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 September 30, 2000
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)



6500 River Place Boulevard, Building I
Austin, Texas                                                 78730
(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.


                                      - 1 -

<PAGE>

                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES


                                      INDEX

                                                                        Page No.



Part I - Financial Information

Item 1. Financial Statements
Consolidated Balance Sheets
         September 30, 2000 and December 31, 1999..............................3

Consolidated Statements of Income
         For the three and nine month periods ended
         September 30, 2000 and September 30, 1999.............................5

Consolidated Statements of Cash Flows
         For the three and nine month periods ended
         September 30, 2000 and September 30, 1999 . . . .. . . . . . . . . . .9

Notes to Consolidated Financial Statements....................................13

Item 2. Management's Discussion and Analysis of
         Financial Conditions and Results of Operations.......................15

Item 3. Quantitative and Qualitative Disclosures
            About Market Risk ................................................20

Part II

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

Signature  Page...............................................................24








                                      - 2 -
<PAGE>
                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (in thousands)
<TABLE>
<CAPTION>

                                               September 30,       December 31,
                                                    2000              1999
                                                        (unaudited)
<S>                                                  <C>                <C>

ASSETS
Investments other than investments in affiliate:
Fixed maturities available for sale
  at  market value (amortized cost of $78,667
  and $78,252 at September 30, 2000 and
  December 31, 1999, respectively )        $      78,840           $     77,515
Equity securities at market (cost
  approximates $11 at September 30, 2000
  and December 31, 1999)                               4                      4
Policy loans                                       3,676                  3,595
Short-term investments                            17,370                 24,839
     Total investments                                                                  99,890                 105,953
Cash                                               1,613                    692
Investment in affiliate                           75,681                 70,013
Accrued investment income                          1,182                  1,180
Agency advances and other receivables              6,534                  6,885
Reinsurance receivables                           16,781                 14,848
Due and deferred premiums                         12,541                 12,392
Property and equipment, net                        1,318                  1,355
Deferred policy acquisition costs                 55,447                 52,490
Present value of future profits of
  acquired businesses                             20,125                 23,109
Other assets                                       4,778                  4,758
Separate account assets                                0                    379
     Total Assets                         $      295,890          $     294,054


</TABLE>

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




                                      - 3 -
<PAGE>

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

<TABLE>
<CAPTION>

                                             September 30,      December 31,
                                                 2000                1999
                                                       (unaudited)
LIABILITIES AND SHAREHOLDERS' EQUITY
<S>                                              <C>                   <C>
Liabilities:
Policy liabilities and contract
  holder deposit funds:
Future policy benefits                   $     61,735       $      59,783
Contract holder deposit funds                  43,515              44,681
Unearned premiums                                   0                  14
Other policy claims and
  benefits payable                              3,111               4,282
                                              108,361             108,760
Subordinated notes payable to affiliate        36,886              41,497
Deferred federal income taxes                  23,200              23,222
Other liabilities                               4,031               4,079
Separate account liabilities                        0     ___         379
Total Liabilities                             172,478             177,937
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 2000 and 1999                   1,169               1,169
Additional paid-in capital                      7,225               7,225
Accumulated other comprehensive income           (838)             (2,454)
Retained earnings                             123,231             117,552
                                              130,787             123,492
Common treasury stock, at cost, 790,639
  at 2000 and 1999.                            (7,375)             (7,375)
Total Shareholders" Equity                    123,412             116,117
Total Liabilities and
  Shareholders' Equity                  $     295,890      $      294,054

</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 Sept. 30,
                                                       2000            1999
                                                           (unaudited)

