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, 1998
                                     
                                     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  33-3630 and 333-1783
                                     
                      KEYPORT LIFE INSURANCE COMPANY
          (Exact name of registrant as specified in its charter)

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



       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, 1998.


Exhibit Index - Page 15                                       Page 1 of  16


                      KEYPORT LIFE INSURANCE COMPANY
   QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED SEPTEMBER 30, 1998


                             TABLE OF CONTENTS


Part I.   FINANCIAL INFORMATION                                     Page

Item 1.   Financial Statements

          Consolidated Balance Sheets as of September 30, 1998
          and December 31, 1997                                        3

          Consolidated Income Statements for the Three and
          Nine Month Periods Ended September 30, 1998 and 1997         4

          Consolidated Statements of Cash Flows for
          the Nine Month Periods Ended September 30, 1998 and 1997     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                            13

Signatures                                                            14

Exhibit Index                                                         15


                      KEYPORT LIFE INSURANCE COMPANY
                                     
                        CONSOLIDATED BALANCE SHEETS
                              (in thousands)

                                           September 30,   December 31,
                             ASSETS           1998           1997
                                            Unaudited
Cash and investments:
   Fixed maturities available for sale
     (amortized cost:  1998 - $11,240,610;
     1997 - $10,981,618)                     $  11,447,201  $ 11,246,539
   Equity securities (cost:  1998 - $43,420;
     1997 - $21,950)                                55,498        40,856
   Mortgage loans                                   56,372        60,662
   Policy loans                                    579,498       554,681
   Other invested assets                           442,268       440,773
   Cash and cash equivalents                     1,261,299     1,162,347
                 Total cash and investments     13,842,136    13,505,858

Accrued investment income                          162,318       165,035
Deferred policy acquisition costs                  281,471       232,039
Value of insurance in force                         55,322        53,298
Intangible assets                                   18,396        18,058
Income taxes recoverable                             5,147        22,537
Receivable for investments sold                    155,498         1,398
Other assets                                        24,458        14,777
Separate account assets                          1,433,486     1,329,189

                Total assets                $   15,978,232  $ 15,342,189

LIABILITIES AND STOCKHOLDER'S EQUITY

Liabilities:

     Policy liabilities                     $   12,342,529  $ 12,086,076

     Deferred income taxes                         119,004       133,003
     Payable for investments purchased and loaned  931,382       722,116
     Other liabilities                              38,555        34,015
     Separate account liabilities                1,395,131     1,263,958
               Total liabilities                14,826,601    14,239,168

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
   Accumulated other comprehensive income           55,967        82,277
   Retained earnings                               586,716       511,796
    Total stockholder's equity                   1,151,631     1,103,021

    Total liabilities and stockholder's equity $15,978,232   $15,342,189

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


                               Three Months Ended       Nine Months Ended
                                    September 30,          September 30,
                                 1998       1997        1998       1997

Investment income           $  201,158   $  210,365   $  608,188 $ 627,535
Interest credited to
  Policyholders                143,271      150,875      425,605   445,412
Investment spread               57,887       59,490      182,583   182,123
Net realized investment gains    4,112        4,951        2,447    20,417
Fee income:
  Surrender charges              4,384        4,180       14,004    11,481
  Separate account fees          5,352        4,774       15,454    12,723
  Management fees                  769          887        3,324     2,467
Total fee income                10,505        9,841       32,782    26,671

Expenses:
  Policy benefits                 (386)        (920)      (1,406)   (3,075)
  Operating expenses           (10,817)     (12,740)     (39,967)  (36,805)
  Amortization of deferred
    policy acquisition costs   (15,465)     (18,273)     (52,786)  (54,013)
  Amortization of value of
    insurance in force          (1,178)      (2,191)      (3,870)   (7,258)
  Amortization of intangible
    Assets                        (314)        (282)        (942)     (846)
Total expenses                 (28,160)     (34,406)     (98,971) (101,997)

Income before income taxes      44,344       39,876      118,841   127,214
Income tax expense             (14,565)     (13,499)     (38,921)  (43,202)

