The Court appointed Liquidator of Southern American Insurance Company in Liquidation  (" SAIC"), Utah Insurance Commissioner, D. Kent Michie, (" Liquidator"), by and through Special Deputy Liquidator, Rheta Beach, herein files this Quarterly Report On Status Of Liquidation Estate For Period Ending December 31, 2007, And Request For Order Of  Approval pursuant to the Liquidation Order issued March 26, 1992, and pursuant to Utah Code Annotated, Section 31A-27-314.                                       

The Liquidator sets forth herein a Report on the status of the liquidation estate and a Financial Report of assets, liabilities and expenses of the liquidation estate of SAIC, including the current assessment of liabilities from all claims filed against the liquidation estate. The attached Exhibit "A" Financial Report, was prepared by accountant, Elizabeth A. Biaett of EAB Associates, Chief Financial Officer for SAIC, under the direction of the Court appointed Special Deputy Liquidator, Rheta Beach. The statements of assets and liabilities are for the period ending September 30, 2007, and the statements of receipts and disbursements are for the period beginning with the date of the Liquidation Order and ending December 31, 2007. The report utilizes the reporting format for receiverships established by the National Association of Insurance Commissioners,  (" NAIC" ) which does not address valuation methods. This format will continue to be used in future reports to the Court unless the Court orders otherwise.

              The Liquidator further requests the Court to issue an Order approving this Quarterly Report, including estate expenditures and the compensation to estate personnel for the fourth quarter of 2007, through the period ending December 31, 2007. The Liquidator will provide a proposed order pursuant to Rule 4-501, 01, 01, 01, 01, Utah Code Annotated, Code of Judicial Administration, Operation of the Courts.

              The Liquidator reports to the Court regarding significant and/or ongoing events and activities in the liquidation of SAIC since the Liquidator' s last Quarterly Report to the Court, as follows:

                        1.   Important activities that occurred during the third and fourth quarters of 2006 and 2007 were (1) the mailing of Notices for the Final Bar Date approved by the Court.  The Motion For Approval And Setting A Final Claims Bar Date For All Remaining SAIC Claims was approved by this Court on July 27, 2006 setting December 28, 2006 as the Final Claims Bar Date; (2) the passing of the December 28, 2006 Final Claims Bar Date; and (3) the receipt by the estate of final claims from numerous claimants.  The analysis and determination of such final claims continued in the fourth quarter, 2007.  A Motion for authorization and approval of a distribution on approved Class 2 claims and a partial distribution on approved Class 3 claims was filed during the fourth quarter 2007. The Court approved a distribution on such approved claims, and the distribution of 100% on Class 2 claims and 32% on Class 3 claims occurred during the fourth quarter 2007.

                        2.     SAIC continues with the established procedure in place for submitting requests for approval of claims to the Court, and is now doing so on a monthly basis for the few remaining claims.  This claims adjudication process of submitting requests for approval on approximately a monthly basis is extremely important in that once SAIC has evaluated claims, and obtains Court approval of its determinations, SAIC can then bill its reinsurers.  As reinsurance is the single largest asset of the estate, this process is critical to the marshaling of those assets for distribution to claimants. SAIC collected approximately $2.4 million in reinsurance through this process during the fourth quarter 2007.  Other reinsurance collections during the quarter were minimal approximating $1,000 from Weavers.

                        3.   The Liquidator is constantly working on the marshaling of all assets.  This quarter the Settlement of an outstanding case resulted in the collection of a remaining $30,000 and the Liquidator also obtained the return of a deposit held by the State of Tennessee amounting to $626,000.

                        4.   The Liquidator continues to pursue resolution of disputed claims.  The efficacy and status of each disputed claims case is reviewed on a regular basis.  If warranted, settlement discussions with claimants on such disputed claims are ongoing to resolve such claims in a manner that will be beneficial to policyholders and creditors of the SAIC estate.                      

                        5.   In the normal course of the liquidation, funds collected are invested in conservative securities according to established and approved investment guidelines.   Due to the distribution in the fourth quarter, 2007, and an anticipated distribution in 2008, funds are now invested in a high yielding money market account.