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 March 31, 1999
Commission File Number 2-39310


                        INTERCONTINENTAL LIFE CORPORATION




       Texas                              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: 8,791,516

                                      - 1 -

<PAGE>






               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES

                                      INDEX

                                                                       Page No.

Part I - Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets
     March 31, 1999 and December 31, 1998.................................... 3

Consolidated Statements of Income
     For the three month periods ended
     March 31, 1999 and 1998................................................. 5

Consolidated Statements of Cash Flows
     For the three month periods ended
     March 31, 1999 and 1998 ................................................ 6

Notes to Consolidated Financial Statements................................... 8

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

Item 3. Quantitative and Qualitative Disclosures
     About Market Risk...................................................... 17

Part II

Other Information............................................................19

Signature Page...............................................................20

                                      - 2 -

<PAGE>



               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                            (in thousands of dollars)
<TABLE>
<CAPTION>
                                                     March 31,               December 31,
                                                        1999                      1998       
                                                    (Unaudited)
<S>                                                      <C>                      <C>    
ASSETS
Investments:
Fixed maturities, at amortized
 cost (market value approximates
 $2,838 and $3,059 at March 31, 
 1999 and December 31, 1998)                          $    2,813                $  3,005
Fixed maturities available for sale,
 at market value (amortized cost
 $415,629 and $435,130 at March 31,
 1999 and December 31, 1998)                             428,633                 450,149
Equity securities, at market value 
(cost approximates $338 at March 31,
 1999 and December 31, 1998)                               2,362                   3,121
Policy loans                                              53,105                  53,614
Mortgage loans                                            10,286                  10,332
Invested real estate and other invested
       assets                                             10,275                  10,025
Short-term investments                                   192,273                 171,840
                                                      ----------              ----------
       Total investments                                 699,747                 702,086
Cash and cash equivalents                                  8,730                  12,206
Notes receivable from affiliates                          46,108                  47,645
Accrued investment income                                  8,094                   7,768
Agent advances and other receivables                      21,721                  20,753
Reinsurance receivables                                   19,999                  18,847
Property and equipment, net                                3,520                   3,470
Deferred policy acquisition costs                         32,729                  31,953
Present value of future profits of
       acquired businesses                                42,746                  43,666
Other assets                                              12,839                  10,643
Separate account assets                                  450,063                 451,211
                                                      ----------              ----------
       Total Assets                                 $  1,346,296            $  1,350,248
                                                      ==========              ==========
</TABLE>

                          The accompanying notes are an
                        integral part of the consolidated
                              financial statements.
                                      -3-
                                       

<PAGE>



               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED BALANCE SHEETS, Continued
                            (in thousands of dollars)
<TABLE>
<CAPTION>

                                                         March 31,          December 31,
LIABILITIES AND SHAREHOLDERS' EQUITY                      1999                  1998       
                                                        (Unaudited)
<S>                                                           <C>                    <C>    
Liabilities:
Policy liabilities and contractholder
 deposit funds:
Future policy benefits                                  $  134,651              $  135,463
Contractholder deposit funds                               542,552                 545,908
Unearned premiums                                            2,115                   2,124
Other policy claims and benefits payable                     9,793                  10,856
                                                        ----------              ----------
                                                           689,111                 694,351
Other policyholders' funds                                   3,103                   3,056
Deferred federal income taxes                               29,306                  30,185
Other liabilities                                           22,420                  20,127
Separate account liabilities                               446,916                 448,294
                                                        ----------              ----------
    Total Liabilities                                    1,190,856               1,196,013
Commitments and Contingencies
Redeemable preferred stock:
Class A Preferred, $1 par value,
    5,000,000 shares authorized, issued                      5,000                   5,000
Class B Preferred, $1 par value,
    15,000,000 shares authorized, issued                    15,000                  15,000
                                                        ----------              ----------
                                                            20,000                  20,000
Redeemable preferred stock held in treasury               (20,000)                (20,000)
                                                               -0-                     -0-
Shareholders' Equity:
Common Stock,  $.22 par value,
 15,000,000 shares authorized;
 10,807,478 and 5,385,739 shares
 issued, 8,791,516 and 4,376,706
 shares outstanding in 1999
 and 1998, respectively                                      2,378                   1,185
Additional paid-in capital                                   4,445                   4,385
Accumulated other comprehensive income                       9,735                  11,571
Retained earnings                                          142,130                 140,356
                                                        ----------              ----------
                                                           158,688                 157,497
Common treasury stock, at cost, 2,015,962 and
1,009,033 in 1999 and 1998,  respectively                  (3,248)                 (3,262)
                                                        ----------              ----------
Total Shareholders' Equity                                 155,440                 154,235
                                                        ----------              ----------
Total Liabilities and Shareholders' Equity            $  1,346,296            $  1,350,248
                                                      ============            ============
</TABLE>

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

                                       -4-

<PAGE>



               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
              (in thousands of dollars, except for per share data)
                                   (unaudited)
<TABLE>
<CAPTION>


                                                                  Three Months Ended
                                                                       March 31,
                                                             1999                   1998       
<S>                                                           <C>                    <C>    
Revenues:                                   

