its long-term debt.  Cash and cash equivalents  as  a
percentage  of  total  assets were 5% as of December 31,  1997,  and  1996,
respectively.   Fixed maturities as a percentage of total  invested  assets
were 82% as of December 31, 1997 and 1996.

Future policy benefits are primarily long-term in nature and therefore, the
Company's  investments  are  predominantly  in  long-term  fixed   maturity
investments  such  as  bonds and mortgage loans  which  provide  sufficient
return  to cover these obligations.  The Company has the ability and intent
to  hold   these  investments  to  maturity;  consequently,  the  Company's
investment  in  long-term  fixed maturities is reported  in  the  financial
statements at their amortized cost.

Many of the Company's products contain surrender charges and other features
which reward persistency and penalize the early withdrawal of funds.   With
respect  to  such products, surrender charges are generally  sufficient  to
cover  the  Company's  unamortized deferred policy acquisition  costs  with
respect to the policy being surrendered.

Cash  provided by (used in) operating activities was ($199,000), $2,914,000
and 720,000 in 1997, 1996 and 1995, respectively.  The net cash provided by
operating  activities  plus net policyholder contract  deposits  after  the
payment  of policyholder withdrawals equaled $3,190,000 in 1997, $9,726,000
in  1996  and $9,733,000 in 1995.  Management utilizes this measurement  of
cash  flows  as an indicator of the performance of the Company's  insurance
operations,  since reporting regulations require cash inflows and  outflows
from  universal life insurance products to be shown as financing activities
when reporting on cash flows.

Cash   provided   by  (used  in)  investing  activities  was  ($2,995,000),
$15,808,000  and ($8,063,000), for 1997, 1996 and 1995, respectively.   The
most  significant aspect of cash provided by (used in) investing activities
are the fixed maturity transactions.  Fixed maturities account for 70%, 81%
and  76% of the total cost of investments acquired in 1997, 1996 and  1995,
respectively.  The net cash provided by investing activities  in  1996,  is
due  to  the  fixed  maturities sold in conjunction  with  the  coinsurance
agreement with FILIC.  The Company has not directed its investable funds to
so-called "junk bonds" or derivative investments.

Net  cash  provided  by  (used  in) financing  activities  was  $2,097,000,
($13,900,000)  and  $8,108,000 for 1997, 1996 and 1995, respectively.   The
change  between 1997 and 1996 is due to a coinsurance agreement with  FILIC
as  of  September 30, 1996.  At closing of the transaction, UG  received  a
reinsurance credit of $28,318,000 for policy liabilities covered under  the
agreement.   UG  transferred  assets equal to the  credit  received.   This
transfer included policy loans of $2,855,000 associated with policies under
the  agreement  and a net cash transfer of $19,088,000 after deducting  the
ceding commission due UG of $6,375,000.

                                 24
<PAGE>

Policyholder contract deposits decreased 20% in 1997 compared to 1996,  and
decreased  11%  in  1996  when  compared to  1995.   Policyholder  contract
withdrawals has decreased 6% in 1997 compared to 1996, and decreased 4%  in
1996 compared to 1995.  The change in policyholder contract withdrawals  is
not  attributable  to  any one significant event.  Factors  that  influence
policyholder  contract  withdrawals  are  fluctuation  of  interest  rates,
competition and other economic factors.

At  December 31, 1997, the Company had a total of $18,242,000 in  long-term
debt  outstanding.   Long-term debt principal reductions are  approximately
$1.5  million  per year over the next several years.  The  senior  debt  is
through  First  of America Bank - NA and is subject to a credit  agreement.
The   debt  bears  interest to a rate equal to the "base  rate"  plus  nine
sixteenths of one percent.  The Base rate is defined as the floating daily,
variable rate of interest determined and announced by First of America Bank
from time to time as its "base lending rate".  The base rate at issuance of
the  loan was 8.25%, and has remained unchanged through March 1, 1997, when
it increased to 8.5%.  Interest is paid quarterly and principal payments of
$1,000,000  are  due in May of each year beginning in 1997,  with  a  final
payment  due  May  8, 2005.  On November 8, 1997, the Company  prepaid  the
$1,000,000 May 8,1998, principal payment.

The  subordinated  debt  was  incurred June 16,  1992  as  a  part  of  the
acquisition  of  the  now  dissolved Commonwealth  Industries  Corporation,
(CIC).   The  10-year notes bear interest at the rate of 7 1/2% per  annum,
payable semi-annually beginning December 16, 1992.  These notes, except for
one  $840,000 note, provide for principal payments equal to 1/20th  of  the
principal balance due with each interest installment beginning December 16,
1997,  with a final payment due June 16, 2002.  The aforementioned $840,000
note  provides  for  a  lump  sum principal  payment  due  June  16,  2002.
Principal   reductions  of  $516,500  per  year   are   required    on  the
aforementioned notes.

As  of  December 31, 1997 the Company has a total $22,148,000 of  cash  and
cash  equivalents, short-term investments and investments held for sale  in
comparison to $18,242,000 of notes payable.  FCC services this debt through
existing  cash  balances and management fees received  from  the  insurance
subsidiaries.   FCC is further able to service this debt through  dividends
it  may  receive  from  UG.  See note 2 in the notes  to  the  consolidated
financial statements for additional information regarding dividends.

Since  FCC  is  a holding company, funds required to meet its debt  service
requirements and other expenses are primarily provided by its subsidiaries.
On  a  parent  only  basis, FCC's cash flow is dependent on  revenues  from
management  and  cost  sharing arrangements with its subsidiaries  and  its
earnings  received on invested assets and cash balances.  At  December  31,
1997,  substantially all of the consolidated shareholders equity represents
net  assets of its subsidiaries.  Cash requirements of FCC primarily relate
to servicing its long-term debt.  The Company's insurance subsidiaries have
maintained adequate statutory capital and surplus and have not used surplus
relief  or  financial reinsurance, which have come under scrutiny  by  many
state insurance departments.  The payment of cash dividends to shareholders
is  not  legally restricted.  However, insurance company dividend  payments
are  regulated  by  the  state insurance department where  the  company  is
domiciled.  UG's dividend limitations are described.

Ohio domiciled insurance companies require five days prior notification  to
the  insurance  commissioner  for  the payment  of  an  ordinary  dividend.
Ordinary  dividends are defined as the greater of:  a) prior year statutory
earnings  or b) 10% of statutory capital and surplus.  For the  year  ended
December  31, 1997, UG had a statutory gain from operations of  $1,779,000.
At  December  31,  1997,  UG's statutory capital and  surplus  amounted  to
$10,997,000.   Extraordinary  dividends  (amounts  in  excess  of  ordinary
dividend  limitations) require prior approval of the insurance commissioner
and are not restricted to a specific calculation.

A life insurance company's statutory capital is computed according to rules
prescribed by the National Association of Insurance Commissioners ("NAIC"),
as   modified  by  the  insurance company's state  of  domicile.  Statutory
accounting   rules   are  different  from  generally  accepted   accounting
principles  and are intended to reflect a more conservative  view  by,  for
example,  requiring immediate expensing of policy acquisition  costs.   The
achievement  of  long-term  growth will require  growth  in  the  statutory
capital  of  the  Company's insurance subsidiaries.  The  subsidiaries  may
secure  additional  statutory  capital through  various  sources,  such  as
internally  generated  statutory earnings or equity  contributions  by  the
Company from funds generated through debt or equity offerings.

                                25
<PAGE>

The  NAIC's risk-based capital requirements require insurance companies  to
calculate  and report information under a risk-based capital formula.   The
risk-based  capital formula measures the adequacy of statutory capital  and
surplus  in  relation  to  investment and insurance  risks  such  as  asset
quality,  mortality and morbidity, asset and liability matching  and  other
business factors.  The RBC formula is used by state insurance regulators as
an early warning tool to identify, for the purpose of initiating regulatory
action,  insurance companies that potentially are inadequately capitalized.
In  addition, the formula defines new minimum capital standards  that  will
supplement  the  current system of low fixed minimum  capital  and  surplus
requirements    on  a  state-by-state  basis.   Regulatory   compliance  is
determined by a ratio of the insurance company's regulatory total  adjusted
capital,  as defined by the NAIC, to its authorized control level  RBC,  as
defined by the NAIC.  Insurance companies below specific trigger points  or
ratios  are  classified  within  certain levels,  each  of  which  requires
specific corrective action.  The levels and ratios are as follows:

                                        Ratio of Total Adjusted Capital to
                                           Authorized Control Level RBC
       Regulatory Event                       (Less Than or Equal to)
  Company action level                                2*
  Regulatory action level                             1.5
  Authorized control level                            1
  Mandatory control level                             0.7

  * Or, 2.5 with negative trend.

At  December 31, 1997, each of the insurance subsidiaries has a Ratio  that
is  in  excess  of  3,  which  is  300% of the  authorized  control  level;
accordingly the insurance subsidiaries meet the RBC requirements.

The  Company's insurance subsidiaries operate under the regulatory scrutiny
of  the  respective  state  insurance  department  where  each  company  is
licensed.  The Company is not aware of any current recommendations by these
regulatory authorities which, if they were to be implemented, would have  a
material   effect  on  the  Company's  liquidity,  capital   resources   or
operations.

Management  believes  the overall sources of liquidity  available  will  be
sufficient to satisfy its financial obligations.


REGULATORY ENVIRONMENT

The Company's insurance subsidiaries are assessed contributions by life and
health   guaranty   associations  in  almost  all   states   to   indemnify
policyholders  of  failed companies.  In several  states  the  company  may
reduce  premium taxes paid to recover a portion of assessments paid to  the
states'  guaranty fund association.  This right of "offset" may come  under
review by the various states, and the company cannot predict whether and to
what extent legislative initiatives may affect this right to offset.  Also,
some  state  guaranty associations have adjusted the basis  by  which  they
assess  the  cost  of  insolvencies to individual companies.   The  Company
believes  that  its  reserve  for  future  guaranty  fund  assessments   is
sufficient to provide for assessments related to known insolvencies.   This
reserve  is based upon management's current expectation of the availability
of  this  right  of  offset, known insolvencies  and  state  guaranty  fund
assessment  bases.  However, changes in the basis whereby  assessments  are
charged  to  individual companies and changes in the  availability  of  the
right  to  offset assessments against premium tax payments could materially
affect the company's results.

                                 26
<PAGE>

Currently,  the Company's insurance subsidiaries are subject to  government
regulation  in  each  of the states in which they conduct  business.   Such
regulation  is  vested in state agencies having broad administrative  power
dealing with all aspects of the insurance business, including the power to:
(i)  grant  and  revoke licenses to transact business;  (ii)  regulate  and
supervise  trade  practices and market conduct;  (iii)  establish  guaranty
associations;   (iv)  license  agents;  (v)  approve  policy   forms;  (vi)
approve  premium rates for some lines of business;  (vii) establish reserve
requirements;  (viii) prescribe the form and content of required  financial
statements and reports;  (ix) determine the reasonableness and adequacy  of
statutory  capital and surplus; and  (x) regulate the type  and  amount  of
permitted  investments.  Insurance regulation is concerned  primarily  with
the  protection of policyholders.  The Company cannot predict the  form  of
any  future proposals or regulation.  The Company's insurance subsidiaries,
USA,  UG,  APPL  and ABE are domiciled in the states of  Ohio,  Ohio,  West
Virginia and Illinois, respectively.

The  insurance regulatory framework continues to be scrutinized by  various
states,  the  federal government and the National Association of  Insurance
Commissioners  ("NAIC").   The  NAIC is  an  association  whose  membership
consists  of the insurance commissioners or their designees of the  various
states.   The  NAIC  has  no  direct regulatory  authority  over  insurance
companies,  however  its primary purpose is to provide  a  more  consistent
method   of  regulation  and  reporting  from  state  to  state.   This  is
accomplished  through  the  issuance of model  regulations,  which  can  be
adopted  by individual states unmodified, modified to meet the state's  own
needs or requirements, or dismissed entirely.

Most  states  also  have insurance holding company statutes  which  require
registration  and periodic reporting by insurance companies  controlled  by
other  corporations licensed to transact business within  their  respective
jurisdictions.  The insurance subsidiaries are subject to such  legislation
and  registered as controlled insurers in those jurisdictions in which such
registration is required.  Statutes vary from state to state but  typically
require periodic disclosure, concerning the corporation, that controls  the
registered insurers and all subsidiaries of such corporation.  In addition,
prior notice to, or approval by, the state insurance commission of material
intercorporate  transfers  of  assets, reinsurance  agreements,  management
agreements  (see  Note  9  of the Notes to the Financial  Statements),  and
payment  of dividends (see Note 2 of the Notes to the Financial Statements)
in  excess  of  specified amounts by the insurance subsidiary,  within  the
holding company system, are required.

Each year the NAIC calculates financial ratio results (commonly referred to
as  IRIS  ratios) for each company.  These ratios compare various financial
information pertaining to the statutory balance sheet and income statement.
The  results are then compared to pre-established normal ranges  determined
by  the  NAIC.  Results outside the range typically require explanation  to
the domiciliary insurance department.

At  year-end 1997, the insurance companies had one ratio outside the normal
range.  The ratio is related to the decrease in premium income.  The  ratio
fell  outside the normal range the last three years.  A primary  cause  for
the  decrease  in  premium revenues is related to the potential  change  in
control  of  UTI over the last two years to two different parties.   During
September  of 1996, it was announced that control of UTI would pass  to  an
unrelated party, but the transaction did not materialize.  At this writing,
negotiations  are  progressing with a different  unrelated  party  for  the
change  in control of UTI. .  Please refer to the Notes to the Consolidated
Financial Statements for additional information.  The possible changes  and
resulting  uncertainties  have  hurt the insurance  companies'  ability  to
recruit and maintain sales agents.  The industry has experienced a downward
trend  in  the  total  number of agents who sell  insurance  products,  and
competition  for the top sales producers has intensified.   As  this  trend
appears  to  continue,  the recruiting focus of the  Company  has  been  on
introducing  quality  individuals  to the  insurance  industry  through  an
extensive  internal training program.  The Company feels this  approach  is
conducive  to  the mutual success of our new recruits and  the  Company  as
these  recruits  market our products in a professional, company  structured
manner.

The NAIC, in conjunction with state regulators, has been reviewing existing
insurance  laws and regulations.  A committee of the NAIC proposed  changes
in  the  regulations  governing insurance company investments  and  holding
company  investments in subsidiaries and affiliates which were  adopted  by
the  NAIC as model laws in 1996.  The Company does not presently anticipate
any material adverse change in its business as a result of these changes.

                                  27
<PAGE>

Legislative and regulatory initiatives regarding changes in the  regulation
of  banks and other financial services businesses and restructuring of  the
federal income tax system could, if adopted and depending on the form  they
take,  have  an  adverse impact on the Company by altering the  competitive
environment  for its products.  The outcome and timing of any such  changes
cannot  be  anticipated  at  this time, but the Company  will  continue  to
monitor  developments in order to respond to any opportunities or increased
competition that may occur.

The  NAIC adopted the Life Illustration Model Regulation.  Many states have
adopted the regulation effective January 1, 1997.  This regulation requires
products which contain non-guaranteed elements, such as universal life  and
interest  sensitive  life, to comply with certain  actuarially  established
tests.   These   tests  are  intended  to  target  future  performance  and
profitability  of a product under various scenarios.  The  regulation  does
not prevent a company from selling a product that does not meet the various
tests.  The only implication is the way in which the product is marketed to
the  consumer.   A  product that does not pass the  tests  uses  guaranteed
assumptions  rather than current assumptions in presenting  future  product
performance  to  the  consumer.  The Company conducts an  ongoing  thorough
review  of  its sales and marketing process and continues to emphasize  its
compliance efforts.

A  task  force of the NAIC is currently undertaking a project to  codify  a
comprehensive set of statutory insurance accounting rules and  regulations.
This  project is not expected to be completed earlier than 1999.   Specific
recommendations  have  been set forth in papers  issued  by  the  NAIC  for
industry  review.  The Company is monitoring the process, but the potential
impact of any changes in insurance accounting standards is not yet known.


ACCOUNTING AND LEGAL DEVELOPMENTS

The  Financial  Accounting Standards Board (FASB) has issued  Statement  of
Financial Accounting Standards (SFAS) No. 128 entitled Earnings per  share,
which  is  effective  for financial statements for fiscal  years  beginning
after   December  15,  1997.   SFAS  No.  128  specifies  the  computation,
presentation, and disclosure requirements for earnings per share (EPS)  for
entities  with publicly held common stock or potential common  stock.   The
Statement's objective is to simplify the computation of earnings per share,
and  to  make the U.S. standard for computing EPS more compatible with  the
EPS standards of other countries.

Under  SFAS  No.  128,  primary EPS computed in  accordance  with  previous
opinions  is replaced with a simpler calculation called basic  EPS.   Basic
EPS  is  calculated  by  dividing income available to  common  stockholders
(i.e.,  net income or loss adjusted for preferred stock dividends)  by  the
weighted-average number of common shares outstanding.  Thus,  in  the  most
significant  change in current practice, options, warrants, and convertible
securities   are  excluded  from  the  basic  EPS  calculation.    Further,
contingently  issuable shares are included in basic EPS  only  if  all  the
necessary conditions for the issuance of such shares have been satisfied by
the end of the period.

Fully  diluted  EPS  has not changed significantly  but  has  been  renamed
diluted  EPS.   Income  available to common stockholders  continues  to  be
adjusted  for  assumed  conversion of all potentially  dilutive  securities
using the treasury stock method to calculate the dilutive effect of options
and  warrants.  However, unlike the calculation of fully diluted EPS  under
previous opinions, a new treasury stock method is applied using the average
market   price  or  the  ending  market  price.   Further,  prior   opinion
requirement  to use the modified treasury stock method when the  number  of
options  or  warrants outstanding is greater than 20%  of  the  outstanding
shares  also  has been eliminated.  SFAS 128 also includes  certain  shares
that  are contingently issuable; however, the test for inclusion under  the
new rules is much more restrictive.

SFAS    No.  128  requires  companies  reporting  discontinued  operations,
extraordinary items, or the cumulative effect of accounting changes are  to
use  income from operations as the control number or benchmark to determine
whether  potential  common  shares  are  dilutive  or  antidilutive.   Only
dilutive securities are to be included in the calculation of diluted EPS.

                                    28
<PAGE>

This  statement  was  adopted for the 1997 Financial Statements.   For  all
periods presented the Company reported a loss from continuing operations so
any  potential issuance of common shares would have an antidilutive  effect
on  EPS.  Consequently, the adoption of SFAS No. 128 did not have an impact
on the Company's financial statement.

