EX-3.1

                                       RESTATED

                             CERTIFICATE OF INCORPORATION

                                          OF

                            SOUTHWESTERN LIFE CORPORATION

                       (PURSUANT TO SECTION 245 OF THE GENERAL
                      CORPORATION LAW OF THE STATE OF DELAWARE)

        Southwestern  Life  Corporation,  a corporation organized and existing
   under and by virtue of the General Corporation Law of the State of Delaware
   (the "Corporation"), does hereby certify that:

        FIRST:  The  name of the Corporation is Southwestern Life Corporation.
   Southwestern  Life  Corporation  was originally incorporated under the name
   I.C.H.,  Inc.,  and  the  original  Certificate  of  Incorporation  of  the
   Corporation  was filed with the Secretary of State of the State of Delaware
   on April 22, 1977.

        SECOND:  The  Restated Certificate of Incorporation of the Corporation
   only restates and integrates, and does not further amend, the provisions of
   the  Corporation's  Certificate  of  Incorporation as heretofore amended or
   supplemented,  and there is no discrepancy between those provisions and the
   provisions of the Restated Certificate of Incorporation.

        THIRD:  The  Restated  Certificate of Incorporation of the Corporation
   was duly adopted by the directors of the Corporation in accordance with the
   provisions  of  Section  245 of the General Corporation Law of the State of
   Delaware.

        FOURTH:  The  text  of  the  Certificate  of  Incorporation  is hereby
   restated to read in its entirety as follows:

   ARTICLE ONE. The name of the Corporation is:

                          Southwestern Life Corporation.

   ARTICLE  TWO. The address of its registered office in the State of Delaware
   is Corporation Trust Center, 1209 Orange Street, in the City of Wilmington,
   County  of  New Castle. The name of the registered agent at such address is
   The Corporation Trust Company.

   ARTICLE  THREE.  The  nature  of  the  business  or  purpose  for which the
   Corporation is to be conducted or promoted is:

        To engage in any lawful act or activity for which a corporation may be
   organized under the General Corporation Law of Delaware.

   ARTICLE  FOUR.  The total number of shares of stock that the Corporation is
   authorized to issue is Two Hundred Fifty Million


   (250,000,000) shares,  of  which Two Hundred Million (200,000,000) shares,
   with  a  par  value  of  One  Dollar ($1.00) per share, shall be designated
   "Common  Stock";  and Fifty Million (50,000,000) shares, without par value,
   shall be designated "Series Preferred Stock."

        The  designations, preferences, limitations and relative rights of the
   shares of each class of stock of the Corporation are as follows:

        A.   COMMON  STOCK.  Except  as  otherwise  provided by law or in this
   Article Four, all shares of Common Stock shall be identical in all respects
   and have equal rights and privileges. Subject to the rights, if any, of any
   series  of  Series  Preferred  Stock,  these rights and privileges include,
   without  limitation, the right to share ratably on a per share basis (i) in
   such  cash, stock or other dividends and distributions as from time to time
   may be declared by the Board of Directors of the Corporation (the "Board of
   Directors") or by the Corporation with respect to the Common Stock and (ii)
   upon the voluntary or involuntary liquidation, dissolution or winding up of
   the  affairs of the Corporation, in all distributions in assets or funds of
   the Corporation.

             1.   Voting.  With  respect to any matter on which the holders of
   Common  Stock  shall be entitled to vote, such holders shall be entitled to
   one  vote  for each outstanding share of Common Stock respectively owned of
   record by them.

        B.   SERIES  PREFERRED  STOCK. Series Preferred Stock may be issued in
   one  or  more  series.  The designations, powers, preferences and relative,
   participating,  optional  and other special rights, and the qualifications,
   limitations  and  restrictions  thereof, of each series of Series Preferred
   Stock  shall  be such as are stated and expressed herein, and to the extent
   not stated and expressed herein, shall be such as may be fixed by the Board
   of Directors (authority so to do being hereby expressly granted) and stated
   in a resolution or resolutions providing for the issuance, or affecting the
   terms,  of  Series  Preferred  Stock of such series adopted by the Board of
   Directors and filed in the Office of the Secretary of State of Delaware and
   recorded  in  the Office of the Recorder of New Castle County, Delaware, in
   accordance  with  the  provisions  of the Delaware General Corporation Law.
   Such  resolution  or  resolutions,  with  respect to each series, shall (1)
   specify  the  series  designation,  (2) specify the stated value or capital
   value,  if  any,  to  be assigned to such series, which amount shall not be
   less  than  the amount to which each share of such series shall be entitled
   to  receive  upon  the voluntary or involuntary liquidation, dissolution or
   winding  up of the Corporation, (3) fix the dividend rate, if any, thereof,
   and  stipulate  whether or not dividends on such series shall be cumulative
   and  if so the date from which they shall be cumulative, (4) fix the amount
   which  the holders of such series shall be entitled to be paid in the event
   of a voluntary or involuntary liquidation, dissolution or winding up of the


   Corporation,  (5)  state whether or not such series shall be redeemable and
   at  what  times and under what conditions and the amount or amounts payable
   thereon  in  the event of redemption; and may, in a manner not inconsistent
   with  the  provisions of the Corporation's Certificate of Incorporation, as
   amended  from time to time (the "Certificate"), (i) designate the number of
   shares  of  such  series which may be issued, (ii) provide for a sinking or
   purchase fund applicable  to  such  series,  (iii)  grant voting rights  to
   holders  of  shares  of  such  series  in addition to those required by the
   Delaware General Corporation Law and not inconsistent with such law or this
   Article  Four,  (iv) impose conditions or restrictions upon the creation of
   indebtedness  of  the Corporation or upon the issuance of additional Series
   Preferred  Stock  or  other capital stock ranking equally therewith or with
   priority  thereto  as  to  dividends  or  liquidation  rights,  (v)  impose
   conditions  or  restrictions upon the payment of dividends or the making of
   other  distributions  upon,  or the redemption, purchase or acquisition of,
   shares  of  any Common Stock, or other capital stock ranking junior to such
   series  of  Series  Preferred  Stock as to dividends or liquidation rights,
   (vi)  grant  to  the holders of such series as a class the right to convert
   shares  of  such  series on the terms and at the conversion ratio fixed for
   such  series,  into  shares  of  Common Stock or other capital stock of the
   Corporation  ranking  junior to such series as to dividends or distribution
   of  assets on liquidation, (vii) prescribe the rights of the Corporation to
   reissue  each  series  purchased  or  otherwise  reacquired  or redeemed or
   retired  through  the operation of a purchase or sinking fund or otherwise,
   or  surrendered  to  the Corporation on conversion, (viii) grant such other
   special  rights  to  the  holders  of shares of such series as shall not be
   inconsistent with the provisions of the Delaware General Corporation Law or
   this  Article  Four  and  (ix)  impose  such  other qualifications, rights,
   preferences  and  restrictions as are not inconsistent with the Certificate
   or  the  provisions  of  the  Delaware  General Corporation Law. The phrase
   "fixed  for  such series" and any similar terms, when referring to a series
   of Series Preferred Stock, shall mean "stated and expressed in a resolution
   or  resolutions  providing for the issuance, or affecting the terms, of any
   series  of  Series  Preferred  Stock  adopted by the Board of Directors and
   filed  in the Office of the Secretary of State of the State of Delaware and
   the Office of the Recorder of New Castle County, Delaware."

             1.   Dividends.  Subject  to  the  conditions  set  forth herein,
   unless otherwise fixed for such series, the holders of the Series Preferred
   Stock  of each series shall be entitled to receive, when and as declared by
   the  Board  of  Directors,  out  of  any  funds  legally available for that
   purpose,  preferential dividends in cash at the rate per annum, or in other
   property,  fixed  for  such  series,  and such additional, participating or
   other dividends as may be fixed for such series. Unless otherwise fixed for
   such  series,  such dividends shall be payable on such date or dates as may
   be fixed by the Board of Directors (hereinafter severally referred to as a


   "dividend  payment  date")  to  holders  of record on a date, not exceeding
   fifty days preceding each such dividend payment date, fixed for such series
   in  advance  of payment of each particular dividend. Preferential dividends
   (but  not  additional,  participating  or other dividends) on shares of the
   Series  Preferred  Stock  shall  accrue  from  the  dividend  payment  date
   immediately  preceding  the  date  of issuance (unless the date of issuance
   shall be a dividend payment date, in which case they shall accrue from that
   date) or from such other date or dates as may be fixed for such series.

                  a.   Unless  otherwise fixed for such series, each series of
   Series  Preferred  Stock  shall  rank on a parity with each other series of
   Series  Preferred  Stock,   irrespective   of   series,   with  respect  to
   preferential  dividends  at the respective rates fixed for such series, and
   no  dividend  shall be declared and paid or set apart for payment on Series
   Preferred  Stock  of  any  series  unless  at  the same time a preferential
   dividend  in like proportion to the preferential dividends accrued upon the
   Series  Preferred  Stock of each other series shall be declared and paid or
   set  apart  for  payment,  as the case may be, on Series Preferred Stock of
   each other series then outstanding. Unless otherwise fixed for such series,
   until  preferential  dividends  at  the rate fixed for each series shall be
   declared  and  paid  or  set  apart  for payment in full on all outstanding
   shares  of Series Preferred Stock for all previous dividend periods and for
   the   current  dividend  period,  no  dividends,  additional  dividends  or
   participating dividends shall be declared or paid upon, and no assets shall
   be  distributed  to  or  set  apart  for,  shares  of  any series of Series
   Preferred   Stock,  any  Common  Stock,  or  other  capital  stock  of  the
   Corporation.  Unless otherwise fixed for such series, no shares of a series
   of   Series  Preferred  Stock  shall  be  purchased  or  redeemed  by   the
   Corporation,  except  for  a sinking fund or funds, unless all preferential
   dividends on each then outstanding series of the Series Preferred Stock for
   all past and current dividend periods shall have been paid, or declared and
   a  sum  sufficient  for  the  payment thereof set apart for payment. Unless
   otherwise  fixed for such series, accrued and unpaid preferential dividends
   on the Series Preferred Stock shall not bear interest.

                 b.   Subject to the dividend rights of the holders of Series
   Preferred  Stock,  the  holders  of  the outstanding shares of Common Stock
   shall be entitled to receive such dividends as may be declared thereon from
   time  to  time  by  the  Board  of Directors, in its discretion, out of any
   assets of the Corporation at the time legally available for the payments of
   dividends;  provided, however, that no dividends may be declared or paid on
   the  Common Stock unless at the same time the Board of Directors shall also
   declare and pay to the holders of the other such class of stock a per share
   dividend  equal,  in  kind  and  amount,  to the per share dividend paid or
   declared and set apart for payment to the holders of Common Stock.


                  c.   Subject  to  the  preferential  dividend  rights of the
   holders of the Series Preferred Stock as a class, the holders of any series
   of  Series  Preferred  Stock  shall  be  entitled  to  receive, when and as
   declared  by the Board of Directors, out of any funds legally available for
   such purpose, such additional or participating dividends, if any, as may be
   fixed for such series.

                  d.   Unless  otherwise  fixed  for  such  series,  the  term
   "accrued and unpaid dividends" as used in this Article Four with respect to
   the  Series  Preferred  Stock  shall  mean  "preferential  dividends on all
   outstanding  shares  of  a  series  of  Series Preferred Stock at the rates
   respectively  fixed  for  such series, from the respective dates from which
   such  preferential  dividends  shall accrue to the date as of which accrued
   and  unpaid  dividends  are  being  determined,  less   the   aggregate  of
   preferential  dividends  theretofore  paid  or  declared  and set apart for
   payment upon such outstanding Series Preferred Stock during such period."

             2.   Voting.  Except  as  otherwise  provided  by  law  or by the
   provisions  of  this Article Four, the resolution of the Board of Directors
   providing for the issuance, or affecting the terms, of any series of Series
   Preferred  Stock may, but need not, provide that the holders of such series
   of Series Preferred Stock have such voting rights as the Board of Directors
   shall  determine.  In  addition  to  any  other voting rights, the Board of
   Directors  may  grant  holders  of any series of Series Preferred Stock the
   right  to  vote  in  the  election of Common Stock Directors as provided in
   Section  A.l.  of  this Article Four. The Board of Directors also may grant
   holders  of any series of Series Preferred Stock the right to vote to elect
   one  or  more  directors of the Corporation (the "Preferred Directors") if,
   but  only  to  the  extent,  dividends  on such series are in arrears for a
   period,  in an amount, or upon such other terms and conditions as are fixed
   for  such  series.  The  election  of any Preferred Director shall have the
   effect of enlarging the Board of Directors by the number of Preferred
   Directors  elected.  Unless  otherwise  fixed  for such series, a Preferred
   Director  may  be removed, with or without cause, by vote of the holders of
   each  series  of  Series  Preferred  Stock  having the right to vote in the
   election  of  such Preferred Director, and any director appointed to fill a
   vacancy  of  a  Preferred Director shall be appointed by the sole remaining
   Preferred  Director  or  by a majority of the remaining Preferred Directors
   whether or not a quorum. Unless otherwise fixed for such series, all series
   of  Series Preferred Stock that have the right to vote in the election of a
   Preferred Director shall vote together as a single class in the election or
   removal of any Preferred Director.

             3.   Conversion.  The Series Preferred Stock of any series may be
   convertible  into  shares  of  any  class or series of capital stock of the
   Corporation  ranking  junior to such series as to dividends or distribution
   of assets on liquidation. Conversion of


   Series  Preferred Stock of any series shall be permitted only if and in the
   manner  and  at  the  conversion  ratio  fixed  for  such series; provided,
   however, that as to any shares of any series of Series Preferred Stock that
   shall  be  subject  to  redemption  and  that  shall  have  been called for
   redemption,  any  right  of  conversion  shall  terminate  at  the close of
   business  on  the  third  full  business  day  before  the  date  fixed for
   redemption,  unless  otherwise  fixed  for  such series. At the time of the
   conversion,   unless  otherwise  fixed  for  such  series,  no  payment  or
   adjustment  need  be made for accrued and unpaid dividends on any shares of
   any  series  of  Series  Preferred  Stock  that  shall  be converted or for
   dividends  on  any  shares of the Corporation's capital stock that shall be
   issuable  upon such conversion. Unless otherwise fixed for such series, all
   accrued and unpaid dividends on such shares of Series Preferred Stock up to
   the  dividend  payment  date  immediately  preceding the date of conversion
   shall  constitute  a  debt  of  the  Corporation  payable to the converting
   stockholder,  and no dividend shall be paid upon any shares of Common Stock
   until such debt shall be paid or sufficient funds set apart for the payment
   thereof. Unless otherwise fixed for such series, the Series Preferred Stock
   of  any  series  that is convertible may be converted (subject to the above
   time limitation in the case of a call for redemption) only into full shares
   of  the  Corporation's capital stock, at the conversion ratio in effect for
   such  series at the time of the conversion. Unless otherwise fixed for such
   series,  no  fraction of a share of such capital stock shall be issued upon
   any  conversion,  but, in lieu of such issuance, there shall be paid to any
   holder  of  shares  of any series of Series Preferred Stock surrendered for
   conversion,  as  soon  as  practicable  after  the  date  such  shares  are
   surrendered for conversion, an amount in cash equal to the same fraction of
   the  market  value  of  a  full  share  of such capital stock issuable upon
   conversion  of  such  series.  For such purpose, unless otherwise fixed for
   such series, the market value of a share of such capital stock shall be the
   closing  price  on the principal national securities exchange on which such
   capital  stock  is listed for trading, or if not so listed, on the National
   Association  of  Securities  Dealers  National Market System; or if no such
   closing  price  is  available,  at the average of the closing bid and asked
   prices reported on the National Association of Securities Dealers Automated
   Quotation  System  on  the  trading day immediately preceding the date upon
   which  such  conversion  occurs; or in the absence of any of the foregoing,
   the  fair  market value as determined and set forth in a resolution adopted
   by  the  Board  of  Directors  (whose  determination  shall  be  final  and
   conclusive).

                  a.   The  conversion ratio of any series of Series Preferred
   Stock  shall  be subject to adjustment in accordance with any anti-dilution
   provisions fixed for such series.

                  b.   Unless  otherwise fixed for such series, any adjustment
   of  the  conversion  ratio  as provided in the resolution establishing such
   series shall remain in effect until further


   adjustment  of  the conversion ratio as required thereunder. Upon each such
   adjustment,  unless  otherwise fixed for such series, a written instrument,
   signed  by an officer of the Corporation, setting forth such adjustment and
   a  computation  and  a  summary of the facts upon which it is based and the
   resolutions,  if  any,  of  the  Board  of  Directors  passed in connection
   therewith,  shall  forthwith be filed with the transfer agent or agents for
   the  Series  Preferred  Stock  and  made  available  for  inspection by the
   stockholders, and any adjustment so evidenced, made in good faith, shall be
   binding upon all stockholders and upon the Corporation.

                  c.   Unless  otherwise  fixed  for  such series, in order to
   convert  shares  of any series of Series Preferred Stock into shares of the
   Corporation's  capital  stock,  the  holder  thereof  shall  surrender  the
   certificate or certificates for shares of such series, duly endorsed to the
   Corporation or in blank, at the office of any transfer agent for the Series
   Preferred  Stock  (or  such  other  place  as  may  be  designated  by  the
   Corporation),  and  shall  give  written  notice to the Corporation at said
   office  that  he  elects  to  convert  the  same and shall state in writing
   therein   the  name  or  names  in  which  he  wishes  the  certificate  or
   certificates  for  shares  of  such  capital  stock  to  be  issued. Unless
   otherwise  fixed  for  such  series,  the  Corporation  will,  as  soon  as
   practicable  thereafter,  deliver  at  said  office  to  such holder of the
   converted  shares of Series Preferred Stock, or to his nominee or nominees,
   a  certificate  or  certificates  for  the  number  of  full  shares of the
   Corporation's  capital stock to which he shall be entitled as aforesaid and
   make  payment  for  any  fractional shares. Unless otherwise fixed for such
   series,  shares  of  Series  Preferred  Stock  shall be deemed to have been
   converted  as of the date of the surrender of such shares for conversion as
   provided above, and the person or persons entitled to receive shares of the
   Corporation's  capital stock issuable upon such conversion shall be treated
   for  all  purposes  as  the  record holder or holders of such shares of the
   Corporation's  capital  stock on such date. Unless otherwise fixed for such
   series,  all shares of any series of Series Preferred Stock that shall have
   been surrendered for conversion shall no longer be deemed to be outstanding
   and  all  rights  with  respect  to  such  shares shall forthwith cease and
   terminate  except  only  the  right  of  the  holder  thereof to receive in
   exchange  therefor  full  shares  of  the  Corporation's  capital stock and
   payment  for any fractional shares. Unless otherwise fixed for such series,
   any  shares  of  any series of Series Preferred Stock so converted shall be
   returned  to  the  status  of  authorized  but  unissued  shares  of Series
   Preferred  Stock  without  designation  as to series and may be reissued as
   Series  Preferred  Stock of any future series to be designated by the Board
   of Directors.

             4.   A  number  of  authorized  shares  of  capital  stock of the
   Corporation  sufficient  to  provide  for  the  conversion of all series of
   Series  Preferred  Stock  outstanding and having conversion rights shall at
   all times be reserved for conversion in accordance with


   the terms of the respective resolutions authorizing such series. 

             5.   Liquidation.  In  the event of the liquidation, dissolution,
   or  winding  up  of  the  affairs  of the Corporation, whether voluntary or
   involuntary,  the  assets of the Corporation shall be distributed among the
   holders  of  its capital stock in accordance with the following schedule of
   priorities and preferences:

                  a.   Unless  otherwise fixed for such series, there shall be
   paid  to  the  holders  of Series Preferred Stock from any available assets
   such  preferential  amounts,  in  cash  or  other property, as may be fixed
   respectively  for  each such series, plus in each case a further amount per
   share equal to all accrued and unpaid dividends thereon, all of which shall
   be  paid  or  set apart for payment before the payment or setting apart for
   payment  of  any  amount  for,  or  the  distribution  of any assets of the
   Corporation  to,  holders  of  Common Stock; provided, however, that unless
   otherwise  fixed  for such series, no such payment shall be made to holders
   of  shares  of  any series of the Series Preferred Stock unless at the same
   time  the respective preferential amounts to which the shares of each other
   series of the Series Preferred Stock are entitled shall likewise be paid or
   set  apart  for  payment to holders of shares of each such other series. In
   the  event  the assets of the Corporation available for distribution to the
   holders  of  Series Preferred Stock shall be insufficient to permit payment
   to  the  holders  of  all  series  of  Series  Preferred  Stock of the full
   preferential  amount  or  amounts,  then  unless  otherwise  fixed for such
   series,  the entire remaining assets shall be distributed to the holders of
   all  series  of the Series Preferred Stock in amounts in like proportion to
   the respective preferential amounts to which they are entitled.

                  b.   After  the amounts provided for by Section B.4.(a) have
   been paid or distributed, the remaining assets and funds of the Corporation
   shall  be  distributed among the holders of the Common Stock and any series
   of  Series  Preferred  Stock or other capital stock of the Corporation that
   ranks  on  parity  with  the  Common  Stock as to distribution of assets on
   liquidation, pro rata on a per share basis.

                  c.   Unless otherwise fixed for a series of Series Preferred
   Stock, neither the consolidation nor merger of the Corporation into or with
   another  corporation  or  corporations,  nor the merger or consolidation of
   another  corporation  or  corporations  with or into the Corporation, nor a
   reorganization of the Corporation, nor the purchase or redemption of all or
   part of the outstanding shares of any class or classes of the capital stock
   of  the Corporation, nor a sale or transfer of the property and business of
   the  Corporation  as,  or  substantially  as,  an entity, shall be deemed a
   liquidation, dissolution, or winding up of the


   affairs  of the Corporation, within the meaning of any of the provisions of
   this Article Four. 

             6.   Redemption. Subject to the limitations of this Article Four,
   the  Series Preferred Stock of any series, to the extent, if any, fixed for
   such  series,  may be redeemed at the option of the Corporation at any time
   or from time to time at such redemption price or prices per share as may be
   fixed  for  such  series  plus, in each case and unless otherwise fixed for
   such series, an amount equal to accrued and unpaid dividends thereon to the
   date  designated  for redemption or to such other date, and upon such other
   terms  not  inconsistent  herewith, as may be fixed for such series. In the
   event  that  at  any  time  less than all the Series Preferred Stock of any
   series  is  to  be  redeemed, the shares to be redeemed may be selected pro
   rata,  or by lot, or by such other equitable method as may be determined by
   the  Board  of Directors. Unless otherwise fixed for such series, notice of
   redemption  shall  be  mailed  or  caused  to be mailed by the Corporation,
   addressed  to  each  holder of record of shares to be redeemed, at his last
   address  as  the  same  appears on the books of the Corporation at least 30
   days  before the date designated for redemption. Unless otherwise fixed for
   such  series, if such notice of redemption shall have been duly mailed, for
   such  shares,  and  if  on or before the redemption date designated in such
   notice, all funds necessary for such redemption shall have been irrevocably
   set aside by the Corporation in trust for the account of the holders of the
   shares  of  one or more series of Series Preferred Stock to be redeemed, so
   as to be available therefor, then, from and after the setting aside of such
   funds  and the mailing of such notice, notwithstanding that any certificate
   for shares of any series of Series Preferred Stock so called for redemption
   shall  not  have  been surrendered for cancellation, the shares represented
   thereby  shall  no  longer  be  deemed  outstanding, and the holder of such
   certificate  or  certificates  shall  have  with  respect to such shares no
   rights  in  or  with respect to the Corporation except the right to receive
   the  redemption price thereof, without interest, upon the surrender of such
   certificate  or  certificates and the right, if and to the extent fixed for
   such  series  by the resolution of the Board of Directors providing for the
   issuance  of shares of the series, to convert such shares, on or before the
   close of business on the third full business day before the date designated
   for  redemption, into other capital stock of the Corporation, and after the
   date designated for redemption such shares shall not be transferable on the
   books  of the Corporation except to the Corporation. Unless otherwise fixed
   for  such  series,  any moneys so set aside in trust by the Corporation and
   unclaimed  at  the end of six years from the date fixed for such redemption
   shall  be  repaid to the Corporation, after which repayment, holders of the
   shares  so  called  for  redemption  shall look only to the Corporation for
   repayment  thereof.  Unless  otherwise fixed for such series, any shares of
   any  Series  Preferred Stock so redeemed shall be returned to the status of
   authorized but unissued shares of Series Preferred Stock so 


   redeemed  shall be returned to the status of authorized but unissued shares
   of  Series  Preferred  Stock  without  designation  as to series and may be
   reissued  as  Series Preferred Stock of any future series designated by the
   Board of Directors.

             7.   Authorized  Shares.  The  number of authorized shares of the
   Series  Preferred  Stock  or  of  any particular series may be increased or
   decreased  by  the  affirmative  vote  of  the holders of a majority of the
   shares of Common Stock.

        C.   $1.75 CONVERTIBLE EXCHANGEABLE PREFERRED STOCK, SERIES 1986-A. At
   meetings  duly  held  on  October  7, 1986, November 4, 1986, and March 17,
   1987,  the  Board of Directors of I.C.H. Corporation (the "Company"), and a
   duly  authorized  committee thereof, duly adopted the following resolutions
   (with  recitals therein accurate at and as of March 17, 1987) designating a
   new series of Series Preferred Stock of the Company:

        WHEREAS,  the  Company's Certificate of Incorporation, as amended (the
   "Certificate"),  now authorizes the issuance of 99,900,000 shares of Common
   Stock,  with  a  par  value  of  $1.00 per share, 100,000 shares of Class B
   Common  Stock  (herein so called), with a par value of $1.00 per share, and
   50,000,000 shares of Series Preferred Stock (herein so called), without par
   value and issuable from time to time in one or more series as determined by
   the Board of Directors; and

        WHEREAS,  Article Four of the Certificate expressly vests in the Board
   of  Directors  the  authority to fix by resolution or resolutions providing
   for the issuance of the Series Preferred Stock the stated or capital value,
   dividend  rate,  voting  powers,  designations,  preferences, and relative,
   participating,  optional  or  other  special rights and the qualifications,
   limitations  or  restrictions  of the shares of Series Preferred Stock that
   are not fixed by the Certificate; and

        WHEREAS,  the  Board  of  Directors  has  designated  and  issued,  by
   resolution  originally adopted on October 8, 1984, 541,563 shares of Series
   1984-A  Preferred  Stock  (herein so called), with a stated value of $41.07
   per share; and

        WHEREAS,  the  Company desires to designate and establish a new series
   of Series Preferred Stock.

        NOW,  THEREFORE,  BE  IT  RESOLVED,  that,  pursuant  to the authority
   expressly granted to and vested in the Board of Directors by the provisions
   of  the  Certificate,  the  Company's issuance of 8,000,000 shares of a new
   series  of  the  Series  Preferred Stock is hereby authorized, and that the
   powers,  designations,  preferences,  and relative, participating, optional
   and  other  special  rights, as well as the qualifications, limitations and
   restrictions,  of  such  shares  (in  addition to the powers, designations,
   preferences and 


   rights  set  forth in, and the qualifications, limitations and restrictions
   imposed  by,  the  Certificate  with respect to the Series Preferred Stock)
   hereby are fixed and determined by the Board of Directors, as follows:

             8.   Designation,  Number  and Stated Value. The series of Series
   Preferred  Stock  authorized  and  established  hereby is designated as the
   $1.75  Convertible Exchangeable Preferred Stock, Series 1986-A (hereinafter
   called  "this  Series").  The  number  of  shares  of  this Series shall be
   8,000,000.  The  stated value of each share of this Series shall be $25.00,
   and  each  share of this Series shall be validly issued and fully paid upon
   receipt  by  the Company of legal consideration in an amount at least equal
   to such stated value and shall not thereafter be assessable.

             9.   Dividends.  The holders of outstanding shares of this Series
   shall  be  entitled  to  receive,  when  and  as  declared  by the Board of
   Directors  out  of  assets  of  the  Company legally available for payment,
   annual  cash dividends at the rate of $1.75 per share, and no more, payable
   in  equal  quarterly  installments  on the 1st calendar day of March, June,
   September,  and  December  in  each year (unless such day is a non-business
   day,  in  which  event  on  the  next  business day thereafter), commencing
   March  1, 1987 (each such payment date being hereinafter called a "Dividend
   Date"  and each regular quarterly or shorter (in the case of the first such
   period)  period  ending  with  a  Dividend  Date being hereinafter called a
   "Dividend  Period";  the  term "Dividend Period," when used with respect to
   any  Parity  Dividend  Stock,  as hereinafter defined, also shall mean each
   dividend  accrual  period  ending  on  a  regular  date  for the payment of
   cumulative  dividends  on such Parity Dividend Stock). Such dividends shall
   be  cumulative  and  shall  accrue  from  the first date of issuance of any
   shares  of  this  Series (the "Issue Date"), whether or not in any Dividend
   Period  the  Company  has  assets  legally  available  for payment thereof.
   Dividends payable on shares of this Series (i) as of March 1, 1987, (ii) on
   any  Redemption  Date  (as  defined  in Section 5 below) not occurring on a
   regular Dividend Date or (iii) on any final distribution date relating to a
   dissolution,  liquidation or winding up of the Company and not occurring on
   a  regular  Dividend  Date  shall  be calculated on the basis of the actual
   number  of  days  elapsed,  (including  the   Redemption   Date  or   final
   distribution date) over a 365-day period. Declared dividends on outstanding
   shares  of  this  Series shall be payable to record holders thereof as they
   appear on the stock register of the Company at the close of business on the
   15th  day  of  the  month preceding the respective Dividend Date or on such
   other record date as may be fixed by the Board of Directors in advance of 
   a Dividend Date, provided that no such record date shall be less than 10 or
   more than 60 calendar days preceding such Dividend Date.

        If at any time full cumulative dividends payable for all past Dividend
   Periods have not been or are not contemporaneously declared and paid or set
   apart for payment on outstanding shares of 


   this  Series  and any other stock ranking on a parity as to dividend rights
   with  this Series (the "Parity Dividend Stock"), all dividends declared and
   paid  or set apart for payment on outstanding shares of this Series and the
   Parity  Dividend  Stock shall be declared and paid or set apart for payment
   pro  rata so that the amount of such dividends per share of this Series and
   the  Parity  Dividend  Stock shall in all cases bear to each other the same
   proportions  that  the respective accrued and unpaid dividends per share on
   this  Series  and the Parity Dividend Stock bear to each other. Unless full
   cumulative  dividends  payable  on  outstanding  shares  of this Series and
   Parity   Dividend  Stock  for  all  past  Dividend  Periods  have  been  or
   contemporaneously  are  declared  and paid or set apart for payment, (a) no
   dividends shall be declared and paid or set apart for payment on the Common
   Stock (as defined in Section 8 below), Series 1984-A Preferred Stock or any
   other class or series of stock of the Company ranking junior to this Series
   as  to  dividend  rights (collectively, the "Junior Dividend Stock") except
   for dividends payable in shares of Junior Dividend Stock, and (b) no shares
   of Junior Dividend Stock shall be redeemed, purchased or otherwise acquired
   by  the Company for value except as a result of conversion into or exchange
   for, or with the proceeds from the sale of, other shares of Junior Dividend
   Stock;  provided,  however,  that,  subject to the provisions of Subsection
   3(c)  below,  the  Company  shall  have  the  right  to redeem, purchase or
   otherwise  acquire under any circumstances shares of any class or series of
   its  stock  (including  the  Series  Preferred Stock) other than the Junior
   Dividend Stock.

             10.  Voting.  The shares of this Series shall not have any voting
   powers  or rights whatsoever, except for such voting powers as are required
   by law or as are granted by this Section 3, as follows:

                  a .   At  any  time  or  times  that  dividends  payable  on
   outstanding  shares  of this Series or any Parity Dividend Stock shall have
   been  in  arrears  and  remain  unpaid  in  an aggregate amount equal to or
   exceeding  the amount of dividends payable thereon for six Dividend Periods
   (a "Dividend Default"), then the holders of record of outstanding shares of
   this  Series  and  the Parity Dividend Stock shall have, in addition to the
   other  voting rights set forth herein, the exclusive right, voting together
   as  a  single  class  without  regard  to  series,  to  elect two Preferred
   Directors  (as  defined in the Certificate) who shall be in addition to the
   directors  constituting  the  Board  of  Directors  immediately before such
   election.  The vote (at an annual meeting of the Company's stockholders) of
   the  record  holders of a majority of the outstanding shares of this Series
   and  the  Parity  Dividend Stock, voting together as a single class without
   regard  to  series, then present and voting (in person or by proxy), or the
   execution  of  a written consent by the record holders of a majority of the
   outstanding  shares  of  this  Series  and  the  Parity Dividend Stock then
   entitled to vote, shall be sufficient to nominate or elect any


   such  Preferred  Directors.  The  holders  of  a majority of the issued and
   outstanding shares of the voting class, present in person or represented by
   proxy,  shall  constitute  a  quorum  at  any  meeting  for the election of
   Preferred  Directors.  The  voting  rights provided by this Subsection 3(a)
   shall  continue until such time as all accrued and unpaid dividends for all
   past  Dividend  Periods on outstanding shares of this Series and the Parity
   Dividend  Stock  shall have been declared and paid or set aside for payment
   in  full,  at  which  time  such  voting  rights shall terminate subject to
   revesting  in  the event any subsequent Dividend Default shall occur and be
   continuing.  Such  Preferred  Directors  shall be Independent Directors (as
   defined  in  the  Certificate)  and  shall  serve as such until the earlier
   occurrence  of   the  election  of  their   respective  successors  or  the
   termination  of  the  voting rights of holders of shares of this Series and
   the Parity Dividend Stock as provided in the preceding sentence. So long as
   a  Dividend  Default  shall  continue,  any vacancy in the office of such a
   Preferred  Director  may  be  filled  by  the remaining Preferred Director;
   provided,  however,  that  any  Preferred  Director may be removed (with or
   without  cause),  and  any  vacancy  resulting  from  such removal shall be
   filled, by vote (at an annual meeting of the Company's stockholders) of the
   record  holders  of a majority of the outstanding shares of this Series and
   the Parity Dividend Stock, voting together as a single class without regard
   to  series,  then  present  and  voting  (in  person  or  by proxy), or the
   execution  of  a written consent by the record holders of a majority of the
   outstanding  shares  of  this  Series  and  the  Parity Dividend Stock then
   entitled to vote.

                  b. So long as any shares of this Series are outstanding, the
   Company  shall  not,  directly  or through merger or consolidation with any
   other corporation:

                       (1)  without the consent of the holders of at least 66-
   2/3%  of  all  shares  at the time outstanding of this Series and any other
   series of Series Preferred Stock ranking on a parity with this Series as to
   dividend  and  liquidation  rights  (the  "Parity Preferred Stock"), voting
   together  as a single class without regard to series, given in person or by
   proxy, either in writing or by a vote at an annual meeting of the Company's
   stockholders  or  at  a  special meeting called for the purpose, authorize,
   create or designate any shares of any class or series of preferred stock of
   the  Company  ranking senior to the shares of this Series as to dividend or
   liquidation rights;

                       (2)  without the consent of the holders of at least 66-
   2/3%  of all shares at the time outstanding of this Series, given in person
   or  by  proxy,  either  in writing or by a vote at an annual meeting of the
   Company's  stockholders or a special meeting called for the purpose, amend,
   alter  or repeal any of the preferences, rights, powers or privileges given
   to  shares  of  this  Series  by the provisions of the Certificate, by this
   Certificate of Designation, or otherwise, so as to affect adversely such


   preferences, rights, powers or privileges; or

                       (3)  without  the  consent of the holders of at least a
   majority  of  all  shares  at  the  time outstanding of this Series and the
   Parity Preferred Stock, voting together as a single class without regard to
   series,  given  in person or by proxy, either in writing or by a vote at an
   annual meeting of the Company's stockholders or at a special meeting called
   for  the purpose, authorize, create or designate any shares of any class or
   series  of  preferred  stock  of  the Company ranking on a parity with this
   Series as to dividend or liquidation rights.

                  c.  Unless  all  accrued  and  unpaid dividends for all past
   Dividend  Periods  on  outstanding shares of this Series have been declared
   and  paid or set aside for payment in full, the Company shall not redeem or
   purchase less than all outstanding shares of this Series (except through an
   offer  made  on the same terms to all holders of outstanding shares of this
   Series)  without  the  consent of the holders of at least a majority of all
   shares at the time outstanding of this Series, given in person or by proxy,
   either in writing or by a vote at a meeting called for the purpose.

                  d.  In  each case in which the vote or consent of holders of
   shares  of  this Series is required by law or is granted by this Section 3,
   such  holders  shall  be entitled to one vote for each outstanding share of
   this  Series  respectively  owned  of  record  by them. With respect to any
   matter  (other than a matter provided for above in this Section 3) on which
   the Series Preferred Stock is entitled to vote by law, the Series Preferred
   Stock  will  vote  as a single class with the Common Stock unless otherwise
   required by law.