          Net income          $ 29,779     $ 26,377     $ 79,920  $ 84,012



                          See accompanying notes

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


                                                       Nine Months Ended
                                                         September 30,
                                                       1998        1997
Cash flows from operating activities:
   Net income                                     $   79,920   $   84,012
   Adjustments to reconcile net income to net cash
      provided by operating activities:
        Interest credited to policyholders           425,606      445,412
        Net realized investment gains                 (2,447)     (20,417)
        Amortization of value of insurance in force
           and intangible assets                       4,812        8,104
        Net amortization on investments              101,918       21,983
        Change in deferred policy
           acquisition costs                         (25,761)     (10,346)
        Change in current and deferred
           income taxes                               12,158       31,582
        Net change in other assets
           and liabilities                            14,896      (16,695)
        Net cash provided by operating
           activities                                611,102      543,635

Cash flows from investing activities:
   Investments purchased - available for sale     (5,207,431)  (3,006,409)
   Investments sold - available for sale           4,060,558    1,414,198
   Investments matured - available for sale          938,164    1,230,537
   Increase in policy loans                          (24,817)     (15,031)
   Decrease in mortgage loans                          4,290        4,603
   Other invested assets purchased, net               33,394
   Value of business acquired, net of cash            (3,999)
        Net cash used in investing activities       (199,841)    (372,102)

Cash flows from financing activities:
   Withdrawals from policyholder accounts         (1,371,637)    (948,879)
   Deposits to policyholder accounts               1,089,325      738,427
   Dividends paid                                     (5,000)
   Securities lending                                (24,997)     415,867
        Net cash (used in) provided by
           financing activities                     (312,309)     205,415

Change in cash and cash equivalents                   98,952      376,948
Cash and cash equivalents at beginning of period   1,162,347      767,385
Cash and cash equivalents at end of period      $  1,261,299 $  1,144,333


                          See accompanying notes


                      KEYPORT LIFE INSURANCE COMPANY
                                     
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 Unaudited

1.   General

In  the  opinion  of  management,  all  adjustments  consisting  of  normal
recurring  accruals  which  are necessary for a fair  presentation  of  the
financial  position  of  Keyport Life Insurance Company  (the  Company)  at
September 30, 1998 and December 31, 1997, and its cash flows and results of
its  operations for the three month and nine month periods ended  September
30,  1998  and 1997, have been made.  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 1997 Form 10-K.  The results of operations for the three and
nine  month periods ended September 30, 1998 are not necessarily indicative
of  the  results  to  be  expected for the full year.   Certain  previously
reported amounts have been reclassified to conform with 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 fixed maturity investments
as "available for sale", which are carried at fair value.

3.   Acquisitions

On  January  2,  1998, the Company acquired the common  stock  of  American
Benefit  Life  Insurance  Company, renamed Keyport Benefit  Life  Insurance
Company  on March 31, 1998, a New York insurance company, for $7.4 million.
The acquisition was accounted for as a purchase and, accordingly, operating
results are included in the consolidated financial statements from the date
of  acquisition.  In connection with the acquisition, the Company  acquired
assets  with a fair value of $9.4 million and assumed liabilities  of  $3.2
million.

4.   Recent Accounting Change

As  of  January  1,  1998,  the  Company  adopted  Statement  of  Financial
Accounting  Standards No. 130 "Reporting Comprehensive Income" (SFAS  130).
SFAS   130  establishes  new  rules  for  the  reporting  and  display   of
comprehensive  income  and its components; however, the  adoption  of  this
statement  did  not  have  any  impact  on  the  Company's  net  income  or
stockholder's equity.  SFAS 130 requires unrealized gains or losses on  the
Company's  available-for-sale  securities, which  prior  to  adoption  were
reported  separately in stockholder's equity, to be included in accumulated
other  comprehensive  income.  Prior year financial  statements  have  been
reclassified to conform to the requirements of SFAS 130.