The  FASB  has issued SFAS No. 130 entitled Reporting Comprehensive  Income
and   SFAS  No.  132  Employers'  Disclosures  about  Pensions  and   Other
Postretirement  Benefits.  Both of the above statements are  effective  for
financial statements with fiscal years beginning after December 15,  1997.

SFAS No. 130 defines how to report and display comprehensive income and its
components in a full set of financial statements.  The purpose of reporting
comprehensive income is to report a measure of all changes in equity of  an
enterprise  that  result from recognized transactions  and  other  economic
events  of the period other than transactions with owners in their capacity
as owners.

SFAS   No.   132  addresses  disclosure  requirements  for  post-retirement
benefits.   The  statement does not change post-retirement  measurement  or
recognition issues.

The  Company  will adopt both SFAS No. 130 and SFAS No. 132  for  the  1998
financial statements.  Management does not expect either adoption to have a
material impact on the Company's financial statements.

The  Company  is  not  aware of any litigation that will  have  a  material
adverse effect on the financial position of the Company.  In addition,  the
Company  does  not believe that the regulatory initiatives currently  under
consideration  by various regulatory agencies will have a material  adverse
impact on the Company.  The Company is not aware of any material pending or
threatened  regulatory action with respect to the Company  or  any  of  its
subsidiaries.   The  Company does not believe that any  insurance  guaranty
fund assessments will be materially different from amounts already provided
for in the financial statements.


YEAR 2000 ISSUE

The  "Year  2000  Issue"  is  the  inability  of  computers  and  computing
technology  to recognize correctly the Year 2000 date change.  The  problem
results  from a long-standing practice by programmers to save memory  space
by  denoting  Years  using just two digits instead of four  digits.   Thus,
systems  that  are  not  Year 2000 compliant may be unable  to  read  dates
correctly  after  the Year 1999 and can return incorrect  or  unpredictable
results.   This   could  have  a  significant  effect  on  the    Company's
business/financial  systems  as  well as  products  and  services,  if  not
corrected.

The  Company established a project to address year 2000 processing concerns
in  September  of 1996.  In 1997 the Company completed the  review  of  the
Company's   internally  and  externally  developed   software,   and   made
corrections  to all year 2000 non-compliant processing.  The  Company  also
secured  verification of current and future year 2000 compliance  from  all
major  external software vendors.  In December of 1997, a separate computer
operating  environment was established with the system  dates  advanced  to
December  of 1999.  A parallel model office was established with all  dates
in the data advanced to December of 1999.  Parallel model office processing
is being performed using dates from December of 1999 to January of 2001, to
insure all year 2000 processing errors have been corrected.  Testing should
be  completed  by the end of the first quarter of 1998.  After  testing  is
completed,  periodic  regression  testing  will  be  performed  to  monitor
continuing  compliance.   By addressing year 2000 compliance  in  a  timely
manner,  compliance  will  be  achieved using existing  staff  and  without
significant impact on the Company operationally or financially.

                                29
<PAGE>

SUBSEQUENT EVENT

On  February 19, 1998, UTI signed a letter of intent with Jesse T. Correll,
whereby   Mr.  Correll  will  personally  or  in  combination  with   other
individuals make an equity investment in UTI over a period of three  years.
Under  the terms of the letter of intent, over a three year period of time,
Mr. Correll will buy 2,000,000 authorized but unissued shares of UTI common
stock  for $15.00 per share and will also buy 389,715 shares of UTI  common
stock,  representing  stock of UTI and UII, that UTI purchased  during  the
last eight months in private transactions at the average price UTI paid for
such  stock, plus interest, or approximately $10.00 per share.  Mr. Correll
also will purchase 66,667 shares of UTI common stock and $2,560,000 of face
amount  of  convertible bonds (which are due and payable on any  change  in
control  of UTI) in private transactions, primarily from officers  of  UTI.
Upon  completion  of  the transaction, Mr. Correll  would  be  the  largest
shareholder of UTI.

UTI  intends  to use the equity that is being contributed to  expand  their
operations through the acquisition of other life insurance companies.   The
transaction  is subject to negotiation of a definitive purchase  agreement;
completion  of due diligence by Mr. Correll; the receipt of regulatory  and
other    approvals;  and  the  satisfaction  of  certain  conditions.   The
transaction is not expected to be completed before June 30, 1998, and there
can be no assurance that the transaction will be completed.


CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

Any  forward-looking statement contained herein or in  any  other  oral  or
written  statement  by  the company or any of its  officers,  directors  or
employees  is qualified by the fact that actual results of the company  may
differ  materially  from any such statement due to the following  important
factors,  among  other risks and uncertainties inherent  in  the  company's
business:

1.   Prevailing interest rate levels, which may affect the ability  of  the
     company  to  sell  its  products, the market value  of  the  company's
     investments   and   the   lapse  ratio  of  the  company's   policies,
     notwithstanding   product   design  features   intended   to   enhance
     persistency of the company's products.

2.   Changes  in  the  federal income tax laws and  regulations  which  may
     affect the relative tax advantages of the company's products.

3.   Changes in the regulation of financial services, including bank  sales
     and    underwriting  of  insurance  products,  which  may  affect  the
     competitive environment for the company's products.

4.   Other factors affecting the performance of the company, including, but
     not   limited   to,   market   conduct  claims,   insurance   industry
     insolvencies, stock market performance, and investment performance.

                                  30
<PAGE>

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Listed  below  are the financial statements included in this  Part  of  the
Annual Report on SEC Form 10-K:

                                                               Page No.
FIRST COMMONWEALTH CORPORATION AND CONSOLIDATED SUBSIDIARIES
  Independent Auditor's Report for the
    Years ended December 31, 1997, 1996, 1995                     32



  Consolidated Balance Sheets                                     33



  Consolidated Statements of Operations                           34



  Consolidated Statements of Shareholders' Equity                 35



  Consolidated Statements of Cash Flows                           36



  Notes to Consolidated Financial Statements                     37-58



ITEM  9.   DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND  FINANCIAL
           DISCLOSURE

None

                                    31
<PAGE>


Independent Auditors' Report



Board of Directors and Shareholders
First Commonwealth Corporation


      We have audited the accompanying consolidated balance sheets of First
Commonwealth  Corporation (a Virginia corporation) and subsidiaries  as  of
December  31,  1997  and 1996, and the related consolidated  statements  of
operations,  shareholders' equity, and cash flows for  each  of  the  three
years  in  the period ended December 31, 1997.  These financial  statements
are the responsibility of the Company's management.  Our responsibility  is
to express an opinion on these financial statements based on our audits.

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

      In  our  opinion, the financial statements referred to above  present
fairly,  in  all material respects, the consolidated financial position  of
First Commonwealth Corporation and subsidiaries as of December 31, 1997 and
1996,   and  the  consolidated  results  of  their  operations  and   their
consolidated  cash flows for each of the three years in  the  period  ended
December  31,  1997,  in  conformity  with  generally  accepted  accounting
principles.

     We have also audited Schedule I as of December 31, 1997, and Schedules
II,  IV  and  V  as  of  December 31, 1997 and 1996, of First  Commonwealth
Corporation  and subsidiaries and Schedules II, IV and V for  each  of  the
three  years  in  the period then ended.  In our opinion,  these  schedules
present  fairly, in all material respects, the information required  to  be
set forth therein.



                                   KERBER, ECK & BRAECKEL LLP





Springfield, Illinois
March 26, 1998

                                     32
<PAGE>

<TABLE>
FIRST COMMONWEALTH CORPORATION
CONSOLIDATED BALANCE SHEETS
As of December 31, 1997 and 1996

ASSETS

                                                      1997          1996
<S>                                             <C>            <C>
Investments:
   Fixed maturities at amortized cost
     (market $184,782,568 and $181,815,225)     $ 180,649,040  $ 179,535,861
   Investments held for sale:
   Fixed maturities, at market
     (cost $1,672,298 and $1,984,661)               1,668,630      1,961,166
   Equity securities, at market
       (cost $3,184,357 and $2,086,159)             3,001,744      1,794,405
   Mortgage loans on real estate at
      amortized cost                                9,469,444     11,022,792
Investment real estate, at cost,
      net of accumulated depreciation               9,760,732      9,779,984
     Real estate acquired in satisfaction of deb    1,724,544      1,724,544
       Policy loans                                14,207,189     14,438,120
       Short-term investments                       1,773,531        400,000
                                                  222,254,854    220,656,872

Cash and cash equivalents                          15,704,573     16,801,288
Investment in parent                                  350,000        350,000
Accrued investment income                           3,630,773      3,424,546
Reinsurance receivables:
   Future policy benefits                          37,814,106     38,745,093
   Policy claims and other benefits                 3,529,078      3,856,124
Other accounts and notes receivable                   840,066        894,321
Cost of insurance acquired                         18,654,506     19,886,494
Deferred policy acquisition costs                  16,745,720     18,162,356
Cost in excess of net assets purchased,
   net of accumulated amortization                  9,180,471      9,624,135
Property and equipment,
   net of accumulated depreciation                  3,152,182      2,994,022
Other assets                                          715,862      1,243,873
    Total assets                                $ 332,572,191  $ 336,639,124


         LIABILITIES AND SHAREHOLDERS' EQUITY
Policy liabilities and accruals:
   Future policy benefits                       $ 253,964,709  $ 252,718,388
   Policy claims and benefits payable               2,080,907      3,193,806
   Other policyholder funds                         2,445,469      2,784,967
   Dividend and endowment accumulations            14,679,816     13,647,676
Income taxes payable:
   Current                                             10,555         60,044
   Deferred                                         3,365,692      3,043,775
Notes payable                                      18,241,602     18,999,853
Indebtedness to (from) affiliates, net                 27,150         36,933
Other liabilities                                   2,914,991      5,088,785
    Total liabilities                             297,730,891    299,574,227
Minority interests in consolidated subsidiaries     1,634,877      1,586,246

Shareholders' equity:
Common stock - $1 par value per share.
  Authorized 62,500 shares - 54,560 and
  59,919 shares issued after deducting
  treasury shares of 930 and 931                      54,616          59,919
Additional paid-in capital                         1,877,243      52,406,191
Unrealized depreciation of investments
  held for sale                                     (198,630)       (305,715)
Accumulated deficit                              (18,526,806)    (16,681,744)
    Total shareholders' equity                    33,206,423      35,478,651
    Total liabilities and
     shareholders' equity                      $ 332,572,191   $ 336,639,124

</TABLE>
                              See accompanying notes
                                       33
<PAGE>
<TABLE>
FIRST COMMONWEALTH  CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Years Ended December 31, 1997
                                     1997              1996            1995

<S>                            <C>              <C>             <C>
Revenues:
Premiums and policy fees       $  33,373,950    $  35,891,609   $ 38,481,638
Reinsurance premiums and
 policy fees                      (4,734,705)      (4,947,151)    (5,383,102)
Net investment income             14,878,336       15,909,226     15,499,751
Realized investment gains
 and (losses), net                  (268,982)        (411,053)      (348,582)
Other income                         105,679           95,400        115,469
                                  43,354,278       46,538,031     48,365,174

Benefits and other expenses:
 Benefits, claims and settlement
  expenses:
    Life                          25,021,845       30,800,404     28,094,061
    Reinsurance benefits
     and claims                   (2,078,982)      (2,283,956)    (2,849,806)
    Annuity                        1,543,258        1,826,600      1,762,584
    Dividends to policyholders     3,929,073        4,100,552      4,217,176
 Commissions and amortization
  of deferred policy
   acquisition costs               4,308,365        4,992,885      5,440,653
Amortization of cost of
 insurance acquired                1,231,988        1,703,400      1,944,798
Operating expenses                 9,265,181       11,631,839     10,672,996
Interest expense                   1,612,438        1,700,823      1,971,360
                                  44,833,166       54,472,547     51,199,822

Loss before income taxes, minority
  interest and equity in loss of
   investees                      (1,478,888)      (7,934,516)    (2,834,648)
Income tax credit (expense)         (321,955)       4,961,506      1,435,824
Minority interest in gain
  of consolidated subsidiaries       (44,219)         (58,639)       (52,814)
Net loss                        $ (1,845,062)    $ (3,031,649)  $ (1,451,638)

Net loss per
 common share                   $     (32.65)    $     (50.60)  $     (24.00)

Average common
 shares outstanding                   56,512           59,919         60,495

</TABLE>
                             See accompanying notes
                                        34
<PAGE>
<TABLE>

FIRST  COMMONWEALTH  CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Years Ended December 31, 1997

                                      1997          1996              1995

<S>                               <C>           <C>             <C>
Common stock
  Balance, beginning of year      $     59,919  $     59,919    $     60,850
    Issued during year                       0             0               0
  Stock retired from purchase
   of fractional shares of
    reverse stock split                 (5,303)            0               0
  Treasury stock acquired
   through liquidation
    of Commonwealth
    Industries Corporation                   0             0            (931)
  Balance, end of year            $     54,616  $     59,919    $     59,919


Additional paid-in capital
  Balance, beginning of year      $ 52,406,191  $ 52,406,191    $ 55,867,760
  Issued during year                         0             0               0
  Stock retired from purchase of
   fractional shares of reverse
   stock split                        (528,948)            0               0
  Treasury stock acquired through
   liquidation of Commonwealth
   Industries Corporation                    0             0      (3,461,569)
  Balance, end of year            $ 51,877,243  $ 52,406,191    $ 52,406,191

Unrealized appreciation (depreciation)
  of investments held for sale
  Balance, beginning of year      $   (305,715) $   (131,215)   $   (423,916)
  Change during year                   107,085      (174,500)        292,701
  Balance, end of year            $   (198,630) $   (305,715)   $   (131,215)

Accumulated deficit
  Balance, beginning of year      $(16,681,744) $(13,650,095)   $(12,198,457)
  Net loss                          (1,845,062)   (3,031,649)     (1,451,638)
  Balance, end of year            $(18,526,806) $(16,681,744)   $(13,650,095)
Total shareholders' equity,
 end of year                      $ 33,206,423  $ 35,478,651    $ 38,684,800

</TABLE>
                             See accompanying notes
                                      35
<PAGE>

<TABLE>
FIRST  COMMONWEALTH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Years Ended December 31, 1997

                                      1997           1996           1995
<S>                            <C>              <C>             <C>
Increase (decrease) in cash and
  cash equivalents
Cash flows from operating
  activities:
 Net loss                      $   (1,845,062)  $  (3,031,649)  $  (1,451,638)
   Adjustments to reconcile net
    loss to net cash provided by (used in)
    operating activities net of changes
    in assets and liabilities resulting
    from the sales  and purchases of
    subsidiaries:
   Amortization/accretion of
    fixed maturities                  610,668         829,326         866,658
   Realized investment (gains)
    losses, net                       268,982         411,053         348,582
   Policy acquisition costs deferred (586,000)     (1,276,000)     (2,370,000)
   Amortization of deferred policy
    acquisition costs               2,002,636       2,155,372       2,100,748
   Amortization of cost of
    insurance acquired              1,231,988       1,703,400       1,944,798
   Amortization of costs in excess of
    net assets purchased              443,664         447,035         691,307
   Depreciation                       468,831         514,507         531,364
   Minority interest                   44,219          58,639          52,814
   Change in accrued
    investment income                (206,227)        195,821        (173,350)
   Change in reinsurance
    receivables                     1,258,033          83,742        (482,226)
   Change in policy liabilities
    and accruals                      812,862       7,444,348       4,954,300
   Charges for mortality and
    administration of universal
    life and annuity products     (10,588,874)    (10,239,476)     (9,757,354)
   Interest credited to account
    balances                        7,212,406       7,075,921       6,644,282
   Change in income taxes payable     272,428      (4,974,013)     (1,460,367)
   Change in indebtedness (to)
    from affiliates, net               (9,783)        199,321          21,528
   Change in other assets and
    liabilities, net               (1,590,001)      1,316,629      (1,741,560)
Net cash provided by (used in)
   operating activities              (199,230)      2,913,976         719,886

Cash flows from investing activities:
 Proceeds from investments sold
   and matured:
  Fixed maturities held for
   sale matured                       290,660       1,219,036         619,612
  Fixed maturities sold                     0      18,736,612               0
  Fixed maturities matured         21,488,265      20,721,482      16,265,140
  Equity securities                    76,302           8,990         104,260
  Mortgage loans                    1,794,518       3,364,427       2,252,423
  Real estate                       1,136,995       3,219,851       1,768,254
  Policy loans                      4,785,222       3,937,471       4,110,744
  Short-term                          400,000         825,000          25,000
 Total proceeds from investments
   sold and matured                29,971,962      52,032,869      25,145,433
 Cost of investments acquired:
  Fixed maturities                (23,220,172)    (29,365,111)    (25,112,358)
  Equity securities                (1,248,738)              0      (1,000,000)
  Mortgage loans                     (245,234)       (503,113)       (322,129)
  Real estate                      (1,444,980)       (813,331)     (1,902,609)
  Policy loans                     (4,554,291)     (4,329,124)     (4,713,471)
  Short-term                       (1,721,671)       (830,983)       (100,000)
 Total cost of investments
   acquired                       (32,435,086)    (35,841,662)    (33,150,567)
 Purchase of property
   and equipment                     (531,528)       (383,411)        (57,625)
Net cash provided by (used in)
 investing activities              (2,994,652)     15,807,796      (8,062,759)

Cash flows from financing activities:
  Policyholder contract deposits   17,905,246      22,245,369      25,021,983
  Policyholder contract
   withdrawals                    (14,515,576)    (15,433,644)    (16,008,462)
  Net cash transferred from
   coinsurance ceded                        0     (19,088,371)              0
  Proceeds from notes payable       1,000,000       9,300,000         300,000
  Payments of principal on notes
   payable                         (1,758,252)    (10,923,475)     (1,205,861)
  Payment for fractional shares
   from reverse stock split          (534,251)              0               0
Net cash provided by (used in)
 financing activities               2,097,167     (13,900,121)      8,107,660

Net increase (decrease) in cash
 and cash equivalents              (1,096,715)      4,821,651         764,787
Cash and cash equivalents at
 beginning of year                 16,801,288      11,979,637      11,214,850
Cash and cash equivalents at
 end of year                    $  15,704,573   $  16,801,288   $  11,979,637

</TABLE>
                                See accompanying notes
                                         36
<PAGE>

FIRST COMMONWEALTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

A.      ORGANIZATION  -  At  December 31, 1997,  the  parent,   significant
        majority-owned    subsidiaries    and    affiliates     of    First
        Commonwealth   Corporation were as  depicted   on   the   following
        organizational chart.

