32

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549


                                   FORM 10-Q

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


   For the Quarter Ended September 30, 1997    Commission file number 1-0557
                         ------------------                           ------


                     POLICY MANAGEMENT SYSTEMS CORPORATION
            (Exact name of registrant as specified in its charter)


     South  Carolina                                             57-0723125
     ---------------                                             ----------
(State  or  other  jurisdiction                               (IRS Employer
 of  incorporation)                                        Identification No.)


One  PMSC  Center  (PO  Box  Ten)
Blythewood,  SC  (Columbia,  SC)                            29016  (29202)
--------------------------------                            --------------
(Address  of  principal  executive                           (Zip  Code)
  offices)


Registrant's  telephone  number,  including  area  code  (803)  333-4000

     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.

       18,331,102 Common shares, $.01 par value, as of November 7, 1997


     The  information  furnished herein reflects all adjustments which are, in
the  opinion of management, necessary for the fair presentation of the results
for the periods reported.  Such information should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended December 31, 1996.

<PAGE>
<TABLE>
<CAPTION>

                                POLICY MANAGEMENT SYSTEMS CORPORATION



                                                INDEX



PART  I. FINANCIAL  INFORMATION                                                                   PAGE



<S>                                                                                                <C>
Item 1. Financial Statements

Consolidated Statements of Income for the Three and Nine Months ended September 30, 1997 and 1996   3

Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996. . . . . . . . . . . .   4

Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1997 and 1996 . . .   5

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

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


PART II. OTHER INFORMATION


Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23


Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
</TABLE>




<PAGE>
<TABLE>
<CAPTION>

                                     PART I
                              FINANCIAL INFORMATION
                      POLICY MANAGEMENT SYSTEMS CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME

                                        Three  Months          Nine  Months
                                      Ended September 30,   Ended September 30,
                                       1997        1996       1997       1996
                                                     (Unaudited)
-------------------------------------------------------------------------------
                                        (In Thousands, Except Per Share Data)

<S>                                   <C>        <C>        <C>        <C>
Revenues
 Licensing . . . . . . . . . . . . .  $ 33,375   $ 24,186   $ 91,900   $ 74,320 
 Services. . . . . . . . . . . . . .   130,692    122,812    392,223    343,193 
                                      ---------  ---------  ---------  ---------
                                       164,067    146,998    484,123    417,513 
                                      ---------  ---------  ---------  ---------
Operating expenses
 Cost of revenues
  Employee compensation & benefits .    60,163     47,192    167,179    131,523 
  Computer and communications
   expenses. . . . . . . . . . . . .     8,737      7,967     26,052     24,038 
  Information services and
   data acquisition costs. . . . . .    22,925     29,981     84,389     87,890 
  Depreciation and amortization of
   property, equipment and
   capitalized software costs. . . .    14,882     12,539     43,297     35,512 
  Other costs & expenses                 9,115     13,669     31,952     29,419 
 Selling, general and administrative
   expenses. . . . . . . . . . . . .    24,227     17,738     67,508     52,329 
 Amortization of goodwill and
   other intangibles . . . . . . . .     2,588      2,616      7,918      7,777 
 Litigation settlement . . . . . . .         -          -          -     (9,422)
                                      ---------  ---------  ---------  ---------
                                       142,637    131,702    428,295    359,066 
                                      ---------  ---------  ---------  ---------

Operating income . . . . . . . . . .    21,430     15,296     55,828     58,447 

Equity in earnings of
   unconsolidated affiliate. . . . .       274          -        964          - 

Other Income and Expenses
  Investment income. . . . . . . . .       372        376      1,143      1,898 
  Interest expense and other
   charges . . . . . . . . . . . . .    (1,378)    (1,475)    (3,951)    (3,544)
                                      ---------  ---------  ---------  ---------
                                        (1,006)    (1,099)    (2,808)    (1,646)
                                      ---------  ---------  ---------  ---------
Income before income taxes . . . . .    20,698     14,197     53,984     56,801 
Income taxes . . . . . . . . . . . .     7,760      5,190     20,261     20,363 
                                      ---------  ---------  ---------  ---------
Net income . . . . . . . . . . . . .  $ 12,938   $  9,007   $ 33,723   $ 36,438 
                                      =========  =========  =========  =========
Net income per share . . . . . . . .  $    .71   $    .50   $   1.85   $   1.94 
                                      =========  =========  =========  =========