 Premium                                                $   2,548               $   3,098
 Net investment income                                     12,915                  13,955
 Earned insurance charges                                  10,062                  10,297
 Other                                                        745                     522
                                                        ---------               ---------
                                                           26,270                  27,872
                                                        ---------               ---------
Benefits and expenses:
 Policyholder benefits and expenses                         8,022                  10,356
 Interest expense on contract holders
     deposit funds                                          7,880                   7,230
 Amortization of present value of future
     profits of acquired businesses                           920                   1,326
 Amortization of deferred policy
     acquisition costs                                        584                     448
 Operating expenses                                         4,189                   4,054
 Interest expense                                               0                     275
                                                        ---------               ---------
                                                           21,595                  23,689
                                                        ---------               ---------
Income from operations                                      4,675                   4,183
Provision for federal income taxes                          1,714                   1,464
                                                        ---------               ---------         

Net income                                             $    2,961               $   2,719
                                                       ==========               =========
Net income per share:
Basic:
        Weighted average common stock
         outstanding                                        8,791                   8,686
Basic earnings per share                               $     0.34               $    0.32
                                                       ==========               =========
Diluted:
Common stock and common stock equivalents                   8,786                   8,786
Diluted earnings per share                             $     0.34               $    0.31
                                                       ==========               =========
</TABLE>


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

                                       -5-

<PAGE>



               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands of dollars)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                              Three Months Ended
                                                                   March 31,
CASH FLOWS FROM OPERATING                                 1999                  1998  
ACTIVITIES
<S>                                                        <C>                   <C> 
Net Income                                            $  2,961                $  2,719
Adjustments to reconcile net income to
       net cash used in 
       operating activities:
Amortization of present value of future
      profits of acquired businesses                       920                   1,326
Amortization of deferred policy
     acquisition costs                                     584                     448
Depreciation                                               109                     123
Financing costs amortized                                  -0-                      31
Changes in assets and liabilities:
Increase in accrued investment income                     (326)                   (413)
(Increase) decrease in agent advances and
     other  receivables                                 (2,120)                   1,304
Policy acquisition costs deferred                       (1,360)                 (1,338)
Decrease in policy liabilities and
     contractholder deposit funds                       (5,240)                (10,286)
Increase in other policyholders' funds                      47                      74
Increase (decrease) in other liabilities                 2,293                  (1,689)
Decrease in deferred federal income taxes                 (879)                   (775)
Increase in other assets                                (2,196)                 (6,045)
Other, net                                              (1,079)                 (1,187)
                                                      ---------               ---------
Net cash used in operating activities                 $ (6,286)               $(15,708)
                                                      ---------               ---------
</TABLE>



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

                                       -6-

<PAGE>



               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands of dollars)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                             Three Months Ended
                                                                  March 31,
CASH FLOWS FROM INVESTING                                1999                   1998 
ACTIVITIES

<S>                                                       <C>                    <C>    
Investments purchased                                $ (11,250)              $ (25,589)
Proceeds from sales and maturities of
 investments                                            33,055                  18,107
Net change in short-term investments                   (20,433)                 22,060
Purchases & retirements of equipment                      (159)                    126
Decrease in notes receivable       
 from affiliates                                         1,537                   1,536
                                                     -----------             ---------
Net cash provided by investing activities                2,750                  16,240

CASH FLOWS FROM FINANCING ACTIVITIES

Issuance of common stock                                    60                      41
                                                     ----------              ---------
Net cash provided by financing activities                   60                      41
                                                     ----------              ---------
Net (decrease) increase in cash and
 cash equivalents                                       (3,476)                    573
Cash and cash equivalents, beginning
 of year                                                12,206                   9,041
                                                     ---------               ---------
Cash and cash equivalents, end of year               $   8,730               $   9,614
                                                     =========               =========
</TABLE>



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

                                       -7-

<PAGE>
                                      


               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

The financial  statements  included herein reflect all adjustments which are, in
the opinion of management,  necessary to present a fair statement of the interim
results.  The statements  have been prepared to conform to the  requirements  of
Form 10-Q and do not necessarily  include all disclosures  required by generally
accepted accounting  principles (GAAP). The reader should refer to Form 10-K for
the year ended  December  31,  1998  previously  filed with the  Securities  and
Exchange Commission for financial statements prepared in accordance with GAAP.

Acquisition of Subsidiary


On June 30, 1998, ILCO,  through a subsidiary,  acquired Grinnell Life Insurance
Company ("Grinnell Life") for a base purchase price of $16.4 million, subject to
certain post-closing adjustments. As part of the transaction,  Grinnell Life was
immediately merged with and into that subsidiary, with that subsidiary being the
surviving entity.

New Accounting Pronouncements

In June 1997, the FASB issued Statement of Financial  Accounting  Standard (FAS)
No. 130, "Reporting  Comprehensive Income." The new standard, which is effective
for  financial  statements  issued for periods  ending after  December 15, 1997,
established   standards  for  reporting,   in  addition  to  net  income,  other
comprehensive  income  and its  components  including,  as  applicable,  foreign
currency income,  minimum pension liability adjustments and unrealized gains and
losses on certain investments in debt and equity securities.  Upon adoption, the
Company is also required to reclassify  financial statements for earlier periods
provided for  comparative  purposes.  The Company  adopted this  standard in the
first  quarter of 1998.  Total  comprehensive  income for the three months ended
March  31,  1999  and  March  31,  1998  is  $1.1  million  and  $672  thousand,
respectively.