        United  Trust,  Inc.  ("UTI") is the ultimate controlling  company.
        UTI   owns  53%   of United Trust Group ("UTG") and 41%  of  United
        Income, Inc. ("UII").  UII  owns  47%  of  UTG.   UTG  owns 79%  of
        First  Commonwealth   Corporation  ("FCC") and  100%  of  Roosevelt
        Equity  Corporation ("REC").  FCC owns 100% of Universal   Guaranty
        Life  Insurance  Company ("UG").  UG owns 100% of  United  Security
        Assurance   Company ("USA").  USA owns  84%  of  Appalachian   Life
        Insurance   Company ("APPL") and APPL owns 100% of Abraham  Lincoln
        Insurance Company ("ABE").


                                    37
<PAGE>

The   Company's significant accounting policies consistently applied in the
preparation  of  the  accompanying consolidated financial  statements   are
summarized as follows.


B.   NATURE  OF  OPERATIONS  -  First  Commonwealth  Corporation   is    an
     insurance  holding company, which  sells  insurance products   through
     its  insurance subsidiaries.  The Company's principal market  is   the
     midwestern  United States.  The primary  focus  of  the  Company   has
     been   the  servicing of existing insurance  business  in force,   the
     solicitation  of  new life  insurance  products  and  the  acquisition
     of other companies in similar lines of business.

C.   PRINCIPLES     OF    CONSOLIDATION    -  The  consolidated   financial
     statements  include the accounts of the  Company  and   its  majority-
     owned subsidiaries.  Other investments in affiliates are  carried   at
     cost.   All  significant intercompany  accounts  and transactions have
     been eliminated.

D.   BASIS    OF   PRESENTATION  -   The   financial  statements  of  First
     Commonwealth  Corporation's  life   insurance subsidiaries  have  been
     prepared  in accordance with generally  accepted accounting principles
     which   differ   from   statutory   accounting practices permitted  by
     insurance regulatory authorities.

E.   USE  OF  ESTIMATES - In preparing financial statements  in  conformity
     with   generally    accepted   accounting principles,   management  is
     required  to  make  estimates  and   assumptions  that   affect    the
     reported   amounts  of assets  and  liabilities,  the  disclosure   of
     contingent  assets  and liabilities at the  date   of   the  financial
     statements,   and  the  reported  amounts  of  revenues  and  expenses
     during   the  reporting period.  Actual results   could   differ  from
     those estimates.

F.   INVESTMENTS - Investments  are  shown  on the following bases:

     Fixed maturities -- at cost, adjusted for amortization  of  premium or
     discount  and  other-than-temporary   market  value   declines.    The
     amortized cost of such investments differs  from their  market values;
     however,  the  Company  has the ability and  intent  to   hold   these
     investments  to  maturity, at which time  the   full   face  value  is
     expected to be realized.

     Investments  held for sale --  at  current market  value,   unrealized
     appreciation  or  depreciation  is  charged directly to  shareholders'
     equity.

     Mortgage   loans  on  real  estate  --  at unpaid  balances,  adjusted
     for amortization of premium  or  discount, less allowance for possible
     losses.

     Real   estate  - Investment real estate  at cost,   less    allowances
     for   depreciation  and,   as   appropriate, provisions  for  possible
     losses.   Foreclosed real estate  is  adjusted for  any impairment  at
     the  foreclosure date.  Accumulated depreciation on  investment   real
     estate  was $539,366 and $442,373 as  of  December 31, 1997 and  1996,
     respectively.

     Policy    loans   --   at   unpaid   balances  including   accumulated
     interest  but  not  in  excess  of  the   cash surrender value.

     Short-term investments -- at cost,  which approximates current  market
     value.

     Realized    gains   and  losses   on   sales   of  investments     are
     recognized  in  net   income   on   the specific identification basis.

                                       38
<PAGE>

G.   RECOGNITION   OF   REVENUES   AND    RELATED  EXPENSES   -
     Premiums  for  traditional life insurance   products,   which  include
     those   products  with  fixed  and  guaranteed  premiums and benefits,
     consist   principally  of  whole  life  insurance  policies,  limited-
     payment   life insurance policies, and certain  annuities   with  life
     contingencies  are  recognized as revenues when  due.   Accident   and
     health insurance premiums are recognized as revenue pro-rata over  the
     terms of the policies.  Benefits and related expenses associated  with
     the  premiums earned are charged to expense proportionately  over  the
     lives  of  the policies through a provision for future policy  benefit
     liabilities  and through deferral and amortization of deferred  policy
     acquisition  costs.   For  universal  life  and  investment  products,
     generally  there is no requirement for payment of premium  other  than
     to  maintain account values at a level sufficient to pay mortality and
     expense  charges.  Consequently, premiums for universal life  policies
     and  investment products are not reported as revenue, but as deposits.
     Policy   fee  revenue  for  universal  life  policies  and  investment
     products  consists  of  charges  for the  cost  of  insurance,  policy
     administration,  and surrenders assessed during the period.   Expenses
     include  interest  credited  to policy account  balances  and  benefit
     claims incurred in excess of policy account balances.

H.   DEFERRED   POLICY  ACQUISITION  COSTS   - Commissions  and
     other costs of acquiring life insurance products  that vary  with  and
     are  primarily  related to the production of new  business  have  been
     deferred.   Traditional life insurance acquisition  costs   are  being
     amortized   over   the   premium-paying   period   of   the    related
     policies  using  assumptions consistent with those used  in  computing
     policy benefit reserves.

     For  universal life insurance and interest sensitive  life   insurance
     products,   acquisition   costs  are   being amortized   generally  in
     proportion  to the present  value  of  expected gross   profits   from
     surrender  charges and investment, mortality,  and  expense   margins.
     Under   SFAS  No.  97,  "Accounting   and   Reporting   by   Insurance
     Enterprises   for Certain Long-Duration  Contracts  and  for  Realized
     Gains  and  Losses from the Sale of Investments," the   Company  makes
     certain    assumptions    regarding   the   mortality,    persistency,
     expenses,  and  interest  rates it expects  to  experience  in  future
     periods.  These assumptions are to be best estimates and  are  to   be
     periodically  updated whenever actual experience  and/or  expectations
     for  the future change from initial assumptions.  The amortization  is
     adjusted  retrospectively when estimates of current  or  future  gross
     profits to be realized from a group of products are revised.

     The  following table summarizes  deferred policy acquisition costs and
     related data for the years shown.

                                        1997         1996          1995
    Deferred, beginning of year    $ 18,162,356  $ 19,041,728  $ 18,772,476

    Acquisition costs deferred:
      Commissions                       312,000       845,000     1,838,000
      Other expenses                    274,000       431,000       532,000
      Total                             586,000     1,276,000     2,370,000

      Interest accretion                827,000       854,000       817,000
      Amortization charged to income (2,829,636)   (3,009,372)   (2,917,748)
      Net amortization               (2,002,636)   (2,155,372)   (2,100,748)

      Change for the year            (1,416,636)     (879,372)      269,252

    Deferred, end of year          $ 16,745,720  $ 18,162,356  $ 19,041,728

                                       39
<PAGE>


     The  following  table reflects the components of the income  statement
     for  the  line  item Commissions and amortization of  deferred  policy
     acquisition costs.


                                       1997         1996          1995
     Net amortization of deferred
      policy acquisition costs    $  2,002,636  $  2,155,372  $  2,100,748
     Commissions                     2,305,729     2,837,513     3,339,905
      Total                       $  4,308,365  $  4,992,885  $  5,440,653

     Estimated   net  amortization expense of deferred  policy  acquisition
     costs for the next five years is as follows:

                                  Interest                       Net
                                 Accretion   Amortization   Amortization
     1998                       $  764,000   $  2,465,000   $  1,701,000
     1999                          692,000      2,211,000      1,519,000
     2000                          626,000      1,982,000      1,356,000
     2001                          568,000      1,784,000      1,216,000
     2002                          514,000      1,606,000      1,092,000


I.    COST  OF INSURANCE ACQUIRED - When  an
      insurance company is acquired, the  Company assigns a portion of  its
      cost  to  the  right  to  receive future  cash  flows from  insurance
      contracts existing at the  date  of the  acquisition.   The  cost  of
      policies  purchased  represents  the actuarially  determined  present
      value  of  the   projected  future  cash flows  from   the   acquired
      policies.  Cost of  Insurance  Acquired  is amortized  with  interest
      in  relation to  expected  future  profits, including  direct charge-
      offs  for  any excess of the unamortized  asset over  the   projected
      future  profits.  The interest rates  utilized  in the   amortization
      calculation are 9%  on  approximately  72%  of  the balance  and  15%
      on  the  remaining  balance.   The  interest   rates   vary  due   to
      differences  in  the  blocks  of  business.   The   amortization   is
      adjusted   retrospectively  when estimates  of  current   or   future
      gross profits to be realized from a group of products are revised.


                                    1997          1996           1995
Cost of insurance acquired,
 beginning of year             $ 19,886,494  $ 27,964,733  $ 29,909,531
   Interest accretion             1,630,058     2,694,172     2,825,066
   Amortization                  (2,862,046)   (4,397,572)   (4,769,864)
   Net amortization              (1,231,988)   (1,703,400)   (1,944,798)
   Balance attributable to
    coinsurance agreement                 0    (6,374,839)            0
Cost of insurance acquired,
 end of year                   $ 18,654,506  $ 19,886,494  $ 27,964,733


                                     40
<PAGE>

     Estimated  net amortization expense of cost of insurance acquired  for
     the next five years is as follows:

                            Interest                           Net
                            Accretion     Amortization    Amortization
1998                     $  1,556,000     $  2,582,000    $  1,026,000
1999                        1,495,000        2,438,000         943,000
2000                        1,435,000        2,429,000         994,000
2001                        1,363,000        2,405,000       1,042,000
2002                        1,279,000        2,237,000         958,000


J.   COST   IN  EXCESS  OF NET ASSETS PURCHASED - Cost in  excess  of   net
     assets  purchased  is  the  excess of the amount  paid  to  acquire  a
     company  over  the fair value of its net assets.  Costs in  excess  of
     net  assets purchased are amortized on the straight-line basis over  a
     40-year  period.  Management continually reviews the value of goodwill
     based  on  estimates  of future earnings.  As  part  of  this  review,
     management  determines  whether goodwill  is  fully  recoverable  from
     projected              undiscounted  net  cash  flows  from   earnings
     of  the  subsidiaries   over the remaining amortization  period.    If
     management  were   to  determine that changes in such  projected  cash
     flows    no    longer    supported                                 the
     recoverability   of   goodwill   over   the    remaining  amortization
     period,  the  carrying value of goodwill would  be  reduced  with    a
     corresponding    charge    to   expense   or    by    shortening   the
     amortization  period  (no  such changes have  occurred).   Accumulated
     amortization of cost in excess of net assets purchased was  $5,971,978
     and $5,528,314 as of December 31, 1997 and 1996, respectively.

K.   PROPERTY  AND EQUIPMENT - Company- occupied property, data  processing
     equipment and furniture and  office equipment  are  stated   at   cost
     less  accumulated  depreciation   of $5,167,938   and   $4,796,100  at
     December    31,    1997   and   1996, respectively.   Depreciation  is
     computed  on a straight-line  basis  for financial reporting  purposes
     using  estimated  useful lives of three  to 30  years.    Depreciation
     expense was $371,838 and  $418,449  for  the years ended December  31,
     1997 and 1996, respectively.

L.   FUTURE    POLICY    BENEFITS  AND  EXPENSES  -  The   liabilities  for
     traditional  life  insurance and accident and health insurance  policy
     benefits  are  computed using a net level method.   These  liabilities
     include  assumptions as to investment yields, mortality,  withdrawals,
     and  other  assumptions  based  on the  life  insurance  subsidiaries'
     experience  adjusted  to reflect anticipated  trends  and  to  include
     provisions  for  possible unfavorable deviations.  The  Company  makes
     these  assumptions at the time the contract is issued or, in the  case
     of   contracts  acquired  by purchase, at the purchase  date.  Benefit
     reserves  for  traditional  life insurance  policies  include  certain
     deferred    profits  on  limited-payment  policies   that are    being
     recognized in income over the policy term.  Policy benefit claims  are
     charged  to  expense  in  the period that  the  claims  are  incurred.
     Current  mortality  rate assumptions are based on 1975-80  select  and
     ultimate tables.  Withdrawal rate assumptions are based upon Linton  B
     or  Linton  C,  which  are  industry  standard  actuarial  tables  for
     forecasting assumed policy lapse rates.

     Benefit  reserves for universal life insurance and interest  sensitive
     life  insurance  products are computed under a  retrospective  deposit
     method  and   represent  policy  account  balances  before  applicable
     surrender  charges.  Policy benefits and claims that  are  charged  to
     expense  include  benefit claims in excess of related  policy  account
     balances.  Interest crediting rates for universal life  and   interest
     sensitive products range from 5.0% to 6.0% in 1997, 1996 and 1995.

M.   POLICY   AND  CONTRACT  CLAIMS - Policy and contract  claims   include
     provisions  for  reported claims in process of settlement,  valued  in
     accordance  with the terms of the policies and contracts, as  well  as
     provisions  for  claims  incurred  and  unreported  based   on   prior
     experience of the Company.


                                  41
<PAGE>

N.   PARTICIPATING INSURANCE - Participating business represents  29%   and
     30%  of the ordinary life insurance in force at December 31, 1997  and
     1996,   respectively.   Premium  income  from  participating  business
     represents  50%,  52%, and 55% of total premiums for the  years  ended
     December  31,  1997,  1996  and  1995, respectively.   The  amount  of
     dividends  to  be  paid  is  determined  annually  by  the  respective
     insurance  subsidiary's  Board of Directors.   Earnings  allocable  to
     participating  policyholders  are based on  legal  requirements  which
     vary by state.

O.   INCOME   TAXES  -  Income  taxes  are  reported  under  Statement   of
     Financial Accounting Standards Number 109.  Deferred income taxes  are
     recorded  to  reflect  the  tax  consequences  on  future  periods  of
     differences between the tax bases of assets and liabilities and  their
     financial reporting amounts at the end of each such period.

P.   BUSINESS  SEGMENTS  -  The  companies  operate  principally   in   the
     individual life insurance business.

Q.   EARNINGS   PER SHARE - Earnings per share are based on  the   weighted
     average   number  of  common  shares  outstanding  during  each  year,
     retroactively  adjusted  to  give effect  to  all  stock  splits.   In
     accordance with Statement of Financial Accounting Standards  No.  128,
     the  computation of diluted earnings per share is not shown since  the
     Company  has  a  loss  from  continuing  operations  in  each   period
     presented,   and  any  assumed  conversion,  exercise,  or  contingent
     issuance  of securities would have an antidilutive effect on  earnings
     per share.

R.   CASH  EQUIVALENTS - The Company considers certificates of deposit  and
     other  short-term instruments with an original purchased  maturity  of
     three months or less as cash equivalents.

S.   RECLASSIFICATIONS   -   Certain  prior  year   amounts    have    been
     reclassified   to   conform   with  the   1996   presentation.    Such
     reclassifications  had  no  effect on previously  reported  net  loss,
     total assets, or shareholders' equity.

T.   REINSURANCE   - In the normal course of business, the  Company   seeks
     to  limit its exposure to loss on any single insured and to recover  a
     portion  of  benefits paid by ceding reinsurance  to  other  insurance
     enterprises  or  reinsurers  under  excess  coverage  and  coinsurance
     contracts.  The Company retains a maximum of $125,000 of coverage  per
     individual life.

     Amounts  paid  or  deemed to have been paid for reinsurance  contracts
     are  recorded as reinsurance receivables.  Reinsurance receivables  is
     recognized  in  a manner consistent with the liabilities  relating  to
     the  underlying reinsured contracts.  The cost of reinsurance  related
     to  long-duration  contracts is accounted for over  the  life  of  the
     underlying reinsured policies using assumptions consistent with  those
     used to account for the underlying policies.


2.  SHAREHOLDER DIVIDEND RESTRICTION

At  December  31,  1997,  substantially all of  consolidated  shareholders'
equity  represents net assets of FCC's subsidiaries.  The payment  of  cash
dividends  to shareholders by FCC s not legally restricted.  UG's  dividend
limitations are described below.

Ohio domiciled insurance companies require five days prior notification  to
the  insurance  commissioner  for  the payment  of  an  ordinary  dividend.
Ordinary  dividends are defined as the greater of:  a) prior year statutory
earnings  or b) 10% of statutory capital and surplus.  For the  year  ended
December  31, 1997, UG had a statutory gain from operations of  $1,779,246.
At  December  31,  1997,  UG's statutory capital and  surplus  amounted  to
$10,997,365.   Extraordinary  dividends  (amounts  in  excess  of  ordinary
dividend  limitations) require prior approval of the insurance commissioner
and are not restricted to a specific calculation.

                                  42
<PAGE>

3.  INCOME TAXES

Until 1984, the insurance companies were taxed under the provisions of  the
Life  Insurance Company Income Tax Act of 1959 as amended by the Tax Equity
and  Fiscal Responsibility Act of 1982.  These laws were superseded by  the
Deficit Reduction Act of 1984.  All of these laws are based primarily  upon
statutory results with certain special deductions and other items available
only to life insurance companies.  Under the provision of the pre-1984 life
insurance  company  income  tax  regulations,  a  portion  of   "gain  from
operations" of a life insurance company was not subject to current taxation
but  was accumulated, for tax purposes, in a special tax memorandum account
designated as "policyholders' surplus account".  Federal income taxes  will
become  payable on this account at the then current tax rate  when  and  if
distributions to shareholders, other than stock dividends and other limited
exceptions,  are made in excess of the accumulated previously taxed  income
maintained in the "shareholders surplus account".

The  following table summarizes the companies with this situation  and  the
maximum amount of income which has not been taxed in each.


                 Company             Shareholders'      Untaxed
                                        Surplus         Balance
                   ABE              $  5,237,958    $   1,149,693
                   APPL                5,417,825        1,525,367
                   UG                 27,760,313        4,363,821
                   USA                         0                0

The  payment  of taxes on this income is not anticipated; and, accordingly,
no deferred taxes have been established.

The  life insurance company subsidiaries file a consolidated federal income
tax return.  The holding companies of the group file separate returns.

Life  insurance company taxation is based primarily upon statutory  results
with  certain  special deductions and other items available  only  to  life
insurance   companies.   Income  tax  expense  consists  of  the  following
components:

                                    1997      1996       1995
Current tax expense (credit)   $         38  $   (152,812) $     (1,324)
Deferred tax expense (credit)       321,917    (4,808,694)   (1,434,500)
                               $    321,955  $ (4,961,506) $ (1,435,824)

The  Companies have net operating loss carryforwards for federal income tax
purposes expiring as follows:

                                         UG             FCC
                      2004          $         0     $   163,334
                      2005                    0         138,765
                      2006            2,400,574          33,345
                      2007              782,452         676,067
                      2008              939,977           4,595
                      2009                    0         168,800
                      2010                    0          19,112
                      2012            2,970,692               0
                      TOTAL         $ 7,093,695     $ 1,204,018

                                    43
<PAGE>

The  Company  has  established a deferred tax asset of $2,904,200  for  its
operating   loss  carryforwards  and  has  established  an   allowance   of
$2,904,200.