Weighted average number of shares. .    18,230     18,179     18,199     18,747 

<FN>

See  accompanying  notes
</TABLE>



<PAGE>
<TABLE>
<CAPTION>

                     POLICY MANAGEMENT SYSTEMS CORPORATION
                          CONSOLIDATED BALANCE SHEETS

                                                (Unaudited)    (Audited)
                                                September 30, December 31,
                                                    1997        1996
-------------------------------------------------------------------------
                                        (In Thousands, Except Share Data)
Assets
<S>                                                <C>        <C>
Current assets
 Cash and equivalents . . . . . . . . . . . . . .  $ 18,639   $ 22,121
 Marketable securities. . . . . . . . . . . . . .     3,006      2,234
 Receivables, net of allowance for uncollectible
  amounts of $1,057 ($883 at 1996). . . . . . . .   139,115    116,113
 Income tax receivable. . . . . . . . . . . . . .     1,439      1,383
 Deferred income taxes. . . . . . . . . . . . . .    15,281     15,343
 Other. . . . . . . . . . . . . . . . . . . . . .    16,684     15,840
                                                   ---------  --------
   Total current assets . . . . . . . . . . . . .   194,164    173,034

Property and equipment, at cost less accumulated
 depreciation and amortization of $134,375
 ($122,462 at 1996) . . . . . . . . . . . . . . .   114,357    115,757
Receivables . . . . . . . . . . . . . . . . . . .     3,481      4,866
Income tax receivable . . . . . . . . . . . . . .     4,041      4,041
Goodwill and other intangibles, net . . . . . . .    71,703     83,363
Capitalized software costs, net . . . . . . . . .   197,412    177,875
Deferred income taxes . . . . . . . . . . . . . .       803      1,560
Investments . . . . . . . . . . . . . . . . . . .     6,211      6,483
Other . . . . . . . . . . . . . . . . . . . . . .     2,001      5,239
                                                   ---------  --------
     Total assets . . . . . . . . . . . . . . . .  $594,173   $572,218
                                                   =========  ========

Liabilities
Current liabilities
 Accounts payable and accrued expenses. . . . . .  $ 49,690   $ 61,435
 Accrued restructuring charges. . . . . . . . . .       164      2,478
 Accrued contract termination costs . . . . . . .       845        407
 Current portion of long-term debt. . . . . . . .     1,941     31,222
 Income taxes payable . . . . . . . . . . . . . .    12,477      6,623
 Unearned revenues. . . . . . . . . . . . . . . .     8,478      9,840
 Other. . . . . . . . . . . . . . . . . . . . . .       396        631
                                                   ---------  --------
   Total current liabilities. . . . . . . . . . .    73,991    112,636

Long-term debt. . . . . . . . . . . . . . . . . .    55,985     34,268
Deferred income taxes . . . . . . . . . . . . . .    64,650     58,370
Accrued restructuring charges . . . . . . . . . .     1,299      1,340
Other . . . . . . . . . . . . . . . . . . . . . .     3,128      2,352
                                                   ---------  --------
    Total liabilities . . . . . . . . . . . . . .   199,053    208,966
                                                   ---------  --------

Commitments and contingencies (Note 1)

Stockholders' Equity
Special stock, $.01 par value, 5,000,000 shares
 authorized . . . . . . . . . . . . . . . . . . .         -          -
Common stock, $.01 par value, 75,000,000 shares
 authorized, 18,269,339 shares issued and
 outstanding (18,179,186 at December 31, 1996). .       183        182
Additional paid-in capital. . . . . . . . . . . .   110,036    106,104
Retained earnings . . . . . . . . . . . . . . . .   289,833    256,110
Foreign currency translation adjustment . . . . .    (4,932)       856
                                                   ---------  --------
    Total stockholders' equity. . . . . . . . . .   395,120    363,252
                                                   ---------  --------
     Total liabilities and stockholders' equity .  $594,173   $572,218
                                                   =========  ========
<FN>


