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, 1996   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

Registrant 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, and  has been subject to  such filing requirements for  the past 90
days.

The aggregate  market value of the  Common Stock held  by non-affiliates of
the  Registrant as of March 3, 1997 was $818,573 based on the bid price for
the Common Stock in the over-the-counter market on such date.

At  March  3, 1997,  the Registrant  had  outstanding 23,967,749  shares of
Common Stock, par value $1 per share. 

DOCUMENTS INCORPORATED BY REFERENCE:  Portions of the Registrant's proxy 
statement for the annual meeting of shareholders to be held during 1997
are incorporated by reference into Part III of this Report.


<PAGE>                             1 of 69




                                   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, 1996,  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 30% of United Income, Inc. ("UII").
UII owns 47% of UTG.  UTG owns 72% of First Commonwealth Corporation ("FCC").
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").


<PAGE>                               2
   
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 March  30, 1994, Farmers and Ranchers Life Insurance Company ("F&R") was
sold to an unrelated third  party.  F&R was a small life  insurance company
which did not significantly contribute to the operations of the group.  F&R
primarily represented a marketing opportunity.   The Company determined  it
would not be able to allocate the time and resources  necessary to properly
develop the opportunity,  due to  continued focus and  emphasis on  certain
other agency forces of the Company.

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

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.   Following the liquidations,  UTG owns 72%  of
the outstanding common stock of FCC.

<PAGE>                               3

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 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.

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.    Approximately  30% of  the
insurance  in  force  is  participating business.    The  Company's average
persistency rate for its policies in force for 1996 and 1995 has been 87.9%
and  87.5%, respectively.   The  Company does  not anticipate  any material
fluctuations in these rates in the future that may result from competition.

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.


MARKETING

The Company  markets  its products  through  separate and  distinct  agency
forces.  The Company has approximately 60 captive agents and 15 independent
agents  who actively  write  new  business.    No  individual  sales  agent
accounted  for  over 10%  of the  Company's premium  volume  in 1996.   The
Company's sales agents do not have the power to bind the Company.

The change in  marketing strategy from traditional  life insurance products
to  universal life  insurance  products had  a  significant impact  on  new
business production.   As a result of the change  in marketing strategy the
agency  force   went  through  a  restructuring   and  retraining  process.
Marketing  is  based  on  a  referral  network  of  community  leaders  and
shareholders of UII and UTI.  Recruiting of new agents is also based on the
same referral network. 

<PAGE>                            4

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.

Recruiting  of agents  is  based on  obtaining  people  with little  or  no
experience in the life  insurance business.   These recruits go through  an
extensive internal training program.

USA is licensed in Illinois, Indiana and Ohio.  During 1996, Ohio accounted
for 99% of USA's direct premiums collected.

ALIC  is  licensed in  Alabama, Arizona,  Illinois, Indiana,  Louisiana and
Missouri.   During 1996,  Illinois and Indiana  accounted for 44%  and 36%,
respectively of ALIC's direct premiums collected.

APPL  is  licensed  in   Alabama,  Arizona,  Arkansas,  Colorado,  Georgia,
Illinois,   Indiana,  Kansas,   Kentucky,  Louisiana,   Missouri,  Montana,
Nebraska, Ohio, Oklahoma, Pennsylvania, Rhode Island, South Carolina, South
Dakota,  Tennessee, Texas,  Utah, Virginia,  Washington, West  Virginia and
Wyoming.   During 1996, 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 1996,  Illinois and Ohio accounted for 33% and 15%, respectively, of
UG's  direct premiums collected.  No other  states account for more than 7%
of UG's direct premiums collected.


UNDERWRITING

The  underwriting procedures  of the  Company's 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.


RESERVES

The  applicable   insurance  laws  under  which   the  Company's  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

<PAGE>                              5

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.

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 1996, 1995 and 1994.


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, 1996, the Company had insurance
in force of $3.953 billion of which approximately $1.109 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.

The  Company's  insurance  subsidiary  ("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,  an industry  rating company,  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.  The
agreement  with FILIC  accounts for  approximately 66%  of the  reinsurance
receivables as of December 31, 1996.  

As a result  of the  FILIC coinsurance agreement,  effective September  30,
1996,  UG received  a reinsurance credit  in the  amount of  $28,318,000 in
exchange  for an equal amount of assets.   UG also received $6,375,000 as a
commission allowance.

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.

In  selecting  a reinsurance  company,  the Company  examines  many factors
including:  

1) Whether the reinsurer  is licensed in  the states  in which  reinsurance
   coverage is being sought;

2) the solvency and  stability of the company.   One source utilized is the
   rating given  the  reinsurer by  the  A.M.  Best Company,  an  insurance
   industry  rating  company.    Another  source is  the  statutory  annual
   statement of the reinsurer;

<PAGE>                            6


3) the history and reputation of the Company;

4) competitive  pricing of  reinsurance coverage.    The Company  generally
   seeks quotes from several reinsurers when considering a new treaty. 

The  Company does not have  any short-duration reinsurance  contracts.  The
effect  of the Company's  long duration  reinsurance contracts  on premiums
earned in 1996, 1995 and 1994 was as follows:

                                         Shown in thousands
                                 1996           1995           1994
                               Premiums       Premiums       Premiums
                                Earned         Earned         Earned

              Direct         $    32,387    $    35,201    $    37,911 
              Assumed                  0              0              0 
              Ceded               (4,768)        (5,203)        (5,627)
              Net premiums   $    27,619    $    29,998    $    32,284 



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,
                                   1996          1995         1994
       Fixed maturities and
         fixed maturities   
         held for sale         $ 13,396,431  $ 13,292,552  $ 12,174,226
       Equity securities             88,661        52,445         3,999 
       Mortgage Loans             1,047,461     1,257,189     1,408,558
       Real Estate                  794,844       975,080       990,857
       Policy Loans               1,121,538     1,041,900       978,555
       Short-term investments       512,322       498,496       412,135
       Other                        170,872       143,527       135,051
       Total consolidated  
         investment income       17,132,129    17,261,189    16,103,381
         Investment expenses     (1,222,903)   (1,761,438)   (1,914,920)
       Consolidated net
         investment income     $ 15,909,226  $ 15,499,751  $ 14,188,461
          

<PAGE>                                7


At December 31, 1996, the Company had a total of $5,750,000 of investments,
which did not produce income during 1996.  These investments are  comprised
of  $5,050,000  in  real estate  including  its  home  office property  and
$700,000 in equity securities.

The following table summarizes  the Company's fixed maturities distribution
at December 31, 1996 and 1995 by ratings category as issued by Standard and
Poor's, a leading ratings analyst.

                              FIXED MATURITIES  

                             RATING          % OF
                                          PORTFOLIO

                                         1996   1995
                       Investment Grade
                          AAA             30%    27%
                          AA              13%    14%
                          A               46%    48%
                          BBB             10%    11%

                       Below investment    
                       grade               1%     0%
                                         100%    100%
                                            

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

                                             Carrying Value
                                            1996           1995

        U.S. government and            
        government agencies            $  29,744,995  $  29,209,267
        States, municipalities and      
        political subdivisions            14,527,351      7,597,203
        Collateralized mortgage           
        obligations                       13,246,780     15,428,596
        Public utilities                  51,913,970     59,219,088
        Corporate                         72,063,931     82,330,372

                                       $ 181,497,027  $ 193,784,526

The following  table  shows the  composition and  average  maturity of the
Company's investment portfolio at December 31, 1996.


                                   Carrying      Average       Average
Investments                         Value        Maturity       Yield   

Fixed maturities and fixed
 maturities held for sale       $181,497,027     6 years        7.08%
Equity securities                  1,794,405  not applicable    4.74%
Mortgage loans                    11,022,792    11 years        8.41%
Investment real estate            14,115,436  not applicable    5.01%
Policy loans                      14,438,120  not applicable    6.55%
Short-term investments               400,000    159 days        4.15%
Total Investments               $223,267,780                    7.21%


At  December 31, 1996, fixed maturities  and fixed maturities held for sale
have  a market  value of  $183,776,000.   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.  

<PAGE>                             8

The  Company  holds  approximately   $400,000  in  short-term  investments.
Management monitors  its  investment maturities  and  in their  opinion  is
sufficient to  meet the  Company's cash requirements.   The following  is a
summary  of  other investments  maturing  in  one  to  five years.    Fixed
maturities and  mortgage loans of $13,360,000  and $1,039,000 respectively,
maturing in one year  and $75,579,000 and $885,000,  respectively, maturing
in two to five years.

The  Company  holds  approximately  $11,023,000  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 $603,000  of  mortgage loans,  net  of a  $10,000  reserve
allowance, which  are in default or  in the process of  foreclosure.  These
loans represent approximately  4% of the total portfolio.   The Company has
one loan that total approximately $63,900 which are 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 are  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 are indicators  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           $ 676,176         6%
                    Commercial       1,878,158        17%
                    Residential      8,468,458        77%

<PAGE>                               9


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


                             MORTGAGE LOANS          REAL ESTATE
                 Colorado          2%                     0%
                 Illinois         12%                    59%
                 Kansas           12%                     0%
                 Louisiana        14%                    12%
                 Mississippi       0%                    16%
                 Missouri          2%                     1%
                 North Carolina    6%                     5%
                 Oklahoma          7%                     1%
                 Virginia          4%                     0%
                 West Virginia    37%                     4%
                 Other             4%                     2%
                 Total           100%                   100%


The following table summarizes delinquent mortgage loan holdings.




           Delinquent
           31 Days or More          1996       1995        1994

           Non-accrual status   $      0    $     0    $      0 
           Other                 613,000    628,000     911,000

           Reserve on            
           delinquent loans      (10,000)   (10,000)    (26,000)

           Total Delinquent     $603,000  $ 618,000  $  885,000

           Interest income
           forgone              
            (Delinquent 
             loans)            $  29,000   $ 16,000   $  4,000

           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.

<PAGE>                               10

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 policy holder 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.


GOVERNMENT REGULATION

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 ALIC are domiciled in  the states of Ohio, Ohio, West Virginia
and Illinois, respectively. 

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 are 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  to  Notes  to  Financial
Statements), and  payment of dividends  (see Note  2 to Notes  to Financial
Statements)  in excess  of  specified amounts  by the  insurance subsidiary
within the holding company system are required.

The  National  Association  of   Insurance  Commissioners  ("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.

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.

<PAGE>                                11

At year end  1996, UG had two ratios  outside the normal range.   The first
ratio compared  commission allowances  with statutory capital  and surplus.
The ratio  was outside the  normal range  due to the  coinsurance agreement
with  First International  Life  Insurance Company  ("FILIC").   Additional
information about the coinsurance agreement with FILIC can be  found in the
section titled  Reinsurance or in Note  7 of the Notes  to the Consolidated
Financial Statements.   Management does not believe that this ratio will be
outside the normal range in future periods.

The second  ratio is related to the decrease in  premium income.  The ratio
fell outside the normal  range the last two years.  The decrease in premium
income is directly attributable  to the change in distribution  systems and
marketing strategy.  The  Company changed its focus from primarily a broker
agency  distribution system  to  a captive  agent  system and  changed  its
marketing  strategy  from  traditional  whole life  insurance  products  to
universal  life  insurance products.    Management  is  taking a  long-term
approach  to its recent changes  to the marketing  and distribution systems
and believes these changes will provide long-term benefits to the Company.
  
