UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549


                                    FORM 10-Q

              [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended September 30, 1996

                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

       For the transition period from _______________ to _______________

                        Commission file number 001-10997

                               INTEGON CORPORATION
                         ______________________________
             (Exact name of registrant as specified in its charter)

           Delaware                                13-3559471
______________________________                _____________________
(State or other jurisdiction of                (I.R.S. Employer
 incorporation or organization)                Identification No.)

           500 West Fifth Street, Winston-Salem, North Carolina 27152
              (Address of principal executive offices) (Zip Code)

                                 (910) 770-2000
                         ______________________________
              (Registrant's telephone number, including area code)

     Indicate  by check mark  whether the  registrant  (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934  during  the  preceding  12 months  (or for such  shorter  period  that the
registrant was required to file such reports),  and (2) has been subject to such
filing requirements for the past 90 days.

Yes X     No

     As of October 31, 1996, there were 15,732,965 shares outstanding of Integon
Corporation's Common Stock.

Page 1
<PAGE>


                      INTEGON CORPORATION AND SUBSIDIARIES


                               INDEX TO FORM 10-Q



PART I - FINANCIAL INFORMATION
                                                                          Page
                                                                          ----
Item 1.  Financial Statements.
     Balance Sheets - September 30, 1996 and December 31, 1995......       3
     Statements of Operations - Three Months Ended September 30,
         1996 and 1995 and Nine Months Ended September 30, 1996
         and 1995...................................................       4
     Statements of Cash Flows - Nine Months Ended
         September 30, 1996 and 1995................................       5
     Notes to Financial Statements..................................       6


Item 2.  Management's Discussion and Analysis of Financial
                Condition and Results of Operations.................       7


PART II - OTHER INFORMATION

Item 6.       Exhibits and Reports on Form 8-K......................      15




Page 2
<PAGE>
                         PART I - FINANCIAL INFORMATION
                         Item 1. Financial Statements.

<TABLE>
<CAPTION>
                      INTEGON CORPORATION AND SUBSIDIARIES
                                 BALANCE SHEETS
                                   (Unaudited)
                  (Dollars in thousands, except per share data)

                                                       September 30,  December 31,
                                                           1996           1995
                                                       -----------    -----------
<S>                                                    <C>            <C>

 ASSETS
 Investments:
 Fixed maturities available for sale--at market .....   $   497,942    $   481,944
Other long-term investments .........................         2,633          2,114
                                                        -----------    -----------
                                                            500,575        484,058
Cash and cash equivalents ...........................        50,678         21,046
Reinsurance receivable ..............................       186,699        199,826
Premiums due and uncollected, net ...................       259,274        199,087
Prepaid reinsurance premiums ........................        53,085         56,726
Accounts and notes receivable, primarily financing
    receivables, net ................................        32,273         28,277
Accrued investment income ...........................         8,311          7,683
Deferred policy acquisition costs ...................        59,292         46,413
Property and equipment, net .........................        67,642         65,247
Goodwill ............................................       107,721        110,976
Deferred loan costs .................................         1,925          2,195
Deferred income taxes ...............................        20,024         12,934
Other assets ........................................         6,091          7,211
                                                        -----------    -----------
                                                        $ 1,353,590    $ 1,241,679
                                                        ===========    ===========
 LIABILITIES AND STOCKHOLDERS' EQUITY
 LIABILITIES
Unearned premiums ...................................   $   371,868    $   305,911
Loss and loss adjustment expenses payable ...........       444,191        416,740
Accrued expenses and other liabilities ..............       120,571        117,374
Short-term debt .....................................        34,000         16,000
Notes payable .......................................       150,751        150,807
                                                        -----------    -----------
                                                          1,121,381      1,006,832
                                                        -----------    -----------
 STOCKHOLDERS' EQUITY
$3.875 Convertible Preferred Stock--$.01 par value
   per share, 1,437,500 shares authorized, issued and
   outstanding ......................................            14             14
Common Stock--$.01 par value per share, authorized--
   35,000,000 shares; issued--17,300,165 shares and
   17,271,707 shares ................................           173            173
Class A Non-Voting Common Stock--$.01 par value per
   share, authorized 20,000,000 shares; issued and
   outstanding--none ................................          --             --
Additional paid-in capital ..........................       147,802        147,296
Net unrealized appreciation (depreciation) of
   securities .......................................        (2,985)         8,288
Retained earnings ...................................       125,026        116,897
Treasury stock--at cost, 1,567,200 shares ...........       (37,821)       (37,821)
                                                        -----------    -----------

