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, 1998
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: 4,368,835.













          INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES

                                INDEX


                                                  Page No.

PART I - FINANCIAL INFORMATION

Consolidated Balance Sheets
      June 30, 1998 and December 31, 1997............... 3

Consolidated Statements of Income 
     For the three and six month periods ended
      June 30, 1998 and 1997............................ 5

Consolidated Statements of Cash Flows
     For the three and six month periods ended
      June 30, 1998 and 1997 ........................... 7

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

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


PART II

Other Information........................................21

Signature Page...........................................23


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



<TABLE>
<S>                                        <C>          <C>
                                           June 30,     Dec. 31,
                                              1998          1997   
                                           (Unaudited)  
ASSETS                                                  
Investments:                                            
Fixed maturities, at amortized cost                     
  (market value approximates                            
   $2,511 and $3,332)                      $   2,492    $    3,412
Fixed maturities available for sale,                    
  at market value (amortized cost of                    
       $470,232 and $436,836)                488,243       454,462
Equity securities, at market value                      
  (cost approximates $338 and $369)             3,709        4,902
Policy loans                                   54,959       53,499
Mortgage loans                                 10,666       10,862
Invested real estate and other                          
  invested assets                               1,518        1,300
Short-term investments                        140,689      164,622
Total Investments                             702,276      693,059

Cash and cash equivalents                        9,620       9,041

Notes receivable from affiliates                50,719      53,792

Accrued investment income                        8,599       7,781

Agent advances and other receivables            24,182      11,362

Reinsurance receivables                         15,694      20,433

Property and equipment, net                      2,165       1,902

Deferred policy acquisition costs               30,496      28,621

Present value of future profits of                      
acquired businesses                             45,860      47,286

Deferred financing costs                            56         111

Other assets                                    12,548       7,929

Separate account assets                        464,219     440,336

Total Assets                               $ 1,366,434  $1,321,653
</TABLE>

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

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

<TABLE>
<S>                                      <C>           <C>
                                            June 30,     Dec. 31,
                                              1998         1997   
                                                 (Unaudited)        
                                                             
LIABILITIES AND SHAREHOLDERS' EQUITY                         
Liabilities:                                                 
Policy liabilities and contractholder                        
deposit funds:                                               
Future policy benefits                     $ 169,634     $ 131,720
Contractholder deposit funds                 516,851       525,135
Unearned premiums                              1,095         7,701
Other policy claims & benefits                               
payable                                        5,901         7,078
                                             693,481       671,634
Other policyholders' funds                     3,069         3,093
Senior loans                                   3,564        10,964
Deferred federal income taxes                 32,595        31,811
Other liabilities                             20,828        20,299
Separate account liabilities                 461,973       438,090
Total Liabilities                          1,215,510     1,175,891

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;                          
5,379,739 and 5,343,739 shares                         
issued,4,368,835 and 4,331,335 shares                  
outstanding in 1998 and 1997                  1,184         1,176
Additional paid-in capital                    4,365         4,253
Accumulated other comprehensive income       13,898        14,403
Retained earnings                           134,765       129,237
                                            154,212       149,069

Common treasury stock, at cost,                        
1,010,904 and 1,012,404 shares in                      
1998 and 1997, respectively                  (3,288)       (3,307)
Total Shareholders' Equity                  150,924       145,762
Total Liabilities and Shareholders'                    
Equity                                   $1,366,434    $1,321,653
</TABLE>

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

          INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                  CONSOLIDATED STATEMENTS OF INCOME
                  FOR THE THREE MONTH PERIODS ENDED
                       JUNE 30, 1998 and 1997
         (in thousands of dollars, except for per share data)
                             (unaudited)

<TABLE>
<S>                                        <C>         <C>
                                           3 Months Ended
                                              June  30,
                                                       