The  NAIC  has adopted  Risk Based  Capital ("RBC")  rules to  evaluate the
adequacy  of statutory  capital  and surplus  in  relation to  a  company's
investment and insurance risks.  The RBC formula reflects the level of risk
of invested  assets and  the  types of  insurance  products.   The  formula
classifies company risks into four categories:

1)        Asset risk - the risk of loss of principal due to default through
          creditor  bankruptcy  or  decline  in  market  value  for  assets
          reported at market.

2)        Pricing inadequacy  - the  risk of adverse  mortality, morbidity,
          and expense experience in relation to pricing assumptions.

3)        Asset and liability  mismatch -  the risk of  having to  reinvest
          funds when market yields fall below levels guaranteed to contract
          holders, and the risk of having to sell assets when market yields
          are above the levels at which the assets were purchased.

4)        General  risk -  the  risk  of  fraud, mismanagement,  and  other
          business risks.

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                                2.0*
   Regulatory action level                             1.5
   Authorized control level                            1.0
   Mandatory control level                             0.7

   * Or, 2.5 with negative trend.

At December  31, 1996, each of  the Company's insurance  subsidiaries has a
Ratio  that  is  in  excess  of  300%  of  the  authorized  control  level;
accordingly the Company's subsidiaries meet the RBC requirements. 

<PAGE>                             12

The NAIC  has recently  released  the Life  Illustration Model  Regulation.
This regulation  requires products which  contain non-guaranteed  elements,
such as universal life  and interest sensitive life, to comply with certain
established actuarial 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 which does not
meet the various  tests.   The only  implication is  the way  in which  the
product is  marketed to the  consumer.  A  product which does  not pass the
tests  uses  guaranteed  assumptions  rather than  current  assumptions  in
presenting future product performance to the consumer.

As states  in which the Company does business adopt the regulation or adopt
a  modified version  of the  regulation, the  Company  will be  required to
comply with this  new regulation.  The Company may  need to modify existing
products or sales methods.

The  NAIC has  proposed a  new  Model Investment  Law that  may affect  the
statutory carrying  values  of certain  investments;   however,  the  final
outcome of that proposal is not certain, nor is it possible to predict what
impact the  proposal will have or  whether the proposal will  be adopted in
the foreseeable future.


EMPLOYEES

There are approximately 100 persons who are employed by the Company and its
affiliates.


ITEM 2.  PROPERTIES

The following table shows the distribution of real estate by type.


                Real Estate          Amount       % of Total 
          Home Office             $ 2,610,908         19%
          Commercial              $ 2,318,514         17%
          Residential development $ 5,341,858         37%
          Foreclosed real estate  $ 3,846,946         27%


Real estate  holdings, net  of accumulated depreciation  of $3,565,000  and
$3,254,000  at   December  31,  1996  and   1995,  respectively,  represent
approximately 4% of  the total assets.  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  $2,688,000.   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  $198,000.  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.  

<PAGE>                             13

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
exceed  management'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

<PAGE>                             14

                                  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
                                             
                    1996
                    First quarter          1/16       1/8
                    Second quarter         1/16       3/16
                    Third quarter          1/16       5/32
                    Fourth quarter         3/32       1/8

                    1995
                    First quarter          1/16       1/8
                    Second quarter         1/8        1/8
                    Third quarter          1/8        1/8
                    Fourth quarter         1/16       1/8



The Company did not pay any dividends during 1996 or  1995.  Limitations on
shareholders dividends  are described in  Note 2 of the  Notes to Financial
Statements.



             Number of Common Shareholders as of March 3, 1997

                                   15,393

<PAGE>                               15

ITEM 6.  SELECTED FINANCIAL DATA

<TABLE>
                          FINANCIAL HIGHLIGHTS
                (000's omitted, except per share data)
                          1996       1995       1994       1993       1992
<S>                   <C>        <C>         <C>        <C>        <C>
Premium income
  net of reinsurance   $ 27,619   $ 29,998    $ 32,284   $ 30,727   $ 21,614 
Total revenues         $ 46,538   $ 48,365    $ 49,261   $ 47,185   $ 41,049 
Net income (loss)      $ (3,032)  $ (1,452)   $ (1,775)  $ (3,343)  $ (4,020)
Net income (loss) 
per share              $  (0.13)  $  (0.06)   $  (0.07)  $  (0.14)  $  (0.21)
Total assets           $336,639   $334,058    $331,410   $326,390   $319,628 
Total long term debt   $ 19,000   $ 20,623    $ 21,529   $ 23,535   $ 26,240 
Dividends paid 
per share                 NONE       NONE       NONE        NONE       NONE 
</TABLE>

<PAGE>                                     16

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


LIQUIDITY AND CAPITAL RESOURCES

The Company and its consolidated  subsidiaries have three  principal needs
for cash - the insurance companies contractual obligations to policyholders,
the payment of operating expenses and servicing of its long-term debt.  Cash
and cash equivalents  as a percentage of total assets were 5%  and  4%  as
of  December 31,  1996,  and  1995,  respectively.   Fixed maturities as a
percentage  of total invested assets were 80% and 78% as of December 31, 
1996 and 1995, respectively.  

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 a  sufficient
return to cover these  obligations.  Most of the  insurance company assets,
other  than  policy  loans, are  invested  in  fixed  maturities and  other
investments, substantially all of which  are readily marketable.   Although
there is no present need or intent to dispose of such investments, the life
companies  could liquidate  portions of  their investments  if such  a need
arose.  The Company has the ability and intent to hold these investments to
maturity;  consequently,  the  Company's  investment  in  long  term  fixed
maturities  are 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.

Consolidated operating  activities of the  Company produced  cash flows  of
$2,559,000, $687,000 and  $1,338,000 in 1996, 1995 and  1994, respectively.
The net cash  provided by  operating activities plus net policyholder 
contract deposits  after the payment of  policyholder withdrawals,  equalled
$9,370,000  in 1996,  $9,701,000 in1995, and $9,555,000 in 1994.  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.


Cash  provided   by  (used   in)  investing  activities   was  $16,163,000,
($8,030,000) and ($26,847,000), for 1996, 1995 and 1994, respectively.  The
most  significant aspect of cash provided by (used in) investing activities
is the fixed maturity transactions.   Fixed maturities account for 82%, 76%
and 79% of the  total cost of investments acquired in  1996, 1995 and 1994,
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  ($13,900,000),
$8,108,000  and  $6,211,000 for  1996, 1995  and  1994, respectively.   The
change  between 1996 and 1995 is due  to a coinsurance agreement with First
International Life Insurance Company  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. 

Policyholder  contract deposits decreased 11% in 1996 compared to 1995, and
increased  8% in  1995  when  compared  to  1994.    Policyholder  contract
withdrawals has  decreased 4% in 1996 compared to 1995, and increased 7% in
1995 compared to 1994.  The changes in policyholder contract withdrawals is
not attributable to any one significant event.  Factors that may be causing
the increase are the  fluctuation of interest rates, competition  and other
economic factors.   The Company's current marketing  strategy and portfolio
is directly  structured to conserve the  existing customer base  and at the
same time increase the customer base through new policy production.

<PAGE>                             17


On  May  8, 1996,  FCC  refinanced  its senior  debt  of  $8,900,000.   The
refinancing was completed through First of America Bank - NA and is subject
to a credit agreement.  The refinanced 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.  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, 1996, the Company prepaid
$500,000 of the May 8, 1997 principal payment.

On a parent only  basis, FCC's cash flow is dependent  on revenues from its
life insurance  subsidiaries from management and  cost sharing arrangements
and  through dividends.   At  December 31,  1996, 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  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 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, 1996,  UG had a statutory gain from  operations of $8,006,000.
At  December 31,  1996,  UG's statutory  capital  and surplus  amounted  to
$10,227,000.    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.
 
The NAIC's  risk-based capital requirements require  insurance companies to
calculate  and   report  information under  a  risk-based capital  formula.
These requirements are  intended to allow insurance regulators  to identify
inadequately  capitalized  insurance companies  based  upon  the types  and
mixtures  of risks  inherent  in the  insurer's  operations.   The  formula
includes components for asset risk, liability risk, interest rate exposure,
and other factors.  Based upon their December 31, 1996, statutory financial
reports, the  Company's  insurance subsidiaries  are adequately capitalized
under the formula. 

The Company  is not  aware  of any  litigation that  will  have a  material
adverse effect on the financial position  of the Company.  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.

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

<PAGE>                               18

RESULTS OF OPERATIONS

1996 COMPARED TO 1995

(a)  REVENUES

Premium  income, net of  reinsurance premium,  decreased 8%  when comparing
1996 to  1995.  The decrease  in premium income is  primarily attributed to
the  change in  marketing strategy  and to  a lesser  extent the  change in
distribution  systems.   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.  

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  termination of  the broker  agency force  caused a  non-
recurring write down  of the  value of  agency force  asset in  1995.   See
discussion of amortization of agency force for further details.)

One  factor  that has  had  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  Company's  average
persistency rate for all policies in force for 1996 and 1995 has been 87.9%
and 87.5%, respectively.
  
Other considerations net of  reinsurance increased 7% compared to  one year
ago.  Other  considerations consists of administrative charges on universal
life  and interest  sensitive life  insurance products.   The  insurance in
force  relating to  these  types  of  products  continues  to  increase  as
marketing efforts are focused on universal life insurance products.

Net  investment income  increased  3% when  comparing 1996  to  1995.   The
overall  investment yields for  1996, 1995 and  1994, are  7.21%, 7.10% and
7.19%,  respectively.   The  improvement in  investment yield  is primarily
attributed to the fixed maturity  portfolio.  The Company has invested 
financing  cash flows generated by cash received through sales of universal
life insurance products.  

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, the Company's
primary  product.    The  Company  monitors  investment  yields,  and  when
necessary adjusts  credited interest  rates  on its  insurance products  to
preserve  targeted spreads.   It  is expected  that  the monitoring  of the
interest  spreads  by  management  will provide  the  necessary  margin  to
adequately provide for associated  costs on insurance policies  the Company
has in force and will write in the future.

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:

<PAGE>                              19


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, $720,000 and  $1,250,000 in
1996, 1995  and 1994, respectively.   The Company  incurred legal  costs of
$906,000, $687,000 and $229,000 in 1996, 1995 and 1994, 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  was due to the decline in first
year premium production.

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,  $687,000  and  $229,000  in  1996,  1995  and  1994,
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  which  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.
 

(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. 

<PAGE>                             20


RESULTS OF OPERATIONS

1995 COMPARED TO 1994

(a)  REVENUES

Total revenue decreased 2% when comparing 1995 to 1994. 

Premium income, net  of reinsurance  premium, decreased  7% when  comparing
1995 to  1994.  The decrease  is primarily attributable to  the decrease in
new business  production and the change in products marketed.  In 1995, the
Company  has streamlined the product portfolio, as well as restructured the
marketing force.  The decrease in first year premium production is directly
related  to the Company's change in distribution  systems.  The Company has
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  marketing strategy from traditional life  insurance products
to  universal life  insurance  products had  a  significant impact  on  new
business production.   As a result of the change  in marketing strategy the
agency  force  went through  a restructure  and  retraining process.   Cash
collected  from   the  universal  life  and   interest  sensitive  products
contribute only  the risk  charge to  premium  income, however  traditional
insurance  products contribute  monies  received to  premium  income.   One
factor that has had 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.  Overall, persistency improved  to 87.5% in
1995 compared to 86.3% in 1994.  

