SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549




                                    FORM 10-Q

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

                         SECURITIES EXCHANGE ACT OF 1934



For the Quarterly Period Ended March 31, 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)


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

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



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


Number  of  common  shares  outstanding  ($.22  Par  Value)  at end  of  period:
8,278,995.

                                      - 1 -

<PAGE>


               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES

                                      INDEX

                                                                        Page No.

Part I - Financial Information

Item 1. Financial Statements

Consolidated Balance Sheets
     March 31, 2000 and December 31, 1999.................................... 3

Consolidated Statements of Income
     For the three month periods ended
     March 31, 2000 and March 31, 1999........................................5

Consolidated Statements of Cash Flows
     For the three month periods ended
     March 31, 2000 and March 31, 1999........................................6

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

Item 2. Management's Discussion and Analysis of
     Financial Conditions and Results of Operations...........................9

Item 3. Quantitative and Qualitative Disclosures
     About Market Risk.......................................................15

Part II

Other Information............................................................16

Signature Page...............................................................17

                                      - 2 -

<PAGE>

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

<TABLE>
<CAPTION>

                                                                      March 31,             December 31,
                                                                          2000                   1999
                                                                     (Unaudited)
<S>                                                                        <C>                    <C>

ASSETS

Investments:

Fixed maturities, at
   amortized cost (market value approximates
    $1,682 and $2,056 at March 31, 2000 and
    December 31, 1999)                                             $       1,710            $      2,088

Fixed maturities available for sale, at market value
(amortized cost of $426,208 and $411,532 at
March 31, 2000 and December 31, 1999)                                    419,466                 404,217

Equity securities, at market value (cost approximates
  $338 at March 31, 2000 and December 31, 1999)                            1,849                   1,943

Policy loans                                                              49,781                  50,882

Mortgage loans                                                             6,789                   6,844

Invested real estate and other invested
       assets                                                             28,189                  21,145

Short-term investments                                                   164,428                 191,695

       Total investments                                                 672,212                 678,814

Cash and cash equivalents                                                  6,530                   3,358

Notes receivable from affiliates                                          39,960                  41,497

Accrued investment income                                                  8,332                   7,529

Agent advances and other receivables                                      20,840                  24,230

Reinsurance receivables                                                   19,281                  18,769

Property and equipment, net                                                4,429                   4,416
Deferred policy acquisition costs                                         36,417                  35,598
Present value of future profits of
       acquired businesses                                                38,865                  39,831

Other assets                                                              10,104                   9,304

Separate account assets                                                  472,634                 457,853

       Total Assets                                              $     1,329,604        $      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>

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

Liabilities:

Policy liabilities and contractholder
 deposit funds:
Future policy benefits                                         $         132,029        $        130,092

Contractholder deposit funds                                             523,639                 533,869

Unearned premiums                                                          1,959                   1,977
Other policy claims and benefits payable                                  10,528                   9,893
                                                                         668,155                 675,831
Other policyholders' funds                                                 3,025                   3,012

Deferred federal income taxes                                             22,809                  21,741

Other liabilities                                                         17,314                  14,635

Separate account liabilities                                             468,226                 454,289

    Total Liabilities                                                  1,179,529               1,169,508

Commitments and Contingencies
Redeemable preferred stock:
Class A Preferred, $1 par value,                                           5,000                   5,000
    5,000,000 shares authorized, issued

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, 8,278,995
    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 loss                                     (3,400)                 (3,712)

Retained earnings                                                        155,163                 151,932
                                                                         158,677                 155,134

Common treasury stock, at cost, 2,576,483 and
 2,027,537 in 2000 and 1999,  respectively                                (8,602)                 (3,443)

Total Shareholders' Equity                                               150,075                 151,691

Total Liabilities and Shareholders' Equity                      $      1,329,604        $      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)
<TABLE>
<CAPTION>

                                                                   Three Months Ended
                                                                         March 31,
                                                                2000                  1999
<S>                                                             <C>                    <C>


Revenues:

 Premium                                                 $      2,278            $      2,548

 Net investment income                                         12,204                  12,915

 Earned insurance charges                                      10,149                  10,062
 Other                                                            768                     745
                                                               25,399                  26,270
Benefits and expenses:

 Policyholder benefits and expenses                             7,353                   8,022

 Interest expense on contract holders
     deposit funds                                              7,159                   7,880

 Amortization of present value of future
     profits of acquired businesses                               966                     920

 Amortization of deferred policy
     acquisition costs                                            694                     584

 Operating expenses                                             4,129                   4,189

