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, 1997
                                      
                                      or
                                      
[  ]  TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF  THE  SECURITIES
EXCHANGE ACT OF 1934
For the transition period from  ____________________ to ____________________

            Commission file numbers:  ___333-01783, 333-13609___
                                      
                       KEYPORT LIFE INSURANCE COMPANY
           (Exact name of registrant as specified in its charter)

          Massachusetts                           05-0302931
(State of other jurisdiction of incorporation or organization)   (I.R.S.
Employer Identification No.)

       125 High Street, Boston, Massachusetts               02110-2712
     (Address of principal executive offices)                (Zip Code)
                                      
                               (617) 526-1400
            (Registrant's telephone number, including area code)


(Former name, former address and former fiscal year, if changed since last
report)

     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.        [X] Yes      [   ] No

     There were 2,412,000 shares of the registrant's Common Stock, $1.25 par
value, outstanding as of September 30, 1997.


Exhibit Index - Page 16                                        Page 1 of  17
                       KEYPORT LIFE INSURANCE COMPANY
      QUARTERLY REPORT ON FORM 10-Q FOR PERIOD ENDED SEPTEMBER 30, 1997


                                TABLE OF CONTENTS


Part I.   FINANCIAL INFORMATION                                 Page

Item 1.   Financial Statements

          Consolidated Balance Sheets as of September 30,
          1997 and December 31, 1996                             3

          Consolidated Income Statements for the Three
          Months and Nine Months Ended September 30, 1997
          and 1996                                               4

          Consolidated Statements of Cash Flows for the
          Nine Months Ended September 30, 1997 and 1996          5

          Notes to Consolidated Financial Statements             6-7

Item 2.   Management's Discussion and Analysis of Results
          of Operations and Financial Condition                  8-13


Part II.  OTHER INFORMATION

Item 6.   Exhibits and Reports on Form 8-K                       14

Signatures                                                       15

Exhibit Index       1                                            16
                       KEYPORT LIFE INSURANCE COMPANY

                         CONSOLIDATED BALANCE SHEETS
                               (in thousands)

                                                September 30    December 31
                                 ASSETS            1997            1996
                                                (Unaudited)
Cash and investments:
  Fixed maturities available for sale
    (amortized cost: 1997 - $10,898,398;
     1996 - $10,500,431)                      $  11,207,337   $  10,718,644
  Equity securities, at fair value
    (cost: 1997 - $20,703; 1996 - $19,412)           43,224          35,863
  Mortgage loans                                     62,402          67,005
  Policy loans                                      547,824         532,793
  Other invested assets                             420,953         183,622
  Cash and cash equivalents                       1,144,333         767,385
           Total cash and investments            13,426,073      12,305,312

Accrued investment income                           162,518         146,778
Deferred policy acquisition costs                   211,675         250,355
Value of insurance in force                          52,037          70,819
Intangible assets                                    18,340          19,186
Due from affiliates                                  35,290             -
Other assets                                         38,362          40,639
Separate account assets                           1,261,980       1,091,468
           Total assets                       $  15,206,275   $  13,924,557


                    LIABILITIES AND STOCKHOLDER'S EQUITY

Liabilities:

  Policy liabilities                          $  12,071,895   $  11,637,528
  Current federal income taxes                       27,353          13,123
  Deferred federal income taxes                      91,679          25,747
  Payable for investments purchased and loaned      675,149         211,234
  Other liabilities                                  37,644          38,476
  Separate account liabilities                    1,212,473       1,017,667
           Total liabilities                     14,116,193      12,943,775

Stockholder's equity:
  Common stock, $1.25 par value; authorized
    8,000 shares; issued and outstanding 2,412
      shares                                          3,015           3,015
  Additional paid-in capital                        505,933         505,933
  Net unrealized investment gains                    98,887          73,599
  Retained earnings                                 482,247         398,235
           Total stockholder's equity             1,090,082         980,782

 Total liabilities and stockholder's equity   $  15,206,275   $  13,924,557

                           See accompanying notes
                       KEYPORT LIFE INSURANCE COMPANY
                                      
                       CONSOLIDATED INCOME STATEMENTS
                               (in thousands)
                                 (Unaudited)


                           Three Months Ended        Nine Months Ended
                             September 30               September 30
                            1997        1996         1997        1996

Investment income       $ 210,365    $ 200,253    $ 627,535   $ 576,315
Interest credited to
  policyholders           150,875      146,071      445,412     420,341
Investment spread          59,490       54,182      182,123     155,974
Net realized investment
  gains                     4,951          755       20,417         319
Fee income:
    Surrender charges       4,180        3,423       11,481      10,929
    Separate account fees   4,774        4,982       12,723      12,018
    Management fees           887          610        2,467       1,843
Total fee income            9,841        9,015       26,671      24,790