Other  considerations net of reinsurance increased 13% compared to one year
ago.  Other considerations consists of administrative charges on  universal
life  and interest  sensitive life  insurance products.   The  insurance in
force  relating to  these  types  of  products  continues  to  increase  as
marketing efforts are focused on universal life insurance products.

Net investment income increased 9% when comparing 1995 to 1994.  The change
reflected an increase in the amount of invested assets, which was partially
offset by a lower effective yield on investments acquired during 1995.  The
overall investment yields  for 1995,  1994 and 1993,  are 7.10%, 7.19%  and
7.40%, respectively.  The Company has  been able to increase its investment
portfolio through financing cash flows, generated by cash  received through
sales of  universal life insurance products.   Although the Company sold no
fixed maturities during the last few years, it did experience a significant
turnover in the  portfolio.   Many companies with  bond issues  outstanding
took advantage  of the lower  interest rates  and retired older  debt which
carried  higher rates.    This was  accomplished  through early  calls  and
accelerated pay-downs of fixed maturity investments.

The Company's investments are generally managed  to match related insurance
and  policy  holder  liabilities.   The  Company  in  conjunction with  the
decrease in average  yield of  the Company's fixed  maturity portfolio  has
decreased the  average  crediting  rate for  the  Company's  insurance  and
investment products.  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,  the Company's  primary
product.   The Company monitors investment yields, and when necessary takes
action  to  adjust credited  interest rates  on  its insurance  products to
preserve  targeted spreads.    Over 60%  of  the insurance  and  investment
product  reserves  are crediting  5% or  less in  interest  and 39%  of the
insurance  and investment  product reserves  are crediting  5.25% to  6% in
interest.   It is expected that  the monitoring of the  interest spreads by
management will  provide  the necessary  margin to  adequately provide  for
associated costs on  insurance policies that  the Company has in  force and
will write in the future.

<PAGE>                              21


Realized investment losses  were $349,000  and $146,000 in  1995 and  1994,
respectively.    Fixed  maturities   and  equity  securities  realized  net
investment losses  of  $169,000 and  real  estate realized  net  investment
losses $180,000 in  1995.   The  net realized  investment losses  for fixed
maturities in 1995  is not  attributable to any  one specific  transaction.
The Company experienced moderate turnover in its fixed maturities portfolio
during 1995.   This was the  result of many  companies taking advantage  of
lower  interest rates  and refinancing  higher coupon  rate bonds  with new
securities at current  lower rates.   This was  accomplished through  early
calls and accelerated pay downs that generated the net investment losses of
fixed  maturities.   The  realized investment  losses  for real  estate  is
primarily  attributable to  one property.    The property  was re-evaluated
during  the year in relation to property  values in the surrounding area of
the  property owned  by the  Company.   In 1994,  the Company  realized net
investment  losses from equity securities  and real estate  of $119,000 and
$513,000, respectively and realized  an investment gain of $467,000  due to
the  sale of an insignificant  subsidiary.  The  realized investment losses
from real  estate in 1994, was due to  permanent impairment of the value of
property located in Louisiana.  The permanent impairment  was due to recent
appraisals and marketing analysis.  The Company had other gains  and losses
during the period that  comprised the remaining amount reported  but were
routine or immaterial in nature to disclose on an individual basis.


(b)  EXPENSES

Total expenses decreased 3% when comparing 1995 to 1994. 

Life benefits net of reinsurance benefits and claims decreased 16% compared
to 1994.   The decrease  is related to the  decrease in first  year premium
production.   Another factor that  has caused life benefits  to decrease is
that  during  1994, the  Company lowered  its  crediting rates  on interest
sensitive products in response to financial market conditions.  This action
will  facilitate the  appropriate  spreads between  investment returns  and
credited interest rates.  It takes  approximately one year to fully realize
a change  in  credited rates  since  a  change becomes  effective  on  each
policy's  next anniversary.  Please  refer to discussion  of net investment
income for analysis of interest spreads. 

The Company experienced an increase of 6% in mortality during 1995 compared
to 1994.  The increase in mortality is due primarily to settlement expenses
discussed in the following paragraph:

During  the  third  quarter  of 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 the expected  death claims on  the business in  force to be
adequately covered by the 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.    As   of  December  31,   1995,  there  remained
approximately $5,738,000 of  the original  face amount which  had not  been
settled.   Through  December  31,  1995,  the  Company  spent  a  total  of
$2,886,000  for the  repurchase of  the 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  $720,000 and
$1,250,000  in 1995  and 1994,  respectively.   The Company  incurred legal
costs of $687,000 and $229,000 in 1995 and 1994, respectively.

Dividends to policyholders increased  approximately 26% when comparing 1995
to 1994.   USA continued to market  participating policies through most  of
1994.   Management  expects dividends  to  policyholders will  continue  to
increase in the future.  A significant portion of the insurance in force is
participating  insurance.    A  significant portion  of  the  participating
business  is  relatively  newer  business,  and  the   dividend  scale  for
participating policies  increases in  the  early durations.   The  dividend
scale is subject to  approval of the Board of Directors  and may be changed
at  their  discretion.   The  Company  has  discontinued  its marketing  of
participating policies.

<PAGE>                              22 


Commissions and amortization of deferred policy acquisition costs increased
23% in 1995 compared  to 1994.  The increase is  directly attributed to the
amortization  of a  larger  asset.   The  increase is  also  caused by  the
reduction  in  first  year premium  production.   To  a  lesser  extent the
increase in  amortization of deferred policy acquisition  costs is directly
related to the change in products  that is currently marketed.  The Company
revised  its  portfolio of  products  as  previously discussed  in  premium
income.   These  new products  pay lower  first year  commissions than  the
products sold  in prior  periods.   The asset increased  due to  first year
premium production  by the  agency force.    The Company  did benefit  from
improved persistency.  

Amortization of cost of  insurance acquired decreased 11% in  1995 compared
to  1994.  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 Company's average persistency  rate for
all policies  in force for 1995  and 1994 has been  approximately 87.5% and
86.3%, respectively.

Operating expenses increased  19% in 1995  compared to 1994.   The increase
was  caused by  several factors.   The primary  factor for  the increase in
operating expenses is  due to the decrease in production.   The decrease in
production was  discussed in the analysis  of premium income. As  such, the
Company was  positioned to handle significantly more  first year production
than was  produced.  First  year operating expenses that  were deferred and
capitalized  as a deferred policy  acquisition costs asset  was $532,000 in
1995  compared to  $1,757,000 in 1994.   The difference  between the policy
acquisition  costs deferred in 1995 compared to 1994, effected the increase
in operating expenses.  The increase in operating expenses was offset, to a
lesser extent, from a 12% reduction in staff in 1995 compared to 1994.  The
reduction in staff was achieved by attrition.

Another factor that caused  the increase in operating expenses  is directly
related to  increased legal costs.   During the  third quarter of  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  policies had a  face amount of  $22,700,000 and
represent  1/2 of  1% of  the insurance  in force  of the  Company.   As of
December 31, 1995,  there remained approximately $5,738,000 of the original
face amount  which have not  been settled.   The Company will  continue its
efforts  to repurchase as  many of the  policies as  possible and regularly
apprise  the  Ohio Department  of Insurance  regarding  the status  of this
situation.   The Company incurred  legal costs of  $687,000 and $229,000 in
1995 and 1994, respectively, for the legal defense of related litigation. 

Interest expense decreased slightly in 1995 compared to 1994.  The decrease
was due to the decrease in the outstanding principal balance.  The interest
rate increased to 10%  on March 1,  1995 compared to 7%  on March 1,  1994.
The Company was able to  minimize the effect of the higher interest rate in
1995 by  early  payments  of  principal.   The  Company  paid  $600,000  in
principal  payments in  1995.   The interest  rate on  the senior  debt has
decreased to 9.25% as of March 1, 1996.


(c)  NET LOSS

The Company had a net loss of $1,452,000 in  1995 compared to a net loss of
$1,775,000  in 1994.    The  moderate  improvement  in  1995  is  primarily
attributable to the  increase in net investment income  and the decrease in
life benefits. 

<PAGE>                           23


FINANCIAL CONDITION

The  financial condition  of  the Company  was  affected by  a  coinsurance
agreement between First International  Life Insurance Company ("FILIC") and
the  Company's  insurance  subsidiary  Universal  Guaranty  Life  Insurance
Company  ("UG")  on September  30,  1996.   The  agreement  provided  UG an
additional $6,375,000 of statutory capital and surplus.  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.   Certain balance  sheet line  items were
impacted by this  agreement and  effects the comparability  of the  current
period with the prior period.


(a)  ASSETS

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 which 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,  1996, 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.

Mortgage  loans decreased 21% in 1996 as  compared to 1995.  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 $603,000 in  mortgage loans, net of a $10,000  reserve allowance, which
are   in  default  or  in  the  process  of  foreclosure,  this  represents
approximately 5% of the total portfolio.  The mortgage delinquency rate for
the insurance industry as published by the NAIC as the "Industry Experience
Factor" is 6.5%.

Investment real estate  and real  estate acquired in  satisfaction of  debt
decreased 17% in 1996  compared to 1995.  The decrease was  due to the sale
of lots  from the Company's  Lake Pointe  development and the  sale of  two
foreclosed properties.  Real estate holdings  represent approximately 4% of
the total assets of the Company.  Total real  estate is separated into four
categories:  Home  Office 19%, Commercial 17%, Residential  Development 37%
and Foreclosed Properties 27%.

Policy  loans  decreased 15%  in  1996  compared  to 1995.    Policy  loans
decreased approximately  $2,787,000 due  to the coinsurance  agreement with
FILIC.  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.

Reinsurance receivables increased significantly due to the  
coinsurance agreement  with FILIC.   The coinsurance  agreement
contributed approximately $28,000,000 to reinsurance receivables for future
policy benefits as of December 31, 1996.


<PAGE>                            24


Deferred policy acquisition costs  decreased 5% in 1996 compared  to 1995.
The costs,  which vary with,  and are  primarily related  to producing  new
business are referred to as deferred policy acquisition costs ("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 that  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 $1,276,000 in policy acquisition costs  deferred, $854,000 in interest 
accretion and $3,010,000 in amortization in 1996.  The Company did not 
recognize any impairments during the period.

Cost  of  insurance  acquired decreased  significantly  during  1996.   The
decrease is primarily attributed to the coinsurance agreement with FILIC.  

 
(b)  LIABILITIES

Total liabilities  increased 2%  in 1996 compared  to 1995.   Future policy
benefits increased 4%  in 1996 and represented 84% of  total liabilities at
December 31, 1996.   Management expects future policy benefits  to increase
in the  future due to  the aging of  the volume of  insurance in  force and
continued production by the Company's sales force.  

Policy  claims and benefits payable increased 3%  in 1996 compared to 1995.
There is no single event that caused this item to increase.   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 9%  in  1996 compared  to  1995.   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 11%  in 1996  compared to
1995.     The  increase  is   attributed  to  the   significant  amount  of
participating business the Company has in  force.  There are generally four
options a policyholder can select to pay policy dividends.  Over 47% of all
dividends  paid   were  put  on   deposit  to  accumulate   with  interest.
Accordingly, management expects this liability to increase in the future. 