The  provision  or  (credit)  for income taxes differed  from  the  amounts
computed by applying the applicable United States statutory rate of 35%  to
the loss before taxes as a result of the following differences:

                                      199719961995
    Tax computed at statutory rate    $  (517,611) $ (2,777,081) $   (992,127)
    Changes in taxes due to:
     Cost in excess of net
      assets purchased                    155,282       156,462       154,435
     Current year loss for which
      no benefit realized               1,039,742             0             0
     Benefit of prior losses             (324,705)   (2,393,300)     (599,113)
     Other(30,753)52,413981
    Income tax expense (credit)       $   321,955  $ (4,961,506) $ (1,435,824)


The  following  table summarizes the major components  which  comprise  the
deferred tax liability as reflected in the balance sheets:

                                               1997     1996
        Investments                        $  (340,479)   $  (355,325)
        Deferred policy acquisition
          costs                              5,861,002      6,356,825
        Cost of insurance acquired           6,529,077      6,960,273
        Agent balances                         (23,954)       (65,609)
        Property and equipment                (104,071)       (21,463)
        Due premiums                        (1,082,960)    (1,175,166)
        Discount of notes                      896,113        922,766
        Future policy benefits              (5,143,733)    (6,074,568)
        Other liabilities                   (1,045,816)    (1,587,422)
        Federal tax DAC                     (2,179,487)    (1,916,536)
        Deferred tax liability             $ 3,365,692    $ 3,043,775

                                      44
<PAGE>

4.  ANALYSIS OF INVESTMENTS, INVESTMENT INCOME AND INVESTMENT GAIN

A.NET  INVESTMENT  INCOME  -  The following table reflects  net  investment
  income by type of investment:

          December 31,
199719961995
  Fixed maturities and fixed maturities
    held for sale                  $ 12,736,865  $ 13,396,431  $ 13,292,552
  Equity securities                      87,211        88,661        52,445
  Mortgage loans                        802,123     1,047,461     1,257,189
  Real estate                           745,502       794,844       975,080
  Policy loans                          976,064     1,121,538     1,041,900
  Short-term investments                 70,624        18,399        21,295
  Other                                 658,008       664,795       620,728
  Total consolidated
   investment income                 16,076,397    17,132,129    17,261,189
  Investment expenses                (1,198,061)   (1,222,903)   (1,761,438)
  Consolidated net
   investment income               $ 14,878,336  $ 15,909,226  $ 15,499,751


At  December  31,  1997,  the  Company  had  a  total  of  $5,797,000  of
investments,  comprised of $3,848,000 in real estate  and  $1,949,000  in
equity securities, which did not produce income during 1997.

The  following table summarizes the Company's fixed maturity holdings and
investments held for sale by major classifications:

                                              Carrying Value
                                               1997     1996
Investments held for sale:
Fixed maturities                          $   1,668,630   $   1,961,166
Equity securities                             3,001,744       1,794,405
Fixed maturities:
U.S. Government, government
  agencies and authorities                   28,032,927      28,301,386
State, municipalities and
   political subdivisions                    22,739,944      14,387,883
Collateralized mortgage obligations          11,093,926      13,246,781
Public utilities                             47,971,152      51,794,312
All other corporate bonds                    70,811,091      71,805,499
                                          $ 185,319,414   $ 183,291,432


By  insurance statute, the majority of the Company's investment portfolio
is  required  to  be invested in investment grade securities  to  provide
ample  protection for policyholders.  The Company does not invest in   so
called "junk bonds" or derivative investments.

                                 45
<PAGE>

Below  investment grade debt securities generally provide  higher  yields
and  involve greater risks than investment grade debt securities  because
their issuers typically are more highly leveraged and more vulnerable  to
adverse  economic conditions than investment grade issuers.  In addition,
the  trading market for these securities is usually more limited than for
investment grade debt securities.  Debt securities classified  as   below
investment grade are those that receive a Standard & Poor's rating of  BB
or below.

The   following  table  summarizes by category securities  held  that   are
below investment grade at amortized cost:

           Below Investment
           Grade Investments             1997        1996          1995
       State, Municipalities and
        political Subdivisions      $        0  $    10,042    $        0
       Public Utilities                 80,497      117,609       116,879
       Corporate                       656,784      813,717       819,010
       Total                        $  737,281  $   941,368    $  935,889

                                        46
<PAGE>

B.INVESTMENT SECURITIES

The  amortized  cost  and  estimated  market  values  of  investments  in
securities including investments held for sale are as follows:
<TABLE>

                              Cost or       Gross       Gross      Estimated
                             Amortized    Unrealized  Unrealized     Market
1997                           Cost         Gains       Losses       Value

<S>                         <C>          <C>         <C>         <C>
Investments Held for Sale:
 U.S. Government and govt.
  agencies and authorities  $  1,448,202 $         0 $   (5,645) $  1,442,557
 States, municipalities and
  political subdivisions          35,000         485          0        35,485
 Collateralized mortgage
  obligations                          0           0          0             0
 Public utilities                 80,169         328          0        80,497
 All other corporate bonds       108,927       1,164          0       110,091
                               1,672,298       1,977     (5,645)    1,668,630
 Equity securities             3,184,357     176,508   (359,121)    3,001,744
 Total                      $  4,856,655 $   178,485 $ (364,766) $  4,670,374

Held to Maturity Securities:
 U.S. Government and govt.
  agencies  and authorities $ 28,032,927 $   641,814 $  (51,771) $ 28,622,970
 States, municipalities and
  political subdivisions      22,739,944     711,548     (1,891)   23,449,601
 Collateralized mortgage
    obligations               11,093,926     210,435    (96,714)   11,207,647
 Public utilities             47,971,152   1,251,180    (80,795)   49,141,537
 All other corporate bonds    70,811,091   1,649,940   (100,218)   72,360,813
 Total                      $180,649,040 $ 4,464,917 $ (331,389) $184,782,568

</TABLE>
                                      47
<PAGE>
<TABLE>
                              Cost or       Gross       Gross      Estimated
                             Amortized    Unrealized  Unrealized     Market
1996                           Cost         Gains       Losses       Value

<S>                         <C>          <C>         <C>          <C>
Investments Held for Sale:
 U.S. Government and govt.
  agencies and authorities  $  1,461,067 $         0 $   (17,458) $  1,443,609
 States, municipalities and
  political subdivisions         145,199         665      (6,397)      139,467
 Collateralized mortgage
  obligations                          0           0           0             0
 Public utilities                119,970         363        (675)      119,658
 All other corporate bonds       258,425       4,222      (4,215)      258,432
                               1,984,661       5,250     (28,745)    1,961,166
 Equity securities             3,184,357     176,508    (359,121)    3,001,744
 Total                      $  2,086,159 $    37,000 $  (328,754) $  1,794,405

Held to Maturity Securities:
 U.S. Government and govt.
  agencies  and authorities $ 28,301,386 $   674,768 $  (136,411) $ 28,839,743
 States, municipalities and
  political subdivisions      14,387,883     352,534     (28,084)   14,712,333
 Collateralized mortgage
    obligations               13,246,781     175,163    (157,799)   13,264,145
 Public utilities             51,794,312     912,535    (381,285)   52,325,562
 All other corporate bonds    71,805,499   1,316,380    (448,437)   72,673,442
 Total                      $179,535,861 $ 3,431,380 $(1,152,016) $181,815,225



The  amortized  cost  of  debt  securities  at  December  31,  1997,   by
contractual  maturity, are shown 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.

                                                      Estimated
    Fixed Maturities Held for Sale       Amortized      Market
          December 31, 1997                Cost         Value

  Due in one year or less                  $    83,927  $    84,952
  Due after one year through five years      1,533,202    1,528,211
  Due after five years through ten years        55,169       55,467
  Due after ten years                                0            0
  Collateralized mortgage obligations                0            0
  Total                                    $ 1,672,298  $ 1,668,630


                                   48
<PAGE>

                                                            Estimated
    Fixed Maturities Held to Maturity        Amortized        Market
          December 31, 1997                     Cost          Value

  Due in one year or less                  $  15,014,861  $  15,003,728
  Due after one year through five years      118,783,635    120,857,201
  Due after five years through ten years      30,251,281     31,726,265
  Due after ten years                          5,505,337      5,987,726
  Collateralized mortgage obligations         11,093,926     11,207,648
  Total                                    $ 180,649,040  $ 184,782,568


An  analysis  of  sales,  maturities  and  principal  repayments  of  the
Company's  fixed  maturities portfolio for the years ended  December  31,
1997, 1996 and 1995 is as follows:


                                 Cost or     Gross      Gross     Proceeds
                                Amortized   Realized   Realized     from
Year ended December 31, 1997      Cost        Gains     Losses      Sale

Scheduled principal repayments,
 calls and tenders:
   Held for sale              $   299,390 $     931   $  (9,661) $   290,660
   Held to maturity            21,457,436    31,551        (722)  21,488,265
Sales:
   Held for sale                        0         0           0            0
   Held to maturity                     0         0           0            0
Total                         $21,756,826 $  32,482   $ (10,383) $21,778,925



                                 Cost or     Gross      Gross     Proceeds
                                Amortized   Realized   Realized     from
Year ended December 31, 1996      Cost        Gains     Losses      Sale

Scheduled principal repayments,
 calls and tenders:
   Held for sale              $   699,361 $   6,035  $     (813) $   704,583
   Held to maturity            20,845,333    13,469    (137,320)  20,721,482
Sales:
   Held for sale                  517,111         0      (2,658)     514,453
   Held to maturity            18,735,848    81,283     (80,519)  18,736,612
   Total                      $40,797,653 $ 100,787  $ (221,310) $40,677,130


                                      49
<PAGE>

                                 Cost or     Gross      Gross     Proceeds
                                Amortized   Realized   Realized     from
Year ended December 31, 1995      Cost        Gains     Losses      Sale

Scheduled principal repayments,
 calls and tenders:
   Held for sale              $   621,461 $       0  $   (1,849) $   619,612
   Held to maturity            16,383,691   107,442    (225,993)  16,265,140
Sales:
   Held for sale                        0         0           0            0
   Held to maturity                     0         0           0            0
   Total                      $17,005,152 $ 107,442  $ (227,842) $16,884,752



C.INVESTMENTS  ON  DEPOSIT - At December 31, 1997, investments  carried  at
  approximately  $17,801,000 were on deposit with various  state  insurance
  departments.


5.   DISCLOSURES ABOUT FAIR VALUES OF FINANCIAL INSTRUMENTS

The  financial statements include various estimated fair value  information
at  December  31,  1996  and 1995, as required by  Statement  of  Financial
Accounting  Standards  107,  Disclosure  about  Fair  Value  of   Financial
Instruments  ("SFAS  107").   Such  information,  which  pertains  to   the
Company's financial instruments, is based on the requirements set forth  in
that  Statement  and does not purport to represent the aggregate  net  fair
value of the Company.

The  following methods and assumptions were used to estimate the fair value
of each class of financial instrument required to be valued by SFAS 107 for
which it is practicable to estimate that value:

(a)  Cash and Cash equivalents

The  carrying  amount in the financial statements approximates  fair  value
because  of the relatively short period of time between the origination  of
the instruments and their expected realization.

(b)  Fixed maturities and investments held for sale

Quoted  market prices, if available, are used to determine the fair  value.
If  quoted market prices are not available, management estimates  the  fair
value  based  on  the  quoted market price of a financial  instrument  with
similar characteristics.

(c)  Mortgage loans on real estate

The  fair values of mortgage loans are estimated using discounted cash flow
analyses  and  interest rates being offered for similar loans to  borrowers
with similar credit ratings.

(d)   Investment  real estate and real estate acquired in  satisfaction  of
debt  An  estimate  of fair value is based on management's  review  of  the
individual  real estate holdings.  Management utilizes sales of surrounding
properties,  current   market  conditions  and  geographic  considerations.
Management  conservatively estimates the fair value  of  the  portfolio  is
equal  to  the carrying value.

                                    50
<PAGE>

(e)  Policy loans

It  is  not practicable to estimate the fair value of policy loans as  they
have  no  stated  maturity and their rates are set at  a  fixed  spread  to
related  policy liability rates.  Policy loans are carried at the aggregate
unpaid  principal  balances in the consolidated balance  sheets,  and  earn
interest at rates ranging from 4% to 8%.  Individual policy liabilities  in
all cases equal or exceed outstanding policy loan balances.

(f)  Short-term investments

For short-term instruments, the carrying amount is a reasonable estimate of
fair  value.   Short-term  instruments represent United  States  Government
Treasury  Bills  and certificates of deposit with various  banks  that  are
protected under FDIC.

(g)  Notes and accounts receivable and uncollected premiums

The Company holds a $840,066 note receivable for which the determination of
fair  value  is  estimated by discounting the future cash flows  using  the
current  rates  at  which  similar loans would be made  to  borrowers  with
similar  credit  ratings and for the same remaining  maturities.   Accounts
receivable  and  uncollected  premiums  are  primarily  insurance  contract
related   receivables  which  are  determined  based  upon  the  underlying
insurance liabilities and added reinsurance amounts, and thus are  excluded
for the purpose of fair value disclosure by paragraph 8(c) of SFAS 107.

(h)  Notes payable

For  borrowings  under  the  senior loan agreement,  which  is  subject  to
floating rates of interest, carrying value is a reasonable estimate of fair
value.  For subordinated borrowings fair value was determined based on  the
borrowing  rates currently available to the Company for loans with  similar
terms and average maturities.
The  estimated fair values of the Company's financial instruments  required
to be valued by SFAS 107 are as follows as of December 31:

</TABLE>
<TABLE>

                                   1997                      1996
                                       Estimated                  Estimated
                           Carrying      Fair        Carrying        Fair
ASSETS                      Amount       Value        Amount         Value

<S>                   <C>           <C>           <C>           <C>
Fixed maturities      $ 180,649,040 $ 184,782,568 $ 179,535,861 $ 181,815,225
Fixed maturities
  held for sale           1,668,630     1,668,630     1,961,166     1,961,166
Equity securities         3,001,744     3,001,744     1,794,405     1,794,405
Mortgage loans on
  real estate             9,469,444     9,837,530    11,022,792    11,022,792
Policy loans             14,207,189    14,207,189    14,438,120    14,438,120
Short-term investments    1,773,531     1,773,531       400,000       400,000
Investment in real estate 9,760,732     9,760,732     9,779,984     9,779,984
Real estate acquired in
satisfaction of debt      1,724,544     1,724,544     1,724,544     1,724,544
Notes receivable            840,066       784,831       840,066       783,310

LIABILITIES
Notes payable            18,241,601    17,754,529    18,999,853    18,999,853

</TABLE>
                                      51
<PAGE>

6.  STATUTORY EQUITY AND GAIN FROM OPERATIONS

The  Company's insurance subsidiaries are domiciled in Ohio,  Illinois  and
West  Virginia  and prepare their statutory-based financial  statements  in
accordance  with  accounting  practices  prescribed  or  permitted  by  the
respective  insurance  department.  These principles  differ  significantly
from  generally  accepted  accounting principles.   "Prescribed"  statutory
accounting   practices  include  state  laws,  regulations,   and   general
administrative rules, as well as a variety of publications of the  National
Association  of  Insurance Commissioners ("NAIC").   "Permitted"  statutory
accounting  practices  encompass  all accounting  practices  that  are  not
prescribed; such practices may differ from state to state, from company  to
company  within a state, and may change in the future.  The NAIC  currently
is  in  the process of codifying statutory accounting practices, the result
of  which  is  expected  to  constitute the  only  source  of  "prescribed"
statutory accounting practices.  Accordingly, that project, which  has  not
yet  been  completed,  will likely change prescribed  statutory  accounting
practices  and  may  result  in changes to the  accounting  practices  that
insurance  enterprises use to prepare their statutory financial statements.
UG's  total  statutory shareholders' equity was $10,997,365 and $10,226,566
at  December  31,  1997  and 1996, respectively.  The  Company's  insurance
subsidiaries reported combined statutory gain from operations (exclusive of
intercompany  dividends) was $3,978,000,  $10,692,000  and  $4,076,000  for
1997, 1996 and 1995, respectively.


7.  REINSURANCE

Reinsurance  contracts do not relieve the Company from its  obligations  to
policyholders.  Failure  of reinsurers to honor  their  obligations   could
result  in  losses  to  the Company.  The Company evaluates  the  financial
condition of its reinsurers to minimize its exposure to significant  losses
from reinsurer insolvencies.

The  Company assumes risks from, and reinsures certain parts of  its  risks
with  other insurers under yearly renewable term and coinsurance agreements
that  are  accounted for by passing a portion of the risk to the reinsurer.
Generally, the reinsurer receives a proportionate part of the premiums less
commissions and is liable for a corresponding part of all benefit payments.

While  the amount retained on an individual life will vary based  upon  age
and  mortality prospects of the risk, the Company generally will not  carry
more than $125,000 individual life insurance on a single risk.

The  Company has reinsured approximately $1.022 billion, $1.109 billion and
$1.088  billion in face amount of life insurance risks with other  insurers
for  1997, 1996 and 1995, respectively.  Reinsurance receivables for future
policy  benefits were $37,814,106 and $38,745,093 at December 31, 1997  and
1996,  respectively,  for estimated recoveries under reinsurance  treaties.
Should  any  reinsurer be unable to meet its obligation at the  time  of  a
claim, obligation to pay such claim would remain with the Company.

Currently,  the Company is utilizing reinsurance agreements  with  Business
Men's  Assurance Company, ("BMA") and Life Reassurance Corporation,  ("LIFE
RE") for new business.  BMA and LIFE RE each hold an "A+" (Superior) rating
from  A.M.  Best,  an industry rating company.  The reinsurance  agreements
were effective December 1, 1993, and cover all new business of the Company.
The agreements are a yearly renewable term ("YRT") treaty where the Company
cedes  amounts above its retention limit of $100,000 with a minimum cession
of $25,000.

One of the Company's insurance subsidiaries (UG) entered into a coinsurance
agreement with First International Life Insurance Company ("FILIC")  as  of
September  30, 1996.  Under the terms of the agreement, UG ceded  to  FILIC
substantially  all  of its paid-up life insurance policies.   Paid-up  life
insurance  generally refers to non-premium paying life insurance  policies.
A.M. Best assigned FILIC a Financial Performance Rating (FPR) of 7 (Strong)
on a scale of 1 to 9.  A.M. Best assigned a Best's Rating of A++ (Superior)
to  The Guardian Life Insurance Company of America ("Guardian"), parent  of
FILIC,   based  on  the  consolidated  financial  condition  and  operating
performance of the company and its life/health subsidiaries.  During  1997,
FILIC  changed  its  name to Park Avenue Life Insurance Company  ("PALIC").
The  agreement with PALIC accounts for approximately 65% of the reinsurance
receivables as of December 31, 1997.

