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, 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 November 12, 1997,  there were 16,133,063  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, 1997 and December 31, 1996.............3
     Statements of Operations - Three Months Ended September 30,
         1997 and 1996 and nine months ended September 30, 1997 and
         1996 .............................................................4
     Statements of Cash Flows - Nine Months Ended September 30,
         1997 and 1996.....................................................5
     Notes to Financial Statements.........................................6


Item 2.  Management's Discussion and Analysis of Financial
                Condition and Results of Operations.......................11


PART II - OTHER INFORMATION

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)

                                                                                        September 30,            December 31,
                                                                                            1997                     1996
                                                                                        -------------            ------------ 
<S>                                                                                                       
ASSETS                                                                               <C>                           <C>
Investments:
Fixed maturities available for sale--at market
     (amortized cost $643,586 and $522,452)....................................        $      650,768             $  521,311
Other long-term investments....................................................                 1,132                  2,743
Short-term investments.........................................................                   471                     --
                                                                                       --------------             ----------
                                                                                              652,371                524,054
Cash and cash equivalents......................................................                33,517                 43,838
Reinsurance receivable.........................................................               163,505                185,077
Premiums due and uncollected (less allowance for
     doubtful accounts of $5,282 and $5,282)...................................               224,077                248,537
Prepaid reinsurance premiums...................................................                49,107                 48,909
Accounts receivable, primarily financing receivables
    (less allowance for doubtful accounts of $1,433
    and $1,112)................................................................                42,445                 32,957
Accrued investment income......................................................                 9,535                  8,933
Deferred policy acquisition costs..............................................                45,615                 55,106
Property and equipment (less accumulated depreciation
     of $16,791 and $10,808)...................................................                76,996                 68,271
Goodwill (less accumulated amortization of $16,176
     and $13,885)..............................................................               104,665                106,957
Deferred income taxes..........................................................                24,257                 22,044
Other assets...................................................................                23,641                 12,116
                                                                                       --------------             ----------
                                                                                       $    1,449,731             $1,356,799
                                                                                       ==============             ==========
 LIABILITIES AND STOCKHOLDERS' EQUITY
 LIABILITIES
Unearned premiums..............................................................        $      336,106             $  364,081
Loss and loss adjustment expenses payable......................................               532,170                478,031
Accrued expenses and other liabilities.........................................               126,241                104,536
Short-term debt................................................................                22,000                 44,000
Notes payable..................................................................               150,723                150,760
                                                                                       --------------             ----------
                                                                                            1,167,240              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, 1,435,700 and
   1,437,500 issued and outstanding............................................                    14                     14
Common Stock--$.01 par value per share, authorized--
   35,000,000 shares; issued--17,700,263 and
   17,303,321 shares...........................................................                   177                    173
Class A Non-Voting Common Stock--$.01 par value per
   share, authorized 20,000,000 shares; issued and
   outstanding--none...........................................................                    --                     --
Additional paid-in capital.....................................................               155,211                147,891
Net unrealized depreciation of securities......................................                 4,852                   (700)
Retained earnings..............................................................                60,058                105,834
Treasury stock--at cost, 1,567,200 shares......................................               (37,821)               (37,821)
                                                                                       --------------             ----------
                                                                                              182,491                215,391
                                                                                       --------------             ----------
                                                                                       $    1,449,731             $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                  Nine Months Ended
                                                                                 September 30,                    September 30,
                                                                           -----------------------------    -------------------
                                                                               1997            1996             1997            1996
                                                                               ----            ----             ----            ----
<S>                                                                             <C>            <C>          <C>            <C>
REVENUES
Net premiums written................................................           $168,085        $214,369     $556,548        $606,442
                                                                               ========        ========     ========        ========

