LEUCADIA NATIONAL CORP, 424B1, 1995-09-14

LEUCADIA NATIONAL CORP
424B1, 1995-09-14
FINANCE SERVICES

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<PAGE>

Rule 424(b)(1)
File No. 33-61867

1,594,000 SHARES

LEUCADIA NATIONAL CORPORATION

COMMON SHARES
($1.00 PAR VALUE)

---------------------

All of the 1,594,000 common shares, par value $1.00 per share (the
"Common Shares"), of Leucadia National Corporation (the "Company")
offered hereby, are being sold by Ian M. Cumming and Joseph S.
Steinberg, Chairman of the Board and President of the Company,
respectively, and certain members of Mr. Cumming's family
(collectively, the "Selling Shareholders"). The Common Shares offered
hereby are issuable upon the exercise of Warrants to Purchase Common
Shares (the "Warrants"). Each Warrant entitles the holder thereof
to purchase one Common Share at an exercise price of $20.1875 per
share (the "Exercise Price"). Unless the over-allotment option
described below is exercised, the Company will not receive any of
the proceeds from the sale of the Common Shares offered hereby,
other than the Exercise Price. See "Use of Proceeds."

The Common Shares are listed on the New York Stock Exchange ("NYSE")
and the Pacific Stock Exchange ("PSE") under the symbol "LUK." On
September 12, 1995, the last reported sale price of the Common Shares on
the NYSE was $55 5/8 per share. See "Price Range of Common Shares and
Dividend Policy."

In order to protect the Company's significant tax loss carryforwards,
the Common Shares are subject to certain transfer restrictions
designed to regulate transfers to, or that will result in a person
becoming, a Five Percent Shareholder (as defined). Such restrictions
may be waived by the Company's Board of Directors. See "Transfer
Restrictions."

---------------------

FOR A DISCUSSION OF CERTAIN FACTORS THAT SHOULD BE CONSIDERED IN
CONNECTION WITH AN INVESTMENT IN THE COMMON SHARES, SEE "RISK FACTORS"
ON PAGE 10.

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THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
NOR HAS THE SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

------------------------------
<TABLE>
<CAPTION>
UNDERWRITING
PRICE TO DISCOUNTS AND PROCEEDS TO PROCEEDS TO
PUBLIC COMMISSIONS COMPANY(1) SELLING SHAREHOLDERS(2)
------ ----------- ---------- -----------------------
<S> <C> <C> <C> <C>
Per Share . . . . . $55.625 $1.80 $20.1875 $33.6325
Total(3) . . . . . . $88,666,250 $2,869,200 $32,178,875 $53,618,175
<PAGE>
<FN>
(1) Consists exclusively of the Exercise Price, before deducting expenses payable by the Company on behalf of the Selling
Shareholders estimated at $450,000. See "Use of Proceeds" and "Selling Shareholders."
(2) After payment of the Exercise Price to the Company and deducting underwriting discounts and commissions, which are payable
by the Selling Shareholders.
(3) The Company has granted the Underwriters an option, exercisable for 30 days from the date of this Prospectus, to purchase
a maximum of 239,100 additional Common Shares to cover over-allotments of Common Shares. The Company will receive
the proceeds from the sale of the Common Shares subject to the option. If the option is exercised in full, the
total Price to Public will be $101,966,188, Underwriting Discounts and Commissions will be $3,299,580, Proceeds to Company will
be $45,048,433 and Proceeds to Selling Shareholders will be $53,618,175.

</TABLE>
____________________

The Common Shares are offered by the several Underwriters when, as
and if delivered to and accepted by the Underwriters and subject to their
right to reject orders in whole or in part. It is expected that the
Common Shares will be ready for delivery on or about September 18,
1995.

CS FIRST BOSTON JEFFERIES & COMPANY, INC.

The date of this Prospectus is September 13, 1995.

<PAGE>

IN CONNECTION WITH THIS OFFERING, THE UNDERWRITERS MAY OVER-ALLOT
OR EFFECT TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF
THE COMMON SHARES OFFERED HEREBY AT A LEVEL ABOVE THAT WHICH MIGHT
OTHERWISE PREVAIL IN THE OPEN MARKET. SUCH TRANSACTIONS MAY BE
EFFECTED ON THE NEW YORK STOCK EXCHANGE, THE PACIFIC STOCK EXCHANGE OR
OTHERWISE. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY
TIME.

--------------------

FOR NORTH CAROLINA RESIDENTS: THE COMMISSIONER OF INSURANCE OF
THE STATE OF NORTH CAROLINA HAS NOT APPROVED OR DISAPPROVED THIS
OFFERING NOR HAS THE COMMISSIONER PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS.

---------------------

AVAILABLE INFORMATION

The Company is subject to the informational requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
in accordance therewith files reports, proxy statements and other
information with the Securities and Exchange Commission (the
"Commission"). The reports, proxy statements and other information
filed by the Company with the Commission can be inspected and copied
at the public reference facilities maintained by the Commission at
Room 1024, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the
Commission's Regional Offices at 7 World Trade Center, 13th Floor, New
York, New York 10048 and Citicorp Center, 500 West Madison Street,
Suite 1400, Chicago, Illinois 60601-2511. Copies of such material
also can be obtained from the Public Reference Section of the
Commission, Washington, D.C. 20549 at prescribed rates. In addition,
material filed by the Company can be inspected at the offices of the
NYSE, 20 Broad Street, New York, New York 10005 and the PSE, 301 Pine
Street, San Francisco, California 94104, on which the Company's
Common Shares are listed.

The Company has filed with the Commission a Registration
Statement on Form S-3 (together with any amendments thereto, the
"Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), with respect to the securities offered hereby.
This Prospectus does not contain all the information set forth in the
Registration Statement. Such additional information may be obtained
from the Commission's principal office in Washington, D.C.

NYFS04...:\30\76830\0001\1980\FRM7135A.17M
<PAGE>

<PAGE>

INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE

The following documents which have been filed by the Company
(File No. 1-5721) with the Commission are incorporated by reference in
this Prospectus:

(a) the Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 (the "Annual Report");

(b) the Company's Quarterly Report on Form 10-Q for the
fiscal quarter ended March 31, 1995; and

All documents filed by the Company pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date of this
Prospectus and prior to the termination of the offering of the Common
Shares contemplated hereby shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of
filing of such documents. Any statement contained in a document
incorporated by reference or deemed to be incorporated by reference
herein shall be deemed to be modified or superseded for all purposes
of this Prospectus to the extent that a statement contained herein or
in any subsequently filed document which also is incorporated or
deemed to be incorporated by reference herein modifies or supersedes
such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a
part of this Prospectus.

The Company will provide without charge to each person to whom a
copy of this Prospectus has been delivered, on the written or oral
request of such person, a copy of any and all of the documents
referred to above which have been or may be incorporated in this
Prospectus by reference, other than exhibits to such documents, unless
such exhibits are specifically incorporated by reference therein.
Requests for such copies should be directed to: Leucadia National
Corporation, 315 Park Avenue South, New York, N.Y. 10010 (telephone
number (212) 460-1900), Attention: Corporate Secretary.

PROSPECTUS SUMMARY

This summary is qualified in its entirety by the detailed
information and financial statements appearing elsewhere or
incorporated by reference in this Prospectus. As used herein, the
term "Company" means Leucadia National Corporation and its
subsidiaries, except as the context otherwise may require. The
information contained in this Prospectus assumes the over-allotment
option is not exercised.

THE COMPANY

The Company is a diversified financial services holding company
principally engaged in personal and commercial lines of property and
casualty insurance, life and health insurance, banking and lending,
manufacturing and the trading stamps business. The Company
concentrates on return on investment and cash flow to build long-term
shareholder value, rather than emphasizing volume or market share.
Additionally, the Company continuously evaluates the retention and
disposition of its existing operations and investigates possible
acquisitions of new businesses in order to maximize shareholder value.

Shareholders' equity has grown from a deficit of $7,657,000 at
December 31, 1978 (prior to the acquisition of a controlling interest
in the Company by the Company's Chairman and President), to a positive
shareholders' equity of $975,404,000 at June 30, 1995, equal to a book
value per common share of negative $.22 at December 31, 1978 and
$34.62 at June 30, 1995. During the same period, the price of a
Common Share on the NYSE has risen from $.16 at December 31, 1978 to
$50.50 at June 30, 1995. Following completion of this offering, the
Company's Chairman and President and their families (excluding certain
private charitable foundations) will beneficially own, in the aggregate,
approximately 35% of the Company's Common Shares outstanding as of
September 12, 1995, having an aggregate market value in excess of
$579,000,000 at that date.

The Company's principal operations are its insurance businesses,
where it is a specialty markets provider of property and casualty and
life insurance products to niche markets. The Company's principal
personal lines insurance products are automobile insurance, homeowners
insurance, graded benefit life insurance marketed primarily to the age
50-and-over population and variable annuity products. The Company's
principal commercial lines are property and casualty products provided
for multi-family residential real estate, retail establishments and
taxicabs in the New York metropolitan area. As indicated in the
Selected Financial Data included herein, the statutory combined ratios
for the Company's property and casualty business have been better than
industry averages for each of the past five years. This has been due,
in part, to the Company's low expense ratios. For the year ended
December 31, 1994, the Company's insurance segments contributed 79% of
total revenue and, at December 31, 1994, constituted 78% of
consolidated assets.

The Company's insurance subsidiaries have a diversified
investment portfolio of securities, substantially all of which are
issued or guaranteed by the U.S. Treasury or by U.S. governmental
agencies or are rated "investment grade" by Moody's Investors Service
Inc. ("Moody's") and/or Standard & Poor's Corporation ("S&P").
Investments in mortgage loans, real estate and non-investment grade
securities represented less than 2% of the insurance subsidiaries'
portfolio at June 30, 1995. In the recent volatile interest rate
environment, the Company's primary goal has been to preserve
investment capital.

The Company's banking and lending operations principally consist
of making instalment loans primarily funded by deposits insured by the
Federal Deposit Insurance Company ("FDIC"). The Company has established
a niche market for automobile loans to individuals with poor credit
histories. The Company's manufacturing operations primarily
manufacture products for the "do-it-yourself" home improvement market
and for industrial and agricultural markets.

At December 31, 1994, the Company had minimum tax loss
carryforwards of approximately $132,000,000. The amount and
availability of the tax loss carryforwards are subject to certain
qualifications, limitations and uncertainties as more fully discussed
in Note 13 of Notes to Consolidated Financial Statements contained in
the Annual Report.<PAGE>
<PAGE>

The Company also has investments, including non-controlling
equity interests representing more than 5% of the outstanding capital
stock of several public companies.

THE OFFERING

Common Shares outstanding
at September 12, 1995(1) 28,206,538 Common Shares.

Common Shares Offered
by the Selling
Shareholders . . . . . 1,594,000 Common Shares issuable
upon the exercise of certain
outstanding Warrants.

Selling Shareholders . . Ian M. Cumming and Joseph S.
Steinberg, Chairman of the
Board of Directors and President
of the Company, respectively, and
certain members of Mr. Cumming's
family (sometimes hereinafter
referred to as the "Selling
Shareholders"). Following
completion of this offering,
Messrs. Cumming and Steinberg
and their families (excluding
certain private charitable
foundations) will beneficially own,
in the aggregate, approximately 35%
of the Company's Common Shares
outstanding as of September 12, 1995,
having an aggregate market value
in excess of $579,000,000 at that
date.

Use of Proceeds . . . . . Unless the over-allotment option is
exercised, the Company will not
receive any of the proceeds from
the sale of the Common Shares,
other than the Exercise Price. If
the over-allotment option is
exercised, the Company will
receive additional estimated net
proceeds of approximately
$12,870,000, before the payment of
expenses of the offering payable
by the Company. The net proceeds
of the offering to be received by
the Company will be used by the
Company for general corporate
purposes, which may include
working capital, acquisitions or
investment opportunities.

Transfer Restrictions . . In order to protect the Company's
significant tax loss carry-
forwards, the Common Shares are
subject to certain transfer
restrictions contained in the
Company's Certificate of
Incorporation (the "Transfer
Restriction") designed to regulate
transfers to, or that will result
in a person becoming, a Five
Percent Shareholder (as defined
below under "Transfer Restrictions
- The Transfer Restriction").
Such restrictions may be waived by
the Board of Directors.

NYSE and PSE Symbol . . . LUK.

____________________
(1) Does not include up to 3,772,814 Common Shares issuable upon
conversion of the Company's outstanding 5-1/4% Convertible
Subordinated Debentures due 2003 (the "Convertible Debentures"),
exercise of the Warrants and exercise of outstanding stock options
granted under the Company's stock option plans.<PAGE>

<PAGE>

SUMMARY FINANCIAL DATA

The summary financial data set forth below has been derived from
and should be read in conjunction with the audited financial state-
ments and other financial information contained in the Annual Report
and with the unaudited financial statements contained in the Second
Quarter 10-Q, which are incorporated by reference in this Prospectus.

SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------- ---------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED INCOME STATEMENT DATA: (a)
Revenues $737,445 $661,768 $1,384,385 $1,408,058 $1,573,015 $1,086,748 $674,914
Net securities gains (losses) (228) (11,123) (12,004) 51,923 51,778 50,391 (1,525)
Interest expense (b) 24,405 21,475 44,003 39,465 38,507 36,925 34,604
Insurance losses, policy benefits and
amortization of deferred acquisition costs 452,428 401,294 819,010 789,752 896,673 558,127 232,986
Income from continuing operations
before income taxes and cumulative
effects of changes in accounting
principles 47,703 41,157 100,318 176,868 143,553 95,030 78,938
Income from continuing operations
before cumulative effects of changes
in accounting principles (c) 33,732 26,567 70,836 116,259 130,607 94,830 65,010
Net income 33,732 26,567 70,836 245,454 130,607 94,830 47,340

Per share:
Primary earnings per common and dilutive
common equivalent share:
Continuing operations before
cumulative effects of changes
in accounting principles $1.15 $.91 $2.43 $3.97 $5.35 $4.00 $2.68
Net income $1.15 $.91 $2.43 $8.38 $5.35 $4.00 $1.95

Fully diluted earnings per common
share:
Continuing operations before
cumulative effects of changes
in accounting principles $1.14 $.91 $2.41 $3.89 $5.33 $3.97 $2.68
Net income $1.14 $.91 $2.41 $8.09 $5.33 $3.97 $1.95

Number of shares used in calculation:
Primary 29,293 29,102 29,101 29,270 24,435 23,704 24,288
Fully Diluted 31,070 29,102 30,857 30,743 24,516 23,916 24,302

<PAGE>

AT JUNE 30, AT DECEMBER 31,
----------- ------------------------------------------------------------------
1995 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C>
SELECTED BALANCE SHEET DATA: (a)
Cash and investments $2,973,512 $2,764,890 $2,989,384 $3,371,624 $3,627,542 $1,741,273
Total assets 4,971,519 4,674,046 4,689,272 4,330,580 4,590,096 2,406,438
Debt, including current maturities 537,877 425,848 401,335 225,588 220,728 208,458
Customer banking deposits 194,462 179,888 173,365 186,339 194,862 176,366
Common shareholders' equity 975,404 881,815 907,856 618,161 365,495 268,567
Book value per Common Share $34.62 $31.44 $32.54 $22.12 $15.89 $11.82

SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------- --------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED INFORMATION ON PROPERTY
AND CASUALTY INSURANCE
OPERATIONS (Unaudited): (a)(d)
GAAP Combined Ratio 102.2% 101.9% 99.1% 96.9% 101.7% 102.1% 105.2%
SAP Combined Ratio 99.4% 99.7% 98.8% 93.7% 102.8% 103.3% 100.8%
Industry SAP Combined Ratio N/A 111.4% 108.4% 106.9% 115.7% 108.8% 109.5%
Premium to Surplus Ratio N/A N/A 1.9x 1.6x 2.0x 2.2x 1.4x
<FN>
_________________________

(a) Data includes acquired companies from date of acquisition.

(b) Includes interest on customer banking deposits of $8,304,000, $9,001,000, $11,954,000, $15,138,000 and $14,145,000 for
the years ended December 31, 1994, 1993, 1992, 1991 and 1990, respectively, and $5,680,000 and $4,014,000 for the six
month periods ended June 30, 1995 and 1994, respectively.

(c) The provision for income taxes for the years ended December 31, 1994 and 1993 and for the six month periods ended June
30, 1995 and 1994 were calculated under Statement of Financial Accounting Standards No. 109, "Accounting for Income
Taxes," which does not reflect the benefit from utilization of tax loss carryforwards. The provision for income taxes
for the years ended December 31, 1992, 1991 and 1990 have been reduced for the benefit from utilization of tax loss
carryforwards.

