SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549




                                    FORM 10-Q

                QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE

                             SECURITIES ACT OF 1934


For the Quarterly Period Ended March 31, 1999
Commission File Number 0-4690



                        FINANCIAL INDUSTRIES CORPORATION
             (Exact Name of Registrant as specified in its charter)

         Texas                                 74-2126975
(State of Incorporation)   (I.R.S. Employer Identification Number)



The Austin Centre, 701 Brazos, 12th Floor
Austin, Texas                                     78701
(Address of principal executive offices)       (Zip Code)

Registrant's telephone number, including area code (512) 404-5000




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

Number of common shares outstanding ($.20 par value) at end of period: 5,054,661

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<PAGE>




                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES


                                      INDEX

                                                                        Page No.



Part I - Financial Information

Item 1. Financial Statements
Consolidated Balance Sheets
         March 31, 1999 and December 31, 1998................................ 3

Consolidated Statements of Income
         For the three month periods ended
         March 31, 1999 and 1998............................................. 5

Consolidated Statements of Cash Flows
         For the three month periods ended
         March 31, 1999 and 1998............................................. 7

Notes to Consolidated Financial Statements....................................9

Item 2. Management's Discussion and Analysis of
         Financial Conditions and Results of Operations......................12

Item 3. Quantitative and Qualitative Disclosures
            About Market Risk .............................................. 19

Part II

Other  Information...........................................................22

Signature  Page..............................................................23







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                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)


<TABLE>
<CAPTION>
                                                   March 31,        December 31,
                                                     1999              1998      
                                                          (unaudited)
<S>                                                   <C>                <C>    

ASSETS
Investments other than investments    
 in affiliate:  
Fixed maturities available for
 sale at market value (amortized
 cost of $74,194 and $76,727 at
 March 31, 1999 and December 31,
 1998, respectively )                         $   76,523              $  79,402

Equity securities at market (cost
 approximates $11 at March 31, 1999
 and December 31, 1998)                               4                       4

Policy loans                                      3,233                   3,155
Short-term investments                           30,192                  27,589
                                              ---------               ---------
     Total investments                          109,952                 110,150
Cash                                              1,758                   2,601
Investment in affiliate                          71,571                  70,950
Accrued investment income                           981                   1,209
Agency advances and other receivables             7,990                   7,759
Reinsurance receivables                          13,164                  12,426
Due and deferred premiums                        11,984                  12,181
Property and equipment, net                       1,758                   1,758
Deferred policy acquisition costs                49,364                  48,510
Present value of future profits of
 acquired businesses                             27,084                  28,294
Other assets                                      5,051                   5,392
Separate account assets                             424                     508
                                              ----------              ---------
     Total Assets                             $ 301,081               $ 301,738
                                              =========               =========
</TABLE>


              The accompanying notes are an integral part of these
                        consolidated financial statements


                                      - 3 -

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                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
<TABLE>
<CAPTION>

                                                  March 31,         December 31,
                                                    1999               1998     
                                                           (unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY      
<S>                                                  <C>                <C>    

Liabilities:
Policy liabilities and contract
 holder deposit funds:
Future policy benefits                          $   60,085        $   60,069
Contract holder deposit funds                       44,759            45,128
Unearned premiums                                       28                28
Other policy claims and benefits payable             5,017             4,582
                                                ----------        ----------
                                                   109,889           109,807
Subordinated notes payable to affiliate             46,108            47,645
Deferred federal income taxes                       24,122            23,984
Other liabilities                                    3,822             4,474
Separate account liabilities                           424               508
                                                ----------        ----------
Total Liabilities                                  184,365           186,418
                                                ----------        ----------
Commitments and Contingencies
Shareholders' equity:
Common stock, $.20 par value, 10,000,000
 shares authorized; 5,845,300 shares
 issued, 5,054,661 outstanding in 1999
 and 1998                                            1,169             1,169
Additional paid-in capital                           7,225             7,225
Accumulated other comprehensive income               5,027             5,898
Retained earnings                                  110,670           108,403
                                                ----------        ----------
                                                   124,091           122,695
Common treasury stock, at cost,  790,639
 in 1999 and 1998.                                  (7,375)           (7,375)
                                                ----------        ----------
Total Shareholders' Equity                         116,716           115,320
                                                -----------       ----------
Total Liabilities and Shareholders' Equity      $  301,081        $  301,738
                                                ==========        ==========
</TABLE>


                   The accompanying notes are an integral part
                         of these consolidated financial
                                   statements.

                                      - 4 -

<PAGE>



                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                      (in thousands except per share data)
<TABLE>
<CAPTION>

                                                          Three Months Ended
                                                               March 31,
                                                        1999            1998    
                                                             (unaudited)
<S>                                                      <C>             <C>    

Revenues:
 Premiums                                        $     8,581         $   9,764
 Net investment income                                 1,753             1,938
 Earned insurance charges                              1,376             1,427
 Other                                                   405               347
                                                 -----------         ---------
                                                      12,115            13,476
Benefits and expenses:
 Policyholder benefits and expenses                    3,741             4,108
 Interest expense on contract holders
 deposit funds                                           505               640
 Amortization of present value of future
 profits of acquired businesses                        1,210             1,513
 Amortization of deferred policy
  acquisition costs                                    1,203             1,196
 Operating expenses                                    2,916             3,099
 Interest expense                                        698               719
                                                 -----------         ---------

Income before federal income tax and
 equity in net earnings of affiliates                  1,842             2,201
Provision for federal income taxes                       339               400
                                                 -----------         ---------

Income before equity in net earnings
 of affiliates                                         1,503             1,801
Equity in net earnings of affiliate,
 net of tax                                              765               532
                                                 -----------         ----------
Net Income                                       $     2,268         $   2,333
                                                 ===========         ==========

</TABLE>

                     The accompanying notes are an integral
                           part of these consolidated
                                   statements.

