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, 2000
        Commission File Number 2-39310


                        INTERCONTINENTAL LIFE CORPORATION
             (Exact Name of Registrant as specified in its charter)



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


6500 River Place Blvd., Building I
Austin, Texas                                         78730
(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: 8,123,071



                                      - 1 -

<PAGE>
               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES

                                      INDEX

                                                                        Page No.

Part I - Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets
     September 30, 2000 and December 31, 1999................................. 3

Consolidated Statements of Income
     For the three and nine month periods ended
     September 30, 2000 and September 30, 1999.................................5

Consolidated Statements of Cash Flows
     For the three and nine month periods ended
     September 30, 2000 and September 30, 1999.................................7

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

Item 2. Management's Discussion and Analysis of
     Financial Conditions and Results of Operations...........................12

Item 3. Quantitative and Qualitative Disclosures
     About Market Risk........................................................18

Part II

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

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

                                      - 2 -

page>

               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS

                                                 (in thousands of dollars)
                                                September 30,       December 31,
<TABLE>
                                                        2000               1999
<CAPTION>
<S>                                                     <C>                 <C>

ASSETS                                                       (Unaudited)

Investments:
Fixed maturities, at
       amortized cost (market value
        approximates $1,393 and $2,056)       $        1,406      $       2,088
Fixed maturities available for sale,
       at market value (amortized cost
       $448,885 and $411,532)                        445,610            404,217
Equity securities, at market value
       (cost approximates $338)                        1,745              1,943
Policy loans                                          48,954             50,882
Mortgage loans                                         6,681              6,844
Invested real estate and
  other invested assets                               42,511             21,145
Short-term investments                               125,915            191,695
       Total investments                             672,822            678,814
Cash and cash equivalents                              4,246              3,358
Notes receivable from affiliates                      36,886             41,497
Accrued investment income                              9,632              7,529
Agent advances and other receivables                  24,700             24,230
Reinsurance receivables                               17,431             18,769
Property and equipment, net                            4,455              4,416
Deferred policy acquisition costs                     38,357             35,598
Present value of future profits of
  acquired businesses                                 36,919             39,831
Other assets                                           7,553              9,304
Separate account assets                              461,789            457,853
       Total Assets                       $        1,314,790  $       1,321,199

</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>

                                               September 30,        December 31,
                                                       2000                1999
  LIABILITIES AND SHAREHOLDERS' EQUITY           (Unaudited)
<S>                                                     <C>                 <C>

Liabilities:
Policy liabilities and contractholder deposit funds:
Future policy benefits                     $        132,019     $       130,092
Contractholder deposit funds                        517,697             533,869
Unearned premiums                                     1,959               1,977
Other policy claims and benefits payable              9,901               9,893
                                                    661,576             675,831
Other policyholders' funds                            3,015               3,012
Deferred federal income taxes                        23,151              21,741
Other liabilities                                    12,802              14,635
Separate account liabilities                        457,267             454,289
    Total Liabilities                             1,157,811           1,169,508
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; 10,855,478 and 10,855,478 shares issued,
    8,123,071 and 8,827,941 shares outstanding in 2000
    and 1999, respectively                            2,388               2,388
Additional paid-in capital                            4,526               4,526
Accumulated other comprehensive income               (1,215)             (3,712)
Retained earnings                                   161,525             151,932
                                                    167,224             155,134
Common treasury stock, at cost, 2,732,407 and
2,027,537 in 2000 and 1999,  respectively           (10,245)             (3,443)

Total Shareholders' Equity                          156,979             151,691
Total Liabilities and
  Shareholders' Equity                   $        1,314,790   $       1,321,199

</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)

                                                Three Months Ended Sept. 30,
<TABLE>                                                   2000             1999
<CAPTION>

Revenues:
<S>                                                     <C>                 <C>

 Premium                                        $        4,081    $       2,446
 Net investment income                                  13,400           12,209
 Earned insurance charges                                9,497           10,161
 Other                                                     652              483
                                                        27,630           25,299
Benefits and expenses:
 Policyholder benefits and expenses                      9,204            7,048
 Interest expense on contract holders
     deposit funds                                       7,441            7,524
 Amortization of present value of future
     profits of acquired businesses                        908              995
 Amortization of deferred policy
     acquisition costs                                     678              461
 Operating expenses                                      4,289            4,328
                                                        22,520           20,356
Income from operations                                   5,110            4,943
Provision for federal income taxes                       1,872            1,808
Net income                                      $        3,238    $       3,135
Net income per share:
Basic:
        Weighted average common stock
         outstanding                                     8,172            8,791
Basic earnings per share                        $         0.40    $        0.36
Diluted:
Common stock and common stock equivalents                8,186            8,817
Diluted earnings per share                      $         0.40    $        0.36