<S>                                                    <C>              <C>
Revenues:
 Premiums                                      $      8,503    $      8,516
 Net investment income                                1,780           1,733
 Earned insurance charges                               824           1,148
 Other                                                    3             324
                                                     11,110          11,721
Benefits and expenses:
 Policyholder benefits and expenses                   3,528           3,557
 Interest expense on contract holders
   deposit funds                                        496             345
 Amortization of present value of future
 profits of acquired businesses                       1,112           1,334
 Amortization of deferred policy
  acquisition costs                                   1,417           1,354
 Operating expenses                                   2,674           2,728
 Interest expense                                       501             532
                                                      9,728           9,850
Income before federal income tax and
 equity in net earnings of affiliates                 1,382           1,871
Provision for federal income taxes                      256             181
Income before equity in net earnings
  of affiliates                                       1,126           1,690
Equity in net earnings of affiliate,
  net of taxes                                        1,041             786
Net Income                                     $      2,167    $      2,476
</TABLE>



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



                                      - 5 -
<PAGE>


                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                      (in thousands except per share data)
<TABLE>
<CAPTION>
                                             Three Months Ended Sept. 30,
                                                 2000               1999

                                                    (unaudited)
<S>                                              <C>                  <C>

Net Income Per Share

Basic:
Average weighted shares outstanding             5,055              5,055
Basic earnings per share                  $      0.43        $      0.49
Diluted:
Common stock and common stock equivalents       5,160              5,203
Diluted earnings per share                $      0.42        $      0.48

</TABLE>














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



                                      - 6 -
<PAGE>


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

                                                Nine Months Ended Sept. 30,
                                                     2000            1999
                                                         (unaudited)
<S>                                                 <C>               <C>

Revenues:
 Premiums                                   $      25,347   $      26,198
 Net investment income                              5,220           5,187
 Earned insurance charges                           3,196           3,733
 Other                                                  6           1,026
                                                   33,769          36,144
Benefits and expenses:
 Policyholder benefits and expenses                10,749          11,490
 Interest expense on contract holders
   deposit funds                                    1,555           1,317
 Amortization of present value of future
  profits of acquired businesses                    2,984           3,946
 Amortization of deferred policy
  acquisition costs                                 3,860           3,737
 Operating expenses                                 8,612           8,450
 Interest expense                                   1,513           1,782
   Total                                           29,273          30,722
Income before federal income tax and
 equity in net earnings of affiliates               4,496           5,422
Provision for federal income taxes                    834             954
Income before equity in net earnings
 of affiliates                                      3,662           4,468
Equity in net earnings of affiliate,
 net of tax                                         2,924           2,077
Net Income                                   $      6,586    $      6,545

</TABLE>

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



                                      - 7 -
<PAGE>

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

                                              Nine Months Ended Sept. 30,
                                                  2000              1999
                                                    (unaudited)
<S>                                             <C>                 <C>

  Net Income Per Share

Basic:
Average weighted shares outstanding              5,055             5,055
Basic earnings per share                   $      1.30       $      1.29
Diluted:
Common stock and common stock equivalents        5,163             5,202
Diluted earnings per share                 $      1.28       $      1.26
</TABLE>














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



                                      - 8 -
<PAGE>

                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
<CAPTION>

                                            Three Months Ended Sept. 30,
                                               2000               1999
<S>                                             <C>                  <C>
                                                                                                  (unaudited)
CASH FLOWS FROM OPERATING
ACTIVITIES

Net Income                             $      2,167       $      2,476
Adjustments to reconcile net income to
 net cash provided by operating activities:
Amortization of present value of future
 profits of acquired business                 1,112              1,334
Amortization of deferred policy
 acquisition costs                            1,417              1,354
Equity in undistributed earnings
  of affiliate                               (1,534)            (1,389)
Changes in assets and liabilities:
(Increase) decrease in accrued
  investment income                              62                 64
Increase in agent advances and other
 receivables                                    (73)              (456)
(Increase) decrease in due and
  deferred premiums                             (26)               288
Increase in deferred policy acquisition
  costs                                      (2,624)            (2,555)
Decrease in other assets                         13                518
(Increase) decrease in policy liabilities
  and accruals                                 (308)               928
Increase  in other liabilities                  281                456
Increase (decrease) in deferred federal
  income taxes                                  102               (122)
Other, net                                     (246)             1,155
Net cash (used in) provided by operating
  activities                             $      343       $      4,051
</TABLE>