The  following is a  reconciliation  of total  accumulated  other  comprehensive
income from December 31, 1998 to March 31, 1999 (in thousands):
<TABLE>
<CAPTION>
                                   Net unrealized         Net                 Total
                                   gain on                appreciation        accumulated
                                   investments            (depreciation)      other
                                   in fixed               of equity           comprehensive
                                   maturities             securities          income
                                   available for
                                   sale
<S>                                    <C>                    <C>                <C>    
Balance at December 31, 1998       $   9,762              $   1,809           $  11,571
Current period change                 (1,309)                  (527)             (1,836)
                                   ----------             ----------          -----------
Balance at March 31, 1999          $   8,453              $   1,282           $   9,735
                                   ==========             ==========          ===========
</TABLE>


                                       -8-

<PAGE>


New Accounting Pronouncements, continued

In June 1997,  the FASB issued FAS No. 131,  "Disclosures  about  Segments of an
Enterprise and Related  Information," which establishes  standards for reporting
information about operating segments. Generally, FAS 131 requires that financial
information  be reported  on the basis that is used  internally  for  evaluating
performance.  The  Company  adopted  FAS 131  effective  January  1,  1998,  and
comparative  information  for  earlier  years will be  restated.  The Company is
principally  engaged,  through  its  subsidiaries,   in  administering  existing
portfolios of individual  life  insurance  and annuity  products.  The Company's
insurance  subsidiaries  are also  engaged  in the  business  of  marketing  and
underwriting individual life insurance and annuity products in 49 states and the
District  of  Columbia.   Such  products  are  marketed   through   independent,
non-exclusive  general  agents.  Management  considers the  Company's  insurance
operations  to  constitute  one  reportable   segment.   Premium   revenues  for
traditional  insurance  products and earned insurance  charges on universal life
and annuity products are presented in the accompanying  consolidated  statements
of income.  No single customer  accounts for 10 percent or more of the Company's
revenue. The Company has no foreign operations.

In February  1998,  the FASB issued FAS No. 132,  "Employers  Disclosures  about
Pensions and Other  Postretirement  Benefits," which revises current  disclosure
requirements for employers' pension and other retiree benefits. FAS 132 does not
change the measurement or recognition of pension or other postretirement benefit
plans. The Company adopted FAS 132 effective January 1, 1998, with the effect of
such adption to be reflected in year-end financial  statements.  The adoption of
FAS No.  132  did  not  have a  material  impact  on the  Company's  results  of
operations, liquidity or financial position.

In December 1997, the Accounting  Standards Executive Committee issued Statement
of Position  ("SOP") 97-3,  "Accounting by Insurance and Other  Enterprises  for
Insurance-Related  Assessments,"  which  provides  guidance  on  accounting  for
insurance-related assessments. The Company is adopted SOP 97-3 effective January
1, 1999. The adoption of SOP97-3 did not have a material impact on the Company's
results of operations, liquidity or financial position.

In  June  1998,  the  FASB  issued  FAS  No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities",  which establishes accounting and reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other contracts,  (collectively  referred to as derivatives) and for
hedging activities. FAS 133 is applicable to financial statements for all fiscal
quarters of fiscal years  beginning  after June 15, 1999.  The operations of the
Company are not affected by the provisions of FAS No. 133.




                                       -9-

<PAGE>



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


For  the  three-month  period  ended  March  31,  1999,   InterContinental  Life
Corporation's  ("ILCO") net income was $2,961,000  (basic  earnings of $0.34 per
common  share,  or diluted  earnings  of $0.34 per common  share) as compared to
$2,719,000  (basic earnings of $ 0.32 per common share,  or diluted  earnings of
$0.31 per common share) in the first three months of 1998.  For the 1998 period,
earnings per share have been adjusted to give effect to the stock  dividend (one
share of common stock for each outstanding share of common stock) which was paid
on March  17,  1999.  Earnings  per  share are  stated  in  accordance  with the
requirements  of FAS No. 128,  which  establishes  two  measures of earnings per
share:  basic earnings per share and diluted earnings per share.  Basic earnings
per share is computed by dividing income available to common shareholders by the
weighted average number of common shares outstanding during the period.  Diluted
earnings per share reflect the potential dilution that would occur if securities
or other contracts to issue common stock were converted or exercised.


                              Results of Operations

For the  three-month  period ended March 31, 1999,  the Company's  income before
federal  income taxes was  $4,675,000 on revenues of  $26,270,000 as compared to
income of $4,183,000,  on revenues of $27,872,000  for the first three months of
1998.

Earnings  per share for the  three-month  period  ended March 31, 1999  includes
$230,121  resulting  from  investment  income  received  on amounts  invested by
Investors Life  Insurance  Company of North America to "seed" two divisions of a
variable annuity separate account which it sponsors.

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 three months of 1999 was $2.5
million,  as  compared  to $3.1  million  for the  first  three  months of 1998.
Reinsurance premiums ceded were $0.7 million for the first three months of 1999,
as compared to $0.8 million in the first three months of 1998.

Earned  insurance  charges for the three-month  period ended March 31, 1999 were
$10.1  million,  as compared to $10.3 million for the same period in 1998.  This
source of revenues is related to the universal  life  insurance and annuity book
of   business   of   Investors   Life   Insurance   Company  of  North   America
("Investors-NA").

The Company's  senior loan was fully  discharged  effective  September 30, 1998,
accordingly,  there was no interest  expense for the first three months of 1999,
as compared to $0.28 million for the first three months of 1998.

As of March 31, 1999,  the market value of the fixed  maturities  available  for
sale  segment  was $428.6  million as compared  to an  amortized  cost of $415.6
million,  or  an  unrealized  gain  of  $13.0  million.  The  increase  reflects
unrealized  gains on such  investments  related  to changes  in  interest  rates
subsequent to the purchase of such investments.  There is no assurance that this
unrealized  gain will be realized  in the future.  The net of tax effect of this
increase  ($8.5  million at March 31,  1999) is included in  "Accumulated  other
comprehensive  income" on the Consolidated  Balance Sheets and has been recorded
as an increase in shareholders'  equity. As required under the provisions of FAS
No. 130, the determination of "Accumulated other comprehensive  income" includes
separate  identification  of the  change in values  which  occurred  during  the
current period.

