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, 1995
          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: 4,145,329. 







 

                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES 

                                        INDEX  


                                                            Page No. 

          Part I - Financial Information 

          Consolidated Balance Sheets
               September 30, 1995 and December 31, 1994..........

          Consolidated Statements of Income 
               For the three and nine month periods ended
               September 30, 1995 and 1994.......................

          Consolidated Statements of Cash Flows
               For the three and nine month periods ended
               September 30, 1995 and 1994.......................

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

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

          Part II

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

          Part III 

          Other Information.......................................

          Signature Page.......................................... 







          Item 1.   Financial Statements

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

                                                   Sept.  30,  December 31,
                                                      1995         1994
                                                    Unaudited
          ASSETS
          Investments:
               Fixed maturities, at amortized cost
                (market value approximates $18,879
                and $24,175)                       $   17,027  $   23,776
               Fixed maturities available for sale
                at market value (amortized cost of
                $463,268 and $388,263)                469,354     357,084
               Equity securities at market (cost
                approximates $408 and $368)             1,612       1,243
               Policy loans                            52,879      48,096
               Mortgage loans                          16,415      17,055
               Invested real estate and other
                invested assets                        14,729       5,580
               Short-term investments                  83,925      94,841
                    Total investments                 655,941     547,675

               Cash and cash equivalents                1,118       5,563

               Notes receivable from affiliates        60,985      60,759

               Accrued investment income                8,868       8,495

               Agent advances and other 
                receivables                            15,879      19,778

               Reinsurance receivables                 13,315      14,066

               Property and equipment, net              4,493       4,418

               Real estate occupied by the 
                Company, net                           36,169      34,418

               Deferred policy acquisition costs       24,082      25,282

               Present value of future profits of 
                acquired businesses                    51,016      46,153

               Deferred financing costs                 1,855       2,462

               Other assets                             9,002       6,506

               Separate account assets                409,095     373,419
                    Total Assets                   $1,291,818  $1,148,994


                   (See Notes to Consolidated Financial Statements) 





 

                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                             CONSOLIDATED BALANCE SHEETS
                              (in thousands of dollars)
                                                    Sept. 30,  December 31,
                                                      1995         1994 
                                                    Unaudited
          LIABILITIES & SHAREHOLDERS' EQUITY
          Liabilities:
          Policy liabilities and contractholder
           deposit funds 
               Future policy benefits              $  126,527  $  117,761
               Contractholder deposit funds           550,187     490,232
               Unearned premiums                       11,514      12,203
               Other policy claims & benefits                            
                payable                                 7,864       8,621
                                                      696,092     628,817
               Other policyholders' funds               2,740       2,669
               Senior loans                            63,885      66,585
               Deferred federal income taxes           19,028       2,662
               Other liabilities                       19,165      24,781
               Separate account liabilities           406,135     371,173
                    Total liabilities               1,207,045   1,096,687

          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;                          
            5,136,239 and 5,107,239 shares
            issued, 4,145,329 and 4,116,329 
            shares outstanding in 1995 and 1994         1,130       1,124
          Additional paid-in capital                    3,190       2,854
          Net unrealized appreciation of equity 
           securities                                     782         568
          Net unrealized gain (loss) on invest-
           ments in fixed maturities available
           for sale                                     3,956     (20,266)
          Retained earnings                            78,733      71,045
                                                       87,791      55,325
          Common Treasury stock, at cost, 990,910
           shares in 1995 and 1994                     (3,018)     (3,018)
          Total Shareholders' equity                   84,773      52,307
          Total Liabilities and Shareholders'      $1,291,818  $1,148,994
           Equity
                   (See Notes to Consolidated Financial Statements) 






                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF INCOME
                             FOR THE THREE MONTH PERIODS
                          ENDED SEPTEMBER 30, 1995 AND 1994
                                     (Unaudited)
                   (in thousands of dollars, except per share data)


                                                     3 Months Ended
                                                      September 30,
                                                     1995        1994
          Revenues:
           Premiums                                $  3,342    $  4,429
           Premiums ceded                              (805)       (997)
             Net premiums                             2,537       3,432
           Earned insurance charges                  10,279       9,121
           Net investment income                     16,779      14,495
           Other                                        858         547 
                Total                                30,453      27,595

