SECURITIES AND EXCHANGE COMMISSION
                                   
                       Washington, D. C.  20549
                                   
                       ________________________
                                   
                               Form 10-Q



   [X]      Quarterly Report Pursuant to Section 13 or 15(d)
               of the Securities Exchange Act of 1934
           For the Quarterly Period Ended September 30, 1995
                                  or
   [ ]      Transition Report Pursuant to Section 13 or 15(d)
               of the Securities Exchange Act of 1934


                        ______________________
                                   
                                   
                     Commission File Number 0-8636
                                   
                                   
               AMERICAN INDEMNITY FINANCIAL CORPORATION
               ________________________________________
        (Exact name of registrant as specified in its charter)
                                   

                Delaware                       510119643
                ________                       _________
     (State or other jurisdiction of     (I. R. S. Employer
       incorporation or organization)     Identification No.)



One American Indemnity Plaza, Galveston, Texas         77550
______________________________________________         _____         
    (Address of principal executive offices)        (Zip Code)


  Registrant's telephone number, including area code - (409) 766-4600

Indicate  by  check  mark whether the registrant  (1)  has  filed  all
reports  required to be filed by Section 13 or 15(d) of the Securities
Exchange  Act  of  1934 during the preceding 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.  Yes [X]  No [ ]

As of November 8, 1995, 1,947,110 shares of registrant's common stock,
$3.33 1/3 par value, were outstanding.

<PAGE>
                                 

                                  
               AMERICAN INDEMNITY FINANCIAL CORPORATION
                           AND SUBSIDIARIES

ITEM 1. FINANCIAL STATEMENTS

             Consolidated Statements of Operations for the
            Three Months Ended September 30, 1995 and 1994
                               Unaudited
                                   
                                                                         
                                                 1995           1994
                                              __________     __________
PREMIUMS AND OTHER INCOME:                                  
  Premiums earned                            $17,243,770    $16,817,922
  Net investment income (net of investment             
    expenses of $94,433 in 1995 and $92,740
    in 1994)                                     968,835      1,159,816
  Realized investment gains (losses)              88,098        (74,565)
  Interest on premium bills receivable and      
    other income                                 185,342        174,055
                                              __________     __________
            TOTAL                             18,486,045     18,077,228

EXPENSES:                                                   
  Losses and loss adjustment expenses         12,490,046     10,883,735
  Policy acquisition costs                     6,310,921      6,468,829
  Retrospective premium adjustments on      
    workers' compensation policies               375,568       (232,120)
                                              __________     __________
            TOTAL                             19,176,535     17,120,444

INCOME (LOSS) BEFORE FEDERAL INCOME TAX         (690,490)       956,784

PROVISION (CREDIT) FOR FEDERAL INCOME TAX:                  
  Current                                        (13,088)        36,071
  Deferred                                                  
                                              __________     __________     
            TOTAL                                (13,088)        36,071

NET INCOME (LOSS)                            $  (677,402)   $   920,713

AVERAGE SHARES OUTSTANDING                     1,946,843      1,946,710

EARNINGS PER SHARE:                                         
  NET INCOME (LOSS)                          $      (.34)   $       .47

DIVIDENDS DECLARED PER SHARE                 $      .075    $       .06
                                   
                                   
                                   
            See Notes to Consolidated Financial Information
<PAGE>                                   
                                   
                                   
               AMERICAN INDEMNITY FINANCIAL CORPORATION
                           AND SUBSIDIARIES

             Consolidated Statements of Operations for the
             Nine Months Ended September 30, 1995 and 1994
                               Unaudited
                                   
                                                                         
                                                    1995           1994
                                                 __________     __________
PREMIUMS AND OTHER INCOME:                                  
  Premiums earned                               $51,158,487    $48,919,803
  Net investment income (net of investment    
    expenses of $290,622 in 1995 and $272,079 
    in 1994)                                      2,965,137      3,710,722  
  Realized investment gains (losses)                  7,212        (82,336)
  Interest on premium bills receivable and              
    other income                                    549,530        519,365
                                                 __________     __________
            TOTAL                                54,680,366     53,067,554