                                               1998       1997   

Revenues:                                              
Net premiums                               $   2,666   $  2,806
Net investment income                         13,843     14,460
Earned insurance charges                      10,333     10,189
Other                                            685      1,100
      Total                                   27,527     28,555

Benefits and expenses:                                 
Policyholder benefits and expenses             9,066      8,933
Interest expense on contractholder                     
deposit funds                                  7,772      7,950
Amortization of present value of                       
future profits of acquired business            1,619      1,581
Amortization of deferred policy                        
acquision costs                                  525        675
Operating expenses                             3,978      4,487
Interest expense                                 246        404
      Total                                   23,206     24,030

Income from operations                         4,321      4,525

Provision for federal income taxes             1,513      1,583
                                                       
Net Income                                 $   2,808   $  2,942

Net income per share                                   
                                                       
Basic:                                                 
                                                       
Weighted average common stock outstanding      4,369      4,321
                                                       
Basic earnings per share                   $    0.64   $   0.68
                                                       
Diluted:                                               
                                                       
Common stock and common stock                          
equivalents                                    4,545      4,421
                                                       
Diluted earnings per share                 $    0.62   $   0.67
</TABLE>
                              
                                     
            The accompanying notes are an integral part of the
                     consolidated financial statements.
                                     
                                     
            INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF INCOME
                      FOR THE SIX MONTH PERIODS ENDED
                          JUNE 30, 1998 and 1997
                     (in thousands of dollars, except
                            for per share data)
                                (unaudited)

<TABLE>
<S>                                        <C>         <C>
                                           6 Months Ended
                                               June  30,
                                                       

                                               1998       1997   

Revenues:                                              
Net premiums                               $   5,764   $  4,760
Net investment income                         27,798     29,081
Earned insurance charges                      20,630     20,406
Other                                          1,207      1,709
      Total                                   55,399     55,956

Benefits and expenses:                                 
Policyholder benefits and expenses            19,422     18,327
Interest expense on contractholder                     
deposit funds                                 15,002     15,966
Amortization of present value of                       
future profits of acquired business            2,945      2,972
Amortization of deferred policy                        
acquision costs                                  973      1,197
Operating expenses                             8,032      7,976
Interest expense                                 521        839
      Total                                   46,895     47,277

Income from operations                         8,504      8,679

Provision for federal income taxes             2,977      3,037
                                                       
Net Income                                 $   5,527   $  5,642

Net income per share                                   
                                                       
Basic:                                                 
                                                       
Weighted average common stock outstanding      4,369      4,321
                                                       
Basic earnings per share                   $    1.27   $   1.30
                                                       
Diluted:                                               
                                                       
Common stock and common stock                          
equivalents                                    4,398      4,421
                                                       
Diluted earnings per share                 $    1.26   $   1.28
</TABLE>
                         
            The accompanying notes are an integral part of the
                     consolidated financial statements.
                                     
                                     
            INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                     FOR THE THREE MONTH PERIODS ENDED
                          JUNE 30, 1998 and 1997
                         (in thousands of dollars)
                                (unaudited)

<TABLE>
<S>                                        <C>         <C>
                                           3 Months Ended
                                                June 30,
                                                       

                                              1998        1997   
CASH FLOWS FROM OPERATING ACTIVITIES:                  

                                                       

Net income                                 $  2,808    $   2,942
Adjustments to reconcile net income                    
to net cash (used in) provided by                      
operating activities:                                  

Amortization of present value of future                
profits of acquired businesses                1,618        1,580

Amortization of deferred policy                        
  acquisition costs                             525          657
Net gain on sale of investments                 (76)         (66)

Depreciation                                     85          376
           

Financing costs amortized                        24          147
                                                       
                                                       
                                                       
                                                       

Changes in assets and liabilities:                     

Decrease in accrued investment income            280          383 

Increase in agent advances and other                   
 receivables                                  (9,266)      (4,416)
                                
Policy acquisition costs deferred             (1,510)      (1,105)           
Decrease in policy liabilities and           
  contract holder deposit funds               (6,778)      (9,006)        
                  
(Decrease) increase in other                 
 policyholders' funds                           (729)           5 
  
(Decrease) increase in other liabilities      (1,678)      3,940
Increase in deferred federal income taxes        144       4,132
Decrease (increase) in other assets            5,166        (205)
Other, net                                    (1,157)     (3,609)
Net cash used in                          
operating activities                        $(10,544)  $  (4,245)     
</TABLE>







            The accompanying notes are an integral part of the
                     consolidated financial statements.
                                     
              INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                        FOR THE THREE MONTH PERIODS ENDED
                             JUNE 30, 1998 and 1997
                            (in thousands of dollars)
                                   (unaudited)
                                     
<TABLE>
<S>                                        <C>         <C>
                                           3 Months Ended
                                               June 30, 
                                                       

                                               1998        1997   

CASH FLOWS FROM INVESTING ACTIVITIES                   
                                                       

Investments purchased                      $  (1,183)  $  (5,098)

Proceeds from sales and maturities of                  
investments                                   17,355      13,310

Net change in short-term investments           1,873      (6,122)

Purchases & retirements of equipment, net       (389)       (374)

Decrease in notes receivable from                      
 affiliates                                    1,537       1,538
                                           

Net cash provided by investing activities     19,193       3,254

                                                       

CASH FLOWS FROM FINANCING ACTIVITIES:                  
                                                       

Issuance of common stock                          79         (65)

Purchase of subsidiary                        (1,322)        -0-
Repayment of debt                             (7,400)        -0-

Net cash used in                         
financing activities                          (8,643)        (65)

Net increase in cash and cash                          
  equivalents                                      6      (1,056)

Cash and cash equivalents,                             
  beginning of year                            9,614       4,313

Cash and cash equivalents, end of year     $   9,620    $  3,257  
                                </TABLE>

                                     
                                     
                                     
                                     
                                     
                                     
                                     
            The accompanying notes are an integral part of the
                     consolidated financial statements.
                                     
                                     
            INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                      FOR THE SIX MONTH PERIODS ENDED
                          JUNE 30, 1998 and 1997
                         (in thousands of dollars)
                                (unaudited)

<TABLE>
<S>                                        <C>         <C>
                                           6 Months Ended
                                                June 30,
                                                       

                                              1998        1997   
                                                       
                                                       
                                                        
                                                       

CASH FLOWS FROM OPERATING ACTIVITIES:                  

                                                       

Net income                                 $   5,527   $   5,642
Adjustments to reconcile net income                    
to net cash (used in) provided by                      
operating activities:                                  

Amortization of present value of future                
profits of acquired businesses                 2,944       2,971

Amortization of deferred policy                        
  acquisition costs                              973       1,179
Net gain on sales of investments                 (76)        (66)

Depreciation                                     208         891
          

Financing costs amortized                         55         295
                                                       
                                                       
                                                       
                                                       

Changes in assets and liabilities:                     

Increase in accrued investment income           (133)       (109)

Increase in agent advances and other                   
 receivables                                  (7,962)       (721)
Policy acquisition costs deferred             (2,848)     (2,273)          
Decrease in policy liabilities and           
 contract holder deposit funds               (17,064)    (12,076)      
Decrease in other                  
 policyholders' funds                           (655)       (197)    
(Decrease) increase in other liabilities      (3,367)      3,297
(Decrease) increase in deferred federal 
 income taxes                                   (631)      1,361
Increase in other assets                        (879)       (795)
Other, net                                    (2,344)       (307)         
Net cash used in                         
operating activities                        $(26,252)     $ (908)             
</TABLE>







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


            INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                      FOR THE SIX MONTH PERIODS ENDED
                           JUNE 30, 1998 and 1997
                         (in thousands of dollars)
                                (unaudited)
                                     