Income  taxes   payable  and   deferred  income  taxes   payable  decreased
significantly  in 1996  compared  to  1995.   The  primary  reason for  the
decrease in deferred income taxes is due to  the coinsurance agreement with
FILIC.   The  change in deferred  income taxes  payable is  attributable to
temporary  differences  between  Generally  Accepted  Accounting Principles
("GAAP") and tax basis.  Federal income taxes are discussed  in more detail
in Note 3 of the Notes to the Consolidated Financial Statements.

Notes payable decreased approximately $1,623,000 in 1996 compared to 1995. 
On  May  8, 1996,  FCC  refinanced  its senior  debt  of  $8,900,000.   The
refinancing  was  completed  through  First of  America  Bank  -  NA.   The
refinanced  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.  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, 1996, the Company prepaid $500,000 of the May 8, 1997
principal payment.   The  Company's  long term  debt is  discussed in  more
detail in Note 10 of the Notes to the Financial Statements.

<PAGE>                            25


(c)  SHAREHOLDERS' EQUITY

Total shareholders'  equity decreased  8% in 1996  compared to  1995.   The
decrease in  shareholders' equity  is  primarily due  to  the net  loss  of
$3,032,000  in  1996.    The  Company  experienced  $175,000 in  unrealized
depreciation of equity securities and investments held for sale in 1996.


REGULATORY ENVIRONMENT

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 ALIC are domiciled in the states of Ohio, Ohio, West  Virginia
and Illinois, respectively. 

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 are 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.

The  National   Association  of   Insurance  Commissioners  (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.

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 1996,  UG had two ratios outside  the normal range.   The first
ratio compared  commission allowances  with statutory capital  and surplus.
The ratio was  outside the normal  range due  to the coinsurance  agreement
with  First International  Life  Insurance Company  ("FILIC").   Additional
information about the coinsurance agreement with FILIC can be found in Note
7 of the Notes to  the Consolidated Financial Statements.   Management does
not believe  that this  ratio will  be outside the  normal range  in future
periods.

The second ratio is  related to the decrease in premium  income.  The ratio
fell outside the normal range the last two years.  The  decrease in premium
income is directly attributable  to the change in distribution  systems and
marketing strategy.  The Company changed  its focus from primarily a broker
agency  distribution system  to  a captive  agent  system and  changed  its
marketing  strategy  from  traditional  whole life  insurance  products  to
universal life  insurance  products.    Management is  taking  a  long-term
approach  to its recent changes  to the marketing  and distribution systems
and believes these changes will provide long-term benefits to the Company.

<PAGE>                             26


The Company  receives funds from its insurance  subsidiaries in the form of
management  and cost sharing arrangements  (See Note 9  of the Notes to the 
Consolidated Financial Statements) and through dividends.  Annual dividends
in excess of maximum  amounts prescribed by state  statutes ("extraordinary
dividends") may not  be paid without  the prior  approval of the  insurance
commissioner in which an insurance subsidiary is domiciled.  (See Note 2 of
the Notes to the Consolidated Financial Statements.)

The  NAIC   has  adopted   Risk-Based  Capital  ("RBC")   requirements  for
life/health  insurance  companies to  evaluate  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 will be 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,  1996, each of  the Company's insurance subsidiaries  has a
Ratio  that  is  in  excess  of  300%  of  the  authorized  control  level;
accordingly the Company's subsidiaries meet the RBC requirements. 

The NAIC  has recently  released  the Life  Illustration Model  Regulation.
This  regulation requires  products which contain  non-guaranteed elements,
such as universal life and interest sensitive life, to comply with  certain
actuarial 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 which does not
meet the  various tests.   The  only implication is  the way  in which  the
product is  marketed to the  consumer.  A product  which does not  pass the
tests  uses  guaranteed  assumptions  rather than  current  assumptions  in
presenting future product performance to the consumer.

As states  in which the Company does business adopt the regulation or adopt
a  modified version  of  the regulation,  the Company  will be  required to
comply with this  new regulation.  The Company may  need to modify existing
products or sales methods.

The  NAIC has  proposed a  new  Model Investment  Law that  may affect  the
statutory carrying  values  of certain  investments;   however,  the  final
outcome of that proposal is not certain, nor is it possible to predict what
impact the proposal  will have on the Company or  whether the proposal will
be adopted in the foreseeable future.

<PAGE>                             27


FUTURE OUTLOOK

The Company operates in a highly competitive industry.  In connection  with
the  development  and   sale  of  its  products,   the  Company  encounters
significant competition from other insurance companies, many  of which have
financial resources or ratings greater than those of the Company. 

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.
Management  believes that  the Company's  ability  to compete  is dependent
upon,  among  other things,  its ability  to attract  and retain  agents to
market  its insurance products and  its ability to  develop competitive and
profitable products.

<PAGE>                              28


ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

No new accounting standards became effective or were adopted by the Company
during  the year  which  resulted in  a  material impact  on  the Company's
financial statements.


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, 1996, 1995, 1994  . . . . . . . . . . 30



     Consolidated Balance Sheets  . . . . . . . . . . . . . . . . . 31



     Consolidated Statements of Operations  . . . . . . . . . . . . 32



     Consolidated Statements of Shareholders' Equity  . . . . . . . 33



     Consolidated Statements of Cash Flows  . . . . . . . . . . . . 34



     Notes to Consolidated Financial Statements . . . . . . . .  35-54




ITEM  9.  DISAGREEMENTS  WITH  ACCOUNTANTS  ON  ACCOUNTING  AND FINANCIAL
          DISCLOSURE

None


<PAGE>                                  29


                          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, 1996 and 1995, and the related consolidated statements of
operations, shareholders' equity, and cash flows for each of the three
years in the period ended December 31, 1996.  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, 1996 and 1995,
and the consolidated results of their operations and their consolidated
cash flows for each of the three years in the period ended December 31,
1996, in conformity with generally accepted accounting principles.

  We have also audited Schedule I as of December 31, 1996, and Schedules
II, IV and V as of December 31, 1996 and 1995, 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, 1997



<PAGE>                                  30


<TABLE>
FIRST COMMONWEALTH CORPORATION
CONSOLIDATED BALANCE SHEETS
As of December 31, 1996 and 1995


                                      ASSETS                          
                                                      1996          1995
<S>                                             <C>            <C>
Investments:
   Fixed maturities at amortized cost (market 
    $181,815,225 and $197,006,257)               $ 179,535,861  $ 190,558,351
   Investments held for sale:
      Fixed maturities, at market (cost 
        $1,984,661 and $3,224,039)                    1,961,166     3,226,175 
      Equity securities, at market  
       (cost $2,086,159 and $2,086,159)               1,794,405     1,946,481 
   Mortgage loans on real estate at amortized cost   11,022,792    13,891,762 
   Investment real estate, at cost, net of 
    accumulated depreciation                         10,268,490    11,683,575 
   Real estate acquired in satisfaction of debt, 
    at cost, net of accumulated depreciation          3,846,946     5,332,413 
   Policy loans                                      14,438,120    16,941,359 
   Short term investments                               400,000       425,000
                                                    223,267,780   244,005,116 

Cash and cash equivalents                            16,801,288    11,979,637 
Investment in parent                                    350,000       350,000
Accrued investment income                             3,424,546     3,620,367 
Reinsurance receivables:                                              
    Future policy benefits                           38,745,093    13,540,364 
    Policy claims and other benefits                  3,856,124       861,488 
Other accounts and notes receivable                     894,321       963,468
Deferred policy acquisition costs                    18,162,356    19,041,728 
Cost of insurance acquired                           19,886,494    27,964,733 
Cost in excess of net assets purchased,                               
    net of accumulated amortization                   9,624,135    10,071,170 
Other assets                                          1,626,987     1,659,714 
             Total assets                         $ 336,639,124 $ 334,057,785 

LIABILITIES AND SHAREHOLDERS' EQUITY

Policy liabilities and accruals:
   Future policy benefits                         $ 252,718,388 $ 242,763,581 
   Policy claims and benefits payable                 3,193,806     3,110,378 
   Other policyholder funds                           2,784,967     3,053,411 
   Dividend and endowment accumulations              13,647,676    12,324,949 
Income taxes payable:
   Current                                               60,044       211,979 
   Deferred                                           3,043,775     7,865,853 
Notes payable                                        18,999,853    20,623,328 
Indebtedness to (from) affiliates, net                   36,933      (162,388)
Other liabilities                                     5,088,785     4,051,080 
             Total liabilities                      299,574,227   293,842,171 
Minority interests in consolidated subsidiaries       1,586,246     1,530,814 


Shareholders' equity:
Common stock - $1 par value per share.  Authorized 
 25,000,000 shares - 23,967,749 and 23,967,749 
 shares issued after deducting treasury shares 
 of 372,506 and 372,506                              23,967,749    23,967,749 
Additional paid-in capital                           28,498,361    28,498,361 
Unrealized depreciation of investments held 
 for sale                                              (305,715)     (131,215)
Accumulated deficit                                 (16,681,744)  (13,650,095)
      Total shareholders' equity                     35,478,651    38,684,800 
      Total liabilities and shareholders' equity  $ 336,639,124 $ 334,057,785 

</TABLE>
                              See accompanying notes.
<PAGE>                                 31

<TABLE>
FIRST COMMONWEALTH CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Years Ended December 31, 1996



                                        1996           1995         1994
<S>                                <C>           <C>           <C>
Revenues:

 Premium income                     $ 32,386,635  $ 35,200,815  $ 37,910,813 
 Reinsurance premium                  (4,767,743)   (5,202,690)   (5,626,582)
 Other considerations                  3,504,974     3,280,823     2,969,131 
 Other considerations paid 
   to reinsurers                        (179,408)     (180,412)     (229,093)
 Net investment income                15,909,226    15,499,751    14,188,461 
 Realized investment gains and 
   (losses), net                        (411,053)     (348,582)     (145,697)
 Other income                             95,400       115,469       194,338

                                      46,538,031    48,365,174    49,261,371 


Benefits and other expenses:

 Benefits, claims and settlement 
   expenses:
     Life                             30,800,404    28,094,061    33,373,186 
     Reinsurance benefits and claims  (2,283,956)   (2,849,806)   (2,807,763)
     Annuity                           1,826,600     1,762,584     1,526,492 
     Dividends to policyholders        4,100,552     4,217,176     3,339,992 
   Commissions and amortization of 
     deferred policy
     acquisition costs                 4,992,885     5,440,653     4,438,133 
   Amortization of cost of 
     insurance acquired                1,703,400     1,944,798     2,181,127 
   Operating expenses                 11,631,839    10,672,996     8,975,985 
   Interest expense                    1,700,823     1,917,360     1,941,565 
                                      54,472,547    51,199,822    52,968,717 


Loss before income taxes
   and minority interest              (7,934,516)   (2,834,648)   (3,707,346)

Credit for income taxes                4,961,506     1,435,824     1,996,284 
Minority interest in gain
   of consolidated subsidiaries          (58,639)      (52,814)      (63,782)
Net loss                            $ (3,031,649) $ (1,451,638) $ (1,774,844)


Net loss per common share           $      (0.13) $      (0.06) $      (0.07)

Weighted average common
   shares outstanding                 23,967,749    24,198,193    24,340,051 

