<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 11-K
ANNUAL REPORT
PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
[ X ] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE PERIOD FROM _______________ TO __________________
COMMISSION FILE NUMBER: 0-8483
A. Full title of the plan and address of the plan, if different from that
of the issuer named below:
THE RETIREMENT PLAN FOR EMPLOYEES
OF THE CENTRAL RESERVE LIFE INSURANCE COMPANY
B. Name of issuer of the securities held pursuant to the plan and address
of its principal executive office:
CERES GROUP, INC.
17800 ROYALTON ROAD
STRONGSVILLE, OHIO 44136
<PAGE> 2
THE RETIREMENT PLAN FOR EMPLOYEES
OF THE CENTRAL RESERVE LIFE INSURANCE COMPANY
INDEX
<TABLE>
<S> <C> <C>
a) Financial Statements
Report of Independent Auditors .................................................................. 3
Statement of Net Assets Available for Benefits, with Fund Information
(Modified Cash Basis) - December 31, 1998 and 1997 ........................................... 5
Statement of Changes in Net Assets Available for Benefits, with Fund
Information (Modified Cash Basis) - December 31, 1998........................................ 7
Notes to Financial Statements ................................................................... 8
Schedule of Assets Held for Investment Purposes (Modified Cash Basis)............................ 13
Schedule of Reportable Transactions (Modified Cash Basis) ....................................... 14
b) Exhibit
Consent of Independent Auditors
</TABLE>
2
<PAGE> 3
Report of Independent Auditors
Board of Trustees
The Retirement Plan for Employees of
Central Reserve Life Insurance Company
We have audited the accompanying statements of net assets available for benefits
(modified cash basis) of the Retirement Plan for Employees of Central Reserve
Life Insurance Company as of December 31, 1998 and 1997, and the related
statement of changes in net assets available for benefits (modified cash basis)
for the year ended December 31, 1998. These financial statements are the
responsibility of the Plan'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.
As described in Note B, the financial statements and supplemental schedules were
prepared on a modified cash basis of accounting, which is a comprehensive basis
of accounting other than generally accepted accounting principles.
In our opinion, the financial statements referred to above present fairly, in
all material respects, information regarding the Plan's net assets available for
benefits (modified cash basis) as of December 31, 1998 and 1997, and changes
therein (modified cash basis) for the year ended December 31, 1998, on a basis
of accounting described in Note B.
3
<PAGE> 4
Our audits were performed for the purposes of forming an opinion on the
financial statements taken as a whole. The accompanying supplemental schedules
of assets held for investment purposes (modified cash basis) as of December 31,
1998, and reportable transactions (modified cash basis) for the year then ended,
are presented for purpose of additional analysis and are not a required part of
the financial statements but are supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. These supplemental
schedules are the responsibility of the Plan's management. The Fund Information
in the statements of net assets available for benefits (modified cash basis) and
the statement of changes in net assets available for benefits (modified cash
basis) is presented for purposes of additional analysis rather than to present
the net assets available for benefits and the changes in net assets available
for benefits of each fund. The supplemental schedules and Fund Information have
been subjected to auditing procedures applied in our audits of the financial
statements and, in our opinion, are fairly stated in all material respects in
relation to the financial statements taken as a whole.
/s/ Ernst & Young LLP
Cleveland, Ohio
June 16, 1999
4
<PAGE> 5
The Retirement Plan for Employees of Central
Reserve Life Insurance Company
Statement of Net Assets Available for Benefits, with Fund Information
(Modified Cash Basis)
December 31, 1998
<TABLE>
<CAPTION>
Guaranteed Core Core Money Ceres
Interest Balanced Equity Bond Market Group, Inc.
Fund Fund Fund Fund Fund Stock Fund
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments held by
Massachusetts Mutual
Life Insurance Company:
Deposit Administration
Group Annuity
Contract #FL-2372
(variable interest
rate), at contract
value $5,410,799
Ceres Group, Inc.
