<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------
FORM 11-K
(X) Annual Report Pursuant to Section 15(d) of the
Securities Exchange Act of 1934
For the Fiscal Year Ended December 31, 1997
Commission File No. 1-12338
----------------------
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
(Full Title of the Plan)
VESTA INSURANCE GROUP, INC.
3760 River Run Drive
Birmingham, Alabama 35243
(Name of Issuer of the Securities Held
Pursuant to the Plan and the Address
of its Principal Executive Office)
<PAGE>
REQUIRED INFORMATION
(a) Financial Statements for the J. Gordon Gaines, Inc. Retirement Savings Plan
<TABLE>
<CAPTION>
Page
------------
<S> <C>
(i) Report of Independent Auditors F-1
(ii) Audited statements of net assets available for
plan benefits as of December 31, 1997 and 1996 F-2
(iii) Audited statements of changes in net assets
available for plan benefits for the years
ended December 31, 1997, 1996 and 1995 F-3
</TABLE>
(b) Exhibits
The following exhibit is filed herewith as a part of this annual report:
Exhibit Number Description of Exhibit
----------------------- ------------------------------
23.1 Consent of Independent
Certified Public Accountants
SIGNATURES
THE PLAN. Pursuant to the requirements of the Securities Exchange Act
of 1934, the Administrator of the J. Gordon Gaines, Inc. Retirement Savings
Plan has duly caused this annual report to be signed on its behalf by the
undersigned hereunto duly authorized.
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
By: J. Gordon Gaines, Inc.,
Administrator of the Plan
By: /s/ DONALD W. THORNTON
-----------------------------------
Donald W. Thornton
Its: Senior Vice President, General
Counsel and Secretary
Date: July 14, 1998
2
<PAGE>
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
Financial Statements and Schedules
December 31, 1997, 1996 and 1995
With Independent Auditors' Report Thereon
<PAGE>
INDEPENDENT AUDITORS' REPORT
The Administrative Committee
J. Gordon Gaines, Inc. Retirement Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the J. Gordon Gaines, Inc. Retirement Savings Plan (Plan) as of
December 31, 1997 and 1996 and the related statements of changes in net assets
available for plan benefits for each of the years in the three-year period ended
December 31, 1997. 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 audits 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 net assets available for plan benefits of the Plan as
of December 31, 1997 and 1996, and the changes in net assets available for plan
benefits for each of the years in the three-year period ended December 31, 1997,
in conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplementary information included
in Schedules 1 and 2 is presented for purposes of additional analysis and is not
a required part of the basic financial statements but is 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. Such information has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
July 7, 1998
<PAGE>
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
Statements of Net Assets Available for Benefits
December 31, 1997 and 1996
1997 1996
---------- ----------
ASSETS
Investments at fair value:
Vesta Insurance Group, Inc. common stock $1,704,775 738,097
(cost: 1997 - $917,361, 1996 - $606,045)
Mutual fund investments:
Vanguard Index Trust (cost: 1997 - $793,290,
1996 - $276,265) 962,225 334,266
Fidelity Balanced Fund (cost: 1997 - $376,592,
1996 - $154,950) 395,697 164,713
Wachovia Fixed Income Fund (cost: 1997 - $124,263,
1996 - $78,023) 127,062 78,882
Wachovia Prime Cash Management (cost: 1997 -
$280,337, 1996 - 162,382) 280,337 162,382
---------- ----------
Total investments 3,470,096 1,478,340
Cash -- 773
Employee contributions receivable 40,657 15,866
Employer contributions receivable 279,932 --
---------- ----------
Total assets 3,790,685 1,494,979
LIABILITIES
Other -- 1,611
Cash overdraft 10,105 --
---------- ----------
Total liabilities 10,105 1,611
---------- ----------
Net assets available for benefits $3,780,580 1,493,368
========== ==========
See accompanying notes to financial statements.