                                   52
<PAGE>

The  Company  does not have any short-duration reinsurance contracts.   The
effect  of  the Company's long-duration reinsurance contracts  on  premiums
earned in 1997, 1996 and 1995 was as follows:

                                  Shown in thousands
                             1997         1996         1995
                           Premiums     Premiums     Premiums
                            Earned       Earned       Earned

     Direct               $  33,374   $  35,891     $  38,482
     Assumed                      0           0             0
     Ceded                   (4,735)     (4,947)       (5,383)
     Net premiums         $  28,639   $  30,944     $  33,099


8.  COMMITMENTS AND CONTINGENCIES

The  insurance  industry has experienced a number of  civil  jury  verdicts
which  have  been  returned  against  life  and  health  insurers  in   the
jurisdictions  in which the Company does business involving  the  insurers'
sales  practices,  alleged agent misconduct, failure to properly  supervise
agents, and other matters.  Some of the lawsuits have resulted in the award
of substantial judgments against the insurer, including material amounts of
punitive  damages.  In some states, juries have substantial  discretion  in
awarding punitive damages in these circumstances.

Under  the insurance guaranty fund laws in most states, insurance companies
doing  business in a participating state can be assessed up  to  prescribed
limits  for  policyholder losses incurred by insolvent or failed  insurance
companies.   Although the Company cannot predict the amount of  any  future
assessments,  most insurance guaranty fund laws currently provide  that  an
assessment  may  be excused or deferred if it would threaten  an  insurer's
financial  strength.   Mandatory assessments  may  be  partially  recovered
through a reduction in future premium tax in some states. The Company  does
not  believe  such  assessments will be materially different  from  amounts
already provided for in the financial statements.

The  Company  and its subsidiaries are named as defendants in a  number  of
legal  actions arising primarily from claims made under insurance policies.
Those   actions   have  been  considered  in  establishing  the   Company's
liabilities.  Management and its legal counsel are of the opinion that  the
settlement of those actions will not have a material adverse effect on  the
Company's financial position or results of operations.


9.  RELATED PARTY TRANSACTIONS

The  employees  of the Company have extensive experience and  expertise  in
acquiring, managing and operating corporations and other business  entities
engaged  in the general life insurance business as well as other  financial
and investment companies.  None of the Company's subsidiaries has employees
of  their own.  On January 1, 1993, FCC entered into an agreement  with  UG
pursuant  to  which FCC provides management services necessary  for  UG  to
carry  on  its  business.   In addition to the UG agreement,  FCC  and  its
affiliates  have  either  directly or indirectly  entered  into  management
and/or  cost-sharing arrangements whereby FCC provides management services.
FCC  received net management fees of $9,893,321, $9,927,000 and $10,464,000
under  these  arrangements in 1997, 1996 and 1995, respectively.   UG  paid
$8,660,481,  $9,626,559  and $10,164,000 to FCC in  1997,  1996  and  1995,
respectively.

In  addition, UII has a service agreement with USA which states that USA is
to  pay UII monthly fees equal to 22% of the amount of collected first year
premiums, 20% in second year and 6% of the renewal premiums in years  three
and  after.  UII's subcontract agreement with UTI states that UII is to pay
UTI  monthly fees equal to 60% of collected service fees from USA as stated
above.

                                 53
<PAGE>

USA paid $989,295, $1,567,891 and $2,015,325 under their agreement with UII
for  1997,  1996 and 1995, respectively.  UII paid $593,577,  $940,734  and
$1,209,195  under  their  agreement with  UTI  for  1997,  1996  and  1995,
respectively.

Respective  domiciliary insurance departments have approved the  agreements
of  the  insurance  companies  and it is Management's  opinion  that  where
applicable, costs have been allocated fairly and such allocations are based
upon generally accepted accounting principles.

On  July 31,1997, the Company entered into employment agreements with eight
individuals, all officers or employees of the Company.  The agreements have
a  term  of three years, excepting the agreements with Mr. Ryherd  and  Mr.
Melville,  which have five-year terms.  The agreements secure the  services
of  these  key  individuals,  providing the  Company  a  stable  management
environment and positioning for future growth


10.   NOTES PAYABLE

At  December 31, 1997 and 1996, the Company has $18,241,601 and $18,999,853
in  long term debt outstanding, respectively.  The debt is comprised of the
following components:

                                   1997            1996
Senior debt                  $  6,900,000      $  8,400,000
Subordinated 10 yr. notes       4,906,775         5,369,293
Subordinated 20 yr. notes       4,034,827         3,830,560
Other notes payable             2,400,000         1,400,000
                             $ 18,241,602      $ 18,999,853

A.  Senior debt

The  senior  debt  is through First of America Bank - Illinois  NA  and  is
subject to a credit agreement.  The debt bears interest at a rate equal  to
the  "base  rate" plus nine-sixteenths of one percent.  The  Base  rate  is
defined  as  the  floating daily, variable rate of interest determined  and
announced  by First of America Bank from time to time as its "base  lending
rate."   The  base  rate at December 31, 1997 was 8.5%.  Interest  is  paid
quarterly.   Principal payments of $1,000,000 are due in May of  each  year
beginning  in 1997, with a final payment due May 8, 2005.  On  November  8,
1997, the Company prepaid the May 1998 principal payment.

The credit agreement contains certain covenants with which the Company must
comply.   These covenants contain provisions common to a loan of this  type
and include such items as; a minimum consolidated net worth of FCC to be no
less  than  400% of the outstanding balance of the debt; Statutory  capital
and  surplus of Universal Guaranty Life Insurance Company be maintained  at
no  less than $6,500,000; an earnings covenant requiring the sum of the pre
tax   earnings  of  Universal  Guaranty  Life  Insurance  Company  and  its
subsidiaries  (based on Statutory Accounting Practices) and  the  after-tax
earnings plus non-cash charges of FCC (based on parent only GAAP practices)
shall not be less than two hundred percent (200%) of the Company's interest
expense on all of its debt service.  The Company is in compliance with  all
of the covenants of the agreement.

B.  Subordinated debt

The  subordinated  debt  was  incurred June 16,  1992  as  a  part  of  the
acquisition  of  the  now  dissolved Commonwealth  Industries  Corporation,
(CIC).   The  10-year notes bear interest at the rate of 7 1/2% per  annum,
payable  semi-annually beginning December 16, 1992.  These  notes,  provide
for  principal payments equal to 1/20th of the principal balance  due  with
each interest installment beginning December 16, 1997, with a final payment
due  June  16,  2002.  In  June  1997, the Company  refinanced  a  $204,267
subordinated  10-year note as a subordinated 20-year note bearing  interest
at the rate of 8.75% per annum.  The repayment terms of the refinanced note
are  the same as the original subordinated 20 year notes.  The original  20
year notes bear interest at the rate of 8 1/2% per annum on $3,529,865  and
8.75%  per annum on $504,962 (of which the $204,267 note refinanced in  the
current  year is included), payable semi-annually with a lump sum principal
payment due June 16, 2012.

                                 54
<PAGE>

C.  Other notes payable

United Income, Inc. ("UII") and First Fidelity Mortgage Company through  an
assignment from United Trust, Inc. (UTI) owned a participating interest  of
$700,000 and $300,000 respectively of the senior debt.  At the date of  the
refinance, these obligations were converted from participations  of  senior
debt  to  promissory notes.  These notes bear interest at the  rate  of  1%
above  the  variable per annum rate of interest most recently published  by
the  Wall  Street Journal as the prime rate.  Interest is payable quarterly
with  principal  due  at maturity on May 8, 2006.  In  February  1996,  FCC
borrowed  an additional $150,000 from UII and $250,000 from UTI to  provide
additional cash for liquidity.  The note bears interest at the rate  of  1%
over  prime as published in the Wall Street Journal, with interest payments
due quarterly and principal due upon maturity of the note on June 1, 1999.

In  November  1997  FCC  borrowed $1,000,000 from  UTI  to  facilitate  the
prepayment of the May 1998 principal payment due on the senior debt. .  The
note  bears interest at the rate of 1% over prime as published in the  Wall
Street Journal, with interest payments due quarterly and principal due upon
maturity of the note on November 8, 2006.

Scheduled  principal reductions on the Company's debt  for  the  next  five
years is as follows:

                  Year                 Amount
                  1998             $    516,504
                  1999                1,916,504
                  2000                1,516,504
                  2001                1,516,504
                  2002                3,840,758


11.  DEFERRED COMPENSATION PLAN

UTI  and  FCC established a deferred compensation plan during 1993 pursuant
to  which an officer or agent of FCC, UTI or affiliates of UTI, could defer
a  portion  of their income over the next two and one-half years in  return
for  a  deferred compensation payment payable at the end of seven years  in
the  amount equal to the total income deferred plus interest at a  rate  of
approximately  8.5%  per annum and a stock option  to  purchase  shares  of
common stock of UTI.  At the beginning of the deferral period an officer or
agent  received an immediately exercisable option to purchase 2,300  shares
of  UTI common stock at $17.50 per share for each $25,000 ($10,000 per year
for  two  and one-half years) of total income deferred.  The option expires
on  December  31,  2000.  A total of 105,000 options were granted  in  1993
under  this  plan.  As of December 31, 1997 no options were exercised.   At
December 31, 1997 and 1996, the Company held a liability of $1,376,384  and
$1,267,598, respectively, relating to this plan. At December 31, 1997,  UTI
common stock had a bid price of $8.00 and an ask price of $9.00 per share.
The  following  information  applies to deferred  compensation  plan  stock
options outstanding at December 31, 1997:

  Number outstanding                      105,000
  Exercise price                           $17.50
  Remaining contractual life              3 years


12.  REVERSE STOCK SPLIT OF FCC

On  May 13, 1997, FCC effected a 1 for 400 reverse stock split.  Fractional
shares  received  a cash payment on the basis of $.25 for each  old  share.
FCC  maintained a significant number of shareholder accounts with less than
$100  of  market  value of stock.  The reverse stock  split  enabled  these
smaller  shareholders  to receive cash for their shares  without  incurring
broker costs and will save the Company administrative costs associated with
maintaining these small accounts.

                                   55
<PAGE>

13.  OTHER CASH FLOW DISCLOSURE

On a cash basis, the Company paid $1,595,699, $1,657,246, and $1,887,170 in
interest  expense  for  the years 1996, 1995 and 1994,  respectively.   The
Company  paid $49,520, $12,149, and $25,821 in federal income tax  for  the
years 1997, 1996 and 1995 respectively.

One  of  the  Company's  insurance  subsidiaries  ("UG")  entered  into   a
coinsurance  agreement  with  First International  Life  Insurance  Company
("FILIC")  as  of  September 30, 1996.  At closing of the  transaction,  UG
received a coinsurance credit of $28,318,000 for policy liabilities covered
under  the  agreement.  UG transferred assets equal to the credit received.
This  transfer included policy loans of $2,855,000 associated with policies
under  the agreement and a net cash transfer of $19,088,000 after deducting
the  ceding commission due UG of $6,375,000.  To provide the cash  required
to  be  transferred  under the agreement, the Company sold  $18,737,000  of
fixed maturity investments.


14.  CONCENTRATION OF CREDIT RISK

The  Company  maintains  cash balances in financial institutions  which  at
times may exceed federally insured limits.  The Company has not experienced
any  losses  in  such  accounts and believes  it  is  not  exposed  to  any
significant credit risk on cash and cash equivalents.


15.   NEW ACCOUNTING STANDARDS


The  Financial  Accounting Standards Board (FASB) has issued  Statement  of
Financial Accounting Standards (SFAS) No. 128 entitled Earnings per  share,
which  is  effective  for financial statements for fiscal  years  beginning
after   December  15,  1997.   SFAS  No.  128  specifies  the  computation,
presentation, and disclosure requirements for earnings per share (EPS)  for
entities  with publicly held common stock or potential common  stock.   The
Statement's objective is to simplify the computation of earnings per share,
and  to  make the U.S. standard for computing EPS more compatible with  the
EPS standards of other countries.

Under  SFAS  No.  128,  primary EPS computed in  accordance  with  previous
opinions  is replaced with a simpler calculation called basic  EPS.   Basic
EPS  is  calculated  by  dividing income available to  common  stockholders
(i.e.,  net income or loss adjusted for preferred stock dividends)  by  the
weighted-average number of common shares outstanding.  Thus,  in  the  most
significant  change in current practice, options, warrants, and convertible
securities  are  excluded  from  the  basic  EPS  calculation.     Further,
contingently  issuable shares are included in basic EPS  only  if  all  the
necessary conditions for the issuance of such shares have been satisfied by
the end of the period.

Fully  diluted  EPS  has not changed significantly  but  has  been  renamed
diluted  EPS.   Income  available to common stockholders  continues  to  be
adjusted  for  assumed  conversion of all potentially  dilutive  securities
using the treasury stock method to calculate the dilutive effect of options
and  warrants.  However, unlike the calculation of fully diluted EPS  under
previous opinions, a new treasury stock method is applied using the average
market   price  or  the  ending  market  price.   Further,  prior   opinion
requirement  to use the modified treasury stock method when the  number  of
options  or  warrants outstanding is greater than 20%  of  the  outstanding
shares  also  has been eliminated.  SFAS 128 also includes  certain  shares
that  are contingently issuable; however, the test for inclusion under  the
new rules is much more restrictive.

SFAS    No.  128  requires  companies  reporting  discontinued  operations,
extraordinary items, or the cumulative effect of accounting changes are  to
use  income from operations as the control number or benchmark to determine
whether  potential  common  shares  are  dilutive  or  antidilutive.   Only
dilutive securities are to be included in the calculation of diluted EPS.

                               56
<PAGE>

This  statement  was  adopted for the 1997 Financial Statements.   For  all
periods presented the Company reported a loss from continuing operations so
any  potential issuance of common shares would have an antidilutive  effect
on  EPS.  Consequently, the adoption of SFAS No. 128 did not have an impact
on the Company's financial statement.

The  FASB  has issued SFAS No. 130 entitled Reporting Comprehensive  Income
and   SFAS  No.  132  Employers'  Disclosures  about  Pensions  and   Other
Postretirement  Benefits.  Both of the above statements are  effective  for
financial statements with fiscal years beginning after December 15, 1997.

SFAS No. 130 defines how to report and display comprehensive income and its
components in a full set of financial statements.  The purpose of reporting
comprehensive income is to report a measure of all changes in equity of  an
enterprise  that  result from recognized transactions  and  other  economic
events  of the period other than transactions with owners in their capacity
as owners.

SFAS   No.   132  addresses  disclosure  requirements  for  post-retirement
benefits.   The  statement does not change post-retirement  measurement  or
recognition issues.

The  Company  will adopt both SFAS No. 130 and SFAS No. 132  for  the  1998
financial statements.  Management does not expect either adoption to have a
material impact on the Company's financial statements.


16.  PENDING CHANGE IN CONTROL OF UNITED TRUST, INC.

On  February 19, 1998, UTI signed a letter of intent with Jesse T. Correll,
whereby   Mr.  Correll  will  personally  or  in  combination  with   other
individuals make an equity investment in UTI over a period of three  years.
Under  the terms of the letter of intent, over a three year period of time,
Mr. Correll will buy 2,000,000 authorized but unissued shares of UTI common
stock  for $15.00 per share and will also buy 389,715 shares of UTI  common
stock,  representing  stock of UTI and UII, that UTI purchased  during  the
last eight months in private transactions at the average price UTI paid for
such  stock, plus interest, or approximately $10.00 per share.  Mr. Correll
also will purchase 66,667 shares of UTI common stock and $2,560,000 of face
amount  of  convertible bonds (which are due and payable on any  change  in
control of UTI) in private transactions, primarily from officers of UTI.

UTI  intends  to use the equity that is being contributed to  expand  their
operations through the acquisition of other life insurance companies.   The
transaction  is subject to negotiation of a definitive purchase  agreement;
completion  of due diligence by Mr. Correll; the receipt of regulatory  and
other    approvals;  and  the  satisfaction  of  certain   conditions.  The
transaction is not expected to be completed before June 30, 1998, and there
can be no assurance that the transaction will be completed.


17.  PROPOSED MERGER

On March 25, 1997, the Board of Directors of UTI and UII voted to recommend
to  the  shareholders a merger of the two companies.   Under  the  Plan  of
Merger, UTI would be the surviving entity with UTI issuing one share of its
stock for each share held by UII shareholders.

UTI owns 53% of United Trust Group, Inc., an insurance holding company, and
UII  owns  47%  of United Trust Group, Inc.  Neither UTI nor UII  have  any
other significant holdings or business dealings.  The Board of Directors of
each  company thus concluded a merger of the two companies would be in  the
best interests of the shareholders.  The merger will result in certain cost
savings,   primarily  related  to  costs  associated  with  maintaining   a
corporation in good standing in the states in which it transacts business.

A  vote of the shareholders of UTI and UII regarding the proposed merger is
anticipated to occur sometime during the third quarter of 1998.