(d) Combined Ratios and the Premium to Surplus Ratios include both Colonial Penn Group, Inc. and its subsidiaries for the
relevant periods since August 16, 1991, and Empire Insurance Company ("Empire"). The 1990 ratios are for Empire only.
For an explanation of these ratios, see Notes (e), (f) and (g) to the table under Selected Financial Data below.

</TABLE>

<PAGE>

THE COMPANY

GENERAL

The Company's insurance subsidiaries have a diversified
investment portfolio of securities, substantially all of which are
issued or guaranteed by the U.S. Treasury or by U.S. governmental
agencies or are rated "investment grade" by Moody's and/or S&P.
Investments in mortgage loans, real estate and non-investment grade
securities represented less than 2% of the insurance subsidiaries'
portfolio at June 30, 1995. In the recent volatile interest rate
environment, the Company's primary goal has been to preserve
investment capital.

The Company's banking and lending operations principally consist
of making instalment loans primarily funded by deposits insured by the
Federal Deposit Insurance Company. The Company has established a
niche market for automobile loans to individuals with poor credit
histories. The Company's manufacturing operations primarily
manufacture products for the "do-it-yourself" home improvement market
and for industrial and agricultural markets.

RECENT DEVELOPMENTS

On June 6, 1995, the Company purchased a 46.4% common stock
interest in MK Gold Company ("MK Gold") from Morrison Knudsen
Corporation ("MKC") for an aggregate cash purchase price of
$22,500,000. In addition, the Company purchased at par all of a
lender's interest under a $20,000,000 revolving credit facility with
MK Gold, of which approximately $15,000,000 was outstanding at June 6,
1995, and released MKC and certain of its affiliates from their
guarantee obligations in connection with such facility. MK Gold, an
international gold mining company whose shares are quoted on the
Nasdaq National Market System, reported total assets and stockholders'
equity of $96,566,000 and $68,288,000, respectively, at March 31,
1995.

On May 26, 1995, the Company's Colonial Penn Group property and
casualty subsidiaries entered into an agreement with the California
Department of Insurance to settle their Proposition 103 rollback
refund for approximately $17,000,000, which is substantially less than
the Insurance Department's original assessment. The fairness of this
settlement is being challenged in an administrative proceeding by a
California consumer group, which has also challenged the Proposition
103 settlements of other insurance companies. A hearing has been
scheduled for October 10, 1995. The Colonial Penn Group and the
Insurance Department are defending the settlement; however, no
assurance can be given that this settlement will be upheld. The
Company believes that the ultimate resolution of this matter will not
have a material adverse effect on the Company's financial condition or
results of operations and will not exceed reserves established in
prior years.

During the second quarter of 1995, the Company filed with the
Commission a Schedule 13D (as amended, the "RCP Schedule 13D")
relating to the common stock of Rockefeller Center Properties, Inc.
("RCP"), a real estate investment trust, the principal asset of which
is a $1.3 billion collateralized loan to the owners of the land and
buildings known as Rockefeller Center in New York City. As disclosed
in the RCP Schedule 13D, the Company has a 7.1% equity interest in RCP
for which it paid approximately $12,900,000 (including brokerage
commissions). The Company has stated in its RCP Schedule 13D that it
intends to make recommendations or proposals to the owners of
Rockefeller Center and to RCP and to hold discussions with the
management of RCP and others relating to strategies for dealing with
the recent bankruptcy filing by the owners of Rockefeller Center and
for the refinancing or repayment of all or a portion of RCP's existing
indebtedness, which may include suggested arrangements by the Company
for the raising of additional debt and equity capital. Such
recommendations or proposals may involve, without limitation, such
things as the arrangement by the Company of loans to RCP by
institutional lenders, the participation by the Company in a tender
offer for some or all of the outstanding shares of RCP common stock,
the acquisition of RCP or its assets by the Company and others, by way
of merger or otherwise, and the purchase by the Company and others of
newly issued shares of RCP common stock. In connection with the
negotiation or consummation of any possible recommendations or
proposals, the RCP Schedule 13D states that the Company may seek
representation on RCP's Board of Directors. As of the date hereof,
the Company has not made any formal or binding offers or entered into
an agreement with RCP, any other stockholder of RCP or the owners of
Rockefeller Center with respect to any such possible recommendations
or proposals.

Beginning in the second quarter of 1994, the Company acquired
equity interests in recently privatized Russian companies for a total
investment of approximately $28,000,000. Due to the risks associated
with investing in emerging markets, the Company has been accounting
for these investments under the cost recovery method. These
investments have a balance of approximately $22,700,000 at June 30,
1995. Early in 1995, the Company opened an office in Moscow to more
closely monitor these investments and to explore new investment
opportunities in the former Soviet Union.

A.M. Best Company ("Best"), an independent rating agency, lowered
its rating for the Company's Empire Group (as defined under
"Business Insurance Operations General") property and casualty
insurance<PAGE>

<PAGE>

subsidiaries to a rating of A- (excellent) from A (excellent),
principally due to the Group's premium growth during the past year.
This rating reflects Best's concern over the decline in the
relationship of the Empire Group's surplus to premiums as a result of
such growth. The Company plans to meet with Best to discuss the
change in its rating and the measures the Company could take to either
reinstate its A rating or to maintain its A- rating. The Company does
not believe that the A- rating of the Empire Group will have a
material adverse effect on the Empire Group's operations. Best has
given the Company's other insurance subsidiaries the following
ratings: Colonial Penn Life Insurance Company ("CPL") and Charter
National Life Insurance Company ("Charter"): "A" (excellent); Colonial
Penn Insurance Company ("CPI"), Colonial Penn Franklin Insurance
Company ("Franklin"), Colonial Penn Madison Insurance Company
("Madison") and Intramerica Life Insurance Company ("Intramerica"):
"A-" (excellent); and Bay Colony Insurance Company ("Bay Colony"):
"NA-3" (insufficient operating data, indicating a company that has
been dormant in recent years).

The Board of Directors has declared a two-for-one stock split
payable on November 15, 1995 in the form of a 100% stock dividend to
shareholders of record on November 1, 1995 (the "Stock Split"). The
Company has paid annual cash dividends in December of each of the last
three years of $.20 per share in 1992 and $.25 per share in 1993 and
1994. The Board of Directors has stated that it is its current
intention to declare and pay a $.25 per Common Share cash dividend in
December 1995 on each Common Share outstanding after giving effect to
the Stock Split (the equivalent of a dividend of $.50 per pre-Stock
Split Common Share) (the "Dividend"). Although the Board has not
taken any action with respect to the Dividend, the Board anticipates
that, absent the occurrence of a material adverse change to the
Company's current business or financial condition, it will authorize
the Dividend during the fourth quarter of 1995.

In addition to its interest in RCP and MK Gold, the Company owns
non-controlling equity interests representing more than 5% of the
outstanding capital stock of each of the following domestic public
companies at September 12, 1995: Carmike Cinemas, Inc. ("Carmike")
(approximately 6% of Class A shares), Jones Plumbing Systems, Inc.
("Jones") (approximately 21%), Jordan Industries, Inc. ("JII")
(approximately 11%) and HomeFed Corporation (approximately 41%).

RISK FACTORS

The following factors, in addition to other information set
forth, or incorporated by reference, in this Prospectus, should be
considered carefully before deciding whether to make an investment in
the Common Shares offered hereby.

INSURANCE OPERATIONS

The insurance industry is a highly competitive industry, in which
many of the Company's competitors have substantially greater financial
resources, larger sales forces, more widespread agency and broker
relationships, and more diversified lines of insurance coverage.
Additionally, certain competitors market their products with
endorsements from affinity groups, while the Company's products are
for the most part unendorsed, which may give such other companies a
competitive advantage. Congress is considering changes to federal
banking laws, certain of which could result in banks being able to
offer insurance products in direct competition with the Company. The
Company is unable to determine what effect, if any, such changes may
have on the Company's operations.

The property and casualty insurance industry has historically
been cyclical in nature, with periods of less intense price competi-
tion and high underwriting standards generating significant profits,
followed by periods of increased price competition and lower under-
writing standards resulting in reduced profitability or loss. Price
<PAGE>

<PAGE>

competition has been significant in recent years. The cyclicality and
competitive nature of the property and casualty insurance business
historically have contributed to significant industry-wide quarter-to-
quarter and year-to-year fluctuations in underwriting results and net
income. Its profitability is affected by many factors, including rate
competition, severity and frequency of claims (including catastrophe
losses), interest rates, state regulation, court decisions and
judicial climate, all of which are outside the Company's control.

Prior to 1988, CPI wrote as primary insurer or as a reinsurer a
variety of diverse commercial property and casualty insurance business
known as "Special Risks." The nature of most of this insurance
involves exposures which can be expected to develop over a relatively
long period of time before a definitive determination of ultimate
losses and loss adjustment expenses can be established and the
relevant reinsurance collected. Although losses with respect to this
block of business are particularly difficult to predict accurately,
the Company believes, based in part upon the recently completed
independent actuarial review, that it has recorded adequate reserves
as of December 31, 1994 ($63,700,000, before reinsurance).

REGULATION

The Company and its subsidiaries are subject to detailed
regulation and supervision in connection with both their insurance and
their banking operations. The Company is subject to government
regulation in each of the states in which it conducts its insurance
operations. Such regulation is vested in state agencies having broad
administrative power affecting many aspects of the Company's business,
including rates, policy forms, capital adequacy and level of
operations, and is concerned primarily with the protection of
policyholders rather than shareholders.

In the event of the insolvency, liquidation or other
reorganization of any of the Company's insurance subsidiaries, the
Company's shareholders would have no right to proceed against any such
insurance subsidiary. In addition, the Company's shareholders would
have no right to cause the liquidation or bankruptcy of any such
insurance subsidiary under federal or state bankruptcy laws. The
insurance laws of the domiciliary state would govern such proceedings
and the relevant insurance commissioner would act as liquidator or
rehabilitator for the insurance subsidiary. Creditors and
policyholders of any such insurance subsidiary would be entitled to
payment in full from the assets of the insurance subsidiary before the
Company, as a shareholder, would be entitled to receive any
distribution therefrom. See "Business-Insurance Operations-Government
Regulation" and "Business-Banking and Lending." For a discussion of
recent developments concerning the Company's Proposition 103
liability, see "The Company-Recent Developments."

HOLDING COMPANY

The Company believes that it has sufficient sources of liquidity
(without consideration of the availability of dividends from its
insurance and banking subsidiaries) to meet its currently anticipated
liquidity needs. However, the Company may become dependent upon
dividends and other distributions received from its insurance and
banking subsidiaries to fund its expenses. The Company's insurance
and banking subsidiaries are restricted under applicable laws in their
ability to pay dividends or make other distributions to the Company.

DEPENDENCE ON KEY PERSONNEL; CONTROL OF COMPANY

The Company is dependent on the services of its senior
management, including Ian M. Cumming and Joseph S. Steinberg, the
Company's Chairman of the Board and President, respectively. Messrs.
Cumming's and Steinberg's employment agreements with the Company
expire June 30, 2003.

<PAGE>

Messrs. Cumming and Steinberg and their families (excluding
certain private charitable foundations) beneficially own, in the
aggregate, approximately 35% of the Company's Common Shares
outstanding at September 12, 1995, after giving effect to this offering
(determined in accordance with Rule 13d-3 promulgated under the
Exchange Act). Accordingly, Messrs. Cumming and Steinberg, as a
practical matter, should be able to elect a majority of the directors
and thus control the management and affairs of the Company's business.
Certain of the Company's public debt instruments contain provisions
granting the holders thereof the right, subject to certain exceptions,
to require the Company to repurchase such debt at 101% of principal
amount plus accrued but unpaid interest upon a change of control of
the Company (as defined in such instruments). None of the change of
control provisions are triggered by this offering.

TRANSFER RESTRICTIONS

In order to protect the Company's significant tax loss
carryforwards, the Common Shares are subject to certain transfer
restrictions contained in the Company's Certificate of Incorporation
(the "Transfer Restriction") designed to regulate transfers to, or
that will result in a person becoming, a Five Percent Shareholder.
Such restrictions may be waived by the Board of Directors. As a
result of the Board's approval, the Transfer Restriction will not
restrict the offer and sale of Common Shares hereunder by Messrs.
Cumming and Steinberg (each of whom is a Five Percent Shareholder),
except for any transfer to a person or entity (including any group of
persons acting in concert) who either prior to or as a result of an
acquisition of Common Shares hereunder owns or will own 5% of the
Leucadia Stock (as defined), taking into account the Tax Ownership
rules described under "Transfer Restrictions" below. Shareholders are
advised to carefully monitor their ownership of Common Shares (and any
future securities of the Company that may constitute Leucadia Stock
for purposes of the Transfer Restriction) and should consult their own
legal advisors and/or the Company to determine whether their Tax
Ownership approaches the proscribed level. All certificates
representing the Common Shares offered hereby will bear a legend
indicating that such securities are subject to the Transfer
Restriction. See "Transfer Restrictions."

USE OF PROCEEDS

The Company will receive an aggregate of $32,178,875 upon the
exercise of the Warrants in connection with the sale of the Common
Shares offered hereby, which constitutes the Exercise Price. If the
over-allotment option granted by the Company to the Underwriters is
exercised in full, the Company also will receive estimated net
proceeds of approximately $12,870,000, before the payment of expenses
of this offering payable by the Company. The balance of the proceeds
of the sale of the Common Shares offered hereby will be received by
the Selling Shareholders. Pursuant to the terms of the Warrants, the
Company is obligated to register the Common Shares issuable upon
exercise of the Warrants and to bear the costs of such registration,
other than underwriting discounts and commissions, which will be paid
by the Selling Shareholders. Such registration expenses, which will
be borne by the Company, are estimated to be approximately $450,000.
The net proceeds of this offering to be received by the Company will
be used by the Company for general corporate purposes, which may
include working capital, acquisitions or investment opportunities.
Pending such uses, the proceeds will be invested in short-term
investment grade obligations.

<PAGE>

PRICE RANGE OF COMMON SHARES AND DIVIDEND POLICY

The Common Shares of the Company are traded on the NYSE and PSE
under the symbol LUK. The following table sets forth, for the
calendar periods indicated, the high and low sales price per Common
Share on the consolidated transaction reporting system, as reported by
the Dow Jones Historical Stock Quote Reporter Service. On January 8,
1993, the Company effected a two-for-one split of the Common Shares in
the form of a 100% stock dividend. Per share amounts set forth in
this Prospectus have been adjusted to reflect such stock split.

SALES PRICE
-----------
HIGH LOW
---- ---
<S> <C> <C>
1993
----
First Quarter $51.25 $38.63
Second Quarter 43.75 36.00
Third Quarter 47.75 39.25
Fourth Quarter 44.50 38.75

1994
----
First Quarter $43.63 $38.25
Second Quarter 38.88 35.50
Third Quarter 37.63 34.63
Fourth Quarter 46.25 36.13

1995
----
First Quarter $48.63 $42.88
Second Quarter 52.00 43.63
Third Quarter (through
September 12, 1995) 57.88 49.13
</TABLE>

On September 12, 1995, the last reported sale price of the Common
Shares on the NYSE was $55.625 per share. As of September 11, 1995,
there were approximately 5,791 record holders of the Common Shares.

The Company paid dividends of $.25 per Common Share on December
30, 1994 and December 15, 1993. The payment of dividends in the
future is subject to the discretion of the Board of Directors and will
depend upon general business conditions, legal and contractual
restrictions on the payment of dividends and other factors that the
Board of Directors may deem to be relevant. For information
concerning the Stock Split and the Dividend, see "The Company-Recent
Developments."

In connection with the declaration of dividends or the making of
distributions on, or the purchase, redemption or other acquisition of
Common Shares, the Company is required to comply with certain
restrictions contained in certain of its debt instruments.

<PAGE>

CAPITALIZATION

The following table sets forth the (unaudited) consolidated
capitalization of the Company at June 30, 1995 and as adjusted to give
effect to the exercise of the Warrants pursuant to which the 1,594,000
Common Shares offered hereby will be issued (based upon the offering
price of $55.625 per share and after deducting the estimated
expenses of the offering payable by the Company).