          Benefits and expenses: 
           Interest expense                           1,443       1,252
           Interest on insurance policies             8,213       7,458
           Benefits and other expenses               17,025      15,657
               Total                                 26,681      24,367 

          Income from operations                      3,772       3,228

          Provision for federal income taxes          1,274       1,129

          Net income                               $  2,498    $  2,099 

          Per Share Data: 

          Common stock and common stock 
           equivalents                                5,372       5,378 

          Net income per share available to 
           common shareholders                     $    .50    $    .42




                   (See Notes to Consolidated Financial Statements) 





 

                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                          CONSOLIDATED STATEMENTS OF INCOME
                              FOR THE NINE MONTH PERIODS
                          ENDED SEPTEMBER 30, 1995 AND 1994
                                     (Unaudited)
                   (in thousands of dollars, except per share data)


                                                     9 Months Ended
                                                      September 30, 
                                                     1995        1994 
          Revenues:
           Premiums                                $ 10,945    $ 14,173
           Premiums ceded                            (2,733)     (2,991)
              Net premiums                            8,212      11,182
           Earned insurance charges                  30,278      29,177
           Net investment income                     48,760      43,230
           Other                                      2,639       2,768 
                Total                                89,889      86,357

          Benefits and expenses: 
           Interest expense                           4,550       3,774
           Interest on insurance policies            24,252      22,500
           Benefits and other expenses               49,260      49,281
               Total                                 78,062      75,555

          Income from operations                     11,827      10,802

          Provision for federal income taxes          4,139       3,780 

          Net income                               $  7,688    $  7,022 

          Per Share Data:

          Common stock and common stock 
           equivalents                                5,372       5,378 

          Net Income per share available to 
           common shareholders                     $   1.52    $   1.37 





                   (See Notes to Consolidated Financial Statements) 






                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                             FOR THE THREE MONTH PERIODS 
                          ENDED SEPTEMBER 30, 1995 AND 1994 
                                     (Unaudited)    
                              (in thousands of dollars)



                                                        3 Months Ended
                                                         September 30,
          CASH FLOWS FROM OPERATING ACTIVITIES          1995      1994

          Net Income                                   $ 2,498  $  2,099

          Adjustments to reconcile net income to net 
           cash (used in) provided by operating
           activities:                                            
          Amortization of present value of future
           profits of acquired businesses                1,447     1,990
          Amortization of deferred policy acquisition
           costs                                         1,014     1,214
          Depreciation                                     (11)    1,303 
          Net gain on sales of investments                  54      (885)
          Financing costs amortized                        274       330

          Changes in assets and liabilities
          Decrease (increase) in accrued investment
           income                                           57      (445)
          Decrease in agent advances and other
           receivables                                   7,608     6,842 
          Policy acquisition costs deferred               (590)     (959)
          Decrease in policy liabilities            
           and contract holder deposit funds            (4,911)   (2,050)
          Increase in other policyholders' funds            31        48 
          Decrease in other liabilities                 (6,975)   (5,105)
          Decrease (increase) in deferred federal    
           income taxes                                  1,661      (834)
          Increase in other assets                      (1,478)     (559)
          Other, net                                    (1,446)      278 
          Net cash (used in) provided by         
           activities                                 $   (767) $  3,267 





                   (See Notes to Consolidated Financial Statements) 






                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS 
                              FOR THE NINE MONTH PERIODS 
                          ENDED SEPTEMBER 30, 1995 AND 1994 
                                     (Unaudited) 
                              (in thousands of dollars)



                                                        9 Months Ended
                                                         September 30,
          CASH FLOWS FROM OPERATING ACTIVITIES          1995      1994 