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


Total  comprehensive income, net of tax, for the nine month  periods  ended
September 30, 1998 and 1997, amounted to $53.6 million and $109.3  million,
respectively.

5.   Recent Accounting Prouncement

In   June  1998,  Statement  of  Financial  Accounting  Standards  No.  133
"Accounting for Derivative Instruments and Hedging Activities", was issued.
This  statement standardizes the accounting for derivative instruments  and
the  derivative  portion  of  certain other  contracts  that  have  similar
characteristics by requiring that an entity recognize those instruments  at
fair  value.   This statement also requires a new method of accounting  for
hedging  transactions, prescribes the type of items and  transactions  that
may  be  hedged, and specifies detailed criteria to be met to  qualify  for
hedge  accounting.  This statement is effective for fiscal years  beginning
after  June  15,  1999.   Earlier adoption is permitted.   The  Company  is
evaluating  the impact of this statement.  Upon adoption, the Company  will
be  required  to  record  a cumulative effect adjustment  to  reflect  this
accounting  change.   At  this  time, the Company  has  not  completed  its
analysis  and  evaluation  of  the requirements  and  the  impact  of  this
statement.



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

     Net income was $29.8 million for the third quarter of 1998 compared to
$26.4 million for the third quarter of 1997.  Year-to-date, net income  was
$79.9 million compared to $84.0 million in the prior year. The increase  in
the  third  quarter is attributable to decreases in operating expenses  and
amortization  on  deferred policy acquisition costs and  increases  in  fee
income, partially offset by decreases in investment spread and increases in
income  tax expense.  The year-to-date decrease is due to a decline in  net
realized investment gains, partially offset by higher fee income and  lower
income tax expense.
  
      Investment spread is the amount by which investment income earned  on
the   Company's  investments  exceeds  interest  credited  on  policyholder
balances.   Investment spread was $57.9 million for the  third  quarter  of
1998  compared to $59.5 million for the third quarter of 1997.  The  amount
by  which  the  average yield on investments exceeds the  average  interest
credited rate on policyholder balances is the investment spread percentage,
which amounted to 1.58% in the third quarter of 1998 and 1.75% in the third
quarter of 1997.  For the first nine months of 1998, investment spread  was
$182.6  million  compared to $182.1 million for the first  nine  months  of
1997.  The investment spread percentage was 1.71% for the first nine months
of 1998 compared to 1.84% for the first nine months of 1997.
  
      Investment  income was $201.2 million for the third quarter  of  1998
compared to $210.4 million for the third quarter of 1997.  The decrease  of
$9.2  million in 1998 compared to 1997 primarily relates to a $17.6 million
decrease resulting from a lower average investment yield, partially  offset
by  a  $8.4  million  increase as a result of a  higher  level  of  average
invested assets.  The third quarter 1998 investment income was net of $17.9
million  of S&P 500 Index call option amortization expense related  to  the
Company's  equity-indexed annuities compared to $13.6 million in the  third
quarter  of  1997.   The average investment yield was 6.20%  in  the  third
quarter  of 1998 compared to 6.77% in the third quarter of 1997.   Year-to-
date,  investment income was $608.2 million compared to $627.5  million  in
the prior year.  The decrease of $19.3 million in 1998 compared to 1997  is
attributable  to  a $46.1 million decrease resulting from a  lower  average
investment yield, partially offset by a $26.8 million increase as a  result
of  a  higher level of average invested assets.  The first nine  months  of
1998  investment income included $53.1 million of S&P 500 Index call option
amortization  expense  related  to the Company's  equity-indexed  annuities
compared to $31.2 million in the prior year.  The average investment  yield
was 6.35% for the first nine months of 1998 compared to 6.86% for the first
nine months of 1997.

