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 June 30, 1997
Commission File Number 2-39310


                     INTERCONTINENTAL LIFE CORPORATION


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


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

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



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



Number of common shares outstanding ($.22 Par Value) at end of
period: 4,321,829.                   











            INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES

                                   INDEX


                                                  Page No.

Part I - Financial Information

Consolidated Balance Sheets
     June 30, 1997 and December 31, 1996................ 3

Consolidated Statements of Income 
     For the three and six month periods ended
     June 30, 1997 and 1996............................. 4

Consolidated Statements of Cash Flows
     For the three and six month periods ended
     June 30, 1997 and 1996............................. 6

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

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

Part II

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

Part III

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

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



Item 1.   Financial Statements

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

                                            June 30,   Dec. 31,
                                              1997       1996  
                                           Unaudited

ASSETS
Investments:
     Fixed maturities, at amortized cost
      (market value approximates $4,439 
      and $8,374)                         $    4,658 $    8,165
     Fixed maturities available for sale
      at market value (amortized cost of
      $441,494 and $451,550)                 443,608    453,896
     Equity securities at market value (cost
      approximates $369 and $373)              2,594      2,304
     Policy loans                             53,162     53,030
     Mortgage loans                           11,055     13,494
     Invested real estate and other
      invested assets                         48,525     38,696
     Short-term investments                   94,874     91,556
          Total investments                  658,476    661,141

     Cash and cash equivalents                 3,257      3,313
          
     Notes receivable from affiliates         56,866     59,940
     
     Accrued investment income                 7,916      7,807

     Agent advances and other 
      receivables                             20,952     21,725

     Reinsurance receivables                  13,617     12,123

     Property and equipment, net               1,780      1,785

     Deferred policy acquisition costs        28,032     26,938

     Present value of future profits of 
      acquired businesses                     42,269     45,240

     Deferred financing costs                    341        636

     Other assets                              9,760      8,965

     Separate account assets                 432,856    414,329
          Total Assets                    $1,276,122 $1,263,942






             (See Notes to Consolidated Financial Statements)

            INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                        CONSOLIDATED BALANCE SHEETS
                         (in thousands of dollars)
                                        June 30,    Dec. 31,
                                          1997        1996  
                                        Unaudited
LIABILITIES & SHAREHOLDERS' EQUITY
Liabilities:
Policy liabilities and contractholder
 deposit funds 
     Future policy benefits             $  123,394  $  119,744
     Contractholder deposit funds          523,609     538,505
     Unearned premiums                       8,718       9,069
     Other policy claims & benefits 
      payable                                5,509       5,988
                                           661,230     673,306
     Other policyholders' funds              2,523       2,720
     Senior loans                           20,364      24,944
     Deferred federal income taxes          25,053      23,692
     Other liabilities                      17,132      13,835
     Separate account liabilities          430,610     412,084
          Total liabilities              1,156,912   1,150,581

Commitments and contingencies                       

Redeemable preferred stock:
 Class A Preferred, $1 par value, 
  5,000,000 shares authorized and 
  issued                                     5,000       5,000
 Class B Preferred, $1 par value,
  15,000,000 shares authorized and 
  issued                                    15,000      15,000
                                            20,000      20,000
Redeemable Preferred Treasury Stock at 
 cost, 20,000,000 shares                   (20,000)    (20,000)
                                               -0-         -0-
Shareholders' equity:
 Common stock, $.22 par value,
  10,000,000 shares authorized;
  5,337,739 and 5,223,739 shares
  issued, 4,321,829 and 4,232,829 
  shares outstanding in 1997 and 1996        1,175       1,150
Additional paid-in capital                   4,232       3,752
Net unrealized appreciation of equity 
 securities                                  1,446       1,255
Net unrealized gain on investments
 in fixed maturities available
 for sale                                    1,374       1,525
Retained earnings                          114,339     108,697
                                           122,566     116,379
Common treasury stock, at cost,
 1,015,910 shares in 1997 and
 990,910 shares in 1996                     (3,356)     (3,018)
Total Shareholders' Equity                 119,210     113,361
Total Liabilities and Shareholders'                 
 Equity                                 $1,276,122  $1,263,942


             (See Notes to Consolidated Financial Statements)

            INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF INCOME
                        FOR THE THREE MONTH PERIODS
                       ENDED JUNE 30, 1997 AND 1996
                                (Unaudited)
             (in thousands of dollars, except per share data)


                                              3 Months Ended
                                                 June 30,
                                             1997        1996  
Revenues:
 Net premiums                             $  2,806   $  2,562
 Earned insurance charges                   10,189      9,604
 Net investment income                      14,460     14,912
 Gain on sale of real estate                   -0-        -0-
 Other                                       1,100        758
      Total                                 28,555     27,836

Benefits and expenses:
 Interest expense                              404        637
 Interest on insurance policies              7,950      7,908
 Benefits and other expenses                15,676     14,819
     Total                                  24,030     23,364

Income from operations                       4,525      4,472

Provision for federal income taxes           1,583      1,536

Net income                                $  2,942   $  2,936


Per Share Data:

Common stock and common stock
 equivalents                                 5,250      5,424

Net income per share available to
 common shareholders                      $    .59   $    .57


             (See Notes to Consolidated Financial Statements)

            INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF INCOME
                         FOR THE SIX MONTH PERIODS
                       ENDED JUNE 30, 1997 AND 1996
                                (Unaudited)
             (in thousands of dollars, except per share data)


                                              6 Months Ended
                                                 June 30, 
                                              1997      1996  
Revenues:
 Net premiums                             $  4,760     $5,496
 Earned insurance charges                   20,406     20,307
 Net investment income                      29,081     30,705
 Gain on sale of real estate                   -0-     23,520
 Other                                       1,709      1,389
      Total                                 55,956     81,417

Benefits and expenses:
 Interest expense                              839      1,738
 Interest on insurance policies             15,966     15,830
 Benefits and other expenses                30,472     31,575
     Total                                  47,277     49,143

Income from operations                       8,679     32,274

Provision for federal income taxes           3,037     11,296

Net income                                $  5,642   $ 20,978
 

Per Share Data:

Common stock and common stock 
 equivalents                                 5,258      5,424

Net income per share available to 
 common shareholders                      $   1.13   $   3.93

             (See Notes to Consolidated Financial Statements)<PAGE>

            INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE THREE MONTH PERIODS
                       ENDED JUNE 30, 1997 AND 1996
                                (Unaudited)
                         (in thousands of dollars)


                                               3 Months Ended
                                                  June 30,
                                                1997     1996  

CASH FLOWS FROM OPERATING ACTIVITIES

Net Income                                   $  2,942  $  2,936

Adjustments to reconcile net income
 to net cash used in operating
 activities:                                           
Amortization of present value of future
 profits of acquired businesses                 1,580     1,632
Amortization of deferred policy 
 acquision costs                                  657       561
Depreciation                                      376      (281)
Net gain on sales of investments                  (66)     (125)
Financing costs amortized                         147       289

Changes in assets and liabilities:
Decrease (increase) in accrued 
 investment income                                383       (41)
Increase in agent advances and other
 receivables                                   (4,416)   (1,412)
Policy acquisition costs deferred              (1,105)   (1,253)
Decrease in policy liabilities                         
 and contract holder deposit funds             (9,006)   (4,058)
Increase (decrease) in other policyholders'
 funds                                              5       (14)
Increase in other liabilities                   3,940       110
Increase (decrease) in deferred federal      
 income taxes                                   4,132    (1,462)
Increase in other assets                         (205)     (909)
Other, net                                     (3,609)   (1,153)
Net cash used in operating
 activities                                  $ (4,245) $ (5,180)



             (See Notes to Consolidated Financial Statements)<PAGE>

            INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE THREE MONTH PERIODS
                       ENDED JUNE 30, 1997 AND 1996
                                (Unaudited)
                         (In thousands of dollars)

                                               3 Months Ended
                                                  June 30,
                                             1997        1996 
CASH FLOWS FROM INVESTING ACTIVITIES

Investments purchased                      $  (5,098)  $ (9,572)
Proceeds from sale and maturities of 
 investments                                  13,310      6,389
Net change in short-term investments          (6,122)    30,937
Payment (Issuance) of notes to affiliate       1,538       (253)
Purchase & retirement of equipment, net         (374)       292

Net cash provided by investing activities      3,254     27,793

CASH FLOWS FROM FINANCING ACTIVITIES

Issuance of common stock                         (65)       (41)

Repayment of debt                                -0-    (15,000)

Net cash used in financing activities           (65)    (15,041)

Net (decrease) increase in cash and cash
 equivalents                                 (1,056)      7,572


Cash and cash equivalents, beginning of
 period                                       4,313       1,953

Cash and cash equivalents, end of period   $  3,257    $  9,525




             (See Notes to Consolidated Financial Statements)<PAGE>

            INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                         FOR THE SIX MONTH PERIODS
                       ENDED JUNE 30, 1997 AND 1996
                                (Unaudited)
                         (in thousands of dollars)



                                              6 Months Ended
                                                  June 30,
                                               1997      1996 