             11.  Liquidation. Upon the dissolution, liquidation or winding up
   of   the  Company,  whether   voluntary  or  involuntary,  the  holders  of
   outstanding  shares  of this Series shall be entitled to receive out of the
   assets  of  the  Company available for distribution to stockholders, before
   any  payment  or  distribution  of  assets  shall be made to holders of the
   Common Stock, Series 1984-A Preferred Stock or any other class or series of
   stock of the Company ranking junior to this Series as to liquidation rights
   (collectively,  the   "Junior   Liquidation   Stock"),   cash   liquidating
   distributions in the amount of the stated value of $25.00 per share, plus a
   sum  equal  to  all  dividends  (whether or not earned or declared) on such
   shares  of  this  Series  accrued  and  unpaid thereon to the date of final
   distribution.  Neither  the consolidation nor merger of the Company into or
   with  another  corporation or corporations, nor the merger or consolidation
   of  another  corporation  or  corporations  with or into the Company, nor a
   reorganization  of  the  Company,  nor the purchase or redemption of all or
   part  of  the outstanding shares of any class or series of capital stock of
   the  Company,  nor  a  sale or transfer of the property and business of the
   Company  as, or substantially as, an entity, shall be deemed a liquidation,
   dissolution or


   winding up of the affairs of the Company, whether voluntary or involuntary,
   within  the  meaning of this Section 4. After the payment to the holders of
   the  shares of this Series of the full preferential amounts provided for in
   this  Section 4, the holders of shares of this Series as such shall have no
   right  or claim to, and shall not be entitled to participate further in any
   distribution  of,  the  remaining  assets  of the Company. In the event the
   assets  of  the Company available for distribution to stockholders upon any
   dissolution, liquidation or winding up of the Company, whether voluntary or
   involuntary,  shall be insufficient to pay in full all preferential amounts
   to  which  holders  of  shares  of  this  Series  and each series of Series
   Preferred  Stock  ranking,  as to liquidation rights, on a parity with this
   Series  are  entitled,  the  holders  of  all such shares shall participate
   ratably  in  any distribution of assets of the Company in proportion to the
   respective  full  preferential  amounts to which holders of all such shares
   would  be entitled to receive upon such dissolution, liquidation or winding
   up if all such amounts were then available for distribution.

             12.  Optional Redemption.

                  a.  The shares of this Series are redeemable, at any time as
   a  whole or (subject to the provisions of Subsection 3(c) hereof) from time
   to time in part, on or after December 1, 1988, at the option of the Company
   exercisable  by  resolution  of  the  Board  of Directors, at the following
   redemption prices per share, plus in each case accrued and unpaid dividends
   to the date fixed for redemption by the Board of Directors (the "Redemption
   Date"),  if redeemed during the 12-month period beginning December 1 of the
   years indicated below:

               Year      Price     Year                     Price

               1988      $26.400   1993                     $25.525
               1989       26.225   1994                      25.350
               1990       26.050   1995                      25.175
               1991       25.875   1996 (and thereafter)     25.000
               1992       25.700

                  b.  If  the  Company  shall  elect  to redeem shares of this
   Series,  notice of such redemption (the "Redemption Notice") shall be given
   by first-class mail, postage prepaid, mailed not less than 10 nor more than
   60  calendar  days before the Redemption Date, to each holder of the shares
   to  be  redeemed, at such holder's address as the same appears on the stock
   register  of the Company. Each Redemption Notice shall state the Redemption
   Date; the number of shares of this Series to be redeemed and, if fewer than
   all  shares  held  by  such  holder  are to be redeemed, the number of such
   shares  to  be  redeemed from such holder and (if deemed appropriate by the
   Company)  the number(s) of the certificate(s) representing such shares; the
   redemption  price per share; and the place or places where certificates for
   such shares are to be surrendered for 


   payment  of  the  redemption  price.  Neither the failure by the Company to
   cause  proper  Redemption  Notice  to  be  given,  nor  any  defect  in the
   Redemption Notice, shall affect the legality or validity of proceedings for
   such redemption.

                  c.  Upon  surrender in accordance with the Redemption Notice
   of  the  certificates  for  any  shares  so  redeemed (properly endorsed or
   assigned  for  transfer,  if the Board of Directors shall so require), such
   shares  shall  be redeemed by the Company at the redemption price specified
   in  the  Redemption  Notice;  provided,  however,  that if on or before the
   Redemption  Date  all  funds  necessary  for the redemption shall have been
   irrevocably  set  aside  by  the  Company  in  trust for the account of the
   holders  of  the shares of this Series called for redemption, then from and
   after  the  mailing  of the Redemption Notice and the setting aside of such
   funds  (provided  that  the  provisions  of  Subsection  3(c)  above do not
   preclude  such  redemption),  notwithstanding  that any certificate for any
   such  shares has not been surrendered, all shares of this Series called for
   redemption  shall  be  deemed  to  have been redeemed and shall cease to be
   outstanding,  and  all rights of the holders thereof as stockholders of the
   Company,  except  the  right  to  receive  the  respective redemption price
   (including  accrued and unpaid dividends to the Redemption Date but without
   interest)  upon  surrender  of  their  stock  certificates and the right to
   convert  such  shares  of this Series in accordance with and subject to the
   provisions  of  Section  6,  shall  cease  and  terminate. If less than all
   outstanding  shares  of  this  Series  are to be redeemed, the shares to be
   redeemed  shall  be  selected by lot or pro rata, as the Company's Board of
   Directors  may  determine,  from  outstanding  shares  of  this Service not
   previously  called  for  redemption.  If  less  than  all shares owned by a
   stockholder   shall  be  redeemed,  a   new  certificate  shall  be  issued
   representing the unredeemed shares without cost to the holder thereof.

             13.  Conversion.

                  a.  Subject  to  and  upon compliance with the provisions of
   this Section 6, each holder of outstanding shares of this Series shall have
   the  right,  at  his  option  exercisable  at  any time before the close of
   business  on  the  third  full business day before any Redemption Date with
   respect  to any such shares (unless the Company shall thereafter default in
   the  payment  of  the  redemption  price  therefor)  or before the close of
   business  on the Exchange Date (as defined in Section 7), to convert any or
   all  of  his  outstanding  shares  of  this Series into that number of duly
   authorized,  validly  issued,  fully paid and nonassessable whole shares of
   Common  Stock (calculated as to each conversion to the nearest 1/100th of a
   share)  as  shall be obtained by dividing the stated value of the shares of
   this Series to be converted by the Conversion Price then in effect. As used
   in this Certificate of Designation, "Conversion Price" shall mean the price
   at which one whole share of Common Stock will be issued upon conversion of 


   outstanding  shares  of  this  Series  pursuant  to  this  Section  6.  The
   Conversion  Price  shall  initially  be  $32.50,  but  shall  be subject to
   adjustment or reduction as provided in this Section 6.

                  b. In order to exercise the conversion privilege, any holder
   of  outstanding  shares of this Series to be converted: (i) shall surrender
   the  certificate  or  certificates  for such shares during regular business
   hours  at the office or agency maintained by the Company in the City of New
   York,  Borough  of  Manhattan  or  at such other offices or agencies as the
   Company   may  determine  (a  "Conversion  Agent"),  which  certificate  or
   certificates  shall  be  duly endorsed or accompanied by proper instruments
   for transfer to the Company or in blank and shall be accompanied by payment
   of  all  amounts  owed to the Company as provided in Subsection 6(o) below;
   (ii) shall give written notice to the Company at said office or agency that
   he  elects  so to convert such shares of this Series; and (iii) shall state
   in  writing  therein the name or names (with address or addresses) in which
   he desires the certificate or certificates for shares of Common Stock to be
   issued.

             As  soon  as  practicable after the surrender of a certificate or
   certificates for shares of this Series to be converted and all instruments,
   amounts  and  notices above prescribed, the Company shall issue and deliver
   to  the  respective  Conversion Agent a certificate or certificates for the
   number  of whole shares of Common Stock (or other securities) issuable upon
   such  conversion, together with a cash payment in lieu of any fraction of a
   share  as provided in Subsection 6(d) and a new certificate or certificates
   for  any  unconverted  shares of this Series formerly represented by one or
   more  of  the  converting  stockholder's  surrendered  certificates, to the
   person  or  persons entitled thereto. Shares of this Series surrendered for
   conversion  shall  be  deemed  to  have  been  converted as of the close of
   business  on  the  date  of such surrender, accompanied by all instruments,
   amounts and notices above prescribed, and the person or persons entitled to
   receive the shares of Common Stock (or other securities) issuable upon such
   conversion  shall  be  treated  for  all  purposes  as the record holder or
   holders  of  such  shares  from and after such time of surrender; provided,
   however,  that any such surrender on any date when the stock transfer books
   of  the  Company  are  closed  for  any  purpose  shall not be effective to
   constitute  the  person or persons entitled to receive the shares of Common
   Stock  or  other  securities  upon  such conversion as the record holder or
   holders  of such shares on such date, but such surrender shall be effective
   to constitute the person or persons in whose name or names the certificates
   for such shares of Common Stock or other securities are to be issued as the
   record  holder  or  holders thereof for all purposes immediately before the
   close  of  business on the next succeeding day on which such stock transfer
   books  are  open,  and  such conversion shall be at the Conversion Price in
   effect at such time on such succeeding day.


                  c. No payment or adjustment shall be made by or on behalf of
   the  Company  on  account  of  dividends accrued, declared or in arrears on
   shares  of  this  Series  surrendered for conversion or on shares of Common
   Stock or other securities issued upon such conversion, except all dividends
   on  shares  of  this Series surrendered for conversion that are accrued and
   unpaid  up  to  the  Dividend  Date  immediately preceding the date of such
   conversion shall constitute a debt of the Company payable to the converting
   stockholder in accordance with the Certificate.

                  d.  No  fractional  share  of Common Stock or other security
   shall  be  issued upon any conversion of shares of this Series, but in lieu
   of  such  issuance the Company shall purchase the fractional share for cash
   in  an  amount equal to the product obtained by multiplying such fractional
   share  by the Closing Price (as hereinafter defined) of the Common Stock or
   such  other  security,  as  the  case  may  be,  on  the  date on which the
   respective shares of this Series are duly surrendered for conversion or, if
   no such Closing Price is then available, on the most recent Trading Day (as
   hereinafter defined) before such date of surrender for which such a Closing
   Price  is  available.  If  more than one certificate representing shares of
   this Series shall be surrendered for conversion at any one time by the same
   stockholder,  the  number of whole shares of Common Stock or other security
   that  shall  be  issuable  upon conversion thereof shall be computed on the
   basis  of  the aggregate number of shares of this Series represented by all
   certificates so surrendered.

        "Closing  Price"  as to any security on any day shall mean the closing
   sale  price  on  the  principal  national  securities exchange on which the
   security  is  listed  for  trading,  or  if  not so listed, on the National
   Association  of  Securities  Dealers  National Market System; or if no such
   closing  price  is  available,  at the average of the closing bid and asked
   quotations  of  the  security  reported  on  the  National  Association  of
   Securities  Dealers  Automated Quotation System; or, if neither such System
   provides  prices  or quotations for such security, the fair market value of
   such  security  as  determined and set forth in a resolution adopted by the
   Board of Directors (whose determination shall be final and conclusive).

        "Trading  Day"  as  to  any  security  shall  mean a date on which the
   principal  national  securities exchange on which the security is listed or
   admitted  to  trading  is  open  for the transaction of business; or if the
   security  is  not  listed or admitted to trading on any national securities
   exchange,  a  date on which any New York Stock Exchange member firm is open
   for the transaction of business.

                  e.   (1)  In  case  the Company shall at any time (A) make a
   distribution  or pay a dividend on the Common Stock in shares of the Common
   Stock,  (B) subdivide the outstanding shares of Common Stock into a greater
   number  of  shares,  or  (C) combine the outstanding shares of Common Stock
   into a smaller number of shares,


   then the Conversion Price in effect immediately before such action shall be
   adjusted so that the holder of outstanding shares of this Series thereafter
   converted  may  receive  the number of shares of Common Stock that he would
   have owned immediately following such action if he had converted the shares
   of  this  Series immediately before the record date (or, if no record date,
   the effective date) for such action. The adjustment in the Conversion Price
   pursuant to this paragraph (i) shall become effective immediately after the
   record date in the case of a dividend or distribution and immediately after
   the  effective  date  in  the  case  of  a  subdivision,   combination   or
   reclassification.

                       (2)  In  case  the Company shall at any time (A) make a
   distribution  on the Common Stock in shares of its capital stock other than
   Common  Stock,  or (B) issue by reclassification of the Common Stock (other
   than pursuant to a change from no par value to par value, or from par value
   to  no par value, or a change in par value, or as a result of a subdivision
   or  combination  of shares of Common Stock) any shares of its capital stock
   other  than  the  Common  Stock,  the  Company  shall,  upon the subsequent
   conversion  of  any share of this Series, issue to the holder of such share
   (in  addition  to  the  number of shares of Common Stock issuable upon such
   conversion) the number of shares of capital stock (other than Common Stock)
   that  such holder would have received if he had converted the share of this
   Series  immediately  before  the  record  date  (or, if no record date, the
   effective date) for such action. The number of shares of such capital stock
   (other  than  Common Stock) so receivable shall be subject to adjustment on
   terms  comparable  to  those applicable to Common Stock in paragraph (i) of
   Subsection 6(e).

                       (3)  In  case  the  Company  shall  distribute  to  all
   holders  of  outstanding  shares  of  the  Common  Stock on the record date
   mentioned  below rights or warrants entitling them for a period expiring on
   or  before  60 calendar days following said record date to subscribe for or
   purchase  shares of Common Stock at a price per share less than the Current
   Market  Price per share of Common Stock at such record date, the Conversion
   Price  shall be adjusted so that the same shall equal the amount determined
   by  multiplying  the  Conversion  Price  in  effect immediately before such
   distribution  by  a fraction, of which the numerator shall be the number of
   shares  of  Common Stock outstanding on such record date plus the number of
   shares  of Common Stock which the aggregate exercise price of the shares of
   Common  Stock  covered  by  such  rights or warrants would purchase at such
   Current  Market  Price (which latter number of shares shall be the quotient
   resulting  from the division of (A) an amount equal to the product obtained
   by  multiplying  the number of shares of Common Stock initially purchasable
   pursuant  to  such rights or warrants by the exercise price for such rights
   or  warrants by (B) such Current Market Price) and of which the denominator
   shall  be  the  number of shares of Common Stock outstanding on such record
   date plus the number of shares of Common


   Stock initially  purchasable  pursuant  to  such  rights or warrants.  Such
   adjustment  shall  be made whenever such rights or warrants are distributed
   and  shall  become  effective  immediately  after  the  record date for the
   determination of stockholders entitled to receive such rights or warrants.

                       (4)  In  case  the  Company  shall  distribute  to  all
   holders  of  outstanding  shares  of  the  Common  Stock on the record date
   mentioned below debt securities or assets (excluding cash dividends or cash
   distributions paid out of consolidated current and retained earnings of the
   Company  as  shown on its books) or rights or warrants (excluding rights or
   warrants  subject  to  the provisions of paragraph (iii) of Subsection 6(e)
   above)  to  subscribe  for or purchase shares of Common Stock, then in each
   such  case  the  Conversion  Price  shall  be determined by multiplying the
   Conversion  Price  in  effect  immediately  before  such  distribution by a
   fraction,  of  which  the  numerator  shall  be  the  remainder obtained by
   subtracting  (A)  the  fair market value on such record date of the assets,
   debt securities, rights or warrants applicable to one share of Common Stock
   as  determined  by the Board of Directors (whose determination of such fair
   market  value  shall  be  final  and conclusive and shall be set forth in a
   resolution  filed  with  each Conversion Agent) from (B) the Current Market
   Price  per  share  of  Common  Stock  on such record date, and of which the
   denominator  shall  be  such Current Market Price. Such adjustment shall be
   made  whenever  any  such  distribution  is made and shall become effective
   immediately  after  the  record  date for the determination of stockholders
   entitled to receive such distribution.

                  f. For the purpose of any computation under Subsection 6(e),
   the  "Current  Market Price" per share of Common Stock at any date shall be
   deemed  to  be the average of the daily Closing Prices of a share of Common
   Stock for the 30 consecutive Trading Days commencing before such date.

                  g.  No  adjustment  of the Conversion Price pursuant to this
   Section  6 need be made unless such adjustment would require an increase or
   decrease  of  at  least  1%  in  the Conversion Price, but in such case any
   adjustment  that  would  otherwise  be  required  then  to be made shall be
   carried forward and shall be made at the time of and together with the next
   subsequent  adjustment. All calculations under this Section 6 shall be made
   to  the  nearest cent or to the nearest 1/100th of a share, as the case may
   be.

                  h.  No  adjustment in the Conversion Price, or in securities
   issuable  upon  conversion  of shares of this Series, shall be made for any
   sale  of,  or  distribution of rights or warrants to purchase, Common Stock
   (or other securities issuable upon conversion of the shares of this Series)
   to  the  extent  that such sale or distribution occurs in connection with a
   dividend  or interest reinvestment plan providing for sales of Common Stock
   (or other securities issuable upon conversion of the shares of this


   Series)  at  a  price  equal  to  at least 95% of the fair market value (as
   defined  in  such plan) of such Common Stock (or such other securities). If
   shares  of  this  Series become convertible solely into cash, no adjustment
   shall be made thereafter, and interest shall not accrue on the cash.

                  i.  Irrespective of any adjustments in the actual Conversion
   Price (or the  number  of shares of Common  Stock  or other securities into
   which  any  share  of this Series is convertible), any share of this Series
   issued  before,  upon  or after such adjustment may continue to express the
   Conversion  Price  and  conversion rate stated in certificates representing
   the initially issued shares of this Series.

                  j.  In  case any consolidation or merger of the Company into
   another  corporation, or any merger of another corporation into the Company
   (excluding  such  a  merger  in  which  the  Company  is  the  surviving or
   continuing  corporation  and which does not result in any reclassification,
   conversion,  exchange  or  cancellation of the outstanding shares of Common
   Stock),  or any sale of all or substantially all of the Company's assets to
   another  corporation  or  person shall be effected, then, as a condition of
   such  consolidation,  merger or sale (a "Transaction"), lawful and adequate
   provision  shall  be  made  whereby the right of each holder of outstanding
   shares  of  this  Series to convert such shares shall become the right from
   and after the Transaction to receive, upon surrender and conversion of such
   shares  of  this  Series and upon the basis, terms and conditions specified
   herein  and  in lieu of the shares of the Common Stock and other securities
   that would have been issuable upon conversion of such shares of this Series
   immediately  before  the  Transaction,  such shares of stock, securities or
   assets as such holder would have owned immediately after the Transaction if
   he had converted his shares of this Series immediately before the effective
   date  of  the  Transaction.  The  Company  shall not effect any Transaction
   unless  prior  to  or  simultaneously  with  the  consummation  thereof the
   successor  corporation or person (if other than the Company) resulting from
   the  Transaction  or  purchasing  assets in the Transaction shall assume by
   written  instrument  the  obligation  to  deliver  to each such holder such
   shares  of  stock, securities or assets as in accordance with the foregoing
   provisions,  such  holder  may  be  entitled  to receive upon surrender and
   conversion of his outstanding shares of this Series.

                  k.  The  Company from time to time may reduce the Conversion
   Price  by  any  amount  for any period of time if the period is at least 20
   calendar  days  and  if  the  reduction  is irrevocable during such period;
   provided,  however,  that  the  Conversion Price shall not be reduced to an
   amount  less  than  the  par  value,  if  any,  of a share of Common Stock.
   Whenever  the Conversion Price is reduced, the Company shall give notice of
   the  reduction  at  least  10  calendar  days  before  the date the reduced
   Conversion Price takes


   effect,  which  notice shall be given in the manner set forth in Subsection
   6(m) and shall state the reduced Conversion Price and the period it will be
   in  effect. A reduction in the Conversion Price pursuant to this Subsection
   shall  not  change  or  adjust the Conversion Price otherwise in effect for
   purposes of this Section 6.

                  l. Whenever the Conversion Price, or the securities issuable
   upon  conversion,  shall  be  adjusted as hereinabove provided, the Company
   shall forthwith file, with each Conversion Agent, a statement that shall be
   signed  by  the Chairman of the Board, the President, any Vice President or
   the  Treasurer  of  the  Company and that shall reflect in detail the facts
   requiring   such  adjustment  and  the  actual  Conversion  Price,  or  the
   securities issuable upon conversion, to be in effect after such adjustment.

                  m. In case the Company at any time shall (i) take any action
   that would require an adjustment in the Conversion Price, or the securities
   issuable upon conversion, pursuant to paragraph (i), (ii), (iii) or (iv) of
   Subsection  6(e),  (ii)  become  a  party  to  any Transaction specified in
   Subsection  6(j),  or  (iii)  liquidate,  dissolve  or wind up its affairs,
   whether  voluntarily  or  involuntarily, then the company shall cause to be
   filed with each Conversion Agent, and shall cause to be mailed, first-class
   postage prepaid, to each record holder of outstanding shares of this Series
   at  his  address  appearing  in  the stock records of the Company, a notice
   describing such action to be taken and stating the record date, if any, for
   the  respective  action  and  the  date  on  which the respective action is
   expected  to  become  effective.  Such  notice  shall  be given at least 10
   calendar  days  before  (i)  the  record  date of any action subject to the
   provisions  of clause (A) of paragraph (i) of Subsection 6(e) or clause (A)
   of  paragraph  (ii)  of  Subsection  6(e) or to the provisions of paragraph
   (iii) or (iv) of Subsection 6(e) or (ii) the expected effective date of any
   other action requiring notice pursuant to this Subsection 6(m). Neither the
   failure  of  the  Company  to cause such notice to be given, nor any defect
   therein, shall affect the legality or validity of the action for which such
   notice is required.

                  n.   The  Company  shall  at  all  times  reserve  and  keep
   available,  free  from  preemptive  rights,  out  of  its treasury stock or
   authorized  but  unissued  Common Stock, or both, solely for the purpose of
   effecting the conversion of shares of this Series hereunder, such number of
   whole  shares  of  Common  Stock  as shall then be sufficient to effect the
   conversion of all outstanding shares of this Series.

                  o. The Company shall pay any and all transfer taxes that may
   be payable in respect of the issuance or delivery of shares of Common Stock
   or other securities on conversion of shares of this Series pursuant hereto;
   provided, however, that the Company shall not be required to pay any tax or
   taxes which may be payable


   in  respect  of any transfer involved in the issuance or delivery of shares
   in  a name other than that of the holder of the shares of this Series to be
   converted,  and no such issuance or delivery shall be made unless and until
   the  person  requesting such issuance has paid to the Company the amount of
   any  such  tax or has established, to the satisfaction of the Company, that
   such tax has been paid or is not due.

             14.  Exchange Provisions.

                  a. The outstanding shares of this Series are exchangeable in
   whole,  but  not  in  part,  at  the  option of the Company, exercisable by
   resolution  adopted  by  the  Board  of  Directors,  on  any  Dividend Date
   beginning  December 1, 1988, for 7% Convertible Subordinated Debentures due
   2011  of  the  Company (the "Debentures"). Holders of outstanding shares of
   this  Series  shall  be  entitled to receive $25.00 principal amount of the
   Debentures  in  exchange  for each outstanding share of this Series held of
   record by them at the time of exchange except that any holder of fewer than
   20  shares  of this Series shall receive a cash payment of $25.00 per share
   for  each  share  held;  accrued  and  unpaid dividends on all shares to be
   exchanged  will be paid as provided in Section 2 in cash in either case. If
   the  Company  elects  to  exchange  the  Debentures  for the shares of this
   Series,  it  shall mail written notice of its intention to exchange to each
   holder  of  record  of  the shares of this Series not less than 30 nor more
   than  60  calendar days before the date fixed by the Board of Directors for
   the  exchange (the "Exchange Date"). Before giving such notice of exchange,
   the Company shall execute and deliver with a bank or trust company selected
   by  the  Company  an  Indenture (the "Indenture") substantially in the form
   filed  as  an  Exhibit to the Registration Statement (File No. 33-9455), as
   amended on the effective date thereof, relating to the Debentures and filed
   with  the  Securities  and  Exchange  Commission,  with such changes in the
   Indenture  or  the Debentures as the Company or the Indenture trustee shall
   deem necessary or appropriate. The Company shall cause the Debentures to be
   authenticated  on  the  Exchange  Date;  at  the  close  of business on the
   Exchange  Date,  the  rights  of  the  holders  of shares of this Series as
   stockholders  of  the Company shall immediately cease and terminate (except
   the  right  to  receive on the Exchange Date an amount equal to accrued and
   unpaid  dividends on such shares to, but excluding, the Exchange Date), and
   the persons entitled to receive the Debentures issuable upon exchange shall
   be  treated  for  all purposes as the registered holders of such Debentures
   pursuant  to  the Indenture. The Debentures shall be delivered, and payment
   for accrued and unpaid dividends on shares of this Series shall be made, to
   the  persons  entitled  thereto  upon surrender to the Company or its agent
   appointed  for  that  purpose of certificates for the shares of this Series
   being exchanged therefor.

                  b. The Company shall not give notice of its


   intention to exchange pursuant to this Section 7 unless:

                       (1)  it shall have filed at the office or agency of the
   Company  maintained  in the City of New York, Borough of Manhattan, for the
   conversion  of  shares  of this Series an opinion of counsel (who may be an
   employee of the Company) that the Indenture has been duly authorized by the
   Company,  has been duly qualified under the Trust Indenture Act of 1989 and
   will,  upon  execution and delivery thereof, constitute a valid and binding
   agreement  of  the  Company  which  is  enforceable  against the Company in
   accordance  with  its  terms  (subject,  as  to enforcement of remedies, to
   bankruptcy,  reorganization, insolvency, moratorium or other laws affecting
   creditors'  rights  generally  from  time  to  time in effect, to equitable
   principles  and  to  such  other  qualifications  as  are  then customarily
   contained  in  opinions  of  counsel experienced in such matters); that the
   Debentures  have  been duly authorized and, when executed and authenticated
   in  accordance  with  the  provisions  of  the  Indenture  and delivered in
   exchange  for  the shares of this Series, will constitute valid and binding
   obligations  of  the  Company  entitled  to  the  benefits of the Indenture
   (subject  as aforesaid); and that the Debentures have been registered under
   the  Securities  Act of 1933 or that the exchange of the Debentures for the
   shares  of this Series is exempt from registration under the Securities Act
   of 1933; and

                       (2)  all  accrued  and  unpaid  dividends  on  the
   outstanding  shares  of this Series for all past Dividend Periods ending on
   the  last  Dividend  Date immediately preceding the Exchange Date have been
   declared and paid or set aside for payment.

             15.  Common Stock Defined. The term "Common Stock" shall mean the
   Common  Stock, par value $1.00 per share, of the Company as the same exists
   on  the  date of this Certificate of Designation and any other class of the
   Company's  capital  stock  into  which such Common Stock may hereafter have
   been changed.

             16.  Miscellaneous.  Holders  of  shares of this Series or of the
   Common  Stock  issued upon conversion thereof shall not have any preemptive
   rights.  Of  the consideration to be received for the issuance of shares of
   this  Series, the Board of Directors hereby determines that an amount equal
   to  the  stated  value  of $25.00 per share shall constitute capital of the
   Company,  and  no  part  of  such consideration shall constitute additional
   paid-in  capital  of  the  Company.  MBank  Dallas, National Association is
   hereby  appointed  Transfer Agent, Registrar, Conversion Agent and Dividend
   Disbursing  Agent  for this Series. Subject to the provisions of Subsection
   3(b),  the Board of Directors reserves the right by subsequent amendment of
   this  Certificate  of Designation from time to time to increase or decrease
   the  number of shares constituting this Series (but not below the number of
   shares  thereof  then  outstanding)  and  in  other  respects to amend this
   Certificate  of  Designation  within the limitations provided hereby and by
   law and the Certificate.


   ARTICLE FIVE. The Corporation is to have perpetual existence.

   ARTICLE  SIX.  In furtherance and not in limitation of the powers conferred
   by statute, the By-Laws of the Corporation may be made, altered, amended or
   repealed by the stockholders or by the Board of Directors.

   ARTICLE  SEVEN.  Meetings of the stockholders may be held within or without
   the  State  of  Delaware,  as  the  By-Laws  may  provide. The books of the
   Corporation  may  be  kept  (subject  to  any  provision  contained  in the
   statutes)  outside  the State of Delaware at such place or places as may be
   designated from time to time by the Board of Directors or in the By-Laws of
   the  Corporation.  Elections  of  directors  need  not be by written ballot
   unless the By-Laws of the Corporation shall so provide.

   ARTICLE  EIGHT.  The Corporation reserves the right to amend, alter, change
   or repeal any provisions contained in this Certificate of Incorporation, in
   the manner now or hereafter prescribed by statute, and all rights conferred
   upon stockholders herein are granted subject to this reservation.

   ARTICLE  NINE.  To  the  fullest  extent  permitted by the Delaware General
   Corporation Law as the same exists or hereafter may be amended, no director
   of this corporation shall be liable to this corporation or its stockholders
   for monetary damages for breach of fiduciary duty as a director.

   IN  WITNESS  WHEREOF,  the  Corporation  has  caused this Certificate to be
   executed  in  its name and on its behalf by its duly authorized officer and
   its  corporate seal to be affixed hereto and attested as of the 10th day of
   October, 1994.

                                   SOUTHWESTERN LIFE CORPORATION



                                   By:/s/James R. Kerber
                                      ---------------------------             
                                      James R. Kerber
                                      Chief Executive Officer
                                      and President

   ATTEST:



   By:/s/Daniel B. Gail
      -----------------
      Daniel B. Gail
      Secretary

EX-3.2

                                       BY LAWS
                                          OF
                            SOUTHWESTERN LIFE CORPORATION
                          (Amended through October 7, 1994)


                                      ARTICLE I
                                       OFFICES

          Section 1.     The registered office shall be in the City of
     Wilmington, County of New Castle, State of Delaware.

          Section 2.     The corporation may also have offices at such other
     places both within and without the State of Delaware as the business of the
     corporation may require and as determined from time to time by the Board of
     Directors.

                                      ARTICLE II
                               MEETINGS OF STOCKHOLDERS

          Section 1.     Meetings of the stockholders for the election of
     directors shall be held at such place as may be fixed from time to time by
     the Board of Directors, within and without the State of Delaware, as shall
     be designated from time to time by the Board of Directors and stated in the
     notice of the meeting. Meetings of stockholders for any other purpose may
     be held at such place, within or without the State of Delaware, as shall be
     stated in the notice of the meeting or in a duly executed waiver of notice
     thereof.


          Section 2.     Annual meetings of stockholders, commencing with the
     year 1977, shall be held on the last Wednesday of April if not a legal
     holiday, and if a legal holiday, then on the next secular day following at
     10:30 A.M., or at such other date and time as shall be designated from time
     to time by the Board of Directors and stated in the notice of the meeting,
     at which they shall elect by a plurality vote 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 stating the place,
     date and hour of the meeting shall be given to each stockholder entitled to
     vote at such meeting not less than ten nor more than sixty days before the
     date of the meeting.

          Section 4.     The officer who has charge of the stock ledger of the
     corporation shall prepare and make, at least ten days before every meeting
     of stockholders, a complete list of the stockholders entitled to vote at
     the meeting, arranged in alphabetical order, and showing the address of
     each stockholder and the number of shares registered in the name of each
     stockholder. Such list shall be open to the examination of any stockholder,
     for any purpose germane to the meeting, during ordinary business hours, for
     a period of at least ten days prior to the meeting, either at a place
     within the city where the meeting is to be held, which place shall be
     specified in the notice of the meeting, or, if not so specified, at the
     place where the meeting is to be held. The list shall also


     be produced and kept at the time and place of the meeting during the whole
     time thereof, and may be inspected by any stockholder who is present.

          Section 5.     Special meetings of the stockholders, for any purpose
     or purposes, unless otherwise prescribed by statute or by the certificate
     of incorporation, may be called by the Chairman of the Board or President
     and shall be called by the Chairman of the Board, President, or Secretary
     at the request in writing of a majority of the Board of Directors, or at
     the request in writing of stockholders owning a majority in amount of the
     entire capital stock of the corporation issued and outstanding and entitled
     to vote. Such request shall state the purpose or purposes of the proposed
     meeting.

          Section 6.     Written notice of a special meeting stating the place,
     date and hour of the meeting and the purpose or purposes for which the
     meeting is called, shall be given not less than ten nor more than sixty
     days before the date of the meeting, to each stockholder entitled to vote
     at such meeting.

          Section 7.     Business transacted at any special meeting of the
     stockholders shall be limited to the purposes stated in the notice.

          Section 8.     The holders of one-third of the issued and outstanding
     shares of the classes of the corporation's stock entitled to vote together
     as a single class and of each class of the corporation's stock entitled to
     vote as a separate class at a meeting of the stockholders, present in
     person or represented by 


     proxy, shall constitute a quorum at the meeting for the transaction of
     business, except as otherwise provided by statute or by the Certificate of
     Incorporation. If, however, such 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. If the adjournment is for
     more than thirty days, or if after the adjournment a new record date is
     fixed for the adjourned meeting, a notice of the adjourned meeting shall be
     given to each stockholder of record entitled to vote at the meeting.