Expenses:
  Policy benefits            (920)        (741)      (3,075)     (2,728)
  Operating expenses      (12,740)     (10,480)     (36,805)    (32,529)
  Amortization of
    deferred policy
      acquisition costs   (18,273)     (15,467)     (54,013)    (44,440)
  Amortization of value
    of insurance in force  (2,191)      (2,407)      (7,258)     (5,975)
  Amortization of
    intangible assets        (282)        (282)        (846)       (846)
Total expenses            (34,406)     (29,377)    (101,997)    (86,518)

Income before federal
    income taxes expense   39,876       34,575      127,214      94,565
Federal income tax
  expense                (13,499)      (12,286)     (43,202)    (32,645)

         Net income     $ 26,377     $  22,289    $  84,012   $  61,920


                                      
                           See accompanying notes
                       KEYPORT LIFE INSURANCE COMPANY
                                      
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (in thousands)
                                 (Unaudited)


                                                  Nine Months Ended
                                                    September 30
                                                  1997           1996
Cash flows from operating activities:
  Net income                                 $    84,012   $    61,920
  Adjustments to reconcile net income to
    net cash provided by operating activities:
      Interest credited to policyholders         445,412       420,341
      Net realized investment gains              (20,417)         (319)
      Amortization of value of insurance
        in force and intangible assets             8,104         6,821
      Net amortization on investments             21,983        15,550
      Change in deferred policy acquisition
        costs                                    (10,346)      (16,427)
      Change in current and deferred federal
        income taxes                              31,582        15,385
      Net change in other assets and liabilities (16,695)      (45,476)
         Net cash provided by operating
           activities                            543,635       457,795

Cash flows from investing activities:
  Investments purchased - available for sale  (3,006,409)   (3,116,451)
  Investments sold - available for sale        1,414,198       760,455
  Investments matured - available for sale     1,230,537       927,439
  Increase in policy loans                       (15,031)      (22,950)
  Decrease in mortgage loans                       4,603         6,028
  Acquisition of value of insurance in force         -         (31,335)
         Net cash used in investing activities  (372,102)   (1,476,814)

Cash flows from financing activities:
  Withdrawals from policyholder accounts        (948,879)     (807,478)
  Deposits to policyholder accounts              738,427     1,849,683
  Securities lending                             415,867       194,932
         Net cash provided by financing
           activities                            205,415     1,237,137

Change in cash and cash equivalents              376,948       218,118
Cash and cash equivalents at beginning
   of period                                     767,385       777,384
Cash and cash equivalents at end of period   $ 1,144,333    $  995,502


                           See accompanying notes
                       KEYPORT LIFE INSURANCE COMPANY
                 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 (Unaudited)
                                      
1.   General

     The accompanying unaudited consolidated financial statements of Keyport
Life Insurance Company (the Company) include all adjustments, consisting  of
normal  recurring accruals, that management considers necessary for  a  fair
presentation  of the Company's financial position and results of  operations
as  of  and for the interim periods presented.  Certain footnote disclosures
normally  included  in  financial statements  prepared  in  accordance  with
generally  accepted  accounting principles have been  condensed  or  omitted
pursuant  to  the  rules  and  regulations of the  Securities  and  Exchange
Commission.   Therefore these consolidated financial  statements  should  be
read  in  conjunction  with  the audited consolidated  financial  statements
contained in the Company's 1996 Form 10-K. The results of operations for the
three  and  nine  months  ended  September  30,  1997  are  not  necessarily
indicative  of the results to be expected for the full year.  Certain  prior
period  amounts in the accompanying unaudited consolidated income  statement
have been reclassified to conform to the current period presentation.

2.   Investments

       The  Company's  general investment policy is to hold  fixed  maturity
assets for long-term investment and, accordingly, the Company does not  have
a  trading  portfolio.   To  provide for maximum portfolio  flexibility  and
enable  appropriate tax planning, the Company classifies  its  entire  fixed
maturities  investments  as  "available  for  sale"  which  are  carried  at
estimated fair value.