See  accompanying  notes
</TABLE>



<PAGE>
<TABLE>
<CAPTION>

                     POLICY MANAGEMENT SYSTEMS CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

                                                      Nine Months
                                                  Ended September 30,
                                                   1997         1996
----------------------------------------------------------------------
                                                     (In Thousands)
<S>                                              <C>         <C>
Operating Activities
 Net income . . . . . . . . . . . . . . . . . .  $  33,723   $  36,438 
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation and amortization. . . . . . . .     53,694      45,507 
   Deferred income taxes. . . . . . . . . . . .      7,059       6,342 
   Provision for uncollectible accounts . . . .      1,763         456 
   Impairment and restructuring charges . . . .        444           - 
 Changes in assets and liabilities:
   Accrued restructuring and lease
    termination costs . . . . . . . . . . . . .   (  2,355)   (  8,080)
   Receivables. . . . . . . . . . . . . . . . .   ( 23,380)   (  4,742)
   Income taxes receivable. . . . . . . . . . .   (     56)     10,181 
   Accounts payable and accrued expenses. . . .   ( 12,077)   ( 21,421)
   Income taxes payable . . . . . . . . . . . .      5,854       6,561 
 Other, net . . . . . . . . . . . . . . . . . .   (    943)   (  2,001)
                                                 ----------  ----------
      Cash provided by operations . . . . . . .     63,726      69,241 
                                                 ----------  ----------

Investing Activities
 Proceeds from sales/maturities of marketable
  securities. . . . . . . . . . . . . . . . . .        250       2,850 
 Investment in unconsolidated affiliate . . . .          -    (  2,315)
 Acquisition of property and equipment. . . . .   ( 22,430)   ( 20,676)
 Capitalized internal software development
  costs . . . . . . . . . . . . . . . . . . . .   ( 46,809)   ( 41,953)
 Proceeds from sale of business unit. . . . . .      2,900           - 
 Purchased software . . . . . . . . . . . . . .          -    (  1,192)
 Business acquisition . . . . . . . . . . . . .          -    (  6,777)
 Proceeds from disposal of property and
  equipment . . . . . . . . . . . . . . . . . .      1,183         747 
                                                 ----------  ----------
      Cash used by investing activities . . . .   ( 64,906)   ( 69,316)
                                                 ----------  ----------

Financing Activities
 Payments on long-term debt . . . . . . . . . .   (120,597)   (138,693)
 Repurchase of common stock . . . . . . . . . .          -    ( 73,603)
 Proceeds from borrowing under credit facility.    113,033     179,550 
 Issuance of common stock under stock
  option plans. . . . . . . . . . . . . . . . .      3,933       6,283 
                                                 ----------  ----------
      Cash used by financing activities . . . .   (  3,631)   ( 26,463)
                                                 ----------  ----------

Effect of exchange rate changes on cash . . . .      1,329    (    526)
Net decrease in cash and
 equivalents. . . . . . . . . . . . . . . . . .   (  3,482)    (27,064)
Cash and equivalents at beginning of period . .     22,121      35,094 
                                                 ----------  ----------
Cash and equivalents at end of period . . . . .  $  18,639   $   8,030 
                                                 ==========  ==========

Supplemental Information
 Interest paid. . . . . . . . . . . . . . . . .  $   3,636   $   1,116 
 Income taxes paid (refunded) . . . . . . . . .      5,471     ( 3,425)

<FN>

See  accompanying  notes
</TABLE>



<PAGE>
                     POLICY MANAGEMENT SYSTEMS CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              SEPTEMBER 30, 1997


NOTE  1.          CONTINGENCIES

     In  June 1993, the Securities and Exchange Commission ("SEC") commenced a
formal  investigation  into possible violations of the Federal securities laws
in  connection with Policy Management Systems Corporation's ("Company") public
reports  and  financial  statements,  as  well  as  trading  in  the Company's
securities.

     On  July  22,  1997, the Company announced a settlement with the SEC that
closed  the  investigation  of the Company's 1990 to 1993 financial statements
and  reports.   The settlement became effective on July 22 simultaneously with
the  filing  of  an  SEC  civil  complaint  in the U.S. District Court for the
District  of  South  Carolina.    In consenting to the settlement, the Company
neither  admitted  nor  denied  the  SEC  allegations  of reporting, books and
records, and internal control violations. The key provisions of the settlement
are  an  injunction  requiring  future  compliance with the federal securities
laws,  payment  by  the  Company of a $1 million civil penalty and payments by
five  current  and  former  officers  of  $20,000  civil  penalties.