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



                                      - 9 -
<PAGE>

                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
                                 (in thousands)

<TABLE>
<CAPTION>


                                             Three  Months Ended Sept. 30,
                                                 2000               1999
                                                       (unaudited)
<S>                                              <C>                <C>
CASH FLOWS FROM INVESTING ACTIVITIES

Fixed maturities purchased                $      (500)     $      (8,561)
Proceeds from sales and maturities of
 fixed maturities                               3,279              4,623
Increase in policy loans                          (73)              (218)
Net change in short-term investments           (1,080)             2,837
Purchase & retirement of property
 and equipment                                      0                  0
Net cash provided by (used in)
 investing activities                           1,626             (1,319)
CASH FLOW FROM FINANCING
 ACTIVITIES

Dividends paid                                      0                  0
Repayment of subordinated notes payable       (1,537)             (1,536)
Net cash used in financing activities         (1,537)             (1,536)
Net increase in cash                             432               1,196
Cash, beginning of period                      1,181               1,002
Cash, end of period                      $     1,613       $       2,198

</TABLE>





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



                                     - 10 -
<PAGE>

                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (in thousands)
<TABLE>
<CAPTION>

                                                   Nine Months Ended Sept. 30,
                                                        2000            1999
                                                            (unaudited)
<S>                                                     <C>              <C>

CASH FLOWS FROM OPERATING
ACTIVITIES

Net Income                                      $      6,586    $      6,545
Adjustments to reconcile net income to
 net cash provided by operating activities:
Amortization of present value of future
 profits of acquired business                          2,984           3,946
Amortization of deferred policy
 acquisition costs                                     3,860           3,737
Equity in undistributed earnings of affiliate         (4,565)         (3,867)
Changes in assets and liabilities:
(Increase) decrease in accrued
 investment income                                        (2)            106
Increase in agent advances and
 other receivables                                    (1,582)         (1,283)
(Increase) decrease in due and deferred premiums        (149)             27
Increase in deferred policy acquisition costs         (6,817)         (7,063)
(Increase) decrease in other assets                      (20)          1,039
(Decrease) increase in policy liabilities
  and accruals                                          (399)             83
Decrease in other liabilities                            (48)           (957)
Decrease in deferred federal income taxes                (22)           (282)
Other, net                                                59           1,084
Net cash (used in) provided by
  operating activities                           $      (115)   $      3,115

</TABLE>


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



                                     - 11 -
<PAGE>

                FINANCIAL INDUSTRIES CORPORATION AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF CASH FLOWS, Continued
                                 (in thousands)
<TABLE>
<CAPTION>


                                               Nine Months Ended Sept. 30,
                                                 2000              1999
                                                       (unaudited)
<S>                                              <C>                 <C>

CASH FLOWS FROM INVESTING ACTIVITIES

Fixed maturities purchased               $    (10,788)     $    (18,557)
Proceeds from sales and maturities of
 fixed maturities                               9,917            17,878
Increase in policy loans                          (81)             (340)
Net change in short-term investments            7,469             2,111
Purchase & retirement of property
 and equipment                                     37                 0
Net cash provided by  investing activities      6,554             1,092
CASH FLOW FROM FINANCING
 ACTIVITIES

Dividends paid                                   (907)                0
Repayment of subordinated notes payable        (4,611)           (4,610)
Net cash used in financing activities          (5,518)           (4,610)
Net increase (decrease) in cash                   921              (403)
Cash, beginning of year                           692             2,601
Cash, end of period                       $     1,613      $      2,198

</TABLE>





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



                                     - 12 -
<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, 1999,  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.

