UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                               Washington, D.C.  20549
                                     Form 10-KSB
     (Mark One)
     [x]  ANNUAL REPORT under Section 13 or 15(d) of the Securities Exchange
     Act of 1934 [Fee Required]

     For the fiscal year ended:                   December 31, 1996

     [ ]  TRANSITION REPORT under Section 13 or 15(d) of the Securities
     Exchange Act of 1934 [No Fee Required]
     For the transition period from ____________ to ____________

     Commission file number 0-14451
                                  Acap Corporation
                   (Name of small business issuer in its charter)
     State of Incorporation:                                IRS Employer Id.:
            Delaware                                           25-1489730
                       Address of Principal Executive Office:
                                10555 Richmond Avenue
                                Houston, Texas  77042

     Issuer's telephone number, including area code:  (713) 974-2242
     Securities registered pursuant to Section 12(b) of the Act:  None
     Securities registered pursuant to Section 12(g) of the Act:

                       Common Stock, par value $.10 per share
                                  (Title of Class)

     Check whether the issuer (1) filed all reports required to be filed by
     Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past
     12 months (or for such shorter period that the registrant was required to
     file such reports), and (2) has been subject to such filing requirements
     for the past 90 days. [x] Yes  [ ] No.

     Check if disclosure of delinquent filers in response to Item 405 of
     Regulation S-B is not contained in this form, and no disclosure will be
     contained, to the best of registrant's knowledge, in definitive proxy or
     information statements incorporated by reference in Part III of this Form
     10-KSB or any amendment to this Form 10-KSB. [x]

     Revenues for the issuer for its most recent fiscal year were $6,270,767.

     As of March 24, 1997, 7,592 shares of the registrant's Common Stock,
     excluding shares held in treasury, were issued and outstanding, and the
     aggregate market value of such shares held by non-affiliates of the
     registrant on such date, based on the average of the closing bid and asked
     prices for such shares on such date, was $1,132,875.

                         DOCUMENTS INCORPORATED BY REFERENCE
     The information required by Part II, Items 5 - 7 of Form 10-KSB is
     incorporated by reference from the registrant's 1996 Annual Report to
     Stockholders.  The information required by Part III, Items 9 - 12 of Form
     10-KSB is incorporated by reference from the registrant's definitive
     information statement to be furnished in connection with the Annual
     Meeting of Stockholders to be held on or about April 28, 1997.
     
     
     <PAGE>
     The Exhibit Index, Part IV, Item 13, is located on page 7 of this 
     Form 10-KSB.
     This Form 10-KSB contains a total of 159 pages including any exhibits.

     Transitional Small Business Disclosure Format (check one):
      [ ] Yes  [x] No

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
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                                       PART I

     ITEM 1.  DESCRIPTION OF BUSINESS.

     Acap Corporation was incorporated under the laws of the State of Delaware
     on March 18, 1985 by the management of American Capitol Insurance Company
     ("American Capitol") to become the parent or "holding company" of American
     Capitol.  Acap Corporation began operating in that capacity on
     October 31, 1985.  American Capitol is a Texas life insurance company
     licensed in 33 states and the District of Columbia.  American Capitol
     began operations as a life insurance company on June 1, 1954.

     Unless the context otherwise requires, the term "Acap" refers to the
     consolidated group of Acap Corporation and its wholly-owned subsidiaries.

     Acap primarily engages in the acquisition and servicing of existing blocks
     of life insurance policies.  Since September 1994, the Company has
     marketed a small volume of final expense insurance and prearranged funeral
     service contracts.  Through its life insurance subsidiaries, Acap
     maintains a broad portfolio of individual life insurance policies and
     annuity contracts.  Life insurance is the only industry segment material
     to the operations of Acap.

