SECURITIES AND EXCHANGE COMMISSION

                                Washington, D.C. 20549




                                      FORM 10-Q

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

                           SECURITIES EXCHANGE ACT OF 1934



          For the Quarterly Period Ended September 30, 1996
          Commission File Number 2-39310


                          INTERCONTINENTAL LIFE CORPORATION


                New Jersey                                  22-1890938     
          (State of Incorporation)  (I.R.S. Employer Identification Number)


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

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



          Indicate by check mark whether the Registrant (1) has filed all
          reports required to be filed by Section 13 or 15(d) of the
          Securities Exchange Act of 1934 during the preceding 12 months
          (or for such shorter period that the Registrant was required to
          file such reports), and (2) has been subject to such filing
          requirements for the past 90 days.
                                                            YES  X    NO    



          Number of common shares outstanding ($.22 Par Value) at end of
          period: 4,206,829. 



                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES

                                        INDEX


                                                            Page No.

          Part I - Financial Information

          Consolidated Balance Sheets
               September 30, 1996 and December 31, 1995................ 3

          Consolidated Statements of Income 
               For the three and nine month periods ended
               September 30, 1996 and 1995............................. 4

          Consolidated Statements of Cash Flows
               For the three and nine month periods ended
               September 30, 1996 and 1995............................. 6

          Notes to Consolidated Financial Statements...................11

          Management's Discussion and Analysis of 
               Financial Conditions and Results of Operations..........13

          Part II

          Computations of Earnings Per Share...........................19

          Part III

          Other Information............................................20

          Signature Page...............................................21

          Item 1.   Financial Statements

                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS
                              (in thousands of dollars) 




                                                    Sept 30,    Dec. 31,
                                                      1996        1995   
                                                    Unaudited
          ASSETS
          Investments:
               Fixed maturities, at amortized cost
                (market value approximates $8,778
                and $14,277)                       $    7,260  $   14,420
               Fixed maturities available for sale
                at market value (amortized cost of
                $466,222 and $463,268)                461,587     483,606
               Equity securities at market (cost
                approximates $368 and $368)             2,397       1,559
               Policy loans                            52,822      53,656
               Mortgage loans                          13,702      14,836
               Invested real estate and other
                invested assets                        29,715      15,467
               Short-term investments                  78,076      85,994
                    Total investments                 645,559     669,538

               Cash and cash equivalents                1,397       6,537

               Notes receivable from affiliates        61,477      61,224

               Accrued investment income                9,519       8,190

               Agent advances and other 
                receivables                            24,777      16,591

               Reinsurance receivables                 14,403      14,474

               Property and equipment, net              4,433       4,460

               Real estate occupied by the 
                Company, net                              -0-      36,169

               Deferred policy acquisition costs       26,588      24,926

               Present value of future profits of 
                acquired businesses                    46,772      48,606

               Deferred financing costs                   814       1,597

               Other assets                             8,760       6,859

               Separate account assets                408,667     416,122
                    Total Assets                   $1,253,166  $1,315,293


                   (See Notes to Consolidated Financial Statements) 


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS
                              (in thousands of dollars)
                                                    Sept 30,    Dec. 31,
                                                      1996        1995   
                                                    Unaudited
          LIABILITIES & SHAREHOLDERS' EQUITY
          Liabilities:
          Policy liabilities and contractholder
           deposit funds 
               Future policy benefits              $  125,388  $  128,265
               Contractholder deposit funds           535,684     544,621
               Unearned premiums                        8,995      10,669
               Other policy claims & benefits                            
                payable                                 6,130       6,125
                                                      676,197     689,680
               Other policyholders' funds               2,735       2,700
               Senior loans                            24,944      59,385
               Deferred federal income taxes           19,662      25,462
               Other liabilities                       17,438      27,105
               Separate account liabilities           406,421     413,876
                    Total liabilities               1,147,397   1,218,208

          Commitments and contingencies

          Redeemable preferred stock:
           Class A Preferred, $1 par value, 
            5,000,000 shares authorized and 
            issued                                      5,000       5,000
           Class B Preferred, $1 par value,
            15,000,000 shares authorized and 
            issued                                     15,000      15,000
                                                       20,000      20,000