          Section 9.     All issued and outstanding shares of the corporation's
     stock entitled to vote on a question brought before a meeting of
     stockholders shall vote as a single class except as otherwise provided by
     the express provisions of the statutes or of the Certificate of
     Incorporation. When a quorum is present at any meeting of the stockholders,
     each question shall be decided, (i) in each case in which classes of the
     corporation's stock will vote together as a single class, by vote of a
     majority of the total number of shares of such classes present in person or
     represented by proxy at the meeting and entitled to vote on the question,
     or (ii) in each case in which classes of the corporation's stock will 


     vote as separate classes, by vote of a majority of the total number of
     shares of each such class present in person or represented by proxy at the
     meeting and entitled to vote on the question; provided, however, that if
     the express provisions of the statutes or of the certificate of
     incorporation require a different vote to decide a question brought before
     the meeting, such express provisions shall govern and control the decision
     of such question.

          Section 10.    Unless otherwise provided in the Certificate of
     Incorporation each stockholder shall at every meeting of the stockholders
     be entitled to one vote in person or by proxy for each share of the capital
     stock having voting power held by such stockholder, but no proxy shall be
     voted or acted upon after three years from its date, unless the proxy
     provides for a longer period.

          Section 11.    Unless otherwise provided in the Certificate of
     Incorporation, any action required to be taken at any annual or special
     meeting of stockholders of the corporation, or any action which may be
     taken at any annual or special meeting of such stockholders, may be taken
     without a meeting, without prior notice and without a vote, if a consent in
     writing, setting forth the action so taken, shall be signed by the holders
     of outstanding stock having not less than the minimum number of votes that
     would be necessary to authorize or take such action at a meeting at which
     all shares entitled to vote thereon were present and vote. Prompt notice of
     the taking of the corporate action without a meeting by less than unanimous
     written consent shall be given to those stockholders who have not consented
     in writing.


                                     ARTICLE III
                                      DIRECTORS

          Section 1.     The number of Directors constituting the whole board
     shall be determined by resolution of the Board of Directors or by the
     stockholders at the annual meeting. The Directors shall be elected at the
     annual meeting of the stockholders, except as provided in Section 2 of this
     Article, and each director shall hold office until his successor is elected
     and qualified. Directors need not be stockholders, but no persons shall be
     qualified to stand for election or re-election as a director if such person
     has attained the age of seventy-five (75) years.

          Section 2.     Vacancies and newly created directorships resulting
     from any increase in the authorized number of directors may be filled as
     provided in the Certificate of Incorporation by a majority of the
     directors, or by the sole remaining director, who are then in office and
     entitled under the Certificate of Incorporation to fill such vacancy or
     newly created directorship, and the directors so chosen shall hold office
     until the next annual election and until their successors are duly elected
     and shall qualify, unless sooner displaced. If there are not directors in
     office, then an election of directors may be held in the manner provided by
     statute. If, at the time of filling any vacancy or any newly created
     directorship, the directors then in office shall constitute less than a
     majority of the whole board (as constituted immediately prior to any such
     increase), the Court of Chancery may, upon application of any stockholder
     or stockholders holding at


     least ten percent of the total number of the shares at the time outstanding
     having the right to vote for the directors to be elected, summarily order
     an election to be held to fill any such vacancies or newly created
     directorships, or to replace the directors chosen by the directors then in
     office.

          Section 3.     The business of the corporation shall be managed by or
     under the direction of its Board of Directors which may exercise all such
     powers of the corporation and do all such lawful acts and things as are not
     by statute or by the Certificate of Incorporation or by these bylaws
     directed or required to be exercised or done by the stockholders. From its
     membership, the Board of Directors shall choose a chairman of the board and
     may choose a vice chairman of the board. The chairman of the board or his
     designee shall preside at all meetings of the stockholders and the Board of
     Directors and shall have such other duties and powers as are described in
     Article V of these bylaws. The vice chairman of the board shall preside at
     meetings of the stockholders and the Board of Directors in the absence of
     the chairman of the board and shall have such other duties and powers as
     from time to time may be assigned to him by the Board of Directors.

                          MEETINGS OF THE BOARD OF DIRECTORS

          Section 4.     The Board of Directors of the corporation may hold
     meetings, both regular and special, either within or without the State of
     Delaware.

          Section 5.     The first meeting of each newly elected Board of
     Directors shall be held at the same place as the meeting of


     stockholders at which the newly elected Board of Directors was elected and
     shall be held immediately following such meetings of stockholders. No
     notice of such meeting shall be necessary to the newly elected directors in
     order legally to constitute the meeting, provided a quorum shall be
     present. In the event such meeting is not held at such time and place, the
     meeting may be held at such time and place as shall be specified in a
     notice given as hereinafter provided for special meetings of the Board of
     Directors, or as shall be specified in a written waiver signed by all of
     the directors.

          Section 6.     Regular meetings of the Board of Directors may be held
     without notice at such time and at such place as shall from time to time be
     determined by the Board.

          Section 7.     Special meetings of the board may be called by the
     Chairman of the Board or President on two days' notice to each director,
     either personally or by mail or by telegram; special meetings shall be
     called by the Chairman of the Board, President or Secretary in like manner
     and on like notice on the written request of two directors unless the board
     consists of only one director, in which case special meetings shall be
     called by the Chairman of the Board, President or Secretary in like manner
     or on like notice on the written request of the sole director.

          Section 8.     At all meetings of the board, a majority of directors
     shall 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 Certificate of Incorporation. If
     a quorum shall not be present at any meeting of the Board 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 9.     Unless otherwise restricted by the Certificate of
     Incorporation or these bylaws, any action required or permitted to be taken
     at any meeting of the Board of Directors or of any committee thereof may be
     taken without a meeting, if all members of the board or committee, as the
     case may be, consent thereto in writing, and the writing or writings are
     filed with the minutes of proceedings of the board or committee.

          Section 10.    Unless otherwise restricted by the Certificate of
     Incorporation or these Bylaws, members of the Board of Directors, or any
     committee designated by the Board of Directors, may participate in a
     meeting of the Board of Directors, or any committee, by means of conference
     telephone or similar communications equipment by means of which all persons
     participating in the meeting can hear each other, and such participation in
     a meeting shall constitute presence in person at the meeting.

                               COMMITTEES OF DIRECTORS

          Section 11.    The Board of Directors may, by resolution passed by a
     majority of the whole board, designate one or more committees, each
     committee to consist of one or more of the 


     directors of the corporation. The board may designate one or more directors
     as alternate members of any committee, who may replace any absent or
     disqualified member at any meeting of the committee. In the absence or
     disqualification of a member of a committee, the member or members thereof
     present at any meeting and not disqualified from voting, whether or not he
     or they constitute a quorum, may unanimously appoint another member of the
     Board of Directors to act at the meeting in the place of any such absent or
     disqualified member. Any such committee, to the extent provided in the
     resolution of the Board of Directors, shall have any and may exercise all
     the powers and authority of the Board of Directors in the management of the
     business and affairs of the corporation, and may authorize the seal of the
     corporation to be affixed to all papers which may require it; but no such
     committee shall have the power or authority in reference to amending the
     Certificate of Incorporation, adopting an agreement of merger or
     consolidation, recommending to the stockholders the sale, lease or exchange
     of all or substantially all of the corporation's property and assets,
     recommending to the stockholders a dissolution of the corporation or a
     revocation of a dissolution, or amending the Bylaws of the corporation;
     and, unless the resolution or the certificate of incorporation expressly so
     provides, no such committee shall have the power or authority to declare a
     dividend or to authorize the issuance of stock. Such committee or
     committees shall have such name or names as may be determined from time to
     time by resolution adopted by the Board of Directors.


          Section 12.    Each committee shall keep regular minutes of its
     meeting and report the same to the Board of Directors when required.

                              COMPENSATION OF DIRECTORS

          Section 13.    Unless otherwise restricted by the Certificate of
     Incorporation or these Bylaws, the Board of Directors shall have the
     authority to fix the compensation of directors. The directors may be paid
     their expenses, if any, of attendance at each meeting of the Board of
     Directors and may be paid a fixed sum for attendance at each meeting of the
     Board of Directors or a stated salary as director. No such payment shall
     preclude any director from serving the corporation in any other capacity
     and receiving compensation therefor. Members of special or standing
     committees may be allowed like compensation for attending committee
     meetings.

                                 REMOVAL OF DIRECTORS

          Section 14.    Unless otherwise restricted by the Certificate of
     Incorporation or Bylaws, any director or the entire Board of Directors may
     be removed, with or without cause, by the holders of a majority of shares
     entitled to vote at an election of the directors to be removed.

                                      ARTICLE IV
                                       NOTICES

          Section 1.     Whenever, under the provisions of the statutes or of
     the Certificate of Incorporation or of these Bylaws, 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 his address
     as it appears on the records of the corporation, with postage thereon
     prepaid, and such notice shall be deemed to be given at the time when the
     same shall be deposited in the United States mail. Notice to directors may
     also be given by telegram.

          Section 2.     Whenever any notice is required to be given under the
     provisions of the statutes or of the Certificate of Incorporation or of
     these Bylaws, a waiver thereof in writing, signed by the person or persons
     entitled to said notice, whether before or after the time stated therein,
     shall be deemed equivalent thereto.

                                      ARTICLE V
                                       OFFICERS

          Section 1.     The officers of the corporation shall be chosen by the
     Board of Directors and shall be the chairman of the board, chief executive
     officer, president, a vice president, a secretary and a treasurer. The
     Board of Directors may also choose additional vice presidents, and one or
     more assistant secretaries and assistant treasurers. Any number of offices
     may be held by the same person, unless the Certificate of Incorporation or
     these bylaws otherwise provide. The Chairman of the Board shall be chosen
     from among the directors.


          Section 2.     The Board of Directors at its first meeting after each
     annual meeting of stockholders shall choose a chairman of the board, chief
     executive officer, president, one or more vice-presidents, a secretary and
     a treasurer.

          Section 3.     The Board of Directors may appoint such other officers
     and agents as it shall deem necessary who shall hold their offices for such
     terms and shall exercise such powers and perform such duties as shall be
     determined from time to time by the Board.

          Section 4.     The salaries of all officers and agents of the
     corporation shall be fixed by the Board of Directors.

          Section 5.     The officers of the corporation shall hold office until
     their successors are chosen and qualify. Any officer elected or appointed
     by the Board of Directors may be removed at any time by the affirmative
     vote of a majority of the Board of Directors. Any vacancy occurring in any
     office of the corporation shall be filled by the Board of Directors.

                              THE CHAIRMAN OF THE BOARD

          Section 6.     The Chairman of the Board shall have responsibility for
     the direction of the business and affairs of the corporation and shall have
     such other duties and powers as may from time to time be assigned to him by
     the Board of Directors.

                             THE CHIEF EXECUTIVE OFFICER

          Section 7.     The Chief Executive Officer of the corporation shall
     have general charge and control of the business and affairs of the
     corporation and shall report to the Chairman of the Board. The Chief
     Executive Officer shall have such other duties and powers 


     as from time to time may be assigned to him by the Board of Directors.

                                    THE PRESIDENT

          Section 8.     The President shall be the Chief Operating Officer of
     the corporation and shall perform such other duties and have such other
     powers as the Board of Directors may from time to time prescribe.

                                 THE VICE PRESIDENTS

          Section 9.     In the absence of the President or in the event of his
     inability or refusal to act, the Vice President (or in the event there be
     more than one Vice President, the Vice Presidents in the order designated
     by the directors, or in the absence of any designation, then in the order
     of their election) shall perform the duties of the President, and when so
     acting, shall have all the powers of and be subject to all the restrictions
     upon the President. The Vice President shall perform such other duties and
     have such other powers as the Board of Directors may from time to time
     prescribe.

                        THE SECRETARY AND ASSISTANT SECRETARY

          Section 10.    The Secretary shall attend all meetings of the Board of
     Directors and all meetings of the stockholders and record all the
     proceedings of the meetings of the corporation and of the Board of
     Directors in a book to be kept for that purpose and shall perform like
     duties for the standing committee when required. He shall give, or cause to
     be given, notice of all meetings of the stockholders and special meetings
     of the Board of Directors, and 


     shall perform such other duties as may be prescribed by the Board of
     Directors, Chairman of the Board, the Board or the President, under whose
     supervision he shall be. He shall have custody of the corporate seal of the
     corporation and he, or an assistant Secretary, shall have authority to
     affix the same to any instrument requiring it and when so affixed, it may
     be attested by his signature or by the signature of such assistant
     Secretary. The Board of Directors may give general authority to any other
     officer to affix the seal of the corporation and to attest the affixing by
     his signature.

          Section 11.    The assistant secretary, or if there be more than one,
     the assistant secretaries in the order determined by the Board of Directors
     (or if there be no such determination, then in the order of their
     election), shall, in the absence of the Secretary or in the event of his
     inability or refusal to act, perform the duties and exercise the powers of
     the Secretary and shall perform such other duties and have such other
     powers as the Board of Directors may from time to time prescribe.

                        THE TREASURER AND ASSISTANT TREASURERS

          Section 12.    The Treasurer shall have the custody of the corporate
     funds and securities and shall keep full and accurate accounts of receipts
     and disbursement in books belonging to the Corporation and shall deposit
     all moneys and other valuable effects in the name and to the credit of the
     Corporation in such depositories as may be designated by the Board of
     Directors.

          Section 13.    He shall disburse the funds of the corporation


     as may be ordered by the Board of Directors, taking proper vouchers for
     such disbursements, and shall render to the President and the Board of
     Directors, at its regular meetings, or when the Board of Directors so
     requires, an account of all his transactions as Treasurer and of the
     financial condition of the Corporation.

          Section 14.    If required by the Board of Directors, he shall give
     the Corporation a bond (which shall be renewed every six years) in such sum
     and with such surety or sureties as shall be satisfactory to the Board of
     Directors for the faithful performance of the duties of his office and for
     the restoration to the Corporation, in case of his death, resignation,
     retirement or removal from office, of all books, papers, vouchers, money
     and other property of whatever kind in his possession or under his control
     belonging to the Corporation.

          Section 15.    The assistant treasurer, or if there shall be more one,
     the assistant treasurers in the order determined by the Board of Directors
     (or if there is no such determination, then in the order of their
     election), shall, in the absence of the Treasurer or in the event of his
     inability or refusal to act, perform the duties and exercise the powers of
     the Treasurer and shall perform such other duties and have such other
     powers as the
     Board of Directors may from time to time prescribe.


                                      ARTICLE VI
                                 CERTIFICATE OF STOCK

          Section 1.     Every holder of stock in the corporation shall be
     entitled to have a certificate, signed by, or in the name of the
     Corporation by, the Chairman of the Board of Directors, or the President or
     a Vice President and the Treasurer or Assistant Treasurer, or the Secretary
     or an Assistant Secretary of the Corporation, certifying the number of
     shares owned by him in the Corporation. If the Corporation shall be
     authorized to issue more than one class of stock or more than one series or
     any class, the powers, designations, preferences and relative,
     participating, optional or other special rights of each class of stock or
     series thereof and the qualification, limitations or restrictions of such
     preferences and/or rights shall be set forth in full or summarized on the
     face or back of the certificate which the Corporation shall issue to
     represent such class or series of stock, provided that, except as otherwise
     provided in Section 202 of the General Corporation Law of Delaware, in lieu
     of the foregoing requirements, there may be set forth on the face or back
     of the certificate which the Corporation shall issue to represent such
     class or series of stock, a statement that the Corporation will furnish
     without charge to each stockholder who so requests the powers,
     designations, preferences and relative, participating, options or other
     special right of each class of stock or series thereof and the
     qualification, limitations or restrictions of such preferences and/or
     rights.


          Section 2.     Any of or all the signatures on the certificate may be
     facsimile. In case any officer, transfer agent or registrar who has signed
     or whose facsimile signature has been placed upon a certificate shall have
     ceased to be such officer, transfer agent or registrar before such
     certificate is issued, it may be issued by the Corporation with the same
     effect as if he were such officer, transfer agent or registrar at the date
     of issue.

                                  LOST CERTIFICATES
          
          Section 3.     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, stolen or
     destroyed, upon the making of an affidavit of that fact by the person
     claiming the certificate of stock to be lost, stolen 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, stolen, or destroyed
     certificate or certificates, or his legal representative, to advertise the
     same in such manner as it shall require and/or to give the Corporation a
     bond in such sum as it may direct as indemnity against any claim that may
     be made against the Corporation with respect to the certificate alleged to
     have been lost, stolen or destroyed.

                                  TRANSFERS OF STOCK

          Section 4.     Upon surrender to the Corporation or the transfer agent
     of the Corporation of a certificate of shares duly


     endorsed or accompanied by proper evidence of succession, assignation or
     authority to transfer, it shall be the duty of the Corporation to issue a
     new certificate to the person entitled thereto, cancel the old certificate
     and record the transaction upon its books.

                                  FIXING RECORD DATE

          Section 5.     In order that the corporation may determine the
     stockholders entitled to notice of or to vote at any meeting of
     stockholders or any adjournment thereof, or to express consent to corporate
     action in writing without a meeting, or entitled to receive payment of any
     dividend or other distribution or allotment of any rights, or entitled to
     exercise any rights in any change, conversion or exchange of stock for the
     propose of any other lawful action, the Board of Directors may fix, in
     advance, a record date, which shall not be more than sixty nor less than
     ten days before the date of such meeting, nor more than sixty days prior to
     any other action. A determination of stockholders of record entitled to
     notice of or to vote at a meeting of stockholders shall apply to any
     adjournment of the meeting; provided, however, that the Board of Directors
     may fix a new record date for the adjourned meeting.

                               REGISTERED STOCKHOLDERS

          Section 6.     The corporation shall be entitled to recognize the
     exclusive right of a person registered on its books as the owner of shares
     to receive dividends, and to vote as such owner, and to hold liable for
     calls and assessments a person registered on its books as the owner of
     shares, and shall not be bound to


     recognize any equitable or other claim to or interest in such share or
     shares on the part of any other person, whether or not it shall have
     express or other notice thereof, except as otherwise provided by the laws
     of Delaware.

                                     ARTICLE VII
                                  GENERAL PROVISIONS
                                      DIVIDENDS
          
          Section 1.     Dividends upon the capital stock of the corporation,
     subject to the provisions of the Certificate of Incorporation, if any, may
     be declared by the Board of Directors at any regular or special meeting,
     pursuant to law. Dividends may be paid in cash, in property, or in shares
     of the capital stock, subject to the provisions of the Certificate of
     Incorporation.

          Section 2.     Before payment of any dividend, there may be set aside
     out of any 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 or reserves 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 interest of the corporation, and the directors may modify
     or abolish any 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 of the corporation shall be fixed by
     resolution of the Board of Directors

                                         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, Delaware". The seal may be used by causing it or a
     facsimile thereof to be impressed or affixed or reproduced or otherwise.

                                     ARTICLE VIII
                                      AMENDMENTS

          Section 1.     These Bylaws may be altered, amended or repealed or new
     Bylaws may be adopted by the stockholders or by the Board of Directors by
     the Certificate Incorporation, at any regular meeting of the stockholders
     or of the Board of Directors or any special meeting of the stockholders or
     of the Board of Directors if notice of such alteration, amendment, repeal
     or adoption of new bylaws be continued in the notice of such special
     meeting. If the power to adopt, amend or repeal bylaws is conferred upon
     the Board of Directors by the Certificate of Incorporation it shall not
     divest or limit the power of the stockholders to adopt, amend or repeal
     bylaws.


                                      ARTICLE IX
                 INDEMNIFICATION OF OFFICERS, DIRECTORS AND EMPLOYEES

          Section 1.     As used in this Article IX, the following terms have
     the indicated meanings:

          (a)  The term "Awards" means all monetary damages, liabilities, fines
          (including without limitation excise taxes assessed with respect to
          employee benefit plans), penalties, deficiencies, assessments,
          settlement amounts, and other awards, and all interest on any thereof,
          whether actual, compensatory, liquidated, exemplary, or punitive.

          (b)  The term "Company" means this corporation and any domestic or
          foreign successor of this corporation in a merger, consolidation, or
          other transaction in which the liabilities of this corporation are
          transferred to such successor by operation of law, and in any other
          transaction in which such successor assumes the liabilities of this
          Corporation but does not specifically exclude liabilities that are the
          subject matter of this Article IX.

          (c)  The term "Director" means any person who is or was a director or
          advisory director of the Company and any person who, while a director
          or advisory director of the Company, is or was serving at the request
          of the Company as a director, officer, partner, venturer, proprietor,
          trustee, employee, agent, or similar functionary of any other foreign
          or domestic corporation or of any foreign or domestic partnership,
          joint venture, sole proprietorship, trust, employee benefit plan, or


          other enterprise.

          (d)  The term "Expense" means such costs of court, fees and
          disbursements of attorneys and experts, and other costs and expenses
          (except Awards) as are incurred in connection with any Proceeding,
          including without limitation any investigation or preparation therefor
          and any Proceeding to establish an Indemnitee's right to
          indemnification under this Article IX.

          (e)  The term "Indemnitee" means (i) any person who is or was a
          director, advisory director, or officer of the Company, (ii) any
          present or former director, advisory director, or officer of the
          Company who, while serving the Company as such, is or was serving at
          the request of the Company as a director, officer, partner, venturer,
          proprietor, trustee, employee, agent, or similar functionary of any
          other foreign or domestic corporation or of any foreign or domestic
          partnership, joint venture, sole proprietorship, trustee, employee
          benefit plan, or other enterprise, and (iii) any estate, executor,
          administrator, personal representative, trustee, heir, or beneficiary
          of any person specified in clause (i) or (ii) of this subsection (e);
          provided, however, that the term "Indemnitee" shall not include any
          person specified in clause (ii) of this subsection (e) (or any estate,
          executor, administrator, personal representative, trustee, heir, or
          beneficiary of such person) if a resolution of the Board of Directors,
          in effect at the time of the act or circumstances for which
          indemnification is sought hereunder, excludes such 


          person from this definition or from the benefits of this Article IX.

          (f)  The term "Officer" means any person who is or was an officer of
          the Company and any person who, while an officer of the Company, is or
          was serving at the request of the Company as a director, officer,
          partner, venturer, proprietor, trustee, employee, agent, or similar
          functionary of any other foreign or domestic corporation or of any
          foreign or domestic partnership, joint venture, sole proprietorship,
          trust, employee benefit plan, or other enterprise.

          (g)  The term "Proceeding" means any threatened, pending, or completed
          action, suit, or proceeding, whether civil, criminal, administrative,
          arbitrative, or investigation; any appeal in such an action, suit, or
          proceeding; and any inquiry or investigation that could lead to such
          an action, suit, or proceeding.

          (h)  The term "serving at the request of the Company", or any similar
          phrase, means providing services pursuant to these bylaws or a
          resolution of the board of directors or any committee thereof or
          pursuant to the performance by the Company's director, advisory
          director, officer, employee, or agent of this or her regular duties to
          the Company.

          Section 2.     The Company shall indemnify and advance Expenses to
     each Indemnitee to the fullest extent required or permitted under Delaware
     law (including without limitation the Delaware General Corporation Law) as
     currently in effect or


     hereafter amended. Without limiting the generality of the foregoing:

          (a)  The Company shall indemnify each Indemnitee who is a party to or
          is threatened to be made a party to or otherwise involved in any
          Proceeding (other than a Proceeding by or in the right of the Company
          to procure a judgement in favor of the Company), by reason of the fact
          that such Indemnitee is or was a Director and/or Officer, against all
          Expenses and Awards actually and reasonably paid or incurred by such
          Indemnitee in connection with the defense or settlement of such
          Proceeding, but only if such Indemnitee acted in good faith and in a
          manner that he or she reasonably believed to be in or not opposed to
          the best interests of the Company and, in the case of a criminal
          Proceeding, also had no reasonable cause to believe that his or her
          conduct was unlawful. The termination of any such Proceeding by
          judgment, order of court, settlement, or conviction, or upon a plea of
          nolo contendere, or its equivalent, shall not, of itself, create a
          presumption that such Indemnitee did not act in good faith and in a
          manner that he or she reasonably believed to be in the best interests
          of the Company, and with respect to any criminal Proceeding, that such
          Indemnitee had reasonable cause to believe that his or her conduct was
          unlawful.

          (b)  The Company shall indemnify each Indemnitee who is a party to or
          is threatened to be made a party to or otherwise involved in any
          Proceeding by or in the right of the Company


     to procure a judgment in favor of the Company, by reason of the fact that
     such Indemnitee is or was a Director and/or Officer, against all Expenses
     actually and reasonably paid or incurred by such Indemnitee in connection
     with the defense or settlement of such Proceeding, but only if such
     Indemnitee acted in good faith and in a manner that he or she reasonably
     believed to be in or not opposed to the best interests of the Company;
     provided, however, that no indemnification for Expenses shall be made under
     this subsection (b) in respect of any claim, issue, or matter as to which
     such Indemnitee shall have been adjudged to be liable to the Company
     unless, but only to the extent that, any court in which such Proceeding was
     brought or appealed shall determine upon application that, despite the
     adjudication of liability but in view of all the circumstances of the case,
     such Indemnitee is fairly and reasonably entitled to indemnification for
     such Expenses as such court shall deem proper.

          (c)  An Indemnitee who acted in good faith and in a manner that he or
          she reasonably believed to be in the interest of the participants and
          beneficiaries of an employee benefit plan shall be deemed to have
          acted in a manner not opposed to the best interests of the Company as
          referred to in this Article IX.

          Section 3.     Any indemnification pursuant to this Article IX shall
     be made by the Company only as ordered by a court of competent jurisdiction
     or as authorized in the specific case upon 


     a determination that such indemnification is required or permitted to the
     circumstances because, in addition to the other requirements of this
     Article IX, the applicable standard of conduct set forth in Section 2 of
     this Article IX has been met by the Director and/or Officer. The foregoing
     determination shall be made in each instance, as soon as reasonably
     practicable, (a) by the stockholders, or (b) by the Board of Directors by a
     majority vote of a quorum consisting of directors who are not parties to
     the respective Proceeding, or (c) if such quorum is not obtainable, or
     (although obtainable) if a quorum of disinterested directors so directs, by
     independent legal counsel in a written opinion. If an Indemnitee meets the
     applicable standard of conduct and other requirements for some, but not
     all, claims for indemnification under this Article IX, the Company shall
     indemnify such Indemnitee for such Awards and Expenses as to which it is
     determined that the applicable standards of conduct and other requirements
     have been met.

          To the fullest extent required or permitted under Delaware law
     (including without limitation the Delaware General Corporation Law) as
     currently in effect or hereafter amended:


          (i)       each Indemnitee's right to indemnification or advances as
          provided by this Article IX shall be enforceable by such Indemnitee in
          any Proceeding before any court of competent jurisdiction;

          (ii)      the burden of proving that indemnification or advances under
          this Article IX are not required or permitted shall be on the person
          alleging any Indemnitee's non-entitlement; and

          (iii)     neither the failure of the Company (including without
          limitation its stockholders, Board of Directors, or independent legal
          counsel) to have made a determination, before the commencement of such
          Proceeding, that indemnification or advances are required or permitted
          in the circumstances because such Indemnitee has met the applicable
          standard of conduct, nor an actual determination by the Company
          (including without limitation its stockholders, Board of Directors, or
          independent legal counsel) that such Indemnitee has not met such
          applicable standard of conduct, shall be a defense to the Proceeding
          or create a presumption that such Indemnitee has not met the
          applicable standard of conduct.

          Section 4.     Notwithstanding any other provision of this Article IX,
     to the extent that an Indemnitee has been successful, on the merits or
     otherwise, in the defense of any Proceeding or in the defense of any claim,
     issue, or matter therein, including without limitation the dismissal of
     such Proceeding without


     prejudice, such Indemnitee shall be indemnified by the Company against all
     Expenses incurred by him or her in connection with such defense.

          Section 5.     All Expenses paid or incurred by an Indemnitee in the
     defense of any Proceeding shall be paid or reimbursed promptly by the
     Company in advance of the final disposition of such Proceeding upon receipt
     of a written undertaking by or on behalf of such Indemnitee to repay the
     amount of such Expenses if, but only to the extent that, it is ultimately
     determined that such Indemnitee is not entitled to be indemnified by the
     Company pursuant to this Article IX. Such written undertaking shall be an
     unlimited general obligation of such Indemnitee, but need not be secured
     and may be accepted without reference to any financial ability to make
     repayment.

          Section 6.     Notwithstanding any other provision of this Article IX,
     the Company shall not be liable to any Indemnitee for Awards or Expenses
     that have been collected or are collectible by or on behalf of such
     Indemnitee from person or entities other than the Company, including
     without limitation those amounts collected or collectible under valid and
     enforceable director and officer liability insurance policies,
     indemnification agreements, or other similar arrangements. In each instance
     in which the Company makes any indemnification payment to an Indemnitee,
     pursuant to this Article IX or otherwise, (a) the Company shall be
     subrogated, to the extent of each such indemnification payment, to all of
     such Indemnitee's right of recovery against persons or entities other 


     than the Company relating to the claims upon which the Awards or Expenses
     were incurred, including without limitation all of such Indemnitee's rights
     of setoff, rights of appeal, and rights under director and officer
     liability insurance policies, indemnification agreements, and other similar
     arrangements; and (b) such Indemnitee shall execute such documents and
     perform such acts as the Company may reasonably request to effect the
     subrogation contemplated by this Section 6.

          Section 7.     Notwithstanding any other provision of this Article IX,
     the Company (pursuant to a resolution adopted by its stockholders, the
     Board of Directors by a majority vote of a quorum of the disinterested
     directors, or a committee of such disinterested directors):

          (a)  may pay or reimburse Expenses paid or incurred by an Indemnitee
          in connection with his or her appearance as a witness or other
          participation in any Proceeding at a time when he or she is not a
          named defendant or respondent in such Proceeding; and

          (b)  may indemnify and advance Expenses to (1) any person who is or
          was an employee or agent of the Company and (ii) any present or former
          director, advisory director, officer, employee, or agent of the
          Company who, regardless of whether then serving the Company as such,
          is or was serving at the request of the Company as a director,
          officer, partner, venturer, proprietor, trustee, employee, agent, or
          similar functionary of any other foreign or domestic corporation or of


          any foreign or domestic partnership, joint venture, sole
          proprietorship, trust, employee benefit plan, or other enterprise to
          the same extent that the Company may indemnify and advance Expenses to
          any Indemnitee under this Article IX; and

          (c)  may indemnify and advance Expenses to any present or former
          director, officer, employee, agent, or other person (including without
          limitation any present or former director, officer, employee, or agent
          of any predecessor or subsidiary of the Company) to such further
          extent, consistent with Delaware law (including without limitation the
          Delaware General Corporation Law) as currently in effect or hereafter
          amended, as may be provided by the certificate of incorporation, these
          bylaws, any general or specific action of the Board of Directors or
          any committee thereof, or any contract or as required or permitted by
          common law.

          Section 8.     The indemnification and advancement of Expenses
     required or permitted by this Article IX shall not be deemed exclusive of
     any other rights to which any Director, Officer, employee, agent, or other
     person seeking indemnification or advancement of Expenses may be entitled
     under any present or future bylaw, contract, vote of stockholders or
     disinterested directors, or otherwise, whether as to action or inaction in
     the official capacity of any of the foregoing persons or as to action or
     inaction in another capacity while holding such office with, or so employed
     or engaged by, the Company.


          Section 9.     The Company may purchase and maintain insurance on
     behalf of any person who is or was a director, officer, employee, or agent
     of the Company or who is or was serving at the request of the Company as a
     director, officer, partner, venturer, proprietor, trustee, employee, agent,
     or similar functionary of any other foreign or domestic corporation or of
     any foreign or domestic partnership, joint venture, sole proprietorship,
     trust, employee benefit plan, or other enterprise, against any liability
     asserted against him or her and incurred by him or her in any such capacity
     or arising out of his or her status as such a person, whether or not the
     Company would have the power to indemnify him or her against that liability
     under this Article IX.

          Section 10.    If any provision of this Article IX is held to be
     illegal, invalid, or unenforceable under present or future law, such
     provision shall be fully serveable, and this Article IX shall be construed
     and enforced as if such illegal, invalid, or unenforceable provision had
     never comprised a part hereof. The remaining provisions hereof shall remain
     in full force and effect and shall not be affected by the illegal, invalid,
     or unenforceable provision or by its severance herefrom. Furthermore, in
     lieu of such illegal, invalid, or unenforceable provision, there shall be
     added automatically as a part of this Article IX a legal, valid, and
     enforceable provision as similar in terms of such illegal, invalid, or
     unenforceable provision as may be possible.

EX-10.1

                            SOUTHWESTERN LIFE CORPORATION

                AMENDED AND RESTATED 1990 STOCK OPTION INCENTIVE PLAN

                       (AS AMENDED EFFECTIVE DECEMBER 14, 1990,
                  AUGUST 7, 1991, JUNE 30, 1994 AND OCTOBER 10,1994)


     1.   PURPOSES OF THE PLAN

          1.1  The purposes of this Plan are to promote the growth and
     profitability of Southwestern Life Corporation (formerly I.C.H.
     Corporation, the "Corporation") by enabling it and its subsidiaries to
     attract and retain the best available personnel for positions of
     substantial responsibility, and to provide key employees of the Corporation
     and its subsidiaries with an opportunity for investment in the
     Corporation's $1.00 par value common stock ("Common Stock") and to give
     them an additional incentive to increase their efforts on behalf of the
     long term success of the Corporation and its subsidiaries.

          1.2  The Corporation may, from time to time, on or before December 31,
     1999, grant to such officers and other employees as may be selected in the
     manner hereinafter provided, options to purchase shares of Common Stock of
     the Corporation ("Options"), subject to the conditions hereinafter
     provided.

     2.   ADMINISTRATION OF THE PLAN

          2.1  This Plan shall be administered by a Stock Option Committee (the
     "Committee") of not less than three members of the Board of Directors of
     the Corporation who shall be appointed annually by the Board of Directors.
     No employee of the Corporation or of any of its subsidiaries who is
     eligible to participate in this Plan or who was eligible within the twelve
     months preceding appointment to the Committee, or will be eligible within
     the twelve months following service on the Committee, to participate in
     this Plan or any other stock plan of the Corporation shall be appointed as
     a member of the Committee. Vacancies occurring in the membership of the
     Committee shall be filled by appointment by the Board of Directors.

          2.2  A majority of the Committee shall constitute a quorum. The acts
     of the majority of the members of the Committee present at any meeting at
     which a quorum is present (or acts approved in writing by a majority of the
     Committee) shall be the acts of the Committee. The Committee shall keep
     minutes of its proceedings, and from time to time shall make such reports
     to the Board of Directors as the Board of Directors shall direct.