<TABLE>
<S>                                        <C>         <C>
                                           6 Months Ended
                                              June 30, 
                                                       

                                               1998        1997   

CASH FLOWS FROM INVESTING ACTIVITIES                   
                                                       

Investments purchased                      $ (26,772)  $ (14,950)

Proceeds from sales and maturities of                  
investments                                   35,462      21,345

Net change in short-term investments          23,933      (3,318)

Purchases & retirements of equipment, net       (263)       (886)

Decrease in notes receivable from                      
 affiliates                                    3,073       3,074
                                            

Net cash provided by investing activities     35,433       5,265

                                                       

CASH FLOWS FROM FINANCING ACTIVITIES:                  
                                                       

Issuance of common stock                         120         167

Purchase of subsidiary                        (1,322)        -0-
Repayment of debt                             (7,400)     (4,580)

Net cash used in financing activities         (8,602)     (4,413)
                                                       

Net increase in cash and cash                          
  equivalents                                    579         (56)

Cash and cash equivalents,                             
  beginning of year                            9,041       3,313

Cash and cash equivalents, end of year     $   9,620    $  3,257  
                                </TABLE>

                                
                                     
            The accompanying notes are an integral part of the
                     consolidated financial statements.
                                     
          INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
                                   
   The financial statements included herein reflect all adjustments
   which are, in the opinion of management, necessary to present a
   fair statement of the interim results.  The statements have been
   prepared to conform to the requirements of Form 10-Q and do not
   necessarily include all disclosures required by generally
   accepted accounting principles (GAAP).  The reader should refer
   to Form 10-K for the year ended December 31, 1997 previously
   filed with the Securities and Exchange Commission for financial
   statements prepared in accordance with GAAP.  
 
                       Acquisition of Subsidiary
                                   
  In July 1997, ILCO through its subsidiary Investors Life
  Insurance Company of Indiana (Investors-IN), an indirect, wholly-
  owned subsidiary of ILCO, acquired State Auto Life Insurance
  Company, an Ohio based life insurer,for a cash purchase price of
  $11.8 million, subject to certain post-closing adjustments. The
  Company had $22.8 million in assets, $6 million in capital and
  surplus, total revenues of $7.9 million, and a good book of
  business.  As part of the purchase agreement, State Auto was
  immediately merged with Investors Life of Indiana.  The summary
  of operations of ILCO for the six months ended June 30, 1998
  reflects State Auto's operations, as compared to the six months
  ended June 30, 1997 which does not include any income from 
  State Auto. 
                                   
   On June 30, 1998, ILCO, through a subsidiary, acquired Grinnell
   Life Insurance Company ("Grinnell Life") for a base purchase price of
   $16.4 million, subject to certain post-closing adjustments.  As
   part of the transaction, Grinnell Life was immediately merged
   with and into that subsidiary, with that subsidiary being the
   surviving entity.  The operations of ILCO for the six-month
   period ending June 30, 1998 do not reflect the operations of
   Grinnell Life.
                                   
                    New Accounting Pronouncements
                                   
   In June 1997, the FASB issued Statement of Financial Accounting
   Standard (FAS) No. 130, " Reporting Comprehensive Income."  The
   new standard, which is effective for financial statements issued
   for periods ending after December 15, 1997, established standards
   for reporting, in addition to net income, other comprehensive
   income and its components including, as applicable, foreign
   currency income, minimum pension liability adjustments and
   unrealized gains and losses on certain investments in debt and
   equity securities.  Upon adoption, the Company is also required
   to reclassify financial statements for earlier periods provided
   for comparative purposes.  The Company adopted this standard in
   the first quarter of 1998.  Total comprehensive income for the
   six months ended June 30, 1998 and June 30, 1997 is $5.0 million
   and $5.6 million, respectively.
                                   