3.   Other Financial Instruments

     As a component of its investment strategy and to reduce its exposure to
interest  rate  risk,  the  Company  utilizes  interest  rate  swap   ("swap
agreements")  and interest rate cap agreements ("cap agreements")  to  match
assets  more  closely  to  liabilities. Swap agreements  are  agreements  to
exchange  with  counterparty interest rate payments of  differing  character
(e.g., fixed-rate payments exchanged for variable-rate payments) based on an
underlying principal balance (notional principal) to hedge against  interest
rate changes. The Company currently utilizes swap agreements to reduce asset
duration and to better match interest rates earned on longer-term fixed rate
assets  with  interest rates credited to policyholders. The Company  had  45
outstanding swap agreements with an aggregate notional principal  amount  of
$2.6  billion and 39 outstanding swap agreements with an aggregate  notional
principal  amount  $2.3 billion, as of September 30, 1997 and  December  31,
1996, respectively.

      Cap  agreements are agreements with a counterparty which  require  the
payment  of  a premium for the right to receive payments for the  difference
between the cap interest rate and a market interest rate on specified future
dates based on an underlying principal balance (notional principal) to hedge
against rising interest rates. The Company had interest rate cap agreements

                       KEYPORT LIFE INSURANCE COMPANY
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
                                 (Unaudited)



with an aggregate notional amount of $450.0 million as of September 30, 1997
and December 31, 1996, respectively.

      With respect to the Company's equity-indexed annuity, the Company buys
call  options on the Standard & Poor's 500 Composite Stock Price Index ("S&P
500  Index")  to  hedge its obligations to provide returns based  upon  this
index.  The Company had call options with a book value of $321.5 million and
$109.6 million as of September 30, 1997 and December 31, 1996, respectively.

     Hedge accounting is applied after the Company determines that the items
to  be  hedged  expose  it to interest rate or price  risk,  designates  the
instruments  as  hedges,  and assesses whether the  instruments  reduce  the
indicated  risks  through the measurement of changes in  the  value  of  the
instruments and the items being hedged at both inception and throughout  the
hedge  period.  From  time  to  time, interest  rate  swap  agreements,  cap
agreements  and  indexed  call options are terminated.   If  the  terminated
position  was  accounted  for  as a hedge,  realized  gains  or  losses  are
amortized  over  the  remaining lives of the hedged assets  or  liabilities.
Conversely, if the terminated position was not accounted for as a hedge,  or
the assets and liabilities that were hedged no longer exist, the position is
"marked  to market", and realized gains or losses are immediately recognized
in income.

      The  net  differential to be paid or received on  interest  rate  swap
agreements is recognized as a component of net investment income.   Premiums
paid  for  interest rate cap agreements are deferred and  amortized  to  net
investment income on a straight-line basis over the terms of the agreements.
The unamortized premium is included in other invested assets. Amounts earned
on  interest  rate  cap  agreements are recorded as  an  adjustment  to  net
investment income. Interest rate cap agreements and swap agreements  hedging
investments designated as available for sale are adjusted to fair value with
the resulting unrealized gains and losses included in stockholder's equity.

      Premiums  paid on indexed call options are amortized to net investment
income  over  the terms of the contracts.  The call options are included  in
other  invested  assets  and are carried at amortized  cost  plus  intrinsic
value,  if  any, of the call options as of the valuation date.   Changes  in
intrinsic  value  of  the  call options are recorded  as  an  adjustment  to
interest credited to policyholders.

     There are risks associated with some of the techniques the Company uses
to  match its assets and liabilities. The primary risk associated with swap,
cap  and  call  option agreements is the risk associated  with  counterparty
nonperformance. The Company believes that the counterparties to its swap and
call option agreements are financially responsible and that the counterparty
risk associated with these transactions is minimal.


                       KEYPORT LIFE INSURANCE COMPANY
           NOTES TO CONSOLIDATED FINANCIAL STATEMENTS-(continued)
                                 (Unaudited)






4.   Recent Accounting Proposal

     In August 1997, the Financial Accounting Standards Board issued a draft
of  an  accounting standard entitled "Accounting for Derivative  Instruments
and  for Hedging Activities."  This accounting standard, if adopted  in  the
form  in  which it was issued, would require companies to report derivatives
on  the  balance sheet at fair value with changes in fair value recorded  in
income  or equity.  The accounting standard would also change the accounting
for  derivatives  used  in  hedging  strategies  from  traditional  deferral
accounting to a current recognition approach which could impact a  company's
income statement and balance sheet and expand the definition of a derivative
instrument.   Management expects that this accounting standard, in  whatever
form,  will  not  be  effective until 1999.  The Company is  evaluating  the
impact of the proposed accounting standard.


Item 2.  Management's Discussion and Analysis of Results of Operations
and Financial Condition
  
Results of Operations

    Net  income was $26.4 million for the third quarter of 1997 compared  to
$22.3  million for the third quarter of 1996.  For the first nine months  of
1997,  net income was $84.0 million compared to $61.9 million for the  first
nine  months  of  1996.   These increases resulted  from  higher  investment
spread,  higher  fee  income  and  higher  net  realized  investment  gains.
Partially  offsetting  these items were increased amortization  of  deferred
policy acquisition costs and federal income tax expense.
  