                                                            232,209        234,847
                                                        -----------    -----------
                                                        $ 1,353,590    $ 1,241,679
                                                        ===========    ===========
</TABLE>

     The accompanying notes are an integral part of these statements.

Page 3
<PAGE>
                   Item 1. Financial Statements. (continued)
<TABLE>
<CAPTION>
                      INTEGON CORPORATION AND SUBSIDIARIES
                            STATEMENTS OF OPERATIONS
                                   (Unaudited)
                      (In thousands, except per share data)

                                                                            Three Months Ended               Nine Months Ended
                                                                              September 30,                     September 30,
                                                                           ------------------                ----------------
                                                                         1996            1995            1996              1995
                                                                         ----            ----            ----              ----
<S>                                                                   <C>              <C>              <C>               <C>

REVENUES
Net premiums written .........................................        $ 214,369        $ 163,564        $ 606,442         $ 458,126
                                                                      =========        =========        =========         =========

Premiums earned ..............................................        $ 191,790        $ 146,537        $ 536,845         $ 413,145
Net investment income ........................................            8,026            7,657           23,637            22,419
Net realized investment gains ................................            1,140            3,248            2,360             6,171
Other income .................................................            4,165            5,157           12,375            15,720
                                                                      ---------        ---------        ---------         ---------
                                                                        205,121          162,599          575,217           457,455
                                                                      ---------        ---------        ---------         ---------
BENEFITS AND EXPENSES
Loss and loss adjustment expenses ............................          147,249          107,820          411,839           301,796
Policy acquisition and other underwriting
  expenses ...................................................           41,977           31,608          114,042            91,038
Other expenses ...............................................            4,311            4,088           11,682            13,472
Amortization of goodwill .....................................              769              775            2,308             2,322
Interest expense .............................................            3,732            3,593           11,087            10,917
                                                                      ---------        ---------        ---------         ---------
                                                                        198,038          147,884          550,958           419,545
                                                                      ---------        ---------        ---------         ---------
INCOME FROM OPERATIONS BEFORE FEDERAL INCOME
  TAXES AND EXTRAORDINARY ITEMS ..............................            7,083           14,715           24,259            37,910

Federal income taxes .........................................            2,212            4,805            7,706            11,836
                                                                      ---------        ---------        ---------         ---------

INCOME BEFORE EXTRAORDINARY ITEMS ............................            4,871            9,910           16,553            26,074

Extraordinary items, net of federal income tax
  benefit of $276 ............................................             --               --               --              (2,624)
                                                                      ---------        ---------        ---------         ---------
     NET INCOME ..............................................            4,871            9,910           16,553            23,450
Preferred stock dividends ....................................            1,393            1,393            4,178             4,178
                                                                      ---------        ---------        ---------         ---------
Net income available to common shareholders ..................        $   3,478        $   8,517        $  12,375         $  19,272
                                                                      =========        =========        =========         =========

EARNINGS PER COMMON SHARE
Primary:
  Income before extraordinary items ..........................        $     .22        $     .55        $     .78         $    1.40
  Extraordinary items ........................................             --               --                                 (.17)
                                                                      ---------        ---------        ---------         ---------
  NET INCOME .................................................        $     .22        $     .55        $     .78         $    1.23
                                                                      =========        =========        =========         =========
Fully diluted:
  Income before extraordinary items ..........................        $     .22        $     .51        $     .78         $    1.33
  Extraordinary items ........................................             --               --               --                (.13)
                                                                      ---------        ---------        ---------         ---------
  NET INCOME .................................................        $     .22        $     .51        $     .78         $    1.20
                                                                      =========        =========        =========         =========

Weighted average common shares outstanding:
  Primary ....................................................           15,880           15,705           15,869            15,700
                                                                      =========        =========        =========         =========
  Fully diluted ..............................................           15,880           19,477           15,869            19,473
                                                                      =========        =========        =========         =========

Dividends declared per share .................................        $     .09        $     .09        $     .27         $     .27
                                                                      =========        =========        =========         =========
</TABLE>

     The accompanying notes are an integral part of these statements.