     Fortune National Corporation ("Fortune Corp"), a Pennsylvania corporation,
     acquired a majority interest in American Capitol in 1984.  In the 1985
     reorganization that resulted in American Capitol becoming a wholly-owned
     subsidiary of Acap, Fortune Corp's majority interest in American Capitol
     was exchanged for an equivalent interest in Acap.  Fortune Corp was
     liquidated during 1996, leaving Fortune Corp's majority stockholder,
     InsCap Corporation ("InsCap"), a Delaware corporation, with the
     controlling interest in Acap, approximately 41% at December 31, 1996.

     Acquisition Strategy

     Acap's strategy for achieving growth and profits is based upon the
     acquisition of blocks of existing life insurance policies through the
     direct purchase of such blocks or indirectly through the acquisition of
     life insurance companies.  By acquiring blocks of life insurance directly
     or through the purchase of other life insurance companies, Acap hopes to
     add "new" life policies to its books more economically than through
     marketing.  

     Generally, insurance companies can acquire policies in two ways; either by
     "purchasing" them policy by policy through marketing, or by buying an
     existing block of policies.  Purchasing an existing block of business has
     the advantage that the policies have an established "history."  That is,
     an existing block will have an established pattern of mortality and lapse
     experience.  Also, the company selling the block of existing life policies
     has already absorbed the risks involved in marketing the life insurance
     products.  In purchasing an existing block of policies, Acap's strategy is
     to set the purchase price at the sum of the expected future profits of the
     block of policies discounted at a rate of return in excess of Acap's cost
     of funds.  Acap then attempts to improve upon the rate of return by
     maintaining the acquired policies at a lower per policy cost than was used
     in the pricing assumptions and by realizing a higher investment yield on
     the acquired assets than was used in the pricing assumptions.

     It also should be noted that the acquisition strategy has certain risks
     and disadvantages.  Since the marketing of life insurance products
     <PAGE>
     generally involves greater risks than acquiring existing blocks of life
     insurance, the profit margins available through marketing may be greater
     than the margins available with respect to an acquired block of life
     insurance.  Also, there are relatively few companies or blocks of business
     meeting Acap's acquisition criteria that become available for purchase
     each year.  Acap's acquisition strategy requires Acap to maintain the
     personnel, computer systems and physical properties necessary to
     accommodate large growth phases without the guarantee that such growth
     will occur.

     Acquisitions to Date

     Acap (i.e., its predecessor, American Capitol) switched from a traditional
     marketing strategy to the current acquisition strategy in 1984 in
     connection with the change in control and associated change in management
     resulting from Fortune Corp's purchase of a majority of the outstanding
     common stock.  Acquisitions made through December 31, 1996 include:

          Fortune National Life Insurance Company, acquired November 29, 1985,
          which added approximately 12,447 life policies and annuity contracts
          to Acap's operations.

          Associated Companies, Inc., acquired January 13, 1989, which
          approximately doubled the existing insurance operations of Acap.

          Trans-Western Life Insurance Company, acquired February 25, 1994,
          which added approximately 4,235 life policies and annuity contracts
          to Acap's operations.

          Family Life Insurance Company of Texas, acquired August 31, 1994,
          which added approximately 46,500 life policies and annuity contracts
          to Acap's operations.

          Texas Imperial Life Insurance Company, acquired September 29, 1994,
          which added approximately 9,750 life policies and annuity contracts
          to Acap's operations.

          Oakley-Metcalf Insurance Company, acquired February 2, 1995, which
          added approximately 3,000 life policies to Acap's operations.

          The policies of World Service Life Insurance Company of America,
          acquired through coinsurance effective June 1, 1996, which added
          approximately 18,000 life policies to Acap's operations.  Also
          effective June 1, 1996, American Capitol executed an administration
          agreement with South Texas Bankers Life Insurance Company, a wholly-
          owned subsidiary of World Service Life Insurance Company of America,
          which added approximately 8,000 policies to Acap's operations.

     Products and Markets

     The policies serviced by Acap are primarily traditional whole life
     policies, interest-sensitive whole life policies, term life policies,
     stipulated premium whole life policies and flexible premium annuity
     contracts.