          Redeemable Preferred Treasury Stock at 
           cost, 20,000,000 shares                    (20,000)    (20,000)
                                                          -0-         -0-
          Shareholders' equity:
           Common stock, $.22 par value,
            10,000,000 shares authorized;
            5,197,739 and 5,166,239 shares
            issued, 4,206,829 and 4,175,329 
            shares outstanding in 1996 and 1995         1,144       1,137
          Additional paid-in capital                    3,628       3,521
          Net unrealized appreciation of equity 
           securities                                   1,319         748
          Net unrealized (loss) gain on invest-
           ments in fixed maturities available
           for sale                                    (3,013)     12,938
          Retained earnings                           105,709      81,759
                                                      108,787     100,103
          Common treasury stock, at cost, 990,910
           shares in 1996 and 1995                     (3,018)     (3,018)
          Total Shareholders' Equity                  105,769      97,085
          Total Liabilities and Shareholders'
           Equity                                  $1,253,166  $1,315,293 

 

                   (See Notes to Consolidated Financial Statements)

                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF INCOME
                             FOR THE THREE MONTH PERIODS
                          ENDED SEPTEMBER 30, 1996 AND 1995
                                     (Unaudited)
                   (in thousands of dollars, except per share data)


                                                      3 Months Ended
                                                         Sept 30,
                                                     1996        1995  
          Revenues:
           Net premiums                            $  2,461    $  2,537
           Earned insurance charges                  11,726      10,279
           Net investment income                     14,635      16,779
           Gain on sale of real estate                  -0-         -0-
           Other                                        652         858
                Total                                29,474      30,453

          Benefits and expenses:
           Interest expense                             528       1,443
           Interest on insurance policies             8,389       8,213
           Benefits and other expenses               15,984      17,025
               Total                                 24,901      26,681

          Income from operations                      4,573       3,772

          Provision for federal income taxes          1,600       1,274

          Net income                               $  2,973    $  2,498


          Per Share Data:

          Common stock and common stock
           equivalents                                5,361       5,372

          Net income per share available to
           common shareholders                     $    .59    $    .50


                   (See Notes to Consolidated Financial Statements)


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF INCOME
                              FOR THE NINE MONTH PERIODS
                          ENDED SEPTEMBER 30, 1996 AND 1995
                                     (Unaudited)
                   (in thousands of dollars, except per share data) 



                                                      9 Months Ended
                                                         Sept 30, 
                                                     1996        1995  
          Revenues:
           Net premiums                            $  7,957    $  8,212
           Earned insurance charges                  32,033      30,278
           Net investment income                     45,340      48,760
           Gain on sale of real estate               23,520         -0-
           Other                                      2,041       2,639
                Total                               110,891      89,889

          Benefits and expenses:
           Interest expense                           2,266       4,550
           Interest on insurance policies            24,219      24,252
           Benefits and other expenses               47,559      49,260
               Total                                 74,044      78,062

          Income from operations                     36,847      11,827

          Provision for federal income taxes         12,896       4,139

          Net income                               $ 23,951    $  7,688
           

          Per Share Data:

          Common stock and common stock 
           equivalents                                5,400       5,372

          Net Income per share available to 
           common shareholders                     $   4.53    $   1.52

                   (See Notes to Consolidated Financial Statements)


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                             FOR THE THREE MONTH PERIODS
                          ENDED SEPTEMBER 30, 1996 AND 1995
                                     (Unaudited)
                              (in thousands of dollars) 


                                                        3 Months Ended
                                                           Sept 30,
          CASH FLOWS FROM OPERATING ACTIVITIES          1996      1995  

          Net Income                                  $  2,973  $  2,498

          Adjustments to reconcile net income to net
           cash (used in) provided by operating
           activities:
          Amortization of present value of future
           profits of acquired businesses               (1,266)    1,447
          Amortization of deferred policy acquisition
           costs                                           691     1,014
          Depreciation                                     -0-       (11)
          Net gain on sales of investments                 -0-        54
          Financing costs amortized                        277       274