EXPENSES:                                                   
  Losses and loss adjustment expenses            38,544,783     32,679,264
  Policy acquisition costs                       18,939,513     17,209,943
  Retrospective premium adjustments on                             
    workers' compensation policies                  955,030         78,065
                                                 __________     __________
            TOTAL                                58,439,326     49,967,272

INCOME (LOSS) BEFORE FEDERAL INCOME TAX          (3,758,960)     3,100,282

PROVISION (CREDIT) FOR FEDERAL INCOME TAX:                  
  Current                                           (13,088)        35,392
  Deferred                                                  
                                                 __________     __________
            TOTAL                                   (13,088)        35,392

NET INCOME (LOSS)                              $ (3,745,872)   $ 3,064,890

AVERAGE SHARES OUTSTANDING                        1,946,754      1,946,677

EARNINGS PER SHARE:                                         
  NET INCOME (LOSS)                            $      (1.92)   $      1.57

DIVIDENDS DECLARED PER SHARE                   $        .21    $       .15
                                   

                                   
            See Notes to Consolidated Financial Information
<PAGE>                                   
                                   
                                   
               AMERICAN INDEMNITY FINANCIAL CORPORATION
                           AND SUBSIDIARIES
                                   
                      Consolidated Balance Sheets
               September 30, 1995 and December 31, 1994
                               Unaudited
                                   
                                                     1995           1994
                                                  ___________     ___________  
ASSETS                                           
______
Investments:                                                
 Fixed maturities - bonds:                                  
   Available for sale                            $ 71,207,953    $ 62,569,334
 Preferred stocks                                   2,258,337       2,268,012
 Common stocks                                     11,541,286      14,475,261
 Mortgage loans on real estate                         25,753          29,034
 Short-term investments                                60,000          60,000
                                                  ___________     ___________
        Total Investments                          85,093,329      79,401,641
Cash and Cash Equivalents                           3,767,901       4,937,544
Accrued Investment Income                             790,678         736,466
Premiums in Course of Collection                    7,012,945       5,962,784
Direct Premium Bills Receivable                     9,034,019       7,908,893
Reinsurance Balances Receivable                    11,901,307      10,788,671
Prepaid Reinsurance Premiums                          756,628       1,327,484
Property and Equipment - Less accumulated                   
  depreciation of $4,697,505 in 1995 and 
  $4,411,800 in 1994                                4,111,162       3,791,245
Deferred Policy Acquisition Costs                   9,480,969       9,097,464
Deferred income taxes                               4,430,000       4,430,000
Other Assets                                        3,025,362       2,819,299
                                                  ___________     ___________
        TOTAL                                    $139,404,300    $131,201,491
                                                            


LIABILITIES AND STOCKHOLDERS' EQUITY
____________________________________
Losses and Loss Adjustment Expenses              $ 52,530,100    $ 50,916,776
Unearned Premiums                                  36,762,210      34,922,255
Reinsurance Balances Held or Payable                3,115,788       3,777,547
Accounts Payable and Other Accrued Liabilities      9,468,175       8,146,547  
                                                  ___________     ___________ 
   Total Liabilities                              101,876,273      97,763,125

Stockholders' Equity:                                       
 Preferred stock, authorized 2,000,000                      
   shares; none outstanding
 Common stock, $3.33 1/3 par value; authorized 
   2,500,000 shares; outstanding shares  
   1,947,110 in 1995 and 1,946,710 in 1994          6,490,351       6,489,018
 Paid-in surplus                                   13,047,085      13,045,866
 Unrealized decline in market value of         
   investments                                     (2,110,548)    (10,352,340) 
 Retained earnings                                 20,101,139      24,255,822
                                                  ___________     ___________  
        Total Stockholders' Equity                 37,528,027      33,438,366
                                                  ___________     ___________
        TOTAL                                    $139,404,300    $131,201,491
                                   