Page 4
<PAGE>
                   Item 1. Financial Statements. (continued)
<TABLE>
<CAPTION>

                                          INTEGON CORPORATION AND SUBSIDIARIES
                                                STATEMENTS OF CASH FLOWS
                                                       (Unaudited)
                                                     (In thousands)




                                                                                        Nine Months Ended
                                                                                           September 30,
                                                                                    ----------------------
                                                                                       1996         1995
                                                                                    ---------    ---------
<S>                                                                                 <C>          <C>

Cash Flows from Operating Activities
Net income ......................................................................   $  16,553    $  23,450
Adjustments to reconcile net income to net cash provided by operating activities:

       Net realized investment gains ............................................      (2,360)      (6,171)
       Depreciation and amortization ............................................       7,157        5,355
       Net amortization of discounts and premiums ...............................         927         (761)
       Provision for deferred federal income taxes (benefit) ....................      (1,020)       2,753
       Net decrease in reinsurance assets .......................................      16,767       24,698
       Increase in premiums due and uncollected .................................     (60,187)     (43,629)
       Increase in deferred policy acquisition costs ............................     (12,879)      (8,450)
        Net increase in accounts and notes receivable,
          accrued investment income and other assets ............................      (2,754)      (3,377)
       Increase in unearned premiums ............................................      65,956       24,973
       Increase in loss and loss adjustment expenses payable ....................      27,451       25,028
        Net increase in accrued expenses and other liabilities ..................       9,768       15,574
                                                                                    ---------    ---------

        Net cash flows provided by operating activities
          from continuing operations ............................................      65,379       59,443
                                                                                    ---------    ---------

Cash Flows from Investing Activities
Investment securities sold ......................................................     441,801      419,642
Investment securities matured, called or redeemed ...............................      18,984       21,995
Investment securities purchased .................................................    (492,463)    (471,912)
Other ...........................................................................      (7,021)       2,135
                                                                                    ---------    ---------
    Net cash flows used in investing activities .................................     (38,699)     (28,140)
                                                                                    ---------    ---------

Cash Flows from Financing Activities
Net increase (decrease) in short-term debt ......................................      18,000       (4,000)
Common stock dividends ..........................................................      (4,247)      (4,239)
Preferred stock dividends .......................................................      (4,178)      (4,178)
Decrease in notes payable .......................................................         (55)         (20)
Increase (decrease) in book cash overdrafts .....................................      (6,568)       8,860
                                                                                    ---------    ---------
    Net cash flows provided by (used in) financing activities ...................       2,952       (3,577)
                                                                                    ---------    ---------
Net increase in cash and cash equivalents .......................................      29,632       27,726
    Cash and cash equivalents at beginning of period ............................      21,046       31,549
                                                                                    ---------    ---------
Cash and cash equivalents at end of period ......................................   $  50,678    $  59,275
                                                                                    =========    =========

Supplemental Disclosures of Cash Flows Information
Interest paid during the period .................................................   $  10,498    $   6,801
Federal income taxes paid during the period .....................................      10,300        7,700
</TABLE>

     The accompanying notes are an integral part of these statements.

Page 5
<PAGE>
                   Item 1. Financial Statements. (continued)

                      INTEGON CORPORATION AND SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1996

                                   (Unaudited)

Note 1 - Accounting Policies

The  accompanying   unaudited   consolidated  financial  statements  of  Integon
Corporation  and  subsidiaries  (the "Company") have been prepared in accordance
with generally accepted accounting principles for interim periods.