Premiums earned.....................................................           $190,136        $191,790     $584,721        $536,845
Net investment income...............................................             10,542           8,026       29,855          23,637
Net realized investment gains (losses)..............................                471           1,140       (1,602)          2,360
Other income........................................................              4,972           4,165       14,172          12,375
                                                                               --------        --------     --------        --------
                                                                                206,121         205,121      627,146         575,217
                                                                               --------        --------     --------        --------
BENEFITS AND EXPENSES
Loss and loss adjustment expenses...................................            148,826         147,249      504,237         411,839
Policy acquisition and other underwriting
  expenses..........................................................             45,364          41,977      145,165         114,042
Other expenses......................................................              5,604           4,311       15,520          11,682
Amortization of goodwill............................................                764             769        2,292           2,308
Interest expense....................................................              3,721           3,732       11,175          11,087
                                                                               --------        --------     --------        --------
                                                                                204,279         198,038      678,389         550,958
                                                                               --------        --------     --------        --------
INCOME (LOSS) FROM OPERATIONS BEFORE FEDERAL
INCOME TAX (BENEFIT) AND DISTRIBUTIONS ON
CAPITAL SECURITIES OF SUBSIDIARY TRUST..............................              1,842           7,083      (51,243)         24,259
Federal income tax (benefit)........................................                641           2,212      (18,394)          7,706
                                                                               --------         -------     --------        --------
Income (loss) before distributions on capital
securities of subsidiary trust......................................              1,201           4,871      (32,849)         16,553
Distributions on capital securities of
subsidiary trust, net of federal income tax
benefit of $930, $--, $2,404 and $--................................             (1,727)             --       (4,464)             --
                                                                               --------        --------     --------        --------


     NET INCOME (LOSS)..............................................               (526)          4,871      (37,313)         16,553
Preferred stock dividends...........................................              1,393           1,393        4,178           4,178
                                                                               --------        --------     --------        --------
Net income (loss) available to common shareholders..................           $ (1,919)       $  3,478     $(41,491)       $ 12,375
                                                                               ========        ========     ========        ========

EARNINGS PER COMMON SHARE
Primary.............................................................           $   (.12)       $    .22     $  (2.61)       $    .78
                                                                               ========        ========    =========        ========
Fully diluted.......................................................           $   (.12)       $    .22     $  (2.61)       $    .78
                                                                               ========        ========    =========        ========

Weighted average common shares outstanding:
  Primary...........................................................             16,417          15,880       15,911          15,869
                                                                               ========        ========     ========        ========
  Fully diluted.....................................................             16,417          15,880       15,911          15,869
                                                                               ========        ========     ========        ========

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,
                                                                                              1997              1996
Cash Flows from Operating Activities                                                   -----------         ---------
<S>                                                                                       <C>               <C>
Net income (loss)...................................................................... $ (37,313)         $  16,553

Adjustments  to  reconcile   net  income  to  net  cash  provided  by
 operating activities:
     Net realized investment (gains) losses............................................     1,602             (2,360)
     Depreciation and amortization.....................................................     8,906              7,157
     Net amortization of discounts and premiums........................................        86                927
     Provision for deferred federal income taxes (benefit).............................    (5,203)            (1,020)
     Net decrease in reinsurance assets................................................    21,374             16,767
     Net (increase) decrease in premiums due and uncollected...........................    24,460            (60,187)
     Net (increase) decrease in deferred policy acquisition
        costs                                                                               9,491            (12,879)
     Net increase in accounts and notes receivable,
        accrued investment income and other assets.....................................   (14,995)            (2,754)
     Increase (decrease) in unearned premiums..........................................   (27,975)            65,956
     Increase in loss and loss adjustment expenses payable.............................    54,139             27,451
     Net increase in accrued expenses and
        other liabilities..............................................................    34,150              9,768
                                                                                        ---------          ---------

        Net cash flows provided by operating activities
        from continuing operations.....................................................    68,722             65,379
                                                                                        ---------          ---------

Cash Flows from Investing Activities
Investment securities sold.............................................................   539,840            441,801
Investment securities matured, called or redeemed......................................    17,515             18,984
Investment securities purchased........................................................  (679,152)          (492,463)
Other, net.............................................................................   (14,436)            (7,021)
                                                                                        ---------          ---------
     Net cash flows used in investing activities.......................................  (136,233)           (38,699)
                                                                                        ---------          ---------

Cash Flows from Financing Activities
Net increase (decrease) in short-term debt.............................................   (22,000)            18,000
Proceeds from Company-obligated mandatorily redeemable
     capital securities of subsidiary trust............................................   100,000                 --
Proceeds from exercise of share options................................................     6,012                 --
Common stock dividends.................................................................    (4,285)            (4,247)
Preferred stock dividends..............................................................    (4,178)            (4,178)
Decrease in notes payable..............................................................       (37)               (55)
Increase in book cash overdrafts.......................................................   (18,322)            (6,568)
                                                                                        ---------          ---------
    Net cash flows provided by financing activities....................................    57,190              2,952
                                                                                        ---------          ---------
Net increase (decrease) in cash and cash equivalents...................................   (10,321)            29,632
    Cash and cash equivalents at beginning of period...................................    43,838             21,046
                                                                                        ---------          ---------
Cash and cash equivalents at end of period............................................. $  33,517          $  50,678
                                                                                        =========          =========

Supplemental Disclosures of Cash Flows Information
Interest paid during the period........................................................    10,578          $  10,498
Federal income taxes paid during the period............................................        36             10,300


</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, 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 September 30, 1997 and
December 31, 1996 and the consolidated  results of operations and cash flows for
the periods ended September 30, 1997 and 1996.