          Changes in assets and liabilities:
          (Increase) decrease in accrued investment
           income                                         (624)       57 
          (Increase) decrease in agent advances
           and other receivables                        (3,392)    7,608
          Policy acquisition costs deferred             (1,269)     (590)
          Decrease in policy liabilities
           and contract holder deposit funds            (2,393)   (4,911)
          Increase in other policyholders' funds             2        31
          Decrease in other liabilities                 (8,236)   (6,975)
          Increase in deferred federal
           income taxes                                    822     1,661 
          Increase in other assets                        (464)   (1,478)

          Other, net                                       865    (1,446)

          Net cash (used in) provided by operating
           activities                                 $(12,014) $   (767)



                   (See Notes to Consolidated Financial Statements)



                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                             FOR THE THREE MONTH PERIODS
                          ENDED SEPTEMBER 30, 1996 AND 1995
                                     (Unaudited) 



                              (In thousands of dollars)
                                                        3 Months Ended
                                                           Sept 30,
          CASH FLOWS FROM INVESTING ACTIVITIES          1996      1995  

          Investments purchased                       $(20,633) $ (2,703)
          Proceeds from sale and maturities of 
           investments                                  15,905    12,054
          Net change in short-term investments          13,533   (11,080)
          Issuance of notes to affiliate                   -0-       -0-
          Payment for purchase of insurance sub-
           sidiary, net of cash acquired                   -0-       -0-
          Purchase & retirement of equipment, net            7       247

          Net cash provided by (used in)
           investing activities                          8,812    (1,482)

          CASH FLOWS FROM FINANCING ACTIVITIES

          Issuance of common stock                          74        72

          Repayment of debt                             (5,000)      -0-

          Net cash (used in) provided by
           financing activities                         (4,926)       72

          Net decrease in cash and cash
           equivalents                                  (8,128)   (2,177)


          Cash and cash equivalents, beginning of
           period                                        9,525     3,295

          Cash and cash equivalents, end of period    $  1,397  $  1,118


                   (See Notes to Consolidated Financial Statements)


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                              FOR THE NINE MONTH PERIODS
                          ENDED SEPTEMBER 30, 1996 AND 1995
                                     (Unaudited)
                              (in thousands of dollars) 


                                                        9 Months Ended
                                                            Sept 30,
          CASH FLOWS FROM OPERATING ACTIVITIES          1996      1995 
        Net Income                                  $ 23,951  $  7,688 

          Adjustments to reconcile net income to net 
           cash (used in) provided by operating
           activities:
          Amortization of present value of future
           profits of acquired businesses                1,834     4,584 
          Amortization of deferred policy acquisition
           costs                                         1,963     2,749
          Depreciation                                     -0-       -0-
          Net gain on sales of investments             (23,732)      -0-
          Financing costs amortized                        783       607

          Changes in assets and liabilities:
          (Increase) decrease in accrued investment
           income                                       (1,329)    1,081
          (Increase) decrease in agent advances
           and other receivables                        (8,115)    6,527
          Policy acquisition costs deferred             (3,625)   (1,549)
          Decrease in policy liabilities
           and contract holder deposit funds           (13,482)  (22,327)
          Increase (decrease) in other
           policyholders' funds                             35      (309)
          Decrease in other liabilities                 (9,669)   (7,029)
          (Decrease) increase in deferred federal 
           income taxes                                 (5,800)   16,141
          Increase in other assets                      (1,901)   (2,496)

          Other, net                                     7,520    (2,303)

          Net cash (used in) provided by 
           operating activities                       $(31,567) $  3,364


                   (See Notes to Consolidated Financial Statements)


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                              FOR THE NINE MONTH PERIODS
                          ENDED SEPTEMBER 30, 1996 AND 1995
                                     (Unaudited)
                              (In thousands of dollars) 




                                                        9 Months Ended
                                                            Sept 30, 
          CASH FLOWS FROM INVESTING ACTIVITIES          1996      1995

          Investments purchased                       $(43,908) $(17,561)
          Proceeds from sale and maturities of
           investments                                  96,970    18,682
          Net change in short-term investments           7,918    10,916 
          Issuance of notes to affiliate                  (253)      -0-
          Payment for purchase of insurance 
           subsidiary, net of cash acquired                -0-   (17,492)
          Purchase & retirement of equipment, net           27        10

          Net cash provided by (used in) 
           investing activities                         60,754    (5,445)