Other Comprehensive Income

The following is a reconciliation of accumulated other comprehensive income from
December 31, 1999 to September 30, 2000 (in thousands):

<TABLE>
<CAPTION>
                                           Net                     Total
                Net unrealized gain        appreciation            accumulated
                (loss) on investments      (depreciation)          other
                in fixed maturities        of equity               comprehensive
                available for sale         securities              income
<S>                      <C>                  <C>                    <C>

Balance at
  December 31, 1999      $ (2,454)           $   (0)              $   (2,454)
Current Period Change       1,618                (2)                   1,616
Balance at
  September 30, 2000     $   (836)           $   (2)              $     (838)
</TABLE>


Accumulated other comprehensive income of FIC includes approximately $943,000 of
net unrealized losses from FIC"s affiliate, ILCO.










                                     - 13 -

<PAGE>

New Accounting Pronouncements

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 133 is applicable to financial statements for all fiscal
quarters of fiscal years  beginning  after June 15, 2000,  as amended by FAS No.
137, "Accounting for Derivative Instruments and Hedging Activities - Deferral of
the  Effective  Date of FAS  No.133." As the Company  does not have  significant
investments in derivative financial instruments,  the adoption of FAS No. 133 is
not  anticipated  to  have  a  material  impact  on  the  Company's  results  of
operations, liquidity or financial position.

Dividends Declared

On January 17, 2000,  FIC's Board of Directors  approved a cash  dividend in the
amount of $.18 per common  share.  The  dividend  was paid on April 12,  2000 to
shareholders of record on April 5, 2000.



















                                     - 14 -
<PAGE>


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

The  following  discussion  addresses  the results of  operations  of  Financial
Industries  Corporation  ("FIC") for the nine months  ended  September  30, 2000
compared with the same nine-month period last year, and the financial  condition
of as of September 30, 2000, compared with December 31, 1999.

For the  nine-month  period  ended  September  30,  2000,  FIC's net  income was
$6,586,000  (basic  earnings of $1.30 per common share,  or diluted  earnings of
$1.28 per common share) as compared to $6,545,000  (basic  earnings of $1.29 per
common share,  or diluted  earnings of $1.26 per common share) in the first nine
months  of  1999.   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 nine-month  period ended  September 30, 2000, was $4,496,000 (on revenues of
$33,769,000),  as compared to  $5,422,000  (on revenues of  $36,144,000)  in the
first nine months of 1999.

Premiums for the first nine months of 2000, net of reinsurance ceded, were $25.3
million,  as  compared  to $26.2  million  in the  first  nine  months  of 1999.
Policyholder  benefits and expenses  were $10.7  million in the third quarter of
2000, as compared to $11.5 million in the first nine months of 1999.

As of September 30, 2000, the market value of the fixed maturities available for
sale  segment  was $78.84  million as compared  to an  amortized  cost of $78.67
million, or an unrealized gain of $.17 million. The increase reflects unrealized
gains on such investments related to changes in interest rates subsequent to the
purchase  of such  investments.  The net of tax  effect of this  increase  ($.11
million at September 30, 2000) has been recorded as an increase in shareholders'
equity.

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.




                                     - 15 -
<PAGE>


            Equity in Net Income of InterContinental Life Corporation

General

For the nine-month  period ended September 30, 2000, the Company's equity in the
net  earnings of  InterContinental  Life  Corporation  ("ILCO"),  net of federal
income tax, was $2,924,000,  as compared to $2,077,000 for the first nine months
of 1999.

As of September 30, 2000, FIC owned 3,590,292  shares of ILCO's common stock. In
addition,  FIC's wholly-owned life insurance  subsidiary,  Family Life Insurance
Company ('Family Life"), owned 342,400 shares of ILCO common stock. As a result,
as of September 30, 2000,  FIC owned,  directly and  indirectly  through  Family
Life, 3,932,692 shares (approximately 48.4 %) of ILCO's common stock.