The  operating  results for the nine  months  ended  September  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. See Note 6 of Notes to Financial Statements.

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.

                                     Page 7
<PAGE>


Item 1.  Financial Statements. (continued)

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 September 30, would have been as follows:
<TABLE>
<CAPTION>
                                                            Three Months Ended            Nine Months Ended
                                                               September 30,                 September 30,
                                                            -------------------          -------------------
                                                             1997          1996           1997         1996
                                                            ------        ------         ------       ------
<S>                                                         <C>           <C>          <C>           <C>
Pro forma net income (loss)..........................        $(675)       $4,789       $(37,760)     $16,305
Pro forma primary earnings
   per share.........................................        $(.13)       $  .21       $  (2.64)     $   .76
Pro forma fully diluted
   earnings per share................................        $(.13)       $  .21       $  (2.64)     $   .76
</TABLE>
See Note 6 of Notes to Financial Statements.

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  September  30, are as
follows:
<TABLE>
<CAPTION>
                                                         Three Months Ended              Nine Months Ended
                                                             September 30,                   September 30,
                                                       ----------------------           --------------------
                                                         1997           1996             1997          1996
                                                        ------         ------           ------        ------
<S>                                                     <C>           <C>               <C>           <C>        
Pro forma basic earnings per
     share.........................................      $(.12)          $.22           $(2.62)         $.79
Pro forma diluted earnings
     per share ....................................      $(.12)          $.22           $(2.62)         $.78


</TABLE>
                                     Page 8
<PAGE>


Item 1.  Financial Statements. (continued)

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  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 and believes that the impact on its  financial  position and results of
operations is not material.

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.  There are no
methodologies  that  can be used  to  guarantee  the  ultimate  accuracy  of the
estimates  developed.  The Company had utilized the same reserve methodology for
five years and had consistently  experienced favorable loss reserve development.
During the first  quarter  1997 review of  reserves,  the loss  experience  data
revealed that the business was  experiencing  yet more adverse  development than
indicated in the

                                     Page 9
<PAGE>


Item 1.  Financial Statements.  (continued)

fourth quarter, and certain other unfavorable factors emerged,  including higher
losses experienced during the fourth quarter than initially estimated, increased
physical damage  frequency and severity  trends,  and a slower than  anticipated
reduction  in claims  costs from loss  control  initiatives  implemented  at the
Company.  Based on this  information,  the Company further segmented the data it
was using to estimate needed reserves and determined that the additional reserve
increase of $42.0 million was necessary.

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.  The  merger  of  Integon  with a  subsidiary  of GMAC was
consummated  on October 17, 1997 following  shareholder  approval on October 16,
1997. Holders of the Company's Common Stock received $26 per share in cash. Each
share of the Company's $3.875 Convertible  Preferred Stock was convertible on or
before  November 6, 1997 into a right to receive  $68.24 per share in cash.  Any
shares of  Convertible  Preferred  Stock not converted were redeemed on November
12, 1997 at $52.33.

On November 12, 1997,  the Company  announced  its offering to purchase for cash
any and all of $150.0 million aggregate  principal amount of 8% Senior Notes due
1999 and 9 1/2% Senior Notes due 2001 issued by Integon,  and any and all of the
$100.0 million aggregate  principal amount of 10 3/4% Capital  Securities issued
by Integon  Capital I.  Concurrently,  the Company is  soliciting  consents from
holders  to  proposed  amendments  to  the  indentures  pursuant  to  which  the
securities were issued. The tender offers are made upon the terms and subject to
the  conditions  set forth in the Offer to  Purchase  and  Consent  Solicitation
Statements  for each security  which was mailed to holders on or about  November
12, 1997.

Each of the consent  solicitations  will expire at 5:00 P.M. New York City time,
on Tuesday,  November 25, 1997 unless  extended  ("Consent  Date").  Each of the
tender offers will expire at 12:00  Midnight,  New York City time, on Wednesday,
December 10, 1997,  unless extended or earlier  terminated by Integon.  Payments
will be made on the third NYSE  trading  day  following  the  expiration  of the
tender offers.