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                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                      (in thousands except per share data)

                                                    Three Months Ended
                                                        March 31,
                                               1999                 1998     
                                                   
                                                        (unaudited)
Net Income Per Share

Basic:
Average weighted shares outstanding               5,055             5,428
Basic earnings per share                     $     0.45      $       0.43
                                             ==========      ============
Diluted:
Common stock and common stock equivalents         5,206             5,603
Diluted earnings per share                   $     0.44      $       0.42
                                             ==========      ============


















                   The accompanying notes are an integral part
                         of these consolidated financial
                                   statements.

                                      - 6 -

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                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
<CAPTION>
                                                                Three Months Ended
                                                                     March 31,
                                                           1999                   1998     
                                                       
                                                                   (unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
<S>                                                       <C>                     <C>    

Net Income                                           $   2,268               $    2,333
Adjustments to reconcile net income to
 net cash provided by operating activities:
Amortization of present value of future
 profits of acquired business                            1,210                    1,513
Amortization of deferred policy
 acquisition costs                                       1,203                    1,196
Financing costs amortized
Equity in undistributed earnings of
  affiliate                                             (1,314)                  (1,220)
Changes in assets and liabilities:
Decrease in accrued investment income                      228                      194
Increase in agent advances and
 other  receivables                                       (969)                    (742)
Decrease (increase) in due premiums                        197                      (68)
Increase in deferred policy acquisition costs           (2,057)                  (1,936)
Decrease in other assets                                   341                    1,180
Increase in policy liabilities and accruals                 82                     (303)
Decrease in other liabilities                             (652)                  (1,786)
Increase in deferred federal income taxes                  138                      328
Other, net                                                 (69)                      (2)
                                                     ----------              -----------
Net cash provided by operating activities            $     606               $      687
                                                     ----------               -----------

</TABLE>


                   The accompanying notes are an integral part
                         of these consolidated financial
                                   statements.

                                      - 7 -

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                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
                                 (in thousands)
<TABLE>
<CAPTION>
                                                     Three Months Ended
                                                          March 31,
                                                  1999                  1998   
                                                        (unaudited)
CASH FLOWS FROM INVESTING ACTIVITIES
<S>                                                <C>                   <C>    

Fixed maturities purchased                    $   (7,000)         $   (9,082)
Increase in policy loans                             (78)                (74)
Proceeds from sales and maturities of
 fixed maturities                                  9,769               4,661
Net decrease in short-term investments            (2,603)              5,674
                                              -----------         -----------
Net cash provided by  investing activities            88               1,179
                                              -----------         -----------
CASH FLOW FROM FINANCING
 ACTIVITIES
Repayment of subordinated notes payable           (1,537)             (1,536)
                                              -----------         -----------
Net cash used in financing activities             (1,537)             (1,536)
                                              -----------         -----------
Net increase (decrease) in cash                     (843)                330
Cash, beginning of year                            2,601                 508
                                              -----------         -----------
Cash, end of year                             $    1,758          $      838
                                              ==========          ===========
</TABLE>









                   The accompanying notes are an integral part
                         of these consolidated financial
                                   statements.

                                      - 8 -

<PAGE>



                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The financial  statements  included herein reflect all adjustments which are, in
the opinion of management,  necessary to present a fair statement of the interim
results.  The statements  have been prepared to conform to the  requirements  of
Form 10-Q and do not necessarily  include all disclosures  required by generally
accepted accounting  principles (GAAP). The reader should refer to Form 10-K for
the year ended  December  31, 1998,  previously  filed with the  Commission  for
financial  statements  prepared  in  accordance  with GAAP.  Certain  prior year
amounts have been reclassified to conform with current year presentation.

The  consolidated   financial  statements  include  the  accounts  of  Financial
Industries Corporation ("FIC") and its wholly-owned subsidiaries. The investment
of FIC in  InterContinental  Life  Corporation  ("ILCO") is presented  using the
equity method.  All significant  intercompany  items and transactions  have been
eliminated.

New Accounting Pronouncements

In June 1997, the FASB issued Statement of Financial  Accounting  Standard (FAS)
 130, "Reporting Comprehensive Income." The new standard, which is effective for
 financial
statements  issued for periods  ending  after  December  15,  1997,  established
standards for reporting, in addition to net income, comprehensive income and its
components including,  as applicable,  foreign currency income,  minimum pension
liability  adjustments and unrealized gains and losses on certain investments in
debt and equity services. The Company adopted this standard in the first quarter
of 1998.  Total  comprehensive  income for the three months ended March 31, 1999
and March 31, 1998 is $1.4 million and $1.5 million, respectively.

The following is a reconciliation of accumulated other comprehensive income from
December 31, 1998 to March 31, 1999 (in thousands):

                                                        Net        Total
                              Net unrealized        appreciation   accumulated
                              gain on investments   (depreciation) other
                              in fixed maturities   of equity      comprehensive
                              available for sale     securities    income   

Balance at December 31, 1998     $  5,900            $     (2)        $  5,898
Current Period Change                (870)                 (1)            (871)
                                 --------           ---------        ----------
Balance at March 31, 1999        $  5,030            $     (3)        $  5,027
                                 ========           =========         ========





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                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES

           NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

New Accounting Pronouncements, continued

In June 1997,  the FASB issued FAS No. 131,  "Disclosures  about  Segments of an
Enterprise and Related  Information," which establishes  standards for reporting
information about operating segments. Generally, FAS 131 requires that financial
information  be reported  on the basis that is used  internally  for  evaluating
performance.  The Company adopted FAS 131 effective January 1, 1998. The Company
is principally  engaged,  through its  subsidiaries,  in administering  existing
portfolios of individual  life  insurance  and annuity  products.  The Company's
insurance  subsidiaries  are also  engaged  in the  business  of  marketing  and
underwriting individual life insurance and annuity products in 49 states and the
District of Columbia.  Such  products are marketed  through an exclusive  career
agency  system.  Management  considers  the  Company's  insurance  operations to
constitute one reportable  segment.  Premium revenues for traditional  insurance
products and earned insurance charges on universal life and annuity products are
presented  in the  accompanying  consolidated  statements  of income.  No single
customer accounts for 10 percent or more of the Company's  revenue.  The Company
has no foreign operations.