As of September 30, 2000, the market value of ILCO's fixed maturities  available
for sale segment was $445.61 million as compared to an amortized cost of $448.89
million,  or  an  unrealized  loss  of  $3.28  million.  The  decrease  reflects
unrealized  losses on such  investments  related to changes  in  interest  rates
subsequent to the purchase of such investments.  Since FIC owns approximately 48
% of the  common  stock  of  ILCO,  the  net  of tax  effect  of  this  decrease
(approximately  $1.0 million at September 30, 2000) is included in  "Accumulated
other  comprehensive  loss"  on the  Consolidated  Balance  Sheets  and has been
recorded as a decrease 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 ("Investors-IN").  Prior
to June 30, 2000, ILCO's primary source of funds consisted of payments under the
surplus debentures from Investors-NA.

Prior to June 30, 2000,  ILCO's principal  source of liquidity  consisted of the
periodic  payment of principal and interest to it by  Investors-NA,  pursuant to
the terms of two surplus  debentures  (the  "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 June
30,  2000,  the  outstanding  principal  balance of the Surplus  Debentures  was
completely paid off.

For periods  subsequent to June 30, 2000,  ILCOs  available source of liquidity
would be from  dividends  paid to it from  its  subsidiaries,  Investors-NA  and
Investors-IN.  Applicable  state  insurance  laws may limit the  ability of such
subsidiaries to pay dividends to ILCO. Investors-NA is domiciled in the State of
Washington.  The Washington insurance law 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



                                     - 16 -
<PAGE>

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 the  policyholder  surplus or (ii) the  insurer's  net
gain  from  operations  for  the  previous  year.  As  of  September  30,  2000,
Investors-NA had earned surplus of $ 52.9 million.

Investors-IN is domiciled in the State of Indiana.  Under the Indiana  insurance
law, 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 $20.86  million at September  30, 2000.  In
June,  1999,  Investors-  IN paid a dividend  in the amount of $3 million to its
sole shareholder, Investors-NA. The amount of the dividend was less than the net
gain from operations for the prior fiscal year;  accordingly,  no prior approval
was required for the payment of the dividend.  Advance notice of the payment was
provided  to the  Indiana  Department  of  Insurance,  in  accordance  with  the
provisions of the Indiana Insurance Code.

The Form 10-Qs of ILCO for the nine-month  periods ended  September 30, 2000 and
September  30,1999,  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 September 30, 2000, the outstanding balance of such indebtedness was
$36.9 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 September  30,
2000,  the statutory  capital and surplus of Family Life was $24.1  million,  an




                                     - 17 -
<PAGE>

amount  substantially  in excess of the surplus floor. As of September 30, 2000,
the  principal  balance of the Surplus  Debenture was $7.88  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.

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 $(0.115 million in the
first nine months of 2000,  as compared to $3.1 million in the first nine months
of 1999.  Net cash flow used in  financing  activities  was $5.5  million in the
first nine months of 2000,  as compared to $4.6 million in the first nine months
of 1999.

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 September 30, 2000, the Company's investment assets totaled $99.9 million,
as compared to $105.95 million as of December 31, 1999.




                                     - 18 -
<PAGE>

The level of short-term  investments at September 30, 2000 was $17.4 million, as
compared  to $24.8  million  as of  December  31,  1999.  The  fixed  maturities
available for sale portion  represents $78.84 million of investment assets as of
September  30, 2000,  as compared to $77.5  million at December  31,  1999.  The
amortized cost of fixed  maturities  available for sale as of September 30, 2000
was $78.67  million  representing a net  unrealized  gain of $.17 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  September  30,  2000,
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).

The   investments  of  Family  Life  and  ILCO's   insurance   subsidiaries   in
mortgage-backed securities included collateralized mortgage obligations ("CMOs")
of  $22.0  million  and  $176.2  million,   respectively,   and  mortgage-backed
pass-through  securities of $28.8 million and $44.4  million,  respectively,  at
September 30, 2000.  Mortgage-backed  pass-through securities,  sequential CMO's
and support bonds,  which  comprised  approximately  50.3 % of the book value of
FIC's  mortgage-backed  securities  and  55.5  % of the  book  value  of  ILCO's
mortgage-backed  securities at September  30, 2000,  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 September  30, 2000,  PAC and TAC
instruments  and scheduled  bonds  represented  approximately  49.7% of the book
value of FIC's  mortgage-backed  securities and approximately 44.5 % of the book
value of ILCO's  mortgage-backed  securities.  Sequential  and  support  classes
represented  approximately  21.5 % of the book  value  of FIC's  mortgage-backed
securities and approximately 35.3 % of the book value of ILCO's  mortgage-backed
securities at September  30, 2000.  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  September  30,  2000.  The
prepayment  risk that  certain  mortgage-backed  securities  are  subject  to is
prevalent in periods of declining  interest rates,  when mortgages may be repaid