</TABLE>

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

                                      - 5 -
<PAGE>


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

<TABLE>
<CAPTION>
                                                    Nine Months Ended
                                                        September 30,
                                                           2000            1999

Revenues:
<S>                                                          <C>           <C>

 Premium                                         $        8,665   $       7,604
 Net investment income                                   37,914          38,084
 Earned insurance charges                                29,182          30,308
Other                                                     2,539           2,266
                                                         78,300          78,262
Benefits and expenses:
 Policyholder benefits and expenses                      23,641          23,642
 Interest expense on contract holders
     deposit funds                                       22,035          23,599
 Amortization of present value of future
     profits of acquired businesses                       2,912           2,883
 Amortization of deferred policy
     acquisition costs                                    1,881           1,676
 Operating expenses                                      12,687          12,682
                                                         63,156          64,482
Income from operations                                   15,144          13,780
Provision for federal income taxes                        5,551           5,057
Net income                                       $        9,593   $       8,723
Net income per share:
Basic:
        Weighted average common stock
         outstanding                                      8,408           8,791
Basic earnings per share                         $         1.14   $        0.99
Diluted:
Common stock and common stock equivalent                  8,415           8,817
Diluted earnings per share                       $         1.14   $        0.99

</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
                                                           September 30,
CASH FLOWS FROM OPERATING                                   2000           1999
ACTIVITIES
<S>                                                          <C>            <C>
Net Income                                        $       3,238  $       3,135
Adjustments to reconcile net income to
       net cash (used in) provided by
       operating activities:
Amortization of present value of future
      profits of acquired businesses                        908            995
Amortization of deferred policy
     acquisition costs                                      678            461
Net gain on sale of investments                               0             73
Depreciation                                                283            120
Changes in assets and liabilities
Increase in accrued investment income                    (1,499)          (394)
(Increase) decrease in agent advances and
     other  receivables                                  (1,992)          7,717
Policy acquisition costs deferred                        (1,503)         (1,537)
Increase (decrease) in policy liabilities and
contractholder deposit funds                                898          (3,944)
Increase (decrease) in other policyholders' funds            27             (16)
Decrease in other liabilities                            (8,443)         (7,048)
Increase (decrease) in deferred federal income taxes      1,689            (997)
Decrease in other assets                                  3,239             882
Other, net                                                   80          (4,419)
Net cash used in operating activities            $       (2,397) $       (4,972)

</TABLE>


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

                                      - 7 -

<PAGE>

               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands of dollars)
                                   (unaudited)
<TABLE>
<CAPTION>

                                                 Three Months Ended
                                                  September 30, ed
CASH FLOWS FROM INVESTING                                   2000          1999
ACTIVITIES
<S>                                                          <C>           <C>


Investments purchased                                $    (8,982)  $   (27,343)
Proceeds from sales and
  maturities of investments                                3,624        29,596
Net change in short-term investments                       1,387         3,220
Purchases and retirements of equipment                      (296)         (170)
Decrease in notes receivable from affiliates               1,537         1,537
Net cash (used in) provided by investing activities       (2,730)        6,840

CASH FLOWS FROM FINANCING ACTIVITIES
(Purchase) issuance of treasury stock                       (924)           27
Net cash (used in) provided by
  financing activities                                      (924)           27
Net (decrease) increase in cash and cash equivalents       (6,051)       1,895
Cash and cash equivalents,
  beginning of period                                      10,297        9,688
Cash and cash equivalents, end of period             $      4,246  $    11,583


</TABLE>




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

                                      - 8 -

<PAGE>

               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands of dollars)
<TABLE>
<CAPTION>


                                                           Nine Months Ended
                                                            September 30,ed
CASH FLOWS FROM OPERATING                            2000                 1999
ACTIVITIES                                                 (unaudited)
<S>                                                   <C>                  <C>


Net Income                                    $      9,593         $     8,723
Adjustments to reconcile net income to
       net cash used in operating activities:

Amortization of present value of future
      profits of acquired businesses                 2,912               2,883
Amortization of deferred policy
     acquisition costs                               1,881               1,676
Net gain on sale of investments                          0                (149)
Depreciation                                           419                 347
Changes in assets and liabilities:
Increase in accrued investment income               (2,103)               (312)
Decrease in agent advances and
     other receivables                                 868                 669
Policy acquisition costs deferred                   (4,640)             (4,382)
Decrease in policy liabilities and
      contractholder deposit funds                 (14,255)            (15,055)
Increase in other policyholders' funds                   3                   9
Decrease in other liabilities                       (1,833)             (2,685)
Increase (decrease) in deferred
  federal income taxes                               1,410              (5,056)
Decrease (increase) in other assets                  1,751              (1,068)
Other, net                                            (336)               (710)
Net cash used in operating activities        $      (4,330)      $     (15,110)

</TABLE>


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

                                      - 9 -
<PAGE>



               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                            (in thousands of dollars)
                                   (unaudited)
<TABLE>

                                                            Nine Months Ended
                                                               September 30,
CASH FLOWS FROM INVESTING                                 2000           1999
ACTIVITIES
<S>                                                        <C>          <C>

Investments purchased                           $      (84,945)  $    (54,825)
Proceeds from sales and maturities of investments       27,044         83,254
Net change in short-term investments                    65,768        (18,176)
Purchases and retirements of equipment                    (458)          (497)
Decrease in notes receivable from affiliates             4,611          4,611
Net cash provided by investing activities               12,020         14,367

CASH FLOWS FROM FINANCING ACTIVITIES
(Purchase) Issuance of treasury stock                   (6,802)            33
Issuance of common stock                                     0             87
Net cash (used in) provided by financing activities     (6,802)           120
Net increase (decrease) in cash
  and cash equivalents                                     888           (623)
Cash and cash equivalents, beginning of year             3,358         12,206
Cash and cash equivalents, end of period        $        4,246   $     11,583

</TABLE>







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

                                     - 10 -

<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,  1999  previously  filed with the  Securities  and
Exchange Commission for financial statements prepared in accordance with GAAP.

Comprehensive Income

The  following is a  reconciliation  of total  accumulated  other  comprehensive
income from December 31, 1999 to September 30, 2000 (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, 1999   $   (4,755)       $  1,043      $ (3,712)
Current period change               2,626            (129)        2,497
Balance at September 30, 2000  $   (2,129)       $    914      $ (1,215)

</TABLE>



New Accounting Pronouncements

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, 2000, as amended by FAS
No.  137,  "Accounting  for  Derivative  Instruments  and Hedging  Activities  -
Deferral of the Effective  Date of FASB  Statement  No.133."

As the Company does not have  significant  investments  in derivative  financial
instruments,  the adoption of FAS No. 133 is not  anticipated to have a material
impact on the Company's results of operations, liquidity or financial position.



                                     - 11 -
<PAGE>


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

     For the nine-month period ended September 30, 2000,  InterContinental  Life
Corporation's  ("ILCO") net income was $9,593,000 (basic and diluted earnings of
$1.14 per common  share) as compared to $8,723,000  (basic  earnings and diluted
earnings of $0.99 per common  share) in the first nine months of 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 nine-month  period ended September 30, 2000, the Company's income before
federal  income taxes was  $15,144,000 on revenues of $78,300,000 as compared to
income of $13,780,000  on revenues of  $78,262,000  for the first nine months of
1999.

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
quality customer service.

Premium income, net of reinsurance,  for the first nine months of 2000 was $8.67
million,  as  compared  to $7.60  million  for the  first  nine  months of 1999.
Reinsurance premiums ceded were $1.21 million for the first nine months of 2000,
as compared to $1.59 million in the first nine months of 1999.  Earned insurance
charges for the nine-month  period ended  September 30, 2000 were $29.2 million,
as  compared  to $30.3  million  for the same  period  in 1999.  This  source of
revenues is related to the universal life insurance and annuity book of business
of the insurance subsidiaries of the Company.

As of September 30, 2000, the market value of the fixed maturities available for
sale  segment  was $445.6  million as compared  to an  amortized  cost of $448.9
million, or an unrealized loss of $3.3 million. The decrease reflects unrealized
losses on such  investments  related to changes in interest rates  subsequent to
the purchase of such investments.  The net of tax effect of this decrease ($2.14
million at September 30, 2000) is included in "Accumulated  other  comprehensive
loss" on the Consolidated  Balance Sheets and has been recorded as a decrease 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.