Common Stock, at
fair value $65,817
Pooled Separate
Investment Accounts,
at fair value $3,900,279 $3,160,970 $379,600
---------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS $5,410,799 $3,900,279 $3,160,970 $379,600 $ -- $65,817
===========================================================================
<CAPTION>
Destiny Destiny Destiny Destiny
International Conservative Moderate Aggressive All Equity
Fund Fund Fund Fund Fund Total
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments held by
Massachusetts Mutual
Life Insurance Company:
Deposit Administration
Group Annuity
Contract #FL-2372
(variable interest
rate), at contract
value $5,410,799
Ceres Group, Inc.
Common Stock, at
fair value 65,817
Pooled Separate
Investment Accounts,
at fair value $4,708 $280,958 $261,509 $260,096 $257,175 8,505,295
---------------------------------------------------------------------------
NET ASSETS AVAILABLE
FOR BENEFITS $4,708 $280,958 $261,509 $260,096 $257,175 $13,981,911
===========================================================================
</TABLE>
See notes to financial statements.
5
<PAGE> 6
The Retirement Plan for Employees of Central
Reserve Life Insurance Company
Statement of Net Assets Available for Benefits, with Fund Information
(Modified Cash Basis)
December 31, 1997
<TABLE>
<CAPTION>
Guaranteed Core Intermediate Money
Interest Balanced Equity Bond Market
Fund Fund Fund Fund Fund Total
-----------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Investments held by Massachusetts
Mutual Life Insurance Company:
Deposit Administration Group
Annuity Contract #FL-2372
(variable interest rate),
at contract value $8,176,352 $ 8,176,352
Pooled Separate Investment Accounts,
at fair value $3,472,863 $2,984,035 $492,601 6,949,499
-----------------------------------------------------------------------------------
NET ASSETS AVAILABLE FOR BENEFITS $8,176,352 $3,472,863 $2,984,035 $492,601 $ -- $15,125,851
===================================================================================
</TABLE>
See notes to financial statements.
6
<PAGE> 7
The Retirement Plan for Employees of Central
Reserve Life Insurance Company
Statement of Changes in Net Assets Available for Benefits,
with Fund Information
(Modified Cash Basis)
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Guaranteed Core Core Money Ceres
Interest Balanced Equity Bond Market Group, Inc.
Fund Fund Fund Fund Fund Stock Fund
----------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Net appreciation in
fair value of
investments $ 473,010 $ 471,610 $ 35,653 $ 12,107
Interest $ 388,223
----------------------------------------------------------------------------
Total investment income 388,223 473,010 471,610 35,653 12,107
Contributions:
Employer (550,853) 225,016 388,804 79,955
Employee 88,129 38,765 87,234 24,331 5,958
----------------------------------------------------------------------------
Total contributions (462,724) 263,781 476,038 104,286 5,958
----------------------------------------------------------------------------
Total additions (74,501) 736,791 947,648 139,939 18,065
Deductions from net assets
attributed to:
Benefits paid to
participants or
beneficiaries 1,318,487 560,330 959,224 155,684
Administrative and
other expense 3,068 1,562 1,817 353
----------------------------------------------------------------------------
Total deductions 1,321,555 561,892 961,041 156,037
Interfund transfers (out) in (1,369,497) 252,517 190,328 (96,903) 47,752
----------------------------------------------------------------------------
Net (decrease) increase (2,765,553) 427,416 176,935 (113,001) 65,817
Net assets available for
benefits beginning of year 8,176,352 3,472,863 2,984,035 492,601
============================================================================
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR $5,410,799 $3,900,279 $3,160,970 $ 379,600 $ -- $ 65,817
============================================================================
<CAPTION>
Destiny Destiny Destiny Destiny
International Conservative Moderate Aggressive All Equity
Fund Fund Fund Fund Fund Total
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Additions to net assets
attributed to:
Investment income:
Net appreciation in
fair value of
investments $ 491 $ 21,431 $ 15,903 $ 11,263 $ 5,810 $ 1,047,278
Interest 388,223