          Net Income (Loss)                            $ 7,688  $  7,022 

          Adjustments to reconcile net income to net 
           cash (used in) provided by operating
           activities:
          Amortization of present value of future
           profits of acquired businesses                4,584     4,876 
          Amortization of deferred policy acquisition
           costs                                         2,749     3,274
          Depreciation                                     -0-     1,314
          Net gain on sales of investments                 -0-    (1,105)
          Financing costs amortized                        607     1,074
          Changes in assets and liabilities
          Decrease (increase) in accrued investment
           income                                        1,081      (129)
          Decrease in agent advances and other
           receivables                                   6,527       962 
          Policy acquisition costs deferred             (1,549)   (2,610)
          (Decrease) increase in policy liabilities
           and contract holder deposit funds           (22,327)  (11,501)
          Decrease in other policyholders' funds          (309)      (34)
          Decrease in other liabilities                 (7,029)   (2,645)
          Decrease (increase) in deferred federal 
           income taxes                                 16,141    (8,925)
          Increase in other assets                      (2,496)   (1,157)
          Other, net                                    (2,303)   (1,050) 
          Net cash provided by (used in) operating
           activities                                 $  3,364  $(10,634)






                   (See Notes to Consolidated Financial Statements) 






                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS 
                             FOR THE THREE MONTH PERIODS 
                          ENDED SEPTEMBER 30, 1995 AND 1994 
                                     (Unaudited) 
                             (In thousands of dollars)
                                                        3 Months Ended
                                                         September 30,
          CASH FLOWS FROM INVESTING ACTIVITIES           1995     1994

          Investments purchased                       $ (2,703) $(35,694)
          Proceeds from sale and maturities of 
           investments                                  12,054    11,990
          Net change in short-term investments         (11,080)   24,099
          Payment for purchase of insurance sub-
           sidiary, net of cash acquired                   -0-       -0-
          Purchase & retirement of equipment, net          247    (3,216)

          Net cash provided by investing activities     (1,482)   (2,821)

          CASH FLOWS FROM FINANCING ACTIVITIES

          Issuance of common stock                          72       -0-

          Issuance of senior loan                          -0-       -0-

          Repayment of debt                                -0-       -0- 

          Net cash used in financing activities             72       -0- 

          Net (decrease) increase in cash and cash                  
           equivalents                                  (2,177)      446

                                                      
          Cash and cash equivalents, beginning of        3,295     5,622 
           period
                                                      $  1,118  $  6,068 
          Cash and cash equivalents, end of period





                   (See Notes to Consolidated Financial Statements) 






                  INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                              FOR THE NINE MONTH PERIODS
                          ENDED SEPTEMBER 30, 1995 AND 1994 
                                     (Unaudited)
                              (In thousands of dollars)
                                                        9 Months Ended
                                                         September 30, 
          CASH FLOWS FROM INVESTING ACTIVITIES           1995     1994 

          Investments purchased                       $(17,561) $(103,419)
          Proceeds from sale and maturities of 
           investments                                  18,682    84,899
          Net change in short-term investments          10,916    51,227 
          Payment for purchase of insurance           
           subsidiary, net of cash acquired            (17,492)      -0-
          Purchase & retirement of equipment, net           10    (3,213)

          Net cash (used in) provided by investing 
           activities                                   (5,445)   29,494

          CASH FLOWS FROM FINANCING ACTIVITIES

          Issuance of common stock                         336        42

          Issuance of senior loan                       15,000       -0- 

          Repayment of debt                            (17,700)  (17,415)

          Net cash used in financing activities         (2,364)  (17,373) 

          Net (decrease) increase in cash and cash
           equivalents                                  (4,445)    1,487

          Cash and cash equivalents, beginning of
           period                                        5,563     4,581

          Cash and cash equivalents, end of period    $  1,118  $  6,068 





                   (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, 1994 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-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.  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 will be a wholly-owned subsidiary of Investors-NA.  This
          transaction was financed, in part, through a $15 million increase
          in the Company's Senior Loan. 

          New Accounting Pronouncement  

          In May 1993, the FASB issued FAS No. 114, "Accounting by
          Creditors for Impairment of a Loan", effective for fiscal years
          beginning after December 15, 1994.  This statement requires that
          impaired loans be valued at the present value of the expected
          future cash flows discounted at the loan's effective interest
          rate or, as a practical expedient, at the loan's observable
          market price or the fair value of the collateral if the loan is
          collateral dependent.  It further amends FAS No. 5, "Accounting
          for Contingencies," to require that all contractual principal and
          interest payments be considered in determining the impairment of
          a loan.  The adoption of FAS No. 114 in January 1995 did not have
          a material effect on the Company's financial statements.  