  Investment spread is the amount by which investment income earned  on  the
Company's  investments  exceeds interest credited to policyholder  balances.
Investment  spread was $59.5 million for the third quarter of 1997  compared
to  $54.2  million for the third quarter of 1996.  The amount by  which  the
average  yield on investments exceeds the average interest credited rate  on
policyholder balances is the investment spread percentage.  Such  investment
spread percentage was 1.75% for the third quarter of 1997 compared to  1.79%
for  the  third  quarter  of  1996.  For the  first  nine  months  of  1997,
investment  spread  was $182.1 million compared to $156.0  million  for  the
first  nine months of 1996.  The investment spread percentage was 1.84%  for
the first nine months of 1997 compared to 1.80% for the first nine months of
1996.
  
 Investment income was $210.4 million for the third quarter of 1997 compared
to  $200.3  million  for the third quarter of 1996. The  increase  of  $10.1
million  in  1997  compared to 1996 primarily relates  to  a  $19.7  million
increase  as  a  result  of  the higher level of  average  invested  assets,
partially  offset by a $9.6 million decrease resulting from a lower  average
investment  yield. The third quarter of 1997 included $13.6 million  of  S&P
500  Index call option amortization expense compared to $4.3 million for the
third  quarter of 1996. The average investment yield was 6.77% for the third
quarter  of  1997 compared to 7.11% for the third quarter of 1996.  For  the
first nine months of 1997, investment income was $627.5 million compared  to
$576.3  million  for the first nine months of 1996.  The increase  of  $51.2
million for the first nine months of 1997 compared to the first nine  months
of  1996  primarily relates to a $73.2 million increase as a result  of  the
higher level of average invested assets, partially offset by a $22.0 million
decrease  resulting from a lower average investment yield.  The  first  nine
months  of  1997  included  $31.2 million  of  S&P  500  Index  call  option
amortization expense compared to $7.8 million for the first nine  months  of
1996.  The  average investment yield was 6.86% for the first nine months  of
1997 compared to 7.13% for the first nine months of 1996.

  Interest  credited to policyholders totaled $150.9 million for  the  third
quarter  of 1997 compared to $146.1 million for the third quarter  of  1996.
The increase of $4.8 million in 1997 compared to 1996 primarily relates to a
$12.9 million increase as a result of a higher level of average policyholder
balances,  partially  offset by an $8.1 million decrease  resulting  from  a
lower  average interest credited rate.  Policyholder balances averaged $12.0
billion  (including  $10.7 billion of fixed annuities and  $1.3  billion  of
equity-indexed  annuities) for the third quarter of 1997 compared  to  $11.0
billion  (including  $10.5 billion of fixed annuities and  $0.5  billion  of
equity-indexed  annuities)   for the third quarter  of  1996.   The  average
interest  credited  rate was 5.02% (5.52% on fixed annuities  and  0.85%  on
equity-indexed  annuities) for the third quarter of 1997 compared  to  5.31%
(5.53%  on  fixed annuities and 0.85% on equity-indexed annuities)  for  the
third  quarter  of  1996.   The  Company's equity-indexed  annuities  credit
interest  to the policyholder at a "participation rate" equal to  a  portion
(ranging  for existing policies from 60% to 95%) of the change in  value  of
the  S&P  500 Index. The Company's equity-indexed annuities also  provide  a
full  guarantee of principal plus interest at 0.85% annually.  For  each  of
the periods presented, the interest credited to equity-indexed policyholders
related to the participation rate was offset by investment income recognized
on  the S&P 500 Index call options, resulting in an 0.85% net credited rate.
For  the  first  nine  months  of 1997, interest credited  to  policyholders
totaled $445.4 million compared to $420.3 million for the first nine  months
of  1996.  The increase of $25.1 million for the first nine months  of  1997
compared  to  the  first nine months of 1996 primarily relates  to  a  $50.0
million  increase  as  a  result of a higher level of  average  policyholder
balances,  partially  offset by a $24.9 million decrease  resulting  from  a
lower  average interest credited rate.  Policyholder balances averaged $11.8
billion  (including  $10.7 billion of fixed annuities and  $1.1  billion  of
equity-indexed  annuities) for the first nine months  of  1997  compared  to
$10.5  billion (including $10.2 billion of fixed annuities and $0.3  billion
of equity-indexed annuities) for the first nine months of 1996.  The average
interest  credited  rate was 5.02% (5.44% on fixed annuities  and  0.85%  on
equity-indexed  annuities) for the first nine months  of  1997  compared  to
5.33%  (5.47% on fixed annuities and 0.85% on equity-indexed annuities)  for
the first nine months of 1996.