                                                               20,301                  21,595
Income from operations                                          5,098                   4,675

Provision for federal income taxes                              1,867                   1,714

Net income                                                $     3,231             $     2,961

Net income per share
Basic:
        Weighted average common stock
         outstanding                                            8,817                   8,791

Basic earnings per share                                 $       0.37             $      0.34

Diluted:
        Common stock and common stock equivalents               8,824                   8,786

Diluted earnings per share                               $       0.37             $      0.34

</TABLE>




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

                                      - 5 -

<PAGE>

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


                                                                       Three Months Ended
                                                                            March 31,
CASH FLOWS FROM OPERATING                                           2000                   1999
ACTIVITIES
<S>                                                                 <C>                     <C>


Net Income                                               $         3,231         $         2,961
Adjustments to reconcile net income to
       net cash used in operating activities:

Amortization of present value of future
      profits of acquired businesses                                 966                     920

Amortization of deferred policy
     acquisition costs                                               694                     584

Depreciation                                                          59                     109

Changes in assets and liabilities:

Increase in accrued investment income                               (803)                   (326)
Decrease (increase) in agent advances and
     other  receivables                                            2,878                  (2,120)

Policy acquisition costs deferred                                 (1,513)                 (1,360)
Decrease in policy liabilities and
contractholder deposit funds                                      (7,676)                 (5,240)

Increase in other policyholders' funds                                13                      47

Increase in other liabilities                                      2,679                   2,293

Increase (decrease) in deferred
 federal income taxes                                              1,068                    (879)

Increase in other assets                                            (800)                 (2,196)

Other, net                                                          (808)                 (1,079)

Net cash used in
 operating activities                                    $           (12)        $        (6,286)
</TABLE>


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

                                      - 6 -

<PAGE>

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

<TABLE>
<CAPTION>

                                                                        Three Months Ended
                                                                              March 31,
CASH FLOWS FROM INVESTING                                             2000               1999
ACTIVITIES
<S>                                                                    <C>                <C>

Investments purchased                                        $      (32,773)     $    (11,250)
Proceeds from sales and maturities
 of investments                                                      12,384            33,055
Net change in short-term investments                                 27,267           (20,433)
Purchases and sales of equipment                                        (72)             (159)
Decrease in notes receivable from affiliates                          1,537             1,537

Net cash provided by investing activities                             8,343             2,750

CASH FLOWS FROM FINANCING ACTIVITIES
Purchase of treasury stock                                           (5,159)               -0-
Issuance of common stock                                                 -0-               60

Net cash (used in) provided by
 financing activities                                                (5,159)               60

Net increase (decrease) in cash and
 cash equivalents                                                     3,172            (3,476)
Cash and cash equivalents, beginning
 of period                                                            3,358            12,206

Cash and cash equivalents, end of period                      $       6,530      $      8,730
</TABLE>


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

                                      - 7 -

<PAGE>

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

The financial  statements  included herein have been presented to conform to the
requirements  of Form 10-Q.  This  presentation  includes year end balance sheet
data which was  derived  from  audited  financial  statements.  The notes to the
financial  statements 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.  Management  believes the  financial  statements  reflect all  adjustments
necessary to present a fair  statement of interim  results.  Certain  prior year
amounts have been reclassified to conform with current year presentation.

Other Comprehensive Income

The  following is a  reconciliation  of total  accumulated  other  comprehensive
income (loss) from December 31, 1999 to March 31, 2000 (in thousands):

<TABLE>
<CAPTION>


                                                     Net unrealized             Net                       Total
                                                     gain (loss) on             appreciation              accumulated
                                                     investments                (depreciation)            other
                                                     in fixed                   of equity                 comprehensive
                                                     maturities                 securities                income (loss)
                                                     available for
                                                     sale
<S>                                                      <C>                         <C>                     <C>


         Balance at December 31, 1999                $  (4,755)                 $   1,043                $   (3,712)
         Current period change                             373                        (61)                      312
         Balance at March 31, 2000                   $  (4,382)                 $     982                $   (3,400)

</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 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.



                                      - 8 -
<PAGE>


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


For  the  three-month  period  ended  March  31,  2000,   InterContinental  Life
Corporation's  ("ILCO") net income was $3,231,000  (basic earnings of $ 0.37 per
common  share and  diluted  earnings  of $0.37 per common  share) as compared to
$2,961,000  (basic earnings of $ 0.34 per common share and diluted earnings of $
0.34 per common share) in the first three 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  three-month  period ended March 31, 2000,  the Company's  income before
federal  income taxes was  $5,098,000 on revenues of  $25,399,000 as compared to
income of  $4,675,000 on revenues of  $26,270,000  for the first three 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 the
provision of quality customer service.