AS
ACTUAL ADJUSTED
------ --------
(IN THOUSANDS)
<S> <C> <C>
Long-term debt (a):
Revolving bank credit agreement borrowings . . . . . . . . . . . . $ 10,000 $ 10,000
Term loans with banks, due in 1999 . . . . . . . . . . . . . . . . 50,000 50,000
7-3/4% Senior Notes due 2013, less debt
discount of $906 . . . . . . . . . . . . . . . . . . . . . . . 99,094 99,094
Industrial revenue bonds . . . . . . . . . . . . . . . . . . . . . 6,540 6,540
Other senior debt . . . . . . . . . . . . . . . . . . . . . . . . 14,939 14,939
8-1/4% Senior Subordinated Notes due 2005 . . . . . . . . . . . . 100,000 100,000
10-3/8% Senior Subordinated Notes due 2002,
less debt discount of $653 . . . . . . . . . . . . . . . . . . 124,347 124,347
6% Subordinated Swiss Franc Bonds due 1996 . . . . . . . . . . . . 32,957 32,957
5-1/4% Convertible Subordinated Debentures due 2003 . . . . . . . 100,000 100,000
---------- ----------
Total long-term debt, including current maturities . . . . 537,877 537,877
---------- ----------
Shareholders' Equity (b):
Common shares, par value $1 per share,
authorized 150,000,000 shares; 28,177,398
and 29,771,398 shares issued and outstanding,
after deducting shares held in treasury . . . . . . . . . . . . 28,177 29,771
Additional paid-in capital (c) . . . . . . . . . . . . . . . . . . 127,178 177,083
Net unrealized gain on investments . . . . . . . . . . . . . . . . 17,468 17,468
Retained earnings . . . . . . . . . . . . . . . . . . . . . . . . 802,581 802,581
---------- ----------
Total shareholders' equity . . . . . . . . . . . . . . . . 975,404 1,026,903
---------- ----------
Total . . . . . . . . . . . . . . . . . . . . . . . . . $1,513,281 $1,564,780
========== ==========
Book Value Per Share (c) . . . . . . . . . . . . . . . . . . . . . . . $34.62 $34.49
====== ======

<FN>
----------------------
(a) Excludes customer banking deposits of approximately $194,462,000. For information with respect
to interest rates, maturities, priorities and restrictions related to outstanding long-term debt,
see Note 9 of Notes to Consolidated Financial Statements contained in the Annual Report.

(b) For information with respect to stock options, warrants and contingent obligations, see Notes 10
and 16 of Notes to Consolidated Financial Statements contained in the Annual Report.

(c) The exercise of the Warrants in connection with this offering results in a federal income tax
deduction equal to the excess of the offering price over the Exercise Price, which results in a
tax benefit of approximately $19,771,000 reflected in the As Adjusted column.

</TABLE>

<PAGE>

SELECTED FINANCIAL DATA

The selected financial data set forth below has been derived from
and should be read in conjunction with the audited financial state-
ments and other financial information contained in the Annual Report
and with the unaudited financial statements contained in the Second
Quarter 10-Q, which are incorporated by reference in this Prospectus.

SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------- ---------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED INCOME STATEMENT DATA: (a)
Revenues $737,445 $661,768 $1,384,385 $1,408,058 $1,573,015 $1,086,748 $674,914
Net securities gains (losses) (228) (11,123) (12,004) 51,923 51,778 50,391 (1,525)
Interest expense (b) 24,405 21,475 44,003 39,465 38,507 36,925 34,604
Insurance losses, policy benefits and
amortization of deferred acquisition costs 452,428 401,294 819,010 789,752 896,673 558,127 232,986
Income from continuing operations
before income taxes and cumulative
effects of changes in accounting
principles 47,703 41,157 100,318 176,868 143,553 95,030 78,938
Income from continuing operations
before cumulative effects of changes
in accounting principles (c) 33,732 26,567 70,836 116,259 130,607 94,830 65,010
(Loss) from discontinued operations
less applicable income taxes - - - - - - (17,670)
Income before cumulative effects of
changes in accounting principles 33,732 26,567 70,836 116,259 130,607 94,830 47,340
Cumulative effects of changes in
accounting principles - - - 129,195 - - -
Net income 33,732 26,567 70,836 245,454 130,607 94,830 47,340

Per share:
Primary earnings (loss) per common and dilutive
common equivalent share:
Continuing operations before
cumulative effects of changes
in accounting principles $1.15 $.91 $2.43 $3.97 $5.35 $4.00 $2.68
Discontinued operations - - - - - - (.73)
Cumulative effects of changes in
accounting principles - - - 4.41 - - -
----- ---- ----- ----- ----- ----- -----
Net income $1.15 $.91 $2.43 $8.38 $5.35 $4.00 $1.95
===== ==== ===== ===== ===== ===== =====
Fully diluted earnings (loss) per common
share:
Continuing operations before
cumulative effects of changes
in accounting principles $1.14 $.91 $2.41 $3.89 $5.33 $3.97 $2.68
Discontinued operations - - - - - - (.73)
Cumulative effects of changes in
accounting principles - - - 4.20 - - -
----- ---- ----- ----- ----- ----- -----
Net income $1.14 $.91 $2.41 $8.09 $5.33 $3.97 $1.95
===== ==== ===== ===== ===== ===== =====
Number of shares used in calculation:
Primary 29,293 29,102 29,101 29,270 24,435 23,704 24,288
Fully Diluted 31,070 29,102 30,857 30,743 24,516 23,916 24,302

--------------------------------

Footnotes on following page.

<PAGE>

SIX MONTHS
ENDED JUNE 30, YEAR ENDED DECEMBER 31,
-------------- -------------------------------------------------------------
1995 1994 1994 1993 1992 1991 1990
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
SELECTED INFORMATION ON PROPERTY
AND CASUALTY INSURANCE
OPERATIONS (Unaudited): (a)(d)(e)
GAAP Combined Ratio 102.2% 101.9% 99.1% 96.9% 101.7% 102.1% 105.2%
SAP Combined Ratio 99.4% 99.7% 98.8% 93.7% 102.8% 103.3% 100.8%
Industry SAP Combined Ratio (f) N/A 111.4% 108.4% 106.9% 115.7% 108.8% 109.5%
Premium to Surplus Ratio (g) N/A N/A 1.9x 1.6x 2.0x 2.2x 1.4x
<FN>
_________________________

(a) Data includes acquired companies from date of acquisition.

(e) The Combined Ratio is the sum of the Loss Ratio and the Underwriting Expense Ratio determined in accordance with
generally accepted accounting principles ("GAAP") or statutory accounting principles ("SAP"), as the case may be. The
Loss Ratio is the ratio of incurred losses and loss adjustment expenses to net premiums earned. The Expense Ratio is
the ratio of underwriting expenses (policy acquisition costs, commissions and a portion of administrative, general and
other expenses attributable to underwriting operations) to net premiums written, if determined in accordance with SAP,
or to net premiums earned, if determined in accordance with GAAP. A Combined Ratio under 100% indicates an
underwriting profit and a Combined Ratio above 100% indicates an underwriting loss. The Combined Ratio does not
include the effect of investment income. Certain accident and health insurance business, which is included in the
statutory results of operations of the property and casualty insurance segment and is reflected in the SAP Combined
Ratio, is reported in the life insurance segment for financial reporting purposes and therefore is not included in the
GAAP Combined Ratios reflected herein. For 1993, the difference in the treatment of costs for GAAP and SAP purposes
was a principal reason for the difference between the GAAP Combined Ratio and the SAP Combined Ratio. For 1992, the
results of certain accident and health insurance business had a non-recurring income item which reduced the SAP
Combined Ratio. In addition, in 1992, certain income credits were recognized only for GAAP. For 1990, the difference
in the treatment of acquisition costs for GAAP and SAP purposes was a principal reason for the unusual difference
between the GAAP Combined Ratio and the SAP Combined Ratio.

(f) Source: Best Week Property/Casualty Supplement, April 3, 1995 Release 2, with respect to annual information for 1994,
Best's Aggregate & Averages, Property/Casualty, 1994 edition, with respect to annual information for 1990 through
1993, and Insurance Services Office, Inc. Operating Results, September 8, 1994, with respect to interim information.
Industry Combined Ratios may not be fully comparable as a result of, among other things, differences in geographical
concentration and in the mix of property and casualty insurance products.

(g) The Premium to Surplus Ratio was calculated by dividing statutory property and casualty insurance net premiums written
by statutory capital and surplus at the end of the year.

/TABLE
<PAGE>
<PAGE>

Certain information concerning the Company's operations is
presented in the following table.

Year Ended December 31,
-------------------------------
1994 1993 1992
---- ---- ----
(In millions)
<S> <C> <C> <C>
Revenues:
--------
Property and Casualty Insurance $ 872.1 $ 842.1 $ 849.0
Life Insurance 223.3 286.3 395.5
Banking and Lending 49.0 38.2 56.4
Incentive Services (a) 19.4 30.7 95.7
Manufacturing 180.1 173.8 168.8
Corporate and Other (b) 40.5 37.0 7.6
-------- -------- --------
$1,384.4 $1,408.1 $1,573.0
======== ======== ========

Income (loss) before income taxes:
---------------------------------
Property and Casualty Insurance $ 96.4 $ 128.0 $ 108.4
Life Insurance 49.1 62.0 63.7
Banking and Lending 16.3 12.6 17.4
Incentive Services (a) 10.3 13.9 12.9
Manufacturing (11.7) (2.2) (6.6)
Corporate and Other (b)(c) (60.1) (37.4) (52.2)
-------- -------- --------
$ 100.3 $ 176.9 $ 143.6
======== ======== ========

Identifiable assets employed:
----------------------------
Property and Casualty Insurance $2,117.9 $2,169.6 $1,843.3
Life Insurance 1,515.1 1,610.5 1,857.0
Banking and Lending 316.4 262.6 268.9
Incentive Services (a) 5.9 37.8 41.2
Manufacturing 93.5 101.0 105.8
Corporate and Other (d) 625.2 507.8 214.4
-------- -------- --------
$4,674.0 $4,689.3 $4,330.6
======== ======== ========
<FN>
At December 31, 1994, the Company and its consolidated subsidiaries had
4,374 full-time employees.

----------------
(a) Includes trading stamp operations for all years and motivation services
operations for 1992. Certain investments that are reflected in the
caption Incentive Services in 1993 and 1992 are reflected in the caption
Corporate and Other in 1994.

(b) Includes Jordan Associated Companies (described below), gains (losses)
from certain investments and real estate and other operations.

(c) Includes corporate interest expense and overhead, including expenses
related to acquisition and certain investing activities.

(d) Principally consists of cash, investments, real estate, receivables and,
at December 31, 1994 and 1993, the deferred income tax asset of
$144,631,000 and $114,001,000, respectively.
</TABLE>

<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF INTERIM OPERATIONS

The following discussion of the periods ended June 30, 1995 and
1994 should be read in conjunction with the Management's Discussion
and Analysis of Financial Condition and Results of Operations included
in the Annual Report and the information contained herein under "The
Company Recent Developments."

LIQUIDITY AND CAPITAL RESOURCES

During each of the six month periods ended June 30, 1995 and
1994, the Company operated profitably and net cash was provided from
operations.

During the six months ended June 30, 1995, the Company used its
revolving bank credit agreement facilities to meet daily cash
requirements and in connection with the MK Gold transaction.

In June 1995, the Company purchased a 46.4% common stock interest
in MK Gold from MKC for an aggregate cash purchase price of
$22,500,000. In addition, the Company purchased at par all of a
lender's interest under a $20,000,000 revolving credit facility with
MK Gold, of which approximately $15,000,000 was outstanding.

In June 1995, the Company sold $100,000,000 principal amount of
its newly authorized 8-1/4% Senior Subordinated Notes due 2005 in an
underwritten public offering. A portion of the proceeds was used to
repay indebtedness outstanding under the Company's revolving credit
agreements incurred in connection with the acquisition of MK Gold.
The remaining proceeds were added to working capital.

During the second quarter of 1995, the Company purchased
2,365,200 common shares of RCP for approximately $11,130,000, which
increased its equity interest in RCP to 7.1%. RCP is a real estate
investment trust, the principal asset of which is a $1.3 billion
collateralized loan to the owners of the land and buildings known as
Rockefeller Center in New York City.

As more fully described in the Annual Report, securities
classified as "available for sale" are carried at fair value with
unrealized gains and losses reflected as a separate component of
shareholders' equity, net of taxes. Principally as a result of
decreases in market interest rates during 1995, the unrealized loss on
investments at the end of 1994 became an unrealized gain of
$17,468,000 as of June 30, 1995. While this has resulted in an
increase in shareholders' equity, it had no effect on results of
operations or cash flows.

In July 1995, pursuant to the chapter 11 reorganization plan of
HomeFed Corporation ("HFC"), the Company acquired 41.2% of HFC's
common stock for a net cash investment of $4,200,000. In addition,
the Company entered into a $20,000,000 eight year secured loan with
HFC, which is convertible into additional shares of HFC common stock
after three years (subject to certain conditions) and which bears
interest at the rate of 12% per year. HFC is a public company
headquartered in Salt Lake City, Utah, whose subsidiaries develop real
property.

In July 1995, the Company purchased approximately 52 acres of
unimproved land zoned for residential and commercial development in
Walton County, Florida, for approximately $13,000,000. The Company
plans to make certain improvements to the property, which will be
subdivided into approximately 230 lots and sold in phases.

<PAGE>

RESULTS OF OPERATIONS

Earned premium revenues of the Colonial Penn P&C Group (as
defined under "Business -- Insurance Operations -- General") were
approximately $235,189,000 and $214,657,000 for the six month periods
ended June 30, 1995 and 1994, respectively, and $120,022,000 and
$108,933,000 for the three month periods ended June 30, 1995 and 1994,
respectively. The increase in earned premiums principally resulted
from acquired blocks of assigned risk business from other insurance
companies, offset in part by modest declines in policies in force in
other business lines. However, voluntary automobile policies in force
at June 30, 1995 were slightly greater than policies in force at
December 31, 1994, as new business generated in the 1995 periods
exceeded lapsed business.

Earned premium revenues and commissions of the property and
casualty insurance operations of the Empire Group were approximately
$157,342,000 and $139,485,000 for the six month periods ended June 30,
1995 and 1994, respectively, and $79,621,000 and $70,827,000 for the
three month periods ended June 30, 1995 and 1994, respectively. The
increase in premium revenue principally resulted from growth of
policies in force and rate increases.

The Company's loss ratios for its property and casualty
operations were as follows:

Three Months Six Months
Ended Ended
June 30, June 30,
------------- --------------

1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
Loss Ratio:
GAAP . . . . . . . . . . . 88.3% 78.9% 86.4% 83.8%
SAP . . . . . . . . . . . . 83.9% 77.5% 84.0% 83.0%
Expense Ratio:
GAAP . . . . . . . . . . . 14.7% 19.1% 15.8% 18.1%
SAP . . . . . . . . . . . . 14.8% 17.2% 15.4% 16.7%
Combined Ratio:
GAAP . . . . . . . . . . . 103.0% 98.0% 102.2% 101.9%
SAP . . . . . . . . . . . . 98.7% 94.7% 99.4% 99.7%

</TABLE>

The increase in the loss ratios reflects additional payments
related to prior years claims (principally no-fault claims) of the
Empire Group. In addition, during the second quarter of 1995, the
Empire Group strengthened reserves principally applicable to
automobile lines. The loss ratios for the Colonial Penn P&C Group
reflect higher losses related to acquired blocks of automobile
assigned risk business, which are partially offset by service fee
income reflected as a reduction of the expense ratios. The 1995
combined ratios reflect lower aggregate catastrophe losses and related
loss adjustment expenses estimated at approximately $1,900,000 for the
six month period ended June 30, 1995 compared with $16,510,000
(including approximately $11,000,000 related to the California
earthquake) for the six month period ended June 30, 1994 (primarily
all in the first quarter of 1994).

Earned premium revenues of the life and health insurance
operations were approximately $84,991,000 and $87,657,000 for the six
month periods ended June 30, 1995 and 1994, respectively, and
$42,919,000 and $44,456,000 for the three month periods ended June 30,
1995 and 1994, respectively. Premium revenues and provision for
insurance losses and policy benefits of the life and health operations
reflect the continued profitable growth of the "Graded Benefit Life"
product. Premium revenues also reflect the run-off of the agent sold
Medicare supplement business, which had less favorable loss experience
in 1995.<PAGE>

<PAGE>

Manufacturing revenues decreased in the 1995 periods as compared
to the 1994 periods principally due to reduced demand from customers
of the bathroom vanities division and a factory fire at the fibers
division. This decrease was partially offset by increased sales in
the 1995 periods at the wire and cable divisions, and increased sales
at the plastics division for the six month period ended June 30, 1995.
The decrease in manufacturing gross profit in the 1995 periods as
compared to the 1994 periods principally reflects the decrease in
manufacturing sales, increased raw material costs at most divisions
and the factory fire at the fibers division.

Trading stamp revenues decreased in the 1995 periods compared to
the 1994 periods principally due to reduced demand from existing
customers. Cost of goods sold applicable to the trading stamp
operations reflects amortization of the apparent excess in the
liability for unredeemed trading stamps of approximately $2,700,000
and $6,000,000 for the six month periods ended June 30, 1995 and 1994,
respectively, and $1,400,000 and $3,000,000 for the three month
periods ended June 30, 1995 and 1994, respectively.