 Average investments (computed without giving effect to SFAS 115), including
a portion of the Company's cash and cash equivalents, were $12.4 billion for
the third quarter of 1997 compared to $11.3 billion for the third quarter of
1996. For the first nine months of 1997, such average investments were $12.2
billion compared to $10.8 billion for the first nine months of 1996.   These
increases  primarily  relate  to a 100 percent  coinsurance  agreement  with
respect  to  a  $954.0  million block of single premium  deferred  annuities
("SPDAs") entered into with Fidelity & Guaranty Life Insurance Company ("F&G
Life")  during  the third quarter of 1996.  Under the F&G Life  transaction,
the  investment  risk of the policies was transferred to the Company,  while
F&G Life continues to administer the policies.

  Net  realized investment gains were $5.0 million for the third quarter  of
1997  compared to $0.8 million for the third quarter of 1996. For the  first
nine  months  of  1997,  net realized investment gains  were  $20.4  million
compared to $0.3 million for the first nine months of 1996.  Sales of  fixed
maturity investments generally are made to maximize total return.   The  net
realized  investment  gains in 1997 included gains on  the  sales  of  fixed
maturity investments of $12.7 million and gains on redemption of seed  money
investments  in  separate account mutual funds sponsored by the  Company  of
$7.7  million.  The net realized investment gains in 1996 were  attributable
to sales of fixed maturity investments.

   Surrender charges are revenues earned on the early withdrawal of  annuity
policyholder  balances.  Surrender charges on  fixed  and  variable  annuity
withdrawals   generally  are  assessed  at  declining   rates   applied   to
policyholder  withdrawals  during the first  five  to  seven  years  of  the
contract. Total surrender charges were $4.2 million for the third quarter of
1997  compared  to $3.4 for the third quarter of 1996.  For the  first  nine
months  of  1997,  surrender charges were $11.5 million  compared  to  $10.9
million for the first nine months of 1996.

  On an annualized basis, annuity withdrawals represented 10.9% and 11.6% of
the total average annuity policyholder and separate account balances for the
third  quarter of 1997 and 1996, respectively, and 11.0% and  10.7%  of  the
total  average  annuity policyholder and separate account balances  for  the
first  nine  months  of  1997  and  1996,  respectively.   The  increase  in
withdrawals  in 1997 was primarily attributable to surrenders  of  annuities
acquired  in  the  F&G  Life transaction; excluding  these  surrenders,  the
withdrawal  percentage for the first nine months of  1997  would  have  been
9.9%.

 Separate account fees are primarily mortality and expense charges earned on
variable annuity and variable life policyholder balances. These fees,  which
are  based  on  the market values of the assets supporting the contracts  in
separate  accounts, were $4.8 million for the third quarter of 1997 compared
to  $5.0 million for the third quarter of 1996.  Such fees represented  1.6%
of  average variable annuity and variable life separate account balances for
the  third quarter of 1997 compared to 2.1% for the third quarter  of  1996.
For  the first nine months of 1997, separate account fees were $12.7 million
compared  to  $12.0 million for the first nine months of 1996.   These  fees
represented  1.6%  of  average variable annuity and variable  life  separate
account balances for the first nine months of 1997 compared to 1.7% for  the
first nine months of 1996.

  Management  fees  are primarily investment advisory fees  related  to  the
separate  account assets. The fees are based on the levels of  assets  under
management, which are affected by product sales and redemptions and  changes
in  the market values of the investments managed.  Management fees were $0.9
million for the third quarter of 1997 compared to $0.6 million for the third
quarter  of  1996.  The increase of $0.3 million in 1997  compared  to  1996
primarily  reflects a higher level of average assets under management.   For
the first nine months of 1997, management fees were $2.5 million compared to
$1.8 million in 1996.  The increase of $0.7 million in 1997 compared to 1996
primarily reflects a higher level of average assets under management.

  Operating expenses primarily represent compensation and other general  and
administrative  expenses. These expenses were $12.8 million  for  the  third
quarter  of  1997 compared to $10.5 million for the third quarter  of  1996.
For  the  first  nine months of 1997, operating expenses were $36.8  million
compared  to $32.5 million for the first nine months of 1996.  The  increase
in  1997  compared  to  1996 was primarily due to  higher  employee  related
expenses.