In  the  opinion  of  management,   these  financial   statements   include  all
adjustments,  including  all normal  recurring  accruals,  necessary  for a fair
presentation of the  consolidated  financial  position at September 30, 1996 and
December 31, 1995 and the consolidated  results of operations and cash flows for
the periods ended September 30, 1996 and 1995.

The operating  results for the three months and nine months ended  September 30,
1996 are not  necessarily  indicative of the results to be expected for the full
year ending December 31, 1996.


Page 6
<PAGE>


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

General

The following  discussion and analysis  should be read in  conjunction  with the
consolidated financial statements and related notes on pages 3 through 6 of this
Quarterly  Report on Form  10-Q.  The  reader is  presumed  to have read or have
access to Integon Corporation's 1995 Annual Report on Form 10-K.

Results of Continuing Operations

Nine Months Ended  September 30, 1996  ("1996")  Compared with Nine Months Ended
September 30, 1995 ("1995")

         Net premiums  written  increased  32.4% from $458.1  million in 1995 to
$606.4 million in 1996.  Nonstandard  automobile  insurance net premiums written
increased  from  $420.1  million in 1995 to $550.1  million in 1996 or 31.0% due
primarily to growth in the Company's  more mature  operating  states.  Specialty
auto products net premiums  written  increased 100.1% from $18.5 million in 1995
to $37.0  million in 1996.  Premiums  earned on all lines of business  increased
29.9% from $413.1  million in 1995 to $536.8  million in 1996 and  reflects  the
increase in net premiums written referred to above.

         Loss and loss adjustment  expenses  increased 36.5% from $301.8 million
in 1995 to $411.8  million  in 1996.  The loss  ratio,  defined as loss and loss
adjustment expenses as a percentage of premiums earned,  increased from 73.1% in
1995 to 76.7% in 1996 due  primarily  to  severe  winter  weather  in the  first
quarter  and  hurricanes  Fran and  Bertha in the  third  quarter.  The  Company
experienced  an increase in the frequency of claims in 1996 compared to the same
period in 1995 and estimates  that the severe winter  weather and the hurricanes
accounted for approximately $12.0 million of additional loss and loss adjustment
expenses.

         Policy  acquisition  and other  underwriting  expenses  increased $23.0
million from $91.0 million in 1995 to $114.0 million in 1996. The expense ratio,
defined as policy acquisition and other underwriting expenses as a percentage of
premiums earned,  decreased from 22.0% in 1995 to 21.2% in 1996. The decrease in
the expense ratio was due primarily to reductions in commission  rates and state
taxes. In addition,  a management  bonus of $1.8 million,  of which $1.0 million
was allocated to policy

Page 7
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations.  (continued)

acquisition  and other  underwriting  expenses and $.8 million was  allocated to
loss  adjustment  expenses,  was  reversed  in the third  quarter of 1996 due to
year-to-date financial results not meeting the Company's financial plan.

         Net  investment  income  increased  5.4% from $22.4  million in 1995 to
$23.6  million  in 1996 as a result of the $67.7  million  increase  in  average
invested  assets.  This higher level of invested assets was partially  offset by
lower  yields.  The pre-tax  yield of the portfolio was 6.0% in 1996 compared to
6.4% in 1995. The percentage of cash and invested  assets invested in tax-exempt
securities  was 20.3% and 25.4% in 1996 and 1995,  respectively.  In addition to
the variances  discussed above, there were pre-tax net realized investment gains
of $2.4  million in 1996  compared to pre-tax net realized  investment  gains of
$6.2 million in 1995.

         Other income less other  expenses  resulted in income of $.7 million in
1996 and $2.2  million in 1995.  The  decrease in 1996 income  reflects the fact
that 1995  results  included  $.9  million  of  income  from the sale of a joint
venture. Premium finance income also declined.

         Interest  expense  increased  1.6% from $10.9  million in 1995 to $11.1
million in 1996 due to increased  short-term  borrowings  to pay parent  company
expenses as the insurance subsidiaries retain earnings to fund future growth.