In February 1998,  the FASB issued SFAS No. 132,  "Employers  Disclosures  about
Pensions and Other  Postretirement  Benefits," which revises current  disclosure
requirements for employers'  pension and other retiree  benefits.  SFAS 132 does
not change the  measurement or  recognition  of pension or other  postretirement
benefit  plans.  The Company  adopted  SFAS 132 for the year ended  December 31,
1998.


In December 1997, the Accounting  Standards Executive Committee issued Statement
of Position  ("SOP") 97-3,  "Accounting by Insurance and Other  Enterprises  for
Insurance-Related  Assessments,"  which  provides  guidance  on  accounting  for
insurance-related assessments. The Company adopted SOP 97-3 effective January 1,
1999.  The adoption of SOP97-3 did not have a material  impact on the  Company's
results of operations, liquidity or financial position.

In  June  1998,  the  FASB  issued  FAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities",  which establishes accounting and reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other contracts, (collectively

                                     - 10 -

<PAGE>


referred to as derivatives) and for hedging activities. FAS 133 is applicable to
financial  statements for all fiscal  quarters of fiscal years  beginning  after
June 15, 1999.  The operations of the Company are not affected by the provisions
of FAS No. 133.


                                     - 11 -

<PAGE>


Item 2. Management's Discussion and Analysis of Financial Conditions and Results
        of Operation:


For  the  three-month  period  ended  March  31,  1999,   Financial   Industries
Corporation's  ("FIC") net income was  $2,268,000  (basic  earnings of $0.45 per
common  share,  or diluted  earnings  of $0.44 per common  share) as compared to
$2,333,000  (basic  earnings of $0.43 per common share,  or diluted  earnings of
$0.42 per common  share) in the first three  months of 1998.  Earnings per share
are stated in accordance with the requirements of FAS No. 128, which establishes
two  measures  of  earnings  per share:  basic  earnings  per share and  diluted
earnings  per share.  Basic  earnings  per share is computed by dividing  income
available to common shareholders by the weighted average number of common shares
outstanding during the period.  Diluted earnings per share reflect the potential
dilution that would occur if securities or other contracts to issue common stock
were converted or exercised.


                              Results of Operations

FIC's  income from  operations - as  determined  before  federal  income tax and
equity in net earnings of its affiliate, InterContinental Life Corporation - for
the  three-month  period ended March 31, 1999,  was  $1,842,000  (on revenues of
$12,115,000  ), as compared to $2,201,000  (on revenues of  $13,476,000)  in the
first three months of 1998.

Earnings per share (basic and  diluted) for the  three-month  period ended March
31,  1999  include  $.03 per share due to the  decrease  in the number of common
shares  outstanding  resulting  from (i) FIC's  purchase on November 17, 1998 of
101,304  shares  of FIC's  common  stock  from the Roy F. and Joann  Cole  Mitte
Foundation  (the  "Foundation"),   a  Texas  non-profit   corporation  which  is
controlled  by Mr.  Mitte and his wife,  at a price of  $18.625  per share (or a
total  purchase price of  $1,886,787)  and (ii) Family Life Insurance  Company's
purchase on November  17, 1998 of 272,000  shares of FIC's common stock from the
Foundation  at a price  of  $18.625  per  share  (or a total  purchase  price of
$5,066,000).

Premiums for the first three months of 1999, net of reinsurance ceded, were $8.6
million,  as  compared  to $9.8  million  in the  first  three  months  of 1998.
Policyholder  benefits  and expenses  were $3.7  million in the 1999 period,  as
compared to $4.1 million in the first three months of 1998.

As of March 31, 1999,  the market value of the fixed  maturities  available  for
sale  segment  was $76.5  million as  compared  to an  amortized  value of $74.2
million, or an unrealized gain of $2.3 million. The increase reflects unrealized
gains on such investments related to changes in interest rates subsequent to the
purchase  of such  investments.  There is no  assurance  that  this gain will be
realized in the future.  The net of tax effect of this  increase  ($1.5 at March
31, 1999) has been recorded as an increase in shareholders'  equity. As required
under the provisions of FAS No. 130, the  determination  of  "Accumulated  other
comprehensive  income" includes separate  identification of the change in values
which occurred during the current period.

The  operating  strategy  of the  Company's  management  emphasizes  several key
objectives:  expense  management;  marketing of  competitively  priced insurance
products  which are designed to generate an acceptable  level of  profitability;
maintenance of a high quality portfolio of investment grade securities;  and the
provision of quality customer service.


            Equity in Net Income of InterContinental Life Corporation

General:

Prior to the  acquisition of Family Life Insurance  Company  ("Family  Life") in
June of 1991,  FIC's  primary  involvement  in the life  insurance  business was
through its equity interest in InterContinental Life Corporation  ("ILCO").  For
the  three-month  period ended March 31, 1999,  the Company's  equity in the net
earnings  of ILCO,  net of federal  income  tax,  was  $765,000,  as compared to
$532,000 for the first three months of 1998.

                                     - 12 -

<PAGE>



On March 17,  1999,  ILCO paid a stock  dividend  (one share of common stock for
each outstanding share of common stock).  FIC currently owns 3,590,292 shares of
ILCO's common stock.  In addition,  Family Life currently owns 342,400 shares of
ILCO common stock.  As a result,  FIC currently  owns,  directly and  indirectly
through  Family Life,  3,932,692  shares  (approximately  45%) of ILCO's  common
stock.

Prior to  September  30, 1998,  FIC held  options to acquire (on a  pre-dividend
basis) an additional  1,702,155 shares. The options were granted under an option
agreement  between FIC and ILCO which was entered into in March,  1986  ("Option
Agreement").  The Option Agreement  provided that it continued in effect as long
as FIC guaranteed  indebtedness of ILCO. Since the Senior Loan of ILCO was fully
repaid on September 30, 1998, FIC's rights under the Option Agreement expired on
September 30, 1998.