   Amortization of deferred policy acquisition costs relates to the costs of
acquiring  new business which vary with, and are primarily related  to,  the
production  of new annuity business.  Such costs include commissions,  costs
of  policy issuance and underwriting and selling expenses.  Amortization was
$18.3  million for the third quarter of 1997 compared to $15.5  million  for
the third quarter of 1996. Amortization of deferred policy acquisition costs
was  $54.0million for the nine months ended September 30, 1997  compared  to
$44.4 million for the nine months ended September 30, 1996.  The increase in
amortization in 1997 compared to 1996 was primarily related to the  increase
in  investment  spread from the growth of business in force associated  with
fixed  and  equity-indexed  products and the  increased  sales  of  variable
annuity  products.   Amortization expense represented  30.7%  and  28.6%  of
investment spread for the third quarter of 1997 and 1996, respectively.  For
the  first nine months of 1997 and 1996, the corresponding percentages  were
29.7% and 28.5%, respectively.

   Amortization  of value of insurance in force relates to the  actuarially-
determined present value of projected future gross profits from policies  in
force at the date of acquisition.  Amortization totaled $2.2 million for the
third  quarter  of  1997 compared to $2.4 million for the third  quarter  of
1996.   The  third quarter of 1997 included increased amortization  of  $1.1
million related to the F&G Life transaction offset by decreased amortization
related  to  a change in mortality assumptions.  Amortization  of  value  of
insurance  in force totaled $7.3 million for the nine months ended September
30,  1997  compared to $6.0 million for the nine months ended September  30,
1996.  The first nine months of 1997 included increased amortization of $4.2
million  related to the F&G Life transaction partially offset  by  decreased
amortization related to a change in mortality assumptions.

  Federal income tax expense was $13.5 million or 33.9% of pretax income for
the  third  quarter of 1997 compared to $12.3 million, or  35.5%  of  pretax
income  for the third quarter of 1996.  For the first nine months  of  1997,
federal  income  tax expense was $43.2 million or 34.0%  of  pretax  income,
compared  to  $32.6  million or 34.5% of pretax income for  the  first  nine
months of 1996.

  Effective  July  18, 1997, due to changes in ownership  of  the  Company's
parent, the Company is no longer included in the consolidated federal income
tax return of Liberty Mutual Insurance Company.  The Company does not expect
this  change to have a material effect on its financial condition or results
from  operations.   It  is expected that the Company will  file  a  separate
federal  income  tax  return  until  the  Company  is  eligible  to  file  a
consolidated federal income tax return with Liberty Financial in 2003.

Financial Condition

 Stockholder's equity as of September 30, 1997 was $1.09 billion compared to
$0.98  billion as of December 31, 1996. The increase in stockholder's equity
was  due  to  a  $25.3 million increase in net unrealized  gains  and  $84.0
million of net income for the period.

  The  Company's  total  investments at September  30,  1997  reflected  net
unrealized  gains  of  $327.5  million.  At  December  31,  1996,  such  net
unrealized investment gains were $229.8 million.

  Approximately $10.8 billion, or 96.7% of the fixed maturity investments at
September  30,  1997,  were rated by Standard & Poor's Corporation,  Moody's
Investors   Service   or  under  comparable  statutory   rating   guidelines
established  by  the  National Association of Insurance  Commissioners.   At
September  30,  1997, the carrying value of investments in below  investment
grade securities totaled $1.0 billion, or 7.7% of total cash and investments
of  $13.4  billion  compared to $1.0 billion, or  8.0%  of  total  cash  and
investments  of  $12.3 billion at December 31, 1996. Below investment  grade
securities  generally provide higher yields and involve greater  risks  than
investment grade securities because their issuers typically are more  highly
leveraged and more vulnerable to adverse economic conditions than investment
grade  issuers.  In  addition, the trading market for  these  securities  is
usually more limited than for investment grade securities.

Management of the Company's Investments

 Asset-liability management is utilized by the Company to minimize the risks
of  interest  rate  fluctuations and policyholder withdrawals.  The  Company
believes  that its fixed and equity-indexed policyholder balances should  be
backed  by  investments,  principally comprised of  fixed  maturities,  that
generate  predictable rates of return. The Company does not have a  specific
target rate of return. Instead, its rates of return vary over time depending
on  the  current interest rates, the slope of the yield curve and the excess
at  which  fixed maturities are priced over the yield curve.  Its  portfolio
strategy  is  designed  to  achieve  acceptable  risk-adjusted  returns   by
effectively managing portfolio liquidity and credit quality.