</TABLE>



                              See accompanying notes
<PAGE>                                   32

<TABLE>

FIRST COMMONWEALTH CORPORATION
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
Three Years Ended December 31, 1996

                                        1996           1995        1994
<S>                               <C>           <C>           <C>
Common stock
   Balance, beginning of year      $  23,967,749 $  24,340,051 $  24,340,051 
   Treasury stock acquired through 
    liquidation of Commonwealth 
    Industries Corporation                     0      (372,302)            0 
    Issued during year                         0             0             0 
    Balance, end of year           $  23,967,749 $  23,967,749 $  24,340,051 



Additional paid-in capital
    Balance, beginning of year     $  28,498,361 $  31,588,559 $  31,588,559 
    Treasury stock acquired through
     liquidation of Commonwealth 
     Industries Corporation                    0    (3,090,198)            0 
    Issued during year                         0             0             0 
    Balance, end of year           $  28,498,361 $  28,498,361 $  31,588,559 



Unrealized appreciation (depreciation) 
 of investments held for sale
    Balance, beginning of year     $    (131,215)$    (423,916)$    (178,621)
    Change during year                  (174,500)      292,701      (245,295)
    Balance, end of year           $    (305,715)$    (131,215)$    (423,916)




Accumulated deficit
   Balance, beginning  of year     $ (13,650,095)$ (12,198,457)$ (10,423,613)
   Net loss                           (3,031,649)   (1,451,638)   (1,774,844)
   Balance, end of year            $ (16,681,744)$ (13,650,095)$ (12,198,457)





Total shareholders' equity, 
 end of year                       $  35,478,651 $  38,684,800 $  43,306,237 

</TABLE>


                             See accompanying notes.
<PAGE>                                 33

<TABLE>
FIRST COMMONWEALTH CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Years Ended December 31, 1996                                   

                                       1996           1995           1994
<S>                             <C>            <C>            <C>
Increase (decrease) in cash and 
 cash equivalents
Cash flows from operating 
 activities:
   Net loss                      $  (3,031,649) $  (1,451,638) $  (1,774,844)
   Adjustments to reconcile net 
    loss to net cash provided by
    operating activities net of 
    changes in assets and 
    liabilities resulting from the
    sales and purchases of 
    subsidiaries:
      Amortization/accretion of 
        fixed maturities               829,326       866,658      1 ,028,327 
      Realized investment (gains) 
        losses, net                    411,053       348,582         145,697
      Policy acquisition costs 
        deferred                    (1,276,000)   (2,370,000)     (4,939,000)
      Amortization of deferred 
        policy acquisition costs     2,155,372     2,100,748       1,529,012 
      Amortization of cost of 
        insurance acquired           1,703,400     1,944,798       2,181,127 
      Amortization of costs in 
        excess of net assets 
        purchased                      447,035       691,307         450,669
      Depreciation                     514,507       531,364         657,533
      Minority interest                 58,639        52,814          63,782 
      Change in accrued investment 
        income                         195,821      (173,350)       (583,950)
      Change in reinsurance 
        receivables                     83,742      (482,226)     (1,012,799)
      Change in policy liabilities 
        and accruals                 7,444,348     4,954,300       9,990,664 
      Charges for mortality and 
        administration of universal 
        life and annuity products  (10,239,476)   (9,757,354)     (9,178,363)
      Interest credited to account 
        balances                     7,075,921     6,644,282       5,931,019 
      Change in income taxes 
        payable                     (4,974,013)   (1,460,367)     (1,996,474)
      Change in indebtedness (to) 
        from affiliates, net           199,321        21,528         205,977 
      Change in other assets and 
        liabilities, net               961,680    (1,774,381)     (1,360,067)
Net cash provided by operating 
 activities                          2,559,027       687,065       1,338,310 

 Cash flows from investing activities:
  Proceeds from investments sold 
    and matured:
      Fixed maturities held for 
       sale matured                  1,152,736       619,612        250,000
      Fixed maturities sold         18,736,612             0              0 
      Fixed maturities matured      20,787,782    16,265,140     23,601,817 
      Equity securities                  8,990       104,260         49,557 
      Mortgage loans                 3,364,427     2,252,423      4,006,557 
      Real estate                    3,219,851     1,768,254      2,640,025 
      Policy loans                   3,937,471     4,110,744      3,974,404 
      Short term                       825,000        25,000      1,038,856 
 Total proceeds from investments 
   sold and matured                 52,032,869    25,145,433     35,561,216 

 Cost of investments acquired:
      Fixed maturities held for 
       sale                                  0             0       (839,375)
      Fixed maturities             (29,365,111)  (25,112,358)   (51,929,105)
      Equity securities                      0    (1,000,000)      (249,925)
      Mortgage loans                  (503,113)     (322,129)    (5,669,888)
      Real estate                     (841,793)   (1,927,413)    (3,321,599)
      Policy loans                  (4,329,124)   (4,713,471)    (3,557,237)
      Short term                      (830,983)     (100,000)      (650,000)
 Total cost of investments 
  acquired                         (35,870,124)  (33,175,371)   (66,217,129)

 Cash of subsidiary at date of sale          0             0     (3,134,343)
 Cash received in sale of subsidiary         0             0      3,978,586 
 Cash of subsidiaries at acquisition 
  date                                       0             0      2,965,115 
Net cash provided by (used in) 
 investing activities               16,162,745    (8,029,938)   (26,846,555)

Cash flows from financing 
  activities:
 Policyholder contract deposits     22,245,369    25,021,983     23,110,031 
 Policyholder contract withdrawals (15,433,644)  (16,008,462)   (14,893,221)
 Net cash transferred from 
  coinsurance ceded                (19,088,371)            0              0 
 Proceeds from notes payable         9,300,000       300,000              0 
 Payments of principal on notes 
  payable                          (10,923,475)   (1,205,861)    (2,005,687)
Net cash provided by (used in) 
 financing activities              (13,900,121)    8,107,660      6,211,123 

Net increase (decrease) in cash 
 and cash equivalents                4,821,651       764,787    (19,297,122)
Cash and cash equivalents at 
 beginning of year                  11,979,637    11,214,850     30,511,972 
Cash and cash equivalents at end 
 of year                         $  16,801,288 $  11,979,637  $  11,214,850 

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


FIRST COMMONWEALTH CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         A.  ORGANIZATION - At  December 31, 1996, the parent,  significant
             majority-owned   subsidiaries   and   affiliates   of    First
             Commonwealth  Corporation were  as depicted  on  the following
             organizational chart.

                               ORGANIZATIONAL CHART
                              AS OF DECEMBER 31, 1996

         United  Trust, Inc. ("UTI") is the  ultimate controlling company.  
         UTI owns 53% of United  Trust Group ("UTG") and 30% of United 
         Income, Inc.  ("UII").  UII owns  47% of  UTG.   UTG  owns 72%  of
         First Commonwealth  Corporation ("FCC").   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").

<PAGE>                                 35

         A  summary  of  the  Company's   significant  accounting  policies
         consistently  applied  in  the  preparation  of  the  accompanying
         consolidated financial statements follows.  

         B.  NATURE OF  OPERATIONS - First  Commonwealth Corporation is  an
             insurance  holding   company  that,   through  its   insurance
             subsidiaries  sells individual  life insurance  products.  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 -- at cost, less allowances  for depreciation and
             any impairment  which would result in  a carrying value  below
             net realizable value.  Foreclosed real estate is adjusted  for
             any   impairment  at  the   foreclosure  date.     Accumulated
             depreciation on real  estate was $3,565,073 and $3,253,979  as
             of December 31, 1996 and 1995, 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.

<PAGE>                                  36

         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.

                                      1996         1995          1994
Deferred, beginning of year      $ 19,042,000  $ 18,772,000  $ 16,254,000
  
Acquisition costs deferred:
 Commissions, net of reinsurance 
  of $0
 $0 and $1,837,000                    845,000      1,838,00     3,182,000
 Marketing, salaries and 
  other expenses                      431,000       532,000     1,757,000

 Total                              1,276,000     2,370,000     4,939,000

 Interest accretion                   854,000       817,000      684,000 
 Amortization charged to income    (3,010,000)   (2,917,000)  (2,213,000)
 Net amortization                  (2,156,000)   (2,100,000)  (1,529,000)

 Deferred acquisition costs
  disposed of at sale of 
  subsidiary                                0             0     (892,000)
 Change for the year                 (880,000)      270,000    2,518,000

Deferred, end of year            $ 18,162,000  $ 19,042,000 $ 18,772,000

<PAGE>                                  37


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


                                              1996      1995      1994   

             Net amortization of deferred 
               policy acquisition costs  $ 2,156,000 $ 2,100,000 $ 1,529,000
             Commissions                   2,837,000   3,341,000   2,909,000
               Total                     $ 4,993,000 $ 5,441,000 $ 4,438,000

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

                                   Interest                     Net       
                                   Accretion  Amortization  Amortization


             1997                 $  800,000  $  2,700,000  $  1,900,000
             1998                    700,000     2,400,000     1,700,000
             1999                    700,000     2,200,000     1,500,000
             2000                    600,000     1,900,000     1,300,000
             2001                    600,000     1,700,000     1,100,000


         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.

                                        1996         1995         1994    


           Cost of insurance 
               acquired, beginning 
               of year              $ 27,965,000 $ 29,910,000 $ 32,091,000

             Additions from 
               acquisitions                    0            0            0 
             Interest accretion        2,695,000    2,825,000    2,967,000  
             Amortization             (4,398,000)  (4,770,000)  (5,148,000)
               Net amortization       (1,703,000)  (1,945,000)  (2,181,000)
             Balance attributable to
              coinsurance agreement   (6,375,000)           0            0 
             Write-offs due to 
              impairment                       0            0            0 
           Cost of insurance 
              acquired, end of year $ 19,887,000 $ 27,965,000 $ 29,910,000

<PAGE>                                     38


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



                                         Interest                   Net     
                                         Accretion Amortization Amortization

             1997                     $  2,100,000 $  3,300,000 $  1,200,000
             1998                        2,000,000    3,000,000    1,000,000
             1999                        2,000,000    2,800,000      800,000
             2000                        1,900,000    2,800,000      900,000
             2001                        1,800,000    2,800,000    1,000,000


         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.
             Cost  in excess  of  net assets  purchased are  amortized over
             periods  not  exceeding  forty years  using  the straight-line
             method.  Management reviews the valuation  and amortization of
             goodwill  on an  annual basis.   As  part of  this review, the
             Company estimates the value of and  the estimated undiscounted
             future cash  flows expected  to  be generated  by the  related
             subsidiaries  to  determine that  no impairment  has occurred.
             Accumulated  amortization of  cost  in  excess of  net  assets
             purchased was  $5,528,314 and  $5,081,279 as  of December  31,
             1996 and 1995, respectively.

         K.  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.  

             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 1996,  1995 and
             1994.

         L.  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.

         M.  PARTICIPATING  INSURANCE  - Participating  business represents
             30%  and  34% of  the  ordinary  life  insurance  in force  at
             December  31, 1996  and 1995,  respectively.   Premium  income
             from participating  business represents 52%,  55%, and 53%  of
             total  premiums for  the years  ended December  31, 1996, 1995
             and 1994,  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.

<PAGE>                                    39


         N.  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.

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

         P.  EARNINGS  PER SHARE  -  Earnings per  share  are based  on the
             weighted average  number of  common shares outstanding  during
             the respective period.