As of March 31, 1999, the market value of ILCO's fixed maturities  available for
sale  segment  was $428.7  million as compared  to an  amortized  cost of $415.7
million,  or  an  unrealized  gain  of  $13.0  million.  The  increase  reflects
unrealized  gains on such  investments  related  to changes  in  interest  rates
subsequent to the purchase of such investments. Since FIC owns approximately 45%
of the  common  stock of ILCO,  the net of tax  effect  of this  increase  ($8.5
million at March 31,  1999) is  included  in  "Accumulated  other  comprehensive
income" on the Consolidated  Balance Sheets and has been recorded as an increase
in shareholders' equity.

Liquidity and Capital Resources of ILCO:

ILCO is a holding company whose principal  assets consist of the common stock of
Investors  Life  Insurance  Company of North  America  ("Investors-NA")  and its
subsidiary,    Investors   Life   Insurance   Company   of   Indiana   (formerly
InterContinental  Life  Insurance  Company).  ILCO's  primary  source  of  funds
consists of payments under the surplus debentures from Investors-NA.

Prior to September 30, 1998, the cash  requirements of ILCO consisted  primarily
of its  service  of  the  indebtedness  created  in  connection  with  the  1988
acquisition of the Investors Life Companies and the 1995 acquisition of Meridian
Life Insurance Company (which company was subsequently  merged into another life
insurance  subsidiary  of  ILCO).  As of  December  31,  1997,  the  outstanding
principal  balance of ILCO's senior loan  obligations  was $11.0 million,  which
reflected the prepayment by ILCO of the payment originally scheduled for January
1, 1998.  A regular  payment in the amount of $3.7  million was made on April 1,
1998,  and a prepayment of the July 1, 1998  installment,  in the amount of $3.7
million, was made on June 30, 1998. The outstanding  principal balance of ILCO's
senior loan obligations was $3.6 million at June 30, 1998. The final installment
on the senior loan  obligation  scheduled  for  October 1, 1998,  was prepaid on
September  30, 1998. As a result,  the senior loan  obligation of ILCO was fully
discharged effective September 30, 1998.

ILCO's  principal  source of  liquidity  consists  of the  periodic  payment  of
principal and interest to it by Investors- NA,  pursuant to the terms of the two
surplus  debentures.  The surplus  debentures were originally issued by Standard
Life  Insurance  Company  and  their  terms  were  previously  approved  by  the
Mississippi  Insurance  Commissioner.  In  connection  with the 1993  merger  of
Standard Life into Investors-NA,  the obligations of the surplus debentures were
assumed  by  Investors-NA.  As of March  31,  1999,  the  outstanding  principal
balances  of  the  surplus  debentures  were  $4.2  million  and  $8.0  million,
respectively.  Since  Investors-NA is domiciled in the State of Washington,  the
Washington  insurance  law  applies  to the  administration  of the terms of the
surplus  debentures.  Under the provisions of the surplus debentures and current
law, no prior approval of the Washington Insurance  Commissioner is required for
Investors-NA  to pay interest or principal on the surplus  debentures;  provided
that,  after  giving  effect  to  such  payments,   the  statutory   surplus  of
Investors-NA  is in  excess  of $10  million  (the  "surplus  floor").  However,
Investors-NA has voluntarily agreed with the Washington  Insurance  Commissioner
that it will provide at least five days advance notice of payments which it will
make under the surplus  debenture.  As of March 31, 1999, the statutory  capital
and surplus of Investors-NA was $65.4 million, an amount substantially in excess
of the surplus floor. The funds required by Investors-NA to meet its obligations
to ILCO under the terms of the surplus  debentures  are generated from operating
income generated from insurance and investment operations.

In addition to the payments under the terms of the Surplus Debentures,  ILCO has
received dividends from its

                                     - 13 -

<PAGE>



subsidiaries. Washington's insurance code includes the "greater of" standard for
payment  of  dividends  to  shareholders,  but  has  a  requirement  that  prior
notification  of a  proposed  dividend  be  given  to the  Washington  Insurance
Commissioner and that cash dividends may be paid only from earned surplus. Under
the "greater of"  standard,  an insurer may pay a dividend in an amount equal to
the greater of (i) 10% of  policyholder  surplus or (ii) the  insurer's net gain
from  operations for the previous year. As of March 31, 1999,  Investors-NA  had
earned  surplus  of  $37.4  million.  Since  the law  applies  only to  dividend
payments,  the ability of Investors-NA  to make principal and interest  payments
under the Surplus  Debentures is not  affected.  ILCO does not  anticipate  that
Investors-NA  will have any difficulty in making principal and interest payments
on the Surplus Debentures for the foreseeable future.

Investors-IN is domiciled in the State of Indiana.  Under the Indiana  insurance
code, a domestic insurer may make dividend  distributions  upon proper notice to
the  Department  of  Insurance,  as long as the  distribution  is  reasonable in
relation to adequate  levels of  policyholder  surplus and quality of  earnings.
Under Indiana law the dividend must be paid from earned  surplus.  Extraordinary
dividend  approval would be required where a dividend exceeds the greater of 10%
of  surplus  or the  net  gain  from  operations  for  the  prior  fiscal  year.
Investors-IN had earned surplus of $18.6 million at March 31, 1999.

The Form 10-Qs of ILCO for the  three-month  periods  ended  March 31,  1999 and
March 31, 1998, set forth the business  operations and financial results of ILCO
and its life insurance  subsidiaries.  Such 10-Q reports of ILCO,  including the
discussion by ILCO's management under the caption  "Management's  Discussion and
Analysis of Financial  Conditions  and Results of Operations"  are  incorporated
herein by reference.


                        Liquidity and Capital Resources:

FIC is a holding company whose  principal  assets consist of the common stock of
Family Life and its equity  ownership in ILCO.  FIC's primary sources of capital
consists of cash flow from operations of its subsidiaries.

The cash  requirements  of FIC and its  subsidiaries  consist  primarily  of its
service of the  indebtedness  created in connection with its ownership of Family
Life. As of March 31, 1999, the  outstanding  balance of such  indebtedness  was
$46.1 million on the Subordinated Notes granted by Investors-NA.