  The  Company  conducts  its investment operations  to  closely  match  the
duration  of  the  assets in its investment portfolio  to  its  policyholder
balances. The Company seeks to achieve an acceptable spread between what  it
earns  on  its assets and interest credited on its policyholder balances  by
investing principally in fixed maturities. The Company's fixed-rate products
incorporate surrender charges to encourage persistency and make the cost  of
its  policyholder  balances  more predictable. Approximately  85.7%  of  the
Company's  fixed  annuity policyholder balances were  subject  to  surrender
charges at September 30, 1997 compared to 85.4% at December 31, 1996.

  As part of its asset-liability management discipline, the Company conducts
detailed  computer  simulations  that model its  fixed-maturity  assets  and
liabilities  under commonly used stress-test interest rate scenarios.  Based
on  the results of these computer simulations, the investment portfolio  has
been  constructed  with  a view to maintaining a desired  investment  spread
between  the  yield  on portfolio assets and the interest  credited  on  its
policyholder  balances  under  a variety of possible  future  interest  rate
scenarios.   At  September  30, 1997 and December 31,  1996,  the  effective
duration  of  the Company's fixed maturities investments (including  certain
cash  and cash equivalents) was approximately 2.8.  Effective duration is  a
common  measure  for  the price sensitivity of a fixed-income  portfolio  to
changes in interest rates.  It measures the approximate percentage change in
the  market  value of a portfolio when interest rates change  by  100  basis
points.   This measure includes the impact of estimated changes in portfolio
cash flows from features, such as prepayments and bond calls.

  As  a  component of its investment strategy and to reduce its exposure  to
interest  rate  risk, the Company utilizes interest rate swap  and  interest
rate  cap  agreements  to  match assets more closely  to  liabilities.  Swap
agreements  are  agreements  to  exchange with  counterparty  interest  rate
payments  of  differing character (e.g., fixed-rate payments  exchanged  for
variable-rate  payments) based on an underlying principal balance  (notional
principal)  to  hedge against interest rate changes. The  Company  currently
utilizes  swap  agreements  to reduce asset duration  and  to  better  match
interest  rates  earned  on  longer-term  fixed-rate  assets  with  interest
credited  to  policyholders. The Company had 45 outstanding swap  agreements
with  an  aggregate  notional  principal  amount  of  $2.6  billion  and  39
outstanding swap agreements and with an aggregate notional principal  amount
$2.3 billion, as of September 30, 1997 and December 31, 1996, respectively.

 Cap agreements are agreements with a counterparty which require the payment
of  a  premium for the right to receive payments for the difference  between
the  cap interest rate and a market interest rate on specified future  dates
based  on  an  underlying principal balance (notional  principal)  to  hedge
against  rising interest rates. The Company had interest rate cap agreements
with an aggregate notional amount of $450.0 million as of September 30, 1997
and December 31, 1996, respectively.

 With respect to the Company's equity-indexed annuity, the Company buys call
options on the S&P 500 Index to hedge its obligations provide returns  based
upon  this index.  The Company had call options with a book value of  $321.5
million  and $109.6 million as of September 30, 1997 and December 31,  1996,
respectively.

  There are risks associated with some of the techniques the Company uses to
match its assets and liabilities. The primary risk associated with swap, cap
and  call  option  agreements  is counterparty nonperformance.  The  Company
believes that the counterparties to its swap and call option agreements  are
financially responsible and that the counterparty risk associated with these
transactions  is minimal.  In addition, swap agreements have  interest  rate
risk  and call options have stock market risk.  However, the swap agreements
hedge  fixed-rate  assets;  the  Company  expects  that  any  interest  rate
movements that adversely affect the market value of swap agreements would be
offset  by  changes  in  the  market  values  of  such  fixed  rate  assets.
Similarly,  the  call  options hedge the Company's  obligations  to  provide
returns  on equity-indexed annuities based upon the S&P 500 Index,  and  the
Company  believes that any stock market movements that adversely affect  the
market  value  of  S&P  call  options would be  substantially  offset  by  a
reduction  in policyholder liabilities.  However, there can be no  assurance
that  these  hedges will be effective in offsetting the potentially  adverse
effects  of  changes  in S&P 500 Index levels.  The Company's  profitability
could  be  adversely  affected if the value of  its  S&P  500  call  options
increase less than (or decrease more than) the value of the guarantees  made
to equity-indexed policyholders.