In  connection  with the merger of Integon with a subsidiary  of GMAC,  the 1992
Stock Option Plan and the Amended and  Restated  Omnibus  Long-Term  Performance
Incentive Compensation Plan were terminated.

                                    Page 10
<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 10 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

Nine Months Ended September 30, 1997 ("1997") Compared with  Nine  Months  Ended
September 30, 1996 ("1996")

         Net  premiums  written  decreased  8.2% from $606.4  million in 1996 to
$556.5 million in 1997.  Nonstandard  automobile  insurance net premiums written
decreased from $550.1 million in 1996 to $487.9 million in 1997 or 11.3%.  Price
increases  taken during the fourth  quarter of 1996 and the first three quarters
of 1997, ranging from 3% to 20% in response to losses experienced,  have had the
effect of  slowing  premium  growth.  Due to changes  which  occur in the mix of
business,  it is not  possible  to  precisely  measure  the amount of  increased
premiums  realized from rate increases.  The determination of the premium amount
is calculated based on a number of variables,  including rate changes, limits of
liability,  deductible  levels,  geographic  location,  and  model  of  vehicle.
Specialty auto products net premiums written  increased 33.8% from $37.0 million
in 1996 to $49.5  million  in 1997.  Premiums  earned on all  lines of  business
increased  8.9%  from  $536.8  million  in 1996 to  $584.7  million  in 1997 and
reflects  primarily the increase in net premiums written during 1996 compared to
1995.

         Loss and loss adjustment  expenses  increased 22.4% from $411.8 million
in 1996 to $504.2  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 86.2% 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
analysis by the Company's actuarial staff and independent consulting actuaries.

         During the first quarter 1997 review of reserves,  the loss  experience
data revealed that the business was  experiencing  yet more adverse  development
than  indicated in the fourth  quarter,  and certain other  unfavorable  factors
emerged,  including  higher losses  experienced  during the fourth  quarter than
initially estimated, increased physical damage frequency and severity

                                    Page 11
<PAGE>


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

trends,  and a slower  than  anticipated  reduction  in claims  costs  from loss
control initiatives  implemented at the Company. Based on this information,  the
Company further  segmented the data it was using to estimate needed reserves and
determined that the additional  reserve increase of $42.0 million was necessary.
Since the end of the first  quarter,  the actual loss  emergence  from  accident
years 1996 and prior has been consistent  with the $42 million reserve  increase
confirming the appropriateness of the adjustment.  Losses for accident year 1997
are also emerging as expected in accordance with the current reserve level.

         The Company's estimate of loss reserves,  including reserves for claims
incurred but not  reported,  are subject to  variability  and,  accordingly  may
develop  differently  than  projected.  The process of estimating  loss and loss
adjustment expense reserves requires the reliance on past history to predict the
development of known claims and claims  incurred but not reported.  There are no
methodologies  that  can be used  to  guarantee  the  ultimate  accuracy  of the
estimate  developed.   These  estimates  are  reviewed  by  management  and,  as
adjustments to these liabilities become necessary such adjustments are reflected
in current operations.

         Policy  acquisition  and other  underwriting  expenses  increased $31.2
million  from  $114.0  million in 1996 to $145.2  million in 1997.  The  expense
ratio,  defined  as policy  acquisition  and other  underwriting  expenses  as a
percentage of premiums  earned,  increased  from 21.2% in 1996 to 24.8% 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.

         As a result of the increased  loss ratio in the fourth quarter of 1996,
and the first quarter of 1997 primarily  relating to the earlier  periods in the
1996 accident  year,  the Company  reviewed the  recoverability  of its deferred
policy  acquisition  cost and  determined  that the sum of the expected loss and
loss adjustment  expenses based on the loss and loss adjustment  expense reserve
analysis at year end, the deferred policy  acquisition cost, and expected policy
maintenance  expenses for the net written  premium for which the deferred policy
acquisition  cost was recorded did not support the level of the acquisition cost
deferred.  As a  result,  the  Company  wrote  off  $3.7  million  of  estimated
unrecoverable deferred policy acquisition cost.

                                    Page 12
<PAGE>


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

         Net  investment  income  increased  26.3% from $23.6 million in 1996 to
$29.9  million in 1997 as a result of the  $120.7  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 6.0% in 1996.  The
percentage of cash and invested  assets  invested in tax-exempt  securities  was
3.6% and 20.3% 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  compared  to pre-tax  net  realized  investment  gains of $2.4
million in 1996.

