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 June 30, 1997

                                       OR

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

       For the transition period from _______________ to _______________

                        Commission file 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 July 31,  1997,  there  were  15,957,039  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 - June 30, 1997 and December 31, 1996..........       3
     Statements of Operations - Three Months Ended June 30,
         1997 and 1996 and six months ended June 30, 1997 and
         1996 .....................................................       4
     Statements of Cash Flows - Six Months Ended June 30,
         1997 and 1996.............................................       5
     Notes to Financial Statements.................................       6


Item 2.  Management's Discussion and Analysis of Financial
                Condition and Results of Operations................      10


PART II - OTHER INFORMATION

Item 4.       Submission of Matters To a Vote of
                Security Holders...................................      19

Item 6.       Exhibits and Reports on Form 8-K.....................      20


                                     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)

                                                                            June 30,     December 31,
                                                                              1997           1996
                                                                          -----------    -----------
ASSETS
<S>                                                                      <C>            <C>
Investments:
Fixed maturities available for sale--at market
     (amortized cost $635,533 and $522,452) ..........................   $   633,239    $   521,311
Other long-term investments ..........................................         1,098          2,743
Short-term investments ...............................................         5,796           --
                                                                          -----------    -----------
                                                                             640,133        524,054
Cash and cash equivalents ............................................        45,766         43,838
Reinsurance receivable ...............................................       175,349        185,077
Premiums due and uncollected (less allowance for
     doubtful accounts of $5,282 and $5,282) .........................       238,395        248,537
Prepaid reinsurance premiums .........................................        49,833         48,909
Accounts receivable, primarily financing receivables
     (less allowance for doubtful accounts of $1,260
     and $1,112) .....................................................        40,181         32,957
Accrued investment income ............................................         9,345          8,933
Deferred policy acquisition costs ....................................        49,688         55,106
Property and equipment (less accumulated depreciation
     of $14,749 and $10,808) .........................................        77,596         68,271
Goodwill (less accumulated amortization of $15,412
     and $13,885) ....................................................       105,429        106,957
Deferred income taxes ................................................        26,823         22,044
Other assets .........................................................        25,899         12,116
                                                                          -----------    -----------
                                                                         $ 1,484,437    $ 1,356,799
                                                                          ===========    ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Unearned premiums ....................................................   $   358,883    $   364,081
Loss and loss adjustment expenses payable ............................       531,027        478,031
Accrued expenses and other liabilities ...............................       144,561        104,536
Short-term debt ......................................................        26,000         44,000
Notes payable ........................................................       150,714        150,760
                                                                          -----------    -----------
                                                                           1,211,185      1,141,408
                                                                          -----------    -----------

Company-obligated mandatorily redeemable capital securities
     of subsidiary trust holding solely Integon Corporation
     Junior Subordinated Deferrable Interest Debentures
                                                                             100,000           --
                                                                          -----------    -----------

STOCKHOLDERS' EQUITY
$3.875 Convertible Preferred Stock--$.01 par value
     per share, 1,437,500 shares authorized, issued and
     outstanding .....................................................            14             14
Common Stock--$.01 par value per share, authorized--
     35,000,000 shares; issued--17,318,155 and
     17,271,707 shares ...............................................           173            173
Class A Non-Voting Common Stock--$.01 par value per
     share, authorized 20,000,000 shares; issued and
     outstanding--none ...............................................          --             --
Additional paid-in capital ...........................................       148,803        147,891
Net unrealized depreciation of securities ............................        (1,345)          (700)
Retained earnings ....................................................        63,428        105,834
Treasury stock--at cost, 1,567,200 shares ............................       (37,821)       (37,821)

                                                                           ----------     ----------
                                                                             173,252        215,391
                                                                           ----------     ----------
                                                                          $1,484,437     $1,356,799
                                                                           ==========     ==========
</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           Six Months Ended
                                                            June 30,                    June 30,
                                                     ----------------------     ----------------------
                                                        1997         1996          1997         1996
                                                     ---------    ---------     ---------    ---------
<S>                                                 <C>          <C>            <C>          <C>
REVENUES
Net premiums written .............................   $ 185,909    $ 197,811     $ 388,463    $ 392,073
                                                     =========    =========     =========    =========