The  principal  source of  liquidity  for  FIC's  subsidiaries  consists  of the
periodic  payment of principal and interest by Family Life pursuant to the terms
of a Surplus  Debenture.  The terms of the  Surplus  Debenture  were  previously
approved by the Washington Insurance  Commissioner.  Under the provisions of the
Surplus Debenture and current law, no prior approval of the Washington Insurance
Department  is required  for Family Life to pay  interest  or  principal  on the
Surplus  Debenture;  provided that,  after giving effect to such  payments,  the
statutory  surplus  of Family  Life is in excess of 6% of assets  (the  "surplus
floor").  However,  Family  Life has  voluntarily  agreed  with  the  Washington
Insurance Commissioner that it will provide at least five days advance notice of
payments which it will make under the surplus  debenture.  As of March 31, 1999,
the statutory  capital and surplus of Family Life was $28.4  million,  an amount
substantially  in  excess  of the  surplus  floor.  As of March  31,  1999,  the
principal balance of the Surplus Debenture was $20.6 million. The funds required
by Family Life to meet its obligations  under the terms of the Surplus Debenture
are generated  primarily from premium  payments from  policyholders,  investment
income and the proceeds from the sale and redemption of portfolio investments.

Washington's insurance code includes the "greater of" standard for dividends but
has requirements that prior  notification of a proposed dividend be given to the
Washington Insurance  Commissioner and that cash dividends may be paid only from
earned surplus. Family Life does not presently have earned surplus as defined by
the regulations adopted by the Washington Insurance Commissioner and, therefore,
is not permitted to pay cash dividends.  However, since the new law applies only
to dividend payments,  the ability of Family Life to make principal and interest
payments  under the Surplus  Debenture  is not  affected.  The Company  does not
anticipate  that Family Life will have any  difficulty  in making  principal and
interest  payments on the Surplus  Debenture in the amounts  necessary to enable
Family Life Corporation to service its indebtedness for the foreseeable future.

                                     - 14 -

<PAGE>



The  sources  of  funds  for  Family  Life  consist  of  premium  payments  from
policyholders,  investment  income and the proceeds from the sale and redemption
of portfolio  investments.  These funds are applied primarily to provide for the
payment of claims under  insurance  and annuity  policies,  operating  expenses,
taxes,  investments in portfolio securities,  shareholder dividends and payments
under the provisions of the Surplus Debenture.

FIC's net cash flow provided by operating  activities  was $606,000 in the first
three months of 1999, as compared to $687,000 in the first three months of 1998.
Net cash flow used in financing  activities was $(1,537,000) in the 1999 period,
as compared to $(1,536,000) in the first three months of 1998.

In connection  with the purchase of the Investors Life Companies by ILCO and the
purchase of Family Life by a wholly-owned  subsidiary of FIC, FIC guaranteed the
payment of the indebtedness created in connection with such acquisitions.  After
giving  effect to the  refinancing  of the ILCO Senior Loan and the repayment of
the ILCO Subordinated Loans, the guaranty commitments of FIC with respect to the
debt  obligations  of ILCO  related to the ILCO  Senior  Loan.  The  outstanding
principal balance of ILCO's senior loan obligations was $3.6 million at June 30,
1998. The final installment on the Senior Loan obligation  scheduled for October
1, 1998,  was  prepaid on  September  30,  1998.  As a result,  the Senior  Loan
obligation of ILCO was fully discharged  effective September 30, 1998, relieving
FIC of the guaranty commitments with respect to the debt obligations of ILCO.

The guaranty  commitments of FIC under the loans incurred in connection with the
acquisition  of Family Life (after  taking into account the  repayments  and new
loans which occurred in July, 1993) relate to: (i) the $22.5 million note issued
by Family Life Corporation to Investors Life Insurance Company of North America,
and (ii) the $34.5 million loaned by Investors-NA to two subsidiaries of FIC.

Management  believes that its cash, cash  equivalents and short term investments
are sufficient to meet the needs of its business and to satisfy debt service.

There are no trends, commitments or capital asset requirements that are expected
to have an adverse effect on the liquidity of FIC.

                                   Investments

As of March 31, 1999, the Company's investment assets totaled $110.0 million, as
compared to $117.8 million as of March 31, 1998.

The level of  short-term  investments  at March 31, 1999 was $30.2  million,  as
compared to $28.8 million as of March 31, 1998. The fixed  maturities  available
for sale portion  represents $76.5 million of investment  assets as of March 31,
1999,  as compared to $86.1  million at March 31, 1998.  The  amortized  cost of
fixed  maturities  available  for sale as of March 31,  1999 was  $74.2  million
representing  a net  unrealized  gain  of $2.3  million.  This  unrealized  gain
principally  reflects  changes in  interest  rates from the date the  respective
investments  were  purchased.  To reduce the exposure to interest  rate changes,
portfolio  investments  are selected so that  diversity,  maturity and liquidity
factors approximate the duration of associated policyholder liabilities.

The assets held by Family Life must comply with applicable  state insurance laws
and  regulations.  In  selecting  investments  for the  portfolios  of its  life
insurance  subsidiaries,  the Company's  emphasis is to obtain  targeted  profit
margins,  while  minimizing  the  exposure  to  changing  interest  rates.  This
objective  is  implemented  by  selecting   primarily   short-  to  medium-term,
investment grade fixed income securities.  In making such portfolio  selections,
the  Company  generally  does not  select  new  investments  which are  commonly
referred to as "high yield" or "non-investment grade".

The fixed maturities  portfolio of Family Life, as of March 31, 1999,  consisted
solely of fixed maturities  investments  which, in the annual  statements of the
companies, as filed with state insurance departments,  were designated under the
National Association of Insurance  Commissioners ("NAIC") rating system as a "1"
(highest quality).