      Interest  credited to policyholders totaled $143.3  million  for  the
third  quarter of 1998 compared to $150.9 million for the third quarter  of
1997.  The decrease of $7.6 million in 1998 compared to 1997 relates  to  a
$12.0  million  decrease resulting from a lower average  interest  credited
rate,  partially offset by a $4.4 million increase as a result of a  higher
level  of  average  policyholder balances.  Policyholder balances  averaged
$12.4  billion  for  the  third quarter of 1998  ($10.6  billion  of  fixed
products,  consisting  of fixed annuities and the closed  block  of  single
premium whole life insurance, and $1.8 billion of equity-indexed annuities)
compared to $12.0 billion ($10.7 billion of fixed products and $1.3 billion
of  equity-indexed annuities) for the third quarter of 1997.   The  average
interest  credited  rate was 4.62% (5.29% on fixed  products  and  .85%  on
equity-indexed annuities) for the third quarter of 1998 compared  to  5.02%
(5.52% on fixed products and .85% on equity-indexed annuities) in the third
quarter of 1997.  The Company's equity-indexed annuities credit interest to
the  policyholder at a "participation rate" equal to a portion (ranging for
existing  policies from 40% to 95%) of the change in value of the  S&P  500
Index.   The Company's equity-indexed annuities also provide full guarantee
of principal if held to term, plus interest at 0.85% annually.  For each of
the   periods   presented,   the   interest  credited   to   equity-indexed
policyholders related to the participation rate is reflected net of  income
recognized  on  the  S&P 500 Index call options resulting  in  a  .85%  net
credited  rate.   For the first nine months of 1998, interest  credited  to
policyholders  totaled $425.6 million compared to $445.4  million  for  the
first nine months of 1997.  The decrease of $19.8 million in the first nine
months of 1998 compared to the first nine months of 1997 is due to a  $33.2
million  decrease  resulting from a lower average interest  credited  rate,
partially offset by a $13.4 million increase as a result of a higher  level
of  average  policyholder balances.  Policyholder balances  averaged  $12.2
billion ($10.5 billion of fixed products and $1.7 billion of equity-indexed
annuities)  for  the first nine months of 1998 compared  to  $11.8  billion
($10.7  billion  of  fixed  products and  $1.1  billion  of  equity-indexed
annuities)  for  the  first nine months of 1997.  The average  year-to-date
interest  credited  rate was 4.64% (5.30% on fixed  products  and  .85%  on
equity-indexed  annuities)  in  1998 compared  to  5.02%  (5.44%  on  fixed
products and .85% on equity-indexed annuities) in 1997.

     Average investments in the Company's general account (computed without
giving  effect to SFAS 115), including a portion of the Company's cash  and
cash equivalents, were $13.0 billion for the third quarter of 1998 compared
to  $12.4 billion in the third quarter of 1997.  For the first nine  months
of  1998,  such  average investments were $12.8 billion compared  to  $12.2
billion   in  the  prior  year.   These  increases  primarily   relate   to
reinvestment of portfolio earnings.

      Net  realized investment gains were $4.1 million in the third quarter
of  1998 compared to net realized investment gains of $5.0 million  in  the
third  quarter of 1997.  Year-to-date, net realized investment  gains  were
$2.4  million,  which is net of losses of $7.6 million  for  certain  fixed
maturity investments where the decline in value was determined to be  other
than  temporary, compared to net realized investment gains of $20.4 million
in  1997.   Sales  of  fixed maturity investments  generally  are  made  to
maximize total return.

      Surrender  charges  are revenues earned on the  early  withdrawal  of
fixed,   equity-indexed   and  variable  annuity   policyholder   balances.
Surrender charges on fixed, equity-indexed 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 $4.4 million in the third quarter of 1998  compared
to  $4.2  million  in  1997.  Year-to-date, surrender  charges  were  $14.0
million compared to $11.5 million in 1997.

      On  an  annualized  basis, total fixed, equity-indexed  and  variable
annuity  withdrawals  represented 12.4% and  10.9%  of  the  total  average
annuity policyholder and separate account balances for the third quarter of
1998  and  1997,  respectively, and 13.7% and 11.0% of  the  total  average
policyholder  and separate account balances for the first  nine  months  of
1998 and 1997, respectively.