Premiums earned ..................................   $ 198,468    $ 180,240     $ 394,585    $ 345,055
Net investment income ............................      10,270        7,858        19,313       15,611
Net realized investment gains (losses) ...........      (1,592)        (857)       (2,073)       1,220
Other income .....................................       4,660        4,035         9,200        8,210
                                                     ---------    ---------     ---------    ---------
                                                       211,806      191,276       421,025      370,096
                                                     ---------    ---------     ---------    ---------
BENEFITS AND EXPENSES
Loss and loss adjustment expenses ................     156,173      134,032       355,411      264,590
Policy acquisition and other underwriting
  expenses .......................................      48,658       37,094        99,801       72,065
Other expenses ...................................       5,170        3,322         9,917        7,371
Amortization of goodwill .........................         764          770         1,528        1,539
Interest expense .................................       3,687        3,724         7,454        7,355
                                                     ---------    ---------     ---------    ---------
                                                       214,452      178,942       474,111      352,920
                                                     ---------    ---------     ---------    ---------
INCOME (LOSS) FROM OPERATIONS BEFORE FEDERAL
INCOME TAX (BENEFIT) AND DISTRIBUTIONS ON
CAPITAL SECURITIES OF SUBSIDIARY TRUST ...........      (2,646)      12,334       (53,086)      17,176

Federal income tax (benefit) .....................        (993)       4,037       (19,035)       5,494
                                                     ---------    ---------     ---------    ---------
Income (loss) before distributions on capital
securities of subsidiary trust ...................      (1,653)       8,297       (34,051)      11,682
Distributions on capital securities of
subsidiary trust, net of federal income tax
benefit of $940, $--, $1,473 and $-- .............      (1,747)        --          (2,737)        --
                                                     ---------    ---------     ---------    ---------
     NET INCOME (LOSS) ...........................      (3,400)       8,297       (36,788)      11,682
Preferred stock dividends ........................       1,392        1,392         2,785        2,785
                                                     ---------    ---------     ---------    ---------
Net income (loss) available to common shareholders   $  (4,792)   $   6,905     $ (39,573)   $   8,897
                                                     =========    =========     =========    =========

EARNINGS PER COMMON SHARE
Primary ..........................................   $    (.30)   $     .44     $   (2.51)   $     .56
                                                     =========    =========     =========    =========
Fully diluted ....................................   $    (.30)   $     .42     $   (2.51)   $     .56
                                                     =========    =========     =========    =========
Weighted average common shares outstanding:
  Primary ........................................      15,751       15,815        15,745       15,863
                                                     =========    =========     =========    =========
  Fully diluted ..................................      15,751       19,654        15,745       15,863
                                                     =========    =========     =========    =========

Dividends declared per share .....................   $     .09    $     .09     $     .18    $     .18
                                                     =========    =========     =========    =========
</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)

                                                                                               Six Months Ended
                                                                                                     June 30,
                                                                                          ------------------------------
                                                                                               1997               1996
                                                                                           ---------           ---------
<S>                                                                                       <C>                  <C>
Cash Flows from Operating Activities                                                      
Net income (loss)......................................................................    $ (36,788)           $ 11,682

Adjustments to reconcile net income to net cash provided by
   operating activities:
     Net realized investment (gains) losses............................................        2,073              (1,220)
     Depreciation and amortization.....................................................        5,702               4,604
     Net amortization of discounts and premiums........................................          292                 491
     Provision for deferred federal income taxes (benefit).............................       (4,437)                 23
     Net decrease in reinsurance assets................................................        8,804              19,668
     Net (increase) decrease in premiums due and uncollected...........................       10,142             (37,223)
     Net (increase) decrease in deferred policy acquisition
        costs..........................................................................        5,418              (8,696)
     Net increase in accounts and notes receivable,
        accrued investment income and other assets.....................................      (13,786)             (3,787)
     Increase (decrease) in unearned premiums..........................................       (5,198)             43,341
     Increase in loss and loss adjustment expenses payable.............................       52,996              12,317
     Net increase (decrease) in accrued expenses and
        other liabilities..............................................................       21,188              (3,575)
                                                                                           ---------           ---------
        Net cash flows provided by operating activities
        from continuing operations.....................................................       46,406              37,625
                                                                                           ---------           ---------