          CASH FLOWS FROM FINANCING ACTIVITIES

          Issuance of common stock                         114       336

          Issuance of senior loan                          -0-    15,000 

          Repayment of debt                            (34,441)  (17,700)

          Net cash used in financing activities        (34,327)   (2,364)

          Net decrease in cash and cash
           equivalents                                  (5,140)   (4,445)

          Cash and cash equivalents, beginning of
           period                                        6,537     5,563

          Cash and cash equivalents, end of period    $  1,397  $  1,118


                   (See Notes to Consolidated Financial Statements)


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Unaudited)

          The financial statements included herein reflect all adjustments
          which are, in the opinion of management, necessary to present a
          fair statement of the interim results.  The statements have been
          prepared to conform to the requirements of Form 10-Q and do not
          necessarily include all disclosures required by generally
          accepted accounting principles (GAAP).  The reader should refer
          to Form 10-K for the year ended December 31, 1995 previously
          filed with the Securities and Exchange Commission for financial
          statements prepared in accordance with GAAP.  Certain prior year
          amounts have been reclassified to conform with current year
          presentation.

          Acquisition of Insurance Subsidiary

          On February 14, 1995, the Company, through Investors Life
          Insurance Company of North America ("Investors-NA"), purchased 
          from Meridian Mutual Insurance Company the stock of Meridian Life
          Insurance Company, an Indianapolis-based life insurer, for a cash
          purchase price of $17.1 million, net of past-closing adjustments. 
          After the aquisition, Meridian Life changed its name to Investors
          Life Insurance Company of Indiana ("Investors-IN").  Investors-IN
          is licensed in ten states and markets a variety of individual
          life and annuity products through independent agents.  This is
          not considered a significant subsidiary for Securities and
          Exchange Commission reporting purposes. 

          Under the terms of the purchase agreement, the Company acquired
          approximately 82% of the outstanding stock of Investors-IN for
          $14 million and Investors-NA acquired approximately 18% of the
          outstanding stock of Investors-IN for the remainder of the
          purchase price.  Immediately following the closing of the
          transaction, the Company contributed the shares acquired by it to
          the unassigned surplus of Investors-NA.  As a result, Investors-
          IN became a wholly-owned subsidiary of Investors-NA.  This
          transaction was financed, in part, through a $15 million increase
          in the Company's Senior Loan. 

          Sale of Home Office Building

          Net income for the first nine months of 1996 includes $15.3
          million resulting from the sale during the first quarter of 1996
          of the Austin Centre, a hotel/office complex, located in Austin,
          Texas.  The selling price was $62.675 million, less $1 million
          paid to a capital reserve account for the purchaser.  The
          property was purchased in 1991 for $31.275 million.  The book
          value of the property, $36.8 million, net of improvements and
          amortization, was retained and reinvested by Investors-NA.  The
          balance of the proceeds of the sale, net of federal income tax,
          was used to reduce the Company's senior loan obligations by $15
          million.  The sale closed on March 29, 1996.  


          New Accounting Pronouncements

          In March 1995, the FASB issued FAS No. 121, "Accounting For the
          Impairment of Long-Lived Assets and For Long-Lived Assets to be
          Disposed of."  This Statement requires that long-lived assets and
          certain identifiable intangibles to be held and used by an entity
          be reviewed for impairment whenever events or changes in
          circumstances indicate that the carrying amount of an asset may
          not be recoverable.  In addition, the Statement requires that
          long-lived assets and certain identifiable intangibles to be
          disposed of be reported at the lower of carrying amount or fair
          value less cost to sell.

          FAS No. 121 is effective for fiscal years beginning after 1995. 
          The Company adopted FAS No 121 effective January 1, 1996.  The
          adoption of this Statement did not have a material impact on the
          Company's financial statements.

          In October 1995, the FASB issued FAS No. 123 "Accounting for
          Stock-Based Compensation," which encourages companies to adopt
          the fair value based method of accounting for stock-based
          compensation.  This method requires the recognition of
          compensation expense equal to the fair value of such equity
          securities at the date of the grant.  This Statement also allows 
          companies to continue to account for stock-based compensation
          under the intrinsic value based method, as prescribed by
          Accounting Principles Board Opinion No. 25, "Accounting for Stock
          Issued to Employees," with footnote disclosure of the pro forma
          effects of the fair value based method.  FAS No. 123 is effective
          for transactions entered into in years that begin after December
          15, 1995.