CASH FLOWS FROM OPERATING ACTIVITIES

Net Income                                   $  5,642  $ 20,978

Adjustments to reconcile net income
 to net cash used in operating
 activities:                                           
Amortization of present value of future
 profits of acquired businesses                 2,971     3,100
Amortization of deferred policy acquisition            
 costs                                          1,179     1,272
Depreciation                                      891       -0-
Net gain on sales of investments                  (66)  (23,732)
Financing costs amortized                         295       506
Changes in assets and liabilities:                     
Increase in accrued investment
 income                                          (109)     (705)
Increase in agent advances and other
 receivables                                     (721)   (4,723)
Policy acquisition costs deferred              (2,273)   (2,356)
Decrease in policy liabilities
 and contract holder deposit funds            (12,076)  (11,089)
(Decrease) increase in other                           
 policyholders' funds                            (197)       33
Increase (decrease) in other liabilities        3,297    (1,433)
(Decrease) increase in deferred federal                
 income taxes                                   1,361    (6,622)
Increase in other assets                         (795)   (1,437)
Other, net                                       (307)    6,655
Net cash used in operating                   
 activities                                  $   (908) $(19,553)



             (See Notes to Consolidated Financial Statements)<PAGE>

            INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                         FOR THE SIX MONTH PERIODS
                       ENDED JUNE 30, 1997 AND 1996
                                (Unaudited)
                         (In thousands of dollars)

                                              6 Months Ended
                                                  June 30, 
                                               1997      1996 


CASH FLOWS FROM INVESTING ACTIVITIES

Investments purchased                      $(14,950)   $(23,275)
Proceeds from sale and maturities of
 investments                                 21,345      81,065
Net change in short-term investments         (3,318)     (5,615)
Payment (Issuance) of notes to affiliate      3,074        (253)
Purchase & retirement of equipment, net        (886)         20

Net cash provided by investing
 activities                                   5,265      51,942

CASH FLOWS FROM FINANCING ACTIVITIES

Issuance of common stock                        167          40

Repayment of debt                            (4,580)    (29,441)

Net cash used in financing activities        (4,413)    (29,401)

Net (decrease) increase in cash and cash
 equivalents                                    (56)      2,988

Cash and cash equivalents, beginning of
 period                                       3,313       6,537

Cash and cash equivalents, end of period   $  3,257    $  9,525


             (See Notes to Consolidated Financial Statements)<PAGE>

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

The financial statements included herein reflect all adjustments
which are, in the opinion of management, necessary to present a
fair statement of the interim results.  The statements have been
prepared to conform to the requirements of Form 10-Q and do not
necessarily include all disclosures required by generally accepted
accounting principles (GAAP).  The reader should refer to Form 10-K
for the year ended December 31, 1996 previously filed with the
Securities and Exchange Commission for financial statements
prepared in accordance with GAAP.  Certain prior year amounts have
been reclassified to conform with current year presentation.

Sale of Home Office Building

Net income for the six months ended June 30, 1996 includes $15.3
million resulting from the sale of the Austin Centre, a
hotel/office complex, located in Austin, Texas.  The selling price
was $62.675 million, less $1 million paid to a capital reserve
account for the purchaser.  The property was purchased in 1991 for
$31.275 million.  The book value of the property, $36.8 million,
net of improvements and amortization, was retained and reinvested
by Investors Life Insurance Company of North America.  The balance
of the proceeds of the sale, net of Federal Income Tax, was used to
reduce the Company's senior loan obligations by $15 million.  The
sale closed on March 29, 1996.  The Company continues to rent space
on three floors under the terms of an operating lease which expires
in September, 1997.


Acquisition of Subsidiary

On March 25, 1997, ILCO and Investors Life Insurance Company of
Indiana ( Investors-IN ), an indirect, wholly-owned subsidiary of
ILCO, entered into an agreement to acquire State Auto Life
Insurance Company, an Ohio domiciled life insurer, from State
Automobile Mutual Insurance Company, for a cash purchase price of
$11.8 million, subject to certain post-closing adjustments.  In
connection with this transaction, the bank group participating in
the Senior Loan agreed to defer payment of $4.5 million otherwise
payable on April 1, 1997 under the terms of the Senior Loan, and to
reduce the amount of the payment otherwise due on July 1, 1997 by
$2.5 million.  This deferral results in extending the maturity date
of the Senior Loan to October 1, 1998.  Under the terms of the
transaction, State Auto Life would be merged into Investors-IN. 
The closing of the transaction took place on July 9, 1997.


New Accounting Pronouncements

In February 1997, the FASB issued FAS No. 128, "Earnings Per
Share," which revises the standards for computing earnings per
share previously prescribed by APB Opinion No. 15, "Earnings Per
Share."  The Statement establishes two measures of earnings per
share:  basic earnings per share and diluted earnings per share. 
Basic earnings per share is computed by dividing income available
to common shareholders by the weighted average number of common
shares outstanding during the period.  Diluted earnings per share
reflects the potential dilution that could occur if securities or
other contracts to issue common stock were converted or exercised. 
The Statement requires dual presentation of basic and diluted
earnings per share on the face of the income statement for all
entities with potential dilutive securities outstanding.  The
Statement also requires a reconciliation of the numerator and
denominator of the basic earnings per share computation to the
numerator and denominator of the diluted earnings per share
computation.

The Statement is effective for interim and annual periods ending
after December 15, 1997.  Earlier application is not permitted. 
However, an entity may disclose pro forma earnings per share
amounts that would have resulted if the entity had applied the
Statement in an earlier period. The Company intends to adopt FAS
128 in its annual financial statements for the year ended December
31, 1997.

The pro forma unaudited earnings per share amounts that would have
resulted assuming the Company had computed its earnings per share
in accordance with the provisions established by FAS 128 for the
three and six months ended June 30, 1997 and 1996 are as follows:


                          Three Months Ended  Three Months Ended
                          June 30, 1997       June 30, 1996


Basic earnings per share       $0.68               $0.70

Diluted earnings per share     $0.67               $0.66


                          Six Months Ended    Six Months Ended
                          June 30, 1997       June 30, 1996


Basic earnings per share       $1.30               $5.01

Diluted earnings per share     $1.28               $4.76






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



For the six-month period ended June 30, 1997, ILCO's net income was
$5,642,000 ($1.13 per common share) as compared to $20,978,000  
($3.93 per common share) in the first six months of 1996. 

Net income from continuing operations (excluding the gain resulting
from the Austin Centre) as described below was $5,642,000 ($1.13 
per common share) for the six-month period ended June 30, 1997, as
compared to $5,678,000 ($1.12  per common share) for the first six
months of 1996.

For the six-month period ended June 30, 1996, net income included
$15.3 million ($2.82 per common share) resulting from the sale of
the Austin Centre, a hotel/office complex, located in Austin,
Texas.  The selling price was $62.675 million, less $1 million paid
to a capital reserve account for the purchaser.  The property was
purchased in 1991 for $31.275 million. A portion of the sale
proceeds, equal to the book value of the property, net of
improvements and amortization ($36.8 million), was retained and
reinvested by Investors Life Insurance Company of North America
("Investors-NA").  The balance of the proceeds, net of federal
income tax, of the sale was used to reduce the Company's senior
loan obligations by $15 million.  The sale closed on March 29,
1996.  The Company and its affiliates will continue to occupy space
on three floors of the office tower as its headquarters, under a
lease which runs through September 30, 1997.  In May , 1997, the
Company renewed the lease, for a 5-year period, with options to
renew for additional 5-year periods.
 
The statutory earnings of the Company's insurance subsidiaries, as
required to be reported to insurance regulatory authorities, before
interest expense, capital gains and losses, and federal income
taxes were $9,868,104  for the six-month period ended June 30, 1997
as compared to $10,306,000  for the comparable period in 1996.
These statutory earnings are the source to provide for the
repayment of ILCO's indebtedness.

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

Premium income, net of reinsurance, for the first six months of
1997 was $4.8 million, as compared to $5.5 million for the first
six months of 1996.   Reinsurance premiums ceded were $2.4  million
for the first six months of 1997, as compared to $1.9 million in
the first six months of 1996. 

Earned insurance charges for the six-month period ended June 30,
1997 were $20.4 million, as compared to $20.3 million for the same
period in 1996.  This source of revenues is related to the
universal life insurance and annuity book of business of Investors-
NA.  

Interest expense was $0.8 million for the first six months of 1997,
as compared to $1.7 million for the first six months of 1996. The
decrease is attributable to a reduction in the average principal
balance of the senior loan from $42.4 million for the first six
months of 1996 to $20.5 million for the first six months of 1997,
as well as a decrease in the average rate of interest paid on the
senior loan - 7.60% for the first six months of 1997, as compared
to 7.81% for the first six months of 1996.

The decline in long-term interest rates during the first six months
of 1997, which was related to general economic conditions, had a
positive effect upon the market value of the fixed maturities
available for sale segment of the portfolio.  As of June 30, 1997,
the market value of the fixed maturities available for sale segment
was $443.6 million as compared to an amortized cost of $441.5 
million, or an unrealized gain of $2.1 million. Such increase
reflects unrealized gains on such investments. There is no
assurance that this unrealized gain will be realized in the future.
The net of tax effect of this increase has been recorded as an
increase in shareholders' equity. 