Cash Flows from Investing Activities
Investment securities sold.............................................................      527,222             284,536
Investment securities matured, called or redeemed......................................       10,824              17,161
Investment securities purchased........................................................     (658,148)           (322,064)
Other, net.............................................................................      (12,615)             (3,853)
                                                                                           ---------           ---------
     Net cash flows used in investing activities.......................................     (132,717)            (24,220)
                                                                                           ---------           ---------

Cash Flows from Financing Activities
Net increase (decrease) in short-term debt.............................................      (18,000)              5,000
Proceeds from Company-obligated mandatorily redeemable
     capital securities of subsidiary trust............................................      100,000                  --
Proceeds from exercise of share options................................................          767                  --
Common stock dividends.................................................................       (2,833)             (2,831)
Preferred stock dividends..............................................................       (2,785)             (2,785)
Decrease in notes payable..............................................................          (46)                (64)
Increase in book cash overdrafts.......................................................       11,135               4,035
                                                                                           ---------           ---------
    Net cash flows provided by financing activities....................................       88,238               3,355
                                                                                           ---------           ---------
Net increase in cash and cash equivalents..............................................        1,928              16,760
    Cash and cash equivalents at beginning of period...................................       43,838              21,046
                                                                                           ---------           ---------
Cash and cash equivalents at end of period.............................................    $  45,766           $  37,806
                                                                                           =========           =========

Supplemental Disclosures of Cash Flows Information
Interest paid during the period........................................................    $   7,245          $   7,169
Federal income taxes paid during the period............................................           --              4,730

</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
                                  JUNE 30, 1997

                                   (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 June  30,  1997  and
December 31, 1996 and the consolidated  results of operations and cash flows for
the periods ended June 30, 1997 and 1996.

The operating results for the six months ended June 30, 1997 are not necessarily
indicative  of the results to be expected for the full year ending  December 31,
1997.

Note 2 - Financing Activity

On February 10, 1997, Integon Capital I, a wholly-owned  subsidiary trust of the
Company,  issued $100.0  million of 10 3/4% capital  securities due February 15,
2027 (the "Capital Securities"),  the proceeds of which were invested in 10 3/4%
junior subordinated debentures of the Company due February 15, 2027.

The sole asset of Integon Capital I consists of $103.1 million of 10 3/4% junior
subordinated  debentures  of Integon  Corporation  due February  15,  2027.  The
obligations  of Integon  Capital I under the  Capital  Securities  are fully and
unconditionally guaranteed by the Company.

Holders  of  the  Capital  Securities  are  entitled  to  receive   preferential
cumulative cash  distributions  accruing from the date of original  issuance and
payable  semi-annually  in  arrears on  February  15 and August 15 of each year,
commencing  August 15,  1997,  at the annual rate of 10 3/4% of the  liquidation
amount of

                                     Page 6
<PAGE>
Item 1.  Financial Statements. (continued)

$1,000 per Capital Security.  The distribution rate and the distribution payment
dates and other payment dates for the Capital  Securities will correspond to the
payments  and payment  dates on the junior  subordinated  debentures  of Integon
Corporation.  Distributions  on the Capital  Securities  are  deferrable  at the
Company's  option  for  up to  five  years.  The  Company,  subject  to  certain
exceptions,  may not pay  dividends on its capital  stock  during such  deferral
periods.

For financial reporting  purposes,  Integon Capital I is treated as a subsidiary
of the Company and,  accordingly,  its accounts are included in the consolidated
financial statements of the Company. The Capital Securities are presented in the
consolidated balance sheet of the Company as a separate line item directly above
stockholders' equity under the caption "Company-obligated mandatorily redeemable
capital securities of subsidiary trust holding solely Integon Corporation junior
subordinated  deferrable interest debentures." The Company records distributions
payable on the Capital  Securities as  "Distributions  on capital  securities of
subsidiary trust" in its consolidated statement of income.

The Company paid $10.75  million of the  proceeds  from the  transaction  into a
reserve account which will be used to pay the first two interest payments on the
Capital  Securities.  The  remaining  net  proceeds to the Company  were used to
contribute  $50.0  million  to  the  insurance   subsidiaries  in  the  form  of
certificates  of  contribution  bearing  interest  at 10  3/4%  per  annum,  not
compounded;  to reduce the  Company's  short-term  debt by $32.0 million and for
general corporate purposes.