     3.   STOCK SUBJECT TO THE PLAN

          3.1  The shares to be issued upon exercise of Options shall be made
     available, at the discretion of the Board of Directors, either from the
     authorized but unissued Common Stock of the Corporation or from shares of
     Common Stock reacquired by the Corporation (whether before or after the
     date of this Plan), including shares purchased in the open market.

          3.2  Subject to the provisions of Section 3.3 of this Plan, the
     aggregate number of shares which may be delivered on exercise of Options
     shall not exceed 2,900,000 shares. If prior to December 31, 1999, an Option
     shall have expired or terminated without having been exercised in full for
     any reason, the unpurchased shares shall (unless this Plan shall have been
     terminated) become available for grant of Options to other employees.

          3.3  In the event that (i) the number of outstanding shares of Common
     Stock of the Corporation shall be changed by reason of split-ups,
     combinations or reclassifications of shares or otherwise, or (ii) any stock
     dividends are distributed to the holders of Common Stock of the
     Corporation, or (iii) the Common Stock of the Corporation is converted into
     or exchanged for other shares as a result of any merger or consolidation
     (including a sale of assets) or other recapitalization then, in any such
     case, the number of shares for which Options theretofore granted and the
     price per share payable upon exercise of such Options shall be
     appropriately adjusted by the Committee so as to reflect such change.

     4.   OPTION PRICE

          4.1  The purchase price of the shares subject to each Option shall be
     determined by the Committee ("Option Price"). The Option Price shall not be
     less than the fair market value (as defined in Section 4.2) of the shares
     of the Common Stock of the Corporation on the day preceding the date on
     which such Option is granted; provided, however, that if the sale prices
     required to determine the fair market value are not available for such day,
     the fair market value shall be determined as of the next preceding day for
     which the required sale prices are available.

          4.2  For purposes of this Plan, the fair market value of a share of
     the Common Stock of the Corporation shall be the mean between the highest
     and lowest sale prices of the Common Stock of the Corporation as reflected
     on the consolidated tape of issues listed for trading on the American Stock
     Exchange (or such other principal national securities exchange on which the
     Common Stock is so listed, as determined by the Committee) on the
     applicable day specified by this Plan for determining such fair market
     value.

     5.   ELIGIBILITY OF OPTIONEES

          5.1  Options may be granted only to key employees of the Corporation
     or of its subsidiaries who are in positions of substantial responsibility
     in the Corporation or in a subsidiary, as determined by the Committee. The
     term "key employees" shall include officers and other employees but shall
     not


     include Directors who are neither officers nor employees devoting their
     full time to the Corporation or to a subsidiary. Members of the Committee
     shall not be eligible to receive an Option.

          5.2  Subject to the terms and conditions of this Plan, the Committee
     shall have exclusive authority (i) to select the employees to be granted
     Options (it being understood that more than one grant may be made to the
     same employee), (ii) to determine the number of shares subject to each
     grant, (iii) to determine the time or times when Options will be granted,
     (iv) to determine the Option Price of the shares subject to each Option,
     (v) to prescribe the form, which shall be consistent with this Plan, of the
     instruments evidencing any Options, and (vi) to impose such other
     conditions, in addition to those otherwise required by this Plan, which the
     Committee may deem to be necessary or desirable to effect the purposes of
     this Plan.

     6.   NON-TRANSFERABILITY OF OPTIONS

          6.1  No Option shall be transferable by the grantee otherwise than by
     the grantee's last will and testament (including without limitation a
     testamentary trust or similar vehicle), or by the laws of descent and
     distribution, and during the grantee's lifetime, such Option shall be
     exercised only by such grantee or such grantee's guardian or legal
     representative.

     7.   EXERCISE OF OPTION

          7.1  Each Option shall terminate on its respective expiration date as
     established by the Committee (the "Expiration Date"), which date shall not
     be later than the expiration of ten years from the date on which the grant
     was made.

          7.2  Each Option shall vest in accordance with the respective vesting
     schedule established for such Option by the Committee ("Vested Option"),
     except that no Option shall vest before the expiration of six (6) months
     from the date on which the Option is granted; provided, however, that in
     the event of a Change of Control Termination (as hereinafter defined) all
     Options granted to any grantee more than six (6) months prior to the Change
     of Control Termination Date (as hereinafter defined) shall be Vested
     Options; further, provided, however, that if the present value of all
     compensation to be paid to a grantee upon a Change of Control Termination,
     including, without limitation, the value of the accelerated vesting of the
     Options and any all other payments and benefits to be paid or provided to
     the grantee as severance compensation, would constitute a "parachute
     payment" (as defined in Section 280G(b)(2) of the Internal Revenue Code of
     1986, as amended), then the accelerated vesting of the Options shall be
     deferred and the vesting of the Options shall be restructured so that such
     payments no longer constitute a "parachute payment," as so defined. Except
     in cases provided in Section 8 hereof, each Vested Option may be exercised
     only during the continuance of the grantee's employment with the
     Corporation or a subsidiary. Subject to the provisions of Section 7 and of
     Section 8 hereof, each Vested Option may be exercised in whole or, from
     time-to-time, in part with respect to the number of shares as to which it
     is has been exercisable in accordance with the terms of this Plan.


          7.3  (a)  To exercise a Vested Option granted under this Plan, the
                    grantee shall complete and deliver to the Secretary of the
                    Corporation, no later than the close of business on the date
                    of exercise, a Notice of Exercise of Stock Option, stating:

                    (i)   the number of shares the grantee has elected to pur-
                          chase;

                    (ii)  the method of payment of the purchase price and with-
                          holding taxes; and

                    (iii) whether the amount of the payment or withholding
                          for applicable federal and state withholding taxes
                          will be the minimum amount required to be withheld
                          or will include an additional sum (and the amount
                          of such additional sum).

               (b)  Subject to subparagraph (d), a Grantee may, at his election,
                    pay for the shares and applicable federal and state
                    withholding taxes:

                    (i)   in cash;

                    (ii)  by surrender of shares of the Corporation's Common
                          Stock having a total fair market value equal to the
                          purchase price and/or withholding taxes;

                    (iii) by having the Corporation withhold a portion of
                          the shares that would otherwise be distributable
                          upon exercise of the option having a fair market
                          value equal to the purchase price and/or
                          withholding taxes; or

                    (iv)  by any combination of methods (i), (ii) and (iii)
                          above.

               (c)  Upon the exercise of a Vested Option or, in the case of an
                    election by grantee under Section 83 of the Internal Revenue
                    Code, on or before the Tax Date (as defined in Paragraph
                    (d)), the grantee shall pay to the Corporation an amount
                    equal to not less than the minimum state and federal tax
                    liability required to be withheld and not more than the
                    total anticipated state and federal tax liability with
                    respect to such exercise, in accordance with his or her
                    election under paragraph (b). Unless grantee shall notify
                    the Corporation in the notice given pursuant to paragraph
                    (a) or (d) of his desire to pay some other amount, the
                    minimum withholding tax liability shall be paid to the
                    Corporation upon exercise of the Vested Option.

               (d)  Any election of the payment methods described in
                    subparagraph (b)(i) shall be given in the Notice of Exercise
                    of Stock Option. Grantees must make their 


                    election of a payment method described in subparagraph
                    (b)(ii), (b)(iii) or (b)(iv) (to the extent it involves the
                    method of payment described in subparagraph (b)(ii) or
                    (b)(iii)) before the date the option exercise becomes
                    taxable ("Tax Date") (normally this would be the date of
                    exercise of the option; if the grantee has not made an
                    election under Section 83(b) of the Internal Revenue Code,
                    however, the date would be six months following the date of
                    exercise of the Option); provided that to the extent
                    required by the Securities Exchange Act of 1934 ("Act") or
                    any rules and regulations adopted pursuant thereto, as may
                    be amended, grantees subject to the reporting requirements
                    of Section 16(a) of the Act must make an election of a
                    payment method described in subparagraph (b)(ii), (b)(iii)
                    or (b)(iv) (to the extent it involves the payment method
                    described in subparagraph (b)(ii) or (b)(iii)) not sooner
                    than six months following the date of the grant of the
                    option and within one of two time periods:

                         (i)  during the ten day period beginning on the third
                              business day following the date of the Corporation
                              releases quarterly and annual summary statements
                              of sales and earnings; or

                         (ii) at least six months before the Tax Date.

                    An election of the payment method described in subparagraph
                    (b)(ii), (b)(iii) or (b)(iv) (to the extent it involves a
                    payment method described in subparagraph (b)(ii) or (b)(iii)
                    shall be given in writing to the Secretary of the
                    Corporation within the time periods set forth above, shall
                    be irrevocable and shall be subject to disapproval by the
                    Committee. If the Committee shall, in its sole discretion,
                    approve an election to permit delivery or to withhold the
                    Corporation's Common Stock in payment of the Exercise Price
                    or withholding tax obligations, it shall pass a resolution
                    to such effect, but any such approval shall be subject to
                    revocation by the Committee prior to the exercise of a
                    Vested Option.

               (e)  Payment of the purchase price for shares under any of the
                    methods described in subparagraphs (b)(i), (b)(ii) or
                    (b)(iv) (to the extent it does not involve withholding of
                    shares) must accompany the Notice of Exercise of Stock
                    Option. Until a grantee has made full payment of the
                    purchase price in cash, shares, withholding or in any
                    combination thereof, and until a certificate covering the
                    shares purchased has been issued to the grantee, such
                    grantee shall not possess any stockholder rights with
                    respect to any of such shares.

          7.4  For purposes of this Section 7, the fair market value (as defined
     in Section 4.2) of a share of the Common Stock of the Corporation shall be
     determined as of the day preceding the date on which the Option is
     exercised in accordance with Section 7.3; provided, however, that if the
     sale prices


     required to determine the fair market value are not available for such day,
     then the fair market value shall be determined as of the next preceding day
     for which the required sale prices are available.

          7.5  For purposes of this SECTION 7:

               (a)  "Change of Control Termination" means a Termination (as
     defined in Section 8.1) that occurs after a Change of Control.

               (b)  "Change of Control" means (i) the occurrence of an event of
     a nature that would be required to be reported in response to Item 1 or
     Item 2 of a Form 8-K Current Report of the Corporation promulgated pursuant
     to Sections 13 and 15(d) of the Act (as hereinafter defined); provided
     that, without limitation, such a Change of Control shall be deemed to have
     occurred if (a) any "person," as such term is used in Sections 13(d) and
     14(d) of the Act (other than the Corporation, any trustee or other
     fiduciary holding securities under any employee benefit plan of the
     Corporation, or any company owned, directly or indirectly, by the
     stockholders of the Corporation in substantially the same proportions as
     their ownership of stock of the Corporation), is or becomes the "beneficial
     owner" (as defined in Rule 13d-3 under the Act), directly or indirectly, of
     securities of the Corporation representing thirty-five percent (35%) or
     more of the combined voting power of the Corporation's then outstanding
     securities or (b) during any period of two consecutive years, individuals
     who at the beginning of such period constitute the Board cease for any
     reason to constitute at least a majority thereof, unless the election by
     the Board or the nomination for election by the Corporation's stockholders
     was approved by a vote of at least sixty percent (60%) of the directors
     then still in office who either were directors at the beginning of the two-
     year period or whose election or nomination for election was previously so
     approved; (ii) the stockholders of the Corporation approve a merger or
     consolidation of the Corporation with any other corporation, other than a
     merger or consolidation that would result in the voting securities of the
     Corporation outstanding immediately prior thereto continuing to represent
     (either by remaining outstanding or by being converted into voting
     securities of the surviving entity) more than eighty percent (80%) of the
     combined voting power of the voting securities of the Corporation or such
     surviving entity outstanding immediately after such merger or
     consolidation; or (iii) the stockholders of the Corporation approve a plan
     of complete liquidation of the Corporation or any agreement for the sale or
     disposition by the Corporation of all or substantially all of the
     Corporation's assets.

               (c)  "Change of Control Termination Date" means the date
     Termination occurs in contemplation of or following a Change of Control,
     which date shall be not earlier than 60 days prior to nor later than one
     year after the effective date of the Change of Control.

     8.   TERMINATION OF EMPLOYMENT

          8.1  If a grantee s employment with the Corporation or a subsidiary
     shall cease for any reason other than the grantee s retirement (after
     attainment of normal retirement age), disability or death, including,
     without limitation, a Change of Control Termination ( Termination ), the
     grantee may exercise each Vested Option to the extent that such Vested
     Option was exercisable pursuant to 


     Section 7.2 when Termination occurred at any time within three (3) months
     after Termination (but in no event after the Expiration Date of such Vested
     Option). Any questions as to whether and when there has been a cessation of
     employment shall be determined by the Committee and its determination on
     such questions shall be final.

          8.2  If a grantee s employment with the Corporation or a subsidiary
     shall cease due to the grantee s death, the grantee s Vested Options will
     be exercisable by the grantee s estate or by the person designated in the
     grantee s last will and testament (including, without limitation, a
     testamentary trust or similar vehicle) at any time within two (2) years of
     the grantee s death (but in no event after the Expiration Date of such
     Vested Options).

          8.3  If a grantee s employment shall cease due to retirement (after
     attainment of normal retirement age) or due to disability, the grantee may
     exercise each Vested Option at any time within two years after such grantee
     shall cease to be an employee (but in no event after the Expiration Date of
     such Option); further, with respect to Options of such grantee that are not
     Vested Options at the time such grantee shall cease to be an employee due
     to retirement (after attainment of normal retirement age) or disability,
     such Options shall not be cancelled at such time, but shall instead vest in
     accordance with the vesting schedule established for such Options pursuant
     to Section 7.2 of this Plan, and such Options shall, upon becoming Vested
     Options, be exercisable by the Option grantee at any time within one year
     after any such Options shall become Vested Options. If an Option grantee
     subject to this Section 8.3 shall die after ceasing to be an employee but
     prior to the Options becoming Vested Options, the provisions of Section 8.2
     of this Plan shall apply and only Vested Options at the time of such
     grantee s death may be exercised pursuant to the provisions of such Section
     8.2. The Committee shall from time to time specify the normal retirement
     age which shall be applicable to all grantees under this Plan.

     9.   INTERPRETATION OF PLAN

          9.1  The Committee shall have full power and authority to construe and
     interpret this Plan. Decisions of the Committee shall be final, conclusive
     and binding on all parties, including the Corporation, its subsidiaries and
     stockholders, and the grantees, their estates, executors, administrators,
     heirs and assigns.

          9.2  It is intended that this Plan be interpreted and administered so
     as to exempt the Options (including without limitation the grant and
     exercise of the Options), to the fullest extent permitted by law (as from
     time to time in effect), from all liability provisions of Section 16(b) of
     the Act and the regulations promulgated thereunder.

          9.3  Nothing in this Plan or in grant hereunder shall confer any right
     to remain in the employment of the Corporation or of a subsidiary or in any
     way impair the right of the Corporation or of a subsidiary to terminate a
     grantee's employment at any time.


     10.  AMENDMENTS TO PLAN

          10.1 The Committee, from time to time, may prescribe, amend and
     rescind rules and regulations relating to this Plan and, subject to the
     approval of the Board of Directors of the Corporation, may at any time
     terminate, modify or suspend the operation of this Plan; provided, however,
     that, without the approval of the stockholders of the Corporation, no such
     modification shall:

               (i)   materially increase the benefits accruing to participants
                     under this Plan;

               (ii)  except as provided in Section 3.3, increase the number of
                     shares of the Corporation which may be issued under this
                     Plan; or

               (iii) materially modify the requirements as to eligibility
                     for participation in this Plan.

     11.  APPLICABLE LAW AND REGULATIONS

          11.1 The obligation of the Corporation to sell and deliver shares
     under Options shall be subject to (i) all applicable laws, rules and
     regulations, and such approvals by any governmental agency as may be
     required, including but not limited to, the effectiveness of a Registration
     Statement under the Securities Act of 1933, as deemed necessary or
     appropriate by counsel for the Corporation, and (ii) the condition that the
     shares of Common Stock reserved for issuance upon the exercise of Options
     shall have been duly listed upon any stock exchange on which the
     Corporation's Common Stock may then be listed. Certificates representing
     shares issued upon exercise of any Option shall bear a legend with respect
     to each applicable restriction set forth in this Section 11.1.

     12.  EFFECTIVE DATE

          12.1 This Plan shall be effective as of April 12, 1990, subject to its
     approval by the stockholders of the Corporation at the 1990 annual meeting
     of stockholders.

EX-10.2

                                 AMENDED AND RESTATED
                            SUPPLEMENTAL BENEFIT AGREEMENT

          THIS AMENDED AND RESTATED SUPPLEMENTAL BENEFIT AGREEMENT (this
     "Restated Agreement") made and entered into this 10th day of October, 1994,
     by and between FACILITIES MANAGEMENT INSTALLATION, INC., a Delaware
     corporation ("FMI"), SOUTHWESTERN LIFE CORPORATION, a Delaware corporation
     ("SLC"), and ________________ ("Employee"),

                                 W-I-T-N-E-S-S-E-T-H:

          WHEREAS, FMI is a wholly-owned subsidiary of SLC and serves as the
     employer of substantially all of the employees who provide services to SLC
     and its affiliated companies; and

          WHEREAS, Employee is an employee of FMI and has served faithfully and
     diligently as an employee of FMI and/or its predecessors and affiliates for
     many years; and

          WHEREAS, Employee is entitled to participate in FMI's welfare benefit
     plans on the same terms and conditions as all other employees of FMI,
     including, without limitation, FMI's Salaried Employees Severance Pay Plan
     ("FMI Severance Pay Plan") and FMI's group life insurance plan ("FMI Group
     Life Insurance Plan"); and

          WHEREAS, as a reward for Employee's past services, FMI and SLC have
     desired and continue to desire to provide additional benefits to Employee
     as hereinafter provided; and

          WHEREAS, FMI, SLC and Employee have previously entered into an
     agreement dated November 30, 1993 under which FMI and SLC agreed to provide
     certain supplemental severance and other benefits to Employee, as the same
     was amended by Addendum to Agreement dated as of February 21, 1994 and by
     Second Addendum to Agreement effective as of November 30, 1993
     (collectively, the "Supplemental Benefit Agreement"); and

          WHEREAS, the Board of Directors of SLC has recently approved an
     amendment to the Supplemental Benefit Agreement to, among other things,
     amend the definition of "Sale Date"; and

          WHEREAS, the parties also wish to modify the Supplemental Benefit
     Agreement to provide for the surrender of Stock Option Shares (as
     hereinafter defined) in satisfaction of the exercise price or tax
     withholding liabilities associated with such shares to be consistent with
     the stock option plans governing such shares, and to make other minor
     clarifying changes; and

          WHEREAS, the parties also wish to integrate into this Restated
     Agreement all prior amendments and addenda to the Supplemental Benefit
     Agreement to date;

          NOW, THEREFORE, in consideration of the premises and the mutual
     promises of the parties


     hereto and other good and valuable consideration paid by Employee to each
     of FMI and SLC, the receipt and sufficiency of which is hereby
     acknowledged, the parties hereto agree as follows:

          1.   Definitions. The following terms shall have the meanings set
     forth below:

          (a)  "Affiliate" has the meaning ascribed to it in Rule 144
     promulgated under the Securities Act of 1933, as amended, and when used
     herein includes Affiliates of SLC and FMI and their respective Successors.

          (b)  "Compensation" means compensation paid by FMI, SLC or their
     Affiliates or Successors to Employee that is includible as gross income in
     Employee's federal income tax return.

          (c)  "Date of Termination" means the date on which the Termination of
     Employment occurs.

          (d)  "Estate" means the Employee's probate estate and includes the
     Employee's heirs and personal representatives.

          (e)  "Gross Misconduct" means an act committed by the Employee against
     FMI, SLC or their Affiliates or Successors, or against any employee,
     officer, director, agent or representative of FMI or SLC or any of their
     Affiliates or Successors that constitutes a felony under the laws of the
     state in which the act is committed.

          (f)  "Market Transactions" means one or more transactions effected
     through a Stock Exchange during the Transaction Period only on one or more
     of the Sale Dates at prices equal to or exceeding the Prevailing Market
     Price.
          
          (g)  "Noninsider Employee" means Employee if and only if Employee is
     not subject to the reporting requirements of Section 16(a) of the
     Securities Exchange Act of 1934, as amended (the "1934 Act"), or the short-
     swing profit provisions of Section 16(b) of the 1934 Act.

          (h)  "Payment Date" means the first business day that is at least
     thirty (30) calendar days after the Employee or the Employee's Estate has
     disposed of all of Employee's Restricted Stock Purchase Shares and Stock
     Option Shares pursuant to the terms hereof.

          (i)  "Prevailing Market Price" means the price per share for shares of
     $1.00 par value common stock of SLC as reported on a Stock Exchange
     composite tape immediately prior to the sale by Employee of the shares then
     being sold by Employee.

          (j)  "Restricted Stock Purchase Agreement Shares" means any shares of
     $1.00 par value common stock of SLC which the Employee purchased under a
     Restricted Stock Purchase Agreement entered into between the Employee and
     System Services Group, the predecessor of FMI, dated March 12, 1982, as
     amended.


          (k)  "Sale Date" means any one or more of the following dates:
     November 25, 1994 and each April 10, May 25, August 25 and November 25 of
     each calendar year thereafter; provided that if any of said dates falls on
     a day on which the Stock Exchange is closed, the Sale Date shall be the
     first day thereafter on which the Stock Exchange is opened; and further
     provided that any Employees who are "insiders" subject to the requirements
     of Section 16 of the 1934 Act shall not engage in any transaction on a Sale
     Date that would violate the short-swing trading prohibitions of Section
     16(b) of the 1934 Act. Notwithstanding the foregoing and only with respect
     to Noninsider Employees, Sale Date shall also include any day or days on
     which the Stock Exchange is open for trading during the period (i)
     commencing November 1, 1994 and (ii) continuing until the expiration of the
     Transaction Period.

          (l)  "Stock Exchange" means any stock exchange on which shares of
     $1.00 par value common stock of SLC are listed for trading.

          (m)  "Stock Option Shares" means (i) any shares of $1.00 par value
     common stock of SLC owned by the Employee on November 30, 1993 which were
     purchased by the Employee pursuant to stock options granted by SLC and/or
     its corporate predecessor to the Employee prior to December 31, 1989, and
     (ii) any shares of $1.00 par value common stock of SLC which the Employee
     purchases after November 30, 1993 pursuant to stock options granted by SLC
     to the Employee between December 31, 1989 and November 30, 1993.

          (n)  "Successor" means the successor to all or substantially all of
     the assets of the transferor whether such assets are transferred by merger,
     consolidation, assignment or otherwise and when used herein includes
     Successors of SLC, FMI and the Affiliates.

          (o)  "Supplemental Benefit Cap" means an amount equal to three hundred
     percent (300%) of the average, annualized Compensation received by the
     Employee during the five consecutive calendar years immediately preceding
     the Date of Termination.

          (p)  "Supplemental Severance Benefit" means an amount equal to two
     hundred percent (200%) of the Employee's salary, excluding bonuses, for the
     twelve (12) consecutive calendar months preceding the Date of Termination;
     provided, however, that if Termination of Employment occurs prior to the
     death of the Employee, the Supplemental Severance Benefit shall be reduced
     by an amount equal to any payments which the Employee is entitled to
     receive under the FMI Severance Pay Plan.

          (q)  "Transaction Period" means the period commencing November 30,
     1993 and ending 180 days after the Date of Termination.

          (r)  "Termination of Employment" means the voluntary or involuntary
     termination of Employee's employment with SLC, FMI or with their Affiliates
     or Successors for any reason other than the Employee's gross misconduct.
     Should Employee continue as an employee of an Affiliate or Successor or
     become an employee of an Affiliate or Successor within thirty (30) calendar
     days of any 


     event which would otherwise constitute a Termination of Employment, a
     Termination of Employment shall be deemed to have occurred unless: (i)
     SLC's and FMI's obligations hereunder are not terminated, or (ii) such
     Affiliate or Successor expressly assumes in writing all of SLC's and FMI's
     obligations hereunder.

          1.   Supplemental Severance Payment. In the event a Termination of
     Employment occurs, FMI agrees to pay the Supplemental Severance Benefit to
     Employee within thirty (30) days after the Date of Termination.

          2.   Supplemental Bonus Payment. On the Payment Date, FMI agrees to
     pay to Employee an amount equal to (i) $5.875 multiplied by the aggregate
     number of (a) Restricted Stock Purchase Shares and Stock Option Shares sold
     by the Employee or by the Employee's Estate in Market Transactions on Sale
     Dates occurring after the date hereof but prior to the expiration of the
     Transaction Period and (b) Stock Option Shares surrendered by the Employee
     to SLC after the date hereof but prior to the expiration of the Transaction
     Period to satisfy the exercise price for Stock Option Shares and any income
     tax withholding obligations for such shares in accordance with the plans
     under which such shares were granted to Employee ((a) and (b) shall be
     collectively referred to herein as the "Shares Sold"), less (ii) an amount
     equal to the aggregate of (a) the gross sales price of the Shares Sold in
     Market Transactions and (b) the total fair market value of the Shares Sold
     constituting the Stock Option Shares surrendered to satisfy exercise price
     or tax withholding obligations on the date of such surrender (as determined
     in accordance with the respective plans governing such surrendered Stock
     Option Shares).

          3.   Supplemental Benefit Cap. Notwithstanding any other provision
     herein, the aggregate amount of monies which the Employee shall be entitled
     to receive under Paragraphs 1 and 2 above shall not exceed an amount equal
     to the Supplemental Benefit Cap.

          4.   Cross Guarantees. SLC and FMI unconditionally guarantee each
     other's obligations under this Restated Agreement.

          5.   Waiver. The failure on the part of any party to this Restated
     Agreement to exercise any rights of that party hereunder shall not
     constitute a waiver of such rights.

          6.   Assignment. This Restated Agreement may not be assigned by
     Employee or by Employee's Estate without the prior written consent of SLC
     and FMI or their permitted assignees. This Restated Agreement may be
     assigned by SLC and FMI to their respective Affiliates or Successors,
     provided each such Affiliate or Successor assumes and agrees to perform all
     of SLC's or FMI's obligations hereunder, as the case may be. Otherwise,
     this Restated Agreement shall not be assigned by SLC or FMI without the
     prior written consent of Employee or Employee's Estate.

          7.   Entire Agreement. This Restated Agreement constitutes the entire
     agreement of the parties hereto with respect to the Supplemental Benefit
     Agreement and the subject matter hereof and thereof and may not be modified
     or amended except in writing signed by or on behalf of the parties


     hereto.

          8.   Controlling Law. This Restated Agreement shall be governed by and
     construed in accordance with the laws of the state of Texas applicable to
     agreements made and to be performed therein.

          9.   Counterparts. This Restated Agreement may be executed in multiple
     counterparts, each of which shall constitute an original copy hereof but
     all of which together shall constitute a single instrument.

                                   SOUTHWESTERN LIFE CORPORATION



                                   By:
                                      --------------------------
                                      James R. Kerber
                                      Chief Executive Officer and
                                      President

                                   FACILITIES MANAGEMENT
                                   INSTALLATION, INC.



                                   By:
                                      ---------------------------
                                      C. Fred Rice
                                      Senior Executive Vice President


                                   EMPLOYEE:



                                   ____________________________

EX-10.3

                       SOUTHWESTERN LIFE CORPORATION COMPANIES

                        SALARIED EMPLOYEES SEVERANCE PAY PLAN

                        As Restated Effective October 1, 1994


                                  TABLE OF CONTENTS



                                                                            Page


     SECTION 1. DEFINITIONS .  . . . . . . . . . . . . . . . . . . . . . .   1

     SECTION 2. ELIGIBILITY  . . . . . . . . . . . . . . . . . . . . . . . . 4

     SECTION 3. SEVERANCE PAY  . . . . . . . . . . . . . . . . . . . . . . . 6

     SECTION 4. DISTRIBUTION OF BENEFITS . . . . . . . . . . . . . . . . . . 7

     SECTION 5. PLAN ADMINISTRATION  . . . . . . . . . . . . . . . . . . . . 8

     SECTION 6. PLAN MODIFICATION OR TERMINATION . . . . . . . . . . . . . . 9

     SECTION 7. GENERAL PROVISIONS . . . . . . . . . . . . . . . . . . . . . 9


                       SOUTHWESTERN LIFE CORPORATION COMPANIES
                        SALARIED EMPLOYEES SEVERANCE PAY PLAN
                       (As Restated Effective October 1, 1994)


          Circumstances  can  develop which may make it necessary for a regular,
     full-time,  salaried  employee  to  be  separated  from  the  Company  or a
     subsidiary  or  affiliate  of  the  Company  or  a  Participating  Company,
     involuntarily  through  no  fault  of his or her own. The Southwestern Life
     Corporation  Companies  Salaried  Employees  Severance  Pay  Plan  has been
     developed to assist employees affected by such circumstances to cushion the
     financial  effects  of the transition period following separation. The Plan
     alone  governs  all  payments to salaried employees in the United States of
     America   because  of  separation  from  employment.  All  other  policies,
     practices, procedures and plans relating to such payments, whether known as
     severance   pay,  separation  pay,  termination  pay,  notice  pay,  layoff
     allowance,  supplemental  unemployment  benefits,  or  the like, are hereby
     superseded. 

     SECTION 1. DEFINITIONS

          1.1. "Administrative Services Contract" means an agreement under which
     the  Company,  a  Participating  Company,  or an Affiliated Group Member is
     obligated  to  provide  administrative or other similar services, including
     but  not  limited  to,  Administrative  Services  Only  (ASO),  Third Party
     Administration (TPA), and Administrative Carrier agreements.

          1.2. "Affiliated Group Member" means a corporation that would be under
     common  control  within  the  meaning  of  section  1563(a) of the Internal
     Revenue  Code  as  amended  ("the  Code"),  if  the phrase "at least eighty
     percent" in such section read "at least fifty percent."

          1.3. "Company"  means Facilities Management Installation, Inc. and any
     successor  thereto  by  merger, purchase or otherwise that expressly adopts
     the Plan.


          1.4. "Controlled  Group" means the Company or any successor by merger,
     purchase or otherwise and any corporation that is under common control with
     the Company within the meaning of section 1563(a) of the Code.

          1.5. The  "Effective  Date"  of  the  Plan is January 1, 1989, and the
     effective  date of the Plan's restatement is October 1, 1994, or such later
     dates as the Plan becomes applicable to a workplace or other portion of the
     Company or a Participating Company in accordance with Section 6.2.

          1.6. An  "Employee"  means  a  person  who is employed as a full-time,
     salaried  employee  by the Company or any Participating Company for six (6)
     months  of  Service for a regularly scheduled workweek of thirty (30) hours
     or  more  immediately  prior  to  his or her termination of employment at a
     workplace or other portion of the Company or a Participating Company in the
     United  States  of  America  to which the Plan applies. Notwithstanding the
     above,  no  part-time,  temporary,  occasional  or seasonal employee, sales
     representative,  employee employed in a foreign country, or employee who is
     covered by a separate employment contract that includes severance-type pay,
     is an Employee under the Plan. An Employee ceases to be an Employee once he
     or she incurs a Severance Date.

          1.7. "Participating Company" means any member of the Controlled Group,
     other than the Company, designated by the Plan Administrator in writing and
     effective as of such date specified therein.

          1.8. "Pay" means the base salary of an eligible Employee at his or her
     stated  rate  on his or her Severance Date. "Pay" does not include overtime
     pay, bonuses, the receipt of previously deferred compensation, or any other
     remuneration.  A  "Week  of Pay" shall be calculated in accordance with the
     Company's regular payroll procedures.

          1.9. The  "Plan"  means  the  Southwestern  Life Corporation Companies
     Salaried Employees Severance Pay Plan, as amended from time to time.


          1.10.     The  "Plan Administrator" is the senior officer of Corporate
     Services for Facilities Management Installation, Inc.

          1.11.     "Retirement"  means  the retirement of an Employee under any
     medical  plan  sponsored  by  the  Company  or  a Participating Company, as
     applicable.

          1.12.       "Service"  means  the  period of continuous employment (a)
     within the Controlled Group as an Employee and (b) with an Affiliated Group
     Member that is recognized by the Company and/or an applicable Participating
     Company for purposes of vacation eligibility.

          1.13.     "Severance  Date" means the date after the Effective Date of
     the  Plan  on  which  an  Employee resigns, dies, retires, is discharged or
     otherwise  terminates  employment,  voluntarily  or  involuntarily, for any
     reason. An Employee's employment is "Severed" on his or her Severance Date.
     Notwithstanding  the  above,  an  Employee  who incurs any of the following
     events,  but who remains employed by the Controlled Group or is transferred
     or  elects  to  transfer  to  an Affiliated Group Member in any capacity or
     status  after  any  such  event,  does not incur a Severance Date upon such
     event:

          a.   Cessation of employment status as an Employee and continuation of
               employment on a part-time basis;

          b.   Placement  on  long term disability status, a leave of absence or
               other inactive employment status;

          c.   Transfer  to  any  member of the Controlled Group, whether or not
               such  member  is  a  Participating  Company, or to any Affiliated
               Group  Member  that  has  a  comparable  severance  pay plan that
               recognizes  service  with  the  Company's  Controlled  Group  for
               purposes  of  its  severance  pay  plan,  where  such transfer is
               pursuant to an offer of 


               comparable  employment  and  is fifty (50) miles or less from the
               Employee's current employment location; or

          d.   Any other change in terms or conditions of employment, including,
               b u t   not  limited  to,  any  change  in  job  or  job  duties,
               compensation, benefits or workplace.

          1.14.     "Severance  Pay"  means a payment made to eligible Employees
     pursuant to Section 2 hereof.

     SECTION 2. ELIGIBILITY

          2.1. Except as otherwise provided in this Section 2, any person who is
     an  Employee  on  his  or her Severance Date may, by written request in the
     manner  prescribed  by the Plan Administrator, elect within forty-five (45)
     days  of  his  or her Severance Date to receive Severance Pay if his or her
     employment is involuntarily Severed for reasons other than poor performance
     or  "misconduct"  (as defined in Section 2.7). Any Employee who fails to so
     elect  within  such  forty-five  (45)  day period shall forfeit any and all
     right  to  receive  Severance  Pay  and  shall not again become eligible to
     receive  Severance  Pay  unless  he  or she is thereafter reemployed by the
     Company or a Participating Company as an Employee, his or her employment is
     later involuntarily Severed and he or she later elects to receive Severance
     Pay  within  such  later forty-five (45) day period in accordance with this
     Section 2.

          2.2. Severance  Pay shall not be made to any Employee if the Severance
     Date occurs by reason of death or if the Employee dies prior to executing a
     release described in Section 2.8.

          2.3. Severance  Pay  shall  not  be made to any Employee if his or her
     employment is voluntarily Severed, such as by:

          a.   Voluntary resignation (including a quit without notice);


          b.   Voluntary Retirement; or


          c.   Failure  to  return  to  active  employment  after  cessation  of
               disability or following termination of a leave of absence.