F-2
<PAGE>
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
Statements of Changes in Net Assets Available for Plan Benefits
For the Years Ended December 31, 1997, 1996, and 1995
<TABLE>
<CAPTION>
1997 1996 1995
---------- --------- ----------
<S> <C> <C> <C>
Dividend income (includes dividends from
sponsor's stock of $3,987, $3,080, and $2,393 in
1997, 1996, and 1995, respectively) $ 76,797 28,338 17,014
Net appreciation (depreciation) of investments 845,618 (61,707) 327,845
---------- --------- ----------
922,415 (33,369) 344,859
---------- --------- ----------
Contributions:
Employee 859,307 364,049 306,017
Employer 632,780 150,601 123,273
---------- --------- ----------
1,492,087 514,650 429,290
---------- --------- ----------
Rollovers 62,314 63,151 6,835
Distributions to participants (189,604) (187,652) (67,542)
---------- --------- ----------
Net increase 2,287,212 356,780 713,442
Net assets available for plan benefits:
Beginning of year 1,493,368 1,136,588 423,146
---------- --------- ----------
End of year $3,780,580 1,493,368 1,136,588
========== ========= ==========
</TABLE>
See accompanying notes to financial statements.
F-3
<PAGE>
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1997, 1996, and 1995
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) BASIS OF PRESENTATION
The accompanying financial statements of J. Gordon Gaines, Inc.
Retirement Savings Plan (the Plan) have been prepared on an accrual
basis in accordance with generally accepted accounting principles. J.
Gordon Gaines (the Company or Sponsor) is a wholly-owned subsidiary of
Vesta Insurance Group, Inc. (Vesta).
(b) USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS
The preparation of financial statements in conformity with generally
accepted accounting principles requires the Plan administrators to make
estimates and assumptions that affect the reported amounts of assets
and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of the
components of changes in net assets during the reporting period. Actual
results could differ from those estimates.
(c) INVESTMENTS VALUATION
Investments in mutual funds and in Vesta common stock are stated at
fair value, based on quotations obtained from national securities
exchanges. Purchase and sales of securities are recorded on a trade-
date basis. Realized gains and losses are calculated using the average
cost method.
For cash, receivables and payables, the carrying amounts approximate
fair value because of the short-term nature of these instruments.
(d) PLAN EXPENSES
Wachovia Services, Inc. (the Trustee) is trustee for the Plan.
Administration fees paid to the Trustee and all other administrative
expenses are paid by the Sponsor.
(e) FEDERAL INCOME TAXES
A determination letter has been received from the Internal Revenue
Service stating that the Plan qualifies under Section 401 of the
Internal Revenue Code and that the Plan is exempt from federal income
tax. Amounts contributed by the employer, Plan earnings and
appreciation in the value of investments will not be taxable to the
employee until a distribution is received from the Plan, except for
appreciation in the value of Vesta Insurance Group, Inc. common stock
which will not be taxed until the participant disposes of that stock.
F-4
<PAGE>
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1997, 1996, and 1995
(2) ORGANIZATION
The Plan was adopted on November 15, 1993. The Plan includes a salary
reduction feature which permits employees who participate (Participants) in
the Plan to defer and save part of their compensation, as provided for
under Section 401(k) of the Internal Revenue Code. The Plan is subject to
the applicable provisions of the Employee Retirement Income Security Act of
1974, as amended (ERISA).
(3) DESCRIPTION OF PLAN
(a) PARTICIPANT CONTRIBUTIONS
Employees become eligible to participate in the Plan on the first day
of January, April, July, or October following completion of one year
of service. Participants may elect to have from 1 to 10 percent of
their compensation deferred and contributed to the Plan. There were
415 participants and 152 participants as of December 31, 1997 and
1996, respectively.
Participants may allocate their contributions, in multiples of 10
percent, to the following investments:
(i) Money Market Fund: Invested primarily in the Wachovia Prime Cash
Management Fund (previously Biltmore Prime Cash Management Fund)
which invests in commercial paper and other money market
instruments maturing in one year or less;
(ii) Bond Fund: Invested primarily in the Wachovia Fixed Income Fund
(previously Biltmore Fixed Income) which invests in direct
obligations of the United States or agencies;
(iii) Balanced Fund: Invested primarily in the Fidelity Balanced Fund
which invests in common or preferred stock, and securities
convertible into common stock, direct obligations of the United
States Government and its agencies, corporate bonds, debentures,
notes, and certificates of indebtedness;
(iv) Equity Fund: Invested primarily in the Vanguard Index Trust
which invests in common or capital stock and convertible bonds,
convertible notes, debentures or preferred stocks which are
convertible into common or capital stocks;
(v) Company Stock Fund: Invested in Vesta Insurance Group, Inc.
common stock.