Underwriting  fees and other costs of $4.0  million  relating to the issuance of
the Capital  Securities  have been  capitalized.  Such costs are being amortized
using the interest-rate method.

Note 3 - Stock Option and Incentive Plans

The Company applies APB 25 and related  Interpretations  in accounting for stock
option  and  incentive  plans.  Accordingly,   no  compensation  cost  has  been
recognized  for stock options  issued under either the 1992 Stock Option Plan or
the Amended and Restated Omnibus Long-Term  Performance  Incentive  Compensation
Plan. Had compensation cost for stock-based  compensation  under these two plans
been  determined  consistent  with Statement of Financial  Accounting  Standards
("SFAS") No. 123, the Company's net income and earnings per share on a pro forma
basis for the period ended June 30, would have been as follows:

                                     Page 7
<PAGE>
Item 1.  Financial Statements. (continued)
<TABLE>
<CAPTION>
                                 Three Months Ended           Six Months Ended
                                       June 30,                    June 30,
                                --------------------        --------------------
                                 1997          1996          1997          1996
                                ------        ------        ------        ------
<S>                           <C>          <C>          <C>           <C>
Pro forma net income (loss).  $  (3,638)   $   8,169    $  (37,245)   $   11,427
Pro forma primary earnings
   per share ..............   $    (.31)   $     .43    $    (2.53)   $     .55
Pro forma fully diluted
   earnings per share......   $    (.31)   $     .42    $    (2.53)   $     .55
</TABLE>

Note 4 - Accounting Standards Issued But Not Yet Adopted

In February 1997, the Financial  Accounting  Standards Board issued SFAS No. 128
"Earnings per Share" which changes the method of calculating earnings per share.
SFAS No.  128  requires  the  presentation  of  "basic"  earnings  per share and
"diluted" earnings per share on the face of the income statement. Basic earnings
per  share  is  computed  by  dividing  the  net  income   available  to  common
shareholders  by the weighted  average shares of outstanding  common stock.  The
calculation of diluted earnings per share is similar to basic earnings per share
except that the denominator  includes  dilutive common stock equivalents such as
stock options and warrants.  The statement is effective for financial statements
for periods ending after December 31, 1997, and early adoption is not permitted.
The pro forma basic earnings per share and diluted earnings per share calculated
in accordance with SFAS No. 128 for the period ended June 30, are as follows:
<TABLE>
<CAPTION>
                                 Three Months Ended           Six Months Ended
                                      June 30,                     June 30,
                                 ---------------------      --------------------
                                  1997          1996         1997        1996
                                  ----          ----         ----        ----
<S>                           <C>           <C>             <C>         <C>
Pro forma basic earnings per
     share .................   $  (.30)      $   .44        $  (2.51)    $ .57
Pro forma diluted earnings
     per share .............   $  (.30)      $   .42        $  (2.51)    $ .56
</TABLE>



In June 1997, the FASB issued SFAS No. 130,  "Reporting  Comprehensive  Income",
which establishes  standards for reporting and displaying  comprehensive  income
and  its  components  (revenues,   expenses,  gains  and  losses)  in  financial
statements.  In addition, SFAS No. 130 requires the Company to classify items of
other comprehensive  income by their nature in a financial statement and display
the accumulated balance of other

                                     Page 8
<PAGE>
Item 1.  Financial Statements. (continued)

comprehensive  income  separately  in the  shareholders'  equity  section of the
statement of financial condition. The Company will adopt SFAS No. 130 on January
1, 1998 as required.

Also in June 1997, the FASB issued SFAS No. 131,  "Disclosures about Segments of
an  Enterprise  and Related  Information".  SFAS No. 131  establishes  reporting
standards  for  public  companies   concerning   annual  and  interim  financial
statements of their operating  segments.  Operating segments are components of a
company  about  which  separate  financial  information  is  available  that  is
regularly  evaluated by the chief  operating  decision  maker in deciding how to
allocate  resources  and assess  performance.  The  standard  sets  criteria for
reporting disclosures about a company's products and services,  geographic areas
and major  customers.  The Company will adopt SFAS No. 131 on January 1, 1998 as
required.