      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 $5.4 million in the third quarter  of
1998  compared  to $4.8 million in 1997.  Such fees represented  1.53%  and
1.61%  of  average  variable  annuity and variable  life  separate  account
balances  for the third quarters of 1998 and 1997, respectively.   Year-to-
date, separate account fees were $15.5 million compared to $12.7 million in
1997.   These fees represented 1.50% and 1.56% of average variable  annuity
and  variable life separate account balances for the first nine  months  of
1998 and 1997, respectively.

      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, redemptions, and  changes
in the market values of the investments managed.  Management fees were $0.8
million in the third quarter of 1998 compared to $0.9 million in the  third
quarter  of 1997.  Year-to-date, management fees were $3.3 million compared
to  $2.5  million  in 1997.  The year to date increase of $0.8  reflects  a
higher level of average assets under management.

      Operating expenses primarily represent compensation and other general
and  administrative  expenses.  These expenses were $10.8  million  in  the
third  quarter  of 1998 compared to $12.8 million in the third  quarter  of
1997.   For  the first nine months of 1998, operating expenses  were  $40.0
million  compared  to $36.8 million in the prior year.  The  year  to  date
increase in 1998 is 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  $15.5 million in the third quarter of 1998  compared  to
$18.3  million  in  the  third quarter of 1997.  Amortization  of  deferred
policy  acquisition  costs  was $52.8 million for  the  nine  months  ended
September  30,  1998 compared to $54.0 million for the  nine  months  ended
September 30, 1997.

     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 $1.2 million in the
third  quarter  of 1998 compared to $2.2 million in 1997.  Amortization  of
value  of insurance in force totaled $3.9 million for the nine months ended
September  30,  1998  compared to $7.3 million for the  nine  months  ended
September  30, 1997.  These decreases in amortization in 1998  compared  to
1997 are due to a change in mortality assumptions.

     Federal income tax expense was $14.6 million or 32.9% of pretax income
in  the third quarter of 1998 compared to $13.5 million, or 33.9% of pretax
income  in  the  third quarter of 1997.  Year-to-date, federal  income  tax
expense  was  $38.9  million or 32.8% of pretax income, compared  to  $43.2
million or 34.0% of pretax income for the first nine months of 1997.

Financial Condition

      Stockholder's  Equity  as of September 30, 1998  was  $1.152  billion
compared  to  $1.103  billion as of December 31,  1997.   The  increase  in
stockholder's  equity  of $48.6 million was due to  $79.9  million  of  net
income  for  the  period, partially offset by a decline in  net  unrealized
investment  gains of available for sale securities of $26.3 million  and  a
$5.0 million dividend paid to the parent company.

      Investments  not  including cash and cash equivalents  totaled  $12.6
billion  at  September 30, 1998 compared to $12.3 billion at  December  31,
1997.

      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
appropriate  tax  planning,  the  Company  classifies  its  fixed  maturity
portfolio  as  "available for sale" and carries such  investments  at  fair
value.   The Company's total investments at September 30, 1998 and December
31,  1997  reflected  net  unrealized gains of $204.5  million  and  $285.4
million,   respectively,  relating  to  its  fixed  maturity   and   equity
portfolios.

      Approximately  $11.3  billion, or 81.6%,  of  the  Company's  general
account  investments at September 30, 1998, was rated by Standard &  Poor's
Corporation, Moody's Investors Service or under comparable statutory rating
guidelines  established by the NAIC.  At September 30, 1998,  the  carrying
value  of  investments  in below investment grade securities  totaled  $1.2
billion,  or  8.3% of general account investments of $13.8 billion.   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  may  be  more limited  than  for  investment  grade
securities.

Management of the Company's Investments

Asset-liability duration 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
80.5% of the Company's fixed annuity policyholder balances were subject  to
surrender charges at September 30, 1998.