          For  purposes  of  this  Section   2,  an   Employee's  employment  is
     voluntarily  Severed  if  the  Severance  occurs by reason of an Employee's
     resignation  or  Retirement  prior  to  the Severance Date scheduled by the
     Company,  or  if it occurs prior to a date on which the Employee expects to
     be involuntarily Severed.

          2.4. Severance  Pay  shall  not  be  made to any Employee who incurs a
     Severance  Date  in  connection  with  (a)  the  sale of all or part of the
     Company,   a  Participating  Company,  a  Controlled  Group  Member  or  an
     Affiliated  Group Member, at which such Employee works, whether by the sale
     of  stock  or assets, or (b) the merger, consolidation or reorganization of
     all  or  part  of  the Company, a Participating Company, a Controlled Group
     Member  or  an  Affiliated  Group Member at which such Employee works, with
     another  entity,  if, before the Employee's Severance Date, the Employee is
     (i)  offered  a  position  of  comparable  employment  by  the purchaser or
     surviving  business,  and  (ii)  is not required to commute more than fifty
     (50)  miles  from  the  employment  location  where he or she was otherwise
     employed on the Severance Date.

          2.5. Severance  Pay  shall  not  be  made to any Employee who incurs a
     Severance  Date  if,  before  the  Employee's  Severance Date, the Employee
     receives an offer of comparable employment from an entity (a) engaged under
     a  service  agreement  to  perform  substantial services for the Company, a
     Participating  Company,  a  Controlled  Group Member or an Affiliated Group
     Member,  or (b) for whom the Company, a Participating Company, a Controlled
     Group  Member  or  an Affiliated Group Member provides substantial services
     under  a service agreement, and, in connection with the offer of comparable
     employment,  the  Employee  is not required to commute more than fifty (50)
     miles  from  the employment location where he or she was otherwise employed
     on the Severance Date.


          2.6. Severance  Pay  shall  not  be  made to any Employee who incurs a
     Severance  Date  because  of  the termination of an Administrative Services
     Contract  if, before the Employee's Severance Date, the Employee is offered
     a  position  of  comparable  employment  by  the  successor provider of the
     services   covered  by  that  Administrative  Services  Contract,  and,  in
     connection  with  that  offer, the Employee is not required to commute more
     than  fifty  (50)  miles  from  the employment location where he or she was
     otherwise employed on the Severance Date.

          2.7. Any  Employee  who  incurs  a  Severance  Date as a result of the
     Employee's  misconduct  shall not be eligible for Severance Pay. Misconduct
     includes,  but  is  not  limited  to, intentional violation of or negligent
     disregard for company rules and procedures, insubordination, theft, violent
     acts  or  threats  of  violence,  or  possession  of  alcohol or controlled
     substances  on  property  of  the  Company, a Controlled Group member or an
     Affiliated Group Member.

          2.8. No  Employee shall be eligible to receive Severance Pay unless he
     or  she  first  releases the Company, its Controlled Group members, and its
     Affiliated  Group  Members  in writing in the manner prescribed by the Plan
     Administrator  from claims or liabilities relating to his or her employment
     or termination of employment.

     SECTION 3. SEVERANCE PAY

          The  Severance  Pay  of  an  eligible  Employee  shall be equal to the
     greater of the amounts calculated using the two following formulas:

          a.   Severance Pay based upon length of Service:

               1.   two Weeks of Pay, plus
               2.   an additional Week of Pay for each full year of Service.

          b.    Severance Pay based upon title:

               1.   Manager                       4 Weeks of Pay


               2.   Director                      8 Weeks of Pay
               3.   Assistant Vice President      12 Weeks of Pay
               4.   Vice President                16 Weeks of Pay
               5.   Officers above Vice President 26 Weeks of Pay

     Despite  the above, the maximum amount of Severance Pay for any Employee is
     52 Weeks of Pay.

     SECTION 4. DISTRIBUTION OF BENEFITS

          4.1. Severance  Pay  will  be  paid in a single sum (after appropriate
     withholding and deductions required by law are made) upon the completion of
     all  requirements  for eligibility for Severance Pay and the termination of
     any waiting periods required by law.

          4.2. Severance Pay shall be made directly out of the general assets of
     the Company.

          4.3. In  the event of a dispute by an Employee as to the amount of any
     distribution  or  its  method  of  payment, such Employee shall present the
     reason  for his or her claim in writing to the Plan Administrator. The Plan
     Administrator  shall,  within sixty (60) days after receipt of such written
     claim,  send  a written notification to the Employee as to its disposition.
     In  the  event  the  claim  is  wholly  or  partially  denied, such written
     notification shall (a) state the specific reason or reasons for the denial,
     (b)  make  specific  reference  to  pertinent  Plan provisions on which the
     denial  is  based,  (c) provide a description of any additional material or
     information  necessary  for  the  Employee  to  perfect  the  claim  and an
     explanation  of  why such material or information is necessary, and (d) set
     forth  the  procedure by which the Employee may appeal the denial of his or
     her  claim.  In the event an Employee wishes to appeal the denial of his or
     her  claim,  he  or  she  may  request  a  review  of such denial by making
     application  in  writing  to  the Plan Administrator within sixty (60) days
     after  receipt of such denial. Such Employee (or his or her duly authorized
     legal  representative) may, upon written request to the Plan Administrator,
     review  any  documents pertinent to his or her claim, and submit in writing
     issues  and  comments  in support of his or her position. Within sixty (60)
     days after receipt of a written appeal 


     (unless  special circumstances, such as the need to hold a hearing, require
     an  extension  of  time, but in no event more than one hundred twenty (120)
     days  after such receipt), the Plan Administrator shall notify the Employee
     of  the  final  decision.  The final decision shall be in writing and shall
     include  specific  reasons for the decision, written in a manner calculated
     to  be understood by the claimant, and specific references to the pertinent
     Plan provisions on which the decision is based.

     SECTION 5. PLAN ADMINISTRATION

          5.1. The  Plan  shall be interpreted, administered and operated by the
     Plan  Administrator,  who  shall  serve without compensation and shall have
     complete  authority,  subject  to  the  express  provisions of the Plan, to
     determine  who  shall  be eligible for Severance Pay and in what amount, to
     interpret  the  Plan, to prescribe, amend and rescind rules and regulations
     relating to it, and to make all other determinations necessary or advisable
     for the administration of the Plan.

          5.2. All  questions  arising  in connection with the interpretation of
     the  Plan  or  its  administration  or  operation shall be submitted to and
     settled  and  determined  by  the Plan Administrator in accordance with the
     procedure  for  claims  and  appeals  described  in  Section  4.3. Any such
     settlement  and determination shall be final and conclusive, and shall bind
     and  may  be relied upon by the Company, any Participating Company, each of
     the  Employees  and  all  other  parties  in  interest.  In  exercising the
     discretion  expressly  vested  in  him  or  her  under  the  Plan, the Plan
     Administrator  shall act only in accordance with nondiscriminatory rules of
     uniform  application  to similarly situated employees. Except to the extent
     prohibited  by  law, the Plan Administrator is fully protected and shall be
     indemnified for actions taken in his or her role as such by the Company and
     the Participating Companies.

          5.3. The Plan Administrator may delegate any of his or her ministerial
     duties  under the Plan to such person or persons from time to time as he or
     she may designate.


     SECTION 6. PLAN MODIFICATION OR TERMINATION

          6.1. Subject to the approval of the President of the Company, the Plan
     may  be  modified or amended at any time by the Plan Administrator, with or
     without notice. Without limiting the foregoing, the Plan may be modified or
     amended to increase, decrease or eliminate the Severance Pay payable to any
     Employee who incurs a Severance Date after such modification or amendment.

          6.2. It  is  the  intention of the Company to continue the Plan and to
     make  Severance  Pay  to  all  eligible Employees. However, the Company, by
     action  of the Plan Administrator, may for any reason terminate the Plan or
     withhold  its  application  as  to  all or some Employees at a workplace or
     other   portion  of  the  Company  or  a  Participating  Company  and  may,
     accordingly,  make  no  Severance  Pay  to  anyone  who  has not incurred a
     Severance Date at the time of such termination or withholding. The Company,
     by  action  of the Plan Administrator, may also extend the applicability of
     the  Plan  to  all  or  some  Employees  at a plant or other portion of the
     Company or a Controlled Group member.

          6.3. Any  modification, amendment, termination, withholding, extension
     or  other  action  relating to the Plan shall only apply to Severance Dates
     occurring  after  such action. No such action shall reduce or eliminate the
     Severance  Pay  of  any  Employee  whose  Severance Date occurs before such
     action is taken. 

     SECTION 7. GENERAL PROVISIONS

          7.1. Nothing  in  the  Plan  shall  be deemed to give any Employee the
     right  to  be  retained  in  the  employ of the Company, a Controlled Group
     member or an Affiliated Group Member, or to interfere with the right of the
     Company,  a  Controlled  Group  member  or  an  Affiliated  Group Member to
     discharge him or her at any time and for any lawful reason, with or without
     notice.

          7.2. Except  as  otherwise  provided  herein  or  by  law, no right or
     i n t erest  of  any  Employee  under  the  Plan  shall  be  assignable  or
     transferable, in whole or in part, either directly or by operation


     of  law  or  otherwise,  including  without  limitation by execution, levy,
     garnishment,  attachment,  pledge or in any manner; no attempted assignment
     or  transfer  thereof  shall  be effective; and no right or interest of any
     Employee  under the Plan shall be liable for, or subject to, any obligation
     or  liability of such Employee. When a payment is due under this Plan to an
     Employee  who is unable to care for his or her affairs, payment may be made
     directly to his or her legal guardian or personal representative.

          7.3. An  Employee may, by written designation in the manner prescribed
     by the Plan Administrator, designate a beneficiary to receive Severance Pay
     in the event he or she dies after a Severance Date.

          7.4. To the extent permitted by law, if the Company or a Participating
     Company  is obligated by law or contract to pay any remuneration other than
     Severance  Pay  under  this  Plan  on  account of or in connection with the
     Severance  Date  of an eligible Employee, the Severance Pay amount shall be
     reduced, dollar for dollar, by the amount of any such remuneration.

          7.5. The  Plan shall be governed by, and construed in accordance with,
     the  Employee  Retirement  Income  Security Act of 1974, as amended and all
     applicable rules and regulations thereunder.

          Effective October 1, 1994.

                              FACILITIES MANAGEMENT INSTALLATION, INC.



                              By:/s/W. Hubert Mathis
                                 -------------------
                              Name: W. Hubert Mathis
                              Its:  Senior Vice President of
                                     Corporate Services

     WITNESS:


     /s/Mary E. Norwood
     ------------------

     (Rev. 10/1/94)

EX-10.4

                                   PARTICIPATION AGREEMENT


          THIS PARTICIPATION AGREEMENT (the "Agreement") is entered into
     effective as of July 1, 1994, between SOUTHWESTERN LIFE INSURANCE COMPANY,
     a Texas life insurance corporation ("Lead") and EMPLOYERS REASSURANCE
     CORPORATION, a Kansas corporation ("Participant"). 

                                  R E C I T A L S: 

          A. Lead and James M. Fail, an individual resident of the State of
     Alabama ("Borrower") have previously entered into that certain Loan
     Agreement dated as of January 25, 1993 (such Loan Agreement, as the same
     may be amended, supplemented or modified from time to time, is hereinafter
     referred to as the "SWL Loan Agreement"), pursuant to which Lead made a
     loan to Borrower in the aggregate principal amount of Twelve Million Three
     Hundred Fifty-Nine Thousand Nine Hundred Fifty-Seven and No/100 Dollars
     ($12,359,957.00) (the "SWL Loan"). 

          B. Consolidated Fidelity Life Insurance Company, a Kentucky life
     insurance corporation ("CFLIC") and Borrower previously entered into that
     certain Loan Agreement dated as of January 25, 1993 (the "CFLIC Loan
     Agreement") pursuant to which CFLIC made a loan to Borrower in the original
     principal amount of Thirty-Two Million Two Hundred Ten Thousand Two Hundred
     Two and No/100 Dollars ($32,210,202.00) (the "CFLIC Loan"). The SWL Loan
     and the CFLIC Loan are hereinafter referred to collectively as the "Loan"
     and the SWL Loan Agreement and the CFLIC Loan Agreement are hereinafter
     referred to collectively as the "Loan Agreements." 

          C. Pursuant to that certain Assignment and Transfer of Notes, Liens
     and Other Rights dated as of June 30, 1994 between Lead and CFLIC, Lead has
     purchased all of CFLIC's right, title and interest in and to the CFLIC
     Loan, the CFLIC Loan Agreement and each of the other documents and
     agreements relating to or evidencing the CFLIC Loan, and all security
     interests and liens securing the same. 

          D. Lead has furnished to Participant copies of the Loan Agreements and
     all of the other Loan Documents (as defined in the Loan Agreements) (the
     Loan Agreements and all of the other Loan Documents are hereinafter
     referred to collectively as the "Loan Documents"). 

          E. The aggregate outstanding unpaid principal balance of the Loans is
     $40,318,754.00 and interest has been prepaid through November 3, 1994. 

          F. Participant has agreed, subject to the terms and conditions
     hereinafter set forth, to purchase from Lead a participation in the Loan.

          G. Lead and Participant wish to enter into this Agreement to
     memorialize their rights and obligations and Participant's Participation
     (hereinafter defined) shall be evidenced by this Agreement. 
     
          NOW, THEREFORE, in consideration of the premises and for other
     valuable consideration, the receipt and adequacy of which are hereby
     acknowledged, Lead and Participant agree as follows:

          1. Subject to the terms and conditions of this Agreement, Participant
     hereby purchases from Lead and Lead hereby sells to Participant a Twenty
     Million One Hundred Fifty-Nine Thousand Three Hundred Seventy-Seven and
     No/100 Dollar ($20,159,377.00) participation in the Loan and a pro rata
     participation in accrued and prepaid interest as of the effective date
     hereof and any collateral securing the Loan (the "Participation") (Lead's
     retained portion of the Loan not so participated being referred to herein
     as the "Retained Portion"). Immediately upon any reduction of Participant's
     Participation hereunder, the term "Participation" shall mean Participant's
     principal amount of participation as so reduced. For the purposes of this
     Agreement, Participant's "pro rata share" shall mean at any time the ratio
     of the outstanding principal amount of the Participation to the then
     outstanding principal amount of the Loan, which as of the date hereof is
     equal to fifty percent. 

          2. From time to time and at any time hereafter as Lead at its sole
     option may elect, Lead may reduce Participant's Participation by: (a)
     delivering to Participant written notice of such reduction stipulating a
     new principal amount of participation, and (b) remitting to Participant, in
     funds available for immediate use by Participant, the amount of the
     difference between Participant's then existing Participation and
     Participant's new principal amount of participation plus interest thereon
     accrued and unpaid to the date of such payment at the same interest rate
     which the Loan bore for the same time period. 

          3. Lead shall, within two Business Days (hereinafter defined) after
     receipt thereof, remit to Participant, in funds available for immediate use
     by Participant, Participant's pro rata share of each payment received by
     Lead with respect to the Loan and interest thereon (whether pursuant to the
     Loan Documents, or by voluntary payment, exercise of set-off, banker's
     lien, counterclaim, cross-action, realization on or with respect to
     collateral, or otherwise); provided, however, if Lead shall ever acquire
     any collateral through foreclosure or by a conveyance in lieu of
     foreclosure or by retaining the collateral in satisfaction of all or part
     of the Loan, Lead shall not be required to remit to Participant its pro
     rata share of the Loan or portion thereof that has been satisfied, and
     Participant shall only be entitled to a pro rata interest in the collateral
     so acquired and shall remain obligated to pay its pro rata portion of all
     reasonable attorneys' fees and other expenses incurred by Lead in
     connection with the enforcement of the Loan Documents. Except for the
     obligation of Lead to account for payments received by it, the sale and
     purchase of the Participation hereunder shall be without recourse to Lead
     and without representation or warranty by Lead. For purposes of this
     Agreement, "Business Day" shall mean any day except a Saturday, Sunday or
     any day on which commercial banks in Dallas, Texas are required to close by
     law. 

          4. Lead may execute any of its duties hereunder by or through agents,
     employees, or attorneys. Lead and its officers, directors, employees,
     attorneys, and agents shall be entitled to rely and shall be fully
     protected in relying on any writing, resolution, notice, consent,
     certificate, affidavit, letter, cablegram, telegram, telex, teletype
     message, facsimile, statement, order, or other document


     or conversation believed by it to be genuine and correct and to have been
     signed or made by the proper person and. with respect to legal matters,
     upon the opinion of counsel selected by Lead. 

          5. Participant hereby represents and warrants to Lead that it is
     purchasing its Participation in the Loan hereunder for its own account and
     not with a view to distribution and acknowledges that its purchase of its
     Participation hereunder constitutes a commercial loan by Participant to
     Borrower and does not constitute an "investment" in Borrower as that term
     is commonly understood. 

          6. Participant hereby represents and warrants that it has
     independently reviewed the Loan Agreements and the other Loan Documents,
     and that there shall be no recourse on, or any liability incurred by, Lead
     for any misstatement (whether material or immaterial) or omission (whether
     negligent or otherwise) of Borrower contained in any of the Loan Documents
     and that Participant has conducted, to the extent it deemed necessary, an
     independent investigation of Borrower, including, but not limited to, an
     investigation relating to the credit-worthiness of Borrower and the risk
     involved to Participant in the loan of its funds to Borrower, and has not
     relied upon Lead for any such investigation or assessment of risk. 

          7. Neither Lead nor any of its officers, directors, employees,
     attorneys, or agents shall be liable for any action taken or omitted to be
     taken by it or them hereunder or under any Loan Document in good faith and
     believed by it or them to be within the discretion or power conferred upon
     it or them by this Agreement or any Loan Document, or be responsible for
     the consequences of any error of judgment, except for gross negligence or
     willful misconduct. Lead shall not be compelled to do any act hereunder or
     under any Loan Document or to take any action towards the execution or
     enforcement of the powers created under this Agreement or any Loan
     Document, or to prosecute or defend any suit in respect hereof or thereof,
     unless indemnified to its satisfaction by Participant against loss, cost,
     liability, and expense. Lead shall not be responsible in any manner to
     Participant for (a) the effectiveness, enforceability, genuineness,
     validity, or due execution of any of the Loan Documents, (b) any
     representation, warranty, document, certificate, report, or statement made
     in any Loan Document, or furnished under or in connection with any of the
     Loan Documents, (c) ascertaining or inquiring as to the performance of or
     compliance with the terms, covenants, and conditions of the Loan Documents,
     (d) the collectibility of the Loan, (e) the validity, enforceability, or
     sufficiency of, or title to, any collateral now or hereafter securing the
     Loan, or (f) the existence, priority, or perfection of any lien or security
     interest granted or purported to be granted under the Loan Documents. 

          8. Lead shall have the right to exercise or refrain from exercising,
     without notice or liability to Participant, any and all rights afforded to
     Lead by the Loan Documents or which Lead may have as a matter of law.
     Without limiting the generality of the foregoing, Lead may in its sole
     discretion, at any time and from time to time, and without notice or
     liability to Participant. (a) collect or enforce any or all of the Loan
     Documents, (b) compromise, settle, or release any claim, obligation, or
     indebtedness, under the Loan Documents or otherwise, (c) give or withdraw
     consents or approvals, (d) enter into any amendment or modification of, or
     waive compliance with the terms of, any Loan Document, (e) extend or renew
     the Loan, and (f) release, substitute, or subordinate any collateral.


     Lead shall have no liability to Participant for failure or delay in
     exercising any rights or powers possessed by the Lead pursuant to the Loan
     Documents or otherwise. 

          9. Participant shall not have any interest in (a) any present or
     future guaranties by or for the account of Borrower which are not
     contemplated in the Loan Agreement, (b) any present or future offset
     exercised by Lead in respect of any extension of credit not contemplated in
     the Loan Agreement, (c) any property now or hereafter taken as collateral
     for any extension of credit not contemplated in the Loan Agreement, or (d)
     any property now or hereafter in the possession or control of Lead which
     may be or become collateral for the obligations of Borrower under any Loan
     Document by reason of a general description of indebtedness secured or of
     property contained in any general loan agreement, collateral agreement, or
     collateral note held by Lead; provided, however, if payments in respect of
     such guaranties or such property or proceeds thereof shall be applied in
     reduction of the Loan, then the Participant shall be entitled to share pro
     rata in such application. 

          10. Except as expressly provided herein to the contrary, should Lead
     or Participant ever receive (whether pursuant to the Loan Documents, or by
     voluntary payment, exercise of set-off, banker's lien, counterclaim,
     cross-action, realization on or with respect to collateral, or otherwise)
     any sum applied or to be applied to the obligations of Borrower under the
     Loan Documents, any such sum shall be shared pro rata with and, within
     three Business Days after receipt thereof, paid to the other party hereto
     so that each of the parties hereto receives its pro rata portion of all
     such sums. Should any trustee or receiver or any court or other
     governmental body of competent jurisdiction, including, without limitation,
     any United States bankruptcy court, ever require that any principal,
     interest, or other sums received by Participant hereunder be returned to
     the Borrower or the Borrower's estate, Participant shall, within three
     Business Days after receipt of notice from Lead of such requirement,
     transmit to Lead in immediately available funds the amount of principal,
     interest, and/or other sums ordered to be so returned to the Borrower or
     the Borrower's estate. 

          11. Participant shall pay its pro rata portion of all reasonable
     attorneys' fees and all other expenses incurred by Lead in connection with
     the administration and any amendment or modification of the Loan Documents
     and the enforcement of the Loan Documents, and Participant shall be
     entitled to its pro rata share of any payments received by Lead with
     respect to such fees and expenses from Borrower, if, as, and when received
     by Lead. 

          12. Participant shall be entitled to receive its pro rata share of any
     interest paid by Borrower to Lead with respect to the Loan. Notwithstanding
     anything to the contrary contained herein, Participant shall receive its
     pro rata share of the aforementioned interest only if, as, and when said
     interest is paid to Lead, and Lead shall incur no liability to Participant
     for any sums not received by it.

          13. To the extent not already available to Participant, Lead shall
     endeavor to provide Participant, promptly after Lead's receipt of
     Participant's written request therefor, (a) copies of all current financial
     statements then in Lead's possession in respect of Borrower, (b) current
     information then in Lead's possession as to the value of collateral and the
     status of liens, and (c) other current


     factual information then in Lead's possession bearing on the continuing
     creditworthiness of Borrower; provided, however, nothing contained in this
     Section shall impose any liability upon Lead for its failure to provide
     Participant any of the foregoing information. 

          14. Lead may at any time and from time to time grant one or more
     participations in the obligations of Borrower under the Loan Documents on
     terms as Lead may determine. Lead shall have no obligation to repurchase
     the Participation or any part thereof. 

          15. Participant shall not subdivide, transfer or assign the
     Participation without the prior written consent of Lead. 

          16. This Agreement shall be governed by and construed in accordance
     with the laws of the State of Texas, and Participant's obligations
     hereunder are performable in Dallas, Dallas County, Texas. 

          17. None of the provisions of this Agreement shall inure to the
     benefit of Borrower or any person other than Lead and Participant;
     consequently, Borrower and any persons other than Lead and Participant
     shall not be entitled to rely upon or raise as a defense, in any manner
     whatsoever, the failure of Lead or Participant to comply with the
     provisions of this Agreement. Neither Lead nor Participant shall incur any
     liability to Borrower or any other person for any act or omission of the
     other party hereto. 

          18. Whenever this Agreement requires or permits any consent, approval,
     notice, request, or demand from one party to another, the consent,
     approval, notice, request, or demand must be in writing to be effective and
     shall be deemed to have been given when personally delivered, or, if
     mailed, when enclosed in an envelope addressed to the party to be notified
     at the address stated below (or at such other address as may have been
     designated by written notice), properly stamped, sealed, and duly deposited
     in the United States mail, registered or certified mail. The address of
     each party for purposes hereof is as follows: 

               LEAD:          Southwestern Life Insurance Company
                              500 North Akard Street
                              Dallas, Texas 75201
                              Attention:     Daniel B. Gail, Esq.
                                             Executive Vice President
                                             and General Counsel

               Copy to:       Winstead Sechrest & Minick P.C.
                              5400 Renaissance Tower
                              1201 Elm Street
                              Dallas, Texas 75270
                              Attention: Edward A. Peterson, Esq.


               PARTICIPANT:   Employers Reassurance Corporation
                              5200 Metcalf
                              Overland Park, Kansas
                              Attention:     James D. Maughn
                                             Senior Vice President
                                             and Actuary

     EXECUTED to be effective as of the date first above written.

                              LEAD:

                              SOUTHWESTERN LIFE INSURANCE COMPANY 



                              By: /s/ Robert L. Beisenherz
                                 ------------------------
                              Name: Robert L. Beisenherz
                              Title: Chairman and CEO

                              PARTICIPANT:

                              EMPLOYERS REASSURANCE CORPORATION



                              By: /s/ James D. Maughn
                                  -------------------
                              Name: James D. Maughn
                              Title: Senior Vice President and Actuary

EX-10.5

                                 As of June 30, 1994


     Consolidated Fidelity Life Insurance Company
     4211 Norbourne Boulevard
     Louisville, Kentucky 40207

     Gentlemen: 

     On May 21, 1992, Southwestern Life Corporation (formerly named I.C.H.
     Corporation) and Consolidated Fidelity Life Insurance Company ("CFLIC")
     entered into an Assignment of Right to Purchase Stock and Grant of Call and
     Put Option (the "Assignment"), a copy of which is attached hereto as
     Exhibit "A", under which Southwestern Life Corporation ("SLC") assigned and
     CFLIC assumed and agreed to perform the obligation of SLC to purchase
     500,000 shares of $1.00 par value common stock of SLC (the"SLC Common
     Stock") from John A. Franco and SLC granted to CFLIC a call and put option
     with respect to said 500,000 shares. 

     On June 30, 1994, in connection with the closing of the transactions
     contemplated by the Agreement entered into among SLC, CFLIC and
     Consolidated National Corporation dated June 15, 1993, CFLIC transferred to
     SLC, among other things, 620,423 shares of SLC Common Stock.

     This letter will confirm that the 620,423 shares SLC Common Stock
     transferred by CFLIC to SLC on June 30, 1994 included the 500,000 shares of
     SLC Common Stock which were subject to the aforementioned Assignment and
     that immediately following the transfer of said shares to SLC the
     Assignment terminated. 

                                   Sincerely,


                                   /s/ John T. Hull
                                   ----------------
                                   John T. Hull
                                   Executive Vice President
                                   Treasurer and Chief Financial Officer

     AGREED TO AS OF JUNE 30, 1994
     CONSOLIDATED FIDELITY LIFE INSURANCE COMPANY


     /s/ Jerry W. Rice
     -----------------
     Jerry W. Rice
     Vice President


                        Assignment of Right to Purchase Stock
                           and Grant of Call and Put Option

     I.C.H. Corporation (ICH) hereby transfers, assigns and conveys to
     Consolidated Fidelity Life Insurance Company (CFLIC), and CFLIC accepts,
     assumes and agrees to perform, the right and obligation of ICH, or its
     designee, to purchase 500,000 shares of common stock of ICH (the Shares)
     from John A. Franco, as evidenced by that certain letter agreement between
     John A. Franco and I.C.H. Corporation, dated November 18, 1991, a true and
     complete copy of which is attached hereto as Exhibit A. If the closing of
     the purchase of the Shares occurs May 21, 1992, the purchase price for the
     Shares will be $4.00 plus one day's interest thereon at the rate equal to
     the prime rate plus 1%. 

     CFLIC represents that it will acquire the Shares for investment purposes
     only and acknowledges that the transferability of the Shares will be
     restricted under applicable securities laws. 

     CFLIC hereby grants ICH, or its designee, the right and option to purchase,
     on or before December 31, 1996, all, but not less than all, of the Shares
     (the Call Option), at a price per Share equal to the greater of (a) $4.00
     plus interest for the period of time that CFLIC owns the Shares at the
     simple rate of 10% per annum, or (b) the average closing sale price of ICH
     common stock, as reported by the American Stock Exchange, for the five
     trading days immediately preceding the date the Call Option is exercised.
     The Call Option shall be exercisable by ICH, or its designee, by the
     delivery of written notice to CFLIC on or before December 16, 1996, with
     the closing to occur on the fifteenth day following the date such notice is
     delivered. 

     ICH hereby grants CFLIC the right to require ICH, or its designee, to
     purchase, on December 31, 1996, all, but not less than all, of the Shares
     (the Put Option), at a price per Share equal to $4.00 plus interest for the
     period of time that CFLIC owns the Shares at the simple rate of 10% per
     annum. The Put Option shall be exercisable by CFLIC by the delivery of
     written notice to ICH on or before December 16, 1996. 

     The closing of the purchase and sale of the Shares upon timely exercise of
     the Call Option or the Put Option shall occur at the principal office of
     CFLIC in Louisville, Kentucky at 10:00 a.m. on the closing date. The
     purchase price payable at such closing shall be paid in immediately
     available funds upon delivery to ICH, or its designee, of good and
     marketable and unencumbered title to the Shares. 

     The Call Option shall be assignable by ICH, but the Put Option shall be
     personal to CFLIC, and shall not be transferable or assignable by CFLIC
     without the prior written consent of ICH. 

                                                                   Exhibit "A"


     Dated the 21st day of May, 1992.

                                   I.C.H. CORPORATION


                                   By: /s/ Robert L. Beisenherz
                                       ------------------------
                                   Name: Robert L. Beisenherz
                                   Title: Chairman and CEO

                                   CONSOLIDATED FIDELITY LIFE              
                     INSURANCE COMPANY


                                   By: /s/ Jerry W. Rice
                                       -----------------
                                   Name: Jerry W. Rice
                                   Title: Vice President

EX-10.6

                                       Stephens Inc.





     May 3, 1994




     I.C.H. Corporation
     Lincoln Plaza, Suite 12
     500 N. Akard
     Dallas, TX 75201

     Attention:     Robert Beisenherz
                    Chairman and CEO

     Gentlemen:

     This  letter  (the  "Agreement")  sets  forth  the  terms  of engagement of
     Stephens  Inc. ("Stephens") to act as exclusive financial advisor to I.C.H.
     Corporation  (the  "Company")  in  connection  with  a business review (the
     "Review")  of  the Company. The purpose of the Review is to explore various
     alternatives available to the Company and its shareholders which would have
     the  desired  effect of maximizing the value of the Company for the benefit
     of  its shareholders. Such alternatives may include, but not be limited to,
     selling the Company or non-strategic subsidiaries or assets of the Company,
     seeking  an  acquisition  of  or  business combination with another entity,
     reducing Company expenses, refinancing the Company's debt or recapitalizing
     the  Company.  The  Review will be used by the Company's Board of Directors
     (the  "Board")  and will not be distributed outside the Company or Stephens
     without the specific written consent of Stephens and the Company.

     It is Stephens' understanding that the Review is to be completed as soon as
     possible  and  that  a  preliminary  report, both written and oral, will be
     given  to the Board on May 26, 1994, with a final report to be delivered to
     the  Board  as  soon  as practicable thereafter, but in no event later than
     July 31, 1994 unless otherwise agreed to by the Board.

     Stephens' rights and obligations under this Agreement shall extend from the
     date  of  its  acceptance  by  the  Company to the earlier of (i) the first
     anniversary  of  such date, or (ii) thirty days after either the Company or
     Stephens delivers written notification to the other party that it wishes to
     terminate this Agreement (the "Engagement Period"); provided, however, that
     the  provisions of the attached indemnification letter and the compensation
     provisions of this Agreement will survive such expiration or termination.



     May 3, 1994
     Page 2

     In consideration  of  the  services to be rendered by Stephens pursuant to
     this  Agreement,  the Company agrees to pay Stephens a fee in the amount of
     $150,000  upon  execution of this Agreement and $25,000 per month beginning
     August  1, 1994 and each month thereafter through the end of the Engagement
     Period. In addition, the Company will reimburse Stephens, upon request, for
     reasonable out-of-pocket expenses directly incurred in connection with this
     e n gagement,  including  travel  expenses  and  the  reasonable  fees  and
     disbursements  of  outside  counsel. In the event the Company determines to
     take  any of the actions as may be discussed in the Review, and if Stephens
     is engaged by the Company to perform any additional services outside of the
     Review,  Stephens  will  perform  such services at its normal and customary
     fees  for  such services under separate engagement to be negotiated between
     Stephens and the Company.

     The  Company  will  furnish  Stephens  or  provide  Stephens access to such
     information  as  Stephens  believes appropriate to its assignment (all such
     information  so  furnished  being the "Information"). Such Information will
     include,  but not be limited to, current actuarial valuations and access to
     the  Company's  independent  consulting actuaries and current financial and
     tax  information  and  access to the Company's independent auditors and tax
     advisors.  The  Company  recognizes and confirms that Stephens (a) will use
     and  rely  primarily  on  the Information and on information available from
     generally recognized public sources in performing the services contemplated
     by this letter without having independently verified the same, and (b) does
     not   assume  responsibility  for  the  accuracy  or  completeness  of  the
     Information  and  such other information. Stephens will not disclose to any
     third party any of the Information that is not otherwise publicly available
     or disclosed by the Company.

     Please  note  that  in  the  ordinary  course  of business Stephens and its
     affiliates  at  any time may hold long or short positions, and may trade or
     otherwise   effect  transactions  as  principal  or  for  the  accounts  of
     customers,  in  debt  or  equity securities or options on securities of the
     Company or any other party that may be involved in the Review.

     The  Company  agrees  to indemnify and hold Stephens harmless in accordance
     w i t h  the  attached  indemnification  letter.  This  Agreement  and  the
     indemnification  letter incorporate the entire understanding of the parties
     with  respect  to  this  engagement  and supersede all previous agreements,
     should they exist.

     This  Agreement has been and is made solely for the benefit of Stephens and
     the  Company and of the persons, agents, employees, officers, directors and
     controlling  persons  referred  to  in the indemnification letter and their
     respective successors, assigns and heirs, and no other person shall acquire
     or have any right under or by virtue of this agreement.


     May 3, 1994
     Page 3

     If  this  letter  correctly  states  our  Agreement,  please so indicate by
     signing  below  and returning a signed copy to us. Upon receipt of a signed
     copy  of  this  letter, the terms of such letter shall constitute a binding
     Agreement between Stephens and the Company.

     Very truly yours,


     STEPHENS INC. 



     By: /s/ Linda Garner
         ----------------
         Linda Garner
         Vice President


     ACCEPTED THIS 18th day May, 1994.

     I.C.H. Corporation



     By: /s/ Robert Beisenherz
         ---------------------
         Robert Beisenherz
         President


     May 3, 1994

     Stephens Inc.
     111 Center Street
     Little Rock, Arkansas 72201

     Gentlemen: 

     This  agreement  sets  forth  the  terms  and conditions upon which we will
     reimburse  certain  expenses,  indemnify and hold you harmless, and provide
     contribution in connection with our engagement of your firm as described in
     your letter to us dated the date hereof.

