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, 1998
[ ] 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, 2nd Floor
                      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
$8,941,475.

As of March 22, 1999, 7,240 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 $2,138,035.

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 1998 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 3, 1999.

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 46 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 34 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 46% at December 31,
1998.

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.  Since
1984, Acap has acquired six companies and four blocks of
business.  Primarily as a result of this acquisition activity,
Acap's assets grew from approximately $64 million at December 31,
1984 to approximately $158 million at December 31, 1998.

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, flexible
premium annuity contracts, and Medicare supplement policies.

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.

Medicare supplement policies are health insurance policies that
cover specified benefits that are not covered by Medicare.
Premium rates may be changed on the policies within a state with
the advance approval of regulatory officials of that state.

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)     1998          1997          1996
                           ----          ----          ----

Life insurance in force 577,049       287,401       291,396

Premium income:
  Life                    2,285         2,645         2,686
  Annuity                   705           977           472
  Health                    368           --            --
                    -----------------------------------------
  Total premiums          3,358         3,622         3,158
                    =========================================

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

(Dollars in Thousands)     1998          1997          1996
                           ----          ----          ----

Texas                     4,635         4,034         3,734
Ohio                        406           454           491
Alabama                     833           447            18
Indiana                     368           414           432
Pennsylvania                310           347           370
Michigan                    251           282           312
Other U.S.                1,691         1,825         1,864
                 ------------------------------------------
  Total                   8,494         7,803         7,221
                 ==========================================

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
over 1,700 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, 1998, Acap had a total of 66 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, 2nd Floor, Houston, Texas 77042.  The Company
leases 21,511 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, 1998 of $1,930,734.  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, 1998.


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 31 of Acap's 1998 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 1998
Annual Report to Stockholders.

ITEM 7.  FINANCIAL STATEMENTS.

Financial statements and supplementary data are incorporated
herein by reference from pages 10-29 of Acap's 1998 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

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

(a)  Exhibits:

 Exhibits           Description                  Location or
                                               Incorporation by
                                                  Reference
 3(a)(1)  Certificate of Incorporation of       *Form 10 effective June
          the Registrant dated March 12,        22, 1986, pages 58-61
          1985
 3(a)(2)  Certificate of Amendment to the       *Form 10 effective June
          Certificate of Incorporation of       22, 1986, pages 62-65
          the Registrant dated October
          25, 1985
 3(a)(3)  Certificate of Amendment to the       *Form 10K dated December
          Certificate of Incorporation of       31, 1988, pages 51-53
          the Registrant dated August 22,
          1986
 3(a)(4)  Certificate of Amendment to the       *Form S4, Registration
          Certificate of Incorporation of       No. 33-27874
          the Registrant dated March 20,
          1989
 3(a)(5)  Certificate of Amendment to the       *Form 10KSB dated
          Certificate of Incorporation of       December 31, 1994, pages
          the Registrant dated May 9,           273- 276
          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
          the Preferred Stock of the            31, 1986, pages 23-31
          Registrant
10(a)(1)  1997 American Capitol Insurance       *Form 10KSB dated
          Company Key Employee Incentive        December 31, 1997, pages
          Stock Option Plan                     11-19
10(a)(2)  Form of Grant of Stock Option         *Form 10KSB dated
          used in 1997 American Capitol         December 31, 1997, pages
          Insurance Company Key Employee        20-25
          Incentive Stock Option Plan
10(b)(1)  Employment Contract between           *Form 10QSB dated March
          American Capitol Insurance            31, 1997, pages 13-26
          Company and John D. Cornett
10(b)(2)  Stock Purchase Agreement              *Form 10QSB dated March
          between American Capitol              31, 1997, pages 27-36
          Insurance Company and John D.
          Cornett
10(c)     Disability Income Agreement           *Form 10KSB dated
          between American Capitol              December 31, 1997, pages
          Insurance Company and William         26-29
          F. Guest
10(d)(1)  Reinsurance Agreement between         *Form 10KSB dated
          American Capitol Insurance            December 31, 1993, pages
          Company and Crown Life                10-66
          Insurance 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, pages
          between American Capitol              48-50
          Insurance Company and Crown
          Life Insurance Company
10(e)(1)  Reinsurance Agreement effective       *Form 10KSB dated
          February 2, 1995 between Oakley-      December 31, 1994, pages
          Metcalf Insurance Company and         213- 260
          Alabama Reassurance Company
10(e)(2)  Amendment dated January 1, 1996       *Form 10KSB dated
          to the Reinsurance Agreement          December 31, 1996, pages
          between Oakley-Metcalf                69-71
          Insurance Company and Alabama
          Reassurance Company
10(e)(3)  Amendment dated December 31,          *Form 10KSB dated
          1996 to the Reinsurance               December 31, 1996, page
          Agreement between Texas               72
          Imperial Life Insurance Company
          and Alabama Reassurance Company
10(f)     Loan Agreement and related            *Form 10KSB dated
          documents between Acap                December 31, 1994, pages
          Corporation and Central               261- 272
          National Bank
10(g)     Coinsurance Agreement dated           *Form 10KSB dated
          June 1, 1996 between World            December 31, 1996, pages
          Service Life Insurance Company        73-138
          of America and American Capitol
          Insurance Company
10(h)     Administration Agreement dated        *Form 10KSB dated
          June 1, 1996 between South            December 31, 1996, pages
          Texas Life Insurance Agency,          139-147
          Inc. and American Capitol
          Insurance Company
10(i)     Administration Agreement dated        *Form 10KSB dated
          June 1, 1996 between South            December 31, 1996, pages
          Texas Life Insurance Company          148-158
          and American Capitol Insurance
          Company
10(j)     Assumption Agreement dated            *Form 10KSB dated
          August 1, 1997 between World          December 31, 1997, pages
          Service Life Insurance Company        30-74
          of America and American Capitol
          Insurance Company
10(k)     Coinsurance Agreement dated           *Form 10KSB dated
          January 1, 1998 between               December 31, 1997, pages
          Universal Life Insurance              75-128
          Company and American Capitol
          Insurance Company
10(l)     Amendments Letter dated               *Form 10KSB dated
          February 27, 1998 amending the        December 31, 1997, pages
          Coinsurance Agreement between         129-132
          Universal Life Insurance
          Company and American Capitol
          Insurance Company
10(m)     Closing Memorandum and                *Form 10KSB dated
          Amendments to the Coinsurance         December 31, 1997, pages
          Agreement between Universal           133-135
          Life Insurance Company and
          American Capitol Insurance
          Company
10(n)     Administration Agreement dated        *Form 10KSB dated
          January 1, 1998 between               December 31, 1997, pages
          Universal Life Insurance              136-153
          Company and American Capitol
          Insurance Company
10(o)     Coinsurance Agreement dated           *Form 10KSB dated
          January 1, 1998 between               December 31, 1997, pages
          Republic-Vanguard Life                154-176
          Insurance Company and American
          Capitol Insurance Company
10(p)     Lease Agreement dated November        *Form 10KSB dated
          21, 1997 between Realtycorp           December 31, 1997, pages
          International Group LC and            177-227
          American Capitol Insurance
          Company
11        Statement re computation of per       *1998 Annual Report to
          share earnings                        Stockholders, page 17
13        1998 Annual Report to                 Pages 10-43
          Stockholders
22        Subsidiaries of the Registrant        Page 44
27        Financial Data Schedule               Page 45
                                          
 _______________________________________________________
* Exhibit is incorporated by reference to the listed document.

(b)Reports on Form 8-K:

No reports on Form 8-K were filed in the last quarter of the year
     ended December 31, 1998.

                 

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 22, 1999

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 22, 1999

By:


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




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

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)