     Traditional whole life policies are generally characterized by a uniform
     death benefit and a level periodic premium throughout the insured's
     lifetime.  These policies combine a savings element with insurance
     protection.  The savings element, called the cash value, builds at a fixed
     <PAGE>
     rate of interest and may be borrowed against by the policyholder and, if
     the policy terminates other than through the death of the insured, may be
     paid to the policyholder.

     Acap's interest-sensitive whole life policies also generally have a
     uniform death benefit and a level periodic premium.  However, with these
     policies, the interest rate credited to the savings element of the policy
     may be varied at Acap's option above a guaranteed minimum rate.  The
     interest-sensitive policies also provide for a surrender charge in the
     event that the policyholder surrenders the policy during the first ten
     years following the issue date of the policy.  Further, Acap may vary
     below a guaranteed maximum the amount charged against the policy for
     expenses and mortality costs.

     Term life policies generally offer pure insurance protection (i.e., no
     savings element) for a specified period.  Such policies typically offer a
     conversion privilege, a renewal privilege, or both.  Premiums typically
     are adjusted upon the exercise of either privilege.

     Stipulated premium whole life policies are characterized by a uniform
     death benefit and a level periodic premium throughout the insured's
     lifetime, however, unlike traditional whole life policies, stipulated
     premium whole life policies have no cash value.

     Flexible premium annuity contracts permit the annuitant to make deposits
     as he sees fit, and allow the annuitant to make withdrawals at his option,
     subject to deduction of applicable surrender charges.  The annuity balance
     earns interest on a tax deferred basis at a rate that Acap may change
     annually.

     From mid-1985 until September 1994, the Company relied exclusively on its
     acquisition strategy and did not actively market new business.  Since
     September 1994, the Company has marketed a small volume of final expense
     insurance and prearranged funeral service contracts.  These policies are
     primarily written through independent funeral homes.  The Company
     currently receives new business from approximately forty funeral homes.

     The following table sets forth information with respect to gross insurance
     in force and net premium income of Acap during the past three years:

     --------------------------------------------------------------------------
     (Dollars in Thousands)        1996           1995           1994
     --------------------------------------------------------------------------
     Life insurance in force   $291,396        286,803        321,859

     Premium income:

          Life                 $  2,686          1,828          1,350
          Annuity                   472            547            223
                               --------       --------       --------
       Total premiums          $  3,158          2,375          1,573
                               ========       ========       ========
     
     
     
     
     
     
     
     <PAGE>
     The table below presents the direct collected premiums by major geographic
     area for the last three years:
     --------------------------------------------------------------------------
     (Dollars in Thousands)        1996           1995           1994
     --------------------------------------------------------------------------

     Texas                      $ 3,734          4,573          2,414
     Ohio                           491            550            614
     Indiana                        432            457            503
     Pennsylvania                   370            399            440
     Michigan                       312            352            396
     Other U.S.                   1,882          2,122          2,298
                               --------       --------       --------
       Total                    $ 7,221          8,453          6,665
                               ========       ========       ========

     The preceding tables include certain premium amounts which under Statement
     of Financial Accounting Standards No. 97 ("FAS 97") are credited to
     liability accounts and are not considered revenues, and exclude surrender
     charges that under FAS 97 are considered revenue.  The premiums of Acap
     affected by FAS 97 are the premiums on interest-sensitive whole life
     policies and annuity contracts.

     Competition

     The life insurance industry is highly competitive.  There are
     approximately 1,770 legal reserve life insurance companies in the United
     States.  Although Acap's acquisition strategy is not the standard strategy
     employed in the industry, Acap must compete with a significant number of
     companies, both inside and outside the life insurance industry, when
     looking for an acquisition.  Many of these companies have substantially
     greater financial resources and larger staffs than Acap.

     Acap also must compete with a significant number of other life insurance
     companies to retain Acap's existing block of policies.  Many of these
     companies have broader and more diverse product lines together with active
     agency forces, and therefore, certain of Acap's policyholders may be
     induced to replace their existing policies with those provided by Acap's
     competitors.