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 toward 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, 1998 the effective duration of the  Company's
fixed  maturities investments (including certain cash and cash equivalents)
was  approximately  2.9.  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 agreements  and
interest  rate cap agreements to match assets more closely to  liabilities.
Swap  agreements  are  agreements to exchange with a 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  earned  on  longer-term fixed-rate  assets  with  interest
credited  to  policyholders.  The Company had 38 and  45  outstanding  swap
agreements with an aggregate notional principal amount of $2.3 billion  and
$2.6 billion at September 30, 1998 and December 31, 1997, 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  $250.0  million  as  of
September 30, 1998 and December 31, 1997, respectively.

With  respect  to the Company's equity-indexed annuities, the Company  buys
call  options  on  the  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  $329.6 million and $323.3 million as of September 30,  1998  and
December 31, 1997, 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,  cap  and  call  option
agreements  are  financially  responsible and that  the  counterparty  risk
associated with these transactions is minimal.  In addition, swap  and  cap
agreements have interest rate risk and call options have stock market risk.
These  swap  and  cap agreements hedge fixed-rate assets  and  the  Company
expects  that any interest rate movements that adversely affect the  market
value  of swap and cap agreements would be offset by changes in the  market
values of such fixed rate assets.  However, there can be no assurance  that
these  hedges will be effective in offsetting the potential adverse effects
of  changes  in  interest  rates.  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  500  Index  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 swap and cap agreements increase less than (or decrease
more  than) the change in the market value of its fixed rate assets  and/or
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.  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,  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,  1998,  $10.2 billion, or 73.6%, 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.
Although no assurance can be given, the Company believes that liquidity  to
fund withdrawals would be available through incoming cash flow, the sale of
short-term  or floating-rate instruments, 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,  1998,  the amount of additional dividends that the Company  could  pay
without such approval was $65.3 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.

Year 2000

Many  companies and organizations have computer programs that use only  two
digits  to identify a year in the date field.  These programs were designed
and  developed without considering the impact of the upcoming change in the
century.   If  not  corrected,  this  could  cause  a  system  failure   or
miscalculations causing disruptions of operations, including,  among  other
things, a temporary inability to process transactions.

In  addressing the Year 2000 issue, the Company has substantially completed
an inventory of its computer programs and assessed its Year 2000 readiness.
The  Company's  computer  programs include internally  developed  programs,
third-party  purchased programs and third-party custom developed  programs.
For  programs  which  were identified as not being  Year  2000  ready,  the
Company  is  in the process of implementing a remedial plan which  includes
repairing or replacing the programs and appropriate testing for Year  2000.
The  Company is also in the process of identifying and reviewing  its  non-
information  technology  systems with respect  to  Year  2000  issues.   In
addition,  the  Company has initiated communication with third  parties  to
determine  the  extent  to  which  the  Company's  interface  systems   are
vulnerable to those third parties' failure to remediate their own Year 2000
issues.

The  Company is developing, and will continue to develop, contingency plans
for  dealing with any adverse effects that become likely in the  event  the
Company's  remediation plans are not successful or third  parties  fail  to
remediate  their  own  Year  2000 issues.  If necessary  modifications  and
conversions are not made, or are not timely completed, or if the systems of
the companies on which the Company's interface system relies are not timely
converted,  the  Year  2000  issues could have a  material  impact  on  the
operations  of  the  Company.   However, the  Company  believes  that  with
modifications  to  existing software and conversions to new  software,  the
Year  2000  issue  will not pose significant operational problems  for  its
computer systems.

In the opinion of management, the cost of addressing the Year 2000 issue is
not  expected to have a material adverse effect on the Company's  financial
condition or its results of operation.

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, 1998.
                                     

                                     
                                     
                                     
                                     
                                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

                                    _________/s/ Bernhard M. Koch__________
                                     
                                              Bernhard M. Koch
                                        Senior Vice President and
                                         Chief Financial Officer
                                       (Principal Financial Officer)


                                      _________/s/ Jeff Whitehead__________
                                     
                                               Jeff Whitehead
                                        Vice President and Treasurer
                                         (Chief Accounting Officer)
                                     
                                     
                                     
Date:  November 12, 1998


                                     
                               Exhibit Index
                                     
                                     
                                     
Exhibit No.    Description                                            Page

   27          Financial Data Schedule                                 16