                                   
                                   
            See Notes to Consolidated Financial Information
<PAGE>                   
      
          
                                   
               AMERICAN INDEMNITY FINANCIAL CORPORATION
                           AND SUBSIDIARIES
                                   
             Consolidated Statements of Cash Flows for the
             Nine Months Ended September 30, 1995 and 1994
                               Unaudited
                                   
                                                     1995           1994
                                                  __________     __________
OPERATING ACTIVITIES:                          
 Net income (loss)                              $ (3,745,872)  $  3,064,890
 Adjustments to reconcile net income to                 
   net cash flow from operating activities:
   Decrease (Increase) in:
     Premiums in course of collection             (1,050,161)    (1,279,137)
     Direct premium bills receivable              (1,125,126)      (495,078)
     Reinsurance balances receivable              (1,112,636)     1,041,674
     Prepaid reinsurance premiums                    570,856        329,585
     Deferred policy acquisition costs              (383,505)    (1,023,331)
     Other assets                                   (206,063)    (1,416,697)
   Increase (Decrease) in:                              
     Unpaid losses and loss adjustment expenses    1,613,324     (2,062,521)
     Unearned premiums                             1,839,955        659,064
     Reinsurance balances held or payable           (661,759)     1,179,253
     Accounts payable and other accrued         
       liabilities                                 1,321,628      2,197,564
   Realized investment (gains) losses                 (7,212)        82,336
   Depreciation                                      285,705        227,162
   Other                                             (23,894)       381,324
                                                  __________     __________   
     Net cash flow from operating activities      (2,684,760)     2,886,088
                                                        
INVESTING ACTIVITIES:                                   
 Sale of bonds                                     5,166,266     21,217,761
 Maturity of bonds                                 3,263,596      5,019,820
 Sale of preferred stocks                             49,338        
 Redemption of preferred stocks                      170,018         27,625
 Sale of common stocks                             5,431,904      2,459,425
 Purchase of bonds                               (11,308,905)   (28,156,361)
 Purchase of preferred stocks                                      (175,000)
 Purchase of common stocks                          (248,500)    (1,080,825)
 Purchase of property and equipment                 (605,622)      (406,286)
 Other                                                 3,281          9,427
                                                  __________      _________  
     Net cash flow from investing activities       1,921,376     (1,084,414)
                                         
                                                     
FINANCING ACTIVITIES:                                   
                                                        
 Cash dividends paid to stockholders                (408,811)      (292,003)
   Proceeds received from exercise of stock                
     options                                           2,552            638
                                                  __________      __________  
     Net cash flow from financing activities        (406,259)      (291,365)
                                                  __________      __________
     Net Increase (Decrease) in Cash and                
       Cash Equivalents                           (1,169,643)     1,510,309
     Cash and Cash Equivalents, January 1          4,937,544      2,628,681
                                                  __________      _________   
     Cash and Cash Equivalents, September 30    $  3,767,901   $  4,138,990
                                                     
                                   
                                   
            See Notes to Consolidated Financial Information
<PAGE>                                   

               AMERICAN INDEMNITY FINANCIAL CORPORATION
                           AND SUBSIDIARIES
                                   
              NOTES TO CONSOLIDATED FINANCIAL INFORMATION


(1)The  financial information included herein is unaudited but, in the
   opinion  of  management,  all  adjustments  (consisting  of  normal
   recurring  accruals)  necessary for a fair presentation  have  been
   included.   These interim consolidated financial statements  should
   be  read in conjunction with the Company's report on Form 10-K  for
   the  year  ended December 31, 1994.  The results of operations  for
   this  interim period are not necessarily indicative of results  for
   the full year.