                                     - 12 -
<PAGE>

For the three-month period ended September 30, 2000, the lapse rate with respect
to universal life insurance  policies  decreased from the lapse rate experienced
in the  similar  period  in 1999.  The rate for the 2000  period  was 5.60 %, as
compared  to  5.89  % in the  1999  period.  The  lapse  rate  with  respect  to
traditional (non-universal) life insurance policies decreased significantly from
the  levels  experienced  in the  third  quarter  of  1999.  The  rate  for  the
three-month period ended September 30, 2000 was 5.31 %, as compared to 8.56 % in
the similar  period in 1999.  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  ("Investors-NA")  and its
subsidiary - Investors Life Insurance Company of Indiana ("Investors-IN").

Financial Industries Corporation ("FIC") currently owns, directly and indirectly
through  its  subsidiary  Family  Life  Insurance   Company,   3,932,692  shares
(approximately 48 %) of ILCO's common stock.

Prior to June 30, 2000,  ILCO's principal  source of liquidity  consisted 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 June 30, 2000, the outstanding principal balance
of the Surplus  Debentures  was completely  paid off. For periods  subsequent to
June 30, 2000, ILCO's available source of liquidity would be from dividends paid
to it from its  subsidiaries.  Applicable  state  insurance  laws may  limit the
ability of such subsidiaries to pay dividends to ILCO. Investors-NA is domiciled
in the State of Washington.  The Washington  insurance law 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 or (ii) the
insurer's net gain from  operations  for the previous  year. As of September 30,
2000, Investors-NA had earned surplus of $52.9 million.

Investors-IN is domiciled in the State of Indiana.  Under the Indiana  insurance
law, 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 $20.86  million at September  30, 2000.  In
June, 1999, Investors-IN paid a dividend in the amount of $3 million to its sole
shareholder, Investors-NA. The amount of the dividend was less than the net gain
from  operations for the prior fiscal year;  accordingly,  no prior approval was
required  for the  payment of the  dividend.  Advance  notice of the payment was
provided  to the  Indiana  Department  of  Insurance,  in  accordance  with  the
provisions of the Indiana Insurance Code.


                                     - 13 -

<PAGE>

ILCO's net cash flow used in  operating  activities  was $4.33  million  for the
nine-month  period ended  September 30, 2000, as compared to $15.11  million for
the first nine months of 1999. The change is primarily  related to a decrease in
other receivables and deferred federal income taxes.

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, 2000,  the  Company's  investment  assets  totaled  $672.8
million,  as compared to $678.8 million as of December 31, 1999. Total assets as
of September 30, 2000 ($1.315 billion)  decreased  slightly from the level as of
December 31, 1999 ($1.321 billion).

The level of short-term investments at September 30, 2000 was $125.9 million, as
compared to $191.7 million at December 31, 1999.

Invested real estate and other invested  assets  increased from $21.1 million at
December 31, 1999 to $42.5  million as of September  30, 2000.  This increase is
related to the  development of the River Place Pointe project (the "Project") by
Investors-NA.  The Project  consists of 47.995  acres of land in Austin,  Texas,
which 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.  Construction on the first phase of the Project, which consists of
two office  buildings and an associated  parking  garage,  commenced  during the
first quarter of 1999 and has been completed.

ILCO began  moving its  corporate  headquarters  to Building I of the Project in
June,  2000  and  completed  the  move in  July,  2000.  The  cost of the  move,
approximately  $375,713,  was treated as a period  cost in the third  quarter of
2000. In connection with the move,  Investors-NA  (the tenant under the lease of
the former Austin Centre space),  entered into a termination  agreement with the
owner of the Austin  Centre to  terminate  its lease at the Austin  Centre as of
July 30, 2000. As part of the termination agreement,  Investors-NA agreed to pay
rent for the month of August,  2000 in the amount of $113,  258 and the landlord
agreed to pay  Investors-NA  $7,252.30  per  month for a period of seven  years,
which latter amount includes a reimbursement to Investors-NA over the seven-year
period of the amount of the rental for the month of August. The present value of
the series of payments to be received by Investors-NA is $480,518,  which amount
was recorded as income in the third quarter of 2000.


                                     - 14 -

<PAGE>

As of September 30, 2000,  approximately  75,000 rentable square feet was leased
in  Building  II of the  Project  to two  tenants,  both of whom  moved into the
building in July, 2000. During the second quarter of 2000, construction began on
the third  office  building of the  Project.  The third  building  will  contain
approximately 116,000 square feet. In July,  Investors-NA completed negotiations
to lease all of the space in Building III to a single tenant. The lease is for a
seven-year term, with its  commencement  date in the first quarter of 2001, upon
completion of the construction of Building III.