------------------------------------------------------------------------------
Total investment income 491 21,431 15,903 11,263 5,810 1,435,501
Contributions:
Employer 12,893 12,984 21,633 29,996 220,428
Employee 86 13,886 13,813 27,078 34,876 334,156
------------------------------------------------------------------------------
Total contributions 86 26,779 26,797 48,711 64,872 554,584
------------------------------------------------------------------------------
Total additions 577 48,210 42,700 59,974 70,682 1,990,085
Deductions from net assets
attributed to:
Benefits paid to
participants or
beneficiaries 5,646 1,917 9,341 115,964 3,126,593
Administrative and
other expense 109 126 161 236 7,432
------------------------------------------------------------------------------
Total deductions 5,755 2,043 9,502 116,200 3,134,025
Interfund transfers (out) in 4,131 238,503 220,852 209,624 302,693 --
------------------------------------------------------------------------------
Net (decrease) increase 4,708 280,958 261,509 260,096 257,175 (1,143,940)
Net assets available for
benefits beginning of year 15,125,851
==============================================================================
NET ASSETS AVAILABLE FOR
BENEFITS END OF YEAR $ 4,708 $ 280,958 $ 261,509 $ 260,096 $ 257,175 $ 13,981,911
==============================================================================
</TABLE>
See notes to financial statements.
7
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The Retirement Plan for Employees of
Central Reserve Life Insurance Company
Notes to Financial Statements (Modified Cash Basis)
December 31, 1998 and 1997
A. DESCRIPTION OF THE PLAN
The following provides only general information regarding the Retirement Plan
for Employees of Central Reserve Life Insurance Company (the "Plan").
Participants should refer to the Plan document for a more complete description
of the Plan's provisions.
GENERAL
Effective January 1, 1998, the Plan was amended to allow for participant
contributions. Previously, the Plan was a non-contributing money purchase plan.
As a result of the amendment, the participant's interest in employer
contributions and subsequent earnings allocated to the participant's account
prior to January 1, 1998 became 100% vested. The Plan is subject to the
provisions of the Employee Retirement Income Security Act of 1974 (ERISA).
All employees of Central Reserve Life Insurance Company ("Central") that have 6
months of service with Central and have attained 20 1/2 years of age are
eligible to participate in the Plan. Central is a wholly-owned subsidiary of
Ceres Group, Inc., ("Ceres") a public registrant, formerly known as Central
Reserve Life Corporation.
CONTRIBUTIONS
Participants may make contributions to the Plan through payroll deferrals.
Participants can elect to make pre-tax contributions from 1% to 10% of their
compensation. Additionally, participants can elect to make after-tax
contributions up to 10% of their compensation. Central will match 100% of the
participants contributions that are contributed to the Ceres Group, Inc. Stock
Fund, up to a maximum $1,000 per year ("Matching Contribution").
In addition, Central may contribute to the Plan a profit sharing contribution,
as determined by the Board of Directors ("Profit Sharing Contribution"). All
eligible, active employees who have worked at least 1,000 hours during the plan
year and are employed on the last day of the plan year and participants who die,
or leave employment during the plan year due to retirement or disability, will
share in this contribution.
Employees may roll over funds into the Plan from other qualified plans.
8
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The Retirement Plan for Employees of
Central Reserve Life Insurance Company
Notes to Financial Statements (Modified Cash Basis)--Continued
A. DESCRIPTION OF THE PLAN--CONTINUED
VESTING
A participant's interest in Matching Contributions and Profit-Sharing
Contributions allocated to the participant's account becomes vested based upon
years of service as follows: 0% vested up to three years; 33% vested after three
years; 67% vested after 4 years; and 100% vested after five years.
Forfeitures of nonvested accounts are used to reduce future Central's
contributions. During 1998, Central's contributions were reduced by $1,088,000
from forfeited nonvested accounts.