         Federal income taxes  decreased $4.1 million from $11.8 million in 1995
to $7.7 million in 1996 due to lower  pre-tax  earnings.  The effective tax rate
increased  from  31.2%  in 1995 to  31.8% in 1996  due  primarily  to  decreased
holdings  of  tax-exempt   securities  in  1996.  The  Company's  investment  in
tax-exempt securities as a percentage of cash and invested assets decreased from
25.4% in 1995 to 20.3% in 1996.

     Income before extraordinary items decreased $9.5 million from $26.1 million
in 1995 to $16.6 million in 1996.

Three Months Ended September 30, 1996 ("1996")  Compared with Three Months Ended
September 30, 1995 ("1995")

     Net premiums written  increased 31.1% from $163.6 million in 1995 to $214.4
million in 1996. Nonstandard automobile insurance

Page 8
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations.  (continued)

net premiums written  increased from $150.4 million in 1995 to $194.5 million in
1996 or 29.0% due  primarily to growth in the  Company's  more mature  operating
states.  Specialty auto products net premiums written increased 126.6% from $6.0
million  in 1995 to $13.5  million  in 1996.  Premiums  earned  on all  lines of
business  increased  30.9% from $146.5 million in 1995 to $191.8 million in 1996
and reflects the increase in net premiums written referred to above.

         Loss and loss adjustment  expenses  increased 36.6% from $107.8 million
in 1995 to $147.2  million  in 1996.  The loss  ratio,  defined as loss and loss
adjustment expenses as a percentage of premiums earned,  increased from 73.6% in
1995 to 76.8% in 1996.  The  increase  in the loss  ratio was due  primarily  to
higher  frequency  of claims in 1996 and to  hurricanes  Fran and  Bertha  which
accounted for $2.7 million of additional  loss and loss  adjustment  expenses in
1996.

         Policy  acquisition  and other  underwriting  expenses  increased $10.4
million from $31.6 million in 1995 to $42.0 million in 1996.  The expense ratio,
defined as policy acquisition and other underwriting expenses as a percentage of
premiums earned, increased from 21.6% in 1995 to 21.9% in 1996. This increase in
the  expense  ratio  is  attributable   primarily  to  increased  investment  in
technology,  partially  offset by the reversal of $1.8 million in the management
bonus  accrual,  of which $1.0 million was allocated to policy  acquisition  and
other  underwriting  expenses and $.8 million was  allocated to loss  adjustment
expenses,  due to  year-to-date  financial  results not  meeting  the  Company's
financial plan.

         Net investment  income increased 4.8% from $7.7 million in 1995 to $8.0
million  in 1996 as a  result  of the  $62.1  million  increase  in the  average
invested  assets.  This higher level of invested assets was partially  offset by
lower  yields.  The pre-tax  yield of the portfolio was 5.8% in 1996 compared to
6.1% in 1995. The percentage of cash and invested  assets invested in tax-exempt
securities  was 20.3% and 25.4% in 1996 and 1995,  respectively.  In addition to
the variances  discussed above, there were pre-tax net realized investment gains
of $1.1 million in 1996  compared to pre-tax net realized  gains of $3.2 million
in 1995.


Page 9
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations.  (continued)

         Other income less other expenses  resulted in an expense of $.1 million
in 1996 and income of $1.1  million in 1995.  The  decrease in other income less
other expenses was due to an increase in corporate  expenses during 1996 and the
1995 realization of $.9 million in income from the sale of a joint venture.

         Interest  expense  increased  3.9%  from $3.6  million  in 1995 to $3.7
million in 1996 due to increased  short-term  borrowings  to pay parent  company
expenses as the insurance subsidiaries retain earnings to fund future growth.

         Federal  income taxes  decreased $2.6 million from $4.8 million in 1995
to $2.2 million in 1996 due to lower  pre-tax  earnings.  The effective tax rate
decreased from 32.7% in 1995 to 31.2% in 1996.

         Income  before  extraordinary  items  decreased  $5.0 million from $9.9
million in 1995 to $4.9 million in 1996.