                                   
                                   
                                   
               INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES
       NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (UNAUDITED)
                                   
                                   
               New Accounting Pronouncements, continued
                                   
   The following is a reconciliation of total accumulated other
   comprehensive income from December 31, 1997 to June 30, 1998 (in
   thousands):
                             Net unrealized                      
                             gain on                             
                             investments in    Net Appreciation  Total
                             fixed maturities  (depreciation)    accumulated 
                             available         of equity         other
                             for sale          securities        comprehensive

Balance at December 31, 1997   $ 11,457          $   2,946      $  14,403 
Current period change               250               (755)          (505)
Balance at June 30, 1998       $ 11,707          $   2,191      $  13,898
                                     
                                   
In June 1997, the FASB issued FAS No. 131, "Disclosures about
Segments of an Enterprise and Related Information," which
establishes standards for reporting information about operating
segments.  Generally, FAS 131 requires that financial information
be reported on the basis that is used internally for evaluating
performance.  The Company adopted FAS 131 effective January 1,
1998, and comparative information for earlier years will be
restated.  This statement does not need to be applied to interim
financial statements in the initial year of application.  The
adoption of FAS No. 131 did not have a material impact on the
Company's results of operations, liquidity or financial position.

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

In December 1997, the Accounting Standards Executive Committee
issued Statement of Position ("SOP") 97-3, "Accounting by
Insurance and Other Enterprises for Insurance-Related
Assessments," which provides guidance on accounting for
insurance-related assessments.  The Company is required to adopt
SOP 97-3 effective January 1, 1999. Previously issued financial
statements should not be restated unless the SOP is adopted prior
to the effective date and during an interim period.  

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

Item 2.  Management's Discussion and Analysis of Financial


Conditions and Results of Operations:

For the six-month period ended June 30, 1998, InterContinental Life
Corporation's ("ILCO") net income was $5,527,000 (basic earnings of
$1.27 per common share, or diluted earnings of $1.26 per common
share) as compared to $5,642,000 (basic earnings of $1.30 per
common share, or diluted earnings of $1.28 per common share) in the
first six months of 1997. Earnings per share are stated in
accordance with the requirements of Financial Accounting Standard
(FAS) No. 128, which establishes two measures of earnings per
share: basic earnings per share and diluted earnings per share.
Basic earnings per share is computed by dividing income available
to common shareholders by the weighted average number of common
shares outstanding during the period. Diluted earnings per share
reflect the potential dilution that would occur if securities or
other contracts to issue common stock were converted or exercised.
For the six month period ended June 30, 1997, earnings per share
have been restated to reflect the effect of FAS No. 128


                        Results of Operations

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 $9,331,000 at June 30, 1998, as compared to $10,027,000
at June 30, 1997. These statutory earnings are the source to
provide for the repayment of ILCO's indebtedness.

For the six-month period ended June 30, 1998, the Company's income
before federal income taxes was $8,504,000 on revenues of
$55,399,000 as compared to income of $8,679,000 on revenues of
$55,956,000 for the same period in 1997.  

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
1998 was $5.8 million, as compared to $4.8 million for the first
six months of 1997. Reinsurance premiums ceded were $2.2 million
for the first six months of 1998, as compared to $2.4 million in
the first six months of 1997. The increase in premium income is
primarily attributable to the inclusion of the business of State
Auto Life Insurance Company. ILCO, through a subsidiary, acquired
State Auto Life Insurance Company in July of 1997.

Earned insurance charges for the six-month period ended June 30,
1998 were $20.6 million, as compared to $20.4 million for the same
period in 1997. This source of revenues is related to the universal
life insurance and annuity book of business of Investors Life
Insurance Company of North America ("Investors-NA").  

Interest expense was $521,000 for the first six months of 1998, as
compared to $839,000 for the first six months of 1997. The decrease
is attributable to a reduction in the average principal balance of
the senior loan from $20.5 million for the six month period ending
June 30, 1997 to $9.1 million for the six month period ending June
30, 1998. The average rate of interest paid on the senior loan
increased slightly - 7.65% for the first six months of 1998, as
compared to 7.60% for the first six months of 1997.