PARTICIPANT ACCOUNTS
Each participant's account is credited with the participant's contributions and
allocations of (a) Central's contributions and (b) Plan earnings, and is charged
with an allocation of administrative expenses. Allocations are based on
participant earnings or account balances, as defined. The benefit to which a
participant is entitled is the benefit that can be provided from the
participant's account.
PAYMENT OF BENEFITS
On termination of service, a participant may receive a lump-sum amount equal to
the vested value of his or her account, or upon death, disability or retirement,
elect to receive annual installments over a stated period of time, or over his
or her lifetime.
INVESTMENT OPTIONS
Upon enrollment in the Plan, participants may direct their participant
contributions for investment in the following investment mediums: the
Massachusetts Mutual Deposit Administration Group Annuity Contract ("Guaranteed
Interest Fund"), the Balanced Fund, the Core Equity Fund, the Core Bond Fund
(formerly know as the Intermediate Bond Fund) and the Money Market Fund. In 1998
the following investment options were added to the plan: Ceres Group, Inc. Stock
Fund, the International Fund, the Destiny Conservative Fund, the Destiny
Moderate Fund, the Destiny Aggressive Fund and the Destiny All Equity Fund.
9
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The Retirement Plan for Employees of
Central Reserve Life Insurance Company
Notes to Financial Statements (Modified Cash Basis)--Continued
B. SIGNIFICANT ACCOUNTING POLICIES
BASIS OF PRESENTATION
The accompanying financial statements are presented on a cash basis modified to
the extent that net appreciation (depreciation) of the fair value of investments
is recorded currently, certain other income, contributions and related assets
are recognized when received rather than when earned, and certain expenses and
related liabilities are recognized when paid rather than when incurred.
VALUATION OF INVESTMENTS AND RELATED INCOME
Ceres Group, Inc. Stock Fund is valued at the last reported sales price of the
stock on the last business day of the plan year. The Massachusetts Mutual Pooled
Separate Investment Accounts are valued at the fair values (as determined by
Massachusetts Mutual Life Insurance Company) of the underlying investments. The
Massachusetts Mutual Deposit Administration Group Annuity Contract ("DAC") is
valued at contract value. DAC funds deposited during 1998 and 1997 were
guaranteed to earn 6.00% and 6.70%, respectively. Guaranteed interest rates are
determined annually by Massachusetts Mutual.
The aggregate cost of investment sales is the average cost pre share or per unit
at the time of the sale. Interest income is recorded when credited by
Massachusetts Mutual Life Insurance Company ("Massachusetts Mutual").
USE OF ESTIMATES
The preparation of financial statements requires management to make estimates
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates.
10
<PAGE> 11
The Retirement Plan for Employees of
Central Reserve Life Insurance Company
Notes to Financial Statements (Modified Cash Basis)--Continued
C. INVESTMENTS
Massachusetts Mutual serves as the trustee for certain assets of the Plan with
the balance held in trust by Investors Bank & Trust Company of Boston,
Massachusetts.
The fair value of investments that represent 5% or more of the Plan's net assets
available for benefits at December 31 are as follows:
1998 1997
------------------------
Deposit Administration Group Annuity
Contract #FL-2372, variable interest
rate--Guarantee Interest Fund $5,410,799 $8,176,352
Separate Investment Accounts:
MassMutual Balanced Fund 3,900,279 3,472,863
MassMutual Core Equity Fund 3,160,970 2,984,035
D. PLAN TERMINATION
Central has the right under the Plan to discontinue contributions at any time
and terminate the Plan, subject to the provisions of ERISA. In the event of
termination of the Plan, participants will become 100 percent vested in their
accounts and the assets of the Plan will be distributed to the participants
based on the amounts in their respective accounts.
E. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated December 2, 1996, stating the Plan is qualified under Section 401(a) of
the Internal Revenue Code (the "Code") and therefore, the related trust is
exempt from taxation. Once qualified, the Plan is required to operate in
conformity with the Code to maintain its qualification. The Plan Administrator
believes the Plan is being operated in compliance with the applicable
requirements of the Code and, therefore, believes that the Plan is qualified and
the related trust is tax exempt.
F. TRANSACTIONS WITH PARTIES-IN-INTEREST
Certain plan assets are invested in funds that are administered and managed by
Massachusetts Mutual. Since Massachusetts Mutual is the trustee to the Plan,
these transactions qualify as party-in-interest.
11
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The Retirement Plan for Employees of
Central Reserve Life Insurance Company
Notes to Financial Statements (Modified Cash Basis)--Continued
G. YEAR 2000 (UNAUDITED)
The Year 2000 issue refers to computer systems that were originally programmed
using two digits rather than four digits to identify the applicable year. When
the Year 2000 occurs, these systems could interpret the Year as 1900 rather than
2000. Unless hardware, system software and applications are Year 2000 compliant,
computers and the devices they control could generate miscalculations and create
operational problems.
To address this issue, Ceres, on behalf of the Plan, developed an extensive
plan, including the formation of a team consisting of internal resources and
third-party experts. The plan, originally developed in 1997, has been in
implementation since that time and consists of four major phases:
assessment-identifying and prioritizing the systems and third parties which have
exposure to Year 2000 issues; strategy-enhancing, replacing or retiring
hardware, software and systems applications; implementation-creating detailed
project plans, marshaling necessary resources and executing the strategies
chosen; and testing and certification-testing of systems and certifying Year
2000 compliance. The assessment and strategy phases have been completed. The
remaining phases are substantially complete and final testing and refinement
will be addressed in 1999. None of the costs associated with compliance efforts
will be borne by the Plan. Ceres believes the efforts described above will
ensure the Plan's systems are adequately prepared for the Year 2000.
The timing of the project and its completion are based on Ceres management's
best estimates, which were derived utilizing numerous assumptions of future
events, including the continued availability of certain resources and other
factors. However, there can be no guarantee that these estimates will be
achieved and actual results could differ materially from those anticipated.
Specific factors that might cause such material differences include, but are not
limited to, the availability and cost of personnel trained in this area, the
ability to locate and correct all relevant codes, and similar uncertainties.
12
<PAGE> 13
The Retirement Plan for Employees of
Central Reserve Life Insurance Company
EIN: 34-0970995 Plan Number: 001
Line 27(a)--Schedule of Assets Held for Investment Purposes
(Modified Cash Basis)
December 31, 1998
<TABLE>
<CAPTION>
Description of Investment
Including Maturity Date, Rate Units/
Identity of Issue, Borrower, of Interest, Collateral, Interest Current
Lessor, or Similar Party Par or Maturity Value Rate Cost Value
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
* Massachusetts Mutual Life Deposit Administration Group Annuity
Insurance Company Contract #FL-2372, variable interest
rate 92,709 $ 5,410,799 $ 5,410,799
* Massachusetts Mutual Life Separate Investment Account M, Balanced
Insurance Company Fund 10,543 2,383,544 3,900,279
* Massachusetts Mutual Life Separate Investment Account A, Core
Insurance Company Equity Fund 611 2,233,624 3,160,970
* Massachusetts Mutual Life Separate Investment Account E, Core Bond
Insurance Company Fund 390 306,673 379,600
* Massachusetts Mutual Life Separate Investment Account BC Destiny
Insurance Company Conservative Fund 1,712 260,118 280,958
* Massachusetts Mutual Life Separate Investment Account, I
Insurance Company International Fund 20 4,216 4,708
* Massachusetts Mutual Life Separate Investment Account BP, Destiny
Insurance Company Moderate Fund 1,546 246,066 261,509
* Massachusetts Mutual Life Separate Investment Account BA, Destiny
Insurance Company Aggressive Fund 1,492 249,973 260,096
* Massachusetts Mutual Life Separate Investment Account BE, Destiny
Insurance Company All Equity Fund 1,344 257,109 257,175
* Massachusetts Mutual Life
Insurance Company Ceres Group Inc. Stock Fund 4,910 57,283 65,817
-------------------------------
$11,409,405 $13,981,911
===============================
</TABLE>
* Denotes party in interest.