  The Company routinely reviews its portfolio of investment securities.  The
Company   identifies   monthly  any  investments  that  require   additional
monitoring, and carefully reviews the carrying value of such investments  at
least  quarterly to determine whether specific investments should be  placed
on  a  nonaccrual basis and to determine declines in value that may be other
than  temporary.  There  were  no non-income producing  investments  in  the
Company's  fixed  maturity portfolio at September 30, 1997 or  December  30,
1996.   In  making  these  reviews, the Company  principally  considers  the
adequacy of collateral (if any), compliance with contractual covenants,  the
borrower's  recent financial performance, news reports and other  externally
generated  information concerning the creditor's affairs.  In  the  case  of
publicly traded fixed maturity investments, management also considers market
value quotations, if available.

Liquidity

  The  Company's  liquidity  needs and financial resources  pertain  to  the
management  of  the  general account assets and policyholder  balances.  The
Company  uses  cash for the payment of annuity and life insurance  benefits,
operating  expenses  and  policy acquisition  costs,  and  the  purchase  of
investments. The Company generates cash from annuity premiums and  deposits,
net  investment  income, and from maturities and sales of  its  investments.
Annuity  premiums,  maturing  investments and  net  investment  income  have
historically  been  sufficient to meet the Company's cash requirements.  The
Company  monitors  cash  and  cash equivalents  in  an  effort  to  maintain
sufficient  liquidity  and has strategies in place  to  maintain  sufficient
liquidity in changing interest rate environments. Consistent with the nature
of  its  obligations, the Company has invested a substantial amount  of  its
general  account assets in readily marketable securities. At  September  30,
1997,  $10.1 billion, or 75.4%, of the Company's general account investments
are considered readily marketable.

  To  the extent that unanticipated surrenders cause the Company to sell for
liquidity  purposes a material amount of securities prior to their maturity,
such  surrenders  could  have  a material adverse  effect  on  the  Company.
However,  the Company believes that liquidity to fund withdrawals  would  be
available  through incoming cash flow, the sale of short-term  or  floating-
rate  instruments or investment securities in its short duration  portfolio,
thereby  precluding the sale of fixed maturity investments in a  potentially
unfavorable market.

  Current  Rhode  Island insurance law permits the payment of  dividends  or
distributions  from the Company to Liberty Financial, which,  together  with
dividends  and  distributions paid during the preceding 12  months,  do  not
exceed  the  lesser  of (i) 10% of statutory surplus  as  of  the  preceding
December  31  or (ii) the net gain from operations for the preceding  fiscal
year.  Any  proposed  dividend  in  excess  of  this  amount  is  called  an
"extraordinary  dividend" and may not be paid until it is  approved  by  the
Commissioner of Insurance of the State of Rhode Island.  As of September 30,
1997,  the  amount  of  dividends that the Company could  pay  without  such
approval was $42.5 million.

  Based  upon the historical cash flow of the Company, the Company's current
financial condition and the Company's expectation that there will not  be  a
material adverse change in the results of operations of the Company and  its
subsidiaries during the next twelve months, the Company believes  that  cash
flow  provided  by  operating  activities  over  this  period  will  provide
sufficient  liquidity  for  the Company to meet  its  liquidity  needs.  The
Company's  cash  flow  may  be influenced by, among  other  things,  general
economic conditions, realized investment gains and losses, the interest rate
environment, market changes, regulatory changes and tax law changes.

Effects of Inflation

  Inflation  has  not  had  a material effect on the Company's  consolidated
results  of operations to date. The Company manages its investment portfolio
in  part  to reduce its exposure to interest rate fluctuations. In  general,
the  fair  value  of  the  Company's fixed maturity portfolio  increases  or
decreases  in inverse relationship with fluctuations in interest rates,  and
the  Company's  net  investment  income increases  or  decreases  in  direct
relationship  with  interest rate changes.  For example, if  interest  rates
decline the Company's fixed maturity investments generally will increase  in
fair  value,  while  net investment income will decrease as  fixed  maturity
investments  mature or are sold and the proceeds are reinvested  at  reduced
rates.  However, inflation may result in increased operating  expenses  that
may  not be readily recoverable in the prices of the services charged by the
Company.

Item 6.  Exhibits and Reports on Form 8-K

(a)  Exhibit

     #27  Financial Data Schedule - page 16

(b)  Reports on Form 8-K

     There were no reports filed on Form 8-K during the quarter ended
September 30, 1997.
                                      



                                 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.



     KEYPORT LIFE INSURANCE COMPANY


     ___________________________________
     Bernhard M. Koch
    (Duly Authorized Officer and Chief Financial Officer)


     ____________________________________
     Jeffery J. Whitehead
    (Duly Authorized Officer and Chief Accounting Officer)





Date:  November 13, 1997









                                Exhibit Index
                                      
                                      
                                      
Exhibit No. Description        Page

       27  Financial Data Schedule        17