Note 5 - Loss and Loss Adjustment Expenses Payable

Loss and loss adjustment  expenses payable represent the estimated  liability on
claims  reported to the Company plus  reserves  for claims  incurred but not yet
reported and the estimated  settlement  expenses  related to these  claims.  The
liabilities  for claims and related  settlement  expenses are  determined  using
"case basis" evaluations and statistical analysis and represent estimates of the
ultimate  net cost of all  losses  incurred  through  the  balance  sheet  date.
Although  considerable  variability  is inherent in such  estimates,  management
believes that the liabilities for unpaid claims and related settlement  expenses
are adequate; however, there can be no assurance that future adjustments to loss
and loss  adjustment  expenses  payable will not be required.  The estimates are
reviewed  by  management  and,  as  adjustments  to  these  liabilities   become
necessary, such adjustments are reflected in current operations.

Note 6 - Sale of the Company

On June 23, 1997, the Company signed a definitive  agreement with General Motors
Acceptance  Corporation  ("GMAC")  providing  for the  Company's  merger  with a
subsidiary  of  GMAC.  Subject  to  shareholder  and  regulatory  approval,  the
definitive  agreement  calls for each  share of the  Company's  Common  Stock to
receive $26.00 in cash,  without  interest.  Each share of the Company's  $3.875
Convertible  Preferred Stock,  which is converted into Common Stock prior to the
effective  date of the merger,  will  thereafter  represent the right to receive
$26.00 per share of

                                     Page 9
<PAGE>
Item 1.  Financial Statements.  (continued)

Common  Stock  issued  upon  conversion  (or  $68.24  per  share of  Convertible
Preferred Stock so converted) in cash, without interest.  After the merger, each
share of  Convertible  Preferred  Stock  will be  convertible  into the right to
receive  $68.24  per  share,  in  cash,  without  interest,  and any  shares  of
Convertible  Preferred  Stock not so  converted  will be  redeemed at $52.33 per
share shortly  following the effective time of the merger.  The payment is to be
made upon  closing  of the  transaction,  subject  to  obtaining  all  necessary
regulatory and stockholder approvals.

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 9 of this
Quarterly  Report on Form  10-Q.  The  reader is  presumed  to have read or have
access to Integon Corporation's 1996 Annual Report on Form 10-K.

Results of Continuing Operations

Six Months Ended June 30, 1997 ("1997") Compared with Six Months Ended June 30,
1996 ("1996")

         Net  premiums  written  decreased  0.9% from $392.1  million in 1996 to
$388.5 million in 1997.  Nonstandard  automobile  insurance net premiums written
decreased from $355.7  million in 1996 to $339.8 million in 1997 or 4.5%.  Price
increases  taken during the fourth quarter of 1996 and the first two quarters of
1997 have had the effect of slowing premium growth.  Specialty auto products net
premiums written  increased 54.0% from $23.5 million in 1996 to $36.2 million in
1997.  Premiums  earned on all lines of  business  increased  14.4% from  $345.1
million in 1996 to $394.6 million in 1997 and reflects primarily the increase in
net premiums written during 1996 compared to 1995.

         Loss and loss adjustment  expenses  increased 34.3% from $264.6 million
in 1996 to $355.4  million  in 1997.  The loss  ratio,  defined as loss and loss
adjustment expenses as a percentage of premiums earned,  increased from 76.7% in
1996 to 90.1% in 1997 due  primarily  to an increase  to loss  reserves of $42.0
million during the first quarter of 1997 following a comprehensive review and 

                                    Page 10
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations. (Continued)

analysis by the Company's actuarial staff and independent consulting actuaries.

         Policy  acquisition  and other  underwriting  expenses  increased $27.7
million from $72.1 million in 1996 to $99.8 million in 1997.  The expense ratio,
defined as policy acquisition and other underwriting expenses as a percentage of
premiums earned,  increased from 20.9% in 1996 to 25.3% in 1997. The increase in
the  expense  ratio  was  due  primarily  to  a  write-off  of  deferred  policy
acquisition  costs of $3.7  million  due to the  increase  in the loss ratio for
accident year 1996 and due to an increase in  personnel-related  and information
systems  costs.  Such costs were  incurred  primarily  to enhance the  Company's
operations, and included expenses for modifications necessary to accommodate the
Year 2000.