     Regulation

     The insurance subsidiaries of the Company are subject to regulation by the
     supervisory insurance agency of each state or other jurisdiction in which
     the insurance subsidiaries are licensed to do business.  These supervisory
     agencies have broad administrative powers relating to the granting and
     revocation of licenses to transact business, the approval of policy forms,
     the form and content of mandatory financial statements, capital, surplus,
     reserve requirements and the types of investments that may be made.  The
     insurance subsidiaries are required to file detailed reports with each
     supervisory agency, and its books and records are subject to examination
     by each.  In accordance with the insurance laws of the State of Texas (the
     insurance subsidiaries' state of domicile) and the rules and practices of
     the National Association of Insurance Commissioners (the "NAIC"), the
     insurance subsidiaries are examined periodically by examiners from Texas.

     Most states have enacted legislation or adopted administrative regulations
     covering such matters as the acquisition of control of insurance companies
     
     <PAGE>
     and transactions between insurance companies and the persons controlling
     them.  The NAIC has recommended model legislation on these subjects that
     has been adopted, with variations, by many states.  The nature and extent
     of the legislation and administrative regulations now in effect vary from
     state to state, and in most states prior administrative approval of the
     acquisition of control of an insurance company incorporated in the state,
     whether by tender offer, exchange of securities, merger or otherwise, is
     required, which process involves the filing of detailed information
     regarding the acquiring parties and the plan of acquisition.

     The insurance subsidiaries are members of an "insurance holding company
     system" and are required to register as such with the State of Texas and
     file periodic reports concerning their relationships with the insurance
     holding company and other affiliates of the holding company.  Material
     transactions between members of the holding company system are required to
     be "fair and reasonable" and in some cases are subject to administrative
     approval, and the books, accounts and records of each party are required
     to be so maintained as to clearly and accurately disclose the precise
     nature and details of the transactions.  Notice to or approval by the
     State of Texas is required for dividends paid by the insurance
     subsidiaries.

     Employees

     At December 31, 1996, Acap had a total of 31 employees.  None of these
     employees is covered by a collective bargaining agreement.  Acap believes
     that it has excellent relations with its employees.

     ITEM 2.  DESCRIPTION OF PROPERTIES.

     The principal offices of the Company are located at 10555 Richmond Avenue,
     Houston, Texas 77042.  The Company holds unencumbered title to a building
     containing approximately 50,000 square feet and approximately 5.5 acres of
     land at that location. The Company occupies approximately 12,000 square
     feet.  Approximately 3,000 square feet of additional space is leased by
     unaffiliated tenants.  The Company's offices are suitable for the conduct
     of its business and provide room for future growth.  Management believes
     that the property is adequately covered by insurance.

     The Company's investment policy prohibits making new investments in real
     estate without the prior approval of the Board of Directors.  There are no
     plans to make any real estate investments in the foreseeable future.  If
     the Company were interested in making a real estate investment, regulatory
     restrictions applicable to Texas life insurance companies would prohibit
     the life insurance subsidiaries from investing in real estate outside of
     the United States, in residential real estate, or in any property, other
     than home office property, that exceeds 5% of the insurer's statutory
     assets.

     The Company owns and services first mortgage loans with aggregate
     principal balances at December 31, 1996 of $2,760,835.  The Company's
     investment policy prohibits making new investments in mortgage loans
     without the prior approval of the Board of Directors.  There are no plans
     to make any mortgage loan investments in the foreseeable future.  If the
     Company were interested in making a mortgage loan investment, regulatory
     restrictions applicable to Texas life insurance companies would prohibit
     the life insurance subsidiaries from investing in mortgage loans on real
     estate outside of the United States, in other than first liens, or in any
     loan that exceeds 25% of the insurer's statutory capital and surplus.
     <PAGE>
     ITEM 3.  LEGAL PROCEEDINGS.

     Acap and its subsidiary are involved in various lawsuits and legal actions
     arising in the ordinary course of operations.  Management is of the
     opinion that the ultimate disposition of these matters will not have a
     material adverse effect on Acap's financial position.

     ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     No matter was submitted to a vote of security holders during the quarter
     ended December 31, 1996.


                                       PART II

     ITEM 5.  MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

     The required information regarding the market for the common equity of the
     Company and related stockholder matters is incorporated herein by
     reference from "Stockholder Information" on page 30 of Acap's 1996 Annual
     Report to Stockholders.

     ITEM 6.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION.

     Management's Discussion and Analysis of Financial Condition and Results of
     Operations is incorporated herein by reference from "Management's
     Financial Analysis" on pages 3 - 8 of Acap's 1996 Annual Report to
     Stockholders.

     ITEM 7.  FINANCIAL STATEMENTS.

     Financial statements and supplementary data are incorporated herein by
     reference from pages 9 - 29 of Acap's 1996 Annual Report to Stockholders.

     ITEM 8.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.

     None.


                                      PART III

     The information required by Items 9-12 is incorporated by reference from
     Acap's definitive information statement, which is to be filed pursuant to
     Regulation 14C.

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     <PAGE>
                                       PART IV

     ITEM 13.   EXHIBITS AND REPORTS ON FORM 8-K.

     (a)  Exhibits:
     
                                                         Location or
     Exhibits            Description             Incorporation by Reference

      3(a)(1)    Certificate of Incorporation     *Form 10 effective June 22,
                 of the Registrant dated March    1986, pages 58-61
                 12, 1985

      3(a)(2)    Certificate of Amendment to      *Form 10 effective June 22,
                 the Certificate of               1986, pages 62-65
                 Incorporation of the
                 Registrant dated October 25,
                 1985

      3(a)(3)    Certificate of Amendment to      *Form 10K dated December
                 the  Certificate of              31, 1988, pages 51-53
                 Incorporation of the
                 Registrant dated August 22,
                 1986

      3(a)(4)    Certificate of Amendment to      *Form S4, Registration No.
                 the  Certificate of              33-27874
                 Incorporation of the
                 Registrant dated March 20,
                 1989

      3(a)(5)    Certificate of Amendment to      *Form 10KSB dated December
                 the Certificate of               31, 1994, pages 273-276
                 Incorporation of the
                 Registrant dated May 9, 1994

      3(b)(1)    Bylaws of the Registrant, as     *Form 10K dated December
                 amended                          31, 1988, pages 54-68

      3(b)(2)    Amendment to the Bylaws of the   *Form 10Q dated March 31,
                 Registrant                       1990, page 11

      4          Certificate of Designations of   *Form 8K dated December 31,
                 the Preferred Stock of the       1986, pages 23-31
                 Registrant

     10(a)(1)    1988 American Capitol            *Form 10K dated December
                 Insurance Company Key Employee   31, 1988, pages 37-44
                 Stock Option Plan

     10(a)(2)    Form of Grant of Stock Option    *Form 10K dated December
                 used in 1988 American Capitol    31, 1988, pages 45-50
                 Insurance Company Key Employee
                 Stock Option Plan            


     10(b)(1)    Employment Contract between      *Form 10KSB dated December
                 American Capitol Insurance       31, 1994, pages 278-290
                 Company and John D. Cornett
     <PAGE>                                              
                                                         Location or   
     Exhibits            Description             Incorporation by Reference

     10(b)(2)    Stock Purchase Agreement         *Form 10KSB dated December
                 between American Capitol         31, 1994, pages 291-300
                 Insurance Company and John D.
                 Cornett

     10(c)       Supplemental Disability Income   *Form 10Q dated September
                 Agreement between American       30, 1990, pages 12-18
                 Capitol Insurance Company and
                 William F. Guest

     10(d)(1)    Reinsurance Agreement between    *Form 10KSB dated December
                 American Capitol Insurance       31, 1993, pages 10-66
                 Company and Crown Life
                 Insurance Company effective
                 December 31, 1992, as amended
    