          The Company plans to adopt FAS No. 123 during 1996 by continuing
          to account for stock-based compensation under the intrinsic value
          method and disclosing the pro forma effects of the fair value
          method in the footnotes to the financial statements. 


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

          For the nine-month period ended September 30, 1996, ILCO's net
          income was $23,951,000 ($4.53 per common share), as compared to
          $7,688,000 ($1.52 per common share) for the similar period in
          1995.  

          Net income for the first nine months of 1996 includes $15.3
          million resulting from the sale of the Austin Centre, a
          hotel/office complex, located in Austin, Texas.  The selling
          price was $62.675 million, less $1 million paid to a capital
          reserve account for the purchaser.  The property was purchased in
          1991 for $31.275 million. A portion of the sale proceeds, equal
          to the book value of the property, net of improvements and
          amortization ($36.8 million), was retained and reinvested by
          Investors Life Insurance Company of North America ("Investors-
          NA").  The balance of the proceeds, net of federal income tax, of
          the sale was used to reduce the Company's senior loan obligations
          by $15 million.  The sale closed on March 29, 1996.  

          The reported results for 1995 include the operations of Investors
          Life Insurance Company of Indiana (formerly known as Meridian
          Life Insurance Company) for the period from February 14, 1995 to
          December 31, 1995.  Investors Life Insurance Company of Indiana
          (Investors-IN) was purchased by ILCO and Investors-NA for an
          adjusted purchase price of $17.1 million; the transaction was
          completed on February 14, 1995.  The name change was completed in
          May, 1995.

          The statutory earnings of the Company's insurance subsidiaries,
          as required to be reported to insurance regulatory authorities,
          before interest expense, capital gains and losses, and federal
          income taxes were $15.5 million at September 30, 1996, as
          compared to $18.4 million at September 30, 1995.  These statutory
          earnings are the source to provide for the repayment of ILCO's
          indebtedness.

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

          Premium income, net of reinsurance, for the first nine months of
          1996 was $7.96 million, as compared to $8.21 million in the same
          period of 1995.  Reinsurance premiums ceded were $2.4 million in
          the first nine months of 1996 and $2.7 million for the first nine
          months of 1995.

          Earned insurance charges for the first nine months of 1996 were   
          $32.03 million, as compared to $30.28 million for the similar
          period in 1995.  This source of revenues is related to the
          universal life insurance and annuity books of business of
          Investors-NA. 

          In December, 1995, Investors-NA entered into a reinsurance
          agreement with Family Life Insurance Company ("Family Life")(an
          insurance company subsidiary of Financial Industries Corporation
          and an affiliated  company of Investors-NA), pertaining to
          universal life insurance written by Family Life.  The reinsurance
          agreement is on a co-insurance basis and applies to all covered
          business with effective dates on and after January 1, 1995.  The
          agreement applies to only that portion of the face amount of the
          policy which is less than $200,000; face amounts of $200,000 or
          more are reinsured by Family Life with a third party reinsurer. 
          As of January, 1996, Investors-NA entered into a reinsurance
          agreement with Family Life, pertaining to annuity contracts
          written by Family Life.  This reinsurance agreement is also on a
          co-insurance basis and applies to all covered business with
          effective dates on and after January 1, 1996.  These arrangements
          reflect management's plan to develop universal life and annuity
          business at Investors-NA, with Family Life concentrating on the
          writing of term life insurance products. 

          Interest expense was $2.27 million for the first nine months of
          1996, as compared to $4.55 million for the similar period in
          1995.  The decrease is attributable to a reduction in the average
          principal balance of the senior loan from $65.96 million for the
          nine month period ending September 30, 1995 to $36.58 million for
          the nine month period ending September 30, 1996, as well as a
          decrease in the average rate of interest paid on the senior loan-
          7.78% for the first nine months of 1996 as compared to 8.72% for
          the same period in 1995.