Premium income, net of reinsurance, for the first three months of 2000 was $2.28
million,  as  compared  to $2.55  million  for the first  three  months of 1999.
Reinsurance premiums ceded were $0.3 million for the first three months of 2000,
as compared to $0.7 million in the first three months of 1999.

Earned  insurance  charges for the three-month  period ended March 31, 2000 were
$10.15 million,  as compared to $10.06 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 March 31, 2000,  the market value of the fixed  maturities  available  for
sale  segment  was $419.5  million as compared  to an  amortized  cost of $426.2
million, or an unrealized loss of $6.7 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 ($4.38
million at March 31, 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.

For the three-month  period ended March 31, 2000, the lapse rate with respect to
universal life insurance  policies  increased from the lapse rate experienced in
the similar period in 1999. The rate for the 2000 period was 6.96%,  as compared
to 5.77% in the  1999  period.  The  lapse  rate  with  respect  to  traditional
(non-universal) life insurance policies decreased from the levels

                                      - 9 -
<PAGE>


experienced in the second quarter of 1999. The rate for the  three-month  period
ended  March 31, 2000 was 7.88%,  as compared to 8.38% 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")(formerly  known as  InterContinental  Life Insurance  Company).
ILCO's primary source of funds consists of payments under two Surplus Debentures
from Investors-NA.

On March 17, 1999,  the Company paid a stock dividend (one share of common stock
for each outstanding share of common stock). As a result,  Financial  Industries
Corporation   ("FIC")  currently  owns,  directly  and  indirectly  through  its
subsidiary  Family  Life  Insurance  Company,  3,932,692  shares  (approximately
47.50%) of ILCO's common stock..

ILCO's  principal  source of  liquidity  consists  of the  periodic  payment  of
principal  and  interest by  Investors-NA,  pursuant to the terms of the Surplus
Debentures.  The Surplus  Debentures  were  originally  issued by Standard  Life
Insurance  Company and their terms were  previously  approved by the Mississippi
Insurance Commissioner. In connection with the 1993 merger of Standard Life into
Investors-NA,  the  obligations  of  the  Surplus  Debentures  were  assumed  by
Investors- NA. As of March 31, 2000, the  outstanding  principal  balance of the
Surplus Debentures was $0.456 million and $2.9 million,  respectively. The terms
of the latter required final payment of the remaining principal balance on March
31, 2000. Effective September 28, 1999, the Company and Investors-NA amended the
payment   schedule  to  provide  payment  of  the  remaining   balance  in  four
installments,  with  the  final  installment  being  due  July  1,  2000.  Since
Investors-NA  is  domiciled  in the  State  of  Washington,  the  provisions  of
Washington  insurance law apply to the Surplus Debentures.  Under the provisions
of the Surplus  Debentures  and current law, no prior approval of the Washington
Insurance Commissioner is required for Investors-NA to pay interest or principal
on the Surplus Debentures;  provided that, after giving effect to such payments,
the statutory  surplus of Investors-NA is in excess of $10 million (the "surplus
floor").  However,  Investors-NA  has  voluntarily  agreed  with the  Washington
Insurance Commissioner that it will provide at least five days advance notice of
payments which it will make under the surplus  debenture.  As of March 31, 2000,
the statutory surplus of Investors-NA was $73.6 million, an amount substantially
in excess of the surplus floor.  The funds required by  Investors-NA to meet its
obligations  to the  Company  under  the  terms of the  Surplus  Debentures  are
generated  from  operating   income  generated  from  insurance  and  investment
operations.

In addition to the payments under the terms of the Surplus Debentures,  ILCO has
received dividends from its subsidiaries.  Washington's  insurance code includes
the "greater of"  standard for payment of dividends to  shareholders,  but has a
requirement  that  prior  notification  of a proposed  dividend  be given to the
Washington Insurance  Commissioner and that cash dividends may be paid only from
earned surplus.  Under the "greater of" standard,  an insurer may pay a dividend
in an amount equal to the greater of (i) 10% of the policyholder surplus or (ii)
the insurer's net gain from  operations  for the previous  year. As of March 31,
2000, Investors-NA had earned surplus of $ 52.037 million.

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

                                     - 10 -
<PAGE>


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

ILCO's net cash flow used in  operating  activities  was $0.012  million for the
three-month  period ended March 31, 2000, as compared to $6.286  million for the
first three  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 March 31, 2000, the Company's investment assets totaled $672.2 million, as
compared to $678.8 million as of December 31, 1999. Total assets as of March 31,
2000 ($1.329 billion)  increased slightly from the level as of December 31, 1999
($1.321 billion).