For the three-month  period ended March 31, 1999, the lapse rate with respect to
universal life insurance  policies  decreased from the lapse rate experienced in
the similar period in 1998. The rate for the 1999 period was

                                      - 10 -

<PAGE>



5.77%,  as compared to 6.30% in the 1998 period.  The lapse rate with respect to
traditional  (non-universal) life insurance policies decreased slightly from the
levels  experienced in the first quarter of 1998.  The rate for the  three-month
period  ended  March 31,  1999 was 8.38%,  as  compared  to 8.93% in the similar
period in 1998. 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 Life Insurance Company of North America and its subsidiary - Investors
Life  Insurance  Company of Indiana  (formerly  known as  InterContinental  Life
Insurance  Company).  ILCO's  primary source of funds consists of payments under
two Surplus Debentures from Investors-NA.

As of December 31, 1997, the outstanding principal balance of ILCO's senior loan
obligations was $11.0 million,  which reflected the prepayment by the Company of
the payment originally  scheduled for January 1, 1998. A regular payment, in the
amount of $3.7  million,  was made on April 1, 1998 and a prepayment of the July
1, 1998 installment,  in the amount of $3.7 million,  was made on June 30, 1998.
The  outstanding  principal  balance of ILCO's senior loan  obligations was $3.6
million at June 30, 1998. The final  installment  on the senior loan  obligation
scheduled  for October 1, 1998,  was prepaid on September 30, 1998. As a result,
the senior loan obligation of ILCO was fully discharged  effective September 30,
1998.

On March 17, 1999,  the Company paid a stock dividend (one share of common stock
for each outstanding share of common stock). As a result,  Financial  Industries
Corporation   ("FIC")  currently  owns,  directly  and  indirectly  through  its
subsidiary Family Life Insurance Company,  3,932,692 shares  (approximately 45%)
of ILCO's common stock.

Prior to the  discharge of ILCO's  senior loan  obligation,  FIC held options to
acquire (on a pre-dividend basis) an additional  1,702,155 shares of ILCO common
stock. The options were granted under an option  agreement  between FIC and ILCO
which was entered into in March, 1986 ("Option Agreement"). The Option Agreement
provided that it continued in effect as long as FIC guaranteed  indebtedness  of
ILCO.  Since the senior loan was fully discharged by ILCO on September 30, 1998,
FIC's rights under the Option Agreement expired on September 30, 1998.

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 and their terms were  previously  approved by the Mississippi
Insurance Commissioner. In connection with the 1993 merger of Standard Life into
Investors-NA,  the  obligations  of  the  Surplus  Debentures  were  assumed  by
Investors-NA.  As of March 31, 1999, the  outstanding  principal  balance of the
Surplus  Debentures  was $4.2  million  and $8.0  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 March 31, 1999,
the statutory surplus of Investors-NA was $65.4 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 its subsidiaries.  Washington's  insurance code includes
the "greater of"  standard for payment of dividends to  shareholders,  but has a
requirement  that  prior  notification  of a proposed  dividend  be given to the
Washington Insurance  Commissioner and that cash dividends may be paid only from
earned surplus.  Under the "greater of" standard,  an insurer may pay a dividend
in an amount equal to the greater of (i) 10% of the policyholder surplus

                                      - 11 -

<PAGE>



or (ii) the  insurer's  net gain from  operations  for the previous  year. As of
March 31, 1999,  Investors-NA had earned surplus of $37.4 million. 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.

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  policyholder  surplus and quality of  earnings.
Under Indiana law the dividend must be paid from earned  surplus.  Extraordinary
dividend  approval would be required where a dividend exceeds the greater of 10%
of surplus or the net gain from operations for the prior fiscal year.
Investors-IN had earned surplus of $18.6 million at March 31, 1999.

ILCO's net cash flow used in operating activities was $6.3 million for the three
month period ended March 31,  1999,  as compared to $15.7  million for the first
three months of 1998.

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 March 31, 1999, the book value of the Company's  investment assets totaled
$699.7 million, as compared to $677.4 million as of March 31, 1998. Total assets
as of March 31, 1999 ($1.35  billion)  increased  slightly  from the level as of
March 31, 1998 ($1.33 billion).

The level of short-term  investments  at March 31, 1999 was $192.2  million,  as
compared to $142.6 million at March 31, 1998.

Invested real estate and other  invested  assets  increased from $1.2 million at
March 31, 1998 to $10.3  million as of March 31, 1999.  This increase is related
to the purchase by Investors-NA of the 47.995 acres of land in Austin, Texas for
the  development  of the River Place Pointe  project.  The land was purchased in
October, 1998 by Investors-NA,  for an aggregate purchase price of $8.1 million.
Prior  to  the  closing  of  the  transaction,   Investors-NA  obtained  a  Site
Development  Permit for the tracts from the City of Austin. The Site Development
Permit allows for the  construction of seven office  buildings  totaling 600,000
square  feet,  with  associated  parking,   drives  and  related   improvements.
Development  of the  initial  phase of the  project  commenced  during the first
quarter of 1999;  when  completed,  the first  phase will  consist of two office
buildings,  a parking  garage and the  infrastructure  for the  entire  project.
Investors-NA  plans to  commence  development  of the  additional  stages of the
project following completion and leasing of Phase One.

