The board of Ullico Inc., the union-owned insurance company under investigation for alleged insider stock trading, said yesterday it will release to stockholders an internal report on the transactions next week. The board also rejected one of the report's key recommendations: that officers and directors return profits from the stock deals.

That decision prompted John W. Wilhelm, president of the Hotel Employees and Restaurant Employees International Union, to resign in protest from the Ullico board. Sources at Ullico said the internal report, conducted by the law firm Winston & Strawn under the direction of former Illinois governor James Thompson (R), will be released to shareholders Monday, and probably to the press later in the week.

The stock transactions are under investigation by the U.S. attorney in Washington, the Department of Labor, the Securities and Exchange Commission and the Maryland Insurance Commissioner.

In a press release, Ullico absolved itself of any wrongdoing. The release said a special eight-member committee appointed by the board found that "no laws were broken and no securities regulations were violated." It said "a majority of the special committee found that there was no reason to recommend that the profits be given back."

Ullico chief executive Robert A. Georgine, whose initiation of the stock sale-and-repurchase arrangement provoked widespread criticism, said that "with the steps we are taking today, we can put these allegations of wrongdoing behind us and move forward to continue to provide our customers with the highest quality products and services."

The board voted for the "immediate elimination" of the "discretionary share repurchase program" that triggered the investigations, and for "the creation and disclosure of new standards for any future share repurchase program."

Under the stock repurchase program, officers and directors were allowed to buy blocks of the company's privately held stock at prices that were virtually certain to rise at the next annual "revaluation." A year later, when it became clear that the stock prices would fall at the next revaluation, officers and directors were allowed to sell shares back to the company at the high price, allowing them to profit while the company absorbed the losses.