                                     - 15 -

<PAGE>



The   investments  of  Family  Life  and  ILCO's   insurance   subsidiaries   in
mortgage-backed securities included collateralized mortgage obligations ("CMOs")
of  $23.9  million  and  $200.6  million,   respectively,   and  mortgage-backed
pass-through  securities  of $4.9 million and $29.6  million,  respectively,  at
March 31, 1999. Mortgage- backed pass-through  securities,  sequential CMO's and
support bonds,  which comprised  approximately 42.5 % of the book value of FIC's
mortgage-backed securities and 49.9% of the book value of ILCO's mortgage-backed
securities at March 31, 1999, are sensitive to prepayment  and extension  risks.
ILCO and FIC have reduced the risk of prepayment associated with mortgage-backed
securities  by  investing  in  planned   amortization   class  ("PAC"),   target
amortization  class ("TAC")  instruments and scheduled bonds.  These investments
are  designed  to  amortize  in a  predictable  manner by  shifting  the risk of
prepayment of the  underlying  collateral to other  investors in other  tranches
("support  classes") of the CMO. At March 31, 1999, PAC and TAC  instruments and
scheduled  bonds  represented  approximately  57.5% of the  book  value of FIC's
mortgage-backed  securities and approximately  51.1% of the book value of ILCO's
mortgage-backed   securities.   Sequential  and  support   classes   represented
approximately  25.5% of the book value of FIC's  mortgage-backed  securities and
approximately  36.0% of the book value of ILCO's  mortgage-backed  securities at
March 31, 1999.  In addition,  FIC and ILCO limit the risk of prepayment of CMOs
by  not  paying  a  premium  for  any  CMOs.  ILCO  and  FIC do  not  invest  in
mortgage-backed securities with increased prepayment risk, such as interest-only
stripped pass-through securities and inverse floater bonds. Neither FIC nor ILCO
had any z-accrual  bonds as of March 31, 1999. The prepayment  risk that certain
mortgage-backed  securities  are subject to is prevalent in periods of declining
interest  rates,  when  mortgages  may be repaid more rapidly than  scheduled as
individuals  refinance  higher rate  mortgages  to take  advantage  of the lower
current rates. As a result,  holders of  mortgage-backed  securities may receive
large prepayments on their investments which cannot be reinvested at an interest
rate  comparable  to the rate on the prepaying  mortgages.  Neither FIC nor ILCO
made  additional  investments in CMOs during 1998 and the first quarter of 1999.
The  current  investment  objectives  of both  FIC and  ILCO do not  contemplate
additions to the portfolio of CMO investments during the remainder of 1999.

Management  believes that the absence of "high-yield" or "non-investment  grade"
investments  (as  defined  above)  in  the  portfolios  of  its  life  insurance
subsidiary  enhances  the ability of the  Company to service  its debt,  provide
security  to its  policyholders  and to credit  relatively  consistent  rates of
return to its policyholders.


                                 Y2K Compliance

The  Company  and its  subsidiaries  utilize a  centralized  computer  system to
process policyholder records and financial information. In addition, the Company
uses non-centralized  computer terminals in connection with its operations.  The
software programs used in connection with these systems will be affected by what
is referred to as the "Y2K date problem".  This refers to the limitations of the
programming  code in  certain  existing  software  programs  to  recognize  date
sensitive information as the year 2000 approaches.  Unless modified prior to the
year 2000,  such systems may not properly  recognize such  information and could
generate erroneous data or cause a system to fail to operate properly.

The Company has evaluated its centralized  computer  systems and has developed a
plan to reach Y2K  compliance.  A central feature of the plan is to convert most
of the  centralized  systems to a common  system which is already in  compliance
with Y2K requirements.  The Company is in the process of this systems conversion
and anticipates  that the project will be completed in advance of the year 2000.
The Company has increased the budget for the  implementation  and  completion of
the Plan from the prior years estimate. As of December 31, 1997, the Company had
budgeted  approximately $330,000 for implementing the Plan. Based on its current
analysis,  the Company expects that the cost of implementing  and completing the
Plan will  result in an  after-tax  expense of  approximately  $898,000  for the
three-year  (1997 - 1999)  conversion  period.  For the three month period ended
March 31, 1999,  the Company has incurred an after tax expense of  approximately
$129,500 in connection with the completion of the Plan.  Between January 1, 1997
and  March  31,  1999,  the  Company  has  expended  approximately  74.7% of the
three-year expected after-tax cost discussed above.

The Plan calls for an upgrade of the  Family  Life's  administrative  systems by
changing  individual lines of computer code in order to modify current operating
software such that it will become Y2K compliant. This

                                      -16 -

<PAGE>



process includes  approximately  29 sub-systems  which provide data input to the
main  systems.  The  administrative  systems  which  are  not  modified  will be
converted onto the Company's CK/4 System,  a system designed to be Y2K compliant
according to the representations of the vendor.

The systems which  administer a substantial  number of Family Life policies will
be  modified  rather  than  converted.   The  modification  of  the  PMS  system
(administering  approximately 106,630 policies for Family Life) was completed in
March, 1998. The conversion of the Cypros AP system (administering approximately
18,430 active  policies for Family Life) is scheduled for  completion at the end
of September, 1999.

A small number of Family Life  policies are  administered  by systems which also
administer  policies for ILCO and its subsidiaries.  With regard to ILCO and its
subsidiaries,   the  ALIS  system  (administering  approximately  49,280  active
policies for  Investors-NA  at the time of conversion)  was converted to CK/4 in
January  of  1998.  The   conversion  of  the  Life  70  system   (administering
approximately   15,510  active  policies  for  Investors-IN)  is  scheduled  for
completion in April,  1999. The  modification of the Lifecomm-B  system which is
responsible for the 17,240 active policies  assumed after ILCO's  acquisition of
State Auto Life is also scheduled for completion in April,  1999. The conversion
of the Lifecomm-A system (administering approximately 62,400 active policies for
Investors-NA) is now scheduled for completion in September of 1999.

The Company  also faces the risk that one or more of its  external  suppliers of
goods  or  services  ("third  party  providers")  will not be in a  position  to
properly  interact  with the  Company due to the  inability  of such third party
provider to resolve its own Y2K issues.  The Company has  completed an inventory
of its third party provider relationships.  In order to assess the Y2K readiness
of such third  party  providers,  the  Company  has  developed  and  forwarded a
detailed questionnaire to such providers. As the responses to the questionnaires
are  received,  the Company will evaluate the overall Y2K readiness of its third
party  provider  relationships.  However,  the Company does not have  sufficient
information at the current time to determine whether the computer systems of its
third party  providers will be in compliance  with the Y2K  requirements  as the
year 2000 approaches.