The fixed maturities  available for sale portion of invested assets at March 31,
1999 was $428.6 million.  The amortized cost of the fixed  maturities  available
for sale  segment as of March 31, 1999 was $415.6  million,  representing  a net
unrealized  gain of $13.0 million.  This unrealized  gain  principally  reflects
changes  in  interest  rates  from  the  date the  respective  investments  were
purchased.   To  reduce  the  exposure  to  interest  rate  changes,   portfolio
investments  are  selected so that  diversity,  maturity and  liquidity  factors
approximate the duration of associated policyholder liabilities.

The  assets  held  by  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  generally  does not select new  investments
which are commonly referred to as "high yield" or "non-investment grade."

The portfolio includes investments in mortgage-backed  securities which includes
collateralized   mortgage   obligations   ("CMOs")   of   $200.6   million   and
mortgage-backed pass-through securities of $29.6 million at March

                                      - 12 -

<PAGE>



31, 1999. Mortgage-backed  pass-through securities,  sequential CMOs and support
bonds,  which comprised  approximately  49.9% of the book value of the Company's
mortgage-backed  securities at March 31, 1999,  are sensitive to prepayment  and
extension risks. The Company has reduced the risk of prepayment  associated with
this portion of the  investment  portfolio by investing in planned  amortization
class ("PAC"),  target  amortization  class ("TAC")  instruments,  and scheduled
bonds.  These  investments  are designed to amortize in a predictable  manner by
shifting the risk of prepayment of the underlying  collateral to other investors
in other tranches  ("support  classes") of the CMO. PAC and TAC  instruments and
scheduled  bonds  represented  approximately  51.1% and  sequential  and support
classes  represented  approximately  36.0%  of the book  value of the  Company's
mortgage-backed  securities at March 31, 1999. In addition,  the Company  limits
the risk of prepayment of CMOs by not paying a premium for any CMOs. The Company
does not invest in  mortgage-backed  securities with increased  prepayment risk,
such as  interest-only  stripped  pass-through  securities  and inverse  floater
bonds. The prepayment risk that certain  mortgage-backed  securities are subject
to is prevalent in periods of declining  interest  rates,  when mortgages may be
repaid  more  rapidly  than  scheduled  as  individuals  refinance  higher  rate
mortgages to take advantage of the lower current rates. As a result,  holders of
mortgage-backed  securities may receive large  prepayments on their  investments
which cannot be  reinvested  at an interest  rate  comparable to the rate on the
prepaying  mortgages.  The Company did not make  additional  investments in CMOs
during 1998 and the first quarter of 1999. The current investment  objectives of
the Company do not  contemplate  additions to the  portfolio of CMO  investments
during the remainder of 1999.

The Company's fixed maturities portfolio (including short-term investments),  as
of March  31,  1999,  included  a  non-material  amount ( 0.60 % 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.  As of March 31,  1998,  the
comparable  percentage was 0.70%.  Of these  non-investment  grade  investments,
0.50% are  concentrated  in the medium  quality  (or "3")  category,  with 0.10%
receiving an NAIC rating of "4" (low  quality) and none with a rating lower than
"4".

The  consolidated  balance  sheets of the Company as of March 31,  1999  include
$46.1 million of "Notes receivable from  affiliates",  represented by (i) a loan
of $22.5 million from Investors-NA to Family Life Corporation ("FLC") and a $2.5
million loan from Investors-CA to Financial Industries Corporation ("FIC") which
loan 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  ("FLIIC") made in July,  1993, in
connection with the same transaction described above.

As of June 12, 1996, the provisions of the notes from  Investors-NA  to FIC, FLC
and Family Life Insurance Investment Company ("FLIIC") were modified as follows:
(a) the $22.5 million note was amended to provide for twenty quarterly principal
payments,  in the amount of  $1,125,000  each, to commence on December 12, 1996;
the final quarterly principal payment is due on September 12, 2001; the interest
rate on the note remains at 11%, (b) the $30 million note was amended to provide
for forty quarterly principal  payments,  in the amount of $163,540 each for the
period  December 12, 1996 to September  12, 2001;  beginning  with the principal
payment due on December 12, 2001, the amount of the principal  payment increases
to $1,336,458;  the final  quarterly  principal  payment is due on September 12,
2006; the interest rate on the note remains at 9%, (c) the $4.5 million note was
amended to provide  for forty  quarterly  principal  payments,  in the amount of
$24,531 each for the period  December 12, 1996 to September 12, 2001;  beginning
with the principal payment due on December 12, 2001, the amount of the principal
payment increases to $200,469;  the final quarterly  principal payment is due on
September  12, 2006;  the interest  rate on the note remains at 9%, (d) the $2.5
million note was amended to provide that the principal balance of the note is to
be repaid in twenty quarterly installments of $125,000 each, commencing December
12, 1996 with the final payment due on September 12, 2001;  the rate of interest
remains at 12%,  (e) the Master  PIK note,  which was issued to provide  for the
payment in kind of interest due under the

                                      - 13 -

<PAGE>



terms of the $2.5 million  note prior to June 12,  1996,  was amended to provide
that the  principal  balance  of the note  ($1,977,119)  is to be paid in twenty
quarterly  principal  payments,  in the amount of  $98,855.95  each, to commence
December 12, 1996 with the final payment due on September 12, 2001; the interest
rate on the note remains at 12%.

In December, 1998, FLIIC was dissolved. In connection with the dissolution,  all
of the assets and  liabilities  of FLIIC became the  obligations of FLIIC's sole
shareholder (FIC). Accordingly, the obligations under the provisions of the $4.5
million note described above are now the obligations of FIC.