          The increase in interest rates during the first nine months of
          1996, which was related to general economic conditions, had a
          negative effect upon the market value of the fixed maturities
          available for sale segment of the portfolio.  As of September 30,
          1996, the market value of the fixed maturities available for sale
          segment was $461.6  million, representing a net unrealized loss
          of $4.6 million over amortized cost.  Such decrease reflects
          unrealized losses on such investments.  The net of tax effect of
          this decrease has been recorded as a reduction in shareholders'
          equity.

          In January, 1995, ILCO, through Investors-NA, purchased, as an
          investment property, an office building project known as One
          Bridgepoint Office Square in Austin, Texas, for a cash purchase
          price of $9.75 million.  The property consists of 20 acres of
          land, with four office building sites and two sites for parking
          garages.  At the time of the purchase, the first stage of the
          development had already been completed, consisting of a five-
          story office building with 83,474 square feet of rentable space
          and a 550-car parking garage.  That stage of the development was
          completed in 1986.  In the fourth quarter of 1995, construction
          commenced on a second building on the site, with 110,000 square
          feet of rentable space, and the second parking garage.  The
          second phase of the project was completed in the summer of 1996
          and is fully rented.  In the first quarter of 1996, construction
          commenced on the third building on the site, with approximately
          81,000 square feet of rentable space.  This third phase is
          projected to be finished in late 1996, and is more than 50% 
          rented.  A fourth building, with approximately 92,000 square feet
          of rentable space, is currently under construction, with an
          expected completion date in the fourth quarter of 1997.

                                Results of Operations

          For the three-month period ended September 30, 1996, the
          Company's income from operations before Federal income taxes was
          $4,573,000  on revenues of $29,474,000, as compared to
          $3,772,000, on revenues of $30,453,000 for the same period in
          1995.  

          For the three-month period ended September 30, 1996, the lapse
          rate with respect to universal life insurance policies increased
          from the lapse rate experienced in the similar period in 1995. 
          The rate for the 1996 period was 9.27%, as compared to 7.88% in
          the 1995 period.  The lapse rate with respect to traditional
          (non-universal) life insurance policies increased slightly from
          the levels experienced in the third quarter of 1995.  The rate
          for the three-month period ended September 30, 1996 was 7.77%, as
          compared to    7.10% in the similar period in 1995.  The lapse
          rates experienced during these periods were within the ranges
          anticipated by management.


                           Liquidity and Capital Resources

          ILCO is a holding company whose principal assets consist of the
          common stock of Investors-NA and its subsidiaries - Investors-IN
          and InterContinental Life Insurance Company ("ILIC").  ILCO's
          primary source of funds consists of payments under two Surplus
          Debentures from Investors-NA.   

          As of December 31, 1995, the outstanding principal balance of the 
          ILCO's senior loan obligations was $59.4 million.  In January,
          1996, the Company made a scheduled payment of $4.5 million under
          its Senior Loan.  In March, 1996, the Company made the scheduled
          payments for April 1st and July 1st, totaling $9 million.  At
          that same time, the Company made a payment of $941,000, an
          additional payment under the terms of the loan applied to the
          principal balance.  On April 1, 1996, an optional principal
          payment in the amount of $15 million was made.  In July, 1996,
          the Company made the principal payment for October 1st ($4.5
          million), plus an optional principal payment of $0.5 million,
          thereby reducing the total amount of the outstanding Senior Loan
          to $24.94 million. 

          ILCO's principal source of liquidity consists of the periodic
          payment of principal and interest by Investors-NA, pursuant to
          the terms of the Surplus Debentures.  The Surplus Debentures were
          originally issued by Standard Life Insurance Company ("Standard
          Life") and their terms were previously approved by the
          Mississippi Insurance Commissioner.  Upon the merger of Standard
          Life into Investors-NA, the obligations of the Surplus Debentures
          were assumed by Investors-NA.  The terms of the merger were
          approved by the Insurance Commissioner of the State of
          Washington, the State of domicile of Investors-NA.  As of 
          September 30, 1996, the outstanding principal balance of the
          Surplus Debentures was $6.4   million and $35.5 million,
          respectively.  Since Investors-NA is domiciled in the State of
          Washington, the provisions of Washington insurance law apply to
          the Surplus Debentures.  Under the provisions of the Surplus
          Debentures and current law, no prior approval of the Washington
          Insurance Commissioner is required for Investors-NA to pay
          interest or principal on the Surplus Debentures; provided that,
          after giving effect to such payments, the statutory surplus of
          Investors-NA is in excess of $10 million (the "surplus floor"). 
          However, Investors-NA has voluntarily agreed with the Washington
          Insurance Commissioner that it will provide at least five days
          advance notice of payments which it will make under the surplus
          debenture.  As of September 30, 1996, the statutory capital and
          surplus of Investors-NA was $54.3 million, an amount
          substantially in excess of the surplus floor.  The funds required
          by Investors-NA to meet its obligations to the Company under the
          terms of the Surplus Debentures are generated from operating
          income generated from insurance and investment operations.