         Net  investment  income  increased  23.7% from $15.6 million in 1996 to
$19.3  million in 1997 as a result of the  $120.5  million  increase  in average
invested assets and a lower percentage  invested in tax-exempt  securities.  The
pre-tax yield of the portfolio was 6.0% in 1997 and 1996. The percentage of cash
and invested assets invested in tax-exempt securities was 3.9% and 22.4% in 1997
and 1996, respectively. In addition to the variances discussed above, there were
pre-tax  net  realized  investment  losses of $2.1  million in 1997  compared to
pre-tax net realized investment gains of $1.2 million in 1996.

         Other income less other  expenses  decreased from income of $.8 million
in 1996 to an expense of $.7 million in 1997 due to one time  expenses  incurred
during the period leading to the merger. See Note 6.

         Interest  expense  increased  1.4%  from $7.4  million  in 1996 to $7.5
million in 1997 due to increased short-term borrowings.

         Federal  income  taxes  decreased  $24.5  million from $5.5 million tax
expense  in 1996 to a $19.0  million  tax  benefit  in 1997  due to a loss  from
operations  before  federal  income tax. The effective tax rate  increased  from
32.0% in 1996 to 35.9% in 1997 due primarily to the underwriting loss in 1997.

         Based on available  information,  the Company has  concluded it is more
likely than not that the deferred tax asset will be realized.

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

         Distributions on capital  securities of subsidiary trust resulted in an
after-tax charge of $2.7 million in 1997,  representing  the Company's  minority
interest in the  earnings of Integon  Capital I, a  single-purpose  wholly-owned
subsidiary  trust.  The  charge is due to the  obligations  incurred  by Integon
Capital I on the Capital Securities issued February 10, 1997. See Note 2.

         Net income decreased $48.5 million from $11.7 million in 1996 to a loss
of $36.8 million in 1997.

Three Months Ended June 30, 1997 ("1997") Compared with Three Months Ended June
30, 1996 ("1996")

         Net  premiums  written  decreased  6.0%  from  $197.8 in 1996 to $185.9
million in 1997. Nonstandard automobile insurance net premiums written decreased
from $178.9 million in 1996 to $159.6 million in 1997 or 10.8%.  Price increases
taken during the fourth  quarter of 1996 and the first two quarters of 1997 have
had the effect of slowing premium  growth.  Specialty auto products net premiums
written  increased  59.9% from $12.5  million in 1996 to $20.0  million in 1997.
Premiums earned on all lines of business  increased 10.1% from $180.2 million in
1996 to $198.5  million  in 1997 and  reflects  primarily  the  increase  in net
premiums written during 1996 compared to 1995.

         Loss and loss adjustment  expenses  increased 16.5% from $134.0 million
in 1996 to $156.2  million  in 1997.  The loss  ratio,  defined as loss and loss
adjustment expenses as a percentage of premiums earned,  increased from 74.3% in
1996 to 78.7% in 1997. A comprehensive  actuarial  review conducted in the first
quarter  of 1997  showed  that loss and loss  adjustment  expenses  relating  to
accident year 1996 increased  significantly  compared to the amounts  previously
reported in 1996.

         Policy  acquisition  and other  underwriting  expenses  increased $11.6
million from $37.1 million in 1996 to $48.7 million in 1997.  The expense ratio,
defined as policy acquisition and other underwriting expenses as a percentage of
premiums earned,  increased from 20.6% in 1996 to 24.5% in 1997. The increase in
the expense  ratio was due  primarily  to an increase in  personnel-related  and
other information  systems costs. Such costs were incurred  primarily to enhance
the Company's operations, and also

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

included expenditures for modifications necessary to accommodate the Year 2000.

         Net  investment  income  increased  30.7% from $7.9  million in 1996 to
$10.3  million in 1997 as a result of the  $139.6  million  increase  in average
invested assets and a lower percentage  invested in tax-exempt  securities.  The
pre-tax yield of the  portfolio  was 6.1% in 1997 compared to 5.9% in 1996.  The
percentage of cash and invested  assets  invested in tax-exempt  securities  was
3.9% and 22.4% in 1997 and 1996,  respectively.  In  addition  to the  variances
discussed  above,  there were  pre-tax net  realized  investment  losses of $1.6
million in 1997 and $.9 million in 1996.