A subsidiary of the Company, Investors Life Insurance Company of
North America ("Investors-NA") is the owner and developer of the
office complex known as Bridgepoint Square Offices.  Once
completed, the project will consist of four office buildings, with
a total rentable space of 364,000 square feet, and two parking
garages. Investors-NA purchased the 20 acre tract of land for this
complex in January, 1995, for a cash purchase price of $9.75
million.  At that time, the tract included one completed and fully
leased office building, an adjacent parking garage, and sites for
three more office buildings and a second parking garage. Since the
purchase, Investors-NA has completed construction on the second
parking garage and two of the remaining building sites.
Construction is in progress on the fourth building, with a
projected completion date in September, 1997.  Investors-NA has
leased essentially all of the space in the four buildings.  Upon
completion of the project, the investment of Investors-NA will be
approximately $46 million. Investors-NA has listed the properties
for sale.  The properties are currently being reviewed by several
prospective buyers.

On March 25, 1997, ILCO and Investors Life Insurance Company of
Indiana ("Investors-IN"), an indirect, wholly-owned subsidiary of
ILCO, entered into an agreement to acquire State Auto Life
Insurance Company, an Ohio domiciled life insurer, from State
Automobile Mutual Insurance Company, for a cash purchase price of
$11.8 million, subject to certain post-closing adjustments.   In
connection with this transaction, the bank group participating in
the Senior Loan have agreed to defer payment of $4.5 million 
otherwise payable on April 1, 1997 under the terms of the Senior
Loan, and to reduce the amount of the payment otherwise due on July
1, 1997 by $2.5 million.  This deferral would result in extending
the maturity date of the Senior Loan to October 1, 1998.  Under the
terms of the transaction, State Auto Life would be merged into
Investors-IN.  The closing of the transaction took place on July 9,
1997.

At the annual meeting of shareholders, which was held on June 17,
1997, the shareholders approved  the redomestication of the company
from the State of New Jersey to the State of Texas.  The
redomestication was implemented by a merger of the Company into a
Texas-domiciled company  (ILCO-Texas) and, following the merger,
changing the name of ILCO-Texas to InterContinental Life
Corporation. 

                           Results of Operations

For the six-month period ended June 30, 1997, the Company's income
before federal income taxes was $8,679,000 on revenues of
$55,956,000, as compared to income of $32,274,000, on revenues of
$81,417,000 for the first six months  of 1996.  Revenues for the
1996 period include $23,520,000 related to the gain resulting from
the sale of the Austin Centre. 

For the three-month period ended June 30, 1997, the lapse rate with
respect to universal life insurance policies increased from the
lapse rate experienced in the similar period in 1996.  The rate for
the 1997 period was 7.92%, as compared to 7.60% in the 1996 period. 
The lapse rate with respect to traditional (non-universal) life
insurance policies increased slightly from the levels experienced
in the second quarter of 1996.  The rate for the three-month period
ended June 30, 1997 was 8.52%, as compared to 8.16% in the similar
period in 1996.  The lapse rates experienced during these periods
were within the ranges anticipated by management.

                     Liquidity and Capital Resources:

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

As of December 31, 1995, the outstanding principal balance of the 
ILCO's senior loan obligations was $59.4 million.  In addition to
making the scheduled principal payments under its senior loan, the
Company made payments of $941,000 in March, 1996, $15.0 million in
April, 1996 and $0.5 million in July, 1996. As of June 30, 1997,
the principal balance of the senior loan was $20.4 million.

ILCO's principal source of liquidity consists of the periodic
payment of principal and interest by Investors-NA, pursuant to the
terms of the Surplus Debentures.  The Surplus Debentures were
originally issued by Standard Life Insurance Company and their
terms were previously approved by the Mississippi Insurance
Commissioner.  Upon the merger of Standard Life into Investors-NA,
the obligations of the Surplus Debentures were assumed by
Investors-NA.  As of June 30, 1997, the outstanding principal
balance of the Surplus Debentures was $5.2 million and $28.8
million, respectively.  Since Investors-NA is domiciled in the
State of Washington, the provisions of Washington insurance law
apply to the Surplus Debentures.  Under the provisions of the
Surplus Debentures and current law, no prior approval of the
Washington Insurance Commissioner is required for Investors-NA to
pay interest or principal on the Surplus Debentures; provided that,
after giving effect to such payments, the statutory surplus of
Investors-NA is in excess of $10 million (the "surplus floor"). 
However, Investors-NA has voluntarily agreed with the Washington
Insurance Commissioner that it will provide at least five days
advance notice of payments which it will make under the surplus
debenture.   As of June 30, 1997, the statutory surplus of
Investors-NA was $56.7 million, an amount substantially in excess
of the surplus floor.  The funds required by Investors-NA to meet
its obligations to the Company under the terms of the Surplus
Debentures are generated from operating income generated from
insurance and investment operations.

In addition to the payments under the terms of the Surplus
Debentures, ILCO has received dividends from Standard Life (now,
from Investors-NA).   Washington's insurance code includes the
"greater of" standard for payment of dividends to shareholders, but
has 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. As of June 30,
1997, Investors-NA had earned surplus of $12.1 million. Since the
law applies only to dividend payments, the ability of Investors-NA
to make principal and interest payments under the Surplus
Debentures is not affected.  ILCO does not anticipate that
Investors-NA will have any difficulty in making principal and
interest payments on the Surplus Debentures in the amounts
necessary to enable ILCO to service the Senior Loan for the
foreseeable future.

InterContinental Life Insurance Company ("ILIC"), a subsidiary of
Investors-NA is domiciled in the State of New Jersey. Under the New
Jersey insurance code, a domestic insurer may make dividend
distributions upon proper notice to the Department of Insurance, as
long as the distribution is reasonable in relation to adequate
levels of policyholder surplus and quality of earnings. Any
dividend must be paid from earned surplus. A proposed payment of a
dividend or distribution which, together with dividends or
distributions paid during the preceding twelve months, exceeds the
greater of (i) 10% of statutory surplus as of the preceding
December 31 or (ii) statutory net gain from operations for the
preceding calendar year is treated as an "extraordinary dividend"
and may not be paid until either it has been approved, or a waiting
period shall have passed during which it has not been disapproved,
by the insurance commissioner. ILIC had earned surplus of $5.2
million at June 30, 1997.
 
Investors-IN is domiciled in the State of Indiana. Under the
Indiana insurance code, a domestic insurer may make dividend
distributions upon proper notice to the Department of Insurance, as
long as the distribution is reasonable in relation to adequate
levels of policyholder surplus and quality of earnings. Under
Indiana law the dividend must be paid from earned surplus.
Extraordinary dividend approval would be required where a dividend
exceeds the greater of 10% of surplus or the net gain from
operations for the prior fiscal year. Investors-IN had earned
surplus of  $12.4 million at June 30, 1997.  As a result of the
purchase of State Auto Life Insurance Company on July 9, 1997, the
surplus of Investors-IN declined by $6 million, to $6.4 million.

ILCO's net cash flow used in operating activities was $0.9 million
for the six month period ended June 30, 1997, as compared to $19.6
million for the first six months of 1996.  This change is primarily
due to fluctuations in the amount of deferred federal income tax
related to the market value of investment assets that are fixed
maturities available for sale and the net gain realized in
connection with the sale of the Austin Centre.

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

                                Investments

As of June 30, 1997, the book value of the Company's investment
assets totaled $658.5 million, as compared to $661.1 million as of
December 31, 1996.  Total assets as of June 30, 1997 ($1.28 
billion) increased from the level as of December 31, 1996 ($1.26
billion). 

The level of short-term investments at June 30, 1997 was $94.9
million, as compared to $91.6 million at the end of 1996.   
 
The fixed maturities available for sale portion of invested assets
at June 30, 1997 was $443.6 million.  The amortized cost of the
fixed maturities available for sale segment as of June 30, 1997 was
$441.5 million, representing a net unrealized gain of $2.1 
million.  This unrealized gain principally reflects changes in
interest rates from the date the respective investments were
purchased.  To reduce the exposure to interest rate changes,
portfolio investments are selected so that diversity, maturity and
liquidity factors approximate the duration of associated
policyholder liabilities.

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

The Company's fixed maturities portfolio (including short-term
investments), as of June 30, 1997, included a non-material amount
(0.93% of total fixed maturities and short-term investments) of
debt securities which, in the annual statements of the companies as
filed with state insurance departments, were designated under the
National Association of Insurance Commissioners ("NAIC") rating
system as "3" (medium quality) or below.  As of December 31, 1996,
the comparable percentage was  1.1%.  Of these non-investment grade
investments, 0.242% are concentrated in the medium quality (or "3")
category, with 0.686 receiving an NAIC rating of "4" (low quality)
and only 0.001% receiving a rating of "5".