                                  57
<PAGE>

<TABLE>
18.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

                                                 1997
                               1st          2nd          3rd          4th

<S>                       <C>          <C>          <C>          <C>
Premium income and other
  considerations, net     $  7,926,386 $  7,808,782 $  6,639,394 $  6,264,683
Net investment income        3,859,617    3,839,187    3,689,445    3,490,087
Total revenues              11,782,828   11,687,571   10,219,574    9,664,305
Policy benefits including
 dividends                   7,942,359    7,360,575    6,742,317    6,369,943
Commissions and
 amortization of DAC         1,610,729      995,540    1,528,216    1,405,868
Operating expenses           2,556,656    2,747,749    2,432,709    1,528,067
Operating loss                (732,231)     183,417     (887,921)     (42,153)
Net income (loss)             (193,275)    (202,275)    (762,374)    (687,138)
Net income (loss) per share      (3.23)       (3.54)      (13.97)      (11.91)


                                                  1996
                                 1st          2nd          3rd          4th
Premium income and other
 considerations, net      $  8,481,511 $  8,514,175 $  7,348,199 $  6,600,573
Net investment income        3,982,268    3,919,715    4,000,172    4,007,071
Total revenues              12,554,619   12,178,359   11,329,201   10,475,852
Policy benefits including
 dividends                   7,141,235    7,805,748    8,786,608   10,710,009
Commissions and
 amortization of DAC         1,942,777    1,482,101    1,263,969    2,007,438
Operating expenses           3,281,560    2,719,974    3,326,744    2,303,561
Operating loss                (250,496)    (252,231)  (2,473,828)  (4,957,961)
Net income(loss)               329,576     (122,482)  (2,162,608)  (1,076,135)
Net income (loss) per share       5.50        (2.01)      (36.09)      (18.00)


                                                 1995
                                1st           2nd         3rd          4th
Premium income and other
 considerations, net      $  9,445,222 $  8,765,804 $  7,868,803 $  7,018,707
Net investment income        3,868,022    3,871,973    3,746,400    4,013,356
Total revenues              13,393,826   12,589,288   11,555,186   10,826,874
Policy benefits including
 dividends                   8,227,705    8,940,389    7,014,070    7,041,851
Commissions and
 amortization of DAC         2,243,591    2,601,769    1,845,751      694,340
Operating expenses           3,001,897    2,296,482    2,025,224    3,349,393
Operating income (loss)       (570,700)  (1,722,716)     193,517     (734,749)
Net income (loss)              124,352   (1,544,567)   1,186,214   (1,217,637)
Net income (loss) per share       2.04       (25.38)       19.35       (20.01)

                                       58
</TABLE>
<PAGE>

                                   PART III


ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

THE BOARD OF DIRECTORS


In    accordance with  the  laws  of  Virginia  and  the  Certificate    of
Incorporation and Bylaws of the Company, as amended, the Company is managed
by  its  executive officers under the direction of the Board of  Directors.
The  Board  elects  executive officers, evaluates their performance,  works
with  management  in establishing business objectives and  considers  other
fundamental  corporate  matters, such as the issuance  of  stock  or  other
securities,  the  purchase  or  sale of a business  and  other  significant
corporate  business  transactions.  In the fiscal year ended  December  31,
1997, the Board met five times.  All directors attended at least 75% of all
meetings of the board except for Messers. Albin, Cellini and Teater.

The  Board of Directors has an Audit Committee consisting of Messrs. Albin,
Geary,  McKee and Larson.  The Audit Committee reviews and acts or  reports
to  the Board with respect to various auditing and accounting matters,  the
scope  of  the  audit  procedures  and the results  thereof,  the  internal
accounting  and  control  systems of the Company, the  nature  of  services
performed  for  the  Company and the fees to be  paid  to  the  independent
auditors,  the  performance  of  the  Company's  independent  and  internal
auditors  and the accounting practices of the Company.  The Audit Committee
also recommends to the full Board of Directors the auditors to be appointed
by the Board.  The Audit Committee met once in 1997.

The  Board  of Directors has a Nominating Committee consisting  of  Messrs.
Young,  Melville  and Miller.  The Nominating Committee reviews,  evaluates
and recommends directors, officers and nominees for the Board of Directors.
There  is  no  formal mechanism by which shareholders of  the  Company  can
recommend nominees for the Board of Directors, although any recommendations
by  shareholders of the Company will be considered.  Shareholders  desiring
to  make  nominations  to  the  Board  of  Directors  should  submit  their
nominations in writing to the Chairman of the Board no later than  February
1st  of the year in which the nomination is to be made.  The Committee  did
not meet in 1997.

The  compensation of the Company's executive officers is determined by  the
full Board of Directors (see report on Executive Compensation).

Under  the  Company's Certificate of Incorporation, the Board of  Directors
may  be  comprised  of  between five and twenty-one directors.   The  Board
currently  has  a fixed number of directors at twelve.  Shareholders  elect
Directors  to  serve  for  a period of one year  at  the  Company's  Annual
Shareholders' meeting.

The  following information with respect to business experience of the Board
of  Directors  has been furnished by the respective directors  or  obtained
from the records of the Company.

DIRECTORS

Name,Age  Position  with  the Company,  Business  Experience  and Other
          Directorships

John S. Albin  70

          Director  of  the Company since 1992;  Director of United  Trust,
          Inc.   since   1984;   farmer  in  Douglas  and  Edgar  counties,
          Illinois, since 1951; Chairman of  the  Board  of Longview  State
          Bank   since   1978;   President  of    the    Longview   Capitol
          Corporation,  a bank holding company,  since  1978; Chairman   of
          First  National  Bank of Ogden, Illinois,  since 1987;   Chairman
          of  the  State  Bank  of  Chrisman  since   1988;  Director   and
          Secretary  of  Illini  Community  Development Corporation   since
          1990;  Chairman  of  Parkland College  Board of   Trustees  since
          1990; board member of the Fisher National Bank, Fisher, Illinois,
          since 1993.

                                   59
<PAGE>

William F. Cellini   63

          Director  of  FCC and certain affiliate  companies since    1984;
          Chairman   of  the   Board  of  New Frontier  Development  Group,
          Chicago,  Illinois for more than the  past five  years; Executive
          Director of Illinois Asphalt Pavement Association.

John W. Collins   72

          Consultant and  past President of Collins-Winston Group since 1976;
          past  Director   of the  Company  and  certain affiliate companies
          from 1982 to 1992.

George E. Francis    54

          Executive  Vice  President  since  July  1997; Secretary  of  the
          Company  and certain affiliate  companies since  1993;   Director
          of  the  Company  and  certain  affiliate companies  since  1992;
          Treasurer  and  Chief  Financial  Officer of   certain  affiliate
          companies from 1984 until 1992; Senior Vice  President and  Chief
          Administrative  Officer  of   certain affiliate  companies  since
          1989.

Donald G. Geary  74

          Director  of  the  Company and certain affiliate companies  since
          1984;  industrial warehousing developer and founder  of  Regal  8
          Inns for more than the past five years.

James E. Melville   52

          President  and Chief Operating Officer since  July  1997;   Chief
          Financial  Officer of the Company  since  1993, Chief   Operating
          Officer   from   1989   to   1991  and   Senior  Executive   Vice
          President of the Company  from  1984  until 1989;   President  of
          the   Company   and   certain  affiliate  companies   from   1984
          until   1991;   Senior   Executive  Vice President   of   certain
          affiliate companies from  1984  until 1989;  consultant   to  UTI
          and  UTG from March  to  September, 1992;  President  and   Chief
          Operating    Officer   of   certain  affiliate   life   insurance
          companies  and  Senior Executive Vice President of  non-insurance
          affiliate companies since 1992.

Joseph H. Metzger  59

          Director of the Company since 1992, Senior  Vice President,  Real
          Estate since 1989; Senior Vice  President, Real Estate of certain
          affiliate companies since 1983.

Luther C. Miller  67

          Director of the Company since 1984; Executive Vice President  and
          Secretary  of  the  Company from 1984  until  1992;  officer  and
          director  of certain affiliate companies for more than  the  past
          five years.

Robert V. O'Keefe  76

          Director  of the Company since 1993; Director  and Treasurer   of
          UTI from 1988 to 1992; Director  of  Cilcorp, Inc.  from 1982  to
          1994;  Director of Cilcorp Ventures,  Inc. from  1985   to  1994;
          Director  of  Environmental  Science  and Engineering  Co.  since
          1990.

Larry E. Ryherd   58

          President,  CEO  and  Director of the  company  since  1992;  UTI
          Chairman  of  the Board of Directors and a Director  since  1984,
          CEO   since 1991; Chairman of the Board of  UII  since 1987,  CEO
          since  1992 and President since 1993; Chairman, CEO and  Director
          of  UTG  since  1992;  President, CEO and  Director  of   certain
          affiliate  companies  since 1992.   Mr.   Ryherd   as  served  as
          Chairman  of  the  Board, .CEO, President  and  COO   of  certain
          affiliate  life insurance companies since  1992  and  1993.    He
          has  also  been  a  Director of the National  Alliance  of   Life
          Companies   since  1992  and is the  1994   Membership  Committee
          Chairman;  he  is  a  member  of the American   Council  of  Life
          Companies and Advisory Board Member of its Forum 500 since 1992.

Robert W. Teater 71

          Director  of the Company since 1992; Director of UTG and  certain
          affiliate  companies since 1992;  Director  of  UII since   1987;
          Director of certain affiliate companies  since 1992;  member   of
          Columbus  School  Board  since  1991  and President  since  1992;
          President   of   Robert    W.    Teater    and   Associates,    a
          comprehensive    consulting    firm    in    natural    resources
          development  and  organization  management  since 1983.

Howard A. Young 77

          Director of the Company since 1984; Director of certain affiliate
          companies   for more than  the  past  five  years; retired   from
          Harris Broadcast Products Corporation, Quincy, Illinois.


                                  60
<PAGE>

EXECUTIVE OFFICERS OF THE COMPANY

More  detailed information on the following officers of the Company appears
under "Election of Directors":
     Larry   E.   Ryherd         Chairman of the Board and Chief  Executive
                                 Officer
     James E. Melville           President and Chief Operating Officer
     George   E.   Francis       Executive Vice President,  Secretary  and
                                 Chief Administrative Officer


Other officers of the company are set forth below:

Name, Age Position with the Company, Business Experience  and   Other
          Directorships


Theodore C. Miller  35

          Senior  Vice  President and Chief Financial Officer  since   July
          1997;  Vice  President and Treasurer since  October  1992;   Vice
          President  and  Controller of  certain  Affiliate Companies  from
          1984 to 1992.


Others not completing the current term:

Thomas  F.  Morrow   Formerly Director and President of the  Company  since
                     1992; retired effective July 31, 1997.

John K. Cantrell   Formerly Chairman of the Board of Directors since  1984;
                   succumbed after a long illness in November 1997.


ITEM 11.  EXECUTIVE COMPENSATION

EXECUTIVE COMPENSATION TABLE

The  following table sets forth certain information regarding  compensation
paid to or earned by the Company's Chief Executive Officer and each of  the
Executive Officers of the Company whose salary plus bonus exceeded $100,000
during  each  of  the Company's last three fiscal years:  Compensation  for
services  provided by the named executive officers to the Company  and  its
affiliates  is  paid  by  the  Company as set  forth  in  their  employment
agreements.  (See Employment Contracts).

SUMMARY COMPENSATION TABLE

                              Annual Compensation (1)
                                                                Other Annual
Name and                                                       Compensation (2)
Principal Position                     Salary($)     Bonus ($)       $

Larry E. Ryherd             1997       400,000         -            18,863
Chairman of the Board       1996       400,000         -            17,681
Chief Executive Officer     1995       400,000         -            13,324

James E. Melville           1997       237,000         -            29,538
President, Chief            1996       237,000         -            27,537
Operating Officer           1995       237,000         -            38,206(3)

                                     61
<PAGE>

George E. Francis           1997       122,000         -             8,187
Executive Vice              1996       119,000         -             7,348
President, Secretary        1995       119,000         -             4,441

Joseph H. Metzger           1997       121,000         -            10,817
Sr. Vice President,         1996        87,000      70,633          10,290
Real Estate, Director       1995        87,000      67,013           6,181


(1)  Compensation deferred at the election of named officers is included in
this section.

(2)   Other  annual  compensation consists of interest earned  on  deferred
compensation  amounts  pursuant  to their  employment  agreements  and  the
Company's  matching  contribution  to the  First  Commonwealth  Corporation
Employee Savings Trust 401(k) Plan.

(3)   Includes  $16,000  for the value of personal  perquisites  owing  Mr.
Melville.


AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR AND FY-END OPTION/SAR
VALUES

The  following table summarizes for fiscal year ending, December 31,  1997,
the  number  of  shares subject to unexercised options  and  the  value  of
unexercised options of the Common Stock of UTI held by the named  executive
officers.   The values shown were determined by multiplying the  applicable
number of unexercised share options by the difference between the per share
market  price  on December 31, 1997 and the applicable per  share  exercise
price.  There were no options granted to the named executive officers   for
the past three fiscal years.

                    Number of Shares           Number of Securities Underlying
                       Acquired on    Value       Unexercised Options/SARs
                       Exercise (#) Realized           ($) at FY-End(#)

Name                                           Exercisable       Unexercisable

Larry E. Ryherd         -               -         13,800                -
James E. Melville       -               -         30,000                -
Joseph H. Metzger       -               -          6,900                -      -
George E. Francis       -               -          4,600                -      -


                                                   Value of Unexercised In the
                                                       Money Options/SARs at
                                                             FY-End ($)

                                               Exercisable       Unexercisable

Larry E. Ryherd                                     -                   -
James E. Melville                                   -                   -
Joseph H. Metzger                                   -                   -
George E. Francis                                   -                   -




COMPENSATION OF DIRECTORS

The  Company's  standard  arrangement for  the  compensation  of  directors
provide that each director shall receive an annual retainer of $2,400, plus
$300  for  each  meeting attended and reimbursement for  reasonable  travel
expenses.   The  Company's director compensation policy also provides  that
directors  who are employees of the Company do not receive any compensation
for  their  services as directors except for reimbursement  for  reasonable
travel expenses for attending each meeting.


EMPLOYMENT CONTRACTS

On July 31, 1997, Larry E. Ryherd entered into an employment agreement with
the  Company.  Formerly, Mr. Ryherd had served as Chairman of the Board and
Chief Executive Officer of the Company and its affiliates.  Pursuant to the
agreement,  Mr. Ryherd agreed to serve as Chairman of the Board  and  Chief
Executive  Officer  of  the  Company and in addition,  to  serve  in  other
positions  of  the  affiliated  companies if  appointed  or  elected.   The
agreement  provides for an annual salary of $400,000 as determined  by  the
Board  of  Directors.  The term of the agreement is for a  period  of  five
years.   Mr.  Ryherd  has  deferred portions of his  income  under  a  plan
entitling him to a deferred compensation payment on January 2, 2000 in  the
amount  of  $240,000 which includes interest at the rate  of  approximately
8.5%  per year.  Additionally, Mr. Ryherd was granted an option to purchase
up to 13,800 of the Common Stock of UTI at $17.50 per share.  The option is
immediately exercisable and transferable.  The option will expire  December
31, 2000.

                                62
<PAGE>

The  Company entered into an employment agreement dated July 31, 1997  with
James  E.  Melville pursuant to which Mr. Melville is employed as President
and Chief Operating Officer and in addition, to serve in other positions of
the  affiliated  companies if appointed or elected at an annual  salary  of
$238,200.   The term of the agreement expires July 31, 2002.  Mr.  Melville
has  deferred  portions  of his income under a  plan  entitling  him  to  a
deferred compensation payment on January 2, 2000 of $400,000 which includes
interest  at  the  rate of approximately 8.5% annually.  Additionally,  Mr.
Melville  was  granted  an option to purchase up to 30,000  shares  of  the
Common  Stock  of  UTI  at  $17.50 per share.  The  option  is  immediately
exercisable and transferable.  The option will expire December 31, 2000.

The Company entered into an employment agreement with George E. Francis  on
July  31,  1997.  Under the terms of the agreement, Mr. Francis is employed
as Executive Vice President of the Company at an annual salary of $126,200.
Mr. Francis also agreed to serve in other positions if appointed or elected
to  such  positions  without  additional compensation.   The  term  of  the
agreement expires July 31, 2000.  Mr. Francis has deferred portions of  his
income  under  a plan entitling him to a deferred compensation  payment  on
January  2,  2000  of  $80,000  which includes  interest  at  the  rate  of
approximately  8.5%  per year.  Additionally, Mr. Francis  was  granted  an
option  to purchase up to 4,600 shares of the Common Stock of UTI at $17.50
per  share.  The option is immediately exercisable and transferable.   This
option will expire on December 31, 2000.

The Company entered into an employment agreement with Joseph H. Metzger  on
July  31,  1997.  Under the terms of the agreement, Mr. Metzger is employed
as  Senior Vice President - Real Estate of the Company at an annual  salary
of $126,200.  The agreement provides that Mr. Metzger receives cash bonuses
if certain real estate sales goals are attained.  The term of the agreement
expires July 31, 2000.  Mr. Metzger also agreed to serve in other positions
if  appointed or elected to such positions without additional compensation.
Mr.  Metzger has deferred portions of his income under a plan entitling him
to  a  deferred  compensation payment on January 2, 2000 of $120,000  which
includes interest   at   the   rate  of  approximately   8.5%   annually.

Additionally,  Mr. Metzger was granted an option to purchase  up  to  6,900
shares  of UTI Common Stock at $17.50 per share.  The option is immediately
exercisable  and  transferable.  This option will expire  on  December  31,
2000.


REPORT ON EXECUTIVE COMPENSATION

INTRODUCTION

The  compensation of the Company's executive officers is determined by  the
full Board of Directors.  The Board of Directors strongly believes that the
Company's  executive officers directly impact the short-term and  long-term
performance  of  the  Company.   With this  belief  and  the  corresponding
objective  of  making  decisions that are  in  the  best  interest  of  the
Company's shareholders, the Board of Directors places significant  emphasis
on  the  design and administration of the Company's executive  compensation
plans.


EXECUTIVE COMPENSATION PLAN ELEMENTS

BASE SALARY.  The Board of Directors establishes base salaries each year at
a  level  intended to be within the competitive market range of  comparable
companies.   In addition to the competitive market range, many factors  are
considered  in  determining base salaries, including  the  responsibilities
assumed  by   the   executive,  the  scope  of  the  executive's  position,
experience,  length of service, individual performance and internal  equity
considerations.  During the last three fiscal years, there were no material
changes in the base salaries of the named executive officers.

                                63
<PAGE>

STOCK OPTIONS.   One   of the Company's priorities  is  for  the  executive
officers  to  be  significant shareholders so  that  the  interest  of  the
executives  are  closely aligned with the interests of the Company's  other
shareholders.  The Board of Directors believes that this strategy motivates
executives  to remain focused on the overall long-term performance  of  the
Company.  Stock  options are granted at the discretion  of  the  Board   of
Directors  and are intended to be granted at levels within the  competitive
market  range  of  comparable companies.  During 1993, each  of  the  named
executive  officers were granted options under their employment  agreements
for  the  Company's  Common Stock as described in the Employment  Contracts
section.   There  were no options granted to the named  executive  officers
during the last three fiscal years.

DEFERRED  COMPENSATION.  A very significant component of overall  Executive
Compensation  Plans is found in the flexibility afforded  to  participating
officers  in  the  receipt of their compensation.  The availability,  on  a
voluntary basis, of the deferred compensation arrangements as described  in
the  Employment  Contracts  section may prove to  be  critical  to  certain
officers, depending upon their particular financial circumstance.


CHIEF EXECUTIVE OFFICER

Larry  E. Ryherd has been Chairman of the Board and Chief Executive Officer
since June of 1991 and Chairman of the Board of the Company's parent,  FCC,
since  1984.   The  Board  of  Directors used the  same  compensation  plan
elements  described  above  for all executive  officers  to  determine  Mr.
Ryherd's 1997 compensation.

In  setting  both the cash-based and equity-based elements of Mr.  Ryherd's
compensation,  the  Board of Directors made an overall  assessment  of  Mr.
Ryherd's  leadership  in  achieving the Company's long-term  strategic  and
business goals.