         Other income less other expenses  decreased from income of $0.7 million
in 1996 to an expense of $1.3 million in 1997 due primarily to one time expenses
incurred  during  the  period  leading  to the  merger.  See  Note 6 of Notes to
Financial Statements.

         Interest  expense  increased  0.8% from $11.1  million in 1996 to $11.2
million in 1997 due to increased short-term borrowings.

         Federal  income  taxes  decreased  $26.1  million from $7.7 million tax
expense  in 1996 to a $18.4  million  tax  benefit  in 1997  due to a loss  from
operations  before  federal  income tax. The effective tax rate  increased  from
31.8% 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.

         Distributions on capital  securities of subsidiary trust resulted in an
after-tax charge of $4.5 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 of
Notes to Financial Statements.

         Net income decreased $53.9 million from income of $16.6 million in 1996
to a loss of $37.3 million in 1997.


                                    Page 13
<PAGE>


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

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

         Net premiums  written  decreased  21.6% from $214.4  million in 1996 to
$168.1 million in 1997.  Nonstandard  automobile  insurance net premiums written
decreased from $194.5 million in 1996 to $148.2 million in 1997 or 23.8%.  Price
increases  taken during the fourth  quarter of 1996 and the first three quarters
of 1997 have had the effect of slowing premium  growth.  Specialty auto products
net premiums written  decreased 1.2% from $13.5 million in 1996 to $13.4 million
in 1997.  Premiums  earned on all lines of business  decreased  0.9% from $191.8
million in 1996 to $190.1 million in 1997 and reflects primarily the decrease in
net premiums written during 1997 compared to 1996.

         Loss and loss adjustment expenses increased 1.1% from $147.2 million in
1996 to  $148.8  million  in 1997.  The  loss  ratio,  defined  as loss and loss
adjustment expenses as a percentage of premiums earned,  increased from 76.8% in
1996 to 78.3% 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  $3.4
million from $42.0 million in 1996 to $45.4 million in 1997.  The expense ratio,
defined as policy acquisition and other underwriting expenses as a percentage of
premiums earned,  increased from 21.9% in 1996 to 23.9% in 1997. The increase in
the expense  ratio was due  primarily  to an increase in  personnel-related  and
other  information  systems  costs  incurred  primarily to enhance the Company's
operations,  and also  included  expenditures  for  modifications  necessary  to
accommodate  the Year 2000.  Additionally  the reversal of a $1.0 million  bonus
accrual in 1996 contributed to the variance from 1996 to 1997.

     Net investment  income  increased  31.3% from $8.0 million in 1996 to $10.5
million in 1997 as a result of the $130.5 million  increase in average  invested
assets due primarily to the issuance of $100.0 million in capital  securities by
Integon  Capital I (See  Note 2 of Notes to  Financial  Statements)  and a lower
percentage invested in tax-exempt securities. The pre-tax yield of the portfolio
was 6.2% in 1997 compared to 5.8% in 1996. The

                                    Page 14
<PAGE>


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

percentage of cash and invested  assets  invested in tax-exempt  securities  was
3.6% and 20.3% in 1997 and 1996,  respectively.  In  addition  to the  variances
discussed above, there were pre-tax net realized investment gains of $.5 million
in 1997 and $1.1 million in 1996.

         Other income less other expenses  resulted in an expense of $.1 million
in 1996 and $.6 million in 1997 due  primarily to a decrease in premium  finance
income.

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

         Federal  income taxes  decreased $1.6 million from $2.2 million in 1996
to $.6 million in 1997 due to a decrease in pre-tax income.

         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 of
Notes to Financial Statements.

         Net income  decreased  $5.4 million from income of $4.9 million in 1996
to a loss of $.5 million in 1997.


                                    Page 15
<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, 1997 is as follows:
                                                                                  September 30, 1997
Type/Ratings of Investments (1)                                       Carrying Amount (2)          Percentage
-------------------------------                                       -------------------          ----------
<S>                                                                             <C>                   <C>   
                                                                         (in thousands)
Fixed maturities:
    Government and agencies......................................               $181,554              26.4%
    Aaa                                                                          111,020              16.1%
    Aa  .........................................................                 82,211              12.0%
    A (3)........................................................                267,891              39.1%
    Baa                                                                            6,257                .9%
                                                                                --------             -----
        Total investment grade...................................                648,933              94.5%
    Below investment grade.......................................                  1,835                .3%
                                                                                --------             -----
        Subtotal.................................................                650,768              94.8%
Other long-term investments......................................                  1,132                .2%
Short-term investments...........................................                    471                .1%
Cash and cash equivalents........................................                 33,517               4.9%
                                                                                --------             -----
        Total invested assets....................................               $685,888             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, 1997 was 5.5%.

