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, 1997

[ ]  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
$6,446,983.

As of March 23, 1998, 7,440 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 $1,793,505.

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 1997 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 May 4, 1998.

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 265 pages including any
exhibits.

Transitional Small Business Disclosure Format (check one):
[ ]  Yes [x]  No
<PAGE>
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 45% at December 31,
1997.

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 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, 1997 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.  Effective August 1, 1997, the
     coinsurance was converted to assumption reinsurance.

     The policies issued by South Texas Bankers Life Insurance
     Company, acquired through coinsurance effective January 1,
     1997, which added approximately 8,000 life 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 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 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)           1997      1996      1995
---------------------------------------------------------
Life insurance in force       287,401   291,396   286,803
                                               
Premium income:

     Life                       2,645     2,686     1,828
     Annuity                      977       472       547
                         --------------------------------
       Total premiums           3,622     3,158     2,375
                         ================================

The table below presents the direct collected premiums by major
geographic area for the last three years:

(Dollars in Thousands)           1997      1996      1995
---------------------------------------------------------
 Texas                          4,034     3,734     4,573
 Ohio                             454       491       550
 Alabama                          447        18        20
 Indiana                          414       432       457
 Pennsylvania                     347       370       399
 Michigan                         282       312       352
 Other U.S.                     1,825     1,864     2,102
                               --------------------------
       Total                    7,803     7,221     8,453
                               ==========================

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 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, 1997, Acap had a total of 38 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 leases
13,087 square feet of office space pursuant to a five year
lease executed in 1997. The Company's offices are suitable for
the conduct of its business and the Company has an option to
lease additional space in the same building to provide room for
future growth. 

The Company's investment policy prohibits making 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, 1997 of
$2,150,163.  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.

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, 1997.

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 32 of Acap's 1997 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 - 9 of Acap's 1997
Annual Report to Stockholders.

ITEM 7.  FINANCIAL STATEMENTS.

Financial statements and supplementary data are incorporated
herein by reference from pages 10 - 31 of Acap's 1997 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.

PART IV
<PAGE>
ITEM 13.  EXHIBITS AND REPORTS ON  FORM 8-K.

(a)  Exhibits:  

 Exhibits           Description              Location or
                                             Incorporation by
                                             Reference

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

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

3(a)(3)   Certificate of Amendment to      *Form 10K dated 
          the  Certificate of              December 31, 1988,
          Incorporation of the             pages 51-53
          Registrant dated August 22, 1986
          
3(a)(4)   Certificate of Amendment to      *Form S4, 
          the  Certificate of              Registration No.
          Incorporation of the             33-27874
          Registrant dated March 20, 1989

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

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

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

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

10(a)(1)  1997 American Capitol Insurance  Pages 11-19
          Company Key Employee Incentive 
          Stock Option Plan                

10(a)(2)  Form of Grant of Stock Option    Pages 20-25
          used in 1997 American Capitol 
          Insurance Company Key Employee 
          Incentive Stock Option Plan
<PAGE>
10(b)(1)  Employment Contract between      *Form 10QSB dated
          American Capitol Insurance       March 31, 1997,
          Company and John D. Cornett      pages 13-26

10(b)(2)  Stock Purchase Agreement between *Form 10QSB dated
          American Capitol Insurance       March 31, 1997,
          Company and John D. Cornett      pages 27-36

10(c)     Disability Income Agreement      Pages 26-29
          between American Capitol 
          Insurance Company and William F.
          Guest
          
10(d)(1)  Reinsurance Agreement between    *Form 10KSB dated
          American Capitol Insurance       December 31, 1993, 
          Company and Crown Life Insurance pages 10-66
          Company effective 
          December 31, 1992, as amended     

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

10(e)(1)  Reinsurance Agreement effective  *Form 10KSB dated
          February 2, 1995 between         December 31, 1994,
          Oakley-Metcalf Insurance Company pages 213- 260
          and Alabama Reassurance Company
            
10(e)(2)  Amendment dated January 1, 1996  *Form 10KSB dated 
          to the Reinsurance Agreement     December 31, 1996,
          between Oakley-Metcalf Insurance pages 69-71
          Company and Alabama Reassurance 
          Company

10(e)(3)  Amendment dated December 31,     *Form 10KSB dated
          1996 to the Reinsurance          December 31, 1996
          Agreement between Texas Imperial page 72
          Life Insurance Company and 
          Alabama Reassurance Company
           
10(f)     Loan Agreement and related       *Form 10KSB dated
          documents between Acap           December 31, 1994,
          Corporation and Central National pages 261- 272
          Bank

 10(g)    Coinsurance Agreement dated      *Form 10KSB dated
          June 1, 1996 between World       December 31, 1996,
          Service Life Insurance Company   pages 73-138
          of America and American Capitol 
          Insurance Company                  

10(h)     Administration Agreement dated   *Form 10KSB dated
          June 1, 1996 between South Texas December 31, 1996,
          Life Insurance Agency, Inc. and  pages 139-147
          American Capitol Insurance       
          Company
           
10(i)     Administration Agreement dated   *Form 10KSB dated
          June 1, 1996 between South Texas December 31, 1996,
          Life Insurance Company and       pages 148-158
          American Capitol Insurance       
          Company
            
10(j)     Assumption Agreement dated       Pages 30-74
          August 1, 1997 between World 
          Service Life Insurance Company 
          of America and American Capitol 
          Insurance Company

10(k)     Coinsurance Agreement dated      Pages 75-128
          January 1, 1998 between 
          Universal Life Insurance Company
          and American Capitol Insurance   
          Company                          

10(l)     Amendments Letter dated          Pages 129-132
          February 27, 1998 amending the 
          Coinsurance Agreement between 
          Universal Life Insurance Company 
          and American Capitol Insurance
          Company

10(m)     Closing Memorandum and           Pages 133-135
          Amendments to the Coinsurance 
          Agreement between Universal Life 
          Insurance Company and American 
          Capitol Insurance Company

10(n)     Administration Agreement dated   Pages 136-153
          January 1, 1998 between 
          Universal Life Insurance Company 
          and American Capitol Insurance
          Company                          

10(o)     Coinsurance Agreement dated      Pages 154-176
          January 1, 1998 between 
          Republic-Vanguard Life Insurance 
          Company and American Capitol 
          Insurance Company

10(p)     Lease Agreement dated            Pages 177-227
          November 21, 1997 between 
          Realtycorp International Group LC
          and American Capitol Insurance
          Company
11        Statement re computation of per  *1997 Annual Report
          share earnings                   to Stockholders,
                                           page 17

13        1997 Annual Report to            Pages 228-263
          Stockholders

21        Subsidiaries of the Registrant   Page 264

27        Financial Data Schedule          Page 265
                                           
* Exhibit is incorporated by reference to the listed document.

(b)       Reports on Form 8-K:

The following report of Form 8-K was filed in the last quarter
of the year ended December 31, 1997:

December 5, 1997 
          Item 5.  Other Events.  Reporting that American
          Capitol Insurance Company had signed an agreement in
          principle to coinsure the individual life insurance
          policies of Universal Life Insurance Company.

<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 23, 1998
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 23, 1998

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