Page 10
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations.  (continued)
<TABLE>
<CAPTION>
Analysis of Financial Condition
         Information  regarding the Company's  investment portfolio at September
30, 1996 is as follows:

                                                        September 30, 1996
                                               -------------------------------
Type/Ratings of Investments (1)                Carrying Amount (2)    Percentage
-------------------------------                -------------------    ----------
                                                 (in thousands)
<S>                                              <C>                     <C>

Fixed maturities:
    Government and agencies .............         $ 92,588                 18.5%
    Aaa .................................          165,408                 33.0%
    Aa ..................................           63,493                 12.7%
    A (3) ...............................          158,444                 31.7%
    Baa (4) .............................           13,633                  2.7%
                                                  --------                -----
        Total investment grade ..........          493,566                 98.6%
    Below investment grade ..............            4,376                  0.9%
                                                  --------                -----
        Subtotal ........................          497,942                 99.5%
Other long-term investments .............            2,633                  0.5%
                                                  --------                -----
        Total invested assets ...........         $500,575                100.0%
                                                  ========                =====
</TABLE>




(1)  The ratings set forth above are based on the ratings,  if any,  assigned by
     Moody's  Investors  Service,  Inc.  ("Moody's").  If Moody's  ratings  were
     unavailable,   the  equivalent   ratings  supplied  by  Standard  &  Poor's
     Corporation ("S&P") or the National Association of Insurance  Commissioners
     ("NAIC") were used where available. The percentage of rated securities that
     were not assigned a rating by Moody's at September 30, 1996 was 12%.

(2)  Carrying amount is estimated  market value for fixed  maturities  available
     for sale.

(3)  The "A" category  includes $23.4 million of securities which were not rated
     by Moody's or S&P, but were rated "1" by the NAIC.

(4)  The "Baa" category includes $4.4 million of securities which were not rated
     by Moody's or S&P, but were rated "2" by the NAIC.


Page 11
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations. (continued)

Liquidity and Capital Resources

         Sources of Funds.  The Company's  major sources of operating funds have
been (i)  dividends  from its  subsidiaries,  (ii)  reimbursements  of costs and
expenses in connection  with the management  agreement among the Company and its
subsidiaries  pursuant to which the Company  provides  certain  services to such
subsidiaries,  (iii) tax sharing payments from the operating subsidiaries of the
Company  and (iv)  borrowings  under  credit  facilities.  The  Company  files a
consolidated  federal income tax return  including its subsidiaries and receives
payments  pursuant  to a  tax  sharing  agreement  among  the  Company  and  its
subsidiaries.  Taxes are computed for each subsidiary and paid to the Company as
if such  subsidiary  were filing a tax return on a  stand-alone  basis,  thereby
providing  additional  funds  to the  Company,  because  the  aggregate  of such
payments  generally  exceeds  taxes to be paid by the Company on a  consolidated
basis.  These  sources are expected to be available  for future needs except for
dividends  from the Company's  subsidiaries.  Dividends  will be retained by the
subsidiaries  as  needed  to  fund  future  growth.   The  Company's   insurance
subsidiaries  are  limited as to the amount of ordinary  dividends  they may pay
(see  "Regulation"  below).  In  addition,  in  determining  the  ability of its
subsidiaries to pay dividends,  the Company monitors its subsidiaries' operating
leverage  based on the  level of net  premiums  written  to  statutory  surplus.
Currently, the Company seeks to maintain its subsidiaries' ratio of net premiums
written to statutory surplus at a level of approximately 3.0x in accordance with
industry standards. The ratio was 3.0x for the twelve months ended September 30,
1996.

As  of  September  30,  1996,  Integon  Corporation,  the  parent  company,  had
approximately  $2.4 million of cash and cash equivalents that were available for
general  corporate  purposes,  including  debt  service,  dividend  payments and
working capital. The Company believes that the sources of funds available to it,
including the $75.0 million  committed  credit facility  described in "Financing
Activities" below, are and will be sufficient to satisfy its short-term needs.


Page 12
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations. (continued)


The principal  sources of funds for the Company's  subsidiaries are net premiums
collected,  proceeds from investment  income and from investments that have been
sold, matured or repaid and premium financing revenues.