13
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The Retirement Plan for Employees of
Central Reserve Life Insurance Company
EIN: 34-0970995 Plan Number: 001
Line 27(d)--Schedule of Reportable Transactions
(Modified Cash Basis)
Year Ended December 31, 1998
<TABLE>
<CAPTION>
Expense
Incurred
Purchase Selling with
Identity of Party Involved Description of Asset Price Price Transaction
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CATEGORY (III)--SERIES OF TRANSACTIONS IN EXCESS OF 5 PERCENT OF PLAN ASSETS
* Massachusetts Mutual Life Deposit Administration Group Annuity
Insurance Company Contract #FL-2372, variable
interest rate
42 purchases $ 1,563,436
142 sales $3,640,971 $341
* Massachusetts Mutual Life Separate Investment Account A,
Insurance Company Core Equity Fund
70 purchases 1,311,167
102 sales 1,603,341 426
* Massachusetts Mutual Life Separate Investment Account M,
Insurance Company Balanced Fund
37 purchases 678,057
87 sales 722,395 111
* Massachusetts Mutual Life Separate Investment Account BE,
Insurance Company Destiny All Equity Fund
49 purchases 516,959
47 sales 264,980 87
<CAPTION>
Current Value
of Asset on
Cost of Transaction Net
Identity of Party Involved Description of Asset Asset Date Gain
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
CATEGORY (III)--SERIES OF TRANSACTIONS IN EXCESS OF 5 PERCENT OF PLAN ASSETS
* Massachusetts Mutual Life Deposit Administration Group Annuity
Insurance Company Contract #FL-2372, variable
interest rate
42 purchases $1,563,436 $1,563,436
142 sales 3,640,971 3,640,971 $ 0
* Massachusetts Mutual Life Separate Investment Account A,
Insurance Company Core Equity Fund
70 purchases 1,311,167 1,311,167
102 sales 1,195,073 1,603,341 408,268
* Massachusetts Mutual Life Separate Investment Account M,
Insurance Company Balanced Fund
37 purchases 678,057 678,057
87 sales 463,979 722,395 258,416
* Massachusetts Mutual Life Separate Investment Account BE,
Insurance Company Destiny All Equity Fund
49 purchases 516,959 516,959
47 sales 259,850 264,980 5,130
</TABLE>
* Denotes party in interest.
There were no category (i), (ii) or (iv) reportable transactions during 1998.
14
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THE RETIREMENT PLAN FOR EMPLOYEES
OF CENTRAL RESERVE LIFE INSURANCE COMPANY
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Plan Administrator have duly caused this annual report to be signed on its
behalf by the undersigned hereunto duly authorized.
THE RETIREMENT PLAN FOR EMPLOYEES
OF CENTRAL RESERVE LIFE INSURANCE COMPANY
By: /s/ Charles E. Miller, Jr.
---------------------------------
Charles E. Miller, Jr.
Plan Administrator
Dated: June 29, 1999
15
<PAGE> 16
EXHIBIT INDEX
23 Consent of Ernst & Young LLP
16
<PAGE> 1
Exhibit 23
Consent of Independent Auditors
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-62657) pertaining to the Retirement Plan for Employees of the Central
Reserve Life Insurance Company of our report dated June 16, 1999, with respect
to the financial statements and schedules of the Retirement Plan for Employees
of the Central Reserve Life Insurance Company included in this Annual Report
(Form 11-K) for the year ended December 31, 1998.
/s/ Ernst & Young LLP
Cleveland, Ohio
June 28, 1999