     If  in connection with or as a result of the performance of services by you
     under such engagement letter you become involved (whether or not as a named
     party) in any action, claim or legal proceeding (including any governmental
     inquiry  or  investigation), we agree, subject to the limitations set forth
     in  the  fifth paragraph of this agreement, to reimburse you for your legal
     fees, disbursements of counsel and other expenses (including the reasonable
     cost  of  investigation  and  preparation)  as  they  are  incurred by you;
     provided,  however,  that  you shall remit to us all such reimbursements to
     the  extent  that  a  court  having jurisdiction shall have determined by a
     final  judgment  that  such  expense  resulted from your bad faith, willful
     misconduct  or  negligence or that of any other person who may be otherwise
     entitled to indemnification hereunder.

     We  also  agree  to  indemnify  and  hold  you harmless against any losses,
     claims,  damages or liabilities, joint or several, as they are incurred, to
     which  you  may  become  subject  in  connection with or as a result of the
     performance  of  services by you under such letter; provided, however, that
     we shall  not be liable under the foregoing indemnity agreement in respect
     of  any  loss, claim, damage or liability to the extent that a court having
     jurisdiction  shall  have  determined  by  a final judgment that such loss,
     claim, damage or liability resulted from your bad faith, willful misconduct
     or  negligence or that of any other person who may be otherwise entitled to
     indemnification hereunder.

     In  the  event that the indemnity in the immediately preceding paragraph is
     unavailable,  then we shall contribute to amounts paid or payable by you in
     respect  to such losses, claims, damages and liabilities in proportion that
     our  interest  bears  to  your interest in the matters contemplated by such
     engagement  letter  (for  example, if your engagement concerns a securities
     offering  or  acquisition  or  divestiture of assets, our interest shall be
     deemed  to be an amount equal to the proposed or actual consideration to be
     paid  or  received  by us and your interest shall be deemed to be an amount
     equal to the fees actually paid to you in connection with such engagement);
     provided,  however,  that  we  shall  not  be  obligated  to  make any such
     contribution  to  the  extent  that  a court having jurisdiction shall have
     determined  by  a final judgment that such loss, claim, damage or liability
     resulted  from  your bad faith, willful misconduct or negligence or that of
     any  other  person who may be otherwise entitled to contribution hereunder.
     If, however, you are not entitled to receive the allocation provided by the
     immediately  preceding sentence for any reason, then we shall contribute to
     such  amount paid or payable by you in such proportion as is appropriate to
     reflect not only such relative interests but also the relative fault of you
     on  the one hand and us on the other hand in connection with the matters as
     to  which  such  losses,  claims,  damages  or liabilities relate and other
     equitable considerations.


     If  any  action  is  brought  against  a person (an "Indemnified Party") in
     respect  of  which  indemnity  may  be  sought  against us pursuant to this
     agreement,  such  Indemnified  Party shall promptly notify us in writing of
     the  institution  of such action and we shall be entitled to participate in
     such  action  or  proceeding  and  in the investigation of such claim, and,
     after  written notice to the Indemnified Party, to assume the investigation
     or  defense  of such claim, action or proceeding with counsel of our choice
     at  our  expense;  provided, however, that such counsel shall be reasonably
     satisfactory  to  the  Indemnified  Party.  Notwithstanding our election to
     assume  the  defense  or investigation of such claim, action or proceeding,
     the  Indemnified  Party  shall  have  the  right to employ separate counsel
     reasonably  satisfactory  to  us  and  to  participate  in  the  defense or
     investigation  of such claim, action or proceeding and we shall advance and
     bear  the reasonable expense of such separate counsel if (i) in the written
     opinion  of  counsel  to the Indemnified Party, use of counsel chosen by us
     could  reasonably  be  expected  to  give  rise  to  a material conflict of
     interest  adversely affecting the legal interests of the Indemnified Party,
     (ii)  we  shall  not  have  employed counsel reasonably satisfactory to the
     Indemnified  Party within a reasonable time after notice of the institution
     of  any  such  action  or  proceeding,  or  (iii)  we  shall  authorize the
     Indemnified  Party  to  employ  separate  counsel at our expense; provided,
     however,  that in no case shall we be responsible for the fees and expenses
     of  more  than  one  counsel  at  any  time  in  any  jurisdiction  for all
     Indemnified  Parties. Further, we shall not be liable for any settlement of
     any such claim or action effected without our prior written consent.

     The  foregoing agreements shall apply to any additional engagement, and any
     modification  of your engagement under the letter of agreement of even date
     herewith. Further, they shall remain in full force and effect following the
     completion  or  termination  of your engagement and shall be in addition to
     any  rights  that  you  may  have  at  common  law or otherwise. The rights
     afforded   you  under  this  agreement  shall,  upon  the  same  terms  and
     conditions, also extend to and inure to the benefit of each person, if any,
     who  may  be deemed to control you, be controlled by you or be under common
     control  with you within the meaning of Section 15 of the Securities Act of
     1933  or  Section  20 of the Securities Exchange Act of 1934 and to each of
     your  and  each  such  person's  respective affiliates directors, officers,
     employees  and  agents. This agreement shall be binding on any successor of
     ours or any substantial portion of our business or assets.

     Very truly yours,

     I.C.H. Corporation



     By: /s/ Robert Beisenherz
         ---------------------
         Robert Beisenherz

EX-11.1

                                     EXHIBIT 11.1

                    SOUTHWESTERN LIFE CORPORATION AND SUBSIDIARIES

               COMPUTATION OF EARNINGS (LOSS) PER SHARE OF COMMON STOCK
                ON AVERAGE SHARES OUTSTANDING AND FULLY DILUTED BASES
                                     (Unaudited)

                    (Dollars in Thousands, Except Per Share Data)



                                                                 Three Months Ended        Nine Months Ended
                                                                    September 30,            September 30,
                                                                --------------------      --------------------
                                                                  1994         1993        1994         1993
                                                                --------     -------      --------    --------
                                                                                                         
   Computation for statements of earnings:
      Operating earnings (loss)                                 $    (145)  $  125,734   $  (34,776)  $  222,881 
      Less dividends on preferred stock                            (3,500)      (7,700)     (11,325)     (23,100)
                                                               ----------   ----------   ----------   ---------- 
      Operating earnings (loss) applicable
        to common stock                                            (3,645)     118,034      (46,101)     199,781 
      Cumulative effect to January 1, 1993 of
        change in method of accounting for
        postretirement benefits                                                                           (1,812)
      Extraordinary losses                                                                                (1,360)
                                                               ----------   ----------   ----------   ----------
      Net earnings (loss) applicable to common stock           $   (3,645)  $  118,034   $  (46,101)  $  196,609 
                                                               ==========   ==========   ==========   ========== 
      Weighted average common shares outstanding               47,261,563   47,914,861   47,654,310   47,913,898 
                                                               ==========   ==========   ==========   ========== 
      Earnings (loss) per common share:
        Operating earnings (loss)                                  $(.08)        $2.46        $(.97)       $4.17 
        Cumulative effect to January 1, 1993 of
           change in method of accounting for
           postretirement benefits                                                                          (.04)
        Extraordinary losses                                                                                (.03)
                                                               ----------   ----------    ----------  ----------
             Net earnings (loss)                                   $(.08)        $2.46        $(.97)       $4.10 
                                                               ==========   ==========    ==========  ========== 
   Additional computations (A):
      Weighted average common shares outstanding               47,261,563   47,914,861    47,654,310  47,913,898  
      Incremental common shares applicable to common
        stock options based on the common stock
        daily average market price during the
        period                                                    495,983      664,431       646,734     821,411 
                                                               ----------   ----------    ----------  ---------- 
      Weighted average common shares, as adjusted              47,757,546   48,579,292    48,301,044  48,735,309 
                                                               ==========   ==========    ==========  ==========

      Weighted average common shares outstanding               47,261,563   47,914,861    47,654,310  47,913,898 
      Incremental common shares applicable to common
        stock options based on the more dilutive of the
        common stock ending or daily average market
        price during the period                                   548,791      842,111       650,145   1,034,481 
      Assumed conversion of convertible preferred shares        6,153,755    7,867,466     6,153,755   7,867,466 
                                                               ----------   ----------    ----------  ---------- 
      Weighted average common shares, assuming full
        dilution                                               53,964,109   56,624,438    54,458,210  56,815,845 
                                                               ==========   ==========    ==========  ========== 
        Net earnings (loss) applicable to common stock
           assuming conversion of convertible preferred
           stock                                               $     (145)  $  122,212    $  (34,776) $  209,143 
                                                               ==========   ==========    ==========  ==========


 (A) These calculations are submitted in accordance with Securities Exchange
 Act of 1934 Release No. 9083, although not required by footnote 2 to
 paragraph 14 of Accounting Principles Board Opinion No. 15 because they
 result in dilution of less than 3% or antidilution.

                                     (Continued)


                    SOUTHWESTERN LIFE CORPORATION AND SUBSIDIARIES

               COMPUTATION OF EARNINGS (LOSS) PER SHARE OF COMMON STOCK
           ON AVERAGE SHARES OUTSTANDING AND FULLY DILUTED BASES, Continued
                                     (Unaudited)

                    (Dollars in Thousands, Except Per Share Data)



                                                                 Three Months Ended        Nine Months Ended
                                                                    September 30,            September 30,
                                                                --------------------      --------------------
                                                                  1994         1993         1994        1993
                                                                --------     -------      --------    --------
                                                                                                                   
   Additional computations, continued(A):
      Earnings (loss) per common share:
        Average shares outstanding:
           Operating earnings (loss)                              $(.08)       $2.43        $(.95)       $4.10 
           Cumulative effect to January 1, 1993 of
             change in method of accounting for
             postretirement benefits                                                                      (.04)
           Extraordinary losses                                                                           (.03)
                                                                  -----        -----        -----        ----- 
                Net earnings (loss)                               $(.08)       $2.43        $(.95)       $4.03 
                                                                  =====        =====        =====        ===== 
        Fully diluted, assuming conversion of all
           applicable securities(B):
        Operating earnings (loss)                                 $ -          $2.14        $(.64)       $3.69 
        Cumulative effect to January 1, 1993 of
           change in method of accounting for
           postretirement benefits                                                                        (.03)
        Extraordinary losses                                                                              (.02)
                                                                  -----        -----        -----        -----
           Net earnings (loss)                                    $ -          $2.14        $(.64)       $3.64 
                                                                  =====        =====        =====        =====


 (B) Fully diluted earnings in 1994 as reflected in this exhibit are
 considered "antidilutive" because they result in per share earnings that
 exceed per share earnings as determined on the primary basis or per share
 losses that are less than per share losses as determined on the primary
 basis. Fully diluted earnings per share in 1994 as reflected in the
 consolidated statement of earnings (loss) were determined based on primary
 earnings per share calculations as a result of such antidilution.

10-Q

                                      FORM 10-Q

                          SECURITIES AND EXCHANGE COMMISSION
                                Washington, D.C. 20549
          (Mark One)
             [X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934

          For The Quarterly Period Ended September 30, 1994

                                          OR

            [  ]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                           SECURITIES EXCHANGE ACT OF 1934

          For the transition period from                 to            
          Commission file number                    1-7697                 

                            Southwestern Life Corporation              
                (Exact name of registrant as specified in its charter)
                                               
                   Delaware                         43-6069928   
          (State or other jurisdiction            (I.R.S. Employer
          of incorporation or organization)       Identification No.)
          
          
                 500 North Akard Street, Dallas, Texas          75201
                (Address of principal executive offices)    (Zip Code)

                                     (214) 954-111                 
                 (Registrant's telephone number, including area code)

            100 Mallard Creek Road, Suite 400, Louisville, Kentucky 40207 
           (Former name, former address and former fiscal year, if changed
          since last report)

          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 [  ]

          Indicate the number of shares outstanding of each of the issuer's
          classes of common stock, as of the latest practicable date.
          
          
               Class and Title of                 Shares Outstanding
                 Capital Stock                  as of November 4, 1994
               ------------------               ----------------------
                                             
          Common Stock, $1.00 Par Value         47,265,016
          

                        Index to Exhibits appears on page 38.
                           This filing contains 136 pages.


                            SOUTHWESTERN LIFE CORPORATION

                                      FORM 10-Q

                                        INDEX



                                                                 Page(s)
                                                                 -------

          PART I.  FINANCIAL INFORMATION

               Item 1.   Financial Statements

                    Consolidated Balance Sheets at September 30,
                         1994 and December 31, 1993 . . . . . . . .  3     

                    Consolidated Statements of Earnings (Loss)
                         for the Three Months and the Nine Months
                         Ended September 30, 1994 and 1993  . . . .  4     

                    Consolidated Statements of Cash Flows for the
                         Nine Months Ended September 30, 1994 and
                         1993 . . . . . . . . . . . . . . . . . . .  5     

                    Notes to Financial Statements . . . . . . . . .  6     

               Item 2.   Management's Discussion and
                         Analysis of Financial Condition and
                         Results of Operations  . . . . . . . . . .  17    

          PART II. OTHER INFORMATION

               Item 1.   Legal Proceedings  . . . . . . . . . . . .  35    

               Item 6.   Exhibits and Reports on Form 8-K . . . . .  36    

          Index to Exhibits . . . . . . . . . . . . . . . . . . . .  38    


                            PART I. FINANCIAL INFORMATION
          ITEM 1. FINANCIAL STATEMENTS
                            SOUTHWESTERN LIFE CORPORATION
                             CONSOLIDATED BALANCE SHEETS
                                     (Unaudited)



                                                                        September 30,   December 31,
               ASSETS                                                        1994          1993     
                                                                        -------------   ------------
                                                                                   
                                                                                 (In Thousands)
          Investments:
             Fixed maturities:
               Available for sale at fair value                           $1,675,198     $1,691,693 
               Held to maturity at amortized cost                             15,101         26,149 
             Equity securities, at fair value                                 17,272         75,831 
             Mortgage loans on real estate, at amortized cost                122,540        138,504 
             Real estate, at lower of cost or fair value                      61,696         67,491 
             Policy loans                                                    174,012        177,736 
             Collateral loans                                                 55,346         34,099 
             Investments in limited partnerships                              47,386         43,640 
             Cash and short-term investments                                 210,881        366,922 
             Other invested assets                                            17,325         16,058 
                                                                          ----------     ---------- 
               Total investments                                           2,396,757      2,638,123 
             Due from reinsurers                                             251,804        388,083 
             Notes and accounts receivable and uncollected premiums           17,106          6,951 
             Accrued investment income                                        29,669         31,633 
             Deferred policy acquisition costs                               216,466        168,525 
             Present value of future profits of acquired business             79,664         50,705 
             Deferred income tax asset                                        55,875         53,033 
             Excess cost of investments in subsidiaries over net
               assets acquired, net of accumulated amortization              300,435        307,604 
             Other assets                                                     38,681         47,999 
             Assets held in separate accounts                                  5,182          5,207 
                                                                          ----------     ---------- 
                                                                          $3,391,639     $3,697,863 
                                                                          ==========     ========== 
               LIABILITIES AND STOCKHOLDERS' EQUITY

             Insurance liabilities:
               Future policy benefits and other policy liabilities        $  908,169     $  927,303 
               Universal life and investment contract liabilities          1,679,929      1,684,396 
             Notes payable:
               Due within one year                                             3,719         34,546 
               Due after one year                                            369,343        383,435 
             Federal income taxes currently payable                           10,787         29,015 
             Other liabilities                                               114,273        138,791 
             Liabilities related to separate accounts                          5,182          5,207 
                                                                          ----------     ---------- 
                                                                           3,091,402      3,202,693 
                                                                          ----------     ---------- 
             Stockholders' equity:
               Preferred stock                                               199,997        229,239 
               Common stock                                                   71,752         71,594 
               Common stock, Class B                                                            100 
               Additional paid-in capital                                    155,605        155,499 
               Net unrealized investment gains (losses), net of
                 deferred income taxes in 1993                               (95,489)        20,458 
               Retained earnings                                              25,731         71,833 
                                                                          ----------     ---------- 
                                                                             357,596        548,723 
               Notes receivable collateralized by common stock                (1,778)        (1,729)
               Treasury stock, at cost                                       (55,581)       (51,824)
                                                                          ----------     ---------- 
                                                                             300,237        495,170 
                                                                          ----------     ---------- 
                                                                          $3,391,639     $3,697,863 
                                                                          ==========     ========== 

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


                            SOUTHWESTERN LIFE CORPORATION
                      CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
                        (In Thousands, Except Per Share Data)
                                     (Unaudited)


                                                                            Three Months Ended            Nine Months Ended   
                                                                              September 30,                 September 30,     
                                                                           -----------------------       -----------------------
                                                                             1994           1993           1994           1993  
                                                                           --------       --------       --------       --------
                                                                                                         
        Income:
           Premium income and other
             considerations                                             $  103,001     $  119,543     $  332,706     $  356,142 
           Net investment income                                            56,027         43,896        138,031        150,082 
           Realized investment gains (losses)                                3,725         18,876        (41,376)        32,245 
           Equity in earnings of equity
             investees and limited partnerships                                937          9,140          1,780         33,662 
           Gain on sale of investment in
             Bankers Life Holding Corporation                                             197,398                       296,774 
           Other Income                                                      3,266         10,362         14,591         43,708 
                                                                        ----------     ----------     ----------     ---------- 
                                                                           166,956        399,215        445,732        912,613 
                                                                        ----------     ----------     ----------     ---------- 

        Benefits, expenses and costs:
           Policyholder benefits                                           103,711        110,748        293,980        327,301 
           Amortization of deferred policy
             acquisition costs and present
             value of future profits                                        12,277         10,968         37,672         38,720 
           Other operating expenses                                         35,922         76,928        108,271        168,692 
           Amortization of excess cost                                       2,397          2,401          7,193          7,204 
           Interest expense                                                 11,581         15,331         36,690         51,613 
                                                                        ----------     ----------     ----------     ---------- 
                                                                           165,888        216,376        483,806        593,530 
                                                                        ----------     ----------     ----------     ---------- 
        Operating earnings (loss) before
           income tax                                                        1,068        182,839        (38,074)       319,083 
        Income tax expense (credit)                                          1,213         57,105         (3,298)        96,202 
                                                                        ----------     ----------     ----------     ---------- 
        Operating earnings (loss)                                             (145)       125,734        (34,776)       222,881 

        Cumulative effect to January 1, 1993 of
           change in method of accounting for
           post-retirement benefits, net of tax
           effect                                                                                                        (1,812)
        Extraordinary losses, net of tax effect                                                                          (1,360)
                                                                        ----------     ----------     ----------     ---------- 
        Net earnings (loss)                                                   (145)       125,734        (34,776)       219,709 

        Less dividends on preferred stock                                   (3,500)        (7,700)       (11,325)       (23,100)
                                                                        ----------     ----------     ----------     ---------- 

        Net earnings (loss) applicable to
           common stock                                                 $   (3,645)    $  118,034     $  (46,101)    $  196,609 
                                                                        ==========     ==========     ==========     ========== 
        Weighted average shares outstanding                             47,261,563     47,914,861     47,654,310     47,913,898 
                                                                        ==========     ==========     ==========     ========== 

        Earnings (loss) per common share:
        Primary:
           Operating earnings (loss)                                         $(.08)         $2.46          $(.97)         $4.17 
           Cumulative effect to January 1, 1993
             of change in method of accounting
             for postretirement benefits                                                                                   (.04)
           Extraordinary losses                                                                                            (.03)
                                                                        ----------     ----------     ----------     ---------- 
             Net earnings (loss)                                             $(.08)         $2.46          $(.97)         $4.10 
                                                                        ==========     ==========     ==========     ========== 

        Fully diluted:
           Operating earnings (loss)                                         $(.08)         $2.14          $(.97)         $3.69 
           Cumulative effect to January 1, 1993
             of change in method of accounting
             for postretirement benefits                                                                                   (.03)
           Extraordinary losses                                                                                            (.02)
                                                                        ----------     ----------     ----------     ---------- 
             Net earnings (loss)                                             $(.08)         $2.14          $(.97)         $3.64 
                                                                        ==========     ==========     ==========     ==========

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


                            SOUTHWESTERN LIFE CORPORATION
                        CONSOLIDATED STATEMENTS OF CASH FLOWS
                For the Nine Months Ended September 30, 1994 and 1993
                                    (In Thousands)
                                     (Unaudited)


                                                                              1994           1993   
                                                                              ----           ----   
                                                                                    

          Cash flows from operating activities:
             Operating earnings (loss)                                     $ (34,776)     $ 222,881 
             Items not requiring (providing) cash:
               Adjustments related to universal life and
                 investment products:
                   Interest credited to account balances                      55,881         78,053 
                   Charges for mortality and administration                  (53,211)       (54,648)
               Depreciation and amortization                                  13,266         13,306 
               Increase (decrease) in future policy benefits                   6,716           (120)
               Decrease (increase) in deferred policy
                 acquisition costs                                              (967)         2,944 
               Increase (decrease) in currently payable
                 income taxes                                                (18,228)        30,121 
               Decrease in deferred income taxes                               5,758         74,294 
               Increase (decrease) in policy liabilities, other
                 policyholder funds, accounts payable
                   and accrued expenses                                      (11,039)        11,013 
               Decrease (increase) in notes and accounts
                 receivable and accrued investment income                     (4,348)         2,719 
               Realized (gains) losses                                        41,376        (32,245)
               Equity in earnings of equity investees and
                 limited partnerships                                         (1,780)       (33,662)
               Gain on termination of reinsurance                             (8,735)       (22,642)
               Gain on sale of stock by BLHC                                               (296,774)
               Other, net                                                      3,060         27,062 
                                                                          ----------     ---------- 
                 Net cash provided (used) by operating
                   activities                                                 (7,027)        22,302 
                                                                          ----------     ---------- 
          Cash flows from investing activities:
             Sales and maturities of long-term invested assets               690,142      1,262,974 
             Sale of investment in BLHC                                                     287,639 
             Purchases of fixed maturities                                  (699,143)      (837,916)
             Purchases of other long-term invested assets                    (92,277)      (119,205)
             Additional investment in CFLIC preferred stock                  (21,078)
             Purchase of subsidiary, net of cash acquired                     (3,589)
             Cash received (transferred) on reinsurance
               transactions                                                   10,108        (43,152)
             Other                                                            (2,500)
                                                                          ----------     ---------- 
                 Net cash provided (used) by investing
                   activities                                               (118,337)       550,340 
                                                                          ----------     ---------- 
          Cash flows from financing activities:
             Proceeds of collateralized mortgage note
               obligations                                                                  171,000 
             Policyholder contract deposits                                  132,972        152,014 
             Policyholder contract withdrawals                              (132,274)      (305,128)
             Principal payments on notes payable                              (4,919)       (38,119)
             Early retirement of subordinated debt                           (10,081)       (38,190)
             Principal payments on collateralized mortgage
               note obligations                                                            (205,356)
             Purchase of common stock for treasury                              (500)          (932)
             Redemption of preferred stock                                                  (50,000)
             Dividends on preferred shares                                   (11,325)       (23,100)
             Other                                                            (4,550)
                                                                          ----------     ---------- 
               Net cash used by financing
                 activities                                                  (30,677)      (337,811)
                                                                          ----------     ---------- 

          Net increase (decrease) short-term investments                    (156,041)       234,831 
          Cash and short-term investments at beginning of
             period                                                          366,922        421,765 
                                                                          ----------     ---------- 
          Cash and short-term investments at end of period                $  210,881     $  656,596 
                                                                          ==========     ========== 

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


                            SOUTHWESTERN LIFE CORPORATION
                            NOTES TO FINANCIAL STATEMENTS
                                     (Unaudited)
                                      __________

          1. SIGNIFICANT ACCOUNTING POLICIES:

          Effective  June  15, 1994, I.C.H. Corporation changed its name to
          Southwestern Life Corporation (the Company or SLC).

          The   financial  information  included  herein  was  prepared  in
          conformity  with  generally  accepted  accounting principles, and
          such  principles  were  applied  on a basis consistent with those
          reflected in the 1993 Annual Report to Shareholders.

          The  information  furnished includes all adjustments and accruals
          which  are,  in  the  opinion of management, necessary for a fair
          statement of results for the interim periods.

          The  disclosures  in  the  notes  presume  that  the users of the
          interim  financial  information  have  read or have access to the
          audited  financial  statements included in the 1993 Annual Report
          to Shareholders.

          Primary  earnings  per  share  are computed by dividing earnings,
          less  preferred  dividend  requirements,  by the weighted average
          number  of  common shares outstanding. In computing fully diluted
          earnings  per share, the weighted average number of common shares
          outstanding  is  adjusted  to  reflect  common  stock equivalents
          resulting  from  stock  options and the assumed conversion of the
          Company's  Series  1984-A  and 1986-A Preferred Stock into common
          shares  if  outstanding  at  the end of the reporting period, and
          preferred   dividend   requirements  are  adjusted  to  eliminate
          dividends  on  the  shares  assumed  to  have been converted. The
          computation  of  fully  diluted  earnings  per share excludes the
          assumed  conversion  of  such preferred shares for each period in
          which the assumed conversion would be antidilutive.

          Previously  reported  amounts  for  1993 have, in some instances,
          been reclassified to conform to the 1994 presentation.

          2. INVESTMENT IN BANKERS LIFE HOLDING CORPORATION:

          The  Company  continued  to reflect its equity in the earnings of
          Bankers Life Holding Corporation (BLHC) through the September 30,
          1993 date of sale. Following are unaudited condensed statement of
          financial results for BLHC for the nine months ended September 30,
          1993 and  the  Company's  equity  in  such results  as  reflected
          in its consolidated statement of earnings (in thousands):


                            SOUTHWESTERN LIFE CORPORATION
                       NOTES TO FINANCIAL STATEMENTS, Continued
                                     (Unaudited)
                                      __________

             2. INVESTMENT IN BANKERS LIFE HOLDING CORPORATION, CONTINUED:
                                              
             Bankers Life Holding Corporation:
               Revenues                                       $1,081,680 
               Earnings from operations                           95,300 
               Extraordinary loss from early debt retirement      (5,600)
               Net earnings attributable to common stock          85,200 

             Amounts recorded by the Company:
               Equity in operating earnings of BLHC           $   29,117 
               Equity in extraordinary losses of BLHC             (1,370)
                                                              ---------- 
               Equity in earnings of BLHC                     $   27,747 
                                                              ==========

             

          3. NOTES PAYABLE:

          Notes  payable  at  September 30, 1994 and December 31, 1993, are
          summarized as follows (in thousands):



                                                            1994      1993
                                                            ----      ----
                                                                
             Borrowings under senior secured loan                  $  30,000
             11 1/4% Senior Subordinated Notes due 1996  $ 256,101   266,101
             11 1/4% Senior Subordinated Notes due 2003     91,161    91,161
             9 1/2% unsecured note payable due 1996         25,550    25,550
             Note payable, interest at prime,
              collateralized by aircraft equipment                     4,872
             Other                                             250       297
                                                         --------- ---------
                                                         $ 373,062 $ 417,981
                                                         ========= =========


          At  September 30, 1994, the Company has notes receivable totaling
          $26,500,000  from   an   unaffiliated   third  party,  which  are
          collateralized  by  the  Company's  note  payable with a carrying
          value  of  $20,835,000.  The Company has the right to set off its
          obligation  against  the  notes  receivable.  In the accompanying
          balance  sheets,  the   Company's   notes  receivable  have  been
          reflected net of amounts due under the note payable.

          4. FEDERAL INCOME TAXES:

          The  provision  for  income  taxes  on  operating earnings (loss)
          consists of the following components (in thousands):


                            SOUTHWESTERN LIFE CORPORATION
                       NOTES TO FINANCIAL STATEMENTS, Continued
                                     (Unaudited)
                                      __________

          4. FEDERAL INCOME TAXES, CONTINUED:


                                                        Nine Months Ended
                                                          September 30,  
                                                        -----------------
                                                          1994      1993  
                                                          ----      ----
                                                            
             Current tax expense (credit)               $ (9,056) $ 21,908
             Deferred tax expense                          5,758    74,294
                                                        --------  --------
                                                        $ (3,298) $ 96,202
                                                        ========  ========


          In  July  1994,  the Internal Revenue Service (IRS) completed its
          examination of the Company and its subsidiaries for the tax years
          1986  through  1989  and  issued its Revenue Agent's Report (RAR)
          relative  to  such  examination  (see  Note  5).  The Company has
          subsequently  assessed the effects of the issues reflected in the
          RAR  on existing net operating loss carryforwards and alternative
          minimum  tax  (AMT) credit carryforwards included in its deferred
          income  tax  asset. As a result of such assessment and updates of
          the  Company's  taxable income projections, at June 30, 1994, the
          Company reduced its net deferred tax asset by $12,265,000 through
          a charge included in its deferred income tax provision. Because a
          substantially  similar  provision   had   been  included  in  the
          Company's  current  income  tax liabilities for such effects, the
          Company  concurrently  reduced its current income tax liabilities
          by  $12,265,000  through  a  credit  in  its  current  income tax
          provision.

          A  reconciliation  of  the  income  tax  provisions  based on the
          prevailing  corporate  income  tax  rate of 35% to the provisions
          reflected  in the consolidated financial statements is as follows
          (in thousands):


                            SOUTHWESTERN LIFE CORPORATION
                       NOTES TO FINANCIAL STATEMENTS, Continued
                                     (Unaudited)
                                      __________

          4. FEDERAL INCOME TAXES, CONTINUED:


                                                       Nine Months Ended
                                                         September 30,  
                                                       -----------------
                                                         1994      1993  
                                                         ----      ----
                                                          
               Computed expected income tax expense
               (credit) at statutory regular tax rate $(13,326) $111,679 
             Amortization of excess cost                 2,518     2,521 
             Increase in (reduction of) deferred
               income tax asset valuation allowance      5,000   (14,573)
             Permanent loss of tax deductions from
               redemption of Company's equity
               securities (see Note 8)                   4,532 
             Effect of change in income tax rate on 
               deferred income tax asset at beginning
               of year                                            (3,500)
             Benefit from utilization of capital loss
               carryforwards not previously reflected
               for financial reporting purposes                   (9,890)
             Capital losses of subsidiary not
               includable in consolidated tax return               9,108 
             Other                                      (2,022)      857 
                                                      --------  -------- 
                   Income tax expense (credit)        $ (3,298) $ 96,202 
                                                      ========  ========


          Net  unrealized investment gains included in stockholders' equity
          at  December 31, 1993, are reflected net of deferred income taxes
          totaling  $8,226,000.   The   deferred  income   tax  effects  of
          unrealized  investment losses included in stockholders' equity at
          September 30, 1994, totaling approximately $33,421,000, have been
          offset by an increase  in the deferred income tax asset valuation
          allowance by  a corresponding amount due to the uncertainty as to
          the Company's ability  to  generate  capital  gains  in an amount
          sufficient to offset the unrealized capital losses.

          5.   COMMITMENTS, LITIGATION AND CONTINGENT LIABILITIES:

          The  Company  and its subsidiaries have been under examination by
          the  IRS  for  the  tax  years  1983  through  1992.  The IRS had
          previously  completed  its examination for the years 1983 through
          1985  and  had previously issued Notices of Proposed Deficiencies
          totaling  approximately  $17.5 million, before interest. In March
          1994, the Company reached agreement with the IRS relative to such
          proposed  deficiencies  and  subsequently paid settlements to the
          IRS  totaling  $3,972,000,  including  interest.  The Company had
          previously  provided  a  liability for such settlements and, as a
          consequence,  the settlements had no effect on the Company's 1994
          results of operations.


                            SOUTHWESTERN LIFE CORPORATION
                       NOTES TO FINANCIAL STATEMENTS, Continued
                                     (Unaudited)
                                     ___________

          5.   COMMITMENTS, LITIGATION AND CONTINGENT LIABILITIES, CONTINUED:

          In July 1994, the IRS completed its examination for the tax years
          1986  through  1989  and  issued Notices of Proposed Deficiencies
          totaling  approximately   $127.7  million,  before  interest.   A
          substantial  portion  of  the  proposed deficiencies involves the
          deductibility  of  approximately $444 million of interest expense
          on  certain  surplus debentures issued by the Company's insurance
          subsidiaries, which was offset by other proposed adjustments that
          mitigate,  in  part,  the  impact of the proposed disallowance of
          surplus  debenture  interest  deductions.  Management  intends to
          vigorously  protest  the  proposed  deficiencies  and has filed a
          written  appeal  relative to the surplus debenture interest issue
          and  other  significant  issues.  Management believes the surplus
          debentures in question were legally enforceable debt instruments,
          as opposed to equity contributions, and that the related interest
          was properly deductible. 

          Modern American Life Insurance Company (Modern) is a defendant in
          a  class  action  lawsuit  filed  on or about May 14, 1993 in the
          Circuit  Court  of  Jackson  County,  Missouri, styled WILLIAM D.
          CASTLE,  ET  AL.  V.  MODERN AMERICAN LIFE INSURANCE COMPANY (the
          Castle  case).  The  suit  purports  to be brought on behalf of a
          class  of  persons  who own what plaintiffs denominate as charter
          contracts,  issued  by  life  insurance  companies merged into or
          acquired  by Modern and its predecessors. The suit alleges breach
          of  contract, and seeks declaratory judgment, costs, expenses and
          such   other  relief  as  the  Court  deems  appropriate.  As  an
          alternative,  the  suit  seeks  rescission.  SLC  was  added as a
          defendant  to  the  CASTLE  case  by  an  amended petition, filed
          February 16, 1994, alleging that the Company should be liable for
          any  judgment against Modern through either disregarding Modern's
          corporate  existence  or  finding  tortious  interference  by the
          Company  with  plaintiff's contracts with Modern. SLC's motion to
          dismiss  the  amended petition as to SLC has been denied. On July
          27,  1994,  the  Circuit  Court  entered  an  order  granting the
          plaintiffs'  motion  for  certification  of  the  suit as a class
          action  and  certified six subclasses composed of the persons who
          own  or  owned  the  so-called  charter  contracts purchased from
          Modern  and  five  of  its  predecessor  corporations. Management
          believes  Modern  has meritorious defenses to the CASTLE case and
          intends to defend the case vigorously.

          On  or  about October 12, 1993, the plaintiffs in the CASTLE case
          also  filed  a  lawsuit  in  the  Circuit  Court  of Cole County,
          Missouri,   naming  Modern  and  the  Director  of  the  Missouri
          Department  of  Insurance  (the Missouri Director) as defendants.
          The second lawsuit, styled ROBERT J. MEYER, ET AL. V. JAY ANGOFF,
          DIRECTOR OF

                            SOUTHWESTERN LIFE CORPORATION
                       NOTES TO FINANCIAL STATEMENTS, Continued
                                    (Unaudited)
                                    ___________


          5.   COMMITMENTS, LITIGATION AND CONTINGENT LIABILITIES, CONTINUED:

          THE  MISSOURI  DEPARTMENT  OF  INSURANCE AND MODERN AMERICAN LIFE
          INSURANCE  COMPANY  (the  MEYER  case),  was  an  appeal from the
          regulatory   proceedings  before   the   Missouri  Department  of
          Insurance, by which Modern received regulatory approvals required
          for  it  to  participate  in  a  restructuring  of  the Company's
          insurance  holding  company  organization.  The restructuring was
          completed  on  or about September 29, 1993. The plaintiffs in the
          MEYER  case  were  seeking  reversal  or remand of the Director's
          order  of approval, declaratory judgment and such other relief to
          which  they  claim they were entitled. On July 16, 1994, the Cole
          Circuit  Court  issued  an  order  indicating it had reviewed the
          Department's  decision  on  the  record  pursuant  to  Missouri's
          administrative procedure act and affirmed the Missouri Director's
          orders.  On  August  16,  1994,  the plaintiffs appealed the Cole
          Circuit Court order to the Missouri Court of Appeals.