(2)Deferred  income taxes reflect the net tax effects of (a) temporary
   differences  between the carrying amounts of assets and liabilities
   for  financial reporting purposes and the amounts used  for  income
   tax  purposes,  and  (b)  operating loss  carryforwards.   The  tax
   effects  of significant items comprising the Company's net deferred
   income taxes as of September 30, 1995 and December 31, 1994 are  as
   follows:

                                September 30, 1995   December 31, 1994
                                      ____________        ___________  
Deferred tax liabilities:                         
Deferred  policy acquisition costs    $ (3,223,529)      $ (3,093,138)
Difference between book and                      
  tax basis of property                   (276,196)          (293,041)
Other                                     (733,055)          (648,145)
                                      ____________        ___________
                                        (4,232,780)        (4,034,324)
Deferred tax assets:                              
Reserves not currently deductible        6,067,097          5,544,486
Unrealized investments losses              717,586          3,519,796
Operating loss carryforwards            11,876,683         10,266,792
                                      ____________        ___________
                                        18,661,366         19,331,074
                                      ____________        ___________
Net Asset                               14,428,586         15,296,750
Valuation allowance                     (9,998,586)       (10,866,750)
                                      ____________        ___________ 
Net deferred tax assets               $  4,430,000        $ 4,430,000


   The  provision  for federal income tax is related to taxes  arising
   under  the  alternative  minimum  tax  system  which  is  based  on
   reported  income, adjusted for differences arising  in  revenue  or
   expense  items,  per  applicable tax laws and regulations,  between
   reported income and taxable income.  The credit for income tax  for
   the  nine months ended September 30, 1995 was $13,088, all of which
   was  current  tax  credit.  The Company did  not  pay  any  federal
   income  taxes  during the first nine months of  1995,  whereas  the
   Company  paid  $160,000 in federal income taxes  during  the  first
   nine months of 1994.

   The  Company has a net operating loss carryforward for tax purposes
   of  $34,931,421, which expires if not previously utilized, in 1998-
   $3,163,998;  1999 - $7,384,546; 2000 - $5,712,421; 2001-$4,927,522;  
   2002-$2,271,256; 2003-$621,205;  2004-$4,596,950;  2005-$1,246,728;
   2006-$118,137; 2007-$43,352; 2008-$13,450; 2009-$13,410; and  2010-
   $4,818,446.

<PAGE>
                                   
               AMERICAN INDEMNITY FINANCIAL CORPORATION
                           AND SUBSIDIARIES
                                   
                MANAGEMENT'S DISCUSSION AND ANALYSIS OF
             FINANCIAL CONDITION AND RESULTS OF OPERATIONS
             _____________________________________________

LIQUIDITY
      The  Company  has  consistently been able to  generate  adequate
amounts  of  cash to meet its needs and management is unaware  of  any
trends,  demands, commitments, events or uncertainties which  will  or
are  reasonably  likely  to have a material effect  on  the  Company's
liquidity.

  Operating Activities
      The  net cash flow from operating activities for the nine months
ended  September 30, 1995 was negative primarily as  a  result  of  an
increase in the amount of funds required for the payment of claims, an
increase  in policy acquisition costs and a decrease in net investment
income  compared with the nine months ended September 30,  1994.   The
negative effect on cash flow of these items was offset somewhat  by  a
7.3% increase in net premiums written for the same comparison period.

      The  amount  of  funds  required for  claim  payments  increased
approximately  10.2%  for  the nine months ended  September  30,  1995
compared with the nine months ended September 30, 1994.  This resulted
primarily from an increase in claim payments, due to increased weather-
related   losses  and  the  settlement  of  several  large  commercial
automobile liability claims in the first nine months of 1995  compared
with the first nine months of 1994.

     Policy acquisition costs increased 10.0% in the first nine months
of  1995  compared with the first nine months of 1994.  This  increase
resulted from increases in amortization of deferred policy acquisition
costs,  expenses  related to commissions and overhead expenses  during
the  first nine months of 1995 compared with the first nine months  of
1994.   Expenses related to commissions increased as a result  of  the
cancellation  of  the  25%  quote  share  reinsurance  agreement   and
increased  bonus  commission  expense.   Overhead  expenses  increased
primarily as a result of an increase in legal expense.