On a consolidated basis, net cash flows provided by operating activities for the
nine  months  ended  September  30,  1996 and 1995 were $65.4  million and $59.4
million,   respectively.   Based  on  the  Company's  current  financial  plans,
management believes that its subsidiaries will continue to realize positive cash
flows from their operating  activities and that the operating liquidity needs of
such subsidiaries can be funded from such cash flow.
Statements concerning cash flows look forward in time.

The following important factors,  among others, could cause actual cash flows to
differ materially from those set forth in the forward looking statements: claims
frequency,  claims  severity,  severe adverse  weather  conditions,  the cost of
automobile repair,  economic activity,  competitive  pricing, and the regulatory
environment in which the Company operates.

         Uses of Funds. The Company's principal uses of funds are the payment of
corporate  operating  expenses,  taxes, debt service and dividends on Common and
Preferred Stock.  During the third quarter of 1996, the Company contributed $6.5
million of capital to the  insurance  subsidiaries  to maintain the ratio of net
premium written to statutory surplus at a level of 3.0x.

The  principal  uses of funds of the Company's  subsidiaries  are the payment of
claims on insurance  policies,  the payment of operating  expenses,  purchase of
investments, tax sharing payments and dividends to the Company.

The  Company  and its  subsidiaries  have no  material  commitments  for capital
expenditures.

         Financing  Activities:  In July 1996,  the Company's  committed  credit
facility  was  increased  from  $25.0  million to $75.0  million to reflect  the
increased  size  of the  Company  and  to pay  parent  company  expenses  as the
insurance  subsidiaries retain earnings to fund future growth. The interest rate
charged  on this  credit  facility  is based  on the  bids of the  participating
lenders and in the case of Eurodollar loans a margin percentage ranging from

Page 13
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial
             Condition and Results of Operations. (continued)

 .55% to .675% is added.  The  facility fee ranges from .20% to .35% of the total
amount of the facility.

         Investments.  In accordance with the Company's  investment  policy, the
Company's   investments   at   September   30,  1996   consisted   primarily  of
investment-grade  securities (rated Baa or better by Moody's Investor  Services,
Inc. or the equivalent). Consolidated cash and cash equivalents at September 30,
1996 amounted to $50.7 million, or 9.2% of total cash and invested assets.

Management has determined  that the entire fixed  maturity  portfolio  should be
classified as "available  for sale".  Fixed  maturity  securities  classified as
"available for sale" are carried at estimated market value. The market value and
amortized  cost of all fixed  maturity  securities  at  September  30, 1996 were
$497.9 million and $502.6 million, respectively.

Management believes that the securities in the Company's investment portfolio at
September 30, 1996 are readily marketable.

         Regulation.  Insurance laws and regulations impose certain restrictions
on the amount of dividends that may be paid by insurance companies.  The maximum
amount of  ordinary  dividends  that a North  Carolina  domiciled  property  and
casualty  insurance  company  may pay at any  point in time  without  regulatory
approval  is the lesser of (a) 10% of the  policyholders'  statutory  surplus of
such property and casualty  insurance company as of the preceding December 31 or
(b) the statutory net income of such property and casualty insurance company for
the  preceding  calendar  year,  less the amount of  dividends  paid  during the
preceding 12 months.  The Company's  insurance  subsidiaries paid  approximately
$4.8 million of ordinary dividends in 1996.

If the insurance  subsidiaries are not able to pay ordinary  dividends and their
requests for the payment of  extraordinary  dividends  are not  granted,  and if
amounts needed are in excess of the available  funds under the credit  facility,
additional borrowings,  the issuance of additional securities or obtaining other
funds could be necessary to pay debt service,  Common Stock and Preferred  Stock
dividends and other expenses of the Company.


Page 14
<PAGE>
Item 6.         Exhibits and Reports on Form 8-K.

a.       Exhibits

                                                      Filed Herewith (*),
                                                     Nonapplicable (NA), or
                                                 Incorporated by Reference from
                                                 ------------------------------
                                                                     Integon
Exhibit                                                            Registration
Number                                        Exhibit             No. or Report
------                                        -------            --------------

11.1  Computation of Earnings per Share       *                      NA

27    Financial Data Schedule                 *                      NA

b.    Reports on Form 8-K.