     In  March 1994, Security Life of Denver Insurance Company ("SLD") brought
suit  against the Company in the United States District Court for the District
of  Colorado  alleging  breach of a life insurance joint development contract,
unfair trade practices, and fraud. SLD sought direct, indirect, consequential,
and  punitive  damages in excess of $80 million. In February 1997, following a
jury  trial,  the  Court  and  jury  entered judgments in favor of the Company
against  SLD  on the claims of fraud and unfair trade practices. A verdict and
judgment  was  returned against the Company for breach of contract and damages
of  $3.5  million,  together with pre-judgment interest. In addition, the jury
found that SLD was using the Company's trade secrets without permission.  As a
result  of post trial motions, the judgment was amended to delete the award of
pre-judgment  interest  and  SLD  was ordered to return the Company's systems.
Both  the Company and SLD have appealed to the United States Court of Appeals.
Changes  in  the  status  of  this  proceeding could result in a change in the
Company's  estimate  of  anticipated  liability  for the costs associated with
these  matters.

     The  Company  is also presently involved in litigation which commenced in
January  of  1996  in  the Circuit Court in Greenville County, South Carolina,
with  Liberty Life Insurance Company and certain of its affiliates ("Liberty")
arising  out  of  the  parties'  prior contractual relationship related to the
development  and  licensing  of  Series  III  life  insurance  systems and the
subsequent  licensing  of  the  Company's  Cybertek  life  insurance  systems.
Liberty's  complaint alleges breach of contract, breach of express and implied
warranties,  fraudulent  inducement,  breach  of  contract  accompanied  by  a
fraudulent  act,  and  recission. Liberty has alleged actual and consequential
damages  of  approximately  $30  million  and  also  seeks treble and punitive
damages. The Company has asserted various affirmative defenses and is pursuing
counterclaims  against  Liberty  for breach of contract, recoupment, breach of
good  faith  and  fair  dealing,  and  breach  of  contract  accompanied  by a
fraudulent act.  The Company is seeking equitable relief, including injunctive
relief,  and  currently  unspecified  actual,  compensatory  and consequential
damages.

     Based upon the allegations raised in a prior lawsuit and the SLD lawsuit,
the Company's insurer, St. Paul Mercury Insurance Company ("St. Paul"),in June
1995  commenced  a  declaratory  judgment action in the United States District
Court  for the District of South Carolina against the Company to determine St.
Paul's  obligation  for  defense  costs  and  to indemnify the Company for any
payment  related to these claims. The Company filed a counterclaim against St.
Paul  seeking to recover the Company's defense costs in both matters, coverage
for  damages, if any, awarded in those matters, and consequential and punitive
damages.

     In  connection  with the dismissal of the prior lawsuit, St. Paul and the
Company  agreed  to  dismiss with prejudice all claims against each other with
respect  to  the  matter, and St. Paul agreed to reimburse the Company for the
Company's legal fees. The action continues as to the parties claims related to
insurance  coverage  for  the  SLD  matter.

     In  addition  to  the  litigation described above, there are also various
other  litigation  proceedings  and  claims  arising in the ordinary course of
business.  The  Company believes it has meritorious defenses and is vigorously
defending  these  matters.

     While  the  resolution  of any of the above matters could have a material
adverse  effect  on  the  results of operations in future periods, the Company
does  not  expect  these  matters  to  have  a  material adverse effect on its
consolidated  financial  position.  The Company, however, is unable to predict
the  ultimate  outcome  or  the  potential  financial impact of these matters.