(b) EMPLOYER MATCHING CONTRIBUTIONS
The Employer, in its sole discretion, may make matching contributions
in an amount determined by the board of directors of the Company. For
1997 and 1996, these matching contributions were 50 percent of employee
contributions up to a maximum of 6 percent of the employee's
compensation. On December 20, 1997, the board of directors granted an
additional discretionary contribution, which was a one-time fifty
percent (50 percent) employer matching contribution on the first six
percent (6 percent) of an employee's compensation contributed to the
Plan for the 1997 plan year for
F-5
<PAGE>
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1997, 1996, and 1995
those eligible employees actively employed by the Company and
participating in the plan as of December 31, 1997.
(c) VESTING
Participants have a fully-vested and nonforfeitable interest in the
portion of their accounts attributable to their contributions. A
Participant acquires a vested interest in the portion of their accounts
attributable to Employer matching and additional discretionary
contributions based on length of employment, as follows:
Years of Service Vesting Percentage
---------------- ------------------
Less than 3 0%
3 20%
4 40%
5 60%
6 80%
7 100%
(d) FORFEITURES
If a Participant incurs a "break in service," as defined in the Plan,
for any reason other than permanent disability, death or normal
retirement, and is not 100 percent vested in the employer discretionary
contributions, the nonvested portion is forfeited. Forfeited amounts
are applied to the Company's contributions.
(e) WITHDRAWAL PROVISIONS
Participants may request that all or part of their accounts
attributable to elective contributions be paid to them to meet an
immediate and heavy financial hardship for which funds are not
reasonably available to them from other sources. The amount paid to a
Participant in this fashion will be taxable and may not be repaid to
the Plan.
(f) PRIORITIES UPON TERMINATION
Upon termination of the Plan, all Participants' funds shall become
fully vested. The trust will continue until the Plan benefits of each
Participant has been distributed.
(g) ROLLOVERS
During 1997 and 1996, assets were rolled into the Plan from the
qualified plans of previous employers of employees of the Company.
F-6
<PAGE>
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1997, 1996, and 1995
(4) INVESTMENTS
The investments of the Plan as of December 31, 1997 and 1996 are summarized
as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
----------------------------------------------------------------
FAIR VALUE
NUMBER OF PER SHARE FAIR
SHARES/UNITS COST OR UNIT VALUE
------------ ---------- ---------- ---------
<S> <C> <C> <C> <C>
Vesta Insurance Group, Inc. 28,712 $ 917,361 59.38 1,704,775
Vanguard Index Trust 10,683 793,290 90.07 962,225
Fidelity Balanced Fund 25,913 376,592 15.27 395,697
Wachovia Fixed Income Fund 12,874 124,263 9.87 127,062
Wachovia Prime Cash Management 280,337 280,337 1.00 280,337
---------- ---------
$2,491,843 3,470,096
========== =========
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996
----------------------------------------------------------------
FAIR VALUE
NUMBER OF PER SHARE FAIR
SHARES/UNITS COST OR UNIT VALUE
------------ ---------- ---------- ---------
<S> <C> <C> <C> <C>
Vesta Insurance Group, Inc. 23,525 $ 606,045 31.38 738,097
Vanguard Index Trust 4,833 276,265 69.16 334,266
Fidelity Balanced Fund 11,698 154,950 14.08 164,713
Biltmore Fixed Income Fund 8,166 78,023 9.66 78,882
Biltmore Prime Cash Management 162,382 162,382 1.00 162,382
---------- ---------
$1,273,665 1,478,340
========== =========
</TABLE>
F-7
<PAGE>
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1997, 1996, and 1995
Allocation of Net Assets Available for Plan Benefits to Investment Programs
<TABLE>
<CAPTION>
DECEMBER 31, 1997
------------------------------------------------------------------
MONEY COMPANY
MARKET BOND BALANCED EQUITY STOCK COMBINED
FUND FUND FUND FUND FUND FUNDS