          In addition to the payments under the terms of the Surplus
          Debentures, ILCO has received dividends from Standard Life (now,
          from Investors-NA).  Washington's insurance code includes the
          "greater of" standard for payment of dividends to shareholders,
          but has requirements that prior notification of a proposed
          dividend be given to the Washington Insurance Commissioner and
          that cash dividends may be paid only from earned surplus.  Since
          the law applies only to dividend payments, the ability of
          Investors-NA to make principal and interest payments under the
          Surplus Debentures is not affected.  ILCO does not anticipate
          that Investors-NA will have any difficulty in making principal
          and interest payments on the Surplus Debentures in the amounts
          necessary to enable ILCO to service the Senior Loan for the
          foreseeable future.

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

          ILCO's net cash flow (used in) provided by operating activities
          was  $(31.6) million for the nine month period ended September
          30, 1996, as compared to $3.4 million for the same period in
          1995.  This change is primarily due to fluctuations in the amount
          of deferred federal income tax related to the market value of
          investment assets that are fixed maturities available for sale
          and to the net gain realized in connection with the sale of the
          Austin Centre.

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

                                     Investments

          As of September 30, 1996, the carrying value of the Company's
          invested assets totaled $645.6 million, as compared to $669.5
          million as of December 31, 1995.  The decrease in invested assets
          is primarily attributable to a decrease in the market value of
          the fixed maturities segment of invested assets.   The level of
          short-term investments as of September 30, 1996 was $78.1
          million, as compared to $86.0 million as of December 31, 1995.
           
          The fixed maturities available for sale portion of invested
          assets at September 30, 1996 was $461.6 million.  The amortized
          cost of the fixed maturities available for sale segment as of
          September 30, 1996 was $466.2 million, representing a net
          unrealized loss of $4.6 million.  This unrealized loss
          principally reflects changes in interest rates from the date the
          respective investments were purchased.  To reduce the exposure to
          interest rate changes, portfolio investments are selected so that
          diversity, maturity and liquidity factors approximate the
          duration of associated policy holder liabilities.

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

          The Company's fixed maturities portfolio (including short-term
          investments), as of September 30, 1996, included a non-material
          amount (1.07% of total fixed maturities and short-term
          investments) of debt securities which, in the annual statements
          of the companies as filed with state insurance departments, were
          designated under the National Association of Insurance
          Commissioners ("NAIC") rating system as "3" (medium quality) or
          below.  For the year ended December 31, 1995, the percentage was
          1.1%.

          The consolidated balance sheets of the Company as of December 31,
          1995 include $61.5 million of "Notes receivable from affiliates",
          represented by (i) a loan of $22.5 million from Investors-NA to
          Family Life Corporation and a $2.5 million loan from Investors
          Life Insurance Company of California to Financial Industries
          Corporation (which is now owned by Investors-NA as a result of
          the merger of Investors-CA into Investors-NA) and $2.0 million of
          additions to the $2.5 million note made in accordance with the
          terms of such note; these loans were granted in connection with
          the 1991 acquisition of Family Life Insurance Company by a
          wholly-owned subsidiary of FIC (ii) a loan of $30 million by
          Investors-NA to Family Life Corporation made in July, 1993, in
          connection with the prepayment by the FIC subsidiaries of 
          indebtedness which had been previously issued to Merrill Lynch as
          part of the 1991 acquisition and (iii) a loan of $4.5 million by
          Investors-NA to Family Life Insurance Investment Company made in
          July, 1993, in connection with the same transaction described
          above.  The NAIC has assigned a rating of "3" to the notes
          described above. These loans have not been included in the
          preceding description of NAIC rating percentages.