         Q.  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.

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

         S.  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  premiums,  commissions,  expense  reimbursements,
             and  reserves on  reinsured business  are accounted  for on  a
             basis  consistent  with  those  used  in  accounting  for  the
             original  policies issued  and the  terms  of the  reinsurance
             contracts.    Expense  reimbursements  received in  connection
             with reinsurance ceded have been  accounted for as a reduction
             of  the related  policy acquisition  costs or,  to the  extent
             such reimbursements exceed the  related acquisition costs,  as
             revenue.

             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;
             consequently, allowances  are established  for amounts  deemed
             uncollectible.  The  Company evaluates the financial condition
             of its reinsurers  and monitors concentrations of credit  risk
             arising   from  similar  geographic  regions,  activities,  or
             economic characteristics  of  the reinsurers  to minimize  its
             exposure to significant losses from reinsurer insolvencies.


2.  SHAREHOLDER DIVIDEND RESTRICTION

At  December  31, 1996,  substantially  all  of consolidated  shareholders'
equity represents  net assets of FCC's  subsidiaries.  The  payment of cash
dividends to shareholders by  FCC is 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, 1996, UG  had a statutory gain from operations  of $8,006,000.
At  December 31,  1996,  UG's statutory  capital  and surplus  amounted  to
$10,227,000.    Extraordinary  dividends  (amounts in  excess  of  ordinary
dividend limitations) require prior  approval of the insurance commissioner
and are not restricted to a specific calculation.

<PAGE>                                40

3.  FEDERAL 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.   If certain  of the life  companies pay
shareholder dividends  in excess  of "shareholders'  surplus" they  will be
required to pay taxes on income not taxed under the pre-1984 acts.

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

                                    Shareholders    Untaxed
                       Company         Surplus      Balance

                         ABE        $  5,242,000 $  1,150,000
                        APPL           4,943,000    1,525,000
                         UG           24,038,000    4,364,000
                         USA             981,000            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:

                                    1996        1995       1994
          Current tax           
           expense (credit)   $   (153,000) $    (1,000) $    35,000        
          Deferred tax  
           expense (credit)     (4,809,000)  (1,435,000)  (2,031,000)
                              $ (4,962,000) $(1,436,000) $(1,996,000)

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

                                             UG             FCC
                        2002      $           0         $   527,000
                        2003                  0             285,000
                        2004                  0             283,000
                        2005                  0             139,000
                        2006          2,109,000              33,000
                        2007            783,000             676,000
                        2008            940,000               4,000
                        2009                  0             169,000
                        2010                  0              19,000
                        TOTAL     $   3,832,000         $ 2,135,000

<PAGE>                                 41

The Company  has established  a deferred  tax asset  of $2,088,000  for its
operating  loss   carryforwards  and   has  established  an   allowance  of
$2,088,000.

The  provision or  (credit) for  income taxes  shown  in the  statements of
operations does not  bear the  normal relationship to  pre-tax income as  a
result of certain permanent differences.  

The sources and effects of such differences are summarized in the following
table:


                                          1996         1995        1994
Tax computed at standard 
  corporate rate                     $ (2,777,000) $  (992,000) $ (1,298,000)
Changes in taxes due to:                                    
  Cost in excess of net assets
   purchased                              156,000      154,000       158,000 
  Benefit of prior losses              (2,393,000)    (599,000)     (696,000)
  Other                                    52,000        1,000      (160,000)
Income tax expense (credit)          $ (4,962,000) $(1,436,000) $ (1,996,000)


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


                                             1996              1995
    Investments                        $   (355,325)     $   (332,722)
    Deferred policy acquisition costs     6,356,825         6,664,605 
    Cost of insurance acquired            6,960,273         9,787,657 
    Agent balances                          (65,609)          (71,625)
    Furniture and equipment                 (21,463)          (34,104)
    Due premiums                         (1,175,166)       (1,285,212)
    Discount of notes                       922,766         1,003,038 
    Future policy benefits               (6,074,568)       (3,656,260)
    Other liabilities                    (1,587,422)       (1,346,525)
    Federal tax DAC                      (1,916,536)       (2,862,999)
    Deferred tax liability             $  3,043,775      $  7,865,853 


<PAGE>                                42


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,
                                        1996          1995          1994
Fixed maturities and fixed 
 maturities held for sale           $ 13,396,431 $ 13,292,552  $ 12,174,226 
Equity securities                         88,661       52,445         3,999 
Mortgage loans                         1,047,461    1,257,189     1,408,558 
Real estate                              794,844      975,080       990,857 
Policy loans                           1,121,538    1,041,900       978,555 
Short-term investments                   512,322      498,496       412,135 
Other                                    170,872      143,527       135,051 
Total consolidated investment income  17,132,129   17,261,189    16,103,381 
Investment expenses                   (1,222,903)  (1,761,438)   (1,914,920)
Consolidated net investment income  $ 15,909,226 $ 15,499,751  $ 14,188,461 

At December 31, 1996, the Company had a total of $5,750,000 of investments,
comprised of $5,050,000 in real estate including its home office property 
and $700,000 in equity securities, which did not produce income during 1996.

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


                                                Carrying Value
                                             1996               1995
Investments held for sale:
          Fixed maturities              $  1,961,166    $     3,226,175
          Equity securities                1,794,405          1,946,481
Fixed maturities:
          U.S. Government, government 
           agencies and authorities       28,301,386         27,205,449
          State, municipalities and 
           political subdivisions         14,387,883          6,774,185
          Collateralized mortgage 
           obligations                    13,246,781         15,395,913
          Public utilities                51,794,312         59,101,260
          All other corporate bonds       71,805,499         82,081,544
                                       $ 183,291,432     $  195,731,007


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.

<PAGE>                               43

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       1996        1995           1994
State, Municipalities and
  Political Subdivisions     $   10,000   $        0     $    32,370
Public Utilities                119,658      119,379         168,869
Corporate                       819,677      833,142         848,033
Total                        $  949,335   $  952,521     $ 1,049,272

<PAGE>                                   44


B.   INVESTMENT SECURITIES

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

                                Cost or      Gross       Gross     Estimated
1996                           Amortized   Unrealized  Unrealized    Market
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             2,086,159     37,000    328,754    1,794,405
  Total                      $  4,070,820 $   42,250  $ 357,499 $  3,755,571

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

<PAGE>                                  45

1995
                                Cost or      Gross       Gross     Estimated
                               Amortized  Unrealized   Unrealized    Market
                                 Cost        Gains       Losses      Value
Investments Held for Sale:                                  
  U.S. Government and govt.
    agencies and authorities $  2,001,860 $    2,579  $     621  $ 2,003,818
  States, municipalities and
    political subdivisions        812,454     14,313      3,749      823,018
  Collateralized mortgage
    obligations                    32,177        506          0       32,683
  Public utilities                119,379        572      2,123      117,828
  All other corporate bonds       258,169        337      9,678      248,828
                                3,224,039     18,307     16,171    3,226,175
  Equity securities             2,086,159     80,721    220,399    1,946,481
  Total                      $  5,310,198 $   99,028  $ 236,570  $ 5,172,656
                                                            
Held to Maturity Securities:                                
  U.S. Government and govt.
    agencies and authorities $ 27,205,449 $1,075,742  $  27,634  $28,253,557
  States, municipalities and
    political subdivisions      6,774,185    312,253      6,804    7,079,634
  Collateralized mortgage
    obligations                15,395,913    295,344     67,472   15,623,785
  Public utilities             59,101,260  2,307,613    126,760   61,282,113
  All other corporate bonds    82,081,544  2,974,554    288,930   84,767,168
  Total                      $190,558,351 $6,965,506  $ 517,600 $197,006,257

The amortized cost of debt  securities at December 31, 1996, 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.

       Fixed Maturities Held for Sale              Amortized
                  December 31, 1996                   Cost
       Due in one year or less                   $     139,724
       Due after one year through five years         1,569,804
       Due after five years through ten years          115,183
       Due after ten years                             159,950
                                                 $   1,984,661

<PAGE>                                   46
 



        Fixed Maturities Held to Maturity           Amortized
                December 31, 1996                      Cost
        Due in one year or less                   $  13,220,430
        Due after one year through five years        74,009,289
        Due after five years through ten years       77,165,456
        Due after ten years                          15,140,686
                                                  $ 179,535,861

Proceeds  from  sales,  calls,  and  maturities  of   investments  in  debt
securities during 1996 were $40,677,000.  Gross gains of $101,000 and gross
losses of $221,000 were realized on those sales, calls and maturities.

Proceeds  from  sales,  calls,  and  maturities   of  investments  in  debt
securities during 1995 were $16,885,000.  Gross gains of $107,000 and gross
losses of $228,000 were realized on those sales, calls and maturities.

Proceeds  from  sales,  calls,  and   maturities  of  investments  in  debt
securities during 1994 were $23,852,000.  Gross gains of $168,000 and gross
losses of $272,000 were realized on those sales, calls and maturities.

C.   INVESTMENTS ON DEPOSIT - At December 31,  1996, investments carried at
     approximately $18,016,000 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

An estimate of fair value is based on management's review  of the portfolio
in relation to market prices of similar  loans with similar credit ratings,
interest rates,  and maturity  dates.  Management  conservatively estimates
fair value of the portfolio is equal to the carrying value.

<PAGE>                              47

(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.

(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.  All short-term instruments  represent certificates of deposit
with various banks and all are protected under FDIC.

(g)  Notes and accounts receivable and uncollected premiums

The Company holds a $840,000 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:

                                 1996                       1995
                                      Estimated                   Estimated
                       Carrying         Fair         Carrying        Fair
                        Amount         Value          Amount         Value

Fixed maturities    $ 179,535,861  $ 181,815,225  $ 190,558,351 $ 197,006,257
Fixed maturities 
 held for sale          1,961,166      1,961,166      3,226,175     3,226,175
Equity securities       1,794,405      1,794,405      1,946,481     1,946,481
Mortgage loans on 
 real estate           11,022,792     11,022,792     13,891,762    13,891,762
Policy loans           14,438,120     14,438,120     16,941,359    16,941,359
Short-term investments    400,000        400,000        425,000       425,000
Investment in real 
 estate                10,268,490     10,268,490     11,683,575    11,683,575
Real estate acquired
 in satisfaction of 
 debt                   3,846,946      3,846,946      5,332,413     5,332,413
Notes receivable          840,066        783,310        840,066       775,399

Liabilities
Notes payable          18,999,853     18,153,803     20,623,328    19,987,666

<PAGE>                                  48


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, may  differ 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 is  expected to be  completed in 1997, 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
$10,227,000 and  $7,274,000 at  December 31,  1996 and  1995, respectively.
The  combined statutory  gain  from operations  (exclusive of  intercompany
dividends) was  $10,297,000, $3,633,000 and  $3,074,000 for 1996,  1995 and
1994, respectively.
       

7.  REINSURANCE

The Company assumes risks  from, and reinsures  certain parts of its  risks
with other insurers under yearly  renewable term and coinsurance agreements
which 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 $1.109 billion, $1.088  billion and
$1.217 billion  in face amount of life  insurance risks with other insurers
for  1996, 1995 and 1994, respectively.  Reinsurance receivables for future
policy benefits were $38,745,000  and $13,540,000 at December 31,  1996 and
1995, respectively,  for estimated recoveries  under reinsurance  treaties.
Should any of the reinsurers be unable  to meet its obligation at the  time
of the claim, obligation to pay such claim would remain with the Company.