---------- -------- --------- --------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at fair value $280,337 127,062 395,697 962,225 1,704,775 3,470,096
Employee contributions
receivable 3,622 2,274 5,975 18,486 10,300 40,657
Employer contributions
receivable 31,300 14,818 34,927 107,166 91,721 279,932
-------- ------- ------- --------- --------- ---------
Total assets 315,259 144,154 436,599 1,087,877 1,806,796 3,790,685
-------- ------- ------- --------- --------- ---------
Liabilities:
Cash overdraft 1,298 -- 3 -- (11,406) (10,105)
-------- ------- ------- --------- --------- ---------
(1,298) -- (3) -- 11,406 10,105
-------- ------- ------- --------- --------- ---------
Net assets available
for plan benefits $316,557 144,154 436,602 1,087,877 1,795,390 3,780,580
======== ======= ======= ========= ========= =========
</TABLE>
Allocation of Net Assets Available for Plan Benefits to Investment Programs
<TABLE>
<CAPTION>
DECEMBER 31, 1996
--------------------------------------------------------------
MONEY COMPANY
MARKET BOND BALANCED EQUITY STOCK COMBINED
FUND FUND FUND FUND FUND FUNDS
------- ------- -------- --------- --------- ---------
<S> <C> <C> <C> <C> <C> <C>
Assets:
Investments at fair value $162,382 78,882 164,713 334,266 738,097 1,478,340
Cash 746 8 6 9 4 773
Employee contributions
receivable 1,968 805 2,361 3,906 6,826 15,866
-------- ------- ------- --------- --------- ---------
Total assets 165,096 79,695 167,080 338,181 744,927 1,494,979
-------- ------- ------- --------- --------- ---------
Liabilities:
Other (449) (30) 1,133 286 671 1,611
-------- ------- ------- --------- --------- ---------
(449) (30) 1,133 286 671 1,611
-------- ------- ------- --------- --------- ---------
Net assets available
for plan benefits $165,545 79,725 165,947 337,895 744,256 1,493,368
======== ======= ======= ========= ========= =========
</TABLE>
F-8
<PAGE>
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1997, 1996, and 1995
Allocation of Changes in Net Assets Available for Plan Benefits to Investment
Programs
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
--------------------------------------------------------------------
MONEY COMPANY
MARKET BOND BALANCED EQUITY STOCK COMBINED
FUND FUND FUND FUND FUND FUNDS
--------- -------- --------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Dividend income $ 11,331 5,432 39,364 16,683 3,987 76,797
Net appreciation of investments -- 1,844 12,037 119,744 711,993 845,618
-------- ------- ------- --------- --------- ---------
11,331 7,276 51,401 136,427 715,980 922,415
-------- ------- ------- --------- --------- ---------
Contributions:
Employee 81,121 45,208 119,162 355,218 258,598 859,307
Employer 67,017 32,871 84,722 244,974 203,196 632,780
-------- ------- ------- --------- --------- ---------
148,138 78,079 203,884 600,192 461,794 1,492,087
-------- ------- ------- --------- --------- ---------
Rollovers 320 -- 8,824 38,754 14,416 62,314
Distributions to participants (20,365) (12,021) (20,087) (28,673) (108,458) (189,604)
Transfers 11,589 (8,907) 26,634 3,282 (32,598) --
-------- ------- ------- --------- --------- ---------
Net increase 151,013 64,427 270,656 749,982 1,051,134 2,287,212
-------- ------- ------- --------- --------- ---------
Net assets available for
plan benefits:
Beginning of year 165,544 79,727 165,946 337,895 744,256 1,493,368
-------- ------- ------- --------- --------- ---------
End of year $316,557 144,154 436,602 1,087,877 1,795,390 3,780,580
======== ======= ======= ========= ========= =========
</TABLE>
F-9
<PAGE>
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1997, 1996, and 1995
Allocation of Changes in Net Assets Available for Plan Benefits to Investment
Programs
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
------------------------------------------------------------------
MONEY COMPANY
MARKET BOND BALANCED EQUITY STOCK COMBINED
FUND FUND FUND FUND FUND FUNDS
--------- -------- --------- --------- --------- ----------
<S> <C> <C> <C> <C> <C> <C>
Dividend income $ 7,743 4,212 6,274 7,029 3,080 28,338
Net appreciation (depreciation)