The consolidated balance sheets of the Company as of June 30, 1997
include $56.9 million of "Notes receivable from affiliates",
represented by (i) a loan of $22.5 million from Investors-NA to
Family Life Corporation and a $2.5 million loan from Investors-CA
to Financial Industries Corporation (which is now owned by
Investors-NA as a result of the merger of Investors-CA into
Investors-NA) and $1.9 million of additions to the $2.5 million
note made in accordance with the terms of such note; these loans
were granted in connection with the 1991 acquisition of Family Life
Insurance Company by a wholly-owned subsidiary of FIC (ii) a loan
of $30 million by Investors-NA to Family Life Corporation made in
July,1993, in connection with the prepayment by the FIC
subsidiaries of indebtedness which had been previously issued to
Merrill Lynch as part of the 1991 acquisition and (iii) a loan of
$4.5 million by Investors-NA to Family Life Insurance Investment
Company made in July, 1993, in connection with the same transaction
described above.  As of June 12, 1996, the provisions of the notes
from Investors-NA to FIC, FLC and FLIIC were modified as follows:
(a) the $22.5 million note was amended to provide for twenty
quarterly principal payments, in the amount of $1,125,000 each, to
commence on December 12, 1996; the final quarterly principal
payment is due on September 12, 2001; the interest rate on the note
remains at 11%, (b) the $30 million note was amended to provide for
forty quarterly principal payments, in the amount of $163,540 each
for the period December 12, 1996 to September 12, 2001; beginning
with the principal payment due on December 12, 2001, the amount of
the principal payment increases to $1,336,458;  the final quarterly
principal payment is due on September 12, 2006; the interest rate
on the note remains at 9%, (c) the $4.5 million note was amended to
provide for forty quarterly principal payments, in the amount of
$24,531 each for the period December 12, 1996 to September 12,
2001; beginning with the principal payment due on December 12,
2001, the amount of the principal payment increases to $200,469; 
the final quarterly principal payment is due on September 12, 2006;
the interest rate on the note remains at 9%, (d) the $2.5 million
note was amended to provide that the principal balance of the note
is to be repaid in twenty quarterly installments of $125,000 each,
commencing December 12, 1996 with the final payment due on
September 12, 2001; the rate of interest remains at 12%, (e) the
Master PIK note, which was issued to provide for the payment in
kind of interest due under the 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%.

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.


                          Accounting Developments

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

The Statement is effective for interim and annual periods ending
after December 15, 1997.  Earlier application is not permitted. 
However, a company may disclose pro forma earnings per share
amounts that would have resulted if it had applied the Statement in
an earlier period. The Company intends to adopt FAS 128 in its
annual financial statements for the year ended December 31, 1997.

The pro forma unaudited earnings per share amounts that would have
resulted assuming the Company had computed its earnings per share
in accordance with the provisions established by FAS 128 for the
six month periods  ended June 30, 1997 and 1996 are as follows:


                                                Six Months
Ended                          Six Months Ended
                               June 30, 1997    June 30, 1996

Basic earnings per share         $1.30            $5.01        
Diluted earnings per share       $1.28            $4.76       
                               



<PAGE>
INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES


Part III.  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.

Item 2.  Changes in Securities

          None


Item 3.  Defaults Upon Senior Securities

          None


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

          
The Annual Meeting of Shareholders was held on June 17, 1997. The
matters voted on at the meeting were: (1) the election of directors
and (2) the approval of the Redomestication of the Company and the
related Plan and Agreement of Merger of the Company into ILCO-
Texas, a wholly-owned subsidiary of the Company. All of the
nominees were reelected as directors, and Proposal No. 2 was
approved by the shareholders.  Proxies for the meeting were
solicited to Regulation 14 under the '34 Act.  

The voting tabulation as to each nominee was as follows:

  Name                In Favor             Withheld    


Crowe, Joseph F.      3,544,526             7,136 
Demgen, Jeffrey H.    3,545,244             6,955
Fleron, Theodore A.   3,544,684             7,195
Gilcrease, W. Lewis   3,545,241             6,421
Grace, James M.       3,544,853             6,809
Kosson, Richard A.    3,545,244             6,418



  Name                In Favor             Withheld


Mitte, Roy F.         3,542,351             9,311
Payne, Eugene E.      3,545,229             6,981
Pruner, H. Gene       3,544,805             6,857
Schmitt, Steven P.    3,545,229             6,433
Shuman, Donald        3,544,611             6,433

The voting tabulation as to Proposal No. 2 was as follows:

    In Favor:   2,956,794

    Against:       68,004

    Abstain:       19,745
                               

Item 5.  Other Information

          None


Item 6.  Exhibits and Reports on Form 8-K

(a)       Exhibits

                                                
          (i)   See Attached Exhibit Index

          (ii)  Form 10-K Annual Report of Registrant for the year
          ended December 31, 1996 heretofore filed by Registrant
          with the Securities and Exchange Commission, which is
          hereby incorporated by reference. 

(b)       Reports on Form 8-K:

                         None



            INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES





                                                            
SIGNATURES


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



                                                            INTER
CONTINENTAL LIFE CORPORATION



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


Date:   August 14, 1997


                               Exhibit Index

Exhibit        Page                Description
Number         Number



3 (a)          1              Articles of Incorporation of
                              InterContinental Life Corporation of
                              Texas

3(b)           7              Amendment to Articles of
                              Incorporation of InterContinental
                              Life Corporation of Texas


3(c)           8              By-laws of InterContinental Life
                              Corporation of Texas

3(d)           18             Articles of Merger of
                              InterContinental Life Corporation
                              and InterContinental Life
                              Corporation of Texas

3(e)           21             Plan and Agreement of Merger Between
                              InterContinental Life Corporation
                              and InterContinental Life
                              Corporation of Texas


                         ARTICLES OF INCORPORATION

                          
                                   OF
                                    
                            
               INTERCONTINENTAL LIFE CORPORATION OF TEXAS
                                    
                                    
     The undersigned natural person of the age of 18 years or more,
      acting as sole incorporator of a corporation under the Texas
        Business Corporation Act, does hereby adopt the following
             Articles of Incorporation for such corporation:

                                ARTICLE I
The name of the corporation is INTERCONTINENTAL LIFE CORPORATION
OF TEXAS
                               ARTICLE II
The period of its duration is perpetual.

                               ARTICLE III
The purpose for which the corporation is organized is to transact
any lawful business for which corporations may be incorporated
under the Texas Business Corporation Act.

                               ARTICLE IV
(A) The aggregate number of shares of capital stock which the
corporation shall have the authority to issue is forty-five
million (45,000,000) to be divided into two classes as follows:
     (1)  30 million shares of Preferred Stock with a par value
          of one dollar ($1.00) each, which may be issued from
          time to time in one or more series, each series to be
          designated by a distinguishing letter or title. The
          Board of Directors of the corporation is hereby
          authorized, within the restrictions stated within this
          Article IV, to establish each series of Preferred
          Stock, to provide for the number of shares in such
          series and to establish preferences, qualifications,
          limitations, restrictions and special or relative
          rights of such series. The authority of the Board of
          Directors of the corporation with respect to each
          series shall include, but not be limited to, the
          determination of the following:
               (a) Liquidation: The rights of the shares of each
               such series in the event of voluntary or
               involuntary liquidation, dissolution or winding up
               of the corporation and the relative rights of
               priority, if any, of payment of such shares of
               such series.
               (b) Designation: The number of shares constituting
               each such series and the distinctive designation
               thereof.
               (c) Dividends: The dividend rate on each such
               series, whether dividends on the shares of such
               series shall be cumulative (and, if cumulative,
               the date or dates from which such dividends would
               accumulate), and the relative rights of priority,
               if any, of payment of dividends on shares of such
               series.
               (d) Voting Rights: The voting rights, if any, of
               each such series, in addition to the voting rights
               provided by law, and the terms thereof.
               (e) Redemption: The redemption options or
               obligations, if any, in respect of each such
               series and the terms and conditions thereof,
               including, without limitation, the date or dates
               upon or after which such shares are redeemable and
               the redemption price payable in respect of such
               shares being so redeemed.
               (f) Sinking Fund: The sinking fund requirements,
               if any, in respect of any redemption required
               pursuant to Clause (e) of this Article IV.
               (g) Conversion: The conversion privileges, if any,
               of each such series and the terms and conditions
               thereof.
          Dividends on outstanding shares of any series of
          Preferred Stock shall be paid or declared and set apart
          for payment before any dividends shall be paid or
          declared or set apart for payment on the Common Stock
          with respect to the same dividend period.
     (2)  15 million shares of Common Stock with a par value of
          $0.22 each, which may be issued from time to time in
          one or more series, each series to be designated by a
          distinguishing letter or title. The Board of Directors
          of the corporation is hereby authorized, within the
          restrictions stated within this Article IV, to
          establish each series of Common Stock, to provide for
          the number of shares in such series and to establish
          preferences, qualifications, limitations, restrictions
          and special or relative rights of such series. The
          Preferred Stock is senior to the Common Stock, and the
          Common Stock is subject to the rights and preferences
          of the Preferred Stock.
(B) No shareholder shall be entitled to cumulate his votes by
giving one candidate as many votes as the number of such
directors to be elected multiplied by the number of shares owned
by such shareholder or by distributing such votes on the same
principle among any number of such candidates.
                                ARTICLE V
The corporation will not commence business until it has received
for the issuance of its shares consideration of a value not less
than One Thousand Dollars ($1,000.00), consisting of money, labor
done, or property actually received.