     10(d)(2)    Amendment dated June 30, 1996    Pages 48-50
                 to the Reinsurance Agreement
                 between American Capitol
                 Insurance Company and Crown
                 Life Insurance Company

     10(e)       Employment Agreement between     Pages 51-68
                 Texas Imperial Life Insurance
                 Company and Richard M. Ridley
                 dated October 1, 1996

     10(f)       Stock Purchase Agreement for     *Form 10KSB dated December
                 Oakley-Metcalf Insurance         31, 1994, pages 162-212
                 Company

     10(g)(1)    Reinsurance Agreement            *Form 10KSB dated December
                 effective February 2, 1995       31, 1994, pages 213-260
                 between Oakley-Metcalf
                 Insurance Company and Alabama
                 Reassurance Company

     10(g)(2)    Amendment dated January 1,       Pages 69-71
                 1996 to the Reinsurance
                 Agreement between Oakley-
                 Metcalf Insurance Company and
                 Alabama Reassurance Company

     10(g)(3)    Amendment dated December 31,     Page 72
                 1996 to the Reinsurance
                 Agreement between Texas
                 Imperial Life Insurance
                 Company and Alabama
                 Reassurance Company

     10(h)       Loan Agreement and related       *Form 10KSB dated December
                 documents between Acap           31, 1994, pages 261-272
                 Corporation and Central
                 National Bank
           

    <PAGE>
                                                         Location or   
     Exhibits            Description             Incorporation by Reference
     
     10(i)       Coinsurance Agreement dated      Pages 73-138
                 June 1, 1996 between World
                 Service Life Insurance Company
                 of America and American
                 Capitol Insurance Company

     10(j)       Administration Agreement dated   Pages 139-147
                 June 1, 1996 between South
                 Texas Life Insurance Agency,
                 Inc. and American Capitol
                 Insurance Company

     10(k)       Administration Agreement dated   Pages 148-158
                 June 1, 1996 between South
                 Texas Life Insurance Company
                 and American Capitol Insurance
                 Company
     
     11          Statement re computation of      *1996 Annual Report to
                 per share earnings               Stockholders, page 16

     13          1996 Annual Report to            Pages 12-47
                 Stockholders

     22          Subsidiaries of the Registrant   Page 11

     27          Financial Data Schedule          Page 159

     _______________________________________________________
     * Exhibit is incorporated by reference to the listed document.

     (b)  Reports on Form 8-K:

          None.
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     <PAGE>
                                      SIGNATURES
     
     In accordance with Section 13 or 15(d) of the Exchange Act, the registrant
     caused this report to be signed on its behalf by the undersigned,
     thereunto duly authorized.

     Acap Corporation

     Date:  March 24, 1997

     By:
          /s/ William F. Guest                    
          ------------------------------------
          William F. Guest
          Chairman of the Board
          

     In accordance with the Exchange Act, this report has been signed below by
     the following persons on behalf of the registrant and in the capacities
     and on the date indicated.

     Date:  March 24, 1997

     By:

          /s/ William F. Guest              /s/ John D. Cornett                 
          --------------------------        ----------------------------------
          William F. Guest                  John D. Cornett
          Chairman of the Board,            Executive Vice President and
                                              Treasurer 
          President and Director            (Principal Financial and
          (Principal Executive Officer)       Accounting Officer)
     



          /s/ R. Wellington Daniels          /s/ C. Stratton Hill, Jr.
          ---------------------------       -----------------------------------
          R. Wellington Daniels             C. Stratton Hill, Jr.
          Director                          Director

     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     
     <PAGE>
     EXHIBIT 21


                          SUBSIDIARIES OF ACAP CORPORATION

     Wholly-owned subsidiary of Acap Corporation:
     --------------------------------------------

     American Capitol Insurance Company (Texas)

     Wholly-owned subsidiaries of American Capitol Insurance Company:
     ----------------------------------------------------------------

     Imperial Plan, Inc. (Texas)
     Texas Imperial Life Insurance Company (Texas)