In 1997,  FIC  Computer  Services  - a  subsidiary  of FIC which  provides  data
processing services for the Company and its affiliates - purchased new mainframe
hardware and accompanying  operating software,  which the vendor has represented
to be Y2K  compliant.  This  hardware  and  software  was  tested  in 1998.  The
telephone system has been tested by the maintenance provider for that system and
the Company has received assurances that the telephone system is Y2K compliant.

With respect to non-centralized  systems (i.e., desktop computers),  the Company
has obtained  updated  software  releases  and new  hardware  designed to be Y2K
compliant according to the  representations of the vendors.  The Company expects
that the effort  needed to correct for Y2K problems on such systems will be less
time intensive than the effort needed to achieve  compliance for its centralized
systems.  The installation of such new PC hardware and software was commenced in
early 1999 and is expected to be completed by September 1, 1999.

In the event that a major administrative system fails to operate properly due to
the Y2K  problem,  or the  Company  does  not  complete  the  necessary  systems
conversions  prior to January 1,  2000,  the  Company  has  developed  a plan to
respond to such a  contingency.  FIC  Computer  Services  has  assigned  certain
personnel to be members of an emergency  response team to resolve Y2K operations
problems. Additionally, insurance policies would be administered manually if the
necessary  systems  conversions  were not completed prior to January 1, 2000, or
subsequent Y2K operations problems persist.  Manual policy  administration would
require  additional  personnel.   If  substantial  additional  personnel  become
necessary for manual policy administration,  the training and salary expenses of
such personnel  could  materially  affect the Company's  business and results of
operations.  The  Company is not able to  estimate  the  likelihood  that manual
administration  will be needed or the amount of any expense which it would incur
in connection with such manual administration.

                    Cautionary Statements for Purposes of the
                     "Safe Harbor" Provisions of the Private
                    Securities Litigation Reform Act of 1995

Except  for  historical  factual  information  set  forth  in this  Management's
Discussion and Analysis, certain

                                     - 17 -

<PAGE>



statements made in this report are forward looking and contain information about
financial  results,  economic  conditions,  Y2K risks and other  risks and known
uncertainties.  The Company cautions the reader that actual results could differ
materially  from those  anticipated by the Company,  depending upon the eventual
outcome  of certain  factors,  including:  (1)  heightened  competition  for new
business,  (2)  significant  changes in interest rates,  (3) adverse  regulatory
changes  affecting the business of insurance and (4) adverse  changes in the Y2K
readiness of the Company or its significant third party providers.

                             Accounting Developments

In February  1997,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Financial Accounting Standard (FAS) No. 128, "Earnings Per Share," which revises
the  standards  for computing  earnings per share  previously  prescribed by APB
Opinion No. 15, "Earnings Per Share." The Statement  establishes two measures of
earnings per share:  basic  earnings  per share and diluted  earnings per share.
Basic  earnings  per share is computed by dividing  income  available  to common
shareholders by the weighted average number of common shares  outstanding during
the period.  Diluted  earnings per share  reflects the  potential  dilution that
could  occur  if  securities  or other  contracts  to issue  common  stock  were
converted or exercised.  The Statement  requires dual  presentation of basic and
diluted  earnings per share on the face of the income statement for all entities
with potential dilutive  securities  outstanding.  The Statement also requires a
reconciliation  of the numerator and denominator of the basic earnings per share
computation to the numerator and  denominator of the diluted  earnings per share
computation.  The Statement is effective for interim and annual  periods  ending
after December 15, 1997. The Company adopted FAS No. 128 in its annual financial
statements for the year ended December 31, 1997.

In June, 1997, the FASB issued FAS No. 130,  "Reporting  Comprehensive  Income",
which  establishes  standards for reporting and display of comprehensive  income
and its components in a financial  statement  with the same  prominence as other
financial  statements.  Total comprehensive income is required to be reported in
condensed interim financial  statements.  Comprehensive income is defined as net
income adjusted for changes in stockholders'  equity resulting from events other
than net income or transactions related to an entity's capital instruments.  The
Company  adopted FAS 130 effective  January 1, 1998,  with  reclassification  of
financial statements for earlier years.

In June 1997,  the FASB issued SFAS No. 131,  "Disclosures  about Segments of an
Enterprise and Related  Information," which establishes  standards for reporting
information  about  operating  segments.   Generally,  SFAS  131  requires  that
financial  information  be  reported  on the basis that is used  internally  for
evaluating performance. The Company adopted SFAS 131 for the year ended December
31, 1998.  The Company is  principally  engaged,  through its  subsidiaries,  in
administering  existing  portfolios  of  individual  life  insurance and annuity
products.  The Company's insurance subsidiaries are also engaged in the business
of marketing and underwriting  individual life insurance and annuity products in
49 states and the District of Columbia.  Such  products are marketed  through an
exclusive  career agency system.  Management  considers the Company's  insurance
operations  to  constitute  one  reportable   segment.   Premium   revenues  for
traditional  insurance  products and earned insurance  charges on universal life
and annuity products are presented in the accompanying  consolidated  statements
of income.  No single customer  accounts for 10 percent or more of the Company's
revenue. The Company has no foreign operations.

In February,  1998, the FASB issued FAS No. 132,  "Employers'  Disclosures About
Pensions and Other  Postretirement  Benefits",  which revises current disclosure
requirements for employers' pension and other retiree benefits. FAS No. 132 does
not change the  measurement or  recognition  of pension or other  postretirement
benefit plans.  The Company adopted FAS No. 132 effective  January 1, 1998, with
restatement  of disclosures  for earlier years.  The adoption of FAS No. 132 did
not have a material impact on the Company's results of operations,  liquidity or
financial position.

In December, 1997, the Accounting Standards Executive Committee issued Statement
of Position  ("SOP") 97-3,  "Accounting by Insurance and Other  Enterprises  for
Insurance-Related  Assessments",  which  provides  guidance  on  accounting  for
insurance-related  assessments.  The Company adopted SOP 97-3, effective January
1, 1999.