                               ARTICLE VI
The address of the corporation's initial registered office is 701
Brazos, Suite 1400, Austin, Texas 78701, and the name of its
initial registered agent at such address is James M. Grace.

                               ARTICLE VII
If, with respect to any action taken by the shareholders of the
corporation, other than plan of merger or consolidation, any
provision of the Texas Business Corporation Act would, but for
this Article, require the vote or concurrence of the holders of
shares having more than a majority of the votes entitled to be
cast thereon, or any class or series thereof, the vote or
concurrence of the holders of shares having only a majority of
the votes entitled to be cast thereon, or any class or series
thereof, shall be required with respect to any such action.

                              ARTICLE VIII
The number of directors constituting the initial Board of
Directors is eleven (11) and the names and addresses of the
persons who are to serve as directors until the first annual
meeting of the shareholders or until their successors are elected
and qualify are:
     Name                     Address
     Roy F. Mitte             701 Brazos, Suite 1400
                              Austin, Texas 78701

     James M. Grace           701 Brazos, Suite 1400
                              Austin, Texas 78701

     Eugene E. Payne          701 Brazos, Suite 1400
                              Austin, Texas 78701

     Jeffrey H. Demgen        701 Brazos, Suite 1400
                              Austin, Texas 78701

     Theodore A. Fleron       701 Brazos, Suite 1400
                              Austin, Texas 78701

     Joseph F. Crowe          706 Golf Crest Lane
                              Austin, Texas

     W. Lewis Gilcrease       114 West San Antonio
                              San Marcos, Texas

     Richard A Kosson         18 Rale Terrace
                              Livingston, New Jersey

     H. Gene Pruner           8705 Flagship Circle
                              Indianapolis, Indiana

                         
     Steven P. Schmitt        701 Brazos, Suite 1400
                              Austin, Texas 78701

     Donald P. Shuman         2 Dayton Road
                              Flemington, New Jersey

     

                               ARTICLE IX
The name and address of the incorporator is:
                    Christopher W. Schrauff
                    701 Brazos, Suite 1400
                    Austin, Texas 78701

EXECUTED BY THE UNDERSIGNED on this 29th day of April, 1997.



                                    /s/ Christopher W. Schrauff
                                   Christopher W. Schrauff



SWORN TO BEFORE ME on this 29th day of April, 1997, by the above
named incorporator,


                                     /s/  Sara Bramlett        
                                   Notary Public in and for
                                   Travis County, Texas

<PAGE>
                           ARTICLES OF AMENDMENT

                     OF THE ARTICLES OF INCORPORATION

               OF INTERCONTINENTAL LIFE CORPORATION OF TEXAS



The undersigned certifies that:

1.   He is the Secretary of InterContinental Life Corporation of
Texas.

2.   At a duly held meeting of the Board of Directors of
InterContinental Life Corporation of Texas, held on May 6, 1997,
the Board of Directors adopted the following resolution approving
the following amendment to the Articles of Incorporation:

     The following shall be added to, not replace, Article VII of
     the Articles of Incorporation:

               "No holder of securities of the of the corporation
          shall be entitled as a matter of right, preemptive or
          otherwise, to subscribe for or purchase any securities of
          the corporation now or hereafter authorized to be issued,
          or securities held in the treasury of the corporation,
          whether issued or sold for cash or other consideration or
          as a dividend or otherwise.  Any such securities may be
          issued or disposed of by the Board of Directors to such
          persons and on such terms as in its discretion it shall
          deem advisable."

3.   No shares of InterContinental Life Corporation of Texas stock
have been issued as of the date of these Articles of Amendment.
Therefore, shareholder approval of these Articles of Amendment is
not required.

4.   The undersigned has executed these Articles of Amendment on
May 7, 1997.



  /s/ Eugene E. Payne           
Eugene E. Payne
Vice President and Secretary






                                BY-LAWS OF

                INTERCONTINENTAL LIFE CORPORATION OF TEXAS


                                 ARTICLE I

                                 OFFICES


     Section 1.  The principal office shall be located at 701
Brazos, Austin, Texas 78701.  The registered office of the
Corporation shall be located at 701 Brazos, Austin, Texas 78701. 
The Agent upon whom process against the corporation may be served
is James M. Grace at said address.  The corporation may also have
offices at such other places within and without the State of Texas
as the Board of Directors may, from time to time, determine or the
business of the corporation may require.

     Section 2.  The corporation may also have offices at such
other places as the Board of Directors may from time to time
determine or the business of the corporation may require.

                                ARTICLE II
                          STOCKHOLDERS' MEETINGS
     Section 1.  All meetings of the stockholders shall be held at
the principal office of the corporation or at such other place as
may from time to time be designated by the Board of Directors and
stated in the notice of the meeting.

     Section 2.  An annual meeting of stockholders, commencing with
the year 1997, shall be held on the first Friday of July in each
year if not a legal holiday, and if a legal holiday, then on the
next secular day following, at 3:00 P.M., or at such other time and
place as designated in a Resolution adopted by the Board of
Directors, when the stockholders shall elect by a plurality vote,
by ballot, a Board of Directors, and transact such other business
as may properly be brought before the meeting.

     Section 3.  Written notice of the annual meeting shall be
served upon or mailed to each stockholder entitled to vote thereat,
at such address as appears on the stock books of the corporation,
not less than ten nor more than sixty days prior to the meeting.

     Section 4.  At least ten days before every election of
Directors, the Secretary shall make a complete list of the
stockholders entitled to vote at the ensuing election, arranged in
alphabetical order, with the post office address, and the number of
shares held be each, which list shall be at all times, during the
usual hours of business, be kept at the principal office, open to
the examination of any stockholder.  The Board of Directors shall
produce at the time and place of each election the transfer books
and stock books of the corporation and said list of stockholders
which shall remain there during the election.

     Section 5.  Special meetings of the stockholders, for any
purpose or purposes, other than those prescribed by statute or by
the Articles of Incorporation, may be called by the Chairman of the
Board, or by the President and shall be called by the Chairman of
the Board or the President or Secretary at the request in writing
of a majority of the members of the Board of Directors.

     Section 6.  Written notice of a special meeting of
stockholders, stating the time and place and object thereof, shall
be served upon or mailed to each stockholders entitled to vote
thereat, at such address as appears on the books of the
corporation, not less than ten days nor more than sixty days before
such meeting.

     Section 7.  Business transacted at all special meetings shall
be confined to the objects stated in the call.

     Section 8.  The holders of a majority of the stock issued and
outstanding and entitled to vote thereat, present in person or
represented by proxy, shall be requisite and shall constitute a
quorum at all meetings of the stockholders for the transaction of
business, except as otherwise provided by statute, by the Articles
of Incorporation or by these By-Laws.  If, however, a quorum shall
not be present or represented at any meeting of the stockholders,
the stockholders entitled to vote thereat, present in person or
represented by proxy, shall have power to adjourn the meeting from
time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented.  At such
adjourned meeting at which a quorum shall be present or
represented, any business may be transacted which might have been
transacted at the meeting as originally notified.

     Section 9.  When a quorum is present or represented at any
meeting, vote of the holders of a majority of the stock having
voting power present in person or represented by proxy shall decide
any question brought before such meeting, unless the question is
one upon which by express provision of the statutes or of the
Articles of Incorporation or of these By-laws, a different vote is
required in which case such express provision shall govern and
control the decision of such question.

     Section 10.  At any meeting of the stockholders every
stockholder having the right to vote shall be entitled to vote in
person or by proxy appointed by an instrument in writing subscribed
by such stockholder or by his duly authorized attorney and bearing
a date not more than three years prior to said meeting.  Each proxy
shall be delivered to the Secretary of the corporation prior to the
holding of the meeting.  The attendance at any meeting of a
stockholder who may theretofore have given a proxy shall not have
the effect of revoking the proxy unless the stockholder so
attending shall, in writing, so notify the Secretary at any time
prior to the voting of the proxy.  Each stockholder shall have one
vote for each share of stock having voting power registered in his
name at the time of the closing of the transfer books or on the
date fixed as a record date for said meeting.  In case the transfer
books of the corporation shall not have been closed and no date
shall have been fixed as a record date for the determination of the
stockholders entitled to vote, no share of stock shall be voted on
at any election of Directors, after the first election of
Directors, which has been transferred on the books of the
corporation within twenty days next preceding such election of
Directors.

     Section 11.  Any action required to be taken at a meeting of
the stockholders may be taken without a meeting if a consent in
writing, setting forth the action so taken, shall be signed by all
of the stockholders entitled to vote with respect to the subject
matter thereof.

                                ARTICLE III
                                 DIRECTORS
     Section 1.  The number of Directors which shall constitute the
whole Board shall be any number not less than three nor more than
twenty-five as authorized by vote of a majority of the entire Board
of Directors at any regular or special meeting, provided that no
decrease shall shorten the term of any incumbent Director.  The
Directors shall be elected by the stockholders at the annual
meeting of stockholders, and each Director shall be elected to
serve until his successor shall be elected and shall qualify.