The  Company's  insurance  subsidiary  ("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 policy.
A.M.  Best, an  industry rating  company, 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.  The
agreement  with  FILIC accounts  for approximately  66% of  the reinsurance
receivables as of December 31, 1996.  

As a result  of the  FILIC coinsurance agreement,  effective September  30,
1996, UG  received a  reinsurance credit  in the  amount of  $28,318,000 in
exchange  for an equal amount of assets.   UG also received $6,375,000 as a
commission allowance.

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.

<PAGE>                           49


The  Company does not have  any short-duration reinsurance  contracts.  The
effect of the  Company's long  duration reinsurance  contracts on  premiums
earned in 1996, 1995 and 1994 was as follows:


                                     Shown in thousands
                                1996          1995         1994
                              Premiums      Premiums     Premiums
                               Earned        Earned       Earned

          Direct           $    32,387    $    35,201    $   37,911 
          Assumed                    0              0             0 
          Ceded                 (4,768)        (5,203)       (5,627)
          Net premiums     $    27,619    $    29,998    $   32,284 




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 judgements against the insurer, including material
amounts of punitive damages.  In some states, juries have substantial 
discretion in awarding punitve damages in these circumstances.

Under  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.  Those mandatory assessments may be partially recovered
through a  reduction in future premium  taxes 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 $9,927,000, $10,464,000 and $10,912,000
under these  arrangements in 1996,  1995 and 1994,  respectively.  UG  paid
$9,627,000,  $10,164,000 and  $10,587,000 to  FCC in  1996, 1995  and 1994,
respectively.

<PAGE>                             50


In addition to  the above agreements, USA has a  service agreement with UII
to  provide services  for  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.   Fees are based on percentages  of premium revenue
applied  to both first  year and  renewal premiums.   USA  paid $1,568,000,
$2,015,000 and $1,357,000 under their agreement with UII for 1996, 1995 and
1994, respectively.

The  agreements  of the  insurance companies  have  been approved  by their
respective domiciliary insurance departments 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  FCC  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 which are charged as current period costs
and included in "general expenses".


10.   NOTES PAYABLE

At December  31,  1996,  the Company  has  $19,000,000 in  long  term  debt
outstanding.  The debt is comprised of the following components:
                                               1996          1995
              Senior debt                  $ 8,400,000   $11,400,000
              Subordinated 10 yr. notes      5,369,000     5,369,000
              Subordinated 20 yr. notes      3,831,000     3,831,000
              Other notes payable            1,400,000             0
              Encumbrance on real
              estate                                 0        23,000
                                           $19,000,000   $20,623,000

On May  8,  1996,  FCC refinanced  its  senior  debt of  $8,900,000.    The
refinancing was completed through First of America Bank - NA and is subject
to a credit agreement.  The refinanced 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.   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, 1996, the Company prepaid
$500,000 of the May 8, 1997 principal payment.

The credit agreement contains certain covenants with which the Company must
comply.  The 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  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
current and  in compliance with all of the terms  on all of its outstanding
debt  and does  not foresee any  problem in  maintaining compliance  in the
future.

<PAGE>                               51

United Income,  Inc. (UII) and  First Fidelity Mortgage Company  through an
assignment  from  United Trust,  Inc.  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.

The  subordinated  debt was  incurred  June  16,  1992  as  a  part  of  an
acquisition.  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 June  16,  1997, with  a  final
payment due June 16, 2002.  During 1995, the Company refinanced $300,695 of
10 year notes to  20 year notes bearing interest at the rate of 8.75%.  The
repayment  terms of these notes are similar  to the original 20 year notes.
The 20  year notes bear interest at  the rate of 8  1/2% per annum, payable
semi-annually  beginning  December 16,  1992,  with  a lump  sum  principal
payment due June 16, 2012.

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

                  Year                           Amount  
                  1997                        $ 1,037,000
                  1998                          1,537,000
                  1999                          1,937,000
                  2000                          1,537,000
                  2001                          1,537,000


11.  OTHER CASH FLOW DISCLOSURE

On a cash basis, the Company paid $1,657,246, $1,887,170, and $1,883,198 in
interest  expense for  the years  1996, 1995  and 1994, respectively.   The
Company paid $12,149, $25,821, and $190 in federal income tax for the years
1996, 1995 and 1994 respectively.

The  Company's  insurance  subsidiary  ("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.


12.  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.    An  officer  or  agent  received  an  immediately
exercisable option to  purchase 23,000 shares of UTI common  stock at $1.75
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 1,050,000 options were granted in 1993  under this plan.  As of December
31, 1996 no  options were exercised.   At December  31, 1996 and 1995,  the
Company  held  a  liability  of $1,268,000  and  $1,167,000,  respectively,
relating to this plan.

<PAGE>                           52


13.  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.


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

On September  23, 1996, UTI and UII entered into a stock purchase agreement
with  LaSalle  Group, Inc.,  a  Delaware  corporation ("LaSalle"),  whereby
LaSalle will acquire 12,000,000 shares of authorized but unissued shares of
UTI for  $1.00 per share and  10,000,000 shares of authorized  but unissued
shares  of UII  for  $0.70  per  share.    Additionally,  LaSalle  intends,
contemporaneously with the closing of the above transaction, to purchase in
privately  negotiated transactions additional shares of UTI and UII so that
LaSalle will own not less than  51% of the outstanding common stock of  UTI
and UII.

The  agreement  requires and  is pending  approval  of the  Commissioner of
Insurance of the State of Ohio,  Illinois and West Virginia, (the states of
domicile of the insurance subsidiaries).  It is anticipated the transaction
will be completed during the second quarter of 1997.<PAGE>

<PAGE>                            53

15.  SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

                                             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       0.01        (0.01)       (0.09)      (0.04)


                                                  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    8,227,705    8,940,389    7,014,070   7,041,851
 dividends
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       0.01        (0.06)        0.05       (0.06)


                                                  1994
                                1st          2nd          3rd          4th
Premium income and other
 considerations, net      $ 8,964,962  $ 9,934,140 $ 7,910,808  $ 8,214,359
Net investment              3,300,446    3,417,511    3,622,195    3,848,309
Total revenues             12,681,470   13,207,458   11,297,282   12,075,161
Policy benefits including
 dividends                  7,383,334    9,440,534    8,994,923    9,613,116
Commissions and  
 amortization of DAC        1,759,083    1,791,036    1,797,961    1,271,180
Operating expenses          2,214,390    1,406,224    2,345,992    3,009,379
Operating income (loss)       876,062       88,949   (2,346,822)  (2,325,535)
Net income (loss)             768,075      427,438   (2,090,687)    (879,670)   
Net income (loss) per share      0.03         0.02        (0.09)       (0.03)

<PAGE>                                   54

                                       PART III


With  respect to Items  10 through 13,  the Company will  file with the 
Securities and Exchange Commission, within 120 days of the close of
its fiscal year, a definitive proxy statement pursuant to Regulation
14-A.

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Information regarding directors of the Company will be set forth in the
Company's proxy statement relating to the annual meeting of shareholders to
be held during 1997,  and is incorporated  herein by reference.  
Information regarding executive officers of the Company is set forth under 
the caption "Executive Officers".


ITEM 11.  EXECUTIVE COMPENSATION

Information  regarding executive compensation will  be set forth in the
Company's proxy statement relating to the annual meeting of shareholders to 
be held during  1997, and is  incorporated herein by reference.


ITEM  12. SECURITY  OWNERSHIP  OF   CERTAIN  BENEFICIAL  OWNERS AND
          MANAGEMENT

Information regarding  security ownership of certain  beneficial owners
and  management  will be  set forth  in  the Company's  proxy statement
relating to the annual meeting of shareholders to be held during 1997,
and is incorporated herein by reference.


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Information  regarding certain  relationships and  related transactions
will be  set forth in  the Company's  proxy statement  relating to the
annual  meeting of  shareholders  to  be  held during 1997,  and is
incorporated herein by reference.

<PAGE>                                 55


                                       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
          for the  reasons  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 57 and 58).

<PAGE>                             56


                                  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  By-Laws for the Company dated September 30, 1992.

10(a)  (1)   Compromise and Settlement Agreement dates as of February 27,
             1991, among First Commonwealth Corporation, Universal Guaranty
             Life Insurance Company, Alliance Life Insurance Company, 
             Roosevelt National Life Insurance Company of America, Abraham
             Lincoln Insurance Company, Appalachian Life Insurance Company,
             Liberty American Assurance Company, and Farmers and Ranchers
             Life Insurance Company, and Southshore Holding Corp., Public
             Investors, Inc., Fidelity Fire and Casualty Insurance Company,
             Insurance Premium Assistance Company, Agency Premium Assistance
             Company Coastal Loans Acquisition Company, Bob  F. Shamburger,
             Gary E. Jackson, Leonard H. Aucoin, Dennis J. Lafont, William
             Joel Herron and Jerry Palmer

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

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

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

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

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

10(dd) (1)   Management Agreement dated  December 20, 1981 among Commonwealth
             Industries Corporation, Executive National Life Insurance Company
             (now known as Investors Trust Assurance Company) and Abraham
             Lincoln Insuance Company

10(ee) (1)   Reinsurance Agreement dated January 1, 1991 between Universal 
             Guaranty Life Insurance Company and Republic-Vanguard Life
             Insurance Company
<PAGE>                               57

INDEX TO EXHIBITS

Exhibit
Number 

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

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

10(hh) (1)   Board Resolution adopting United  Trust, Inc.'s Officer 
             Incentive Fund
10(ii) (1)   Employment Agreement dated as of April 15, 1993 between Larry E.
             Ryherd and First Commonwealth Corporation and United Trust, Inc.

10(jj) (1)   Employment  Agreement  dated  as of  April  15, 1993 between  
             Thomas  F.  Morrow  and  First Commonwealth Corporation and 
             United Trust, Inc.

10(kk) (1)   Employment  Agreement  dated  as  of April  15, 1993 between  
             James E.  Melville  and  First Commonwealth Corporation and 
             United Trust, Inc.

10(ll) (1)   Employment  Agreement  dated  as  of  June  16, 1992 between  
             George  E.  Francis and  First Commonwealth Corporation

10(mm) (1)   Amendment Number One to Employment Agreement dated as of April 
             15, 1993 between George E. Francis and First Commonwealth 
             Corporation

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

10(oo) (1)   Agreement  dated   June  16,  1992  between  John K. Cantrell 
             and First Commonwealth Corporation

10(pp) (1)   Termination Agreement  dated as of  January 29, 1993 between 
             Scott J. Engebritson  and United Trust, Inc., United  Fidelity,
             Inc.,  United  Income, Inc., First Commonwealth  Corporation
             and   United  Security Assurance Company

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

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

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

10(tt)  (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.
    