     Net investment income decreased 20.1% in the first nine months of
1995  compared  with  the first nine months of 1994,  primarily  as  a
result of reduced yields on the Company's derivative securities.

      The  net cash flow from operating activities for the nine months
ended  September  30,  1994  was positive as  a  result  of  favorable
operating results.

  Investing Activities
      During  the  first  nine months of 1995, management  invested  a
portion of available cash balances and the proceeds received from  the
disposition  of  investments into investment grade  bonds  and  common
stocks  which  provided  favorable yields.  The  net  cash  flow  from
investing activities was positive in the first nine months of 1995  as
total  investment  sales  and  maturities  exceeded  total  investment
purchases.

     During the first nine months of 1995, unrealized investment gains
increased stockholders' equity by approximately $8,242,000,  of  which
approximately $5,762,000 of this amount was from debt securities, with
the  remainder  from  equity securities.  These unrealized  investment
gains  were  a  result of an overall improvement in investment  market
conditions during the first nine months of 1995.

<PAGE>

Approximately $2,633,000 of the $5,762,000 unrealized investment gains
on  debt securities was related to six derivative issues owned by  the
company.   On  September 30, 1995, the value carried in the  Company's
balance sheet for these six issues was $19,298,000.

      The  Company's  debt and equity securities are reported  on  the
Company's  balance  sheet  at  their respective  market  values  which
fluctuate  based upon a variety of market factors.  Such  fluctuations
will result in changes to the Company's unrealized investment gains or
losses   and  will  have  a  corresponding  impact  on  the  Company's
stockholders' equity.  The derivative securities mentioned  above  are
known  as  inverse  floaters  as  their  yields,  which  are  adjusted
periodically, vary inversely to certain LIBOR rates.  These derivative
securities  will  probably exacerbate swings in unrealized  investment
gains  and losses and stockholders' equity in the event of significant
movement  of  the  applicable LIBOR rates.   Additionally,  the  yield
formulas  for these securities will result in commensurate  swings  in
investment  income.   At  current yield rates and  considering  future
yield resets for these securities, net investment income for the final
three  months  of  1995  is  expected to be reduced  by  approximately
$41,000  as  compared to the corresponding period in  1994.   This  is
subject  to  change,  either positively or  negatively,  depending  on
future investment market conditions.

      The  Company  believes that the principal  of  these  derivative
securities  is  assured at maturity as they are issued  by  government
agencies.   However, if conditions are favorable for their disposition
or  if unforeseen circumstances occur, the Company may dispose of  all
or a portion of these securities prior to maturity.

      During the first nine months of 1994, management invested  funds
which  were  generated  from the disposition of investments,  together
with  a portion of available cash balances, into bonds and common  and
preferred  stocks.   As  a result, the net cash  flow  from  investing
activities was negative for the nine months ended September 30, 1994.

  Financing Activities
      There  were no new financing commitments entered into the  first
nine months of 1995.  The net cash flow from financing activities  was
negative  for the first nine months of 1995 and the first nine  months
of 1994, as a result of cash dividends paid to stockholders.

CAPITAL RESOURCES
      The  activities  of insurance companies are regulated  by  state
authorities  and  adequate levels of reserves and equity  capital  are
required to be maintained to ensure that enough capital is retained in
the business to provide sufficient funds to meet its obligations.  The
Company  has  met  all  statutory  and  regulatory  requirements   and
management believes that sufficient funds have been retained  to  meet
its  obligations.  The Company has no current commitments or plans for
debt or equity financing.

RESULTS OF OPERATIONS

      Premiums earned increased 2.5% and 4.6%, respectively,  for  the
three  months  and nine months ended September 30, 1995 compared  with
the  same  1994  periods.   The increase in premiums  earned  resulted
primarily  from  the  continued increase in the number  of  commerical
lines  policies  written and the cancellation of the 25%  quota  share
reinsurance agreement in the third quarter of 1994.