The NAIC continued its rating of "3" to the "Notes  receivable from affiliates",
as amended.  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 policyholders and to credit relatively  consistent
rates of return to its policyholders.

                              Year 2000 Compliance

The  Company  and its  subsidiaries  utilize a  centralized  computer  system to
process policyholder records and financial information. In addition, the Company
uses non-centralized  computer terminals in connection with its operations.  The
software programs used in connection with these systems will be affected by what
is referred to as the "year 2000 problem". This refers to the limitations of the
programming  code in  certain  existing  software  programs  to  recognize  date
sensitive information as the year 2000 approaches.  Unless modified prior to the
year 2000,  such systems may not properly  recognize such  information and could
generate erroneous data or cause a system to fail to operate properly.

The Company has evaluated its centralized  computer  systems and has developed a
plan to reach year 2000 compliance.  A central feature of the Plan is to convert
most  of the  centralized  systems  to a  common  system  which  is  already  in
compliance  with year 2000  requirements.  The Company is in the process of this
systems conversion and anticipates that the project will be completed in advance
of the year 2000.

The Plan calls for a  conversion  of certain  systems  onto the  Company's  CK/4
System;  a  system  which  is  designed  to be Y2K  compliant  according  to the
representations  of the vendor.  Those systems  which are not converted  will be
upgraded  by  changing  individual  lines of  computer  code in order to  modify
current operating software such that it will become Y2K compliant.

Under the Plan,  the Company will utilize its own personnel and personnel of its
affiliated company, FIC Computer Services, Inc., acquire Y2K compliant operating
software,  and engage the  assistance of outside  consultants  to facilitate the
systems  conversions  and  modifications.  The Company is in the process of this
systems conversion and anticipates that the project will be completed in advance
of the year 2000.  The Company has increased  the budget for the  implementation
and  completion  of the Plan from the prior years  estimate.  As of December 31,
1997, the Company had budgeted approximately $470,000 for implementing the Plan.
Based on its current analysis, the Company expects that the cost of implementing
and  completing  the Plan will result in an after-tax  expense of  approximately
$587,000 for the three-year (1997 - 1999) conversion period. For the three month
period  ended March 31, 1999,  the Company has incurred an after-tax  expense of
approximately  $114,400 in connection  with the completion of the Plan.  Between
January 1, 1997 and March 31, 1999, the Company has expended approximately 70.2%
of the three-year expected after-tax cost discussed above. In the event that the
Plan does not achieve full  compliance  by the target  dates,  or if  unforeseen
matters  involving Y2K appear before or after January 1, 2000,  the Company will
utilize the staff of FIC  Computer  Services,  Inc. to identify and resolve such
issues as and if they arise.

In order to continuously  evaluate the  effectiveness of the  modifications  and
conversions  made to the various  systems,  FIC  Computer  Services has acquired
testing software to simulate dates on or after January 1, 2000.

                                      -14-

<PAGE>



Additionally, FIC Computer Services runs the systems through model office cycles
and also conducts visual inspections of screen displays to determine whether the
systems are functioning in a Y2K compliant manner.

As of  March  31,  1999,  FIC  Computer  Services,  Inc.  estimated  that it had
completed the necessary  conversions  and  modifications  on the  administrative
systems  which  process  approximately  66 % of the  insurance  policies for the
Company and its  subsidiaries.  This included the  conversion of the ALIS System
(administering  approximately 42,000 active policies) to CK/4 in February, 1998,
the System 38 (administering  approximately 9,400 active policies) conversion in
January, 1997, the TI System (administering approximately 5,240 active policies)
conversion to CK/4 in July,  1998 and the  conversion of the  Lifecomm-B  system
(which is  responsible  for  approximately  18,000  policies  assumed  after the
acquisition of State Auto Life) in February,1999.  The conversion of the Life 70
system (administering  approximately  15,507active policies for Investors-IN) is
scheduled for completion in May,  1999. The conversion of the Lifecomm-A  system
(administering   approximately  60,260  active  policies  for  Investors-NA)  is
scheduled for  completion in September of 1999. The  modification  of one of the
Company's  smaller systems which administers  approximately  2,570 active credit
life policies was completed on schedule in December 1998. The  modification of a
smaller system which  administers  approximately  15,470 active  industrial life
policies is scheduled for completion in June of 1999.

The various  software  applications  described above are licensed to the Company
under agreements which permit the Company's  subsidiaries to process business on
its computer systems utilizing such software.

In 1997,  FIC Computer  Services,  Inc.  purchased  new  mainframe  hardware and
accompanying  operating  software,  which the vendor has  represented  to be Y2K
compliant.  FIC Computer  Services,  Inc. has  completed  the  installation  and
testing of such new  mainframe  hardware and software  for  compliance  with the
requirements of the Year 2000 conversion. In addition, FIC Computer Services has
purchased  certain  third-party  software  which is run on the  mainframe.  This
software has been  represented  by the vendor as being in  compliance  with Year
2000 requirements. Testing is currently being done on such third-party software,
which  testing is expected to be completed by September 1, 1999.  The  telephone
system,  which includes both PBX and voice mail systems,  has been tested by the
maintenance  provider  for that system and the Company has  received  assurances
that the telephone system is Y2K compliant.

With respect to non-centralized  systems (i.e., desktop computers),  the Company
has obtained  updated  software  releases  and new  hardware  designed to be Y2K
compliant according to the  representations of the vendors.  The Company expects
that the effort  needed to correct for Y2K problems on such systems will be less
time intensive than the effort needed to achieve  compliance for its centralized
systems.  The installation of such new PC hardware and software was commenced in
early 1999 and is expected to be completed by September 1, 1999.