of investments -- (1,623) 6,394 48,612 (115,090) (61,707)
-------- ------- ------- -------- -------- ---------
7,743 2,589 12,668 55,641 (112,010) (33,369)
-------- ------- ------- -------- -------- ---------
Contributions:
Employee 40,422 17,732 42,481 74,617 188,797 364,049
Employer 18,416 7,081 16,102 29,494 79,508 150,601
-------- ------- ------- -------- -------- ---------
58,838 24,813 58,583 104,111 268,305 514,650
-------- ------- ------- -------- -------- ---------
Rollovers 9,428 6,581 7,532 30,952 8,658 63,151
Distributions to participants (6,415) (13,297) (20,214) (120,172) (27,554) (187,652)
Transfers (4,119) 5,788 6,855 73,203 (81,727) --
-------- ------- ------- -------- -------- ---------
Net increase 65,475 26,474 65,424 143,735 55,672 356,780
Net assets available for
plan benefits:
Beginning of year 100,069 53,253 100,522 194,160 688,584 1,136,588
-------- ------- ------- -------- -------- ---------
End of year $165,544 79,727 165,946 337,895 744,256 1,493,368
======== ======= ======= ======== ======== =========
</TABLE>
F-10
<PAGE>
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1997, 1996, and 1995
Allocation of Changes in Net Assets Available for Plan Benefits to Investment
Programs
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1995
--------------------------------------------------------------------
MONEY COMPANY
MARKET BOND BALANCED EQUITY STOCK COMBINED
FUND FUND FUND FUND FUND FUNDS
--------- -------- ---------- --------- -------- ----------
<S> <C> <C> <C> <C> <C> <C>
Dividend income $ 4,364 2,530 3,660 4,067 2,393 17,014
Net appreciation
of investments -- 4,116 7,626 38,667 277,436 327,845
-------- ------ ------- ------- ------- ---------
4,364 6,646 11,286 42,734 279,829 344,859
-------- ------ ------- ------- ------- ---------
Contributions:
Employee 37,271 17,833 39,784 59,446 151,683 306,017
Employer 14,296 6,076 13,694 23,203 66,004 123,273
-------- ------ ------- ------- ------- ---------
51,567 23,909 53,478 82,649 217,687 429,290
-------- ------ ------- ------- ------- ---------
Rollovers 954 -- -- 1,827 4,054 6,835
Distributions to participants (8,778) (9,179) (14,897) (11,056) (23,632) (67,542)
Transfers (4,300) 261 (15,065) (9,136) 28,240 --
-------- ------ ------- ------- ------- ---------
Net increase 43,807 21,637 34,802 107,018 506,178 713,442
Net assets available for
plan benefits:
Beginning of year 56,262 31,616 65,720 87,142 182,406 423,146
-------- ------ ------- ------- ------- ---------
End of year $100,069 53,253 100,522 194,160 688,584 1,136,588
======== ====== ======= ======= ======= =========
</TABLE>
F-11
<PAGE>
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
Notes to Financial Statements
December 31, 1997, 1996, and 1995
(5) RELATED PARTY TRANSACTIONS
The Sponsor paid all of the Plan's administrative expenses in 1997, 1996
and 1995. During 1997, 1996 and 1995, the Plan acquired and sold Vesta
Insurance Group, Inc. common stock as follows:
<TABLE>
<CAPTION>
SELLING PRICE/
SHARES COST FAIR VALUE
------- -------- -------------
<S> <C> <C> <C>
1997:
Acquired 8,829 $412,337 412,337
Sold 3,642 101,727 158,358
------ -------- ---------
Balance at year-end 28,712 917,361 1,704,775
1996:
Acquired 7,973 $280,052 280,052
Stock split in form of a dividend 4,353 -- --
Sold 1,208 29,668 38,612
------ -------- ---------
Balance at year-end 23,525 606,045 738,097
------ -------- ---------
1995:
Acquired 6,309 $227,602 227,602
Sold 67 2,024 2,574
------ -------- ---------
Balance at year-end 12,407 396,370 676,182
====== ======== =========
</TABLE>
(6) SUBSEQUENT EVENT
On June 1, 1998, Vesta Insurance Group, Inc. (the Company) announced that
certain accounting irregularities were discovered by the Company and that
an investigation was to ensue in order to determine the magnitude of the
irregularities. On June 29, 1998, the Company announced that the
investigation had been completed and that the Company would restate its
historical financial statements. Additionally, the Company announced that
it would restate its financial statements for the first quarter of 1998.