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


          For the nine-month period ended September 30, 1995, ILCO's net
          income was $7,688,000 ($1.52 per common share), as compared to
          $7,022,000  ($1.37 per common share) for the similar period in
          1994.  

          The results for the first nine months of 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 September 30, 1995.  Investors
          Life Insurance Company of Indiana (Investors-IN) was purchased by
          ILCO and Investors Life Insurance Company of North America
          (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 $18.4 million for the nine-month period ended
          September 30, 1995, as compared to $15.2 million for the nine-
          month period ended September 30, 1994.  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
          1995 was $8.2 million, as compared to $11.2 million in the same
          period of 1994.  The decline is primarily attributable to the
          decision to discontinue the writing of credit life and accident
          and health insurance, as well as the reduction in premiums
          received for traditional (non-universal) life insurance and
          accident and health insurance policies.  This decline was
          partially offset by the premium income resulting from the
          inclusion of Investors-IN.  Reinsurance premiums ceded were $2.7
          million in the first nine months of 1995, as compared to $3.0
          million for the similar period in 1994.

          Earned insurance charges for the first nine months of 1995 were
          $30.3 million, as compared to $29.2 million for the similar
          period in 1994.  This source of revenues is related to the
          universal life insurance book of business of Investors-NA.
            
          Interest expense was $4.6 million for the first nine months of
          1995, as compared to $3.8 million for the first nine months of
          1994.  The increase is attributable to an increase in the average
          rate of interest paid on the senior loan - 8.72% for the first
          nine months of 1995 as compared to 6.56% for the 1994 period. 

          The decline in long-term interest rates during the first nine
          months of 1995, which was related to general economic conditions,
          had a positive effect upon the market value of the fixed
          maturities available for sale segment of the portfolio.  As of
          September 30, 1995, the market value of the fixed maturities
          available for sale segment was $469.4 million as compared to a
          carrying value of $463.3 million, or an unrealized gain $6.1
          million.  There is no assurance that this unrealized gain may be
          realized in the future.
            
          The investment income earned on the Company's portfolio affects
          the level of interest rates which the Company credits to its
          universal life insurance, whole life insurance and annuity
          products.  The objective of the Company is to maintain an
          appropriate margin between the rate of interest which it earns on
          its investments and the rate which it credits to policyholders. 

          During the first six months of 1994, management completed its
          review of the credit life and credit disability business of the
          Company.  As a result of this review, management determined that
          these product lines were not producing desired profitability
          objectives.  Accordingly, management announced that the Company's
          subsidiaries which underwrote credit insurance would discontinue
          the writing of new credit life and credit disability insurance. 
          For the full year of 1995, this action is expected to have a
          negative effect on premium income in the amount of $2.9 million.

          Total assets as of September 30, 1995 ($1.29 billion) increased
          from the level as of December 31, 1994 ($1.15 billion).  The
          increase in total assets is primarily attributable to (a) the
          inclusion of Investors-IN and (ii) an increase in the amount of
          separate account assets.

          On January 31, 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, which is 100% leased to
          third-party tenants, consists of 20 acres of land, a five-story
          office building with 83,474 square feet of rentable space and a
          550-car parking garage.


          Results of Operations:

          For the quarter ended September 30, 1995, the Company's income
          from operations before Federal income taxes was $3,772,000 on
          revenues of $30,453,000, as compared to $3,228,000, on revenues
          of $27,595,000 for the third quarter of 1994.