         Other income less other  expenses  decreased from income of $.7 million
in 1996 to an expense of $.5 million in 1997 due to one time  expenses  incurred
during the period leading to the merger. See Note 6.

         Interest expense remained at $3.7 million in 1996 and 1997.

         Federal  income  taxes  decreased  $5.0  million  from $4.0 million tax
expense  in 1996 to an $1.0  million  tax  benefit  in 1997  due to a loss  from
operations  before  federal  income tax. The effective tax rate  increased  from
32.7% in 1996 to 37.5% in 1997 due primarily to the underwriting loss in 1997.

         Based on available  information,  the Company has  concluded it is more
likely than not that the deferred tax asset will be realized.

         Distributions on capital  securities of subsidiary trust resulted in an
after-tax charge of $1.7 million in 1997,  representing  the Company's  minority
interest in the  earnings of Integon  Capital I, a  single-purpose  wholly-owned
subsidiary  trust.  The  charge is due to the  obligations  incurred  by Integon
Capital I on the Capital Securities issued February 10, 1997. See Note 2.

         Net income  decreased $11.7 million from $8.3 million in 1996 to a loss
of $3.4 million in 1997.

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

Analysis of Financial Condition
         Information  regarding the Company's  investment  portfolio at June 30,
1997 is as follows:
<TABLE>
<CAPTION>

                                              June 30, 1997
Type/Ratings of Investments (1)            Carrying Amount (2)      Percentage
-------------------------------            -------------------   ---------------
                                             (in thousands)
<S>                                          <C>                 <C>

                                                                           
Fixed maturities:
    Government and agencies ..............   $158,058                  23.0%
    Aaa ..................................    110,201                  16.1%
    Aa ...................................     81,808                  11.9%
    A (3) ................................    274,533                  40.0%
    Baa ..................................      6,165                    .9%
                                             --------                 ------
        Total investment grade ...........    630,765                  91.9%
    Below investment grade ...............      2,474                    .4%
                                             --------                 ------
        Subtotal .........................    633,239                  92.3%
Other long-term investments ..............      1,098                    .2%
Short-term investments ...................      5,796                    .8%
Cash and cash equivalents ................     45,766                   6.7%
                                             --------                 ------
        Total invested assets ............   $685,899                 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 June 30,
         1997 was 6.7%.

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

(3)      The "A" category includes $21.2 million of securities which were not
         rated by Moody's or S&P, but were rated "1" by the NAIC.

                                    Page 14
<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. 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 2.9x
for the twelve  months  ended June 30,  1997.  On  February  13,  1997,  Integon
Corporation  contributed $50.0 million to the domestic insurance subsidiaries in
the form of certificates of contribution.  Interest on the certificates  accrues
at the  rate  of 10 3/4%  per  annum,  not  compounded,  and is due and  payable
semiannually to the extent funds exist pursuant to regulatory requirements.

As of June 30, 1997, Integon Corporation,  the parent company, had approximately
$1.9  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

                                    Page 15
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations. (continued)


committed  credit facility  described in "Financing  Activities"  below, are and
will be sufficient to satisfy its short-term needs.

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
six months  ended June 30, 1997 and 1996 were $46.4  million and $37.6  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 above forward
looking  statement:  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 first quarter of 1997, the Company contributed $50.0
million of capital in the form of  certificates of contribution to the insurance
subsidiaries to maintain the ratio of net premiums 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, the payment of
interest  on the  certificates  of  contribution,  distributions  on the Capital
Securities,  purchase of investments,  tax sharing payments and dividends to the
Company.

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

                                    Page 16
<PAGE>
Item 2.  Management's Discussion and Analysis of Financial
         Condition and Results of Operations. (continued)


         Financing  Activities:  The Company has a committed  credit facility of
$75.0 million. 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 .55% to .675% is added.  The  facility fee ranges from
 .20% to .35% of the total amount of the facility.

On February 10, 1997, Integon Capital I issued $100.0 million of 10 3/4% capital
securities due February 15, 2027, the proceeds of which were invested in 10 3/4%
junior subordinated debentures of the Company, due February 15, 2027. See Note 2
of Notes to Financial Statements.

         Investments.  In accordance with the Company's  investment  policy, the
Company's  investments at June 30, 1997 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 June 30, 1997 amounted to
$45.8 million, or 6.7% 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 June 30, 1997 were $633.2
million and $635.5 million, respectively.