NOTE  2.          PREPARATION  OF  INTERIM  FINANCIAL  STATEMENTS

     The  consolidated  financial  statements  of  Policy  Management  Systems
Corporation have been prepared in accordance with the rules and regulations of
the  SEC.    These  consolidated  financial  statements  include estimates and
assumptions  that  affect  the  reported  amounts  of  assets and liabilities,
disclosure  of  contingent  assets and liabilities and the amounts of revenues
and  expenses.    Actual  results  could  differ from those estimated.  In the
opinion  of management, these statements include all adjustments necessary for
a fair presentation of the results of all interim periods reported herein. All
adjustments  are  of  a  normal  recurring  nature unless otherwise disclosed.
Certain  information  and  footnote  disclosures  prepared  in accordance with
generally accepted accounting principles have been either condensed or omitted
pursuant  to SEC rules and regulations.  However, management believes that the
disclosures  made  are  adequate  for  a  fair  presentation  of  results  of
operations,  financial  position and cash flows.  These consolidated financial
statements  should  be  read  in  conjunction  with the consolidated financial
statements  and  accompanying  notes  included  in the Company's latest annual
report  on  Form  10-K.


NOTE  3.          NEW  ACCOUNTING  STANDARDS

     In  February  1997,  Statement of Financial Accounting Standards No. 128,
"Earnings  Per Share" ("FAS 128"), was issued.  FAS 128 is designed to improve
the  earnings  per  share  information  provided  in  financial  statements by
simplifying  the  existing  computational  guidelines, revising the disclosure
requirements,  and  increasing the comparability of earnings per share data on
an  international basis.  FAS 128 is effective for financial statements issued
for  periods  ending  after  December  15, 1997, including interim periods and
earlier  application  is not permitted.  The Company will adopt FAS 128 on its
effective  date.    Pro forma earnings per share of the Company computed using
FAS  128  is  not  different  from  earnings per share computed using existing
standards  and  guidelines.

     In  June  1997,  Statement  of  Financial  Accounting  Standards  No. 130
"Reporting  Comprehensive Income" ("FAS 130") was issued.  FAS 130 establishes
standards  for  reporting  and  display  of  comprehensive  income  and  its
components.    FAS  130 is effective for fiscal years beginning after December
15, 1997. The effect on the Company's financial statements will be immaterial.
The  Company  will  adopt  FAS  130  on  its  effective  date.

     In  June  1997,  Statement  of  Financial  Accounting  Standards  No. 131
"Disclosures  about  Segments  of an Enterprise and Related Information" ("FAS
131")  was issued.  FAS 131 is designed to improve the information provided in
financial statements about the different types of business activities in which
the  enterprise  engages  and  economic  environments  in which the enterprise
operates.   FAS 131 is effective for fiscal years beginning after December 15,
1997.    Earlier  application is encouraged.  The Company does not believe the
adoption  of  FAS 131 will have a material impact on its financial statements.

NOTE  4.          RECLASSIFICATION

     Certain  prior  year amounts have been reclassified to conform to current
year  presentation.

<PAGE>
                     POLICY MANAGEMENT SYSTEMS CORPORATION
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The  following  discussion  and  analysis  provides  information  which
management  believes  is  relevant  to  an assessment and understanding of the
Company's  consolidated  results  of  operations and financial condition.  The
discussion  should  be  read  in  conjunction  with the consolidated financial
statements  and  notes thereto contained in Part I of this report on Form 10-Q
and  with the Company's Annual Report on Form 10-K for the year ended December
31,  1996.

                             RESULTS OF OPERATIONS

     Set  forth below are certain operating items expressed as a percentage of
revenues  and  the  percent  increase  (decrease)  for those items between the
periods  presented:
<TABLE>
<CAPTION>

                                                                        1997 vs. 1996
                                                                           Percent
                                          Percentage of Revenues      Increase (Decrease)
                                      ------------------------------  ------------------
                                          Three           Nine         Three    Nine
                                       Months Ended    Months Ended    Months   Months
                                       September 30,   September 30,   Ended    Ended
                                      --------------  --------------
                                       1997    1996    1997    1996      September 30
                                      ------  ------  ------  ------  ------------------