The level of short-term  investments  at March 31, 2000 was $164.4  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 $28.2  million as of March 31,  2000.  This  increase  is
related to the purchase by  Investors-NA  of the 47.995 acres of land in Austin,
Texas  for the  development  of the River  Place  Pointe  project.  The land was
purchased in October,  1998 by Investors-NA,  for an aggregate purchase price of
$8.1 million.  Prior to the closing of the transaction,  Investors-NA obtained a
Site  Development  Permit  for the  tracts  from  the City of  Austin.  The Site
Development  Permit  allows  for the  construction  of  seven  office  buildings
totaling  600,000  square  feet,  with  associated  parking,  drives and related
improvements.  Construction  on Phase One commenced  during the first quarter of
1999.  Upon  completion  of Phase One, the Company  plans to move its  corporate
headquarters to space in one of the buildings.  The move is currently  scheduled
for the third quarter of 2000. In connection  with the move,  Investors-NA  (the
tenant under the lease of its current  Austin Centre space) intends to sub-lease
said space. In February,  2000,  Investors-NA completed plans to develop a third
office  building on the site.  The third  building  will  contain  approximately
116,000  square feet.  Construction  is scheduled to commence  during the second
quarter of 2000.

The fixed maturities  available for sale portion of invested assets at March 31,
2000 was $419.5 million.  The amortized cost of the fixed  maturities  available
for sale  segment as of March 31, 2000 was $426.2  million,  representing  a net
unrealized  loss of $6.7 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,

                                     - 11 -
<PAGE>


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  $  181.3   million  and
mortgage-backed  pass-through  securities  of $ 39.4  million at March 31, 2000.
Mortgage-backed  pass-through  securities,  sequential  CMOs and support  bonds,
which  comprised  approximately  53.8%  of  the  book  value  of  the  Company's
mortgage-backed  securities at March 31, 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  46.2% and  sequential  and support
classes  represented  approximately  35.8 % of the book  value of the  Company's
mortgage-backed  securities at March 31, 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  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 March 31, 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 March 31,  2000  include
$39.96 million of "Notes receivable from affiliates",  represented by (i) a loan
of $22.5 million from Investors-NA to Family Life Corporation ("FLC") and a $2.5
million loan from  Investors-CA to Financial  Industries  Corporation  ("FIC") -
which  loan  is  now  owned  by  Investors-NA  as a  result  of  the  merger  of
Investors-CA  into  Investors-NA)  - and $2.0  million of  additions to the $2.5
million note made in  accordance  with the terms of such note;  these loans were
granted in connection with the 1991 acquisition of Family Life Insurance Company
by a wholly-owned  subsidiary of FIC (ii) a loan of $30 million by  Investors-NA
to Family Life Corporation made in July, 1993, in connection with the prepayment
by the FIC  subsidiaries  of indebtedness  which had been  previously  issued to
Merrill Lynch as part of the 1991  acquisition  and (iii) a loan of $4.5 million
by Investors-NA to Family Life Insurance  Investment  Company  ("FLIIC") made in
July, 1993, in connection with the same transaction described above.

As of June 12, 1996, the provisions of the notes from  Investors-NA  to FIC, FLC
and Family Life Insurance Investment Company ("FLIIC") were modified as follows:
(a) the $22.5 million note

                                     - 12 -

<PAGE>



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
($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.

                                      -13-

<PAGE>


             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.

                                      -14-

<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 $23.3 million at March
31, 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 $625.5 million at
March 31, 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 $218.4 million at March 31,
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 $12.3
million at March 31, 2000 and $12.0 million at December 31, 1999.


                                     - 15 -
<PAGE>

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



Part II. Other Information

Item 1.  Legal Proceedings

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

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


Item 2.  Changes in Securities

                  None

Item 3.  Defaults Upon Senior Securities

                  None

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

                  None

Item 5.  Other Information

                  None



                                     - 16 -

<PAGE>


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

     The Registrant filed a report on Form 8-K on February 1, 2000, reporting on
     the status of the stock  repurchases  under its stock  repurchase  plan.  A
     subsequent  Form 8-K was filed on May 2,  2000,  reporting  on the  updated
     status of the purchases made by the Registrant  under the stock  repurchase
     plan. Each such Form 8-K is hereby incorporated by reference.

                                     - 17 -
<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: May 15, 2000


                                     - 18 -
<PAGE>