The fair value of the Company's common stock has declined to approximately
$20 per share as of June 30, 1998. As of December 31, 1997, the Plan owned
28,712 shares of the Company's common stock, valued at $59.38 per share.
The effect of the decline in the value of this common stock would reduce
the net assets of the Plan by approximately $1.1 million as of December 31,
1997.
F-12
<PAGE>
SCHEDULE I
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
Item 27a-Schedule of Assets Held for Investment Purposes
As of December 31, 1997
<TABLE>
<CAPTION>
NUMBER OF FAIR
SHARES/UNITS COST VALUE
------------- --------------- ---------------
<S> <C> <C> <C>
Vesta Insurance Group, Inc. common stock* 28,712 $ 917,361 1,704,775
Vanguard Index Trust 10,683 793,290 962,225
Fidelity Balanced Fund 25,913 376,592 395,697
Wachovia Fixed Income Fund 12,874 124,263 127,062
Wachovia Prime Cash Management 280,337 280,337 280,337
---------- ---------
$2,491,843 3,470,096
========== =========
</TABLE>
* Vesta Insurance Group, Inc. owns 100 percent of the common stock of the
Sponsor making Vesta a party-in-interest.
F-13
<PAGE>
SCHEDULE 2
J. GORDON GAINES, INC.
RETIREMENT SAVINGS PLAN
Item 27d-Schedule of Reportable Transactions
For the Year Ended December 31, 1997
<TABLE>
<CAPTION>
CURRENT
PURCHASE VALUE OF
NUMBER PRICE AND ASSET ON
OF AGGREGATE SELLING TRANSACTION NET
SHARES COST PRICE DATE GAIN
--------------- --------------- -------------- --------------- ------------
<S> <C> <C> <C> <C> <C>
Purchase of investments:
* Vesta Insurance Group,
Inc. common stock 8,829 $ 412,337 -- 412,337 --
Vanguard Index Trust 6,308 544,273 -- 544,273 --
Fidelity Balanced Fund 16,039 246,108 -- 246,108 --
Cash Management Fund 1,087,718 1,087,718 -- 1,087,718 --
Sale of investments:
* Vesta Insurance Group, Inc.
common stock 3,642 101,727 158,358 158,358 56,631
Vanguard Index Trust 458 27,247 36,057 36,057 8,810
Fidelity Balanced Fund 1,824 24,466 27,162 27,162 2,696
Cash Management Fund 887,826 887,826 887,826 887,826 --
</TABLE>
* Vesta Insurance Group, Inc. owns 100 percent of the common stock of the
Sponsor making Vesta a party-in-interest.
F-14
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit Page
Number Description of Exhibit Number
- ------- --------------------------------------------------- ------
<S> <C> <C>
23.1 Consent of Independent Certified Public Accountants
</TABLE>
3
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
The Administrative Committee
J. Gordon Gaines, Inc. Retirement Savings Plan
We consent to incorporation by reference in the registration statement of Form
S-8 of J. Gordon Gaines, Inc. Retirement Savings Plan of our report dated July
7, 1998, relating to the statements of net assets available for plan benefits
of J. Gordon Gaines, Inc. Retirement Savings Plan as of December 31, 1997 and
1996, and the related statements of changes in net assets available for plan
benefits and related schedules for each of the years in the three-year period
ended December 31, 1997, which report appears in the December 31, 1997, Annual
Report on Form 11-K of J. Gordon Gaines, Inc. Retirement Savings Plan.
Birmingham, Alabama
July 10, 1998