      The  following  reports on Form 8-K were filed during the quarter ended
      September 30, 1996.

      Filing Date           Item No.    Description
      ----------            --------    -----------

      July 26, 1996            5        Other Events. Copy of press release
                                        concerning second quarter 1996 results.

      September 23, 1996       5        Other Events.  Copy of press release
                                        concerning third quarter 1996 losses
                                        due to hurricane.


Page 15
<PAGE>



                                    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.


                               INTEGON CORPORATION



November 12, 1996          /s/ Brian T. Sheekey
                           --------------------
                                Brian T. Sheekey
                            (Duly Authorized Officer
                        and Principal Accounting Officer)



Page 16
<PAGE>



                                INDEX TO EXHIBITS


                                                     Filed Herewith (*),
                                                  Nonapplicable (NA), or
                                         Incorporated by Reference From

                                                       Integon
Exhibit                             Registration     Sequential       Page
Number                                 Exhibit     No. or Report      Number
------                               ---------     --------------  ------------
11.1   Computation of Earnings
           Per Share                   11.1               *

27     Financial Data Schedule         27                 *

<PAGE>
Exhibit 11.1
<TABLE>
<CAPTION>

                      INTEGON CORPORATION AND SUBSIDIARIES
                        COMPUTATION OF EARNINGS PER SHARE
                  (Dollars in thousands, except per share data)
                                   (Unaudited)


                                                                      Three Months Ended               Nine Months Ended
                                                                         September 30,                    September 30,
                                                                      -------------------                ----------------
                                                                    1996              1995             1996              1995
                                                                    ----              ----             ----              ----
<S>                                                           <C>                <C>                <C>                <C>

Income available to common shareholders:

Income before extraordinary items .....................       $      4,871       $      9,910       $     16,553       $     26,074
Preferred stock dividends .............................              1,393              1,393              4,178              4,178
                                                              ------------       ------------       ------------       ------------
Income before extraordinary items
 available to common shareholders .....................              3,478              8,517             12,375             21,896

Extraordinary items ...................................               --                 --                 --               (2,624)
                                                              ------------       ------------       ------------       ------------
    Net income available to common
      shareholders ....................................       $      3,478       $      8,517       $     12,375       $     19,272
                                                              ============       ============       ============       ============


Weighted average common shares outstanding:
Primary:
     Common shares outstanding ........................         15,732,440         15,704,507         15,724,386         15,699,957
     Assumed exercise of stock options ................            147,979               --              144,273               --
                                                              ------------       ------------       ------------       ------------
    Total .............................................         15,880,419         15,704,507         15,868,659         15,699,957
                                                              ============       ============       ============       ============
Fully diluted:
     Common shares outstanding ........................         15,732,440         15,704,507         15,724,386         15,699,957
     Assumed conversion of convertible
        preferred stock ...............................               --            3,772,966               --            3,772,966
     Assumed exercise of stock options ................            147,979               --              144,273               --
                                                              ------------       ------------       ------------       ------------
    Total .............................................         15,880,419         19,477,473         15,868,659         19,472,923
                                                              ============       ============       ============       ============

Earnings per common share:
Primary:
     Income before extraordinary items ................       $        .22       $        .55       $        .78       $       1.40
     Extraordinary items ..............................               --                 --                 --                 (.17)
                                                              ------------       ------------       ------------       ------------
       Net income .....................................       $        .22       $        .55       $        .78       $       1.23
                                                              ============       ============       ============       ============
Fully diluted:
     Income before extraordinary items ................       $        .22       $        .51       $        .78       $       1.33
     Extraordinary items ..............................               --                 --                 --                 (.13)
                                                              ------------       ------------       ------------       ------------
       Net income .....................................       $        .22       $        .51       $        .78       $       1.20
                                                              ============       ============       ============       ============
</TABLE>