     No Director's name shall be submitted to the shareholders at
the Annual Meeting for reelection unless said Director during his
preceding term in office attended at least half of the duly called
meetings of the Directors of the Company unless the Board in light
of existing circumstances determines otherwise.

     Section 2.  A regular meeting of the Board shall be held
without notice immediately following and at the same place as the
annual shareholders' meeting for the purposes of electing officers
and conducting such other business as may come before the meeting. 
The Board, by resolution, may provide for additional regular
meetings which may be held without notice.

     Section 3.  A special meeting of the Board may be called at
any time by the Chairman of the Board or by a majority of the
members of the Board of Directors for any purpose.  Such meeting
shall be held upon not less than three (3) days notice.  Such
notice shall be given by posting written notice in the United
States mail, postage prepaid.  Such notice shall specify the date,
time and place of the meeting.

     Section 4.  The Board may act without a meeting if, prior or
subsequent to such action, each member of the Board shall consent
in writing to such action.  Such written consent or consents shall
be filed in the minute book.

     Section 5.  At all meetings of the Board, the presence of a
majority of the Directors shall be necessary and sufficient to
constitute a quorum for the transaction of business, and the act of
a majority of the Directors present at any meeting at which there
is a quorum shall be the act of the Board of Directors, except as
may be otherwise specifically provided by statute or by the
Articles of Incorporation or by these By-laws.  Any Director may
participate in a meeting of the Board or a committee thereof by
means of a conference telephone or any other means of
communication, provided, that all persons participating in the
meeting are able to hear each other.  Any Director participating in
accordance with the preceding sentence of this Section 5 of Article
III shall be deemed present for all purposes of the meeting.  If a
quorum shall not be present at any meeting of Directors, the
Directors present thereat may adjourn the meeting from time to
time, without notice other than announcement at the meeting, until
a quorum shall be present.

     Section 6.  Any vacancy in the Board, including a vacancy
caused by an increase in the number of Directors, may be filled by
the affirmative vote of a majority of the remaining Directors, even
though less than a quorum of the Board, or by a sole remaining
Director.

     Section 7.  The property and business of the corporation shall
be managed by its Board of Directors who may exercise all such
powers of the corporation and do all such lawful acts and things as
are not by statute or by the Articles of Incorporation or by these
By-laws directed or required to be exercised or done by the
stockholders.

     If the Corporation owns 10% or more of the shares of stock of
another corporation, any voting or other action that may be taken
by the Corporation in its capacity as shareholder of such
corporation shall be taken by a majority vote of the Corporation's
Board of Directors or a majority vote of the Executive Committee of
the Board of Directors.

     Section 8.  The Board of Directors shall have the power to
remove Directors for cause and to suspend Directors pending a final
determination that cause exists for removal.


                      EXECUTIVE AND OTHER COMMITTEES

     Section 9.  The Board of Directors may appoint an executive
committee, to consist of two or more of the Directors, which,
except to the extent limited in said resolution, shall have and may
exercise the powers of the Board of Directors in the management of
the business, affairs and property of the corporation during the
intervals between the meetings of the Directors, and may have power
to authorize the seal of the corporation to be affixed to all
papers which may require it.  Vacancies in the membership of the
committee shall be filled by the Board of Directors at a regular
meeting thereof or at a special meeting called for that purpose. 
The executive committee shall keep regular minutes to its
proceedings and report the same to the Board when required. The
Board of Directors is authorized from time to time by a resolution
adopted by a majority of the entire board to establish one or more
other committees, each committee shall have at least three members.
Said resolution may provide the committees with powers consistent
with the laws of the State of Texas.  The Board of Directors may be
resolution adopted by a majority of the entire Board abolish any
such committees or amend any resolution authorizing such
committees.


                         COMPENSATION OF DIRECTORS

     Section 10.  Directors, as such, shall not receive any stated
salary for their services, but, by resolution of the Board, a fixed
sum and expenses of attendance, if any, may be allowed for
attendance at each regular or special meeting of the Board;
provided, that nothing herein contained shall be construed to
preclude any Director from serving the corporation in any other
capacity and receiving compensation therefor.  Members of the
executive or any other committee may be allowed like compensation
for attending committee meetings.

                                ARTICLE IV
                                  NOTICES

     Section 1.  Any notice required by these By-laws, by the
Articles of Incorporation, or by the Texas Business Corporation Act
may be waived in writing by any person entitled to notice.  The
waiver or waivers may be executed either before or after the event
with respect to which notice is waived.  Each Director or
shareholder attending a meeting without protesting, prior to its
conclusion, the lack of proper notice shall be deemed conclusively
to have waived notice of the meeting.

     Section 2.  Whenever under the provisions of the statutes or
of the Articles of Incorporation or of these By-Laws, notice is
required to be given to any Director or stockholder, it shall not
be construed to mean personal notice, but such notice may be given
in writing, by mail, addressed to such Director or stockholder at
such address as appears on the books of the corporation, and such
notice shall be deemed to be given at the time when the same shall
be thus mailed.


                                 ARTICLE V
                                 OFFICERS

     Section 1.  The officers of the Corporation shall be a
Chairman of the Board, President, one or more Vice Presidents, a
Secretary, a Treasurer and one or more Assistant Secretaries.  Any
two of the aforesaid offices, except those of President and Vice
President, may be held by the same person.

     Section 2.  The Board of Directors at its first meeting after
each annual meeting of stockholders shall elect a President from
its members, and the Board shall also annually choose a Vice
President, a Secretary and a Treasurer none of whom need be members
of the Board.

     Section 3.  The Board may appoint additional Vice Presidents
and Assistant Secretaries and Assistant Treasurers and such other
officers, and agents as it shall deem necessary, who shall have
such authority and shall perform such duties as from time to time
shall be prescribed by the Board.

     Section 4.  The officers of the corporation shall hold office
until their successors are chosen and qualify in their stead.  Any
officer elected or appointed by the Board of Directors may be
removed with or without cause, at any time, by the affirmative vote
of a majority of the whole Board of Directors.  If the office of
any officer becomes vacant for any reason, the vacancy shall be
filled by the Board of Directors.


                                 CHAIRMAN

     Section 6.  The Chairman of the Board shall be the Chief
Executive Officer of the Corporation and shall preside at all
meetings of the shareholders and the Board of Directors.  Subject
only to the authority of the Board of Directors, he shall have
general charge and supervision over, and responsibility for, the
business and affairs of the Corporation.  All other officers of the
Corporation shall be subject to the authority, supervision and
direction of the Chairman of the Board.  The Chairman may enter
into and execute in the name of the Corporation, contracts or other
instruments in the regular course of business and contracts and
other instruments not in the regular course of business and
contracts and other instruments not in the regular course of
business which are authorized, either generally or specifically, by
the Board of Directors or the Executive Committee.


                                 PRESIDENT

     Section 7.  The President shall perform such duties and shall
have such authority as is usually vested in the office of the
president of a corporation, subject to the supervision and
direction of the Chairman of the Board of Directors.


                              VICE PRESIDENT

     Section 8.  One or more Vice President shall be elected to
perform such duties and have such authority as from time to time
may be delegated to them by the Chairman of the Board or by the
President or by the Executive Committee.


                                 TREASURER

     Section 9.  The Treasurer shall have the custody of the funds
and securities of the corporation and shall keep or cause to be
kept regular books of account for the Corporation.  The Treasurer
shall perform such other duties and possess such other powers as
are incident to that office or as shall be assigned by the Chairman
of the Board or by the President or by the Executive Committee.


                     SECRETARY AND ASSISTANT SECRETARY

     Section 10.  The Secretary shall cause notices of all meetings
to be served as prescribed in these By-laws and shall keep or cause
to be kept the minutes of all meetings of the shareholders and the
Board and Executive Committee.  The Secretary shall perform such
other duties and possess such other powers as are incident to that
office or as are assigned by the Chairman of the Board or by the
President or the Executive Committee.  One or more Assistant
Secretaries may be elected to perform such duties as may be
assigned to them by the Chairman of the Board or by the President
or by the Executive Committee, but they shall not have authority to
give notices of meetings.  The Secretary shall be the only person
authorized to give notices of meetings and shall cause notices of
all meetings to be served as prescribed in these By-laws.


                                ARTICLE VI
                           CERTIFICATES OF STOCK

     Section 1.  The certificates of stock of the corporation shall
be numbered and entered into the books of the corporation as they
are issued.  They shall exhibit the holder's name and the number of
shares owned by him in the corporation, and shall be signed by the
president or Vice-President and Treasurer or Assistant Treasurer or
the Secretary or Assistant Secretary.  If any certificate is signed
by a transfer agent or an assistant transfer agent or by a transfer
clerk on behalf of the corporation and a registrar, the signature
of any such officer may be facsimile.