          Various other lawsuits and claims are pending against the Company
          and  its  subsidiaries. Based in part upon the opinion of counsel
          as  to  the ultimate disposition of the above discussed and other
          matters, management believes that the liability, if any, will not
          be material.

          6.   REALIZED INVESTMENT GAINS (LOSSES):

          Following  is  an  analysis  of  the  major  components  of gains
          (losses) on investments (in thousands):



                                   Three Months Ended   Nine Months Ended 
                                     September 30,        September 30,  
                                   ------------------   -----------------
                                    1994      1993       1994      1993 
                                    ----      ----       ----      ----
                                                    
             Fixed maturities     $   887  $   (796)  $  3,132  $ 13,227 
             Mortgage-backed
               securities                    (3,342)   (46,448)   (4,356)
             Equity securities        272    31,783       (213)   37,896 
             Investment in limited
               partnership                                        (5,013)
             Real estate            2,840    (4,287)     2,586    (5,042)
             Other                   (274)   (4,482)      (433)   (4,467)
                                  -------  --------   --------  -------- 
                                  $ 3,725  $ 18,876   $(41,376) $ 32,245 
                                  =======  ========   ========  ========


          7. EXTRAORDINARY LOSSES:

          For  the  nine  months  ended  September  30,  1993,  the Company
          reflected an extraordinary loss totaling $690,000, resulting from
          the premium

                             SOUTHWESTERN LIFE CORPORATION
                        NOTES TO FINANCIAL STATEMENTS, Continued
                                      (Unaudited)
                                      ____________


          7. EXTRAORDINARY LOSSES, CONTINUED:

          paid  to  effect  the early redemption of $37.5 million principal
          amount  of  the  Company's 16 1/2% Senior Subordinated Debentures
          due  1994.  In  addition, the Company reflected its equity in the
          extraordinary  loss  of  BLHC  resulting from early retirement of
          debt  totaling  $1,370,000.  The  extraordinary  losses have been
          reflected net of the estimated tax effects totaling $700,000.
               
          8. TRANSACTIONS WITH CONSOLIDATED FIDELITY LIFE INSURANCE COMPANY:

          On  June  15,  1993,  the Company, the Company's then-controlling
          shareholder,  Consolidated  National Corporation (CNC), and CNC's
          subsidiary, Consolidated Fidelity Life Insurance Company (CFLIC),
          entered  into  an  agreement (the 1993 Agreement) under which (i)
          the  Company  was  authorized,  and  undertook the obligation, to
          negotiate  the  termination of reinsurance agreements pursuant to
          which   CFLIC  reinsured  certain  annuity  business  written  by
          Southwestern  Life Insurance Company (Southwestern), a subsidiary
          of  the Company, and Bankers Life and Casualty Company (Bankers),
          a  former  subsidiary  of  the  Company,  and  (ii)  the  Company
          transferred  assets, consisting of a limited partnership interest
          (that  has  since  been  liquidated)  and  83% of the outstanding
          common  stock  of  I.C.H.  Funding  Corporation (ICH Funding), to
          CFLIC to acquire preferred stock of CFLIC, with a stated value of
          $63,000,000.  Under  the  terms  of the 1993 Agreement, the CFLIC
          preferred  stock  was  to  be  repurchased  by  CFLIC immediately
          following  the  termination  of the CFLIC reinsurance agreements.
          The  reinsurance  agreements  had  been  entered  into in 1990 in
          conjunction  with  the  Company's sale of Marquette National Life
          Insurance  Company (Marquette) to CNC and its stockholders. Under
          the  reinsurance  agreements,  Employers  Reassurance Corporation
          (ERC), an independent  third party reinsurer, retroceded to CFLIC
          certain  annuity business which was reinsured with ERC by each of
          Southwestern and Bankers.

          On   June  30,  1994,  the   CFLIC  reinsurance  agreements  were
          terminated, and the business reinsured thereunder was recaptured,
          effective   as  of  April  1,  1994.  Immediately  prior  to  the
          termination  of  the  CFLIC reinsurance agreements, Union Bankers
          Insurance  Company  (Union Bankers), a subsidiary of the Company,
          utilized  available cash to purchase all of the outstanding stock
          of Marquette, a subsidiary of CFLIC, for $8,215,000. The purchase
          price  was  based on the fair value of Marquette's underlying net
          assets,  consisting  primarily   of   cash   and   U.S.  Treasury
          obligations,  adjusted for the value of Marquette's various state
          insurance  licenses,  as  determined  by an independent actuarial
          firm. Marquette's results of operations have been included in the
          Company's consolidated results of operations


                           SOUTHWESTERN LIFE CORPORATION
                      NOTES TO FINANCIAL STATEMENTS, Continued
                                   (Unaudited)
                                   ___________

          8. TRANSACTIONS  WITH  CONSOLIDATED FIDELITY LIFE INSURANCE COMPANY,
          CONTINUED:

          for  periods subsequent to June 30, 1994. Following completion of
          the  terminations,  CFLIC repurchased the shares of its preferred
          stock  held  by  the  Company  by transferring to the Company the
          senior  secured loan of the Company with an outstanding principal
          balance  of  $30  million,  all  of the outstanding shares of the
          Company's  Series  1984-A  Preferred Stock with a stated value of
          $22,242,000,  all  of  the  outstanding  shares  of the Company's
          Series  1987-B Preferred Stock with a stated value of $7,000,000,
          a  U.S.  Treasury note (par value $1,050,000), and 620,423 shares
          of   the  Company's  Common  Stock.   Immediately  following  the
          repurchase  of  the CFLIC preferred stock, SLC retired the senior
          secured  loan  and  the  SLC  preferred stocks. The shares of SLC
          Common Stock received were placed in treasury.

          Upon  termination  of the CFLIC reinsurance agreement relating to
          the  business written by Southwestern, CFLIC transferred cash and
          invested  assets  to  ERC  with a fair value equal to the reserve
          liabilities being recaptured, net of the ceding fees payable. Due
          primarily to a requirement by insurance regulatory authorities to
          transfer  such  investments  upon  termination of the reinsurance
          agreements  at  their fair value, the Company increased its basis
          in   the  CFLIC   preferred  stock  by  investing  an  additional
          $26,212,000   (including   $21,078,000   cash  and  a  $5,134,000
          receivable) immediately prior to the terminations to enable CFLIC
          to  have  sufficient  assets (other than the Company's securities
          being  transferred  to  the  Company upon redemption of the CFLIC
          preferred  stock)  to  complete  the  terminations. A substantial
          portion  of such amount was attributable to a decline in the fair
          value  of  the  83%  interest  in  ICH  Funding subsequent to the
          Company's transfer of such investment to CFLIC in June 1993.

          In  conjunction  with  the  termination  of the CFLIC reinsurance
          agreement  relating  to  the  business  written  by Southwestern,
          annuity reserve liabilities totaling $323,305,000 were assumed by
          ERC  and  invested  assets with a fair value of $289,414,000 were
          transferred  by  CFLIC to ERC. The difference between the reserve
          liabilities assumed by ERC and the assets transferred from CFLIC,
          totaling  $33,891,000,  represented the aggregate ceding fee paid
          to  CFLIC  to  effect  the  termination.  Immediately thereafter,
          Southwestern  recaptured  $107,163,000 of the reserve liabilities
          from  ERC  and  received  invested  assets   from   ERC  totaling
          $93,942,000. The assets consisted of cash, short-term investments
          and  marketable  fixed maturity investments totaling $25,455,000,
          CFLIC's  investment  in  ICH  Funding  and  certain  pass-through
          certificates issued by a


                           SOUTHWESTERN LIFE CORPORATION
                      NOTES TO FINANCIAL STATEMENTS, Continued
                                    (Unaudited)
                                    ___________

          8. TRANSACTIONS  WITH  CONSOLIDATED FIDELITY LIFE INSURANCE COMPANY,
          CONTINUED:

          special  purpose  trust  with  an  estimated  fair value totaling
          $12,528,000,  collateral  loans  due  from James M. Fail and CFSB
          Corporation  totaling  $50,640,000, and other assets, principally
          mortgage  loans,  totaling $5,319,000. The difference between the
          reserve  liabilities  recaptured  by  Southwestern and the assets
          transferred  from ERC, totaling $13,221,000, represented a ceding
          fee  paid  by  Southwestern,  and  reduced  ERC's net ceding fees
          incurred  to   effect   the   CFLIC  reinsurance  termination  to
          $20,670,000.  The  reinsurance agreement between Southwestern and
          ERC  was amended to provide that ERC will be permitted to recover
          the  net  ceding  fees  incurred out of the future profits on the
          portion  of Southwestern's annuity business it retained, together
          with  interest at 2% per annum on the unamortized balance of such
          ceding  fees.  For  financial reporting purposes, the reinsurance
          arrangement  between Southwestern and ERC has been reflected as a
          financing  arrangement  and,  accordingly, is not be reflected in
          the  Company's  financial statements except for the interest paid
          to ERC.

          The  amount  of  the ceding fees paid to CFLIC in connection with
          the  recapture  was  determined  by  management  of  the  Company
          utilizing  the  methodology developed by an independent actuarial
          firm,  with  appropriate  adjustments  in  assumptions to reflect
          changes in market interest rates and other factors.

          Pursuant  to  the  1993 Agreement, the Company agreed to bear the
          federal income tax consequences resulting from the termination of
          the  CFLIC  reinsurance  agreements.  Upon  closing  of the CFLIC
          termination,  the  Company  agreed to indemnify CNC and CFLIC for
          tax  liabilities  of CFLIC and Marquette arising through June 30,
          1994,  and  deposited  into  an escrow account $8,825,000 of cash
          which the Company was to have received upon CFLIC's repurchase of
          its preferred stock as a source of funds for the payment of taxes
          for  which  the  Company is responsible. With the payment of such
          tax  liabilities, the Company will be entitled to all tax refunds
          to  which  CFLIC  is  entitled  through  the carryback of capital
          losses  resulting  from  the termination of the CFLIC reinsurance
          agreements  or  as a result of any redetermination of CFLIC's tax
          liabilities  through  the  first  taxable  period  of  CFLIC  and
          Marquette  ending  after  such  termination.  Management  of  the
          Company  has estimated that CFLIC will be entitled to tax refunds
          totaling  approximately  $5.8  million  through  the carryback of
          capital  losses.  Upon  collection of the tax refund, the Company
          will  utilize  a portion of the proceeds to satisfy the remaining
          $5,134,000 receivable held by CFLIC.


                           SOUTHWESTERN LIFE CORPORATION
                      NOTES TO FINANCIAL STATEMENTS, Continued
                                    (Unaudited)
                                    ___________

          8. TRANSACTIONS  WITH  CONSOLIDATED FIDELITY LIFE INSURANCE COMPANY,
          CONTINUED:

          For  financial  reporting  purposes,  the  Company  recorded  the
          redemption  of  its preferred stocks received from CFLIC at their
          stated  value  which,  in  management's opinion, approximated the
          fair  value  of such securities as of the date the 1993 Agreement
          was  entered  into.  The  620,423  shares of the Company's Common
          Stock received from CFLIC were recorded at their market value, or
          $5.25  per  share,  as of the date of closing. The termination of
          the  CFLIC  reinsurance  agreements, the receipt of a payment-in-
          kind dividend from CFLIC representing dividends on such preferred
          stock  from  the date of issuance through the date of redemption,
          and the redemption of the Company's securities resulted in a pre-
          tax  gain totaling approximately $8,735,000 and an after-tax gain
          totaling  approximately $1,936,000. Because the redemption of the
          CFLIC  preferred stock involved the receipt by the Company of its
          own  equity  securities,  approximately  $12.9 million of the tax
          basis loss on such exchange cannot be deducted for federal income
          tax  purposes  and,  as  a  consequence,  the  income tax effects
          associated  with  these transactions approximated 78% of the pre-
          tax gain.

          9. CHANGE IN CONTROL:

          On  February  11,  1994, the Company purchased all of the 100,000
          shares  of  its  Class  B Common Stock held by CNC for total cash
          consideration  of $500,000. The Class B Common Stock had entitled
          CNC  to  elect  75% of the Company's Board of Directors. Upon the
          purchase, the Class B shares were automatically converted into an
          identical  number of shares of Common Stock and at June 30, 1994,
          have  been  reflected  as  Treasury Shares. Concurrently with the
          purchase  of  such  stock,  the  Company entered into Independent
          Contractor  and  Services  Agreements  (Services Agreements) with
          Robert  T. Shaw and C. Fred Rice, the controlling shareholders of
          CNC.  The  Services  Agreements provide for a lump sum payment to
          Messrs.  Shaw and Rice totaling $2 million as of the closing date
          and  additional  payments  totaling  $8,575,000  over  a ten-year
          period.  In  addition,  the  Company  agreed to provide customary
          employee  benefits to Messrs. Shaw and Rice and their dependents.
          In  the  event of the deaths of Messrs. Shaw or Rice, any amounts
          not  previously  paid  under  the Services Agreements will become
          immediately  payable  to  their estates. In consideration for the
          Services Agreements, Messrs. Shaw and Rice agreed that they would
          attempt  to  identify  business  opportunities  in  the insurance
          industry  which  may  be  suitable for the Company and to consult
          with  the Company regarding such other matters as the Company may
          reasonably  request.  In addition, Mr. Rice continues to serve as
          an


                            SOUTHWESTERN LIFE CORPORATION
                       NOTES TO FINANCIAL STATEMENTS, Continued
                                     (Unaudited)
                                     ___________

          9. CHANGE IN CONTROL, CONTINUED:

          executive  officer  of the Company and was re-elected to serve on
          the   Company's  Board  of  Directors.  The  Services  Agreements
          replaced  a  management  and  consulting  contract  with CNC that
          provided  for  annual  payments  to  CNC  totaling $2 million. In
          addition,  Mr.  Shaw  was  granted  an  option to acquire the two
          aircraft  owned  by the Company at their depreciated book values.
          In  cash transactions completed on June 30 and August 5, 1994, an
          entity   controlled  by  Mr.  Shaw  purchased  one  aircraft  for
          $1,144,000  and  an  unrelated third party to whom the option was
          assigned   purchased   the   other   aircraft   for   $4,005,000,
          respectively.  The  Company  provided a liability for the present
          value  of  amounts payable under the Services Agreements totaling
          $9,050,000  in  its  financial  statements  for  the  year  ended
          December 31, 1993.


          ITEM 2.  MANAGEMENT'S  DISCUSSION  AND  ANALYSIS  OF  FINANCIAL
                   CONDITION AND RESULTS OF OPERATIONS

          LIQUIDITY AND CAPITAL RESOURCES:

               On  February  11,  1994,  SLC  purchased  all of the 100,000
          shares  of  its  Class  B  Common  Stock  from CNC for total cash
          consideration  of  $500,000.  As  a result of the repurchase, and
          subsequent conversion, SLC is no longer authorized to issue Class
          B  Common  Stock  and  all  references  in  SLC's  Certificate of
          Incorporation  to  the Class B Common Stock have been eliminated.
          Concurrent  with  the  repurchase  of  the  Class B Common Stock,
          Stephens  Inc.  (Stephens)  and Torchmark Corporation (Torchmark)
          purchased 4,457,000 shares and 4,667,000 shares, respectively, of
          SLC    Common  Stock  from  CNC,   which   reduced  CNC  and  its
          subsidiaries'  holding  in  SLC  Common  Stock  to  approximately
          1,620,000  shares,  or  3.4%  of  SLC's  then outstanding shares.
          Additional  information  regarding  the repurchase of the Class B
          Common  Stock  and other terms of the transaction are included in
          Note 9 of the Notes to Financial Statements included elsewhere in
          this Form 10-Q. Management believes the repurchase of the Class B
          Common  Stock  is   significant   for   various   reasons.   Most
          importantly,  management  believes that SLC's access to both debt
          and  equity  capital  markets  has  been  limited  because of the
          control  position  held  by CNC through the Class B Common Stock,
          and  that  the  repurchase  and  conversion of the Class B Common
          Stock  and considerable reduction in CNC's holdings of SLC Common
          Stock  could  ultimately  enhance  SLC's ability to refinance its
          currently outstanding debt. In May 1994, SLC engaged Stephens, an
          investment  banking  firm, to conduct a review of SLC in order to
          provide  advice  and  recommendations to SLC's Board of Directors
          concerning SLC's strategic plans.

               On  June  30, 1994, reinsurance agreements involving certain
          annuity  business  written by SLC's subsidiary, Southwestern, and
          SLC's former subsidiary, Bankers, that had been reinsured through
          an independent third party reinsurer, ERC, to CFLIC, a subsidiary
          of  CNC,  were terminated in accordance with an agreement entered
          into  among  SLC,  CNC  and  CFLIC  effective  June  15, 1993, as
          amended. See Note 8 of the Notes to Financial Statements included
          elsewhere in this Form 10-Q for additional information and a more
          detailed discussion of the terms of these transactions.

               The  termination  of  the  CFLIC reinsurance agreements, the
          receipt  of  a  $3.9  million payment-in-kind dividend from CFLIC
          representing  dividends  on  its preferred stock from the date of
          issuance  through  the  date of repurchase, and the redemption of
          certain  of  SLC's securities resulted in a pre-tax gain totaling
          approximately   $8.7  million  and  an  after-tax  gain  totaling
          approximately  $1.9  million  which  have been reflected in SLC's
          statement  of  earnings  for  the nine months ended September 30,
          1994.  In  addition,  there were no dividends declared or paid on
          the  SLC  preferred  stocks  received  in the transaction for the
          three months 


          ending  June  30,  1994,  resulting  in dividend savings totaling
          approximately  $.8  million.  Because the redemption of the CFLIC
          preferred  stock  involved  the  receipt by SLC of its own equity
          securities,  approximately $12.9 million of the tax basis loss on
          such  exchange cannot be deducted for federal income tax purposes
          and,  as  a  consequence,  the income tax effects associated with
          these   transactions   approximated  78%  of  the  pre-tax  gain.
          Management  believes  the completion of the CFLIC transactions as
          described  above  and  in  Note  8 to the Financial Statements is
          significant  in  that it has eliminated a significant transaction
          with  a  former  affiliate,  has  reduced  outstanding  debt  and
          preferred  stock,  has simplified SLC's structure and has reduced
          state  insurance  regulatory concerns. Based on the prime rate in
          effect  as  of  June  30,  1994,  the  retirement of SLC's senior
          secured  loan  is  expected  to result in annual interest expense
          savings  totaling  approximately $2.5 million, and the retirement
          of  the SLC preferred stocks will result in a reduction in annual
          preferred  dividend  requirements   totaling   $3.3  million.  In
          addition,  CNC's  and  CFLIC's  ownership in shares of SLC Common
          Stock  was further reduced to 2.1% of SLC's outstanding shares as
          a result of these transactions.

               During  the  nine  months  ended  September  30,  1994,  SLC
          experienced  a  significant  decline  in  the  fair  value of its
          available  for  sale  fixed  maturity investments, primarily as a
          result  of  increases  in  market  interest  rates.  Because such
          securities  are  reflected  at  their  fair  value  for financial
          reporting  purposes,  the  decline  in fair value, coupled with a
          loss  after  preferred  dividend  requirements  in the first nine
          months  of 1994, had a significant impact on stockholders' equity
          and  book  value  per  common  share. Common stockholders' equity
          declined $165.7 million, from $265.9 million, or $5.55 per share,
          at  year-end  1993  to  $100.2  million,  or  $2.12 per share, at
          September 30, 1994. Of this decline, $115.9 million, or $2.45 per
          share,  was  attributable  to the change in unrealized investment
          gains  and  losses.  Because of its available liquidity and other
          factors, management does not anticipate that SLC will be required
          to  liquidate  a  substantial  portion  of its available for sale
          fixed  maturity  portfolio  over  the  near-term. See "Investment
          Portfolio"  below  for  additional  information  regarding  SLC's
          available for sale fixed maturities.

               The  following  table   reflects  SLC's   cash  sources  and
          requirements  on  a  projected  basis  for  1994, based on actual
          results through September 30, 1994, (in millions):


                                                    
             Cash sources:
               Dividends from insurance subsidiaries            $ 35.0 
               Dividends from noninsurance subsidiaries            5.0 
               Investment income                                   6.9 
               Sale or redemption of investments                  11.2 
               Other                                               6.7 
                                                                ------ 
                  Total sources                                   64.8 
                                                                ------ 
             Cash requirements/uses:
               Long-term debt principal payments                   8.5 
               Early retirement of subordinated debt              10.0 
               Interest                                           50.1 
               Preferred dividends                                14.8 
               Purchase 11 1/4% Notes due 1996 from
                  subsidiaries                                    12.6 
               Additional investment in CFLIC preferred stock     21.1 
               Other                                              12.7 
                                                                ------ 
                  Total requirements/uses                        129.8 
                                                                ------ 
               Net cash required during year                     (65.0)
               Cash and marketable securities available,
                  beginning of year                              132.1 
                                                                ------ 
               Cash and marketable securities available,
                  end of year                                   $ 67.1 
                                                                ====== 

             

               SLC's  projected 1994 cash sources as reflected in the above
          table  exceed  the  previously  projected  1994  cash sources, as
          reflected  in   SLC's  1993   Annual  Report  on  Form  10-K,  by
          approximately  $14.2  million.  Included  in the increase in such
          cash  sources  is a $5.0 million prepayment on a note receivable,
          anticipated  receipts from CFLIC totaling $6.5 million, and other
          miscellaneous sources totaling $2.7 million. SLC's projected cash
          requirements/uses  as  reflected  in  the  above table exceed the
          previously  projected  cash  requirements  by approximately $17.9
          million.  Included in the increase in such cash requirements/uses
          is  a  $21.1 million additional investment in the preferred stock
          of  CFLIC  (see  Note  8  of  the  Notes  to Financial statements
          included  elsewhere  in  this Form 10-Q). In addition, other cash
          uses  not  previously  projected include the use of $10.0 million
          cash  to purchase $10.0 million principal amount of 11 1/4% Notes
          due 1996 in July 1994 and an increase in other miscellaneous uses
          totaling $8.3 million. Offsetting such increases in the projected
          uses  of  cash  in  1994  is  a  $21.5  million  reduction in the
          anticipated  purchase  by  SLC of its 11 1/4% Notes due 1996 from
          certain of its subsidiaries.

               Although  SLC  believes  it  has  the  ability  to  meet its
          commitments  over the next twelve months, its ability to meet its
          commitments  beyond  November  1995 is dependent on being able to
          effect  a   restructuring   or   refinancing   of  its  presently
          outstanding 


          debt  obligations  or  the  sale of certain assets. The projected
          available  cash  at  the parent company level at the end of 1994,
          plus  the anticipated level of earnings and, therefore, available
          dividends   from  its   life   insurance  subsidiaries,  will  be
          insufficient  to meet all of its principal requirements beginning
          in  November  1995,  at  which  time  sinking  fund  requirements
          totaling $100 million will become due. SLC is presently exploring
          various  alternatives to eliminate the anticipated 1995 liquidity
          deficit.  While  there can be no assurances that SLC will be able
          to  accomplish  a  refinancing  or restructuring of its presently
          outstanding  debt  or  to successfully negotiate and complete the
          sale  of  certain of its assets, management believes that SLC has
          the  ability  and  that  there  is sufficient time to develop and
          execute  a  plan  which  will  accomplish  the desired objectives
          before  the  above  principal  obligations become due in November
          1995.

          INVESTMENT PORTFOLIO:

               In   1993,  the  Company   adopted  Statement  of  Financial
          Accounting  Standards  (SFAS)  No.  115,  "Accounting for Certain
          Investments   in  Debt  and  Equity  Securities"  issued  by  the
          Financial  Accounting  Standards  Board (FASB), which established
          new  standards  of  accounting  and  reporting  for,  among other
          things, all investments in debt securities. SFAS No. 115 expanded
          the  use of fair value accounting (which is defined as the amount
          at  which  a financial instrument could be exchanged in a current
          transaction  between  willing  parties, other than in a forced or
          liquidation sale) and required financial institutions to classify
          their  fixed  maturity  investments  in  one of three categories:
          held-to-maturity,  available-for-sale,  or  trading.  The Company
          classified  its  fixed  maturity  investments  as either held-to-
          maturity  or  available-for-sale.  Under SFAS No. 115, securities
          classified  as  "held-to-maturity"  are carried at amortized cost
          and  declines in value do not result in a writedown to fair value
          unless  such  losses  are  determined to be other than temporary.
          Securities  classified  as  "available-for-sale"  are  carried at
          their  fair  value and losses are reflected as unrealized losses,
          unless  the  decline  in  value  is  determined  to be other than
          temporary, in which case the losses must be reflected as realized
          losses  and charged to earnings. SFAS No. 115 also indicates that
          a  decline  in  value  of  a security below its amortized cost is
          properly  classified  as other than temporary if the value of the
          security  cannot  reasonably  be expected to increase to at least
          its amortized cost in the near future.

               In  1993,  the Emerging Issues Task Force (EITF) of the FASB
          also  issued  EITF  Issue  No. 93-18, "Impairment Recognition for
          Purchased  Investment  in  a  Collateralized  Mortgage Obligation
          Investment  or  in  a Mortgage-Backed Interest Only Certificate,"
          which  provided   an   analytical  framework  for  measuring  the
          impairment of certain "high-risk" CMO's and which has been widely
          used  to  provide guidance as to when write-downs should be taken
          on  other  CMO investments in accordance with SFAS No. 115. Under
          EITF No. 93-


          18,  if  the  projected future cash flows from an investment on a
          discounted  basis utilizing a "risk-free" rate of return are less
          than  the  investment's  amortized cost on the basis of generally
          accepted  accounting  principles  (GAAP), a write-down to present
          value is required.
           
               In  light  of  SFAS No. 115 and positions taken by the EITF,
          the  Company  classified its investments in certain Class B pass-
          through certificates issued by Fund America Investors Corporation
          II  (the  Fund America Investment) and the residual interest in a
          special  purpose  trust,  the  Secured Investors Structured Trust
          1993-1 (the SIST Residual), as available-for-sale and reduced the
          carrying  value  of  such investments from $95.5 million to $67.1
          million  at  December  31,  1993.  The reduction in fair value of
          $28.4  million  was  determined  to  be  temporary  and  thus was
          accounted  for as an unrealized investment loss and reported as a
          charge to stockholders' equity.

               The  Fund  America  Investment  and  the  SIST  Residual are
          collateralized  by  the  principal  component  of bonds (the RFCO
          Strips)  issued  by  the Resolution Funding Corporation, a mixed-
          ownership government corporation established for the sole purpose
          of  providing financing for the Resolution Trust Corporation, the
          agency  charged   with   resolving   failed  savings   and   loan
          associations.  By their terms, the payment of the RFCO Strips are
          due  in full in single payments in April 2030 (in the case of the
          Fund  America Investment) and in January 2021 (in the case of the
          SIST  Residual) in amounts sufficient to assure the full recovery
          of  SLC's Fund America Investment and SIST Residual. Although not
          obligations  of,  or  guaranteed  as  to principal by, the United
          States  of  America,  the  Offering Circulars for the RFCO Strips
          stated  that  the  principal  amount  of the RFCO Strips would be
          fully  repaid from proceeds of noninterest bearing obligations of
          the  United  States  issued  by the Secretary of the Treasury and
          deposited  in  a  separate account at the Federal Reserve Bank in
          New York. Accordingly, management believed that these investments
          were  not  "high  risk" CMOs, as defined in current authoritative
          accounting literature, and that, if held to maturity, there would
          be no permanent impairment in the value of these investments.

               The  Fund  America Investment and the SIST Residual are both
          highly sensitive to changes in mortgage loan prepayment rates and
          changes   in  market  interest  rates,  particularly  the  London
          Interbank  Offered  Rate  (LIBOR) upon which interest payments to
          holders  of  senior  classes  of  these investments are generally
          based.  During  the  first  three  months  of 1994, mortgage loan
          prepayment  rates and LIBOR both increased, as a consequence, the
          aggregate  unrealized  losses  on the Fund America Investment and
          SIST  Residual  increased to $46.4 million at March 31, 1994. The
          Company,  after  consulting  with its independent accountants and
          other  advisors, re-evaluated the Fund America Investment and the
          SIST  Residual.  Notwithstanding  the  collateral provided by the
          RFCO Strips as discussed above, on


          the basis of its review of these investments, and the application
          of  SFAS  No. 115 and EITF No. 93-18, the Company determined that
          the declines in value of these investments at March 31, 1994 were
          other  than  temporary  and  that  a  reflection of such declines
          through  a  charge  to  earnings was appropriate. Accordingly, at
          March  31,  1994,  SLC  reflected  a  charge  to earnings for the
          writedown  of  these  investments  from  their  GAAP  book  value
          totaling  $96.4  million  to  their  fair  value  totaling  $50.0
          million,  or  a  total  charge  of  $46.4  million. For financial
          reporting  purposes,  the  $50.0  million  fair  value  of  these
          investments  became  their new cost basis for periods after March
          31,  1994.  Prior to March 31, 1994, SLC and its subsidiaries had
          accrued  investment income on these investments at an annual rate
          of  6%  of  their  prior  GAAP book values, or approximately $5.7
          million  of  annual investment income. Because the fair values of
          these  investments  at March 31, 1994 were determined based on an
          assumed 11% discount rate, investment income on these investments
          has  been  accrued  at  11%  of  their new cost basis for periods
          subsequent  to that date, or approximately $5.5 million of annual
          investment  income. As a consequence, the writedowns reflected at
          March  31, 1994, are not expected to have a significant effect on
          the  Company's future reported results of operations. However, as
          discussed  below,  significant  additional  writedowns  in future
          periods  could  ultimately  have a substantial effect on reported
          results.

               The declines in value of the Fund America Investment and the
          SIST  Residual  have  not  had,  and  are not expected to have, a
          substantial  effect  on  the  Company's operating cash flows. For
          purposes of statutory accounting, the Investment Working Group of
          the  National  Association  of Insurance Commissioners (NAIC) has
          tentatively  decided  not  to follow or adopt the GAAP accounting
          standards of SFAS No. 115 and EITF No. 93-18 described above.

               At September 30, 1994 aggregate unrealized investment losses
          on  the  Fund  America  Investment  and the SIST Residual totaled
          approximately  $29.0  million  and  the  carrying  value  of such
          investments  after  the  reflection  of  such  unrealized  losses
          totaled $25.0 million. Although no further writedowns of the Fund
          America Investment and the SIST Residual through the statement of
          earnings  were  required at September 30, 1994, further increases
          in  interest rates and continued unsettled activity in the market
          for  CMOs may necessitate further substantial writedowns of these
          investments. Any such additional writedowns will be reported as a
          charge  to  earnings  for the period or periods in which they are
          realized.  The Company is presently unable to predict the size or
          timing  of  any  such  additional  writedowns, if any. Additional
          writedowns,  if required, could result in a substantial reduction
          in subsequently reported earnings. 

               At  December  31,  1993, SLC reflected unrealized investment
          gains  of  $20,458,000  and  at  September  30,  1994,  reflected
          unrealized investment losses of $95,489,000. Following is an 


          analysis  of  the  major  components  of  such  unrealized  gains
          (losses) (in thousands):



                                                September 30, December 31,
                                                     1994         1993    
                                                ------------  ----------- 
                                                          
             Available for sale fixed maturities   $(120,719)   $  21,424 
             Equity securities                         1,154        7,271 
             Equity in unrealized gains of
               limited partnerships                    4,921        5,349 
             Other                                       179         (159)
                                                   ---------    --------- 
                                                    (114,465)      33,885 
             Less effect on other balance sheet
               accounts:
                 Deferred policy acquisition costs    25,376      (16,647)
                 Unearned revenue reserves            (6,400)       6,266 
                                                   ---------    --------- 
             Gross unrealized investment gains
               (losses)                              (95,489)      23,504 
             Minority interest in unrealized losses                 5,180 
             Deferred income taxes                                 (8,226)
                                                   ---------    --------- 
             Net unrealized investment gains
               (losses)                            $ (95,489)   $  20,458 
                                                   =========    =========


               The  fair values of other than the above discussed mortgage-
          backed  debt  securities  declined  approximately  $141.6 million
          between  the  two  dates  primarily  as  a result of increases in
          market  interest  rates  and  the  negative  effect  of such rate
          increases  on  the  fair  values  of such securities. At year-end
          1993,  unrealized  investment  losses  totaling $28.4 million had
          been  reflected  relative  to the Fund America Investment and the
          SIST Residual. As a result of the $46.4 million writedown of such
          investments  at  March  31, 1994, the $28.4 million of unrealized
          investment  losses  at  year-end  1993  were eliminated; however,
          subsequent  to  March  31,  1994, additional unrealized losses on
          such investments totaling $29.0 million have been reflected. 