Finance revenues reflect the level of consumer instalment loans.
As more fully described in the Annual Report, based on its experience
in providing collateralized automobile loans to individuals with poor
credit histories, the Company concluded that there were opportunities
for successful expansion of this business. Accordingly, on a
controlled basis the Company is increasing its investments in such
loans. The Company's actual loss experience has increased during this
expansion, which reflects the additional competition that has recently
entered this market. However, actual losses remain less than the 6%
reserve maintained on this portfolio. At June 30, 1995 and December
31, 1994, these loans aggregated $135,659,000 and $129,512,000,
respectively.

Investment and other income increased in the 1995 periods
compared to the 1994 periods as a result of higher available interest
rates and increased fee income related to acquired blocks of
automobile assigned risk business. Investment and other income in the
1995 periods includes a gain, net of expenses, of approximately
$3,800,000 related to the settlement of certain litigation.
Investment and other income for the six month period ended June 30,
1994 includes approximately $8,458,000 related to the disposition of
the El Salvador Government bonds.

Net securities losses were $228,000 and $11,123,000 for the six
month periods ended June 30, 1995 and 1994, respectively, and $640,000
and $9,656,000 for the three month periods ended June 30, 1995 and
1994, respectively. Included in the six month period ended June 30,
1994 are provisions for write-downs of investments of approximately
$3,568,000.

Higher interest expense in the 1995 periods as compared to the
1994 periods principally reflects the increased level of borrowings
outstanding. Interest expense also reflects the level of deposits at
the Company's banking and industrial loan subsidiaries and an increase
in interest rates related to those deposits.

The increase in selling, general and other expenses in the 1995
periods as compared to the 1994 periods principally reflects operating
expenses of real estate properties acquired during 1994, increased
provisions for loan losses and expenses relating to certain investing
activities. The real estate properties acquired in 1994 did not
generate significant revenues during the 1995 periods.

The decrease in the effective income tax rate in the 1995 periods
as compared to the 1994 periods reflects a reduction in the tax
provision for the resolution of certain federal tax contingencies and,
for the six month period ended June 30, 1995, a reduction in the tax
provision for the favorable resolution of a state tax matter.

The number of shares used to calculate primary earnings per share
amounts was 29,293,000 and 29,102,000 for the six month periods ended
June 30, 1995 and 1994, respectively, and 29,296,000 and 29,059,000
for the three month periods ended June 30, 1995 and 1994,
respectively. The number of shares used<PAGE>

<PAGE>

to calculate fully diluted earnings per share amounts was 31,070,000
and 29,102,000 for the six month periods ended June 30, 1995 and 1994,
respectively, and 31,109,000 and 29,059,000 for the three month
periods ended June 30, 1995, and 1994, respectively. The increase in
the number of shares utilized in calculating per share amounts was
principally caused by the increase in the market price of the
Company's Common Shares. In addition, for fully diluted per share
amounts, the Convertible Debentures were not assumed to have been
converted in 1994 since the effect of such assumed conversion would
have been to increase earnings per share.

BUSINESS

INSURANCE OPERATIONS
GENERAL

The Company engages in the personal property and casualty and
life and health insurance businesses on a nationwide basis and
specializes in commercial property and casualty insurance business in
the New York metropolitan area. The Company's principal property and
casualty insurance subsidiaries are the Colonial Penn P&C Group,
consisting of CPI, Madison, Franklin and Bay Colony, and the Empire
Group, consisting of Empire and Allcity Insurance Company ("Allcity").
The Company's principal life insurance subsidiaries are Charter, CPL
and Intramerica. In conducting its insurance operations, the Company
focuses primarily on profitability and persistency rather than volume.

PROPERTY AND CASUALTY INSURANCE

The Colonial Penn P&C Group, which maintains its headquarters in
Valley Forge, Pennsylvania, is licensed in all 50 states, the District
of Columbia, Puerto Rico and the U.S. Virgin Islands and writes
insurance throughout most of the United States. The Colonial Penn P&C
Group has regional offices in Wayne, Pennsylvania, Tampa, Florida and
Phoenix, Arizona. The Empire Group is licensed in five states and
operates primarily in the New York metropolitan area.

During the year ended December 31, 1994, 80%, 14% and 6% of net
earned premiums of the Company's property and casualty insurance
operations were derived from personal and commercial automobile lines,
other commercial lines and other personal lines, respectively. Total
property and casualty net earned premiums for the year ended December
31, 1994 were $746,400,000, of which $447,200,000 was attributable to
the Colonial Penn P&C Group.

Set forth below is certain statistical information for the
Company's property and casualty operations prepared in accordance with
GAAP and SAP. The Loss Ratio is the ratio of incurred losses and loss
adjustment expenses to net premiums earned. The Expense Ratio is the
ratio of underwriting expenses (policy acquisition costs, commissions,
and a portion of administrative, general and other expenses
attributable to underwriting operations) to net premiums written, if
determined in accordance with SAP, or to net premiums earned, if
determined in accordance with GAAP. A Combined Ratio below 100%
indicates an underwriting profit and a Combined Ratio above 100%
indicates an underwriting loss. The Combined Ratio does not include
the effect of investment income.

<PAGE>

YEAR ENDED DECEMBER 31,
-----------------------------
1994 1993 1992
---- ---- ----
<S> <C> <C> <C>
Loss Ratio:
GAAP 81.2% 76.9% 82.3%
SAP 81.6% 76.1% 85.3%
Industry (SAP) (a) 81.2% 79.5% 88.1%

Expense Ratio:
GAAP 17.9% 20.0% 19.4%
SAP 17.2% 17.6% 17.5%
Industry (SAP) (a) 27.2% 27.4% 27.6%

Combined Ratio (b):
GAAP 99.1% 96.9% 101.7%
SAP 98.8% 93.7% 102.8%
Industry (SAP) (a) 108.4% 106.9% 115.7%
<FN>
_______________

(a) Source: Best Week Property/Casualty Supplement, April 3, 1995 Release
2, with respect to 1994 and Best's Aggregates & Averages,
Property/Casualty, 1994 Edition with respect to 1993 and 1992. Industry
combined ratios may not be fully comparable as a result of, among other
things, differences in geographical concentration and in the mix of
property and casualty insurance products.

(b) For 1993, the difference in the treatment of certain costs for GAAP and
SAP purposes was a principal reason for the difference between the GAAP
Combined Ratio and the SAP Combined Ratio. For 1992, the results of
certain accident and health insurance business, which are reflected in
the SAP Combined Ratio but are not reflected in the GAAP Combined Ratio,
included a non-recurring income item which reduced the SAP Combined
Ratio. In addition, in 1992 certain income credits were recognized only
for GAAP purposes.
</TABLE>

Based on published reports, the Colonial Penn P&C Group's SAP
Expense Ratios for 1994 and 1993 are among the lowest in the industry.

The Colonial Penn P&C Group

The Colonial Penn P&C Group's primary business is providing
private passenger automobile and homeowners insurance coverage to the
mature adult population. As of December 31, 1994, the Group had
approximately 352,000 voluntary auto policies in force. Substantially
all of the Group's policies are written for a one-year period.
However, in many states CPI and Franklin offer a "guaranteed lifetime
protection" provision to certain qualifying policyholders that ensures
their policies will be renewed at rates then in effect for their
classification.

The Colonial Penn P&C Group primarily markets its insurance
products to the standard and preferred risk market segments through
direct response marketing methods. Direct response marketing includes
any form of marketing in which a company and a customer deal directly
with each other, rather than through an insurance agent. The Colonial
Penn P&C Group has become a low cost provider of its products to its
niche markets,

<PAGE>

enabling it to charge competitive rates. Since acquisition of the
Colonial Penn P&C Group in 1991, the Company has substantially reduced
the Group's marketing expenses, which the Company did not believe were
justified by prior operating results, and also refined its marketing
efforts. This strategy has resulted in a decrease in policies in
force; however, the rate of decline has slowed in each year since
acquisition. The Company believes that new business generated in 1995
will exceed lapsed premiums, although there can be no assurance that
this will be achieved.

In recent years, the Colonial Penn P&C Group has acquired blocks
of private passenger automobile assigned risk business from other
insurance companies. In addition to the premiums paid by
policyholders, the Group also receives fee income from the insurance
company from which the business was acquired. The Group's low expense
ratio enables it to offer competitive rates for this business. The
Colonial Penn P&C Group currently has contracts in force covering
approximately $100,000,000 of annualized written premiums.

Net earned premiums for the Colonial Penn P&C Group for the year
ended December 31, 1994 were concentrated in the states listed below:

Percentage of Net
Earned Premiums

State Automobile(1) Homeowners
----- ------------- ----------
<S> <C> <C>
California (2) 19% 15%
Florida 17 26
New York 13 11
Connecticut 7 4
Arizona 7 6
Pennsylvania 4 6
All others 33 32
--- ---
Total 100% 100%
=== ===
<FN>
______________

(1) Excludes net earned premiums related to acquired assigned risk business
described above and mandatory assumed risk business, which generally
relates to the amount of writings in the applicable state.

(2) For a discussion of the impact of legislation relating to California
property and casualty operations, see "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included in
the Annual Report.

</TABLE>

Prior to the Company's acquisition of Colonial Penn, CPI wrote as
primary insurer or as a reinsurer a variety of diverse commercial
property and casualty insurance business known as "Special Risks."
The nature of most of this insurance, which was not written after
1988, involves exposures which can be expected to develop over a
relatively long period of time before a definitive determination of
ultimate losses and loss adjustment expenses can be established and
the relevant reinsurance collected. Although losses with respect to
this block of business are particularly difficult to predict
accurately, the Company believes, based in part upon a recently
completed independent actuarial review, that it has recorded adequate
reserves as of December 31, 1994 ($63,700,000, before reinsurance).

<PAGE>

The Empire Group

The Empire Group provides personal insurance coverage to
automobile owners and homeowners and commercial insurance for
residential real estate, restaurants, retail establishments, taxicabs
(both medallion and radio-controlled) and several types of service
contractors.

For the years ended December 31, 1994, 1993 and 1992, net earned
premiums and commissions for the Empire Group were $299,200,000,
$259,400,000 and $243,100,000, respectively. Substantially all of the
Empire Group policies are written in New York for a one-year period.
The Empire Group is licensed in New York to write all lines of
insurance that may be written by a property and casualty insurer,
except residual value, credit, unemployment, animal and marine
protection and indemnity insurance and ocean marine insurance.

As is true with the Company's other insurance subsidiaries, the
Empire Group's marketing strategy emphasizes profitability rather than
volume. The voluntary business of the Empire Group is produced
through general agents, local agents and insurance brokers, who are
compensated for their services by payment of commissions on the
premiums they generate. There are five general agents, one of which
is owned by Empire, and approximately 400 local agents and insurance
brokers presently acting under agreements with the Empire Group.
These agents and brokers also represent other competing insurance
companies.

Like the Colonial Penn P&C Group, the Empire Group also has
acquired blocks of private passenger automobile and commercial
automobile assigned risk business from other insurance companies. The
Empire Group currently has contracts in force covering approximately
$100,000,000 of annualized written premiums. In addition, the Empire
Group receives a fee as a "servicing carrier," providing
administrative services, including claims processing, underwriting and
collection activities, for the New York Public Automobile Pool. This
latter arrangement does not involve the assumption of any material
underwriting risk by the Empire Group.

Losses and Loss Adjustment Expenses

Liabilities for unpaid losses, which are not discounted (except
for certain workers' compensation liabilities), and loss adjustment
expenses ("LAE") are determined using case-basis evaluations,
statistical analyses and estimates for salvage and subrogation
recoverable and represent estimates of the ultimate claim costs of all
unpaid losses and LAE. Liabilities include a provision for losses
which have occurred but have not yet been reported. These estimates
are subject to the effect of trends in future claim severity and
frequency experience. Adjustments to such estimates are made from
time to time due to changes in loss experience and are reflected in
current earnings.

The Company's property and casualty insurance subsidiaries rely
upon standard actuarial ultimate loss projection techniques to obtain
estimates of liabilities for losses and LAE. These projections
include the extrapolation of both losses paid and incurred by business
line and accident year and implicitly consider the impact of inflation
and claims settlement patterns upon ultimate claim costs based upon
historical patterns. In addition, methods based upon average loss
costs, reported claim counts and pure premiums are reviewed in order
to obtain a consistent range of estimates for setting the reserve
levels. For further input, loss reserve committees periodically
review changes in operations in pertinent areas including underwriting
standards, product mix, claims management and legal climate.

<PAGE>

In the following table, the liability for losses and LAE of the
Company's property and casualty insurance subsidiaries are reconciled
for each of the three years ended December 31, 1994. Included therein
are current year data and prior year development.

RECONCILIATION OF LIABILITY FOR LOSSES AND
LOSS ADJUSTMENT EXPENSES

1994 1993 1992
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Net liability for losses
and LAE at
beginning of year (a) $ 889,082 $ 904,326 $938,384
---------- ---------- --------
Provision for losses and
LAE for claims occurring
in the current year 679,377 624,048 619,691
Decrease in estimated
losses and LAE for
claims occurring in
prior years (71,484) (84,382) (41,912)
---------- ---------- --------
Total incurred losses
and LAE 607,893 539,666 577,779
---------- ---------- --------
Reclassification of
uncollectible
reinsurance reserves
due to commutations-
prior years 15,528 - -
---------- ---------- --------
Losses and LAE payments for
claims occurring during:
Current year 259,295 236,369 239,055
Prior years 329,303 318,541 372,782
---------- ---------- --------
588,598 554,910 611,837
---------- ---------- --------
923,905 889,082 904,326

Reserve deducted above for
reinsurance not considered
collectible 26,547 41,065 34,273
---------- ---------- --------
950,452 930,147 938,599
Reinsurance
recoverable (b) 117,566 121,721 -
---------- ---------- --------
Liability for losses and
LAE at end of year as
reported in financial
statements $1,068,018 $1,051,868 $938,599
========== ========== ========
<FN>
_____________

(a) The liability for losses and LAE at January 1, 1992 excludes approximately
$41,998,000 of reinsurance not considered collectible.

(b) For 1992, liability for losses and LAE is shown net of reinsurance
recoverable.

</TABLE>

<PAGE>

The Company's property and casualty insurance subsidiaries'
liability for losses and LAE as of December 31, 1994 was $933,033,000
determined in accordance with SAP and $1,068,018,000 determined in
accordance with GAAP. The difference principally relates to
liabilities assumed by reinsurers, which are not deducted from GAAP
liabilities ($144,113,000), reduced by $4,035,000, net, included in
accounts other than property and casualty loss reserves for GAAP and
$5,093,000 for salvage and subrogation.

The tables below present the development of balance sheet
liabilities from 1984 through 1994 and include periods prior to
acquisition for the Empire Group and the Colonial Penn P&C Group.
Because of substantial differences in the development of reserves of
the Empire Group and the Colonial Penn P&C Group, loss and LAE
development data is presented separately for each group. The
liability line at the top of each table indicates the estimated
liability for unpaid losses and LAE recorded as of the dates
indicated. The middle section of the table shows the re-estimated
amount of the previously recorded liability based on experience as of
the end of each succeeding year. As more information becomes
available and claims are settled, the estimated liabilities are
adjusted upward or downward with the effect of decreasing or
increasing net income at the time of adjustment. The lower section of
the table shows the cumulative amount paid with respect to the
previously recorded liability as of the end of each succeeding year.

The "cumulative redundancy (deficiency)" represents the aggregate
change in the estimates over all prior years. For example, the
initial 1984 liability estimate indicated on the Empire Group table
($156,434,000) has been re-estimated during the course of the
succeeding ten years, resulting in a re-estimated liability at
December 31, 1994 of $140,989,000, or a redundancy of $15,445,000. If
the re-estimated liability exceeded the liability initially
established, a cumulative deficiency would be indicated. The
cumulative deficiencies reflected in the Colonial Penn P&C Group table
are for periods prior to the Company's acquisition of that Group. The
Company believes that the Colonial Penn P&C Group's conservatism and
improved claims management procedures since acquisition in 1991 have
contributed significantly to the creation of the redundancies included
in its table below.

In evaluating this information, it should be noted that each
amount shown for "cumulative redundancy (deficiency)" includes the
effects of all changes in amounts for prior periods. For example, the
amount of the redundancy (deficiency) related to losses settled in
1988, but incurred in 1984, will be included in the cumulative
redundancy (deficiency) amount for 1984, 1985, 1986 and 1987. This
table is not intended to and does not present accident or policy year
loss and LAE development data. Conditions and trends that have
affected development of the liability in the past may not necessarily
occur in the future. Accordingly, it may not be appropriate to
extrapolate future redundancies or deficiencies based on these tables.