<PAGE>                               58

<TABLE>

FIRST COMMONWEALTH CORPORATION                                   Schedule I
SUMMARY OF INVESTMENTS - OTHER THAN
INVESTMENTS IN RELATED PARTIES
As of December 31, 1996



  Column A                         Column B      Column C         Column D

                                                                  Amount at
                                                                 Which Shown
                                                                 in Balance
                                       Cost         Value           Sheet
<S>                              <C>           <C>            <C>
Fixed maturities:
   United States Government and
    government agencies and 
    authorities                  $  28,301,386  $  28,839,743  $  28,301,386 
   State, municipalities, and 
    political subdivisions          14,387,883     14,712,333     14,387,883 
   Collateralized mortgage 
    obligations                     13,246,781     13,264,145     13,246,781 
   Public utilities                 51,794,312     52,325,562     51,794,312 
   All other corporate bonds        71,805,499     72,673,442     71,805,499 
     Total fixed maturities        179,535,861  $ 181,815,225    179,535,861 


Investments held for sale:
  Fixed maturities:
   United States Government 
    and government agencies and 
    authorities                      1,461,067  $   1,443,609      1,443,609 
   State, municipalities, and 
    political subdivisions             145,199        139,467        139,467 
   Collateralized mortgage 
    obligations                              0              0              0 
   Public utilities                    119,970        119,658        119,658 
   All other corporate bonds           258,425        258,432        258,432 
                                     1,984,661  $   1,961,166      1,961,166 

 Equity securities:
   Public utilities                     82,073  $      56,053         56,053 
   All other corporate securities    2,004,086      1,738,352      1,738,352 
                                     2,086,159  $   1,794,405      1,794,405 




Mortgage loans on real estate       11,022,792                    11,022,792 
Investment real estate              10,268,490                    10,268,490 
Real estate acquired in 
 satisfaction of debt                3,846,946                     3,846,946 
Policy loans                        14,438,120                    14,438,120 
Short term investments                 400,000                       400,000 
       Total investments        $  223,583,029                 $ 223,267,780 

</TABLE>

<PAGE>                                   59

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.



<PAGE>                                  60

<TABLE>
FIRST COMMONWEALTH CORPORATION
CONDENSED FINANCIAL INFORMATION OF
REGISTRANT PARENT ONLY BALANCE SHEETS                             Schedule II
As of December 31, 1996 and 1995


                                                       1996         1995
<S>                                               <C>          <C>

ASSETS

 Investment in Universal Guaranty Life Insurance 
   Company                                        $ 55,383,654 $ 58,862,430 
   Cash and cash equivalents                         1,484,550    1,735,664 
   Mortgage loans                                            0       11,023 
   Deferred income taxes                               703,583      295,168 
   Other assets                                         89,875       11,521 
       Total assets                               $ 57,661,662 $ 60,915,806 




LIABILITIES AND SHAREHOLDERS' EQUITY

Liabilities:
   Notes payable                                  $ 18,999,853 $ 20,599,853 
   Indebtedness to subsidiaries and affiliates, 
    net                                                795,392      464,356 
   Income taxes payable                                 12,906       12,029 
   Other liabilities                                 2,374,860    1,154,768 
       Total liabilities                            22,183,011   22,231,006 




Shareholders' equity:
   Common stock                                     23,967,749   23,967,749 
   Additional paid-in capital                       28,498,361   28,498,361 
   Unrealized depreciation of investments held 
    for sale of affiliates                            (305,715)    (131,215)
   Accumulated deficit                             (16,681,744) (13,650,095)
       Total shareholders' equity                   35,478,651   38,684,800 
       Total liabilities and shareholders' 
          equity                                 $  57,661,662 $ 60,915,806 
</TABLE>

<PAGE>                               61

<TABLE>
FIRST COMMONWEALTH CORPORATION
CONDENSED FINANCIAL INFORMATION OF
REGISTRANT PARENT ONLY STATEMENTS OF OPERATIONS
Three Years Ended December 31, 1996                              Schedule II

                                           1996         1995         1994
<S>                                   <C>          <C>          <C>

Revenues:

   Net investment income               $   54,028   $   42,714  $    98,194 
   Management fees from affiliates      9,988,960   10,486,574   10,911,520 
   Other income                            12,071          794        1,145 
                                       10,055,059   10,530,082   11,010,859 


Expenses:

   Interest expense                     1,700,426    1,916,564    1,941,565 
   Operating expenses                   8,477,037    7,473,514    7,356,280 
                                       10,177,463    9,390,078    9,297,845 

   Operating income (loss)               (122,404)   1,140,004    1,713,014 

   Credit (provision) for income taxes    395,031      (61,469)      32,945 
   Equity in loss of subsidiaries      (3,304,276)  (2,530,173)  (3,520,803)
       Net loss                      $ (3,031,649) $(1,451,638) $(1,774,844)

</TABLE>

<PAGE>                               62



<TABLE>
FIRST COMMONWEALTH CORPORATION
CONDENSED FINANCIAL INFORMATION OF REGISTRANT
PARENT ONLY STATEMENTS OF CASH FLOWS
Three Years Ended December 31, 1996                               Schedule II


                                           1996         1995         1994
<S>                                   <C>          <C>          <C>
Increase (decrease) in cash and cash 
 equivalents
Cash flows from operating activities:
Net loss                               $ 3,031,649 $(1,451,638)  $(1,774,844)
  Adjustments to reconcile net loss 
   to net cash provided by operating 
    activities:
       Equity in loss of subsidiaries    3,304,276   2,530,173     3,520,803 
       Change in indebtedness to 
        affiliates, net                    331,036     725,387      (851,969)
       Change in other assets and 
        liabilities                      1,141,738    (125,201)      231,330
       Change in deferred income taxes    (408,415)     48,571       (66,933)
       Change in income taxes payable          877     (19,971)       32,000 
   Net cash provided by operating 
    activities                           1,337,863   1,707,321     1,090,387 


Cash flows from investing activities:

   Proceeds from mortgage loan payments     11,023       1,644        45,254 
   Cost of investments acquired mortgage 
    loans                                        0           0       (57,921)
   Net cash provided by (used in) investing 
    activities                              11,023       1,644       (12,667)


Cash flows from financing activities:
   Proceeds from notes payable           9,300,000           0             0
   Payments of principal on notes 
    payable                            (10,900,000)   (900,000)   (2,000,000)
   Net cash used in financing 
    activities                          (1,600,000)   (900,000)   (2,000,000)

Net increase (decrease) in cash and 
 cash equivalents                         (251,114)    808,965      (922,280)
Cash and cash equivalents at beginning 
 of year                                 1,735,664     926,699     1,848,979 
Cash and cash equivalents at end 
 of year                             $   1,484,550  $1,735,664   $   926,699 


</TABLE>

<PAGE>                                 63



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

    Column A   Column B       Column C       Column D   Column E    Column F
<S>         <C>            <C>           <C>           <C>         <C>
                                                                   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:

Life 
 insurance  $   32,128,258 $   4,717,488  $            0 $   27,410,770  0.0%

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

            $   32,386,635 $   4,767,743  $            0 $   27,618,892  0.0%



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

</TABLE>

<PAGE>                                64


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

Column A         Column B     Column C     Column D    Column E     Column F
<S>          <C>            <C>          <C>        <C>           <C>
                                                                   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:

Life 
 insurance  $   34,952,367 $    5,149,939 $            0 $   29,802,428  0.0%

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

            $   35,200,815 $    5,202,690 $            0 $   29,998,125  0.0%





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

</TABLE>

<PAGE>


<TABLE>

FIRST COMMONWEALTH CORPORATION
REINSURANCE
As of December  31, 1994  and
for the year ended December 31, 1994                            Schedule IV






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





Life 
insurance
in force  $4,543,746,000 $1,217,119,000 $1,077,413,000 $4,404,040,000  24.5%




Premiums:

Life 
 insurance $   37,667,044 $   5,580,736 $             0 $  32,086,308   0.0%


Accident 
 and health
 insurance        243,769        45,846               0       197,923   0.0%

           $   37,910,813 $   5,626,582 $             0 $  32,284,231   0.0%


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

</TABLE>

<PAGE>                            66


<TABLE>
FIRST COMMONWEALTH CORPORATION
VALUATION AND QUALIFYING ACCOUNTS
For the years ended December 31, 1996, 1995, & 1994              Schedule V

                           Balance at   Additions                 Balances
                           Beginning     Charges                     at
Description                Of Period  and Expenses Deductions  End of Period
                        <C>           <C>           <C>          <C>
December 31, 1996

Allowance for doubtful 
 accounts - mortgage 
 loans                  $     10,000   $          0 $         0  $    10,000 
Accumulated depreciation 
 on property and 
 equipment and EDP 
 conversion costs          3,117,543        203,413           0    3,320,956 
Accumulated amortization 
 of costs in excess of net 
 assets purchased          5,081,279        447,035           0    5,528,314 
Accumulated depreciation 
 on real estate            3,253,979        311,094           0    3,565,073 
   Total                $ 11,462,801   $    961,542 $         0 $ 12,424,343 


December 31, 1995

Allowance for doubtful 
 accounts - mortgage 
 loans                  $    26,000    $          0 $   16,000 $      10,000 
Accumulated depreciation 
 on property and 
 equipment and EDP 
 conversion costs         2,886,575         230,968          0     3,117,543 
Accumulated amortization 
 of costs in excess of 
 net assets purchased     4,389,972         691,307          0     5,081,279 
Accumulated depreciation 
 on real estate           3,006,803         300,396     53,220     3,253,979 
   Total               $ 10,309,350     $ 1,222,671 $   69,220 $  11,462,801 


December 31, 1994

Allowance for doubtful 
 accounts - mortgage 
 loans                 $    300,000     $         0 $  274,000  $     26,000 

Accumulated depreciation 
 on property and 
 equipment and EDP 
 conversion costs         2,539,131         356,390      8,946     2,886,575 
Accumulated amortization
 of costs in excess of 
 net assets purchased     4,007,303         450,669     68,000     4,389,972 
Accumulated depreciation 
 on real estate           2,705,660         301,143          0     3,006,803 
   Total              $   9,552,094     $ 1,108,202 $3  50,946 $  10,309,350 
</TABLE>

<PAGE>                                    67

                                 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 25, 1997
John S. Albin, Director




/s/  John K. Cantrell                                 Date:  March 25, 1997
John K. Cantrell, Chairman of the Board
  and Director



/s/  William F. Cellini                               Date:  March 25, 1997
William F. Cellini, Director





/s/  John W. Collins                                  Date:  March 25, 1997
John W. Collins, Director



/s/  George E. Francis                                Date:  March 25, 1997
George E. Francis, Senior Vice President
  and Director



/s/  Donald G. Geary                                  Date:  March 25, 1997
Donald G. Geary, Director



/s/  James E. Melville                                Date: March 25, 1997
James E. Melville, Senior Executive 
  Vice President, Chief Financial Officer
  and Director

<PAGE>                              68



/s/  Joseph H. Metzger                                Date: March 25, 1997
Joseph H. Metzger, Senior Vice President
  and Director



/s/  Luther C. Miller                                 Date: March 25, 1997
Luther C. Miller, Director



/s/  Thomas F. Morrow                                 Date: March 25, 1997
Thomas F. Morrow, Vice Chairman, Chief
  Operating Officer and Director



/s/  Robert V. O'Keefe                               Date: March 25, 1997
Robert V. O'Keefe, Director



/s/  Larry E. Ryherd                                 Date: March 25, 1997
Larry E. Ryherd, President, Chief
Executive Officer and Director


/s/  Robert W. Teater                                Date: March 25, 1997
Robert W. Teater, Director



/s/  Howard A. Young                                 Date: March 25, 1997
Howard A. Young, Director



<PAGE>