          For the three-month period ended September 30, 1995, the lapse
          rate with respect to universal life insurance policies increased
          from the lapse rate experienced in the similar period in 1994. 
          The rate for the 1995 period was 8.0%, as compared to 6.6% in the
          1994 period.  The lapse rate with respect to traditional (non-
          universal) life insurance policies increased from the levels
          experienced in the third quarter of 1994.  The rate for the
          three-month period ended September 30, 1995 was  9.8%, as
          compared to 8.7% in the similar period in 1994.  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 subsidiaries - Investors Life Insurance Company of
          Indiana (formerly known as Meridian Life Insurance Company) 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, 1994, the outstanding principal balance of the 
          ILCO's senior loan obligations was $66.6 million.  On January 2,
          1995, the Company made a scheduled payment of $4.5 million under
          its Senior Loan.  In connection with the acquisition of
          Investors-IN in February, 1995, ILCO borrowed an additional $15
          million under its Senior Loan to help finance the purchase.  On
          April 3, 1995, a principal payment in the amount of $13.2 million
          was made, which prepaid the Senior Loan until October 1, 1995. 
          As a result, the Senior Loan had a principal balance at September
          30, 1995 of $63.9 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 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.  As of September 30, 1995, the outstanding
          principal balance of the Surplus Debentures was $7.2 million and
          $64.3 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, 1995, the statutory
          surplus of Investors-NA was $60.0 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).  Effective July 25, 1993, Washington amended
          its insurance code to retain the "greater of" standard for
          payment of dividends to shareholders, but enacted 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. Investors-NA does not presently
          have earned surplus as defined by the regulations adopted by the
          Washington Insurance Commissioner and, therefore, is not
          permitted to pay a cash dividend.  However, since the new 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 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
          currently has earned surplus.

          ILCO's net cash flow provided by (used in) operating activities
          was  $3,364,000 for the nine-month period ended September 30,
          1995, as compared to $(10,634,000) for the same period in 1994. 
          This change is primarily due to fluctuations in the amount of
          deferred federal income taxes, related to the market value of the
          portion of investments assets that are fixed maturities available
          for sale.

          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, 1995, the book value of the Company's
          invested assets totaled $655.9 million, as compared to $547.7
          million as of December 31, 1994.  This change was affected
          primarily by the inclusion of Investors-IN, which added
          approximately $93 million in investment assets.  

          The level of short-term investments as of September 30, 1995 was
          $83.9 million, as compared to $94.8 million as of December 31,
          1994. The decline in the level of short-term investments reflects
          the actions of management to diversify the investment portfolio
          of the Company. 

          The fixed maturities available for sale portion of invested
          assets at September 30, 1995 was $469.4 million.  The amortized
          cost of the fixed maturities available for sale segment as of
          September 30, 1995 was $463.3 million, representing a net
          unrealized gain of $6.1 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 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, 1995, included a non-material
          amount (0.57% of total fixed maturities and short-term
          investments) of debt securities which, in the 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 December 31, 1994, the comparable percentage was
          1.1%.  Of these non-investment grade investments, .30% were in
          the medium quality (or "3") category, with only .27% receiving an
          NAIC rating of "4" (low quality) or below.  

          The consolidated balance sheets of the Company as of September
          30, 1995 include $60.985 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-CA to Financial Industries Corporation (which is
          now owned by Investors-NA as a result of the merger of Investors-
          CA into Investors-NA) and $1.485 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 $30 million note and the $4.5 million note
          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 policyholders and to credit relatively consistent
          rates of return to its policyholders.


          Accounting Developments:

          In May 1993, the FASB issued FAS No. 114, "Accounting by 
          Creditors for Impairment of a Loan", effective for fiscal years
          beginning after December 15, 1994.  This statement requires that
          impaired loans be valued at the present value of the expected
          future cash flows discounted at the loan's effective interest
          rate or, as a practical expedient, at the loan's observable
          market price or the fair value of the collateral if the loan is
          collateral dependent.  It further amends FAS No. 5, "Accounting
          for Contingencies," to require that all contractual principal and
          interest payments be considered in determining the impairment of
          a loan.  The adoption of FAS No. 114 in January, 1995, did not
          have a material impact on the Company's financial statements.




                          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,
                                      1995      1994      1995      1994
                                                  (in thousands)

          Net income                $ 2,498   $  2,099  $  7,688  $  7,022
            
           
          Interest expense reduc-                       
           tion net of income tax
           effect                       162        136       484       354

          Net income available to 
           common shareholders      $ 2,660   $  2,235  $  8,172  $  7,376
           
          Divide by:
           Common shares out-
            standing, treasury
            stock                     4,145      3,291     4,145     3,291 
           Dilutive common share
            equivalents               1,227      2,087     1,227     2,087
                      

          Common stock and common 
           stock equivalents          5,372      5,378     5,372     5,378

          Net income per share 
           available to common 
           shareholders             $   .50   $    .42  $   1.52  $   1.37 






                  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, 1994 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 13, 1995