<PAGE>

ANALYSIS OF LOSS AND LOSS ADJUSTMENT EXPENSE DEVELOPMENT (THE EMPIRE GROUP)

Year Ended December 31,
-------------------------------------------------------------------------------------------------------------
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Liability for
Unpaid Losses and
Loss Adjustment
Expenses $156,434 $165,713 $182,133 $206,709 $222,814 $235,223 $251,401 $280,679 $322,516 $353,917 $406,695

Liability
Re-estimated
as of:
One Year Later $142,474 $160,728 $180,975 $198,384 $213,671 $227,832 $249,492 $280,020 $321,954 $344,156 $ -
Two Years Later 144,504 162,962 175,305 194,530 206,088 217,432 245,141 277,866 324,262
Three Years Later 143,635 156,870 170,152 188,843 198,500 212,649 243,849 284,052
Four Years Later 139,113 157,001 168,574 184,564 194,324 211,859 247,314
Five Years Later 139,441 155,413 165,717 181,990 196,070 211,952
Six Years Later 139,584 154,045 164,487 183,015 196,646
Seven Years Later 139,435 154,151 166,266 183,082
Eight Years Later 139,741 155,727 165,953
Nine Years Later 141,054 155,411
Ten Years Later 140,989

Cumulative
Redundancy $ 15,445 $ 10,302 $ 16,180 $ 23,627 $ 26,168 $ 23,271 $ 4,087 $ (3,373) $ (1,746) $ 9,761 $ -
(Deficiency) ======== ======== ======== ======== ======== ======== ======= ======== ======== ======== =========

Cumulative Amount
of Liability
Paid Through:
One Year Later $ 44,056 $ 51,795 $ 54,359 $ 60,446 $ 64,140 $ 65,822 $ 78,954 $ 89,559 $113,226 $116,986 $ -
Two Years Later 74,265 83,249 88,770 97,627 101,206 109,479 126,908 150,043 182,250
Three Years Later 95,527 106,348 114,322 123,092 131,705 140,916 167,330 197,848
Four Years Later 110,368 123,275 130,433 142,910 152,330 166,023 196,099
Five Years Later 120,479 132,618 141,346 155,786 168,117 182,001
Six Years Later 126,094 139,276 149,079 164,213 178,095
Seven Years Later 130,015 143,926 153,681 170,215
Eight Years Later 132,600 146,840 157,332
Nine Years Later 134,881 149,645
Ten Years Later 137,100

Gross Liability -
End of Year $391,829 $451,442
Reinsurance 37,912 44,747
-------- --------
Net Liability -
End of Year as
Shown Above $353,917 $406,695
======== ========
Gross Re-estimated
Liability - Latest $393,045

Re-estimated
Reinsurance - Latest 48,889
--------
Net Re-estimated
Liability - Latest $344,156
========
Gross Cumulative
Deficiency $ (1,216)
========

/TABLE
<PAGE>

<PAGE>

ANALYSIS OF LOSS AND LOSS ADJUSTMENT EXPENSE DEVELOPMENT (THE COLONIAL PENN P&C GROUP)

Year Ended December 31,
-----------------------------------------------------------------------------------------------------------
1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994
---- ---- ---- ---- ---- ---- ---- ---- ---- ---- ----
(In thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Liability for
Unpaid Losses and
Loss Adjustment
Expenses $215,200 $217,000 $324,700 $386,200 $ 410,500 $ 448,800 $626,300 $657,700 $581,810 $535,165 $517,210

Liability
Re-estimated
as of:
One Year Later $193,200 $236,500 $352,600 $389,900 $ 445,600 $ 555,900 $659,800 $616,400 $497,994 $473,442 $ -
Two Years Later 198,800 245,900 340,600 409,000 506,800 588,600 619,600 574,000 463,885
Three Years Later 203,500 241,600 338,700 443,700 535,600 563,800 614,000 555,800
Four Years Later 200,000 248,100 359,400 467,300 522,800 565,800 605,900
Five Years Later 197,100 231,200 384,000 459,400 526,700 562,900
Six Years Later 193,500 257,600 375,700 464,700 526,200
Seven Years Later 199,200 250,800 381,300 465,300
Eight Years Later 201,100 255,900 384,900
Nine Years Later 202,900 261,700
Ten Years Later 206,900

Cumulative
Redundancy
(Deficiency) $ 8,300 $(44,700) $(60,200) $(79,100) $(115,700) $(114,100) $ 20,400 $101,900 $117,925 $ 61,723 $ -
======== ======== ======== ======== ========= ========= ======== ======== ======== ======== ========

Cumulative Amount
of Liability
Paid Through:
One Year Later $105,500 $126,200 $177,100 $207,700 $ 243,300 $ 258,500 $279,300 $283,200 $205,200 $212,317 $ -
Two Years Later 156,600 178,500 249,800 304,000 353,300 387,500 432,500 390,100 317,492
Three Years Later 177,500 208,600 288,700 356,800 419,900 467,500 492,900 461,000
Four Years Later 187,600 227,600 313,700 393,100 462,200 496,400 536,500
Five Years Later 195,600 213,100 332,700 416,800 476,400 523,400
Six Years Later 187,000 223,000 343,600 425,500 496,900
Seven Years Later 190,800 227,800 349,200 441,800
Eight Years Later 192,700 231,100 366,000
Nine Years Later 194,400 245,800
Ten Years Later 203,200

Gross Liability -
End of Year $660,039 $616,576
Reinsurance 124,874 99,366
-------- --------
Net Liability -
End of Year as
Shown Above $535,165 $517,210
======== ========
Gross Re-estimated
Liability - Latest $592,052

Re-estimated
Reinsurance - Latest 118,610
--------
Net Re-estimated
Liability - Latest $473,442
========
Gross Cumulative
Redundancy $ 67,987
========
</TABLE>
<PAGE>

<PAGE>

LIFE INSURANCE

The principal life insurance products offered during the three
year period ended December 31, 1994 were "Graded Benefit Life" and
variable annuity products. The Company profitably increased sales of
these products in 1994 and continues to explore the development of
other new products for its niche markets. Through its various
subsidiaries, the Company is licensed in all 50 states, the District
of Columbia, Puerto Rico, Guam and the U.S. Virgin Islands and
generally sells its products throughout most of the United States.
Total direct life insurance in force as of December 31, 1994 was $2.3
billion.

The following table reflects premium receipts on variable annuity
and other investment oriented products and premiums earned on other
life and health insurance products. Variable annuity and other
investment oriented product premium receipts are not recorded as
revenue under GAAP but are recorded in a manner similar to a deposit,
and are included below.

<TABLE>
<CAPTION>
Year Ended December 31,
----------------------------------------
1994 1993 1992
---- ---- ----
(In thousands)
<S> <C> <C> <C>
Graded Benefit Life $113,678 $109,838 $109,552
Variable Annuity 98,557 81,484 58,207
Other Investment
Oriented Products 9,523 6,828 9,828
Agent-sold Medicare
Supplement Products (1) 35,967 47,364 62,724
Other Health Products 16,225 18,992 22,367
Other 2,629 495 1,847
-------- -------- --------
Total (2) $276,579 $265,001 $264,525
======== ======== ========
<FN>
__________________

(1) Effective December 31, 1992, the Company ceased marketing Medicare
Supplement products through agents.

(2) Excludes premium receipts (refunds) in 1993 and 1992 of ($1,655,000) and
$28,745,000, respectively, on reinsurance of certain ordinary life
policies and group life and health insurance contracts underwritten by
other insurance companies and assumed by the life insurance
subsidiaries.
</TABLE>

Life and Health Insurance Products

Graded Benefit Life. "Graded Benefit Life" is a guaranteed-issue
product. These modified-benefit, whole life policies are offered on
an individual basis primarily to persons age 50 to 80, principally in
face amounts of $350 to $10,000, without medical examination or
evidence of insurability. Premiums are paid as frequently as monthly.
Benefits paid are less than the face amount of the policy during the
first two years, except in cases of accidental death. Graded Benefit
Life is marketed using direct response marketing techniques. New
policyholder leads are generated primarily from television
advertisements. The Company intends to continue to concentrate its
marketing efforts towards soliciting new policyholders where the cost
is justified, upgrading existing policyholders' policy packages and
obtaining referrals from existing policyholders.

Investment Oriented Products. The principal investment oriented
product offered is a no-load variable annuity ("VA") product. The VA
product is marketed as an investment vehicle to individuals seeking to
defer, for federal income tax purposes, the annual increase in their
account balance. Premiums from this VA product either<PAGE>

<PAGE>

are invested at the policyholders' election in unaffiliated mutual
funds where the policyholder bears the entire investment risk or in a
fixed account where the funds earn interest at rates determined by the
Company. The Company's VA product is currently marketed in
conjunction with Scudder, Stevens and Clark, a mutual fund manager.

Medicare Supplement Products. In 1992, the Company decided to
discontinue actively marketing Medicare supplement products due to
increased competition in this market. The increased competition
resulted from federal and state regulation that mandated
standardization of such products. The Company does continue to offer,
on a profitable basis, renewals of its non-standardized products to
existing policyholders. The Company expects its renewals of these
products will continue to decline in the future.

INSURANCE OPERATIONS - GENERAL

Investments

Investment activities represent a significant part of the
Company's insurance related revenues and profitability. Investments
are managed by the Company's investment advisors under the direction
of, and upon consultation with, the Company's several investment
committees.

The Company's insurance subsidiaries have a diversified
investment portfolio of securities, substantially all of which are
rated "investment grade" by Moody's and/or S&P or issued or guaranteed
by the U.S. Treasury or by governmental agencies. The Company's
insurance subsidiaries do not generally invest in less than
"investment grade" or "non-rated" securities, real estate or
mortgages, although from time to time they may make such investments
in amounts not expected to be material. In 1994's rising interest
rate environment, the Company's primary goal was to preserve
investment capital.

The composition of the Company's insurance subsidiaries'
investment portfolio as of December 31, 1994 and 1993 was as follows:

PROPERTY AND CASUALTY LIFE AND HEALTH
--------------------- ---------------------
1994 1993 1994 1993
---- ---- ---- ----
(Dollars in thousands)
<S> <C> <C> <C> <C>
Bonds and notes:
U.S. Government and agencies 73% 75% 77% 75%
Rated investment grade 23 22 16 19
Non rated - other - - 1 1
Rated less than investment grade 1 - 1 -
Policyholder loans - - 2 2
Equity securities 1 1 1 1
Other, principally accrued interest 2 2 2 2
--- --- --- ---
Total 100 % 100 % 100% 100%
=== === === ===
Estimated average yield to maturity
of bonds and notes (a) 6.5 % 6.2 % 6.2% 6.2%
Estimated average remaining life of bonds
and notes (a) 3.5 yrs. 4.5 yrs. 3.9 yrs. 5.1 yrs.
Carrying value of investment portfolio $1,603,083 $1,650,085 $772,137 $779,739
Market value of investment portfolio $1,602,242 $1,651,411 $771,553 $780,867
<FN>
_________________

(a) Excludes trading securities, which are not significant.
</TABLE>
<PAGE>

<PAGE>

Reinsurance

Reinsurance is obtained for investment oriented products for face
amounts in excess of $500,000 per life. The life insurance
subsidiaries generally do not obtain reinsurance for the Graded
Benefit Life products because these policies generally have a low face
amount. The Colonial Penn P&C Group obtained reinsurance for casualty
risks in excess of $2,000,000 in 1995, 1994 and 1993, although most
Colonial Penn P&C Group automobile policies do not have policy limits
in excess of $100,000 per risk and $300,000 per accident. The Empire
Group's maximum retained limit for workers' compensation was $500,000
since July 1, 1992 and $200,000 from January 1, 1992 through June 30,
1992; for other property and casualty lines, the Empire Group's
maximum retained limit was $225,000 for 1995, 1994 and 1993 and
$175,000 for 1992.

Additionally, the Company's property and casualty insurance
subsidiaries have entered into certain excess of loss and catastrophe
treaties to protect against certain losses. The Colonial Penn P&C
Group's retention of lower level losses in such treaties was
$11,000,000 in 1994 and 1993, and $4,000,000 in 1992. Although the
Group has completed its 1995 reinsurance program at acceptable upper
loss limits, it was unable to obtain 1994 levels of deductibility at
reasonable cost. Accordingly, the Group's retention of lower level
losses was increased to $15,000,000. The Empire Group's retention of
lower level losses in such treaties was $3,000,000 for 1995, 1994 and
1993, and $1,750,000 for 1992.

Although reinsurance does not legally discharge an insurer from
its primary liability for the full amount of the policy liability, it
does make the assuming reinsurer liable to the insurer to the extent
of the reinsurance ceded. The Company's reinsurance generally has
been placed with certain of the largest reinsurance companies,
including (with their respective Best ratings) General Reinsurance
Corporation (A++), Lincoln National Life Insurance Co. (A+) and Munich
American Reinsurance Company (A++), each of which the Company believes
to be financially capable of meeting its respective obligations.
However, to the extent that any reinsuring company is unable to meet
its obligations, the Company's insurance subsidiaries would be liable
for the reinsured risks. The Company has established reserves, which
the Company believes are adequate, for any nonrecoverable reinsurance.

Government Regulation

Insurance companies are subject to detailed regulation and
supervision in the states in which they transact business. Such
regulation pertains to matters such as approving policy forms and
various premium rates, minimum reserves and loss ratio requirements,
the type and amount of investments, minimum capital and surplus
requirements, granting and revoking licenses to transact business,
levels of operations and regulating trade practices. The majority of
the Company's property and casualty insurance operations are in states
requiring prior approval by regulators before proposed rates may be
implemented. Certain states have indicated that they may change the
bases (e.g., age, sex and geographic location) on which rates
traditionally have been established. Rates proposed for life
insurance generally become effective immediately upon filing.
Insurance companies are required to file detailed annual reports with
the supervisory agencies in each of the states in which they do
business, and are subject to examination by such agencies at any time.
Increased regulation of insurance companies at the state level and new
regulation at the federal level is possible, although the Company
cannot predict the nature or extent of any such regulation or what
impact it would have on the Company's operations.

The National Association of Insurance Commissioners ("NAIC") has
adopted model laws incorporating the concept of a "risk based capital"
("RBC") requirement for insurance companies. Generally, the RBC
formula is designed to measure the adequacy of an insurer's statutory
capital in relation to the risks inherent in its business. The RBC
formula is used by the states as an early warning tool to identify
weakly capitalized companies for the<PAGE>

<PAGE>

purpose of initiating regulatory action. Each of the Company's
insurance subsidiaries' RBC ratio as of December 31, 1994
substantially exceeded minimum requirements.

The NAIC also has adopted various ratios for insurance companies
which, in addition to the RBC ratio, are designed to serve as a tool
to assist state regulators in discovering potential weakly capitalized
companies or companies with unusual trends. Generally, insurance
companies having three or more of such ratios outside their "normal"
range may be designated as requiring regulatory attention. Charter
had four "other than normal" NAIC ratios for the year ended December
31, 1994, three of which related to either the 1993 reinsurance of a
block of life insurance business described under "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" included in the Annual Report or Charter's investment in
its insurance subsidiaries. The Company believes that there are no
underlying problems or weaknesses at Charter and that it is unlikely
that material adverse regulatory action will be taken.

On November 8, 1988, California voters passed Proposition 103, an
insurance initiative that requires, among other things, a 20% rollback
in insurance rates for policies written or renewed during the twelve
month period beginning November 8, 1988. In November 1994, the
Colonial Penn P&C Group received an order requiring it to refund
$35,300,000, plus $21,700,000 of interest as its rollback obligation.
The Colonial Penn P&C Group disagrees with the calculation of the
assessment. The Company believes that the ultimate resolution of this
matter will not have a material adverse effect on the Company's
financial condition or results of operations and will not exceed
reserves established in prior years. For a discussion of recent
developments with respect to Proposition 103, see "The Company-Recent
Developments."

The Company's insurance subsidiaries are members of state
insurance funds which provide certain protection to policyholders of
insolvent insurers doing business in those states. Due to
insolvencies of certain insurers in recent years, the Company's
insurance subsidiaries have been assessed certain amounts which have
not been material and are likely to be assessed additional amounts by
state insurance funds. The Company believes that it has provided for
all anticipated assessments and that any additional assessments will
not have a material adverse effect on the Company's financial
condition or results of operations.

BANKING AND LENDING

The Company's banking and lending operations primarily are
conducted through American Investment Bank, N.A. ("AIB"), its national
bank subsidiary, American Investment Financial ("AIF"), an industrial
loan corporation, and Transportation Capital Corp. ("TCC"), a small
business investment company. AIB and AIF take money market and other
non-demand deposits that are eligible for insurance provided by the
FDIC. At December 31, 1994, AIB and AIF had deposits of $179,888,000
compared to $173,365,000 at December 31, 1993. AIB and AIF currently
have several deposit-taking and lending facilities in the Salt Lake
City area. TCC makes collateralized loans to operators of medallion
taxicabs and limousines.