The Company  also faces the risk that one or more of its  external  suppliers of
goods  or  services  ("third  party  providers")  will not be in a  position  to
properly  interact  with the  Company due to the  inability  of such third party
provider to resolve its own Y2K  issues.  Pursuant to the Plan,  the Company has
completed an inventory of its third party  provider  relationships.  In order to
assess  the Y2K  readiness  of such  third  party  providers,  the  Company  has
developed  and  forwarded a detailed  questionnaire  to such  providers.  As the
responses to the  questionnaires  are  received,  the Company will  evaluate the
overall Y2K readiness of its third party provider  relationships.  However,  the
Company does not have  sufficient  information  at the current time to determine
whether the computer  systems of its third party providers will be in compliance
with the Y2K requirements as the year 2000 approaches.

In the event that a major administrative system fails to operate properly due to
the Y2K  problem,  or the  Company  does  not  complete  the  necessary  systems
conversions  prior to January 1,  2000,  the  Company  has  developed  a plan to
respond to such a  contingency.  FIC  Computer  Services  has  assigned  certain
personnel to be members of an emergency  response team to resolve Y2K operations
problems. Additionally, insurance policies would be administered manually if the
necessary  systems  conversions  were not completed prior to January 1, 2000, or
subsequent Y2K operational  problems arise. Manual policy  administration  would
require  additional  personnel.   If  substantial  additional  personnel  become
necessary for manual policy administration,  the training and salary expenses of
such personnel  could  materially  affect the Company's  business and results of
operations.

                                      - 15 -

<PAGE>



The Company is not able to estimate the  likelihood  that manual  administration
will be needed or the amount of any expense  which it would incur in  connection
with such manual administration.


   Cautionary Statements for Purposes of the "Safe Harbor" Provisions of the
                Private Securities Litigation Reform Act of 1995

Except  for  historical  factual  information  set  forth  in this  Management's
Discussion  and  Analysis,  certain  statements  made in this report are forward
looking and contain  information about financial results,  economic  conditions,
Y2K risks and other  risks and known  uncertainties.  The Company  cautions  the
reader that actual results could differ materially from those anticipated by the
Company, depending upon the eventual outcome of certain factors,  including: (1)
heightened  competition for new business,  (2)  significant  changes in interest
rates, (3) adverse  regulatory  changes  affecting the business of insurance and
(4) adverse changes in the Y2K readiness of the Company or its significant third
party providers.


                             Accounting Developments

In February  1997,  the  Financial  Accounting  Standards  Board  (FASB)  issued
Financial Accounting Standard (FAS) No. 128, "Earnings Per Share," which revises
the  standards  for computing  earnings per share  previously  prescribed by APB
Opinion No. 15, "Earnings Per Share." The Statement  establishes two measures of
earnings per share:  basic  earnings  per share and diluted  earnings per share.
Basic  earnings  per share is computed by dividing  income  available  to common
shareholders by the weighted average number of common shares  outstanding during
the period.  Diluted  earnings per share  reflects the  potential  dilution that
could  occur  if  securities  or other  contracts  to issue  common  stock  were
converted or exercised.  The Statement  requires dual  presentation of basic and
diluted  earnings per share on the face of the income statement for all entities
with potential dilutive  securities  outstanding.  The Statement also requires a
reconciliation  of the numerator and denominator of the basic earnings per share
computation to the numerator and  denominator of the diluted  earnings per share
computation.  The Statement is effective for interim and annual  periods  ending
after December 15, 1997. The Company adopted FAS No. 128 in its annual financial
statements for the year ended December 31, 1997.

In June, 1997, the FASB issued FAS No. 130,  "Reporting  Comprehensive  Income",
which  establishes  standards for reporting and display of comprehensive  income
and its components in a financial  statement  with the same  prominence as other
financial  statements.  Total comprehensive income is required to be reported in
condensed interim financial  statements.  Comprehensive income is defined as net
income adjusted for changes in stockholders'  equity resulting from events other
than net income or transactions related to an entity's capital instruments.  The
Company  adopted FAS 130 effective  January 1, 1998,  with  reclassification  of
financial statements for earlier years.

In June 1997,  the FASB issued FAS No. 131,  "Disclosures  about  Segments of an
Enterprise and Related  Information," which establishes  standards for reporting
information about operating segments. Generally, FAS 131 requires that financial
information  be reported  on the basis that is used  internally  for  evaluating
performance.  The Company adopted SFAS 131 for the year ended December 31, 1998.
The Company is principally engaged,  through its subsidiaries,  in administering
existing  portfolios of individual  life  insurance  and annuity  products.  The
Company's  insurance  subsidiaries are also engaged in the business of marketing
and underwriting individual life insurance and annuity products in 49 states and
the  District of Columbia.  Such  products  are  marketed  through  independent,
non-exclusive  general  agents.  Management  considers the  Company's  insurance
operations  to  constitute  one  reportable   segment.   Premium   revenues  for
traditional  insurance  products and earned insurance  charges on universal life
and annuity products are presented in the accompanying  consolidated  statements
of income.  No single customer  accounts for 10 percent or more of the Company's
revenue. The Company has no foreign operations.