The fixed maturities  available for sale portion of invested assets at September
30,  2000  was  $445.6  million.  The  amortized  cost of the  fixed  maturities
available  for  sale  segment  as of  September  30,  2000 was  $448.9  million,
representing  a net  unrealized  loss  of $3.3  million.  This  unrealized  loss
principally  reflects  changes in  interest  rates from the date the  respective
investments  were  purchased.  To reduce the exposure to interest  rate changes,
portfolio  investments  are selected so that  diversity,  maturity and liquidity
factors approximate the duration of associated 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   $176.2   million   and
mortgage-backed  pass-through securities of $44.4 million at September 30, 2000.
Mortgage-backed  pass-through  securities,  sequential  CMOs and support  bonds,
which  comprised  approximately  55.5%  of  the  book  value  of  the  Company's
mortgage-backed  securities at September  30, 2000,  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 44.5 % and sequential
and support classes  represented  approximately  35.3 % of the book value of the
Company's  mortgage-backed  securities at September  30, 2000. 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

                                     - 15 -
<PAGE>

investments  in CMOs during 1999.  For the year 2000,  the Company's  investment
objectives include the making of selected investments in CMOs.

The Company's fixed maturities portfolio (including short-term investments),  as
of September 30, 2000 and December 31, 1999, included a non-material amount (0.1
% 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. Of these
non-investment  grade  investments,  all  received an NAIC rating of "5" (lowest
quality).

The consolidated  balance sheets of the Company as of September 30, 2000 include
$ 36.89 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   Life  Insurance   Company  of  California
("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% and (e) the Master PIK note,  which was issued to provide for the
payment in kind of interest  due under the terms of the $2.5  million note prior
to June 12, 1996, was amended to provide that the principal balance of the note

                                     - 16 -
<PAGE>

($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.

             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 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 and (3)
adverse regulatory changes affecting the business of insurance.

                             Accounting Developments

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, 2000, as amended by FAS
No.  137,  "Accounting  for  Derivative  Instruments  and Hedging  Activities  -
Deferral of the  Effective  Date of FAS No.  133".  As the Company does not have
significant investments in derivative financial instruments, the adoption of FAS
No. 133 is not anticipated to have a material impact on the Company's results of
operations, liquidity or financial position.



                                     - 17 -
<PAGE>

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 $22.5  million at
September 30, 2000 and $23.3  million at December 31, 1999.  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  approximate  market value of such assets was
$610.8 million at September 30, 2000 and $639.5 million at December 31, 1999.

The fixed income  investments  of the Company  include  certain  mortgage-backed
securities.  The market value of such securities was $220.5 million at September
30,  2000 and $ 208.0  million at  December  31,  1999.  Assuming  an  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
$11.2 million at September 30, 2000 and $12.0 million at December 31, 1999.

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

                                     - 18 -

<PAGE>
changes on a range of factors, including duration and potential prepayment.

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 involved the
same type of policy and includes  allegations which are substantially  identical
to the  allegations in the first action.  In July,  2000, the court,  on its own
motion,  moved to dismiss the action for failure on the part of the plaintiff to
prosecute the matter. The plaintiff did not file a motion to retain the case and
the matter has been removed from the court's docket.

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

          a. As  previously  reported in a press release dated October 13, 2000,
          the  Board of  Directors  of the  Company  has  established  a Special
          Committee  of outside  directors of the Board to explore a merger with
          Financial  Industries  Corporation ("FIC"). FIC owns approximately 48%
          of the common stock of ILCO. The Board and the Special  Committee have
          received a report on an actuarial evaluation of the Company and FIC,
                                     - 19 -

<PAGE>
          which was performed by an independent  actuarial  consulting firm. The
          special  committee  will  review the  actuarial  evaluation  and other
          pertinent  information,  and  furnish a  recommendation  on the merger
          proposal to the Board.  As of the date of this report on Form 10-Q, no
          date has been set for the next  meeting of the Board of  Directors  of
          the Company.

          b. On October 13, 2000,  Charles K. Chacosky submitted his resignation
          as a  director  and  officer  of the  Company  and its life  insurance
          company  subsidiaries.   Mr.  Chacosky  advised  the  Board  that  his
          resignation was for personal reasons.

Item 6.  Exhibits and Reports on Form 8-K

         (a)      Exhibits

                  Form 10-K Annual Report of Registrant  for the year ended
                  December 31, 1999  heretofore  filed by Registrant with the
                  Securities and Exchange Commission, which is hereby
                  incorporated by reference.

         (b)      Reports on Form 8-K

                           None



                                     - 20 -

<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 hereunto duly authorized.


INTERCONTINENTAL LIFE CORPORATION



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

Date: November 14,   2000



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