At December 31, 1994, the Company's consolidated banking and
lending operations had outstanding loans (net of unearned finance
charges) of $264,196,000 compared to $205,744,000 at December 31,
1993. At December 31, 1994, 49% were loans to individuals generally
collateralized by automobiles; 22% were unsecured loans to individuals
acquired from others in connection with investments in limited
partnerships; 23% were unsecured loans to executives and
professionals; 4% were loans to small business concerns collateralized
principally by taxicab medallions and other personal property; and 2%
were instalment loans to consumers, substantially all of which were
collateralized by real or personal property.

It is the Company's policy to charge to income an allowance for
losses which, based upon management's analysis of numerous factors,
including current economic trends, aging of the loan portfolio and
historical loss<PAGE>

<PAGE>

experience, is deemed adequate to cover reasonably expected losses on
outstanding loans. At December 31, 1994, the allowance for loan
losses for the Company's entire loan portfolio was $12,308,000 or 4.7%
of the net outstanding loans, compared to $8,341,000 or 4.1% of net
outstanding loans at December 31, 1993.

The funds generated by the deposits are primarily used to make
instalment loans, including collateralized personal automobile loans
to individuals who have difficulty in obtaining credit. These
automobile loans are made at interest rates above those charged to
individuals with good credit histories. In determining which
individuals qualify for these loans, the Company takes into account a
number of highly selective criteria with respect to the individual as
well as the collateral to attempt to minimize the number of defaults.
Additionally, the Company closely monitors these loans and takes
prompt possession of the collateral in the event of a default. For
the three year period ended December 31, 1994, the Company generated
$182,448,000 of these loans ($101,000,000 during 1994). At December
31, 1994, the allowance for loan losses for this portfolio was
$7,771,000 or 6% of net outstanding loans; actual loss experience has
been 1.7% per year of average outstanding loans. The Company is
satisfied with the results of this loan portfolio and believes that
there is an opportunity for continued growth in this niche market.
See "Management's Discussion and Analysis of Financial Condition and
Results of Interim Operations."

The Company's lending operations compete with banks, savings and
loan associations, credit unions, credit card issuers and consumer
finance companies, many of which are able to offer financial services
on very competitive terms. Additionally, substantial national
financial services networks have been formed by major brokerage firms,
insurance companies, retailers and bank holding companies. Some
competitors have substantial local market positions; others are part
of large, diversified organizations.

The Company's principal lending operations are subject to
detailed supervision by state authorities, as well as federal
regulation pursuant to the Federal Consumer Credit Protection Act and
regulations promulgated by the Federal Trade Commission. The
Company's banking operations are subject to federal and state
regulation and supervision by, among others, the Office of the
Comptroller of the Currency (the "OCC"), the FDIC and the State of
Utah. AIB's primary federal regulator is the OCC, while the primary
federal regulator for AIF is the FDIC.

The Competitive Equality Banking Act of 1987 ("CEBA") places
certain restrictions on the operations and growth of AIB and restricts
further acquisitions of banks and savings institutions by the Company.
CEBA does not restrict the growth of AIF as currently operated.

TRADING STAMPS

The Company's trading stamp business is conducted by The Sperry
and Hutchinson Company, Inc. ("S&H"). S&H distributes Green Stamps to
retailers under license agreements that give the retailer an exclusive
franchise for a particular category of retail establishment in a
particular geographic area. Customers of participating retailers
receive Green Stamps when they purchase goods and services.

Since 1969, when annual sales for the trading stamp industry as a
whole peaked, sales for both the industry and S&H have been declining.
The Company expects that this declining trend in trading stamp sales
will continue. The Company has attempted, but has not succeeded in,
developing new uses for its trading stamp business.

<PAGE>

When trading stamps are sold, S&H receives cash and accrues as a
liability the estimated obligation to deliver merchandise and/or cash
associated with those stamps. Demands for redemption generally occur
over a considerable period of time. The loss of customers usually
results in an acceleration of redemptions and requires the expenditure
of available funds to provide the merchandise and/or cash required for
such redemptions.

The Company's trading stamp business competes with other
incentive companies and other forms of promotional and merchandising
techniques. Retail establishments, for example, frequently utilize
store coupons, special advertising programs, games, extra services and
related programs.

MANUFACTURING

The Company's manufacturing operations consist primarily of the
manufacture of bathroom vanities and related products for the "do-it-
yourself" market, and padding, absorbent, erosion control and
proprietary plastic netting products for various industrial and
agricultural markets.

Bathroom vanities and related products are sold through
manufacturers' representatives, primarily to home improvement centers.
Principally due to operating inefficiencies and pricing pressures,
this division has not operated profitably in recent years. In
1994, the Company commenced a restructuring program to reevaluate and
reduce its existing product lines, to review the manufacturing process
and to reduce overhead. The Company is unable to predict if this
division's restructuring efforts will result in a return to
profitability.

The fibers and plastics divisions manufacture and market padding,
absorbent and erosion control products, which may be reinforced with
plastic netting, for the furniture, automotive, erosion control and
maintenance industries and thermoplastic netting used for a variety of
purposes including, among other things, construction, packaging,
agriculture, carpet backing and filtration.

The manufacturing operations are subject to a high degree of
competition, generally on the basis of price, service and quality.
Additionally, these manufacturing operations are dependent on cyclical
industries, including the construction and automobile industries.
Through its various manufacturing divisions, the Company holds patents
on certain improvements to the basic manufacturing processes and on
applications thereof. The Company believes that the expiration of
these patents, individually or in the aggregate, is unlikely to have a
material effect on manufacturing operations.

OTHER OPERATIONS AND INVESTMENTS

In April 1994, the Company acquired a 30% interest in Caja de
Ahorro y Seguro S.A. ("Caja") from the government of Argentina for a
preliminary purchase price of approximately $46,000,000, including
costs. Caja is a holding company whose subsidiaries are engaged in
property and casualty insurance, life insurance and banking in
Argentina. The preliminary purchase price is subject to adjustment
based upon the reduction in Caja's net assets from December 31, 1993
to the acquisition date. Amounts included in the Company's results of
operations for Caja since acquisition have not been material.

A subsidiary of the Company is a partner in The Jordan Company
and Jordan/Zalaznick Capital Company. These partnerships each
specialize in structuring leveraged buyouts in which the partners are
given the opportunity to become equity participants. John W. Jordan
II, a former director of the Company, is the managing partner of the
two partnerships. Since 1982, the Company has invested an aggregate
of $29,147,000 in these partnerships and related companies and,
through December 31, 1994, has received approximately $69,728,000
(consisting of cash, interest bearing notes and other receivables)
relating to the disposition of investments and management and other
fees. At December 31, 1994, through these partnerships, the Company
had interests in an aggregate of 16<PAGE>

<PAGE>

companies (the "Jordan Associated Companies"), which are carried in
the Company's consolidated financial statements at $12,270,000. The
Jordan Associated Companies include JII, Carmike and Jones.

Certain subsidiaries of the Company remain under the control of
the Wisconsin Insurance Commissioner as a result of rehabilitation or
liquidation proceedings initiated prior to their acquisition by the
Company. The Company believes only two of these subsidiaries have any
residual value to the Company. The Company estimates that the fair
value of the net tangible assets of these subsidiaries is
approximately $34,000,000 in excess of their recorded carrying value
at December 31, 1994. Although the Company expects to receive these
assets, the Company is unable to predict when these subsidiaries will
be returned to its control.

In 1994, the Company expanded its real estate investments by
acquiring a 615,000 square foot office building located near Grand
Central Terminal in New York City, and two luxury residential
condominium towers in downtown San Diego, California. The New York
City office building, which was purchased for $50,800,000, has 355,000
square feet of contiguous space available for occupancy. After
certain improvements to the building are completed, the Company
intends to lease the available space. The San Diego towers were
acquired for $42,000,000 through the Company's acquisition of HSD
Venture. HSD Venture, a California general partnership that had been
in reorganization proceedings under chapter 11 of the Bankruptcy Code,
is the developer and owner of the towers, which include 202
residential units, 180 of which are for sale, and 42,000 square feet
of retail space.

<PAGE>

MANAGEMENT

DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY

The directors and executive officers of the Company are as
follows:

NAME AGE POSITION WITH LEUCADIA OFFICE HELD SINCE
---- --- ---------------------- -----------------
<S> <C> <S> <C>
Ian M. Cumming 55 Director and Chairman June 1978
of the Board
Joseph S. Steinberg 51 Director and President December 1978;
January 1979
Paul M. Dougan 57 Director May 1985
Lawrence D. Glaubinger 69 Director May 1979
James E. Jordan 51 Director February 1981
Jesse Clyde Nichols, III 56 Director June 1978
Thomas E. Mara 49 Executive Vice President May 1980;
and Treasurer January 1993
Lawrence S. Hershfield 38 Executive Vice President July 1993
Joseph A. Orlando 39 Vice President and January 1994;
Comptroller March 1994
Paul J. Borden 46 Vice President August 1988
Mark Hornstein 47 Vice President July 1983
Ruth Klindtworth 60 Secretary and Vice President- February 1976;
Corporate Administrator January 1990
David K. Sherman 30 Vice President August 1992
</TABLE>

Mr. Cumming has served as a director and Chairman of the Board of
the Company since June 1978. In addition, he has served as a director
of Allcity, since February 1988 and as a director of MK Gold since
June 1995. Mr. Cumming has also been a director of Skywest, Inc., a
Utah-based regional air carrier, since June 1986.

Mr. Steinberg has served as a director of the Company since
December 1978 and as President of the Company since January 1979. In
addition, he has served as a director of Allcity since February 1988,
as a director of JII, which owns and manages manufacturing companies,
since June 1988, and as a director of MK Gold since June 1995.

Mr. Dougan has served as a director of the Company since May
1985. He has been a director and President and Chief Executive
Officer of Equity Oil Company ("Equity Oil"), a company engaged in oil
and gas exploration and production, since January 1994. Prior
thereto, he served as corporate secretary and manager of corporate
development of Equity Oil since May 1968.

Mr. Glaubinger has served as a director of the Company since May
1979. He has been Chairman of the Board of Stern & Stern, Inc., a
company primarily engaged in the manufacture and sale of textiles,
since November 1977. He has also been President of Lawrence Economic
Consulting Inc., a management consulting firm, since January 1977.
Mr. Glaubinger is a director of Marisa Christina Inc., an importer of
women's clothing.

Mr. Jordan has served as a director of the Company since February
1981. Since October 1986, he has been President of The William Penn
Corporation ("William Penn"). William Penn, approximately 19.7% of
the

<PAGE>

common stock of which is beneficially owned by the Company, is a
holding company for an investment advisor to The William Penn family
of mutual funds. Mr. Jordan is a director of three mutual funds in
The William Penn family, Penn Square Mutual Fund, William Penn
Interest Income Fund and Scottish Widows International Fund, and a
director of MCIT PLC, a British investment trust company.

Mr. Nichols has served as a director of the Company since June
1978. He has been President, since May 1974, of Nichols Industries,
Inc., a holding company engaged, through subsidiaries, in
manufacturing.

Mr. Mara joined the Company in April 1977 and was elected Vice
President of the Company in May 1977. He has served as Executive Vice
President of the Company since May 1980 and as Treasurer of the
Company since January 1993. Mr. Mara also served as Treasurer of the
Company from April 1981 to April 1985. In addition, he has served as
a director of Allcity since October 1994.

Mr. Hershfield has served as Executive Vice President of the
Company since July 1993 and prior thereto served as Vice President of
the Company since April 1990. From 1981 to April 1990, he served in a
variety of executive positions, including President, with a former
public subsidiary of the Company.

Mr. Orlando, a certified public accountant, has served as
Comptroller of the Company since March 1994 and as Vice President of
the Company since January 1994. Mr. Orlando previously served in a
variety of capacities with the Company and its subsidiaries since
1987.

Mr. Borden joined the Company as Vice President in August 1988
and has served in a variety of other capacities with the Company and
its subsidiaries.

Mr. Hornstein joined the Company as Vice President in July 1983
and has served in a variety of other capacities with the Company and
its subsidiaries.

Ms. Klindtworth has been employed by the Company since July 1960
and was appointed Assistant Secretary in May 1973. She has served as
Secretary of the Company since February 1976, as Vice President-
Corporate Administrator of the Company since January 1990 and prior
thereto had served as Assistant Vice President-Corporate Administrator
of the Company since February 1979.

Mr. Sherman has served as Vice President of the Company since
August 1992. For the five years prior, he served in a variety of
capacities with the Company and its subsidiaries.

<PAGE>

SELLING SHAREHOLDERS

The following table lists each of the Selling Shareholders,
together with (i) the number of Common Shares, including the number of
Common Shares issuable upon exercise of the Warrants, beneficially
owned by each person, (ii) the number of Common Shares offered hereby
which are issuable upon exercise of the Warrants held by each person,
(iii) the number of Common Shares to be beneficially owned by each
such person after the conclusion of this offering, and (iv) the
percentage of such class to be beneficially owned by such person after
conclusion of this offering.

After Offering
Number of Shares -------------------------
Name and Position Offered Hereby Number of Percent of
with the Company Number of Shares Issuable Upon Shares Class
in the Past Beneficially Owned Exercise of Beneficially Beneficially
Three Years, if any Before Offering Warrants (a) Owned Owned (b)
------------------- ------------------- ---------------- ----------- ---------
<S> <C> <C> <C> <C>
Ian M. Cumming 5,972,961(c)(d) 690,000(e) 5,182,961(d)(f) 17.4%
Chairman of the Board

Annette P. Cumming 123,200(g)(h) 50,000 73,200(h) *
Trustee, under Agreement
dated January 3, 1979 for
John Darnaby Cumming Age
21 Trust

Annette P. Cumming, 123,200(i)(j) 50,000 73,200(j) *
Trustee, under Agreement
dated January 3, 1979 for
David Edward Cumming Age
21 Trust

John D. Cumming 2,000(k) 2,000 0(l) --

Jennifer Cumming Ruff 5,000(m) 4,000 1,000 *

Margaret Cumming 4,000(n) 4,000 0 --

Joseph S. Steinberg 5,457,670(o)(p)(q) 794,000 4,663,670(p)(q)(r) 15.6%
President and Director

<FN>
______________

* Less than 1%.

(a) On August 12, 1992, following shareholder approval, the Company issued to each of Mr. Ian M. Cumming
and Mr. Joseph S. Steinberg Warrants to purchase 800,000 Common Shares at an exercise price of
$20.1875 per share, the closing price of a Common Share on the consolidated transaction reporting
system, as reported by the Dow Jones Historical Stock Quote Reporter Service on January 9, 1992, the
last day prior to the Board of Directors' resolution authorizing the issuance of the Warrants.

(b) Based on 28,206,538 Common Shares outstanding as of September 12, 1995 plus the 1,594,000 Common Shares
issuable upon exercise of the Warrants held by the Selling Shareholders. The percentage shown does
not give effect to (i) the exercise of the over-allotment option, (ii) the exercise of stock options
or warrants to purchase 6,000 Common Shares

<PAGE>

currently outstanding, none of which are held by any of the Selling Shareholders, or (iii) the
conversion of the Convertible Debentures.

(c) Includes (i) 36,000 Common Shares beneficially owned by Mr. Cumming's wife as to which Mr. Cumming
may be deemed to be the beneficial owner, (ii) 73,200 Common Shares beneficially owned by Annette P.
Cumming, Trustee, under Agreement dated January 3, 1979 for John Darnaby Cumming Age 21 Trust (the
"JD Cumming Age 21 Trust"), a Selling Shareholder, as to which Mr. Cumming may be deemed to be the
beneficial owner, (iii) 12,078 Common Shares beneficially owned by Annette P. Cumming, Trustee, under
Agreement dated December 1, 1992 for John Darnaby Cumming Lifetime Trust (the "JD Cumming Lifetime
Trust"), as to which Mr. Cumming may be deemed to be the beneficial owner, (iv) 73,200 Common Shares
beneficially owned by Annette P. Cumming, Trustee, under Agreement dated January 3, 1979 for David
Edward Cumming Age 21 Trust (the "DE Cumming Age 21 Trust"), a Selling Shareholder, as to which Mr.
Cumming may be deemed to be the beneficial owner, (v) 12,078 Common Shares beneficially owned by
Annette P. Cumming, Trustee, under Agreement dated December 1, 1992 for David Edward Cumming Lifetime
Trust (the "DE Cumming Lifetime Trust"), as to which Mr. Cumming may be deemed to be the beneficial
owner, (vi) 50,000 Common Shares being offered hereby by the J. D. Cumming Age 21 Trust, which such
trust currently has the right to acquire upon exercise of Warrants, as to which Mr. Cumming may be
deemed to be the beneficial owner, (vii) 50,000 Common Shares being offered hereby by the D. E.
Cumming Age 21 Trust, which such trust currently has the right to acquire upon exercise of Warrants,
as to which Mr. Cumming may be deemed to be the beneficial owner and (viii) 690,000 Common Shares
being offered hereby, which Mr. Cumming currently has the right to acquire upon exercise of Warrants.