(2)      Carrying  amount is estimated market value for  fixed maturities avail-
         able for sale.

(3)      The "A" category includes $18.9  million of securities  which were  not
         rated by Moody's or S&P, but were rated "1" by the NAIC.

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

                                    Page 16

<PAGE>


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

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. In light of the merger that occurred in October, (see Note 6 of Notes to
Financial  Statements)  the Company  and its parent  company  will be  reviewing
sources  of funds for the  future.  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 2.7x for the twelve  months ended  September 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 a result of the merger of the  Company  with a  subsidiary  of
General  Motors  Acceptance  Corporation  (see  Note  6 of  Notes  to  Financial
Statements)  a capital  contribution  of $30.9  million was made to the domestic
insurance subsidiaries in October 1997.

As of September 30, 1997, Integon Corporation, the parent company, believes that
the sources of funds  available to it are and will be  sufficient to satisfy the
needs for general corporate purposes,  including debt service, dividend payments
and working capital. These sources, including the $75.0 million 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
nine  months  ended  September  30,  1997 and 1996 were $68.7  million and $65.4
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

                                    Page 17
<PAGE>


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

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.

         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
and Note 6 of Notes to Financial Statements.

         Investments.  In accordance with the Company's  investment  policy, the
Company's   investments   at   September   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 September 30,
1997 amounted to $33.5 million, or 4.9% of total cash and invested assets.

                                    Page 18

<PAGE>


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

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, 1997 were
$650.8 million and $643.6 million,  respectively.  Management  believes that the
securities  in the  Company's  investment  portfolio at  September  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
preceding  twelve  months.  The Company's  insurance  subsidiaries  have made no
payments of ordinary  dividends  during the twelve  months ended  September  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 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
        September 30, 1997.

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

         July 1, 1997           5            Other Events. Copy of press release
                                             announcing extension ofexchange for
                                             capital securities.

         July 7, 1997           5            Other Events. Copy of press release
                                             announcing the  exchange of capital
                                             securities.

         July 18, 1997          5            Other Events. Announcement relating
                                             to amendment to Merger Agreement.

         August 4, 1997         5            Other Events. Copy of press release
                                             concerning  second  quarter  1997  
                                             results. 

         August 14, 1997        5            Other Events. Copy of press release
                                             declaring a  cash dividend  on  the
                                             Company's Common Stockand Preferred
                                             Stock.


                                    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



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



                                    Page 21
<PAGE>



                                                       Exhibit 11.1


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

                                                                        Three Months Ended                   Nine Months Ended
                                                                            September 30,                        September 30,
                                                                      ----------------------             -------------------------
                                                                        1997           1996                1997            1996
                                                                      --------      --------             --------       --------
<S>                                                                    <C>            <C>                <C>             <C>
Income available to common shareholders:

Net income (loss)..............................................       $  (526)        $4,871             $(37,313)        $16,553
Preferred stock dividends......................................         1,393          1,393                4,178           4,178
                                                                      -------         ------             --------         -------
    Net income (loss) available to common
      shareholders.............................................       $(1,919)        $3,478             $(41,491)        $12,375
                                                                      =======         ======             ========         =======


Weighted average common shares outstanding:
Primary:
     Common shares outstanding.................................    16,002,942     15,732,440           15,843,641      15,724,386
     Assumed exercise of stock options.........................       414,415        147,979               67,267         144,273
                                                                   ----------     ----------           ----------      ----------
    Total......................................................    16,417,357     15,880,419           15,910,908      15,868,659
                                                                   ==========     ==========           ==========      ==========
Fully diluted:
     Common shares outstanding.................................    16,002,942     15,732,440           15,843,641      15,724,386
     Assumed exercise of stock options.........................       414,415        147,979               67,267         144,273
                                                                   ----------     ----------           ----------      ----------
    Total......................................................    16,417,357     15,880,419           15,910,908      15,868,659
                                                                   ==========     ==========           ==========      ==========

Earnings per common share:
Primary........................................................        $ (.12)        $  .22               $(2.61)         $  .78
                                                                       ======         ======               ======          ======
Fully diluted..................................................        $ (.12)        $  .22               $(2.61)         $  .78
                                                                       ======         ======               ======          ======


</TABLE>
                                    Page 22
<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             *