As of June 30, 1998, the market value of the fixed maturities
available for sale segment was $488.2 million as compared to an
amortized cost of $470.2 million, or an unrealized gain of $18
million. The increase reflects unrealized gains on such investments
related to changes in interest rates subsequent to the purchase of
such investments. There is no assurance that this unrealized gain
will be realized in the future. The net of tax effect of this
increase ($11.7 million at June 30, 1998) is included in
"Accumulated other comprehensive income" on the Consolidated Balance
Sheets and has been recorded as an increase in shareholders'
equity.  As required under the provisions of FAS No. 130, the
determination of "Accumulated other comprehensive income" includes
separate identification of the change in values which occurred
during the current period.

For the three-month period ended June 30, 1998, the lapse rate with
respect to universal life insurance policies increased slightly
from the lapse rate experienced in the similar period in 1997.  The
rate for the 1998 period was 7.95%, as compared to 7.92% in the
1997 period.  The lapse rate with respect to traditional (non-
universal) life insurance policies decreased from the levels
experienced in the second quarter of 1997.  The rate for the three-
month period ended June 30, 1998 was 7.78%, as compared to 8.52% in
the similar period in 1997.  The lapse rates experienced during
these periods were within the ranges anticipated by management.

In July 1997, ILCO, through a subsidiary, acquired State Auto Life
Insurance Company ("State Auto Life") for a cash purchase price of
$11.8 million. As part of the transaction, State Auto Life was
immediately merged into that subsidiary. The operations of ILCO for
the six month period ended June 30, 1998 reflect the operations of
the acquired company, as compared to the six month period ended
June 30, 1997 which do not reflect such operations.

On June 30, 1998, ILCO, through a subsidiary, acquired Grinnell
Life Insurance Company ("Grinnell Life") for a base purchase price
of $16.4 million, subject to certain post-closing adjustments.  As
part of the transaction, Grinnell Life was immediately merged with
and into that subsidiary, with that subsidiary being the surviving
entity.  The operations of ILCO for the six-month period ending
June 30, 1998 do not reflect the operations of Grinnell Life.

                   Liquidity and Capital Resources:

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

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

ILCO's principal source of liquidity consists of the periodic
payment of principal and interest by Investors-NA, pursuant to the
terms of the Surplus Debentures.  The Surplus Debentures were
originally issued by Standard Life Insurance Company and their
terms were previously approved by the Mississippi Insurance
Commissioner.  In connection with the 1993 merger of Standard Life
into Investors-NA, the obligations of the Surplus Debentures were
assumed by Investors-NA.  As of June 30, 1998, the outstanding
principal balance of the Surplus Debentures was $4.7 million and
$14.9 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, 1998, the statutory surplus of
Investors-NA was $69.1 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. Under the "greater
of" standard, an insurer may pay a dividend in an amount equal to
the greater of (i) 10% of the policyholder surplus or (ii) the
insurer's net gain from operations for the previous year. As of
June 30, 1998, Investors-NA had earned surplus of $35.6 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.
 
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 $17.9 million at June 30, 1998.

ILCO's net cash flow provided by (used in) operating activities was
$(26.2) million for the six month period ended June 30, 1998, as
compared to $(0.9) million for the first six months of 1997.

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, 1998, the book value of the Company's investment
assets totaled $702.3 million, as compared to $693.1 million as of
December 31, 1997.  Total assets as of June 30, 1998 ($1.37
billion) increased from the level at of December 31, 1997 ($1.32
billion). 

The level of short-term investments at June 30, 1998 was $140.7
million, as compared to $164.6 million at December 31, 1997.