               Unless determined to be other than temporary, changes in the
          fair values of available for sale fixed maturities have no effect
          on  SLC's reported results of operations, but can have a volatile
          effect  on  SLC's  stockholders' equity and book value per common
          share,  as  the  carrying  values  of  available  for  sale fixed
          maturities  are  adjusted  in  SLC's  balance sheet to their fair
          values  at  each  reporting  date  through  a charge or credit to
          stockholders'  equity.  In addition, unrealized investment losses
          generally  have a more significant impact on stockholders' equity
          than unrealized gains because of deferred income tax effects. Net
          unrealized  investment gains must be tax-effected, or reduced for
          the  potential  income  tax  expense  associated with such gains,
          through  a  provision  of  a  deferred  income tax liability. Net
          unrealized   investment  losses  are  likewise  tax-effected,  or
          reduced  for  the  potential  income tax benefits associated with
          such losses; however, if such 


          tax - effecting   results  in  a  deferred  income   tax   asset,
          consideration  must  be  given to providing a valuation allowance
          against  such  deferred income tax asset. At present, the Company
          does  not  have  sufficient unrealized investment gains to offset
          its  unrealized  investment losses and cannot predict its ability
          to  realize  the  potential income tax benefits if its unrealized
          investment   losses   were   actually  incurred.  Accordingly,  a
          valuation  allowance  has  been  provided  against  the Company's
          deferred  income  tax  asset  related  to  unrealized  investment
          losses,  which  effectively  eliminates  the  recognition  of any
          portion  of   the   income  tax  benefits  associated  with  such
          unrealized  losses.  Because of its available liquidity and other
          factors, such as its seasoned block of traditional life insurance
          business,  SLC has no current plans, and management believes that
          SLC  will  not  have  the  need  over  the  near-term  future, to
          liquidate any significant portion of its available for sale fixed
          maturity investments at a loss. Following is an analysis of gross
          unrealized  investment  gains  and  losses  on available for sale
          fixed  maturities as of September 30, 1994 and  December 31, 1993
          (in thousands):



                                           September 30,    December 31,
                                               1994             1993    
                                           ------------     ----------- 
                                                      
               Gross unrealized gains        $    8,050     $    63,535 
               Gross unrealized losses         (128,769)        (42,111)
                                             ----------     ----------- 
               Net unrealized gains (losses) $ (120,719)    $    21,424 
                                             ==========     ===========


               The  following  table  sets  forth  the  carrying  value and
          quality  for each of the two categories of fixed maturities as of
          September  30,  1994,  classified  in  accordance with the rating
          assigned  by Standard & Poor's Corporation (S&P) or, if not rated
          by  S&P, based on ratings assigned by the National Association of
          Insurance  Commissioners,  with  Class  1  treated  as A, Class 2
          treated  as  BBB-,  Class 3 treated as BB- and Classes 4, 5 and 6
          treated as B and below (in millions):




                                  Held to
                      Available  Maturity            Percent of    Percent
                       for Sale     at       Total      Total     of Total
          Investment   at Fair  Amortized    Fixed      Fixed     Invested
           Quality      Value      Cost   Maturities Maturities    Assets 
          ---------- ---------- --------- ---------- ---------- ----------
                                                      
          AAA         $   682.5   $   1.7  $   684.2      40.5%      28.6%
          AA              206.8                206.8      12.2        8.6 
          A               425.4                425.4      25.1       17.7 
          BBB+             80.8                 80.8       4.8        3.4 
          BBB              94.7                 94.7       5.6        4.0 
          BBB-             92.1       7.0       99.1       5.9        4.1 
                      ---------   -------  ---------      ----       ---- 
           Total
           investment
           grade        1,582.3       8.7    1,591.0      94.1       66.4 
                      ---------   -------  ---------      ----       ---- 
          BB+              29.2                 29.2       1.7        1.2 
          BB and BB-       46.6                 46.6       2.8        1.9 
          B and Below      17.1       6.4       23.5       1.4        1.0 
                      ---------   -------  ---------      ----       ---- 
           Total
           investment
           grade           92.9       6.4       99.3       5.9        4.1 
                      ---------   -------  ---------      ----       ---- 
            Total
            fixed
            maturi-
            ties      $ 1,675.2   $  15.1  $ 1,690.3     100.0%      70.5%
                      =========   =======  =========     =====       ====


               Fixed   maturities   classified  as  held  to  maturity  are
          principally  private  placement  corporate  securities  and gross
          unrealized  gains  and  losses  on  such  investments totaled $.1
          million and $2.1 million, respectively, as of September 30, 1994.

               The  amortized  cost  and  fair value of noninvestment-grade
          fixed  maturities  totaled  $113.4  million  and  $98.8  million,
          respectively, at September 30, 1994.

               Effective   March   31,   1994,   SLC's   subsidiaries  sold
          substantially   all  of  their  commercial  mortgage  loans  with
          remaining   principal   balances   of   less  than  $300,000  for
          approximately  $9.0  million. No significant gains or losses were
          incurred  as  a result of such sale. SLC is currently considering
          the  sale  of  substantially  all  of  its  remaining  commercial
          mortgage  loan  portfolio.  At September 30, 1994, mortgage loans
          represented approximately 5% of SLC's total investment portfolio.

               Cash and short-term investments declined from $366.9 million
          at  year-end  1993  to  $210.9  million  at  September  30, 1994,
          primarily  as  a  result of reinvestments made in higher-yielding
          longer duration securities.

               As  discussed  in  the 1993 Annual Report, the claims-paying
          ratings  assigned  to  certain  of  SLC's subsidiaries by various
          nationally   recognized  statistical  rating  organizations  were
          lowered


          over  the  past  two years. Except as discussed below, management
          believes SLC's subsidiaries have not experienced more than normal
          policy  surrenders  and  withdrawals as a result of these ratings
          downgrades.  For  the  nine  months  ended  September  30,  1994,
          policyholder  contract  deposits   totaled   $132.9  million  and
          policyholder   contract   withdrawals   totaled  $132.3  million.
          Approximately  $68.8  million  of  such  withdrawals  represented
          scheduled  maturities  of  guaranteed investment contracts (GICs)
          which  were not reinvested with an SLC subsidiary. Because of its
          available   liquidity  and  readily  marketable  securities,  the
          subsidiary   has   not   encountered,  and  management  does  not
          anticipate  that the subsidiary will encounter, any difficulty in
          meeting  its  obligations relative to such withdrawals. Exclusive
          of  the  GIC withdrawals, policyholder contract deposits exceeded
          policyholder withdrawals by $69.4 million. 

          RESULTS OF OPERATIONS:

               For  the nine months ended September 30, 1994, SLC reflected
          an  operating  loss  and  net  loss,  before  preferred  dividend
          requirements,  of  $34.8  million.  The  1994  first  nine months
          results  compare to a gain from operations for the same period in
          1993  of  $222.9  million  and  net  earnings,  before  preferred
          dividend   requirements,   totaling   $219.7  million.  Preferred
          dividend  requirements  totaled  $11.3  million in the first nine
          months  of  1994,  as compared to $23.1 million in the first nine
          months  of  1993.  Results  in  1993 also included a charge for a
          change  in  accounting  for postretirement benefits totaling $1.8
          million  and extraordinary losses related to the early retirement
          of debt totaling $1.4 million.

               SLC's  results  for  the  first nine months of both 1994 and
          1993  were  affected  by  several items of an infrequent and non-
          recurring  nature,  including  the  gain  recognized on the stock
          offering by BLHC and a gain on the sale of SLC's interest in BLHC
          in  1993,  gains from the termination of reinsurance arrangements
          in  both  periods  and  significant writedowns of mortgage-backed
          securities  in  1994.  In  addition,  in the first nine months of
          1993, SLC included in its results of operations its equity in the
          earnings   of  BLHC  and  reflected  significant  provisions  for
          consolidation,  reorganization  expenses and litigation expenses.
          Following  is a condensed summary of results for the three months
          and  the  nine months ended September 30, 1994 and 1993, by major
          sources of income and expense (in thousands):




                                                                              Three Months Ended           Nine Months Ended  
                                                                               September 30,                  September 30,   
                                                                              -------------------          ------------------- 
                                                                              1994           1993           1994           1993 
                                                                              ----           ----           ----           ---- 
                                                                                                         
        Earnings (loss) before non-recurring
           income (charges), equity in the earnings
           of BLHC, realized investment gains
           (losses), interest expense on long-term
           debt, and provision for income taxes                         $    8,924     $   (1,743)    $   31,257     $   15,090 
        Gain on BLHC stock offering                                                                                      99,376 
        Gain on sale of investment in BLHC                                                197,398                       197,398 
        Gain on reinsurance terminations                                                    5,525          8,735         22,643 
        Equity in operating earnings of BLHC                                                8,578                        29,117 
        Realized investment gains (losses)                                   3,725         18,876        (41,376)        32,245 
        Consolidation and reorganization expenses                                         (23,870)                      (23,870)
        Provision for costs of litigation
           and other contingencies                                                         (7,320)                       (7,320)
        Interest expense on long-term debt                                 (11,581)       (14,605)       (36,690)       (45,596)
        Income tax (expense) credit                                         (1,213)       (57,105)         3,298        (96,202)
                                                                        ----------     ----------     ----------     ---------- 

        Operating earnings (loss)                                             (145)       125,734        (34,776)       222,881 
        Less dividends on preferred stock                                   (3,500)        (7,700)       (11,325)       (23,100)
                                                                        ----------     ----------     ----------     ---------- 

        Operating earnings (loss) attributable to
           common stock                                                 $   (3,645)    $  118,034     $  (46,101)    $  199,781 
                                                                        ==========     ==========     ==========     ========== 


               For the nine months ended September 30, 1994, premium income
          and  other  considerations  decreased  $23.4 million, or 6.6%, as
          compared to the corresponding period 1993. Following is a summary
          of  premiums by major line of business for each of the respective
          periods (in thousands):



                                                        Nine Months Ended
                                                          September 30,  
                                                        -----------------
                                                         1994      1993 
                                                         ----      ----
                                                           
             Individual life and annuity              $  89,207  $  86,001
             Individual health                          163,787    165,230
             Group and other                             79,712    104,911
                                                      ---------  ---------
                                                      $ 332,706  $ 356,142
                                                      =========  =========


               Group  and  other  premium income declined $25.2 million, or
          2 4 %,  primarily  as  a  result  of  terminating  several  large
          unprofitable  group  health  cases  in  late 1993 and early 1994.
          SLC's  subsidiaries  presently  derive  substantial revenues from
          their  interest-sensitive  and  universal life products; however,
          for  financial  reporting  purposes,  these types of products are
          treated as deposit products and, therefore, premiums received are
          not reflected as a component of premium income.

               During  the  nine  months  ended  September  30,  1994,  net
          investment  income decreased $12.1 million, or 8%, as compared to
          the  corresponding period in 1993. Net investment income includes
          1) earnings on surplus investments and assets invested to support
          the  reserve   liabilities   of  the  Company's  traditional  and
          interest-sensitive  life  and  health insurance products (general
          investment


          portfolio)  and 2) investment activity related to separately held
          assets  supporting  a  GIC product, the credited rate on which is
          indexed  to  the  S&P  500 Stocks Composite Average (S&P 500). In
          addition,  in  1993,  net  investment  income included investment
          income  on  certain  mortgage-backed securities held in a special
          purpose  trust  (the  Trust)  securing the Trust's collateralized
          mortgage note obligation. The accounts of the Trust are no longer
          consolidated with those of the Company for periods after July 30,
          1993, as the result of SLC's sale of a 75% interest in the Trust.
          Assets  supporting  the  S&P 500 GIC product include, among other
          investments,  put  and call options on various equity based index
          futures, including the S&P 500. The return on such investments is
          highly volatile and, under certain market conditions, such as the
          overall  decline  in equity markets experienced in the first nine
          months  of  1994,  can  result  in investment losses, or negative
          investment  yields.  The negative investment yield experienced in
          the  first  half of 1994 on the assets supporting the indexed GIC
          product  was  more  than offset by a reduction in GIC benefits as
          discussed  below  under  the  analysis  of change in policyholder
          benefits.  Following is a summary of investment income (loss) for
          the  three  categories  of investments as described above for the
          nine months ended September 30, 1994 and 1993 (in thousands):



                                                      Nine Months Ended  
                                                        September 30,    
                                                      -----------------  
                                                       1994        1993 
                                                       ----        ---- 
                                                         
             General investment portfolio            $138,591  $125,874 
             Investments supporting indexed GIC
               product                                  6,468    20,714 
             Mortgage-backed securities held in
               the Trust                                         13,029 
                                                     --------  -------- 

             Gross investment income                  145,059   159,617 
             Less investment expenses                  (7,028)   (9,535)
                                                     --------  -------- 

             Net investment income                   $138,031  $150,082 
                                                     ========  ========


               The   increase  in  investment  income  from   the   general
          investment portfolio was attributable, in part, to a $3.9 million
          payment-in-kind  dividend  received  on the CFLIC preferred stock
          and  a  $2.0  million fee received upon the prepayment of certain
          notes  by Financial Benefit Group during the 1994 second quarter.
          In  addition,  beginning April 1, 1994, the effective date of the
          CFLIC  reinsurance   recaptures,   the   Company   has  reflected
          investment  income  on  the investments transferred from CFLIC to
          ERC.  Investment income on such assets approximated $10.4 million
          in  the 1994 period. Exclusive of the non-recurring dividend from
          CFLIC  and  the fee received from Financial Benefit Group, yields
          on  the  general investment portfolio averaged approximately 7.2%
          in  the first nine months of 1994 as compared to 6.5% in the same
          1993 period.


               Realized  investment  losses  totaled  $41.4 million for the
          first  nine  months  of  1994,  as  compared  to investment gains
          totaling   $32.2   million   for   the  comparable  1993  period.
          Substantially   all  of  the  investment   losses  in  1994  were
          attributable to writedowns of certain mortgage-backed securities,
          as  discussed  under  "Investment Portfolio." Investment gains in
          1993  included  $8.2  million  of  gains  resulting  from  BLHC's
          redemption of certain of its securities utilizing proceeds of its
          stock  offering  and  $27.8 million of gains on the sale of SLC's
          investment  in  CCP  Insurance, Inc. Other gains in 1993 resulted
          primarily  from  sales of fixed maturities and equity securities,
          which  were  offset,  in  part, by a $5.0 million writeoff of the
          Company's investment in a partnership owning equity securities in
          a company which had filed for bankruptcy. See Note 6 of the Notes
          to  Financial Statements included elsewhere in this Form 10-Q for
          a comparative analysis of realized investment gains and losses.

               Equity  in  the  earnings  of  equity  investees and limited
          partnerships  includes  SLC's  pro  rata  share  of the operating
          earnings  of  BLHC  and other investments in limited partnerships
          which  are  accounted  for  by the equity method. Following is an
          analysis of the components of such earnings (in thousands):



                                                       Nine Months Ended
                                                         September 30,
                                                       -----------------
                                                         1994      1993
                                                         ----      ----
                                                           
          Equity in operating earnings of:
             BLHC                                                $ 29,117
             Limited partnership investments           $  1,780     4,545
                                                       --------  --------
                                                       $  1,780  $ 33,662
                                                       ========  ========


               In  1994,  other  income includes a $4.8 million gain on the
          termination of the CFLIC reinsurance agreement and the redemption
          of  certain  of  SLC's  debt and equity securities, as previously
          discussed.  In  1993, other income included $22.6 million of non-
          recurring income associated with the termination of a reinsurance
          agreement  between  Bankers  and an SLC subsidiary. Excluding the
          income  from  the reinsurance transaction, other income decreased
          from $21.1 million in 1993 to $9.8 million in 1994. A substantial
          portion  of  the  decline  in other income was as a result of the
          recapture  of  the CFLIC reinsurance. Previously, the Company had
          reflected  its  share  of the profits from such reinsurance as an
          experience refund under the other income caption. Effective April
          1, 1994,   the   Company   recaptured   such  business  and   has
          subsequently  reflected  the results in the various line items of
          its  statement  of  earnings,  including primarily net investment
          income and policyholder benefits.

               Following  is  a  summary  of policyholder benefits by major
          business segment (in thousands):




                                                       Nine Months Ended
                                                          September 30,
                                                       -----------------
                                                         1994      1993
                                                         ----      ----
                                                           
             Individual life and annuity               $107,538  $103,489
             Individual health                          112,814   106,548
             Group and other                             50,910    77,139
             Accumulation products                       22,718    40,125
                                                       --------  --------
                                                       $293,980  $327,301
                                                       ========  ========


               Life  and  annuity  benefits  increased  approximately  $4.0
          million,  or  4%.  A  substantial portion of the increase in such
          benefits  was   attributable  to   the  recapture  of  the  CFLIC
          reinsurance  effective  April  1, 1994, and the reflection of the
          related  benefits in the 1994 second and third quarters which was
          offset,  in  part,  by a reduction in credited rates on interest-
          sensitive life insurance policies between the periods. Individual
          health    benefits   increased   $6.3   million,   reflecting   a
          deterioration  in  the individual health benefit ratio from 64.5%
          in  1993  to  68.9%  in 1994. The benefit ratio applicable to the
          Company's  medicare  supplement  business increased from 68.7% in
          the  first  nine  months  of 1993 to 75.8% in the comparable 1994
          period,  reflecting a deficiency in premiums charged for Medicare
          supplement  products in 1994. The Company received rate increases
          for  some  of  these  products  in 1994 and may seek approval for
          additional  rate  increases  in  1995.  Group  benefits decreased
          approximately $26.2 million, or 34%, primarily as a result of the
          termination  of  several  large group health cases, as previously
          discussed.  The  group benefit ratio decreased from 73.5% in 1993
          to  63.9%  in  1994.  Benefits  related  to accumulation products
          include  primarily  interest  credited to annuity and GIC account
          balances.  As  previously  discussed,  due  to reduced investment
          earnings, benefits attributable to the GIC product indexed to the
          S&P  500 totaled $4.3 million in the first nine months of 1994 as
          compared to benefits totaling $19.7 million in 1993.

               Other   operating  expenses  decreased  approximately  $60.4
          million  from  the 1993 period to the 1994 period. Following is a
          summary  of  the major items included in other operating expenses
          (in thousands):




                                                      Nine Months Ended
                                                         September 30,
                                                       -----------------
                                                        1994      1993
                                                        ----      ----
                                                           
             Non-deferrable commissions                $ 29,232  $ 32,895
             General and administrative expenses         66,441    87,258
             Taxes, licenses and fees                    12,598    12,936
             Consolidation and reorganization                      23,870
             Provision for costs of litigation
               and other contingencies                              7,320
             Placement fee for collateralized
               mortgage note obligations                            4,413
                                                       --------  --------
                                                       $108,271  $168,692
                                                       ========  ========


               Non-deferrable  commissions  decreased primarily as a result
          of  a  reduction  in  the  sale  of  new  group  health insurance
          products. General and administrative expenses decreased primarily
          as  a  result of the expense reduction and consolidation programs
          implemented  during  1993.  The  consolidation and reorganization
          expenses  in  the  1993  third  quarter  included a $10.8 million
          writedown  of  certain  home  office  real estate, a $9.8 million
          writeoff  of certain capitalized data processing costs and a $3.3
          million  writeoff of furniture and equipment. In addition, during
          the 1993 third quarter a $7.3 million provision was reflected for
          the  costs  associated  with pending litigation and certain other
          contingencies.   The  placement  fee  in  1993  relates  to   the
          refinancing    of    a    previously-consolidated    subsidiary's
          collateralized mortgage note obligations.

               Interest  expense  declined  $14.9 million, or approximately
          29%,  in  the  first  nine months of 1994 as compared to the same
          period  in  1993.  In 1994, SLC incurred interest expense only on
          its  outstanding  long-term  debt,  whereas  in  1993  it had two
          categories  of  interest expense, including interest on long-term
          debt  and  collateralized  mortgage obligations. Interest expense
          relative  to  long-term  debt,  declined  $8.9  million,  or 19%,
          primarily  as  a result of the retirement of approximately $120.9
          million  of  SLC's  16 1/2% Senior Subordinated Debentures during
          1993.  Through July 1993, SLC's consolidated results included the
          accounts  of  the Trust that held mortgage-backed securities used
          to collateralize certain promissory notes payable to unaffiliated
          parties. SLC, through ICH Funding, sponsored the formation of and
          held  a  residual  equity interest in the Trust. Interest expense
          related   to  the  Trust's  obligations  and  included  in  SLC's
          consolidated  results  totaled  $6.0  million for the first seven
          months  of 1993. In July 1993, SLC's and an affiliate's ownership
          interests  were  reduced  through a sale of a 75% interest in the
          Trust.  As  a  consequence of the sale, the accounts of the Trust
          are  no  longer  included  in  SLC's  consolidated results and no
          similar interest expense was incurred in 1994.
           
               An  income  tax  credit  in the 1994 first nine month period
          totaled  $3.3  million  on  a  pre-tax  loss  of  $38.1  million,
          representing  8.7%  of the pre-tax loss. In the first nine months
          of 


          1993, income tax expense represented 30% of pre-tax earnings. The
          unusual  relationship   in   1994  resulted  primarily  from  the
          amortization  of  excess  cost  for which there are no income tax
          consequences,  the  loss  of approximately $4.5 million in income
          tax  benefits  as  a result of SLC's redemption of its own equity
          securities  in the CFLIC transactions (see Note 8 of the Notes to
          Financial Statements included elsewhere in this Form 10-Q), and a
          $5.0  million increase in the deferred income tax asset valuation
          allowance  due  to  uncertainties  as to the Company's ability to
          generate  future  investment  gains  in  an  amount sufficient to
          utilize all of the losses resulting from the writedown of certain
          mortgage-backed  securities.  In  1993,  the  effective  tax rate
          differed  from  the expected 35% rate as a result of amortization
          of  excess  cost  and  an $8.8 million reduction in the valuation
          allowance  relative  to  SLC's  deferred income tax assets. SLC's
          deferred  income tax assets, before valuation allowance, declined
          from  $145.1  million  at  year-end  1992  to  $28.1  million  at
          September  30, 1993, primarily as a result of the gain recognized
          on  the  BLHC  stock  offering  and other realized and unrealized
          investment  gains  in the first nine months of 1993. Accordingly,
          the  valuation  allowance  relative  to SLC's deferred income tax
          assets  totaling  $24.1  million  at year-end 1992 was reduced to
          $15.3  million  at  September  30,  1993,  based  on management's
          assessment  that  SLC's  ability  to  realize the benefits of its
          r e maining   tax   assets,   specifically   its   capital   loss
          carryforwards, had been significantly enhanced.

               SLC  recognized  a  $1.8  million charge in 1993, net of $.9
          million  in  deferred taxes, for the cumulative effect to January
          1,  1993,  of  the  adoption of Statement of Financial Accounting
          Standards    (SFAS)   No.   106,   "Employers'   Accounting   for
          Postretirement  Benefits Other than Pensions." SLC had previously
          provided  a  liability  totaling $20.1 million for postretirement
          benefits  for  retirees of certain acquired companies through its
          purchase  accounting  relative to such companies. The 1993 charge
          reflected  the  cost of providing postretirement benefits for its
          remaining  employees.  SLC  also reported extraordinary losses in
          1993  totaling $1.4 million, net of tax effects, related to early
          extinguishment  of  debt.  See  Note  7 of the Notes to Financial
          Statements  included  elsewhere  in this Form 10-Q for additional
          information regarding such extraordinary losses.

               Preferred  dividend requirements declined $11.8 million from
          $23.1  million  in the first nine months of 1993 to $11.3 million
          in  the  1994 comparable period. Utilizing proceeds from the sale
          of its interest in BLHC, SLC redeemed $50 million stated value of
          its  11% Series 1987-A Preferred Stock on September 30, 1993, and
          $50 million stated value of its 16% Series 1987-C Preferred Stock
          on  December  2,  1993.  In  addition, SLC redeemed $29.2 million
          stated value of its preferred stocks in the CFLIC transaction and
          there  were no dividends declared on such preferred stocks during
          the 1994 second quarter.


               SLC  incurred a $.1 million operating loss (before preferred
          dividend  requirements)  for the three months ended September 30,
          1994, as compared to operating earnings of $125.7 million for the
          same  period in 1993. The operating results for the third quarter
          of 1993 were effected by numerous items of a non-recurring nature
          as  previously  discussed  under  the analysis of results for the
          first  nine  months,  including  the  gain  on  the sale of SLC's
          investment  in  BLHC  and  realized  investment  gains  primarily
          resulting  from the sale of SLC's investment in CCP Insurance. In
          addition,  in the 1993 third quarter, SLC reflected a substantial
          provision  for  consolidation  and  reorganization expenses and a
          provision  for  certain litigation costs and other contingencies.
          Results of operations, before the nonrecurring credits (charges),
          equity  in  the  earnings  of  BLHC,  realized  investment  gains
          (losses),  interest  expense on long-term debt and provisions for
          income  taxes,  improved approximately $10.6 million, from a loss
          of $1.7 million for the three months ended September 30, 1993, to
          earnings of $8.9 million for the three months ended September 30,
          1994.  Factors  contributing to such improvement include the same
          items  as  previously discussed under the analysis of results for
          the  first  nine  months,  including  a  reduction  in  operating
          expenses,  an  improvement  in the results of the group and other
          insurance  segment,  an  improvement  in investment yields, and a
          widening  of  the  spread between earnings on invested assets and
          interest   credited  to  policyholder  account  balances.   These
          improvements  were offset, in part, by a slight increase in death
          benefits  in  the  individual  life insurance segment. Individual
          life  insurance death benefits can vary significantly from period
          to  period.  The ratio of benefits incurred for individual health
          insurance  products totaled 67.5% of earned premiums in the third
          quarter  of  1994,  as  compared  to 67.4% for the same period in
          1993.

               Realized   investment  gains  for  the  three  months  ended
          September 30, 1994, totaled $3.7 million, primarily from sales of
          real  estate.  Realized  gains  in  the  third  quarter  of  1993
          consisted  primarily  of  the  gain  reflected on the sale of CCP
          Insurance,  reduced by losses on mortgage-backed securities, real
          estate  and  other  investments.  See  Note  6  of  the  Notes to
          Financial  Statements  included elsewhere in this Form 10-Q for a
          comparative  analysis  of  realized  gains  and  losses. Interest
          expense  declined  24.5%  from  $15.3  million  in the 1993 third
          quarter  to $11.6 million in the 1994 third quarter, primarily as
          a  result  of debt reductions as previously discussed. Similarly,
          preferred  dividend requirements declined 54.5% from $7.7 million
          in  the  1993  third  quarter  to  $3.5 million in the 1994 third
          quarter,  primarily  as  a  result  of  the  redemption of $129.2
          million of SLC's preferred stocks between the periods.

               Reporting  results  of  insurance  operations on a quarterly
          basis   necessitates  numerous  estimates  throughout  the  year,
          principally  in   the   calculation   of  reserves   and  in  the
          determination  of the effective rate for federal income taxes. It
          is  the  Company's practice to review its estimates at the end of
          each quarter and, if


          necessary,  make  appropriate  refinements,  with  the  resulting
          effect  being reported in current operations. Only at year-end is
          the  Company  able to assess retrospectively the precision of its
          previous  quarter estimates. The Company's fourth quarter results
          contain  the  effect of the difference between previous estimates
          and  final  year  end  results, and therefore, the results for an
          interim  period  may  not  be  indicative  of the results for the
          entire year.


                              PART II. OTHER INFORMATION


          ITEM 1.  LEGAL PROCEEDINGS.

               Reference  is  made  to  Item  1 of Part II of the Quarterly
          Report  on  Form  10-Q  of  the  Registrant for the quarter ended
          September  30, 1994, in which developments in the following legal
          proceedings numbered 1 and 2 were reported:

               1.   WILLIAM  D.  CASTLE,  ET  AL.  V.  MODERN AMERICAN LIFE
          INSURANCE  COMPANY,  CV93-10275  (the "CASTLE case"): On July 27,
          1994, the Circuit Court entered an order granting the plaintiffs'
          motion  for  certification  of  the  suit  as  a class action and
          certified six subclasses composed of the persons who own or owned
          the so-called charter contracts purchased from Modern and five of
          its predecessor corporations.

               2.   ROBERT  J. MEYER, ET AL. V. JAY ANGOFF, DIRECTOR OF THE
          MISSOURI   DEPARTMENT  OF  INSURANCE  AND  MODERN  AMERICAN  LIFE
          INSURANCE  COMPANY,  CV193-1331CC (the "MEYER case"): On July 16,
          1994,  the  Cole Circuit Court issued an order indicating that it
          had  reviewed the Department's decision on the record pursuant to
          Missouri's administrative procedure act and affirmed the order of
          the  Missouri  Director  of  Insurance.  On  August 16, 1994, the
          plaintiff's  in  the  MEYER  case  appealed the order of the Cole
          Circuit Court to the Missouri Court of Appeals.

               Management  believes  they have meritorious defenses to both
          the  CASTLE  and  MEYER  cases  and  intend  to defend both cases
          vigorously.  For  further  information  regarding  the  MEYER and
          CASTLE  cases,  see  Note  5 to the Financial Statements included
          elsewhere in this Form 10-Q, which Note is incorporated herein by
          reference in its entirety.

               3.   DEPARTMENT OF INSURANCE OF THE STATE OF CALIFORNIA (THE
          "DEPARTMENT")   PROCEEDING  AGAINST  PHILADELPHIA  AMERICAN  LIFE
          INSURANCE  COMPANY  ("PALICO"):  On  September  30, 1994, PALICO,
          without admitting that it had engaged in a pattern or practice of
          violating the Unfair Claims Settlement Practices Regulations (the
          "Regulations")  of  California,  entered  into  a stipulation and
          waiver  with  the  Department  pursuant to which PALICO agreed to
          cease  and  desist  from violating certain of the Regulations and
          the California Insurance Code and paid $200,000 to the Department
          in respect of this matter.

               4.   IRS PROCEEDING. For updated information relating to the
          Notices  of  Proposed  Deficiencies issued by the IRS for the tax
          years  1986  through  1989,  see Note 5 to the Notes to Financial
          Statements included elsewhere in this Form 10-Q, which discussion
          is incorporated herein by reference.


               The  Company  has  no developments to report for the quarter
          ended  September  30, 1994 in any other previously reported legal
          proceeding.


          ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K.

               (a)  The  exhibits listed on the Index to Exhibits appearing
          on page 38 are filed herewith.

               (b)  During  the  quarter  ended September 30, 1994, on July
          15, 1994, SLC filed a Report on Form 8-K, dated June 30, 1994, to
          report,  under  Item  5  of that form, the recapture of insurance
          business  and  repurchase  of  securities  contemplated  by  that
          certain  agreement,  dated June 15, 1993, among SLC, Consolidated
          Fidelity   Life  Insurance  Company  ("CFLIC")  and  Consolidated
          National   Corporation   ("CNC"),   as   amended,  including  (1)
          termination  of  the  agreement pursuant to which CFLIC reinsured
          certain business written by a subsidiary of the SLC and (2) SLC's
          acquisition   from   CFLIC  of  the  following  debt  and  equity
          securities of SLC that CFLIC held: a senior secured loan, with an
          outstanding  principal  balance of $30 million; 541,563 shares of
          Series  1984-A   Preferred  stock,   stated   value  $22,242,000,
          constituting  all  of the shares of that series then outstanding;
          140,000  shares of $4.50 Redeemable Preferred stock, Series 1987-
          B,  stated  value  $7,000,000,  constituting all of the shares of
          that series then outstanding; and 620,423 shares of Common Stock.

               On  October  13, 1994, SLC filed a Report on Form 8-K, dated
          October  10,  1994,  to  report  under  Item  5 of that form, (1)
          realized  losses  in  the amount of $46.4 million in the value of
          certain of its investments in collateralized mortgage obligations
          were  appropriate  as of the quarter ended March 31, 1994 and (2)
          the  resignation  of  Robert L. Beisenherz as the Chairman of the
          Board,  Chief  Executive  Officer and President of the Registrant
          and  the  appointment  of  James  R.  Kerber  as the Registrant's
          President  and  Chief  Executive Officer and as a director of the
          Registrant.


                                      SIGNATURES

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

                                        SOUTHWESTERN LIFE CORPORATION 



                                        BY:/s/James R. Kerber
                                           ---------------------------
                                           James R. Kerber
                                           Chief Executive Officer and
                                           President
               


                                        BY:/s/John T. Hull
                                           ---------------------------
                                           John T. Hull
                                           Executive Vice President,
                                           Chief Financial Officer and
                                           Principal Accounting Officer
               

          Date:  November 14, 1994




                                  INDEX TO EXHIBITS

          Exhibit                                                Sequential
            No.                      Description                  Page No. 
          -------                    ------------                 ----------
                                                                
          3.1       Restated Certificate of Incorporation of
                    Registrant dated October 10, 1994 . . . . . . . . 39   

          3.2       Bylaws of Registrant dated October 7,
                    1994  . . . . . . . . . . . . . . . . . . . . . . 64   

          10.1      Amended and Restated 1990 Stock Option
                    Incentive Plan of Registrant dated
                    October 10, 1994  . . . . . . . . . . . . . . . . 96   

          10.2      Amended and Restated Supplemental Benefit
                    Agreement of Registrant dated October 10,
                    1994  . . . . . . . . . . . . . . . . . . . . . . 104  

          10.3      Salaried Employees Severance Pay Plan of 
                    Registrant as restated effective October 1,
                    1994  . . . . . . . . . . . . . . . . . . . . . . 109  

          10.4      Participation Agreement between Registrant
                    and Employers Reassurance Corporation dated
                    July 1, 1994  . . . . . . . . . . . . . . . . . . 121  

          10.5      Letter Agreement between Registrant and
                    Consolidated Fidelity Life Insurance
                    Company Regarding Termination of Call and
                    Put Option dated June 30, 1994  . . . . . . . . . 127  

          10.6      Letter Agreement between Registrant and 
                    Stephens Inc. Regarding Engagement to
                    Perform Investment Advisory Services for
                    the Registrant dated May 3, 1994  . . . . . . . . 130  

          11.1      Computation of Earnings (Loss) Per Share of
                    Common Stock on Average Shares Outstanding
                    and Fully Diluted Bases for the Three
                    Months and the Nine Months ended
                    September 30, 1994 and 1993 . . . . . . . . . . . 135  

          27        Financial Data Schedules  . . . . . . . . . . . . 137

EX-27

 

<ARTICLE> 7
<MULTIPLIER> 1,000
       
                             
<PERIOD-TYPE>                   9-MOS
<FISCAL-YEAR-END>                          DEC-31-1994
<PERIOD-START>                             JAN-01-1994
<PERIOD-END>                               SEP-30-1994
<DEBT-HELD-FOR-SALE>                         1,675,198
<DEBT-CARRYING-VALUE>                           15,101
<DEBT-MARKET-VALUE>                             13,619
<EQUITIES>                                      17,272
<MORTGAGE>                                     122,540
<REAL-ESTATE>                                   61,696
<TOTAL-INVEST>                               2,185,876
<CASH>                                         210,881
<RECOVER-REINSURE>                                   0
<DEFERRED-ACQUISITION>                         296,130
<TOTAL-ASSETS>                               3,391,639
<POLICY-LOSSES>                              2,588,098
<UNEARNED-PREMIUMS>                                  0
<POLICY-OTHER>                                       0
<POLICY-HOLDER-FUNDS>                                0
<NOTES-PAYABLE>                                373,062
<COMMON>                                        71,752
<PREFERRED-MANDATORY>                                0
<PREFERRED>                                    199,997
<OTHER-SE>                                      28,488
<TOTAL-LIABILITY-AND-EQUITY>                 3,391,639
<PREMIUMS>                                     332,706
<INVESTMENT-INCOME>                            138,031
<INVESTMENT-GAINS>                            (41,376)
<OTHER-INCOME>                                  14,591
<BENEFITS>                                     293,980
<UNDERWRITING-AMORTIZATION>                     37,672
<UNDERWRITING-OTHER>                           108,271
<INCOME-PRETAX>                               (38,074)
<INCOME-TAX>                                   (3,298)
<INCOME-CONTINUING>                           (34,776)
<DISCONTINUED>                                       0
<EXTRAORDINARY>                                      0
<CHANGES>                                            0
<NET-INCOME>                                  (34,776)
<EPS-PRIMARY>                                    (.97)
<EPS-DILUTED>                                    (.97)
<RESERVE-OPEN>                                       0
<PROVISION-CURRENT>                                  0
<PROVISION-PRIOR>                                    0
<PAYMENTS-CURRENT>                                   0
<PAYMENTS-PRIOR>                                     0
<RESERVE-CLOSE>                                      0
<CUMULATIVE-DEFICIENCY>                              0