In February,  1998, the FASB issued FAS No. 132,  "Employers'  Disclosures About
Pensions and Other

                                     - 16 -

<PAGE>



Postretirement  Benefits",  which revises current  disclosure  requirements  for
employers'  pension and other retiree benefits.  FAS No. 132 does not change the
measurement or recognition of pension or other postretirement benefit plans. The
Company  adopted FAS No. 132  effective  January 1, 1998,  with  restatement  of
disclosures  for  earlier  years.  The  adoption  of FAS No.  132 did not have a
material impact on the Company's  results of operations,  liquidity or financial
position.

In December, 1997, the Accounting Standards Executive Committee issued Statement
of Position  ("SOP") 97-3,  "Accounting by Insurance and Other  Enterprises  for
Insurance-Related  Assessments",  which  provides  guidance  on  accounting  for
insurance-related  assessments.  The Company adopted SOP 97-3, effective January
1,  1999.  The  adoption  of SOP  97-3  did not have a  material  impact  on the
Company's results of operations, liquidity or financial position.

In  June,  1998,  the  FASB  issued  FAS No.  133,  "Accounting  for  Derivative
Instruments and Hedging Activities",  which establishes accounting and reporting
standards for derivative  instruments,  including certain derivative instruments
embedded in other contracts,  (collectively  referred to as derivatives) and for
hedging  activities.  FAS No. 133 is applicable to financial  statements for all
fiscal  quarters of fiscal years  beginning  after June 15, 1999. As the Company
does not have significant  investments in derivative financial instruments,  the
adoption of FAS 133 does not have a material impact on the Company's  results of
operations, liquidity or financial position.


Item 3.  Quantitative and Qualitative Disclosures About Market Risk

General:

ILCO's principal assets are financial  instruments,  which are subject to market
risks.  Market risk is the risk of loss arising  from adverse  changes in market
rates and prices,  principally  interest rates on fixed rate investments.  For a
discussion of the  Company's  investment  portfolio  and the  management of that
portfolio to reflect the nature of the underlying  insurance  obligations of the
Company's insurance  subsidiaries,  please refer to the information set forth in
Item 2 "Management's Discussion and Analysis of Financial Conditions and Results
of Operations - Investments" of this report.

The  following is a discussion of the Company's  primary  market risk  sensitive
instruments.  It should be noted that this  discussion has been developed  using
estimates  and  assumptions.  Actual  results may differ  materially  from those
described below.  Further,  the following  discussion does not take into account
actions which could be taken by management in response to the assumed changes in
market rates. In addition, the discussion does not take into account other types
of risks which may be involved in the business  operations of the Company,  such
as the reinsurance recoveries on reinsurance treaties with third party insurers.

The primary market risk to the Company's  investment  portfolio is interest rate
risk. The Company does not use derivative financial instruments.

Interest Rate Risk:

Assuming an immediate  increase of 100 basis points in interest  rates,  the net
hypothetical  loss in fair market  value  related to the  financial  instruments
segment of the Company's balance sheet is estimated to be $23.3 million at March
31, 1999 and $17.1  million at December 31, 1998.  For purposes of the foregoing
estimate,  the following  categories of the Company's  fixed income  investments
were  taken into  account:  (i) fixed  maturities,  including  fixed  maturities
available for sale, (ii) short-term  investments and (iii) notes receivable from
affiliates. The market value of such assets was $669.8 million at March 31, 1999
and $672.6 million at December 31, 1998.

The fixed income  investments  of the Company  include  certain  mortgage-backed
securities.  The market value of such securities was $237.8 million at March 31,
1999 and $250.8 million at December 31, 1998. Assuming an

                                     - 17 -

<PAGE>



immediate  increase of 100 basis points in interest rates,  the net hypothetical
loss in the fair market  value  related to such  mortgage-backed  securities  is
estimated to be $12.8 million at March 31, 1999 and $7.1 million at December 31,
1998.

Fixed income investments held in separate accounts have not been included, since
gains and losses on those  assets  generally  accrue to the  policyholders.  The
hypothetical  effect of the interest  rate risk on fair values was  estimated by
applying a commonly used model.  The model  projects the impact of interest rate
changes on a range of factors, including duration and potential prepayment.


                                     - 18 -

<PAGE>



               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES

Part II. Other Information

Item 1.  Legal Proceedings

The Company and  Investors-NA  are  defendants  in a lawsuit  which was filed in
October, 1996, in Travis County, Texas. CIGNA Corporation, an unrelated Company,
is also a named  defendant in the lawsuit.  The named  plaintiffs in the suit (a
husband and wife),  allege that the universal  life  insurance  policies sold to
them by INA Life Insurance Company (a company which was merged into Investors-NA
in 1992) utilized unfair sales practices.  The named plaintiffs seek reformation
of the life insurance contracts and an unspecified amount of damages.  The named
plaintiffs  also seek a class action as to similarly  situated  individuals.  No
certification  of a class has been  granted as of the date  hereof.  The Company
believes that the suit is without  merit and intends to  vigorously  defend this
matter.

In August,  1997,  another  individual  filed a similar action in Travis County,
Texas against the corporate entities  identified above. The lawsuit involves the
same type of policy and includes  allegations which are substantially  identical
to the  allegations  in the first action.  The named  plaintiff also seeks class
certification.  The  Company  believes  that  the  court  would  consider  class
certification  with  respect  to only one of these  actions.  The  Company  also
believes that this action is without merit and intends to vigorously defend this
matter.

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, 1998
     heretofore filed by Registrant with the Securities and Exchange Commission,
     which is hereby incorporated by reference.

(b)  Reports on Form 8-K:

     None

                                     - 19 -

<PAGE>


               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES





                                    SIGNATURE


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:  May 14, 1999


                                     - 20 -