Management believes that the securities in the Company's investment portfolio at
June 30, 1997 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

                                    Page 17
<PAGE>


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


preceding  twelve  months.  The Company's  insurance  subsidiaries  have made no
payments of ordinary  dividends  during the twelve  months  ended June 30, 1997.
Dividends will be retained by the subsidiaries as needed.

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 18
<PAGE>
                           PART II - OTHER INFORMATION

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

The annual meeting of  stockholders  of the Company was held on May 15, 1997 for
the  following  purposes:  (i) electing  three  directors to serve for a term of
three years each expiring at the annual  meeting of  stockholders  to be held in
2000, and (ii)  considering and acting upon a proposal to ratify the appointment
of  Deloitte  & Touche  LLP as  independent  auditors  for the  Company  for the
calendar year 1997.

Derek V. Smith,  Frederick B.  Whittemore,  and Ronald N. Zebeck were elected as
directors at the  meeting.  The votes cast for and withheld for each nominee for
director were as follows:  Derek V. Smith  13,518,640  and 93,702;  Frederick B.
Whittemore,  13,520,010 and 92,332;  and Ronald N. Zebeck 13,518,700 and 93,642.
The number of votes cast for and against, and the number of abstentions for the
auditors were as follows: 13,539,210, 12,475, and 60,657.

                                    Page 19
<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


b.      Reports on Form 8-K.

        The  following  reports on Form 8-K were filed during the quarter ended
        June 30, 1997.

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

        April 28, 1997        5         Other Events.  Copy of press release
                                        announcing retention of Goldman, Sachs &
                                        Co. to review strategic alternatives and
                                        reported first quarter 1997 results.

        June 10, 1997         5         Other Events.  Copy of press release
                                        announcing the election of a new
                                        President and Chief Executive Officer.

        June 24, 1997         5         Other Events.  Copy of press release
                                        announcing the sale of the Company to
                                        General Motors Acceptance Corporation.

        June 24, 1997         5         Other Events. Copy of Plan of Merger and
                                        Amendment to Rights Agreement.


                                    Page 20
<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



August 14, 1997                     /s/ Brian T. Sheekey
                                    --------------------
                                        Brian T. Sheekey
                                        (Duly Authorized Officer
                                        and Principal Accounting Officer)



                                    Page 21
<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                    Six Months Ended
                                                         June 30,                          June 30,
                                              ---------------------------       ----------------------------
                                                 1997                1996             1997            1996
                                                 ----                ----             ----            ----
<S>                                          <C>             <C>                <C>             <C>
Income available to common shareholders:

Net income (loss) .........................   $     (3,400)   $      8,297      $    (36,788)   $     11,682
Preferred stock dividends .................          1,392           1,392             2,785           2,785
                                              ------------    ------------      ------------    ------------
    Net income (loss) available to common
      shareholders ........................   $     (4,792)   $      6,905      $    (39,573)   $      8,897
                                              ============    ============      ============    ============


Weighted average common shares outstanding:
Primary:
     Common shares outstanding ............     15,750,955      15,728,236        15,744,598      15,720,895
     Assumed exercise of stock options ....           --            86,417              --           142,436
                                              ------------    ------------      ------------    ------------
    Total .................................     15,750,955      15,814,653        15,744,598      15,863,331
                                              ============    ============      ============    ============
Fully diluted:
     Common shares outstanding ............     15,750,955      15,728,236        15,744,598      15,720,895
     Assumed conversion of convertible
       preferred stock ....................           --         3,772,966               --              --
     Assumed exercise of stock options ....           --           152,769               --          142,436
                                              ------------    ------------      ------------    ------------
    Total .................................     15,750,955      19,653,971        15,744,598      15,863,331
                                              ============    ============      ============    ============

Earnings per common share:
Primary ...................................   $       (.30)   $        .44      $      (2.51)   $        .56
                                              ============    ============      ============    ============
Fully diluted .............................   $       (.30)   $        .42      $      (2.51)   $        .56
                                              ============    ============      ============    ============
</TABLE>


<PAGE>
                                INDEX TO EXHIBITS


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


11.1     Computation of Earnings                        
         per Share                   11.1               *