Mr.  Ryherd's  base  salary reflects a consideration  of  both  competitive
forces  and  the  Company's performance.  The Board of Directors  does  not
assign specific weights to these categories.

The Company surveys total cash compensation for chief executive officers at
the  same  group of companies described under "Base Salary"  above.   Based
upon  its  survey,  the Company then determines a median  around  which  it
builds  a  competitive range of compensation for the CEO.  As a  result  of
this review, the Board of Directors concluded that Mr. Ryherd's base salary
was  in  the  low  end  of the competitive market,  and  his  total  direct
compensation (including stock incentives) was competitive for CEOs  running
companies comparable in size and complexity to the Company.

The  Board  of  Directors  considered the Company's  financial  results  as
compared to other companies within the industry, financial performance  for
fiscal  1997  as  compared  to fiscal 1996, the Company's  progress  as  it
relates to the Company's growth through acquisitions and simplification  of
the  organization, the fact that since the Company does not  have  a  Chief
Marketing  Officer, Mr. Ryherd assumes additional responsibilities  of  the
Chief  Marketing  Officer,  and Mr. Ryherd's  salary  history,  performance
ranking and total compensation history.

Through  fiscal 1997, Mr. Ryherd's annual salary was $400,000,  the  amount
the  Board  of Directors set in January 1996.  In July 1997, the  Board  of
Directors  reviewed Mr. Ryherd's salary.  Following a review of  the  above
factors,   the  Board  of  Directors  decided  to  recognize  Mr.  Ryherd's
performance  by  placing a greater emphasis on long-term incentive  awards,
and therefore retained Mr. Ryherd's base salary at $400,000.

                                  64
<PAGE>

CONCLUSION.

The Board of Directors believes the mix of structured employment agreements
with   certain   key  executives,  conservative  market   based   salaries,
competitive  cash incentives for short-term performance and  the  potential
for   equity-based  rewards  for  long  term  performance   represents   an
appropriate balance.  This balanced Executive Compensation Plan provides  a
competitive and motivational compensation package to the executive  officer
team  necessary to continue to produce the results the Company  strives  to
achieve.   The  Board of Directors also believes the Executive Compensation
Plan  addresses  both the interests of the shareholders and  the  executive
team.



                          BOARD OF DIRECTORS

               John S. Albin            Joseph H. Metzger
               William F. Cellini       Luther C. Miller
               John W. Collins          Robert V. O'Keefe
               George E. Francis        Larry E. Ryherd
               Donald G. Geary          Robert W. Teater
               James E. Melville        Howard A. Young


PERFORMANCE GRAPH

   The following graph compares the cumulative total shareholder return  on
the  Company's Common Stock during the five fiscal years ended December 31,
1997,  with  the  cumulative  total return on the  NASDAQ  Composite  Index
Performance and the NASDAQ Insurance Stock Index (1):

                         Percent Change from Base

                NASDAQ         NASDAQ Insurance           FCC

1992           100.00              100.00               100.00
1993           114.68              106.83                44.64
1994           111.93              100.49                22.32
1995           158.72              142.93                22.32
1996           194.95              162.93                22.32
1997           239.45              238.54                50.00



(1)The  Company  selected  the NASDAQ Composite  Index  Performance  as  an
   appropriate comparison because the Company's Common Stock is not  listed
   on  any  exchange but the Company's Common Stock is traded in the  over-
   the-counter  market.   Furthermore,  the  Company  selected  the  NASDAQ
   Insurance  Stock  Index as the second comparison  because  there  is  no
   similar  single  "peer  company" in the  NASDAQ  system  with  which  to
   compare  stock  performance and the closest additional  line-of-business
   index  which  could  be  found  was the NASDAQ  Insurance  Stock  Index.

                                   65
<PAGE>

   Trading activity in the Company's Common Stock is limited, which may  be
   in  part a result of the Company's low profile from not being listed  on
   any  exchange,  and  its  reported operating losses.   The  Company  has
   experienced  a  tremendous growth rate over  the  period  shown  in  the
   Return  Chart  with assets growing from approximately  $233  million  in
   1991  to  approximately $333 million in 1997.  The growth rate has  been
   the  result  of  acquisitions  of  other  companies  and  new  insurance
   writings.     The   Company  has  incurred  costs  of   conversions  and
   administrative  consolidations associated with the  acquisitions,  which
   has  contributed  to  the operating losses.  The  Return  Chart  is  not
   intended to forecast or be indicative of possible future performance  of
   the Company's stock.


The  foregoing  graph shall not be deemed to be incorporated  by  reference
into  any  filing of the Company under the Securities Act of  1933  or  the
Securities  Exchange  Act of 1934, except to the extent  that  the  Company
specifically incorporates such information by reference.


COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

The  following persons served as directors of the Company during  1997  and
were  officers or employees of the Company or its subsidiaries during 1997:
George  E.  Francis,  James E. Melville, Joseph H. Metzger,  and  Larry  E.
Ryherd.   Accordingly,  these individuals have  participated  in  decisions
related  to  compensation of executive officers  of  the  Company  and  its
subsidiaries.

During  1997,  the  following executive officers of the Company  were  also
members  of the Board of Directors of UII, two of whose executive  officers
served  on  the  Board of Directors of the Company:  Messrs.  Melville  and
Ryherd.

During  1997, Larry E. Ryherd and James E. Melville, executive officers  of
the  Company, were also members of the Board of Directors of UTI, three  of
whose  executive officers served on the Board of Directors of the  Company:
Messrs. Francis, Melville, and Ryherd.


ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

PRINCIPLE HOLDERS OF SECURITIES

The  following  tabulation sets forth the name and address  of  the  entity
known  to be the beneficial owners of more than 5% of the Company's  Common
Stock  and  shows:   (i)  the  total  number  of  shares  of  Common  Stock
beneficially  owned by such person as of March 31, 1998 and the  nature  of
such  ownership; and (ii) the percent of the issued and outstanding  shares
of Common Stock so owned as of the same date.

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

Common         United Trust Group, Inc           43,303               79%
Stock $1.00,   5250 South Sixth Street
par value      Springfield, IL 62703


SECURITY OWNERSHIP OF MANAGEMENT

The  following  tabulation shows with respect to each of the directors  and
nominees  of  the  Company, with respect to the Company's  chief  executive
officer  and  each  of the Company's executive officers whose  salary  plus
bonus  exceeded $100,000 for fiscal 1997, and with respect to all executive
officers and directors of the Company as a group:  (i) the total number  of
shares  of  all  classes of stock of the Company or any of its  parents  or
subsidiaries,  beneficially owned as of March 31, 1998 and  the  nature  of
such  ownership; and (ii) the percent of the issued and outstanding  shares
of stock so owned as of the same date.

                                  66
<PAGE>

Title       Directors, Named Executive      Number of Shares    Percent
of          Officers, & All Directors &      and Nature of         of
Class       Executive Officers as a Group      Ownership         Class

UII's       John S. Albin                           0              *
Common      William F. Cellini                      0              *
Stock, no   John W. Collins                         0              *
par value   George E. Francis                       0              *
            Donald G. Geary                         0              *
            James E. Melville                       0              *
            Joseph H. Metzger                       0              *
            Luther C. Miller                        0              *
            Robert V. O'Keefe                       0              *
            Larry E. Ryherd                    47,250   (1)        3.4%
            Robert W. Teater                    7,380   (2)        *
            Howard A. Young                         0              *
            All directors and
            executive officers                 54,630              3.9%
            as a group (twelve in number)


UTI's       John S. Albin                      10,503   (3)        *
Common      William F. Cellini                  1,000              *
Stock, no   John W. Collins                         0              *
par value   George E. Francis                   4,600   (4)        *
            Donald G. Geary                     1,200              *
            James E. Melville                  52,500   (5)        3.2%
            Joseph H. Metzger                   6,900   (6)        *
            Luther C. Miller                        0              *
            Robert V. O'Keefe                     300   (7)        *
            Larry E. Ryherd                   562,431   (8)       33.8%
            Robert W. Teater                        0   (2)        *
            Howard A. Young                       100              *
            All directors and
            executive officers                639,534             38.5%
            as a group (twelve in number)


Company's   John S. Albin                           0              *
Common      William F. Cellini                      0              *
Stock,      John W. Collins                         0              *
$1.00 par   George E. Francis                       0              *
value       Donald G. Geary                       225              *
            James E. Melville                     544   (9)        *
            Joseph H. Metzger                       0              *
            Luther C. Miller                        0              *
            Robert V. O'Keefe                       0              *
            Larry E. Ryherd                         0              *
            Robert W. Teater                        0              *
            Howard A. Young                        46              *
            All directors and
            executive officers                    815             1.5%
            as a group (twelve in number)

                                    67
<PAGE>

(1)  Includes   47,250 shares beneficially in trust for the three  children
     of  Larry  E.  Ryherd and Dorothy LouVae Ryherd, namely Shari  Lynette
     Serr, Derek Scott Ryherd and Jarad John Ryherd.

(2)  Includes 201 shares owned directly by Mr. Teater' s spouse.

(3)  Includes 392 shares owned directly by Mr. Albin's spouse.

(4)  Includes  4,600  shares  which  may  be  acquired  upon  exercise
     of outstanding stock options.

(5)  James   E.   Melville owns 2,500 shares individually and  14,000
     shares jointly with his spouse.  Includes: (i)  3,000 shares of  UTI's
     Common  Stock  which are held beneficially in trust for his  daughter,
     namely  Bonnie  J. Melville; (ii) 3,000 shares of UTI's Common  Stock,
     750 shares of which are in the name of Matthew C. Hartman, his nephew;
     750 shares of which are in the name of Zachary T. Hartman, his nephew;
     750  shares  of  which are in the name of Elizabeth  A.  Hartman,  his
     niece; and 750 shares of which are in the name of Margaret M. Hartman,
     his  niece; and (iii) 30,000 shares which may be  acquired  by   James
     E. Melville upon exercise of  outstanding  stock options.

(6)  Includes  6,900  shares  which  may  be  acquired  upon  exercise
     of outstanding stock options.

(7)  300 shares owned directly by Mr. O'Keefe's spouse.

(8)  Larry E. Ryherd owns 230,621 shares of UTI's Common Stock in his
     own  name.  Includes:  (i) 150,050 shares of UTI's Common Stock in the
     name  of Dorothy LouVae Ryherd, his wife; (ii) 150,000 shares of UTI's
     Common  Stock  which  are held beneficially in  trust  for  the  three
     children  of Larry  E. Ryherd and Dorothy LouVae Ryherd, namely  Shari
     Lynette  Serr, Derek Scott Ryherd and Jarad John Ryherd; (iii)  14,800
     shares of UTI's Common Stock, 6,700 shares of which are in the name of
     Shari  Lynette  Serr, 1,200 shares of which are held in  the  name  of
     Derek  Scott  Ryherd, 6,900 shares of which are in the name  of  Jarad
     John Ryherd; (iv) 500 shares of UTI's Common Stock held in the name of
     Larry  E.  Ryherd as custodian for Charity Lynn Newby, his niece;  (v)
     500 shares held in the name of Larry E. Ryherd as custodian for Lesley
     Carol  Newby,  his  niece; (vi) 2,000 shares held  by  Dorothy  LouVae
     Ryherd,  his wife as custodian for granddaughter, 160 shares  held  by
     Larry  E.  Ryherd  as custodian for granddaughter;  and  (vii)  13,800
     shares  which  may  be acquired by Larry E. Ryherd  upon  exercise  of
     outstanding stock options.

(9)  James  E.  Melville owns 168 shares individually and 376  shares
     jointly with his spouse.

*  Less than 1%.

Except  as  indicated  above, the foregoing persons hold  sole  voting  and
investment power.

Directors  and  officers  of  the Company file periodic  reports  regarding
ownership of Company securities with the Securities and Exchange Commission
pursuant  to  Section  16(a) of the Securities  Exchange  Act  of  1934  as
amended, and the rules promulgated thereunder.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

RELATED PARTY TRANSACTIONS

UTI  has a service agreement with its affiliate, UII (equity investee),  to
perform  services  and  provide  personnel and  facilities.   The  services
included  in  the agreement are claim processing, underwriting,  processing
and  servicing  of  policies, accounting services,  agency  services,  data
processing and all other expenses necessary to carry on the business  of  a
life insurance company.

                                 68
<PAGE>

UII  has  a service agreement with USA which states that USA is to pay  UII
monthly  fees equal to 22% of the amount of collected first year  premiums,
20% in second year and 6% of the renewal premiums in years three and after.
UII's  subcontract agreement with UTI states that UII is to pay UTI monthly
fees equal to 60% of collected service fees from USA as stated above.

The  employees  of the Company have extensive experience and  expertise  in
acquiring, managing and operating corporations and other business  entities
engaged  in the general life insurance business as well as other  financial
and investment companies.  None of the Company's subsidiaries has employees
of  their  own.  On January 1, 1993, the Company entered into an  agreement
with  UG  pursuant  to  which  the  Company  provides  management  services
necessary  for  UG  to  carry  on its business.   In  addition  to  the  UG
agreement,   the  Company  and  its  affiliates  have  either  directly  or
indirectly entered into management and/or cost-sharing arrangements for the
Company's management services.  The Company received net management fees of
$9,893,321,  $9,927,000 and $10,464,000 under these arrangements  in  1997,
1996    and   1995,  respectively.   UG  paid  $8,660,481,  $9,626,559  and
$10,164,000 to the Company in 1997, 1996 and 1995, respectively.

USA paid $989,295, $1,567,891 and $2,015,325 under their agreement with UII
for  1997,  1996 and 1995, respectively.  UII paid $593,577,  $940,734  and
$1,209,195  under  their  agreement with  UTI  for  1997,  1996  and  1995,
respectively.

Their  respective  domiciliary  insurance  departments  have  approved  the
agreements  of the insurance companies and it is Management's opinion  that
where applicable, costs have been allocated fairly and such allocations are
based upon generally accepted accounting principles.  The costs paid by UTI
for these services include costs related to the production of new business,
which  are  deferred  as policy acquisition costs and charged  off  to  the
income  statement  through  "Amortization of  deferred  policy  acquisition
costs".   Also  included  are  costs associated  with  the  maintenance  of
existing policies that are charged as current period costs and included  in
"general expenses".

On  July  31, 1997, UTI issued convertible notes for cash received totaling
$2,560,000 to seven individuals, all officers or employees of the  Company.
The  notes bear interest at a rate of 1% over prime, with interest payments
due   quarterly  and  principal due upon maturity of  July  31,  2004.  The
conversion  price  of the notes are graded from $12.50 per  share  for  the
first  three years, increasing to $15.00 per share for the next  two  years
and  increasing  to  $20.00 per share for the last two years.   Conditional
upon  the seven individuals placing the funds with UTI were the acquisition
by UTI of a portion of the holdings of UTI owned by Larry E. Ryherd and his
family and the acquisition of common stock of UTI and UII held by Thomas F.
Morrow  and  his  family  and the simultaneous retirement  of  Mr.  Morrow.
Neither Mr. Morrow nor Mr. Ryherd was a party to the convertible notes.

Approximately  $1,048,000 of the cash received from  the  issuance  of  the
convertible notes was used to acquire stock holdings of UTI and UII of  Mr.
Morrow and to acquire a portion of the UTI holdings of Larry E. Ryherd  and
his  family.   The remaining cash received will be used by UTI  to  provide
additional  operating  liquidity  and  for  future  acquisitions  of   life
insurance companies.  On July 31, 1997, UTI acquired a total of 126,921  of
its  own shares of common stock and 47,250 shares of UII common stock  from
Thomas F. Morrow and his family.  Mr. Morrow simultaneously retired  as  an
executive  officer of the Company.  Mr. Morrow will remain as a  member  of
the  Board of Directors of UTI.  In exchange for his stock, Mr. Morrow  and
his family received approximately $348,000 in cash, promissory notes valued
at  $140,000  due  in  eighteen  months, and  promissory  notes  valued  at
$1,030,000 due January 31, 2005.  These notes bear interest at a rate of 1%
over  prime,  with interest due quarterly and principal due upon  maturity.

The  notes do not contain any conversion privileges.  Additionally, on July
31,  1997,  UTI acquired a total of 97,499 shares of UTI common stock  from
Larry  E.  Ryherd  and  his  family.  Mr. Ryherd and  his  family  received
approximately $700,000 in cash and a promissory note valued at $251,000 due
January  31,  2005.  The acquisition of approximately 16% of  Mr.  Ryherd's
stock  holdings  in UTI was completed as a prerequisite to the  convertible
notes placed by other management personnel to reduce the total holdings  of
Mr.  Ryherd and his family in UTI to make the stock more attractive to  the
investment community.  Following the transaction, Mr. Ryherd and his family
own approximately 31% of the outstanding common stock of UTI.

On  July 31,1997, the Company entered into employment agreements with eight
individuals, all officers or employees of the Company.  The agreements have
a  term  of three years, excepting the agreements with Mr. Ryherd  and  Mr.
Melville,  which have five-year terms.  The agreements secure the  services
of  these  key  individuals,  providing the  Company  a  stable  management
environment and positioning for future growth

                               69
<PAGE>

PENDING CHANGE IN CONTROL OF UNITED TRUST, INC.

On  February 19, 1998, UTI signed a letter of intent with Jesse T. Correll,
whereby   Mr.  Correll  will  personally  or  in  combination  with   other
individuals make an equity investment in UTI over a period of three  years.
Under  the terms of the letter of intent, over a three year period of time,
Mr. Correll will buy 2,000,000 authorized but unissued shares of UTI common
stock  for $15.00 per share and will also buy 389,715 shares of UTI  common
stock,  representing  stock of UTI and UII, that UTI purchased  during  the
last eight months in private transactions at the average price UTI paid for
such  stock, plus interest, or approximately $10.00 per share.  Mr. Correll
also will purchase 66,667 shares of UTI common stock and $2,560,000 of face
amount  of  convertible bonds (which are due and payable on any  change  in
control of UTI) in private transactions, primarily from officers of UTI.

UTI  intends  to use the equity that is being contributed to  expand  their
operations through the acquisition of other life insurance companies.   The
transaction  is subject to negotiation of a definitive purchase  agreement;
completion  of due diligence by Mr. Correll; the receipt of regulatory  and
other    approvals;  and  the  satisfaction  of  certain  conditions.   The
transaction is not expected to be completed before June 30, 1998, and there
can be no assurance that the transaction will be completed.


PROPOSED MERGER

On March 25, 1997, the Board of Directors of UTI and UII voted to recommend
to  the  shareholders a merger of the two companies.   Under  the  Plan  of
Merger, UTI would be the surviving entity with UTI issuing one share of its
stock for each share held by UII shareholders.