Invested real estate and other invested assets decreased from $48.5
million at June 30, 1997 to $1.5 million at June 30, 1998. The
decrease in invested real estate and other invested assets and the
corresponding increase in the level of short term investments as
compared to the same period in 1997 is attributable to the sale by
Investors-NA of its interest in the Bridgepoint Square Office
property during the fourth quarter of 1997.
 
The fixed maturities available for sale portion of invested assets
at June 30, 1998 was $488.2 million.  The amortized cost of the
fixed maturities available for sale segment as of June 30, 1998 was
$470.2 million, representing a net unrealized gain of $18 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, 1998, included a non-material amount
(0.63% 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 June 30, 1997, the
comparable percentage was 0.93%.  Of these non-investment grade
investments,0.031% are of the medium quality (or "3") category,
with 0.475% receiving an NAIC rating of "4" (low quality) and
0.126% with a rating of "5" ("lower quality"). The securities in
category "5" represent a reclassification of existing investments.

The consolidated balance sheets of the Company as of June 30, 1998
include $50.7 million of "Notes receivable from affiliates",
represented by (i) a loan of $22.5 million from Investors-NA to
Family Life Corporation ("FLC") and a $2.5 million loan from
Investors-CA to Financial Industries Corporation ("FIC") - which
loan is now owned by Investors-NA as a result of the merger of
Investors-CA into Investors-NA) - and $2.0 million of additions to
the $2.5 million note made in accordance with the terms of such
note; these loans were granted in connection with the 1991
acquisition of Family Life Insurance Company by a wholly-owned
subsidiary of FIC (ii) a loan of $30 million by Investors-NA to
Family Life Corporation made in July, 1993, in connection with the
prepayment by the FIC subsidiaries of indebtedness which had been
previously issued to Merrill Lynch as part of the 1991 acquisition
and (iii) a loan of $4.5 million by Investors-NA to Family Life
Insurance Investment Company made in July, 1993, in connection with
the same transaction described above.

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


                         Year 2000 Compliance

The Company and its subsidiaries utilize a centralized computer
system to process policyholder records and financial information. 
In addition, the Company uses non-centralized computer terminals 
in connection with its operations.  The software programs used in
connection with these systems will be affected by what is referred
to as the "year 2000 problem" or "Y2K problem".  This refers to the
limitations of the programming code in certain existing software
programs to recognize date sensitive information as the year 2000
approaches.  Unless modified prior to the year 2000, such  systems
may not properly recognize such information and could generate
erroneous data or cause a system to fail to operate properly.  

The Company has evaluated its centralized computer systems and has
developed a plan to reach  year 2000 compliance.  A central feature
of  the Plan is to convert most of the centralized systems to a
common system which is already in compliance with year 2000
requirements.  The Company is in the process of this systems
conversion and anticipates that the project will be completed in
advance of the year 2000. Based on its intitial analysis, the
Company expects that the cost of implementing and completing the
Plan will result in a after-tax expense of approximately $510,000
for the three-year (1997 - 1999) conversion period.

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

As of June 30, 1998, the Company estimated that it had completed
the necessary conversions and modifications on the administrative
systems which process approximately 38% of the insurance policies
for the Company and its subsidiaries. This included the conversion
of the ALIS System (administering approximately 49,280 policies) to
CK/4 in January of 1998, and the TI System (administering
approximately 5,244 policies) conversion to CK/4 which was
completed the end of May, 1998. The conversion of the Life 70
system (administering approximately 17,285 policies for Investors-
IN) is scheduled for completion in April, 1999. The modification of
the LifeComm-B system which is responsible for the 19,205 policies
assumed after the acquisition of State Auto Life Insurance Company
is also scheduled for completion in April, 1999. The conversion of
the LifeComm-A system (administering approximately 65,266 policies
for Investors-NA) is now scheduled for completion in September of
1999. The modification of three non-material systems which
administer 6,806 credit life policies, 2,514 group certificates and
15,938 industrial life policies are scheduled for completion in
December of 1998, March of 1999 and June of 1999 respectively.