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


                               Accounting Developments

                                  Long-Lived Assets

          In March, 1995, the FASB issued FAS No. 121," Accounting For the
          Impairment of Long-Lived Assets and For Long-Lived Assets to be
          Disposed of."  This Statement requires that long-lived assets and
          certain identifiable intangibles to be held and used by an entity
          be reviewed for impairment whenever events or changes in
          circumstances indicate that the carrying amount of an asset may
          not be recoverable.  In addition, the Statement requires that
          long-lived assets and certain identifiable intangibles to be
          disposed of be reported at the lower of carrying amount or fair
          value less cost to sell.

          FAS No. 121 is effective for the fiscal years beginning after
          1995.  The Company adopted FAS. No. 121 effective January 1,
          1996.  Management determined that adoption of this Statement did
          not have a material impact on the Company's financial statements.

                               Stock-Based Compensation

          In October, 1995, the FASB issued Statement of FAS No. 123,
          "Accounting for Stock-Based Compensation."  This Statement
          encourages companies to adopt a fair value based method of
          accounting for employee stock options and other equity
          instruments awarded as compensation.  Under this method,
          compensation expense equal to the fair value of the security at
          the award grant date is recognized as compensation expense over
          the vesting period of the awarded security.  However, the
          Statement also allows companies to continue to account for stock-
          based compensation under the intrinsic value based method, as
          prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
          Employees."  Under the intrinsic value based method, the
          compensation cost is computed as the excess, if any, of the
          quoted market price of the equity security at the measurement
          date over the amount an employee must pay to acquire the
          security.  If a company continues to account for stock-based
          compensation under the intrinsic value based method, it must make
          certain pro-forma disclosures in the footnotes to the financial
          statements for the difference in the fair value based  method and 
          the intrinsic value based method.  This Statement is effective
          for stock-based compensation transactions entered into in fiscal
          years that begin after December 15, 1995.

          Management intends to continue to account for stock-based
          compensation under the intrinsic value based method as prescribed
          by APB No. 25, and allowed under FAS No. 123.  The company will
          make the appropriate pro-forma disclosures required by FAS 123 in
          1996. 

                          INTERCONTINENTAL LIFE CORPORATION 
          PART II

          ITEM 6(A)

          Net income per share is based on the weighted average common and
          common equivalent shares outstanding during each year. 


                                      3 Months Ended     9 Months Ended
                                         Sept 30,           Sept 30,
                                      1996      1995      1996      1995  
                                                (in thousands) 


          Net income                $ 2,973   $  2,498  $ 23,951  $  7,688
            
           
          Interest expense reduc-
           tion net of income tax
           effect                       181        162       524       484

          Net income available to 
           common shareholders      $ 3,154   $  2,660  $ 24,475  $  8,172
           
          Divide by:
           Common shares out-
            standing, treasury
            stock                     4,207      4,145     4,207     4,145 
           Dilutive common share
            equivalents               1,154      1,227     1,193     1,227
                      

          Common stock and common 
           stock equivalents          5,361      5,372     5,400     5,372 

          Net income per share 
           available to common 
           shareholders             $   .59   $    .50  $   4.53  $   1.52



                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES


          Part III.      Other Information


          Item 1.  Legal Proceedings

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


          Item 2.  Changes in Securities

               None


          Item 3.  Defaults Upon Senior Securities

               None


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

               None 


          Item 5.  Other Information

               None


          Item 6.  Exhibits and Reports on Form 8-K

               (a)  Exhibits

               Form 10-K Annual Report of Registrant for the year ended
               December 31, 1995 heretofore filed by Registrant with the
               Securities and Exchange Commission, which is hereby
               incorporated by reference. 

               (b)  Reports on Form 8-K:

               None


                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES


                                        SIGNATURES

          Pursuant to the requirements of the Securities and Exchange Act
          of 1934, the Registrant has duly caused this report to be signed
          on its behalf by the undersigned thereunto duly authorized.



                                        INTERCONTINENTAL LIFE CORPORATION



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


          Date:  November 14, 1996