UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                  SCHEDULE 13G


                    Under the Securities Exchange Act of 1934
                               (Amendment No. 1 )*


                            ARM Financial Group, Inc.
                                (Name of Issuer)


                                  Common Stock
                         (Title of Class of Securities)

                                    00194410
                                 (CUSIP Number)




*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.

The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).








                                  SCHEDULE 13G

         CUSIP No. 00194410

1.       NAME OF REPORTING PERSON
         S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON

                  Warburg Pincus Asset Management, Inc.
                  13-2673503

2.       CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*    (a) [ ]
                                                              (b) [ ]

3.       SEC USE ONLY

4.       CITIZENSHIP OR PLACE OF ORGANIZATION

                  United States

                      5.      SOLE VOTING POWER              251,800

NUMBER OF             6.      SHARED VOTING POWER            245,500
SHARES
BENEFICIALLY
OWNED BY
EACH                  7.      SOLE DISPOSITIVE POWER         564,800
REPORTING
PERSON                8.      SHARED DISPOSITIVE POWER             0
WITH


9.       AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON  564,800

10.      CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES 
         CERTAIN SHARES* [ ]

11.      PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 9      2.64%

12.      TYPE OF REPORTING PERSON*

                  Investment Advisor


                                *SEE INSTRUCTION


                                       2






                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549
                                  Schedule 13G
                    Under the Securities Exchange Act of 1934

Amendment No. 1                                               Date:   01/21/98

Fee Being Paid:   NO

Item 1 (a)        Name of issuer:         ARM Financial Group Inc.

Item 1 (b) Address of issuer's principal executive offices:

                         515 West Market Street
                         Louisville, KY  40202

Item 2 (a)        Name of person filing:

                         Warburg Pincus Asset Management, Inc.

Item 2 (b)        Address of principal business office:

                         466 Lexington Avenue
                         New York, NY  10017

Item 2 (c)        Citizenship:      United States

Item 2 (d)        Title of class of securities:      Common Stock

Item 2 (e)        Cusip No.:        00194410

Item 3   Type of Person: Investment Advisor

Item 4 (a)        Amount beneficially owned:         564,800

Item 4 (b)        Percent of class: 2.64%

Item 4 (c)        (i)    sole power to vote:         251,800
                   (ii)    shared power to vote:     245,500
                   (iii)   sole power to dispose:    564,800
                   (iv)    shared power to dispose:  0

Item 5   Ownership of 5 percent or less of a class:      Not Applicable

Item 6   Ownership of more than 5 percent on behalf of another person: Warburg
         Pincus Asset Management, Inc. serves as Investment Advisor to many
         accounts. The securities which are the subject of this report are owned
         by our accounts. None




         of these accounts, individually, own more than 5% of the securities
         which are the subject of this report.

Item 7   Identification and classification of subsidiary:    Not Applicable



Item 8   Identification and classification of members of
         the group: Not Applicable

Item 9   Notice of dissolution of the group:     Not Applicable

Item 10  Certification:

                  By signing below I certify that, to the best of my knowledge
                  and belief, the securities referred to above were acquired in
                  the ordinary course of business and were not acquired for the
                  purpose of and do not have the effect of changing or
                  influencing the control of the issuer of such securities and
                  were not acquired in connection with or as a participant in
                  any transaction having such purpose or effect.

                  After reasonable inquiry and to the best of my knowledge and
                  belief, I certify that the information set forth in this
                  statement is true, complete, and correct.


                                        /S/ Linda S. Iovan
                                  --------------------------------
                                            Linda S. Iovan
                                            Vice President