(d) Excludes 235,145 Common Shares that are beneficially owned by a private charitable foundation, of which
Mr. Cumming is a trustee and President and as to which Mr. Cumming disclaims beneficial ownership.

(e) Excludes 100,000 Common Shares issuable upon exercise of Warrants being offered hereunder by other
Selling Shareholders as to which Mr. Cumming may be deemed to be the beneficial owner.

(f) Includes an aggregate of 206,556 Common Shares described in clause (i) through (v) of footnote (c)
above.

(g) Includes 50,000 Common Shares being offered hereby issuable upon exercise of Warrants beneficially
owned by the Selling Shareholder.

(h) Excludes 12,078 Common Shares beneficially owned by the JD Cumming Lifetime Trust.

(i) Includes 50,000 Common Shares being offered hereby issuable upon exercise of Warrants beneficially
owned by the Selling Shareholder.

(j) Excludes 12,078 Common Shares beneficially owned by the DE Cumming Lifetime Trust.

(k) Consists of Common Shares being offered hereby issuable upon exercise of Warrants beneficially owned
by the Selling Shareholder. John D. Cumming is the son of Ian M. Cumming. Excludes (i) 50,000
Common Shares issuable upon exercise of Warrants beneficially owned by the JD Cumming Age 21 Trust
being offered hereby by such trust, (ii) 73,200 Common Shares beneficially owned by the JD Cumming
Age 21 Trust and (iii) 12,078 Common Shares beneficially owned by the JD Cumming Lifetime Trust.

(l) Excludes (i) 73,200 Common Shares beneficially owned by the JD Cumming Age 21 Trust and (ii) 12,078
Common Shares beneficially owned by the JD Cumming Lifetime Trust.

(m) Includes 4,000 Common Shares being offered hereby issuable upon exercise of Warrants beneficially
owned by the Selling Shareholder.

(n) Consists of Common Shares being offered hereby issuable upon exercise of Warrants beneficially owned
by the Selling Shareholder.

(o) Includes (i) 21,200 Common Shares beneficially owned by Mr. Steinberg's wife and one of Mr.
Steinberg's minor children as to which Mr. Steinberg may be deemed to be the beneficial owner, (ii)
2,000 Common Shares which Mr. Steinberg's wife currently has the right to acquire upon exercise of
Warrants as to which Mr. Steinberg may be deemed to be the beneficial owner and (iii) 794,000 Common
Shares being offered hereby which Mr. Steinberg currently has the right to acquire upon exercise of
Warrants.
<PAGE>

<PAGE>

(p) Excludes 563,700 Common Shares held by two trusts for the benefit of Mr. Steinberg's minor children
(the "Steinberg Children Trusts"), as to which Mr. Steinberg disclaims beneficial ownership.

(q) Excludes 194,970 Common Shares beneficially owned by a private charitable foundation, of which Mr.
Steinberg and his wife are trustees and as to which Mr. Steinberg disclaims beneficial ownership.

(r) Includes (i) 21,200 Common Shares beneficially owned by Mr. Steinberg's wife and one of Mr.
Steinberg's minor children as to which Mr. Steinberg may be deemed to be the beneficial owner and
(ii) 2,000 Common Shares which Mr. Steinberg's wife currently has the right to acquire upon exercise
of Warrants as to which Mr. Steinberg may be deemed to be the beneficial owner.

</TABLE>

As reflected in the table above, after giving effect to the
completion of this offering, Mr. Cumming, directly and indirectly
through his wife and certain trusts for the benefit of his children of
which Mrs. Cumming is the Trustee, will beneficially own an aggregate
of 5,182,961 Common Shares, and Mr. Steinberg, directly and indirectly
through his wife and minor child, will beneficially own an aggregate
of 4,663,670 Common Shares, which together represent an aggregate of
33.0% of the Common Shares. In addition, the Steinberg Children
Trusts beneficially own 563,700 Common Shares or approximately 1.9% of
the outstanding Common Shares following completion of this offering.
After giving effect to this offering, Messrs. Cumming and Steinberg
will continue to be able to exercise effective control over the
Company through their representation on the Board and their positions
as principal executive officers of the Company, and by reason of their
substantial voting power with respect to the election of directors and
actions requiring shareholder approval.

DESCRIPTION OF CAPITAL STOCK

GENERAL

The authorized capital stock of the Company presently consists of
150,000,000 Common Shares and 6,000,000 preferred shares, par value
$1.00 (the "Preferred Shares"). As of September 12, 1995, 28,206,538
Common Shares and no Preferred Shares were outstanding. Under New
York law, the Company's Board of Directors has authority to issue,
without further action by shareholders, one or more series of
Preferred Shares, and to determine at the time of issuance of each
such series the rights and preferences thereof (including dividend
rate, liquidation priority and conversion and voting rights, if any).

DIVIDENDS

Holders of Common Shares are entitled to receive such dividends
as lawfully may be declared from time to time by the Board of
Directors out of the Company's earned surplus, subject to the
priorities accorded any Preferred Shares which may be issued.

VOTING RIGHTS

Holders of Common Shares are entitled to one vote per share for
the election of directors and with respect to all other matters
submitted to a vote of shareholders. Common Shares do not have
cumulative voting rights, which means that the holders of more than
50% of such shares voting for the election of directors can elect 100%
of the directors if they choose to do so and, in such event, the
holders of the remaining shares so voting will not be able to elect
any directors.

<PAGE>

LIQUIDATION RIGHTS

Upon liquidation dissolution or winding up of the Company,
holders of Common Shares will be entitled to receive, pro rata, all
assets remaining after the payment of corporate debts and any
liquidation preferences of, and unpaid dividends on, any series of
Preferred Shares which may be then outstanding.

THE TRANSFER RESTRICTIONS

There are certain restrictions on the transferability of Common
Shares. For a description of the transfer restrictions, see "Transfer
Restrictions."

TRANSFER AGENT

Mellon Securities Trust Co. is the Transfer Agent and Registrar
for the Common Shares.

TRANSFER RESTRICTIONS

GENERAL

The Company's Certificate of Incorporation contains the Transfer
Restriction, which imposes restrictions on, among other things,
transfer of the Common Shares. The Transfer Restriction is designed
to restrict transfers of Leucadia Stock (as defined below) that could
result in the imposition of limitations on the use by the Company and
its subsidiaries, for federal income tax purposes, of the significant
tax loss and other carryovers described below currently available to
the Company and its subsidiaries.

Tax Law Limitations

The benefit of a company's existing loss and credit carryovers
can be reduced or eliminated under Section 382 of the Internal Revenue
Code of 1986, as amended (the "Code"). Section 382 limits the use of
losses and other tax benefits by a company that has undergone an
"ownership change," as defined in Section 382 of the Code. Generally,
an "ownership change" occurs if one or more shareholders, each of whom
owns 5% or more in value of a company's capital stock, increase their
aggregate percentage ownership by more than 50 percentage points over
the lowest percentage of stock owned by such shareholders over the
preceding three-year period. For this purpose, all holders who each
own less than 5% of a company's capital stock generally are treated
together as one 5% shareholder. In addition, certain attribution
rules, which generally attribute ownership of stock to the ultimate
beneficial owner thereof without regard to ownership by nominees,
trusts, corporations, partnerships or other entities, are applied in
determining the level of stock ownership of a particular shareholder.
Under tax regulations currently in effect, with limited exceptions,
options (including warrants and convertible debt) to acquire capital
stock are generally disregarded until exercised (other than in
specified circumstances). All percentage determinations are based on
the fair market value of a company's capital stock, including any
preferred stock which is voting or convertible (or otherwise
participates in corporate growth).

If an "ownership change" were to occur in respect of either or
both of the Leucadia Group (consisting of the Company and its
subsidiaries, other than (x) the Company's life insurance subsidiaries
and (y) prior to 1993, PHLCORP, Inc. ("Phlcorp") and its subsidiaries)
and the Phlcorp Group (consisting of Phlcorp and its subsidiaries),
the amount of taxable income in any year (or portion of a year)
subsequent to the ownership change that could be offset by its net
operating losses ("NOLs") or other carryovers existing (or "built-in")
prior to such "ownership change" generally could not exceed an amount
equal to the product obtained by multiplying (i) the
<PAGE>

<PAGE>

aggregate value of the group with respect to which the "ownership
change" occurred (with certain adjustments) by (ii) the federal long-
term tax exempt rate. Because the aggregate value of the Leucadia
Group and the Phlcorp Group, as well as the federal long-term tax-
exempt rate, fluctuate, it is impossible to predict with any accuracy
the annual limitation upon the amount of taxable income of the
Leucadia Group or the Phlcorp Group that could be offset by such loss
or credit carryforwards (and "built-in" losses) were an "ownership
change" to occur in the future. However, if such limitation were to
exceed the taxable income against which it otherwise would be applied
for any year following an "ownership change," the limitation for the
ensuing year would be increased by the amount of such excess. The
Company believes that, in view of the significant loss carryforwards
of the various subsidiaries in the Leucadia Group (as well as loss
carryforwards of subsidiaries not in the Leucadia Group), application
of the limitations would represent a material adverse consequence.

For more information with respect to the Company's loss
carryovers, see Note 13 of Notes to Consolidated Financial Statements
contained in the Annual Report.

THE TRANSFER RESTRICTION

The Transfer Restriction generally restricts until December 31,
2005 (or earlier, in certain events) any attempted transfer of Common
Shares or any other securities that would be treated as "stock" of the
Company under the then applicable tax regulations (the "Leucadia
Stock") to a person or group of persons who own, or who would own as a
result of such transfer, 5% or more of the Leucadia Stock (as
determined under the then applicable tax regulations) (a "Five Percent
Shareholder"). The Transfer Restriction also restricts any other
attempted transfer of Leucadia Stock that would result in the
identification of a new Five Percent Shareholder including, among
other things, an attempted acquisition of Leucadia Stock from an
existing Five Percent Shareholder. For these purposes, numerous rules
of attribution, including, without limitation, ownership attributed
from certain related parties, and, in certain cases, deemed ownership
of any Leucadia Stock that such person or group could acquire by
reason of any option, conversion privilege or otherwise ("Tax
Ownership"), and rules of aggregation and calculation prescribed under
the Code (and related regulations) will be applied in determining
whether the 5% threshold has been met and whether a group exists. The
restriction also may apply to proscribe the creation or transfer of
certain "options" (which are broadly defined) in respect of the
Leucadia Stock to the extent, generally, that exercise of the option
would result in a proscribed level or a proscribed increase of
Leucadia Stock ownership.

Under the Transfer Restriction, acquisitions of Leucadia Stock
(including "options") directly from the Company, whether by way of
acquisition in a public or private offering, the exercise of an option
or conversion privilege, or otherwise, are not subject to the Transfer
Restriction.

As a result of the Board's approval, the Transfer Restriction
will not restrict the offer and sale of Common Shares hereunder by
Messrs. Cumming and Steinberg (each of whom is a Five Percent
Shareholder), except for any transfer to a person or entity (including
any group of persons acting in concert), who either prior to or as a
result of an acquisition of Common Shares hereunder owns or will own
5% or more of the Leucadia Stock, taking into account the Tax
Ownership rules described above. However, subsequent transfers of the
Common Shares would be subject to the Transfer Restriction, and would
be proscribed, in the absence of Board approval, if the intended
transferee is or would become a Five Percent Shareholder. In
addition, future acquisitions of Common Shares or other securities of
the Company (other than directly from the Company) would be subject to
the Transfer Restriction and may be restricted if the proposed
transferee (or transferor) is, or would become as a result of such
transfer, a Five Percent Shareholder.

The determination of Five Percent Shareholder status is based
upon the outstanding Leucadia Stock, which currently consists of only
the Common Shares. Future changes in the capitalization of the
Company may<PAGE>
<PAGE>

affect who will be deemed a Five Percent Shareholder, thereby
affecting the applicability of the Transfer Restriction to future
transfers of the Common Shares. However, because the Transfer
Restriction generally applies (with certain exceptions) to a person or
group of persons who own (including by attribution) at least 5% of all
"stock" of the Company, a change in capitalization that increased the
"stock" of the Company likely would result in a reduction in the
number of individuals or groups who would be subject to the Transfer
Restriction, while a diminution of the "stock" of the Company would
have the opposite effect.

Shareholders are advised to carefully monitor their ownership of
Common Shares (and any future securities of the Company that may
constitute Leucadia Stock for purposes of the Transfer Restriction)
and should consult their own legal advisors and/or the Company to
determine whether their Tax Ownership approaches the proscribed level.

Application of the Transfer Restriction

Under the terms of the Company's Certificate of Incorporation,
all questions of interpretation and compliance with the Transfer
Restriction will be determined by the Company's Board of Directors.
Generally, the Transfer Restriction will be imposed only with respect
to the number of shares of Leucadia Stock (or, in the case of
"options," if restricted, the portion of the option allocable to the
number of shares of Leucadia Stock) purportedly transferred in excess
of the 5% threshold established in the Transfer Restriction (the
"Excess Shares"). If the Board determines that a purported transfer
of the Common Shares has violated the Transfer Restriction, such
purported transfer (the "Purported Transfer") would be void ab initio,
even if such transfer has been recorded by the transfer agent for the
Common Shares and new certificates issued; provided, however, that the
Transfer Restriction shall not preclude the settlement of any
transaction entered into through the facilities of the NYSE. The
purported transferee of such Common Shares would not be entitled to
any rights of shareholders, including the right to vote such Common
Shares, or to receive dividends or distributions in liquidation in
respect thereof, if any. In addition, the Company will require the
purported transferee to surrender the relevant Common Shares and any
dividends such purported transferee has received on them to an agent
to be designated by the Board of Directors (the "Selling Agent"). The
Selling Agent will thereupon sell the Common Shares in one or more
arm's-length transactions (executed on the NYSE, if possible) to a
buyer or buyers, which may include the Company; provided that nothing
shall require the Selling Agent to sell the Excess Shares within any
specific time frame if, in the Selling Agent's discretion, such sale
would disrupt the market for the Common Shares or have an adverse
effect on the value of the Common Shares. If the purported transferee
has resold the Common Shares before receiving the Company's demand to
surrender such Common Shares, the purported transferee generally will
be required to transfer to the Selling Agent the proceeds of the sale
and any distributions such purported transferee has received thereon.
After repaying its own expenses and reimbursing the purported
transferee for the price paid for the Common Shares (or the fair
market value of the Common Shares, calculated on the basis of the
closing market price on the day before the attempted transfer to the
purported transferee by gift, inheritance or similar transfer), the
Selling Agent will pay any remaining amounts to a named charity or, in
certain circumstances, charities to be selected by the Board of
Directors of the Company.

As previously stated, it should be noted that the Transfer
Restriction does not apply to issuances of Leucadia Stock directly by
the Company. As a result, the Transfer Restriction does not prevent
the exercise of either currently outstanding employee stock options
(or employee stock options that may be granted in the future under the
Company's currently authorized stock option plan). Such acquisitions
have been excluded from the operation of the Transfer Restriction
because the Board of Directors of the Company previously determined
that the issuance of Common Shares under such circumstances would not
adversely affect the Company's NOLs and other tax attributes. In
addition, since the Board of Directors will be able to consider the
effect on the Company's NOLs and other tax attributes on future
issuance of Common Shares (or other securities) at the time of the
issuance (whether as a result of transactions with third parties, such
as an acquisition for Common Shares, or the<PAGE>

<PAGE>

issuance of Common Shares in a private placement or public offering or
as compensation to the Company's employees, officers or directors
(including Messrs. Cumming and Steinberg, who are the Company's
principal shareholders) or otherwise in advance of agreeing to issue
such Common Shares, future issuances of Common Shares (as well as
grants of certain options) by the Company also have been excluded from
the Transfer Restriction. Consequently, persons or entities who are
able to acquire Common Shares directly from the Company, including
employees, officers and directors of the Company (including the
Company's Chairman and President), may do so without application of
the Transfer Restriction, irrespective of the number of Common Shares
being acquired. As a result, such persons or entities may be seen to
have an advantage over other persons or entities who are not so able
to acquire Common Shares directly from the Company and, therefore, are
restricted by the terms of the Transfer Restriction; however, as in
the case of the Common Shares subject to this offering, where Board
approval is necessary to effect such acquisition, an acquisition of
Common Shares from other than the Company, even if otherwise
restricted by the Transfer Restriction, will be permitted under the
Transfer Restriction if Board approval is obtained.

All certificates representing the Common Shares bear a legend
indicating that such securities are subject to the Transfer
Restriction.