UTI owns 53% of United Trust Group, Inc., an insurance holding company, and
UII  owns  47%  of United Trust Group, Inc.  Neither UTI nor UII  have  any
other significant holdings or business dealings.  The Board of Directors of
each  company thus concluded a merger of the two companies would be in  the
best interests of the shareholders.  The merger will result in certain cost
savings,   primarily  related  to  costs  associated  with  maintaining   a
corporation in good standing in the states in which it transacts business.

A  vote of the shareholders of UTI and UII regarding the proposed merger is
anticipated to occur sometime during the third quarter of 1998.


YEAR 2000 ISSUE

The  "Year  2000  Issue"  is  the  inability  of  computers  and  computing
technology  to recognize correctly the Year 2000 date change.  The  problem
results  from a long-standing practice by programmers to save memory  space
by  denoting  Years  using just two digits instead of four  digits.   Thus,
systems  that  are  not  Year 2000 compliant may be unable  to  read  dates
correctly  after  the Year 1999 and can return incorrect  or  unpredictable
results.   This  could  have  a  significant  effect  on   the    Company's
business/financial  systems  as  well as  products  and  services,  if  not
corrected.

The  Company established a project to address year 2000 processing concerns
in  September  of 1996.  In 1997 the Company completed the  review  of  the
Company's internally  and  externally  developed   software,    and    made
corrections  to all year 2000 non-compliant processing.  The  Company  also
secured  verification of current and future year 2000 compliance  from  all
major  external software vendors.  In December of 1997, a separate computer
operating  environment was established with the system  dates  advanced  to
December  of 1999.  A parallel model office was established with all  dates
in the data advanced to December of 1999.  Parallel model office processing
is being performed using dates from December of 1999 to January of 2001, to
insure all year 2000 processing errors have been corrected.  Testing should
be  completed  by the end of the first quarter of 1998.  After  testing  is
completed,  periodic  regression  testing  will  be  performed  to  monitor
continuing  compliance.   By addressing year 2000 compliance  in  a  timely
manner,  compliance  will  be  achieved using existing  staff  and  without
significant impact on the Company operationally or financially.

                                70
<PAGE>

RELATIONSHIP WITH INDEPENDENT PUBLIC ACCOUNTANTS

Kerber,  Eck and Braeckel LLP served as the Company's independent certified
public accounting firm for the fiscal year ended December 31, 1997 and  for
fiscal  year  ended December 31, 1996.  In serving its primary function  as
outside auditor for the Company, Kerber, Eck and Braeckel LLP performed the
following  audit  services:  examination of annual  consolidated  financial
statements;  assistance  and  consultation  on  reports  filed    with  the
Securities  and  Exchange Commission and; assistance  and  consultation  on
separate  financial  reports  filed with  the  State  insurance  regulatory
authorities pursuant to certain statutory requirements.

                                71
<PAGE>

                               PART IV

ITEM  14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM  8-K

(a)     The following documents are filed as a part of the report:

   (1)  Financial Statements:
        See Item 8, Index to Financial Statements

   (2)  Financial Statement Schedules

        Schedule  I  -  Summary  of Investments - other  than  invested  in

        related parties.

        Schedule II - Condensed financial information of registrant

        Schedule IV - Reinsurance

        Schedule V - Valuation and Qualifying Accounts


        NOTE:    Schedules  other  than those  listed  above   are  omitted
        because   they   are   not  required   or   the   information    is
        disclosed in the financial statements or footnotes.

(b)     Reports on Form 8-K filed during fourth quarter.
        None

(c)     Exhibits:

        Index to Exhibits (See Pages 73 and 74).


                                 72
<PAGE>

                          INDEX TO EXHIBITS
Exhibit
Number


3(a)    (1)    Articles of Incorporation for the Company dated  August 25, 1967.

3(b)    (1)    Amended Articles  of Incorporation for the Company dated  January
               27, 1988.

3(c)    (1)    Charter Agreement for the Company dated May 22, 1991.

3(d)    (1)    Amended Articles of Incorporation for the Company dated March
               12, 1993.

3(e)    (1)    Code of ByLaws for the Company dated September 30, 1992.

10(a)   (2)    Credit Agreement  dated May 8, 1996 between First of America
               Bank  -  Illinois,  N.A.,as lender and First Commonwealth
               Corporation,  as borrower.


10(b)   (2)    $8,900,000 Term Note  of First  Commonwealth Corporation  to
               First America  Bank  Illinois, N.A. dated May 8, 1996.

10(c)   (2)    Coinsurance  Agreement dated  September  30, 1996  between
               Universal  Guaranty  Life Insurance  Company  and First
               International  Life Insurance Company, including assumption
               reinsurance agreement  exhibit  and amendments.

10(d)   (1)    Subcontract Agreement dated  September  1,   1990  between
               United  Trust,  Inc.  and United Income, Inc.

10(e)   (1)    Service Agreement dated November  8, 1989  between  United
               Security Assurance  Company and United Income, Inc.

10(f)   (1)    Management and Consultant Agreement  dated  as  of  January
               1, 1993 between First Commonwealth Corporation and Universal
               Guaranty   Life Insurance Company

10(g)   (1)    Management  Agreement dated  December  20,  1981   between
               Commonwealth  Industries Corporation, and Abraham Lincoln
               Insurance Company

10(h)   (1)    Reinsurance  Agreement dated  January  1,   1991   between
               Universal  Guaranty  Life Insurance  Company  and  Republic
               Vanguard  Life Insurance Company

                                    73
<PAGE>

                          INDEX TO EXHIBITS
    Exhibit
    Number

10(i)  (1)     Reinsurance  Agreement dated  July 1, 1992 between  United
               Security Assurance  Company and Life Reassurance Corporation
               of America

10(j)  (1)     United Trust, Inc. Stock Option Plan

10(k)  (1)     Board  Resolution adopting United  Trust,  Inc.'s  Officer
               Incentive Fund

10(l)          Employment   Agreement dated  as  of July 31,
               1997   between  Larry  E.  Ryherd  and   First  Commonwealth
               Corporation

10(m)          Employment   Agreement dated  as of July 31, 1997
               between James E. Melville and First Commonwealth Corporation

10(n)          Employment   Agreement dated  as of July 31, 1997
               between George E. Francis and First Commonwealth Corporation

10(o)  (1)     Consulting  Arrangement entered  into June 15, 1987
               between Robert E. Cook and  United Trust, Inc.

10(p)  (1)     Agreement  dated June  16, 1992  between    John   K.
               Cantrell  and  First   CommonwealthCorporation

10(q)  (1)     Stock  Purchase Agreement dated   February  20,  1992
               between United Trust Group, Inc.  and Sellers

10(r)  (1)     Amendment No. One  dated April  20,  1992 to the Stock
               Purchase Agreement  between  the Sellers and United Trust
               Group, Inc.

10(s)  (1)     Security Agreement dated June 16, 1992 between  United
               Trust Group, Inc. and the Sellers

10(t)  (1)     Stock Purchase Agreement dated June 16, 1992  between
               United Trust Group, Inc. and First Commonwealth Corporation

Footnote

(1)    Incorporated  by  reference from  the  Company's  Annual Report
       on Form 10-K, File No. 0-5392, as of December 31, 1993.

(2)    Incorporated by reference from the Company's Annual Report  on
       Form 10-K, File No. 0-5392, as of December 31, 1996.


                                    74
<PAGE>

<TABLE>
FIRST COMMONWEALTH CORPORATION                                Schedule   I
SUMMARY OF INVESTMENTS - OTHER THAN
INVESTMENTS IN RELATED PARTIES
As of December 31, 1997


 Column A                            Column B      Column C     Column D
                                                                Amount at
                                                              Which Shown in
                                                                 Balance
                                       Cost          Value         Sheet
<S>                              <C>            <C>           <C>
Fixed maturities:
 Bonds:
   United States Government and
    government agencies and
     authorities                 $  28,032,927  $  28,622,970 $  28,032,927
   State, municipalities,
    and  political subdivisions     22,739,944     23,449,601    22,739,944
   Collateralized mortgage
    obligations                     11,093,926     11,207,647    11,093,926
   Public  utilities                47,971,152     49,141,537    47,971,152
   All other corporate bonds        70,811,091     72,360,813    70,811,091
 Total fixed maturities            180,649,040  $ 184,782,568   180,649,040
Investments held for sale:
 Fixed maturities:
   United States Government and
    government agencies
    and authorities                  1,448,202  $   1,442,557     1,442,557
   State, municipalities, and political
    subdivisions                        35,000         35,485        35,485
   Public utilities                     80,169         80,496        80,496
   All other corporate bonds           108,927        110,092       110,092
                                     1,672,298  $   1,668,630     1,668,630
  Equity securities:
   Banks, trusts and insurance
    companies                        2,473,969  $   2,167,368     2,167,368
   All other corporate securities      710,388        834,376       834,376
                                     3,184,357  $   3,001,744     3,001,744


Mortgage loans on real estate        9,469,444                    9,469,444
Investment real estate               9,760,732                    9,760,732
Real estate acquired in
 satisfaction of debt                1,724,544                    1,724,544
Policy loans                        14,207,189                   14,207,189
Short-term investments               1,773,531                    1,773,531
   Total investments            $  222,441,135                $ 222,254,854

</TABLE>
                                  75
<PAGE>

FIRST COMMONWEALTH CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT                   Schedule II
NOTES TO CONDENSED FINANCIAL INFORMATION


(a)  The  condensed  financial information should be read in  conjunction
     with  the  consolidated   financial  statements  and  notes  of  First
     Commonwealth Corporation and Consolidated Subsidiaries.


                                  76
<PAGE>

<TABLE>
FIRST  COMMONWEALTH CORPORATION
CONDENSED FINANCIAL INFORMATION OFREGISTRANT
PARENT ONLY BALANCE SHEETS
As of December 31, 1997 and 1996                           Schedule II
                                                1997               1996
<S>                                       <C>                 <C>
ASSETS
   Investment in affiliates               $   51,786,698      $  55,383,654
   Cash and cash equivalents                   1,747,781          1,484,550
   Deferred income taxes                         158,804            703,583
   Other assets                                   70,125             89,875
     Total assets                         $   53,763,408      $  57,661,662




LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Notes payable                          $   18,241,602    $    18,999,853
   Indebtedness to subsidiaries
    and affiliates, net                        1,406,396            795,392
   Income taxes payable                           10,555             12,906
   Other liabilities                             898,432          2,374,860
     Total liabilities                        20,556,985         22,183,011




Shareholders' equity:
   Common stock                                   54,616             59,919
   Additional paid-in capital                 51,877,243         52,406,191
   Unrealized depreciation of
    investments held for sale of
    affiliates                                  (198,630)          (305,715)
   Accumulated deficit                       (18,526,806)       (16,681,744)
     Total shareholders' equity               33,206,423         35,478,651
     Total liabilities and
      shareholders' equity                 $  53,763,408      $  57,661,662

</TABLE>
                                   77
<PAGE>

<TABLE>
FIRST  COMMONWEALTH CORPORATION
CONDENSED  FINANCIAL INFORMATION
OF REGISTRANT PARENT ONLY STATEMENTS OF OPERATIONS



Three Years Ended December  31,  1997                         Schedule II



                                        1997         1996        1995

<S>                                  <C>          <C>         <C>
Revenues:

  Management fees from affiliates    $ 9,099,595  $ 9,988,960 $10,486,574
  Interest income                         71,147       54,028      42,714
  Other income                             9,708       12,071         794
                                       9,180,450   10,055,059  10,530,082


Expenses:

  Interest expense                     1,612,438    1,700,426   1,916,564
  Operating expenses                   5,153,625    8,477,037   7,473,514
                                       6,766,063   10,177,463   9,390,078
  Operating income (loss)              2,414,387     (122,404)  1,140,004

  Credit (provision) for
   income taxes                         (555,408)     395,031     (61,469)
  Equity in loss of subsidiaries      (3,704,041)  (3,304,276) (2,530,173)
     Net loss                        $(1,845,062) $(3,031,649)$(1,451,638)

</TABLE>
                                   78
<PAGE>

<TABLE>
FIRST COMMONWEALTH CORPORATION
CONDENSED FINANCIAL INFORMATION
OF REGISTRANT PARENT ONLY STATEMENTS OF CASH FLOWS
Three Years Ended December 31, 1997                            Schedule II

                                         1997         1996        1995

<S>                                 <C>            <C>         <C>
Increase (decrease) in cash and cash equivalents
Cash flows from operating activities:
 Net loss                           $(1,845,062)   $(3,031,649)$(1,451,638)
 Adjustments to reconcile net loss to net
  cash provided by operating activities:
  Equity in loss of subsidiaries      3,704,041      3,304,276   2,530,173
  Change in income taxes payable         (2,351)           877     (19,971)
  Change in deferred  income  taxes     544,779       (408,415)     48,571
  Change in indebtedness (to) from
    affiliates, net                     611,004        331,036     725,387
  Change in other assets
    and liabilities                  (1,456,678)     1,141,738    (125,201)
Net cash provided by
 operating activities                 1,555,733      1,337,863   1,707,321

Cash flows from investing activities:
  Proceeds from mortgage
   loan payments                              0         11,023       1,644
Net cash provided by
  investing activities                        0         11,023       1,644

Cash flows from financing activities:
  Proceeds from notes payable         1,000,000      9,300,000           0
  Payments of principal
   on notes payable                  (1,758,251)   (10,900,000)   (900,000)
  Payment for fractional shares
   from reverse split                  (534,251)             0           0
Net cash used in
  financing activities               (1,292,502)    (1,600,000)   (900,000)

Net increase (decrease) in cash and
  cash equivalents                      263,231       (251,114)    808,965
Cash and cash equivalents at
  beginning of year                   1,484,550      1,735,664     926,699
Cash and cash equivalents
  at end of year                   $  1,747,781   $  1,484,550 $ 1,735,664
</TABLE>
                                   79

<PAGE>


FIRST COMMONWEALTH CORPORATION
REINSURANCE
As of December 31, 1997 and the year ended December 31, 1997     Schedule IV







Column A      Column B     Column C      Column D     Column E      Column F
                                                                   Percentage
                           Ceded  to      Assumed                  of amount
                            other        from other                assumed to
            Gross amount   companies      companies*  Net amount       net






Life insurance
in force $3,691,867,000 $1,022,458,000 $1,079,885,000 $3,749,294,000   28.8%

Premiums and policy fees:

Life insurance
        $    33,133,414 $    4,681,928 $            0 $   28,451,486    0.0%

Accident and health
insurance
                240,536         52,777              0        187,759    0.0%
        $    33,373,950 $    4,734,705 $            0 $   28,639,245    0.0%






*  All  assumed  business  represents the Company's  participation  in  the
   Servicemen's Group Life Insurance Program (SGLI).

                                    80
<PAGE>

FIRST  COMMONWEALTH CORPORATION
REINSURANCE
As of December 31, 1996 and the year ended December 31, 1996      Schedule IV






Column A      Column B     Column C      Column D     Column E      Column F
                                                                   Percentage
                           Ceded  to      Assumed                  of amount
                            other        from other                assumed to
            Gross amount   companies      companies*  Net amount       net








Life insurance
in force $3,952,958,000 $1,108,534,000 $1,271,766,000 $4,116,190,000   30.9%



Premiums and policy fees:

Life insurance
        $    35,633,232 $   4,896,896 $             0 $   30,736,336    0.0%

Accident and health
insurance       258,377        50,255               0        208,122    0.0%

        $    35,891,609 $   4,947,151 $             0 $   30,944,458    0.0%






*  All  assumed  business  represents the Company's  participation  in  the
   Servicemen's Group Life Insurance Program (SGLI).

                                  81
<PAGE>

FIRST  COMMONWEALTH CORPORATION
REINSURANCE
As of December 31, 1995 and the year ended December 31, 1995      Schedule IV






Column A      Column B     Column C      Column D     Column E      Column F
                                                                   Percentage
                           Ceded  to      Assumed                  of amount
                            other        from other                assumed to
            Gross amount   companies      companies*  Net amount       net







Life insurance
in force $4,207,695,000 $1,087,774,000 $1,039,517,000 $4,159,438,000    25.0%



Premiums and policy fees:

Life insurance
         $   38,233,190 $    5,330,351 $            0 $   32,902,839     0.0%

Accident and health
 insurance      248,448         52,751              0        195,697     0.0%

         $   38,481,638 $    5,383,102 $            0 $   33,098,536     0.0%






*  All  assumed  business  represents the Company's  participation  in  the
   Servicemen's Group Life Insurance Program (SGLI).

                              82
<PAGE>

FIRST COMMONWEALTH CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
For the years ended December 31, 1997, 1996 and 1995            Schedule V

                         Balance at      Additions
                          Beginning       Charges                 Balances at
   Description            Of Period     and Expenses  Deductions    End of

Period

December 31, 1997

Allowance for doubtful accounts -
    mortgage loans      $   10,000      $         0   $        0   $  10,000


December 31, 1996

Allowance for doubtful accounts -
    mortgage loans      $   10,000      $         0   $        0   $  10,000



December 31, 1995

Allowance for doubtful accounts -
    mortgage loans      $   26,000      $         0    $  16,000   $  10,000


                                   83
<PAGE>

                                SIGNATURES

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



                    FIRST COMMONWEALTH CORPORATION
                              Registrant



/s/  John S. Albin                          Date:       March 24, 1998
John S. Albin, Director



/s/  William F. Cellini                     Date:       March 24, 1998
William F. Cellini, Director



/s/  John W. Collins                        Date:       March 24, 1998
John W. Collins, Director



/s/  George E. Francis                      Date:       March 24, 1998
George E. Francis, Executive Vice
 President, Secretary, Chief
 Administrative Officer and Director



/s/  Donald G. Geary                        Date:       March 24, 1998
Donald G. Geary, Director



/s/  James E. Melville                      Date:       March 24, 1998
James E. Melville, President,
 Chief Operating Officer and
 Director

                                   84
<PAGE>

/s/  Joseph H. Metzger                      Date:       March 24, 1998
Joseph H. Metzger, Senior Vice
 President and Director



/s/  Luther C. Miller                       Date:       March 24, 1998
Luther C. Miller, Director



/s/  Robert V. O'Keefe                      Date:       March 24, 1998
Robert V. O'Keefe, Director



/s/  Larry E. Ryherd                        Date:       March 24, 1998
Larry E. Ryherd, Chairman, Chief
 Executive Officer and Director



/s/  Robert W. Teater                       Date:       March 24, 1998
Robert W. Teater, Director



/s/  Howard A. Young                        Date:       March 24, 1998
Howard A. Young, Director



/s/  Theodore C. Miller                     Date:       March 24, 1998
Theodore C. Miller, Chief Financial
 Officer

                                 85
<PAGE>