<PAGE>

     Primarily as a result of the unrealized losses in market value of
investments experienced in 1994, average invested assets at  September
30,  1995  decreased approximately $2,232,000 compared with  September
30,  1994.   Additionally, net investment income decreased  16.5%  and
20.1%  respectively,  for  the  three months  and  nine  months  ended
September 30, 1995 compared with the same 1994 period, primarily as  a
result of reduced yields on the Company's derivative securities.   The
average  investment yield reflected this decrease as it was 4.81%  for
the  nine months ended September 30, 1995 compared with 5.86% for  the
nine  months  ended September 30, 1994.  Management will  continue  to
seek improvement in investment earnings without sacrificing investment
portfolio quality.

      The  loss  and loss adjustment expense ratio was 72.4%  for  the
three  months  ended September 30, 1995 compared with  64.7%  for  the
three  months  ended  September 30, 1994 and was 75.3%  for  the  nine
months  ended  September 30, 1995 compared with  66.8%  for  the  nine
months  ended  September 30, 1994.  This increase  resulted  primarily
from claims attributable to the occurrence of numerous weather-related
natural catastrophes in Texas during 1995, which were unprecedented in
their  severity.   Claims  from weather-related  natural  catastrophes
resulted  in  approximately $1,028,000 in losses for the three  months
ended September 30, 1995, compared with approximately $309,000 for the
three  months  ended September 30, 1994.  For the  nine  months  ended
September  30, 1995, weather-related natural catastrophes resulted  in
losses  of approximately $5,696,000, compared with $2,276,000 for  the
nine  months ended September 30, 1994.  The remainder of the  increase
in  this  ratio for the first nine months of 1995 resulted principally
from  an  increased  number of large commercial  automobile  liability
claims which occurred during the second quarter of 1995.

      The policy acquisition cost ratio was 36.6% for the three months
ended  September  30, 1995 compared with 38.5% for  the  three  months
ended September 30, 1994.  The decrease in this ratio was a result  of
decreases in amortization of deferred policy acquisition costs  during
the  third  quarter of 1995 compared with the third quarter  of  1994.
The  policy acquisition cost ratio was 37.0% for the nine months ended
September  30,  1995, compared with 35.2% for the  nine  months  ended
September  30,  1994.   The increase in this ratio  was  a  result  of
increases  in  amortization  of  deferred  policy  acquisition  costs,
expenses related to commissions and overhead expenses during the first
nine  months  of  1995 compared with the first nine  months  of  1994.
Expenses  related  to  commissions  increased  as  a  result  of   the
cancellation  of  the  25%  quota  share  reinsurance  agreement   and
increased  bonus  commission  expense.   Overhead  expenses  increased
primarily as a result of an increase in legal expense.

       The  occurrence  of  numerous  severe  weather-related  natural
catastrophes,  the  increase  in policy  acquisition  costs,  and  the
decrease  in  net  investment  income  resulted  in  a  net  loss   of
approximately $3,746,000 for the nine months ended September 30,  1995
compared  with  net income of approximately $3,065,000  for  the  nine
months ended September 30, 1994.

<PAGE>

                                   
               AMERICAN INDEMNITY FINANCIAL CORPORATION
                           AND SUBSIDIARIES
                                   
                                   
                                   
                                   
Item 6. (a)    Exhibit 11 -   Computation of Fully Diluted  Net
               Income per Common and Common Equivalent Share.

               Exhibit 27 -   Financial Data Schedule.

        (b)    Reports on Form 8-K

               No  reports  on  Form 8-K have been  filed  during  the
               quarter for which this report is filed.

                                   
                          
                                   
                                   
                              SIGNATURES
                                   
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.





               AMERICAN INDEMNITY FINANCIAL CORPORATION
               ________________________________________
                             (Registrant)









Date    NOVEMBER 13, 1995                  PHILLIP E. APGAR
        _________________       _______________________________________        
                                           PHILLIP E. APGAR
                                   VICE PRESIDENT-TREASURER - CHIEF
                                         FINANCIAL OFFICER
                               (PRINCIPAL FINANCIAL & ACCOUNTING OFFICER)