In 1997, FIC Computer Services - a subsidiary of FIC which provides
data processing services to ILCO and its affiliates - purchased new
mainframe hardware and accompanying operating software, which the
vendor has represented to be Y2K compliant.  This hardware and
software will be tested in 1998. The telephone system has been
tested by the maintenance provider for that system and the Company
has received assurances that the telephone system is Y2K compliant.

With respect to non-centralized systems(i.e., desktop computers),
the Company anticipates that updated software releases will be
commercially available well in advance of the year 2000.
Accordingly, to the extent that such systems rely on date sensitive
information, the Company expects that the effort needed to correct
for year 2000 problems will be less time intensive than the effort
needed to achieve compliance for its centralized systems.


                       Accounting Developments

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

The Statement is effective for interim and annual periods ending
after December 15, 1997.  The Company adopted FAS No. 128 in its annual
financial statements for the year ended December 31, 1997.

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

In June, 1997, the FASB issued FAS No. 131, "Disclosure About
Segments of an Enterprise and Related Information", which
establishes standards for reporting information about operating
segments.  Generally, FAS No. 131 requires that financial
information be reported on the basis that it is used internally for
evaluating performance.  The Company adopted FAS No. 131 effective
January 1, 1998 and comparative information for earlier years will
be restated.  This statement does not need to be applied to interim
financial statements in the initial year of application. The
adoption of FAS No. 131 did not have a material impact on the
Company's results of operations, liquidity or financial position.

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

In December, 1997, the Accounting Standards Executive Committee
issued Statement of Position ("SOP") 97-3, "Accounting by Insurance
and Other Enterprises for Insurance-Related Assessments", which
provides guidance on accounting for insurance-related assessments. 
The Company is required to adopt SOP 97-3, effective January 1,
1999.  Previously issued financial statements should not be
restated unless the SOP is adopted prior to the effective date and
during an interim period.  The adoption of SOP 97-3 is not expected
to have a material impact on the Company's results of operations,
liquidity or financial position.

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

          INTERCONTINENTAL LIFE CORPORATION AND SUBSIDIARIES

Part II.  Other Information

Item 1.  Legal Proceedings

The Company and Investors-NA are defendants in two lawsuits which
were filed in Travis County, Texas in which the named plaintiffs
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 also seek a class action as to similarly situated
individuals. A more detailed discussion of these lawsuits is
contained in Part II, Item 1 Legal Proceedings of the Company's
Form 10-Q for the three-month period ended March 31, 1998 and the
Company's Form 10-K for the year ended December 31, 1997.

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 the Shareholders was held on May
          19, 1998. The only matter submitted at the meeting to a
          vote of the Shareholders was the election of directors.
          All of the nominees were elected as directors. The
          nominees included one individual, Elizabeth Nash, who had
          not previously served as a director of the Company.

          The voting tabulation as to each nominee was as follows:

            Name                   In Favor       Withheld

          Bender, Robert           3,809,134      1,685
          Demgen, Jeffrey H.       3,809,139      1,680
          Fleron, Theodore A.      3,809,139      1,680
          Gilcrease, W. Lewis      3,802,107      8,712
          Grace, James M.          3,808,779      2,040
          Kosson, Richard          3,802,107      8,712
          Mitte, Roy F.            3,808,279      2,540     
          Nash, Elizabeth          3,802,962      7,857
          Payne, Dr. Eugene E.     3,808,779      2,040
          Pruner, H. Gene          3,802,467      8,352
          Schmitt, Steven P.       3,809,139      1,680     



Item 5.  Other Information

          None

Item 6.  Exhibits and Reports on Form 8-K

     (a)  Exhibits

          Form 10-K Annual Report of Registrant for the year ended
          December 31, 1997 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





                              SIGNATURE


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



                              INTERCONTINENTAL LIFE CORPORATION



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






Date: August 14, 1998