CERTAIN UNITED STATES FEDERAL TAX
CONSEQUENCES TO NON-UNITED STATES HOLDERS

The following general discussion is a summary of certain U.S.
federal income and estate tax consequences of the ownership and
disposition of Common Shares applicable to Non-U.S. Holders of such
Common Shares who acquire and own such Common Shares as a capital
asset within the meaning of Section 1221 of the U.S. Internal Revenue
Code of 1986, as amended (the "Code"). A "Non-U.S. Holder" is a
person other than (i) a citizen or resident of the United States, (ii)
a corporation or partnership created or organized in the United States
or under the laws of the United States or of any state, or (iii) an
estate or trust whose income is includable in gross income for United
States federal income tax purposes regardless of its source. For
purposes of the withholding tax on dividends discussed below, a non-
resident fiduciary of an estate or trust will be considered a Non-U.S.
Holder.

This discussion does not consider specific facts and
circumstances that may be relevant to a particular Non-U.S. Holder's
tax position and does not consider U.S. state and local or non-U.S.
tax consequences. This discussion also does not consider the tax
consequences to any person who is a shareholder, partner or
beneficiary of a holder of the Common Shares. Further, it does not
consider Non-U.S. Holders subject to special tax treatment under the
federal income tax laws (including banks and insurance companies,
dealers in securities, and holders of securities held as part of a
"straddle," "hedge," or "conversion transaction").

The following discussion is based on provisions of the Code, the
applicable Treasury regulations promulgated and proposed thereunder,
judicial authority and administrative interpretations, and the
relevant facts as of the date hereof. The foregoing are subject to
change, possibly on a retroactive basis, and any such change could
affect the continuing validity of this discussion.

The following summary is included herein for general information.
Accordingly, each prospective Non-U.S. Holder is urged to consult a
tax advisor with respect to the United States federal tax consequences
of acquiring, holding and disposing of Common Shares, as well as any tax
consequences that may arise under the laws of any U.S. state, local,
or other U.S. or non-U.S. tax jurisdiction.<PAGE>
<PAGE>

DIVIDENDS

In general, dividends paid to a Non-U.S. Holder of Common
Shares will be subject to withholding of U.S. federal income tax at a
30% rate unless such rate is reduced by an applicable income tax
treaty. The Income Tax Treaty Between Canada and the United States
generally reduces the withholding tax rate on dividends to 15% for
holders of less than 10% of the voting stock of the Company and to
10% for the holders of 10% or more of the voting stock of the Company.
Under the third Protocol to the Treaty, which was approved by the United
States Senate on August 11, 1995 and will enter into force after the
exchange of the instruments of ratification, the withholding tax rate
is reduced further for holders of 10% or more of the voting stock of the
Company. Dividends that are effectively connected with such holder's
conduct of a trade or business in the United States or, if a tax
treaty applies, attributable to permanent establishment, or, in the
case of an individual, a "fixed base," in the United States ("U.S.
trade or business income") are generally subject to U.S. federal
income tax at regular rates, but are not generally subject to the 30%
withholding tax if the Non-U.S. Holder files the appropriate form with
the payor. Any U.S. trade or business income received by a Non-U.S.
Holder that is a corporation may also, under certain circumstances, be
subject to an additional "branch profits tax" at a 30% rate or such
lower rate as may be applicable under an income tax treaty.

Dividends paid to an address in a foreign country are presumed
(absent actual knowledge to the contrary) to be paid to a resident of
such country for purposes of the withholding discussed above, and
under the current interpretation of U.S. Treasury regulations, for
purposes of determining the applicability of a tax treaty rate. Under
proposed U.S. Treasury regulations, not currently in effect, however,
a Non-U.S. Holder of Common Shares who wishes to claim the benefit of
a reduced treaty rate would be required to satisfy applicable
certification and other requirements, including the requirement
to file a form containing the holder's name and address and an official
statement by the competent authority in the foreign country attesting
to the holder's status as a resident thereof.

A Non-U.S. Holder of Common Shares that is eligible for a reduced
rate of U.S. withholding tax pursuant to an income treaty, or whose
dividends have otherwise been subject to withholding in an amount which
exceeds such holder's U.S. federal income tax liability, may obtain a
refund of any excess amounts currently withheld by filing an
appropriate claim for a refund with the U.S. Internal Revenue Service.

<PAGE>

DISPOSITION OF COMMON SHARES

Except as described below, Non-U.S. Holders generally will not be
subject to U.S. federal income tax in respect of gain recognized on a
disposition of Common Shares provided that: (a) the gain is not U.S.
trade or business income, (b) the Non-U.S. Holder is not an
individual who is present in the United States for 183 or more days in
the taxable year of the disposition and who meets certain other
requirements, (c) the Non-U.S. Holder is not subject to tax pursuant
to the provisions of the U.S. tax law applicable to certain United
States expatriates, and (d) either the Company is not a "U.S. real
property holding corporation" for federal income tax purposes or
(i) the Common Shares are "regularly traded on an established
securities market" (within the meaning of the relevant provisions of
the Code) and (ii) the Non-U.S. Holder has not held, directly or
indirectly, at any time during the 5-year period ending on the date
of disposition, more than 5% of the Common Shares. The Company
believes that it is not now and has not been within the past five years,
and anticipates that it will not become a "U.S. real property holding
corporation" for U.S. federal income tax purposes.

FEDERAL ESTATE TAXES

In general, an individual who is a Non-U.S. Holder for U.S.
estate tax purposes will incur liability for U.S. federal estate tax
if the fair market value of the property included in such individual's
taxable estate for U.S. federal estate tax purposes exceeds the
statutory threshold amount. For these purposes, Common Shares owned
or treated as owned by an individual who is a Non-U.S. Holder at the
time of death will be included in the individual's taxable estate for
U.S. federal tax purposes, unless an applicable estate tax
treaty provides otherwise. Under the Protocol, which would have limited
retroactive effect, Common Shares of a Non-U.S. Holder who is a
Canadian resident for purposes of the Treaty and who is not a citizen
of the United States, would not be includable in such holder's taxable
estate provided that such shares are not part of the business
property of a permanent establishment or fixed base in the United
States, the value of the decedent's worldwide gross estate does not
exceed $1.2 million, and the Company is not and has not been within
the past five years a U.S. real property holding Company for U.S.
federal income tax purposes.

U.S. INFORMATION REPORTING REQUIREMENTS AND BACKUP WITHHOLDING TAX

The Company must report annually to the Internal Revenue Service
and to each Non-U.S. Holder the amount of dividends paid to, and the
tax withheld with respect to, each Non-U.S. Holder. These reporting
requirements apply whether or not withholding was reduced or
eliminated by an applicable tax treaty. Copies of these information
returns may also be made available under the provisions of a specific
treaty or agreement to the tax authorities in the country in which the
Non-U.S. Holder resides. The United States backup withholding tax
(which generally is a withholding tax imposed at the rate of 31% on
certain payments to persons that fail to furnish the information
required under the United States information reporting requirements)
will generally not apply to dividends paid on Common Shares to a Non-
U.S. Holder at an address outside the United States.

<PAGE>

Except as provided below, Non-U.S. Holders will not be subject
to backup withholding with respect to the payment of proceeds from
the disposition of Common Shares effected by the foreign office of
a broker; provided, however, that, if the broker is a U.S. person
or a U.S. related person, information reporting (but not backup
withholding) would apply unless the broker has documentary evidence
in its records as to the Non-U.S. Holder's foreign status, or the
Non-U.S. Holder certifies as to its foreign status under penalty or
perjury or otherwise establishes an exemption. For this purpose,
a "U.S. related person" is (i) a "controlled foreign corporation"
for U.S. federal income tax purposes, or (ii) a foreign person 50% or
more of whose gross income from all sources for the three-year period
ending with the close of its taxable year preceding the payment
(or for such part of the period that the broker has been in existence)
is derived from activities that are effectively connected with
the conduct of a U.S. trade or business.

Non-U.S. Holders will be subject to information reporting and
backup withholding at a rate of 31% with respect to the payment of
proceeds from the disposition of Common Shares effected by, to or
through the United States office of a broker, U.S. or foreign, unless
the Non-U.S. Holder certifies as to its foreign status under penalty
of perjury or otherwise establishes an exemption.

Any amounts withheld under the backup withholding rules from a
payment to a Non-U.S. Holder will be allowed as a credit against such
Non-U.S. Holder's U.S. federal income tax, and any amounts withheld in
excess of such Non-U.S. Holder's federal income tax liability will
generally refunded, provided that the required information is furnished
to the Internal Revenue Service.

UNDERWRITING

Under the terms and subject to the conditions contained in an
Underwriting Agreement dated September 13, 1995 (the "Underwriting
Agreement"), the underwriters named below (the "Underwriters")
have severally but not jointly agreed to purchase from the Selling
Shareholders the following respective numbers of Common Shares:

<TABLE>
<CAPTION>
Number of
Underwriter Common Shares
----------- -------------
<S> <C>
CS First Boston Corporation . . 797,000
Jefferies & Company, Inc. . . . 797,000
---------
Total . . . . . . . . . . . 1,594,000
=========
</TABLE>

The Underwriting Agreement provides that the obligations of the
Underwriters are subject to certain conditions precedent and that the
Underwriters will be obligated to purchase all of the Common Shares
offered hereby (other than those shares covered by the over-allotment
option described below) if any are purchased. The<PAGE>

<PAGE>

Underwriting Agreement provides that, in the event of a default by an
Underwriter, in certain circumstances the purchase commitments of non-
defaulting Underwriters may be increased or the Underwriting Agreement
may be terminated.

The Company has granted to the Underwriters an option,
expiring at the close of business on the 30th day after the date of
this Prospectus, to purchase up to 239,100 additional Common Shares at
the initial public offering price, less the underwriting discounts and
commissions, all as set forth on the cover page of this Prospectus.
Such option may be exercised only to cover over-allotments in the sale
of Common Shares offered hereby. To the extent that this option to
purchase is exercised, each Underwriter will become obligated, subject
to certain conditions, to purchase approximately the same percentage of
additional Common Shares as it was obligated to purchase pursuant to the
Underwriting Agreement.

The Selling Shareholders and the Company have been advised by the
Underwriters that they propose to offer the Common Shares to the public
initially at the public offering price set forth on the cover page
of this Prospectus and to certain dealers at such price less a
concession of $1.08 per share, and the Underwriters and such dealers
may allow a discount of $.10 per share on sales to certain other
dealers. After the initial public offering, the public offering price
and concession and discount to dealers may be changed by the
Underwriters.

The Company and the Selling Shareholders have agreed that they
will not offer, sell, contract to sell or otherwise dispose
of, directly or indirectly, or file with the Commission a registration
statement under the Securities Act relating to, any additional Common
Shares or securities convertible into or exchangeable or exercisable for
any Common Shares without the prior written consent of CS First Boston
Corporation for a period of 90 days after the date of this Prospectus,
other than pursuant to certain specified exemptions including the
exercise of options and warrants then outstanding, the grant of stock
options, restricted stock or other stock-based awards to directors,
officers or employees of the Company or its subsidiaries and by Selling
Shareholders in connection with pledges.

The Company and the Selling Shareholders have agreed to indemnify
the Underwriters against certain liabilities, including civil
liabilities under the Securities Act, or contribute to payments which
the Underwriters may be required to make in respect thereof.

Each of CS First Boston Corporation and Jefferies & Company, Inc.
has previously performed investment banking and other financial
advisory services for the Company for which it has received customary
compensation. Such services included acting as an underwriter of the
Company's 10-3/8% Senior Subordinated Notes due 2002 in June 1992,
Convertible Debentures in February 1993, the Company's 7-3/4% Senior
Notes due 2013 in August 1993 and the Company's 8-1/4% Senior
Subordinated Notes due 2005 in June 1995.

NOTICE TO CANADIAN RESIDENTS

RESALE RESTRICTIONS

The distribution of Common Shares in Canada is being made only on
a private placement basis exempt from the requirement that the Company
prepare and file a prospectus with the securities regulatory
authorities in each province where trades of Common Shares are
effected. Accordingly, any resale of Common Shares in Canada must be
made in accordance with applicable securities laws which will vary
depending on the relevant jurisdiction, and which may require resales
to be made in accordance with available statutory exemptions or
pursuant to a discretionary exemption granted by the applicable
Canadian securities regulatory authority. Purchasers are advised to
seek legal advice prior to any resale of Common Shares.

<PAGE>

REPRESENTATIONS OF PURCHASERS

Each purchaser of Common Shares in Canada who receives a purchase
confirmation will be deemed to represent to the Company, the Selling
Shareholders and the dealer from whom such purchase confirmation is
received that (i) such purchaser is entitled under applicable
provincial securities laws to purchase such Common Shares without the
benefit of a prospectus qualified under such securities laws, (ii)
where required by law, that such purchaser is purchasing as principal
and not as agent, and (iii) such purchaser has reviewed the text above
under "Resale Restrictions."

RIGHTS OF ACTION AND ENFORCEMENT

The securities being offered are those of a foreign issuer and
Ontario purchasers will not receive the contractual right of action
prescribed by section 32 of the Regulation under the Securities Act
(Ontario). As a result, Ontario purchasers must rely on other
remedies that may be available, including common law rights for
damages or rescission or rights of action under the civil liability
provisions of the U.S. federal securities laws.

All of the issuer's directors and officers as well as the experts
named herein may be located outside of Canada and, as a result, it may
not be possible for Ontario purchasers to effect service of process
within Canada upon the issuer or such persons. All or a substantial
portion of the assets of the issuer and such persons may be located
outside of Canada and, as a result, it may not be possible to satisfy
a judgment against the issuer or such persons in Canada or to enforce
a judgment obtained in Canadian courts against such issuer or persons
outside of Canada.

NOTICE TO BRITISH COLUMBIA RESIDENTS

A purchaser of Common Shares to whom the Securities Act (British
Columbia) applies is advised that such purchaser is required to file
with the British Columbia Securities Commission a report within ten
days of the sale of any Common Shares acquired by such purchaser
pursuant to this offering. Such report must be in the form attached
to British Columbia Securities Commission Blanket Order BOR #88/5, a
copy of which may be obtained from the Company. Only one such report
must be filed in respect of Common Shares acquired on the same date
and under the same prospectus exemption.

LEGAL MATTERS

The validity of the securities offered hereby and certain legal
matters will be passed upon by Weil, Gotshal & Manges (a partnership
including professional corporations), New York, New York, General
Counsel to the Company (members of which own approximately 83,000
Common Shares). Certain legal matters will be passed upon for the
Underwriters by Cahill Gordon & Reindel (a partnership including a
professional corporation), New York, New York.

EXPERTS

The consolidated balance sheets as of December 31, 1994 and 1993
and the consolidated statements of income, changes in shareholders'
equity and cash flows for each of the three years in the period ended
December 31, 1994, incorporated by reference in this Prospectus, have
been incorporated herein in reliance on the report of Coopers &
Lybrand L.L.P., independent accountants, given on the authority of
that firm as experts in accounting and auditing.

<PAGE>

NO DEALER, SALESMAN OR
OTHER PERSON HAS BEEN
AUTHORIZED TO GIVE ANY 1,594,000 SHARES
INFORMATION OR TO MAKE ANY
REPRESENTATION NOT CONTAINED
IN THIS PROSPECTUS AND, IF
GIVEN OR MADE, SUCH LEUCADIA NATIONAL
INFORMATION OR REPRESENTATION CORPORATION
MUST NOT BE RELIED UPON AS
HAVING BEEN AUTHORIZED BY THE COMMON SHARES
COMPANY, ANY SELLING ($1.00 par value)
SHAREHOLDER OR ANY
UNDERWRITER. THIS PROSPECTUS
DOES NOT CONSTITUTE AN OFFER
TO SELL OR A SOLICITATION OF
AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY IN
ANY JURISDICTION TO ANY
PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER IN SUCH
JURISDICTION. NEITHER THE
DELIVERY OF THIS PROSPECTUS
NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY
CIRCUMSTANCES, CREATE AN
IMPLICATION THAT THE
INFORMATION HEREIN IS CORRECT
AS OF ANY TIME SUBSEQUENT TO
THE DATE HEREOF OR THAT THERE
HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE
SUCH DATE.

_____________________

TABLE OF CONTENTS Prospectus

Page
----
Available Information . . 2
Incorporation of Certain
Documents by Reference. 3
Prospectus Summary . . . 4
The Company . . . . . . . 8
Risk Factors . . . . . . 10
Use of Proceeds . . . . . 12 CS First Boston
Price Range of Common Jefferies & Company, Inc.
Sharesand Dividend
Policy. . . . . . . . . 12
Capitalization . . . . . 13
Selected Financial Data . 14
Management's Discussion
and Analysis of
Financial Condition and
Results of Interim
Operations. . . . . . . 17
Business . . . . . . . . 19
Management . . . . . . . 33
Selling Shareholders . . 35
Description of Capital
Stock . . . . . . . . . 37
Transfer Restrictions . . 37
Certain United States
Federal Tax Consequences
to Non-United States
Holders . . . . . . . . 40
Underwriting . . . . . . 43
Notice to Canadian
Residents . . . . . . . 44
Legal Matters . . . . . . 44
Experts . . . . . . . . . 45