                             LOST CERTIFICATES

     Section 2.  The Board of Directors may direct a new
certificate or certificates to be issued in place of any
certificate or certificates theretofore issued by the corporation,
alleged to have been lost or destroyed, upon the making of an
affidavit of that fact by the person claiming the certificate of
stock to be lost or destroyed.  When authorizing such issue of a
new certificate or certificates, the Board of Directors may, in its
discretion and as a condition precedent to the issuance thereof,
require the owner of such lost or destroyed certificate or
certificates, or his legal representative, to advertise the same in
such manner as it shall require and/or give the corporation a bond
in such sum and with such surety or sureties as it may direct as
indemnity against the corporation with respect to the certificate
alleged to have been lost or destroyed.


                             TRANSFER OF STOCK

     Section 3.  Upon surrender to the corporation or transfer
agent of the corporation of a certificate of stock duly endorsed or
accompanied by proper evidence of succession, assignment or
authority of transfer, it shall be the duty of the corporation to
issued a new certificate to the person entitled thereto, cancel the
old certificate and record the transaction upon its books.


                         CLOSING OF TRANSFER BOOKS

     Section 4.  The Board of Directors may close the stock
transfer books of the corporation in its discretion for a period
not exceeding fifty days preceding the date of any meeting, annual
or special, of the stockholders, or the date for payment of any
dividend, or the date for the allotment of rights or the date when
any change or conversion or exchange of capital stock shall go into
effect.  In lieu of closing the stock transfer books, the Board of
Directors may fix, in advance, a date not exceeding fifty (50) days
preceding the date of any meeting, annual or special, of
stockholders or the date for the payment of any dividend, or the
date for the allotment of rights, or the date when any change or
conversion or exchange of capital stock shall go into effect, as a
record date for the determination of the stockholders entitled to
notice of and to vote at any such meeting, or entitled to receive
payment of any such dividend, or any such allotment of rights, or
to exercise the rights in respect to any such change, conversion or
exchange of capital stock, and in such case only stockholders of
record on the date so fixed shall be entitled to such notice of,
and to vote at, such meeting or to receive payment of such dividend
or allotment of rights, or to exercise such rights, as the case may
be, notwithstanding any transfer of any stock on the books of the
corporation after such record date fixed as aforesaid.


                          REGISTERED STOCKHOLDERS

     Section 5.  The corporation shall be entitled to treat the
holder of record of any share or shares of stock as the holder in
fact thereof and accordingly shall not be bound to recognize any
equitable or other claim to or interest in such share on the part
of any other person whether or not it shall have express or other
notice thereof, except as expressly provided by the laws of Texas.


                                ARTICLE VII
                                 INDEMNITY

     Section 1.  Any present or future director or officer of the
corporation and any present or future director or officer of any
other corporation serving as such at the request of the corporation
because of the corporation's interest in such other corporation, or
the legal representative of any such director or officer, shall be
indemnified by the corporation against reasonable costs, expenses
(exclusive of any amount paid to the corporation in settlement) and
counsel fees paid or incurred in connection with any action, suit
or proceeding to which any such director or officer or his legal
representative may be made a party by reason of his being or having
been such director or officer and shall otherwise be accorded the
fullest benefits contemplated and set forth in Articles 2.02 and
2.02-1 of the Texas Business Corporation Act, subject to the
qualifications set forth in said Statute.


                               ARTICLE VIII
                            GENERAL PROVISIONS
                                 DIVIDENDS

     Section 1.  Dividends upon stock of the corporation, subject
to the provisions of the Articles of Incorporation, if any, may be
declared by the Board of Directors at any regular or special
meeting, pursuant to law.  Dividends may be declared in cash, in
property or in stock.

     Section 2.  Before payment of any dividend, there may be set
aside out of the funds of the corporation available for dividends
such sum or sums as the Directors from time to time, in their
absolute discretion, think proper as a reserve fund to meet
contingencies, or for equalizing dividends, or for repairing or
maintaining any property of the corporation, or for such other
purpose as the Directors shall think conducive to the interests of
the corporation, and the Directors may modify or abolish any such
reserve in the manner in which it was created.


                                  CHECKS

     Section 3.  All checks or demands for money and notes of the
corporation shall be signed by such officer or officers or such
other person or persons as the Board of Directors may, from time to
time, designate.


                                FISCAL YEAR

     Section 4.  The fiscal year shall begin the first date of
January in each year.


                                   SEAL

     Section 5.  The corporate seal shall have inscribed thereon
the name of the corporation, the year of its organization and the
words "Corporate Seal, Texas."


                                ARTICLE IX
                    AMENDMENTS TO AND EFFECT OF BY-LAWS

     Section 1.  These By-laws are subject to the provisions of the
Texas Business Corporation Act and the Corporation's Articles of
Incorporation, as it may be amended from time to time.  If any
provision in these By-laws is inconsistent with a provision in that
Act or the Articles of Incorporation, the provision of that Act or
the Articles of Incorporation shall govern.

     Section 2.  These By-laws may be altered, amended or repealed
by the shareholders or the Board.  Any By-law adopted, amended or
repealed by the shareholders may be amended or repealed by the
Board, unless the resolution of the shareholders adopting such By-
law expressly reserves to the shareholders the right to amend or
repeal it.

<PAGE>


                            ARTICLES OF MERGER

                                    OF

                     INTERCONTINENTAL LIFE CORPORATION

                                    AND

                INTERCONTINENTAL LIFE CORPORATION OF TEXAS



     Pursuant to the provisions of Articles 5.01, 5.03, 5.04 and
5.05 of the Texas Business Corporation Act, the undersigned
domestic and foreign corporations adopt the following Articles of
Merger for the purpose of merging INTERCONTINENTAL LIFE
CORPORATION into INTERCONTINENTAL LIFE CORPORATION OF TEXAS.


     1. The names of the corporations and the States under the
laws of which they are respectively organized are:


     Name of Corporation                               State

     InterContinental Life Corporation                 New Jersey
     InterContinental Life Corporation of Texas        Texas


     2. The laws of the State under which such foreign
corporation is organized permit such merger, and the plan of
merger was duly authorized by all action required by the laws
under which it was incorporated or organized and by its
constituent documents.


     3. The name of the surviving corporation is InterContinental
Life Corporation of Texas, a Texas corporation, and it is to be
governed by the laws of the State of Texas. Its principal office
in the state under whose laws it is to be governed is located at
701 Brazos Street, Suite 1400, Austin, Texas 78701. Furthermore:


          (a) The surviving corporation may be served with
          process in the State of New Jersey in any proceeding
          for the enforcement of any obligation of any domestic
          corporation or any foreign corporation, previously
          amenable to suit in New Jersey, which is a party to
          such merger, and in any proceeding for the enforcement
          of the rights, if any were provided for in the Articles
          of Incorporation of either InterContinental Life
          Corporation or InterContinental Life Corporation of
          Texas, of a dissenting shareholder of any such New
          Jersey corporation against the surviving corporation;
          and


          (b) The surviving corporation irrevocably appoints the
          Secretary of State of the State of New Jersey as its
          agent to accept service of process in any such
          proceeding outlined in (a) above. The Secretary of
          State shall mail such process in such proceeding to 701
          Brazos Street, Suite 1400, Austin, Texas 78701; and


          (c) Under the provisions of the New Jersey Business
          Corporation Act, no amount is due to the dissenting
          shareholders of the New Jersey corporation due to the
          rights of dissenting shareholders .

     4. The Plan and Agreement of Merger in the form attached 
hereto was approved by the shareholders of the undersigned New
Jersey corporation in the manner prescribed by the New Jersey
Business Corporation Act, and was approved by the sole
shareholder the undersigned domestic corporation in the manner
prescribed by the Texas Business Corporation Act. The Articles of
Incorporation of InterContinental Life Corporation of Texas, the
surviving corporation, are amended by the Articles of Merger as
follows:


     "ARTICLE I:  The name of the corporation is INTERCONTINENTAL
     LIFE CORPORATION."


     5. As to each of the undersigned corporations, the number of
shares outstanding and entitled to vote are as follows:

                                                Number of Shares
     Name of Corporation                          Outstanding   

     InterContinental Life Corporation             4,361,076*
     InterContinental Life Corporation of Texas            1

          *InterContinental Life Corporation has issued 5,339,497
          shares. However, 978,421 shares are held in treasury by
          InterContinental Life Corporation and, therefore, these
          shares are not entitled to vote pursuant to 14A:5-13 of
          the New Jersey Business Corporation Act.

          6. As to each of the undersigned corporations, the total
          number of shares voted for, against and abstained, are as
          follows:

                                            Number of Shares     
                                    Total      Total       Total
Name of Corporation                  For      Against     Abstain

InterContinental Life Corporation  2,956,794   68,004      19,745

InterContinental Life Corporation
of Texas                              1           0           0


     7. The share of capital stock of InterContinental Life
Corporation of Texas outstanding immediately prior to the
Effective Date of the Merger shall cease to exist and shall be
deemed cancelled, retired and eliminated.

Dated June 17, 1997.