                                     - 19 -
<PAGE>


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  1999.  For the year  2000,  the  investment  objectives  of FIC and ILCO
include the making of selected investments in CMOs.

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.

             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  statements  made in this report are forward
looking and contain information about financial results, economic conditions 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 and (3)
adverse regulatory changes affecting the business of insurance.

                             Accounting Developments

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  applicable  to financial  statements  for all
fiscal quarters of fiscal years beginning after June 15, 2000, as amended by FAS
No.  137,  "Accounting  for  Derivative  Instruments  and Hedging  Activities  -
Deferral of the  Effective  Date of FAS No.  133".  As the Company does not have
significant investments in derivative financial instruments, the adoption of FAS
No. 133 is not anticipated to 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.





                                     - 20 -
<PAGE>

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  48.4 % 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 $ 3.2 million at  September  30, 2000 and $9.7 million
          at December 31,  1999.  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 $ 96.2  million at  September  30, 2000 and $102.4
          million at December 31, 1999.

          The  fixed  income   investments  of  the  Company   include   certain
          mortgage-backed  securities.  The market value of such  securities was
          $30.9 million at September 30, 2000 and $ 27.3 million at December 31,
          1999.  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 $ 1.3 million at
          September 30, 2000 and $ 1.9 million at December 31, 1999.

(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 $6.5 million at September 30, 2000 and $6.3 million at
          December 31, 1999.



                                     - 21 -
<PAGE>



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.

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 involved the
same type of policy and includes  allegations which are substantially  identical
to the  allegations in the first action.  In July,  2000, the court,  on its own
motion,  moved to dismiss the action for failure on the part of the plaintiff to
prosecute the matter. The plaintiff did not file a motion to retain the case and
the matter has been removed from the court's docket.


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





                                     - 22 -
<PAGE>

Item 5.  Other Information

          a. As  previously  reported in a press release dated October 13, 2000,
          the  Board of  Directors  of the  Company  has  established  a Special
          Committee  of outside  directors of the Board to explore a merger with
          InterContinental Life Corporation ("ILCO"). FIC owns approximately 48%
          of the common stock of ILCO. The Board and the Special  Committee have
          received a report on an actuarial  evaluation of the Company and ILCO,
          which was performed by an independent  actuarial  consulting firm. The
          Special  Committee  will  review the  actuarial  evaluation  and other
          pertinent  information  and  furnish a  recommendation  on the  merger
          proposal to the Board.  As of the date of this report on Form 10-Q, no
          date has been set for the next  meeting of the Board of  Directors  of
          the Company.

          b. On October, 10, 2000, Charles K. Chacosky submitted his resignation
          as a  director  and  officer  of the  Company  and its life  insurance
          company  subsidiaries.   Mr.  Chacosky  advised  the  Board  that  his
          resignation was for personal reasons.

          c. On October 5, 2000,  Dale E. Mitte  submitted his  resignation as a
          director of the Company,  since his health  condition  does not permit
          him to actively participate in the work of the Board.

Item 6.  Exhibits and Reports on Form 8-K

         (a)        Exhibits

                    Form 10-K  Annual  Report of  Registrant  for the year ended
                    December 31, 1999  heretofore  filed by Registrant  with the
                    Securities   and  Exchange   Commission,   which  is  hereby
                    incorporated by reference.

         (b)        Reports on Form 8-K

                    None.




                                     - 23 -
<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:   November 14, 2000






















                                     - 24 -
<PAGE>