                                     - 18 -

<PAGE>



The adoption of SOP 97-3 did not have a material impact on the Company's results
of operations, liquidity or financial position.

In  June,  1998,  the  FASB  issued  FAS No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities",  which establishes accounting and reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other contracts,  (collectively  referred to as derivatives) and for
hedging  activities.  FAS No. 133 is applicable to financial  statements for all
fiscal  quarters of fiscal years  beginning  after June 15, 1999. As the Company
does not have significant  investments in derivative financial instruments,  the
adoption of FAS 133 does not have a material impact on the Company's  results of
operations, liquidity or financial position.


Item 3. Quantitative and Qualitative Disclosures About Market Risk

General:

FIC's principal  assets are financial  instruments,  which are subject to market
risks.  Market risk is the risk of loss arising  from adverse  changes in market
rates, principally interest rates on fixed rate investments. For a discussion of
the  Company's  investment  portfolio and the  management  of that  portfolio to
reflect the nature of the  underlying  insurance  obligations  of the  Company's
insurance  subsidiaries,  please  refer to the  information  set forth in Item 2
"Management's  Discussion  and Analysis of Financial  Conditions  and Results of
Operation Investments" of this report.

The  following is a discussion of the Company's  primary  market risk  sensitive
instruments.  It should be noted that this  discussion has been developed  using
estimates  and  assumptions.  Actual  results may differ  materially  from those
described below.  Further,  the following  discussion does not take into account
actions which could be taken by management in response to the assumed changes in
market rates. In addition, the discussion does not take into account other types
of risks which may be involved in the business  operations of the Company,  such
as the reinsurance recoveries on reinsurance treaties with third party insurers.

The primary market risk to the Company's  investment  portfolio is interest rate
risk. Since the Company own  approximately  45% of the common stock of ILCO, the
interest  rate risk of ILCO's fixed income  portfolio has an effect on the value
of  FIC's  "investment  in  affiliate".  The  Company  does  not use  derivative
financial instruments.

Interest Rate Risk:

(a)      FIC's Fixed Income Investments:

         Assuming an immediate  increase of 100 basis points in interest  rates,
         the net hypothetical loss in fair market value related to the financial
         instruments  segment of the Company's  balance sheet is estimated to be
         $3.4  million at March 31, 1999 and $2.5  million at December 31, 1998.
         For purposes of the foregoing estimate, the following categories of the
         Company's fixed income  investments were taken into account:  (i) fixed
         maturities,  including  fixed  maturities  available for sale, and (ii)
         short-term  investments.  The  market  value of such  assets was $106.7
         million at March 31, 1999 and $107.0 million at December 31, 1998.

         The  fixed  income   investments   of  the  Company   include   certain
         mortgage-backed  securities.  The market value of such  securities  was
         $29.8 million at March 31, 1999 and $33.9 million at December 31, 1998.
         Assuming an immediate  increase of 100 basis points in interest  rates,
         the net  hypothetical  loss in the fair  market  value  related to such
         mortgage-backed securities is estimated to be $1.6 million at March 31,
         1999 and $1.2 million at December 31, 1998.




                                     - 19 -

<PAGE>



(b)      FIC's Investment in Affiliate:

         The value of FIC's investment in affiliate is affected by the amount of
         unrealized gains and losses, net of tax, in the investment portfolio of
         its affiliate, ILCO. Assuming an immediate increase of 100 basis points
         in interest  rates,  the net  hypothetical  loss in value,  net of tax,
         related to the  Company's  investment  in  affiliate is estimated to be
         $6.3 million at March 31, 1999 and $4.6 million at December 31, 1998.


 The hypothetical  effect of the interest rate risk on fair values was estimated
by applying a commonly  used model.  The model  projects  the impact of interest
rate changes on a range of factors, including duration and potential prepayment.

                                     - 20 -

<PAGE>



                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES


Part II.Other Information

Item 1.  Legal Proceedings

The Company and its subsidiaries are defendants in certain legal actions related
to the normal business  operations of the Company.  Management believes that the
resolution  of such  legal  actions  will not have a  material  impact  upon the
financial statements.

ILCO and  Investors-NA  are  defendants in a lawsuit which was filed in October,
1996, in Travis County, Texas. CIGNA Corporation,  an unrelated Company, is also
a named  defendant in the lawsuit.  The named  plaintiffs in the suit (a husband
and wife), allege that the universal life insurance policies sold to them by INA
Life Insurance  Company (a company which was merged into  Investors-NA  in 1992)
utilized unfair sales  practices.  The named  plaintiffs seek reformation of the
life  insurance  contracts  and an  unspecified  amount  of  damages.  The named
plaintiffs  also seek a class action as to similarly  situated  individuals.  No
certification  of a class has been  granted as of the date  hereof.  The Company
believes that the suit is without  merit and intends to  vigorously  defend this
matter.

In August,  1997,  another  individual  filed a similar action in Travis County,
Texas against the corporate entities  identified above. The lawsuit involves the
same type of policy and includes  allegations which are substantially  identical
to the  allegations  in the first action.  The named  plaintiff also seeks class
certification.  The  Company  believes  that  the  court  would  consider  class
certification  with  respect  to only one of these  actions.  The  Company  also
believes that this action is without merit and intends to vigorously defend this
matter.

Item 2.  Changes in Securities

                  None

Item 3.  Defaults Upon Senior Securities

                  None

Item 4.  Submission of Matters to a Vote of Security Holders

                  None

Item 5.  Other Information

                  None

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  Form 10-K  Annual  Report  of  Registrant  for the year  ended
                  December  31, 1998  heretofore  filed by  Registrant  with the
                  Securities   and   Exchange   Commission,   which  is   hereby
                  incorporated by reference.

         (b)      Reports on Form 8-K:

                  None

                                     - 21 -

<PAGE>





                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES



                                    SIGNATURE



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.





                        FINANCIAL INDUSTRIES CORPORATION

                               /s/ James M. Grace 
                                   James M. Grace, Treasurer



Date:   May 14, 1999


                                     - 22 -