                              INTERCONTINENTAL LIFE CORPORATION
(SEAL)
                              By:  /s/ Roy F. Mitte             
                                  Roy F. Mitte, President

                              INTERCONTINENTAL LIFE CORPORATION
                              OF TEXAS
(SEAL)
                              By:   /s/ Roy F. Mitte           
                                  Roy F. Mitte, President

I, Barbara Marshburn, a notary public, do hereby certify that on
June 17, 1997, personally appeared before me Roy F. Mitte, who,
being first duly sworn, declared the he is President of
InterContinental Life Corporation and that he signed the
foregoing document as President, and that the statements
contained therein are true.

 /s/ Barbara Marshburn 
Notary Public                 (SEAL)

I, Barbara Marshburn, a notary public, do hereby certify that on
June 17, 1997, personally appeared before me Roy F. Mitte, who,
being first duly sworn, declared the he is President of
InterContinental Life Corporation of Texas and that he signed the
foregoing document in as President, and that the statements
contained therein are true.

 /s/ Barbara Marshburn 
Notary Public                 (SEAL)



                       PLAN AND AGREEMENT OF MERGER

                                  BETWEEN

                     INTERCONTINENTAL LIFE CORPORATION

                                    AND

                INTERCONTINENTAL LIFE CORPORATION OF TEXAS


     This PLAN AND AGREEMENT OF MERGER (the "Agreement") is dated
this      day of                  , 1997, by and between
InterContinental Life Corporation of Texas, a Texas domiciled
company (hereinafter "ILCO-Texas" or the "Surviving Company") and
InterContinental Life Corporation, an New Jersey domiciled
company (hereinafter "ILCO" or the "Merging Company"), in
accordance with Article 5.01 of the Texas Business Corporation
Act and Section 14A:10-7 of the New Jersey Business Corporation
Act.

                                 RECITALS

A.   ILCO-Texas is a duly organized and validly existing  company
     under the Texas law and is in good standing under the laws
     of the State of Texas.  ILCO-Texas is a direct, wholly-owned
     subsidiary of ILCO;

B.   ILCO is a duly organized and validly existing company under
     the New Jersey law and is in good standing under the laws of
     the State of New Jersey;  

C.   The Board of Directors of ILCO has determined that it is
     desirable and in the best interests of ILCO to change the
     domicile of ILCO from New Jersey to Texas.  To accomplish
     that change, the Board of Directors of ILCO authorized the
     creation of ILCO-Texas, as a wholly-owned subsidiary of
     ILCO.  In addition, the Board of Directors of ILCO has
     adopted a resolution authorizing the merger of ILCO with and
     into ILCO-Texas (the "Merger") in accordance with the terms
     and conditions set forth in this Plan and Agreement of
     Merger and pursuant to the provisions of the laws of the
     State of New Jersey and the State of Texas.

E.   This Plan and Agreement of Merger and the Merger is subject
     to the approval of the shareholders of ILCO, by an
     affirmative vote by a majority of those shares of ILCO
     constituting at least a quorum at the Annual Meeting.  This
     Plan and Agreement of Merger and the Merger has been
     authorized and approved by the sole shareholders of ILCO-
     Texas.

F.   No director, officer, agent or employee of ILCO or ILCO-
     Texas has received or will receive any fee, commission,
     compensation or other valuable consideration for aiding,
     promoting or assisting the Merger.


NOW THEREFORE, ILCO and ILCO-Texas, in consideration of the
mutual covenants, agreements and provisions hereinafter
contained, do hereby agree upon and prescribe the terms and
conditions of the Merger and the mode of carrying it into effect,
as follows:


                                 ARTICLE I

                     MERGER AND SURVIVING CORPORATION

1.1.      At the Effective Time, as defined in Section 4.1 below,
          ILCO shall be merged into and with ILCO-Texas.  The
          Surviving Company shall be ILCO-Texas, which name shall
          thereupon be changed to InterContinental Life
          Corporation.

1.2.      The Merger shall occur pursuant to the provisions of
          Part 5, Articles 5.01, 5.03, 5.04 and 5.05 of the Texas
          Business Corporation Act and Section 14A:10-7 of the
          New Jersey Business Corporation Act.



                                ARTICLE II

                   TERMS, CONDITIONS AND MODE OF MERGER

2.1.      The Articles of Incorporation and Bylaws of the
          Surviving Company shall not be amended by this Merger
          and shall remain in effect unchanged until those
          Articles of Incorporation or Bylaws may be amended in
          accordance with the laws of the State of Texas.


2.2.      The directors and officers of the Surviving Company at
          the Effective Time shall continue to be the directors
          and officers of the Surviving Company until their
          respective successors shall have been elected and
          qualified as provided by the Bylaws of the Surviving
          Company and the laws of the State of Texas.

2.3.      At the Effective Time, the separate existence of the
          Merging Company shall cease and all the property,
          rights, privileges, franchises, patents, trademarks,
          licenses, registrations, causes of action, and other
          assets of every kind and description of the Merging
          Company at the Effective Time shall, to the extent
          permitted by law, transfer to, vest in and devolve upon
          the Surviving Company without further act or deed.


2.4       All rights of creditors, including but not limited to
          insurance policyholders, and all liens upon the
          property of the Surviving Company and the Merging
          Company shall be preserved unimpaired, notwithstanding
          the Merger, and from and after the Effective Time all
          debts, liabilities and duties of the Merging Company
          shall attach to the Surviving Company and may be
          enforced against it to the same extent as if said
          debts, liabilities and duties had been incurred or
          contracted by the Surviving Company.


                                ARTICLE III

                            TREATMENT OF SHARES


3.1.      At the Effective Time, all of the issued and
          outstanding shares of the common stock of ILCO,
          consisting of 5,339,497 shares of common stock, par
          value of $.22 per share, shall be converted into issued
          and outstanding shares of ILCO-Texas, par value of $.22
          per share.  

3.2.      At the Effective Time, all of the authorized shares of
          (i) the Class A preferred stock of ILCO, consisting of
          5,000,000 shares, par value of $1.00 per share, held in
          treasury and (ii) the Class B preferred of ILCO,
          consisting of 15,000,000 shares, par value of $1.00 per
          share, held in treasury shall be converted into
          authorized and unissued shares of the preferred stock
          of ILCO-Texas, par value of $1.00 per share.  

                                ARTICLE IV

                              EFFECTIVE TIME

4.1.      This Merger shall become effective (the "Effective
          Time") upon the filing of all required documents with
          the Texas Secretary of State and the New Jersey
          Secretary of State, whichever is later, provided that
          such documents shall not be filed until the later of
          the following:

          a.   approval of this Merger by the affirmative vote of
               a majority of those shares of common stock of ILCO
               constituting at least a quorum at the meeting of
               shareholders at which the Merger is considered; 

          b.   approval of this Merger by the sole shareholder of
               ILCO-Texas; and 

          c.   the obtaining of all necessary consents or
               approvals of any federal or state regulatory
               authority necessary for the consummation of the
               Merger.

4.2.      Notwithstanding anything to the contrary in this Plan
          and Agreement of Merger, in the event that the
          conditions set forth in Section 4.1.a. to 4.1.c.,
          hereof, have not been satisfied on or before December
          31, 1997, this Agreement shall be automatically
          terminated without the need for further action by
          either party.

                                 ARTICLE V
                                     
                             POWER OF ATTORNEY


5.1       As of the Effective Time, ILCO-Texas hereby appoints
          the New Jersey Secretary of State and his or her
          successors in office as the attorney-in-fact or agent
          of ILCO-Texas to accept service of process in any
          proceeding to enforce any obligation of the Surviving
          Company (including any obligations of ILCO), and
          service on the New Jersey Secretary of State shall be
          deemed sufficient service on the Surviving Company, 
          This power of attorney shall be irrevocable so long as
          the Surviving Company has outstanding in the State of
          New Jersey any contracts or  other obligation
          whatsoever.

                                ARTICLE VI

                                TERMINATION


6.1       Subject to applicable law, this Plan and Agreement of
          Merger may be amended, modified, supplemented or
          abandoned by mutual consent of the respective Boards of
          Directors of ILCO and ILCO-Texas before or after
          approval hereof by the respective shareholders of ILCO
          or ILCO-Texas.

                                ARTICLE VII

                               GOVERNING LAW


7.1.      THIS PLAN AND AGREEMENT OF MERGER SHALL BE GOVERNED BY
          AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
          OF TEXAS, EXCEPT TO THE EXTENT THE LAWS OF THE STATE OF
          NEW JERSEY SHALL MANDATORILY APPLY TO THIS MERGER.

     IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective duly authorized
officers on this  17th day of   June         , 1997.

                         INTERCONTINENTAL LIFE CORPORATION


                           By:      /s/ Roy f. Mitte          
                                   Roy F.  Mitte
                                   Chairman of the Board,   
                                   President and Chief Executive  
                                   Officer


                         Attest:    /s/ Eugene E. Payne         
                                   Eugene E. Payne, Secretary
                                                            
     
                         INTERCONTINENTAL LIFE CORPORATION OF
                         TEXAS

                           By:       /s/ Roy F. Mitte           
                                   Roy F.  Mitte
                                   Chairman of the Board,   
                                   President and Chief Executive  
                                  Officer

                         Attest:     /s/ Eugene E. Payne         
                                   Eugene E. Payne, Secretary