<S>                                   <C>     <C>     <C>     <C>     <C>     <C>
Revenues
 Licensing . . . . . . . . . . . . .   20.3%   16.4%   18.9%   17.8%   38.0%   23.7%
 Services. . . . . . . . . . . . . .   79.7    83.6    81.1    82.2     6.4    14.3 
                                      ------  ------  ------  ------                
                                      100.0   100.0   100.0   100.0    11.6    16.0 
Operating expenses
 Cost of revenues
  Employee compensation and benefits   36.7    32.1    34.5    31.5    27.5    27.1 
  Computer & communication expenses.    5.3     5.4     5.4     5.8     9.7     8.4 
  Information services & data
   acquisition costs . . . . . . . .   14.0    20.4    17.4    21.1   (23.5)   (4.0)
  Depreciation & amortization
   of property, equipment &
   capitalized software costs. . . .    9.1     8.5     8.9     8.5    18.7    21.9 
  Other costs & expenses . . . . . .    5.5     9.3     6.7     7.0   (33.3)    8.6 
 Selling, general &
   administrative expenses . . . . .   14.8    12.1    13.9    12.5    36.6    29.0 
 Amortization of goodwill and
   other intangibles . . . . . . . .    1.5     1.8     1.7     1.9    (1.1)    1.8 
 Litigation settlement and
   expenses, net . . . . . . . . . .      -       -       -    (2.3)      -       - 
                                      ------  ------  ------  ------                
                                       86.9    89.6    88.5    86.0     8.3    19.3 
Operating income . . . . . . . . . .   13.1    10.4    11.5    14.0    40.1    (4.5)
Equity in earnings of unconsolidated
   affiliate . . . . . . . . . . . .    0.1       -     0.2       -       -       - 
Other income and expenses. . . . . .   (0.6)   (0.7)   (0.6)   (0.4)      -       - 
                                      ------  ------  ------  ------                
Income before income taxes . . . . .   12.6     9.7    11.1    13.6    45.8    (5.0)
Income taxes . . . . . . . . . . . .    4.7     3.5     4.2     4.9    49.5    (0.5)
                                      ------  ------  ------  ------                
Net income . . . . . . . . . . . . .    7.9%    6.2%    6.9%    8.7%   43.6%  (7.5)%
                                      ======  ======  ======  ======                
</TABLE>



<PAGE>
THREE  MONTHS  COMPARISON

     Comparisons  of  revenues, operating income and margins for each business
unit  for  the  periods  presented  are  as  follows:


<TABLE>
<CAPTION>

                                            Three Months
                                         Ended September 30,
REVENUES                                   1997     1996    Change
--------------------------------------------------------------------
                                       (Dollars in Millions)

<S>                                        <C>      <C>      <C>
Enterprise Software and Services
 Property & Casualty                       $ 63.2   $ 53.6    17.9%
 Life . . . . . . . . . . . . . . . . . .    28.5     20.5    39.3 
Information Services
 Property & Casualty                         16.5     24.0   (31.4)
 Life . . . . . . . . . . . . . . . . . .    14.0     14.2   ( 1.5)
                                           -------  -------  ------
  Total U.S. revenues . . . . . . . . . .   122.2    112.3     8.8 
International . . . . . . . . . . . . . .    41.9     34.7    20.7 
                                           -------  -------  ------
    Total revenues. . . . . . . . . . . .  $164.1   $147.0    11.6%
=========================================  =======  =======  ======


OPERATING INCOME
--------------------------------------------------------------------                          
Enterprise Software and Services
 Property & Casualty. . . . . . . . . . .  $ 18.1   $ 13.6    33.0%
 Life . . . . . . . . . . . . . . . . . .     5.7      5.6     2.6 
Information Services
 Property & Casualty. . . . . . . . . . .       -      0.2   (89.8)
 Life . . . . . . . . . . . . . . . . . .     0.6      0.7   (26.3 
Corporate . . . . . . . . . . . . . . . .    (7.1)    (6.1)   16.2 
                                           -------  -------  ------
  Total U.S. operating income . . . . . .    17.3     14.0    23.5 
International . . . . . . . . . . . . . .     4.1      1.3   220.5 
                                           -------  -------  ------
    Total operating income. . . . . . . .  $ 21.4   $ 15.3    40.1%
=========================================  =======  =======  ======


OPERATING INCOME AS PERCENTAGE OF REVENUE
-------------------------------------------------------------------                          
Enterprise Software and Services
 Property & Casualty. . . . . . . . . . .    28.6%    25.4%
 Life . . . . . . . . . . . . . . . . . .    20.2     27.4 
Information Services
 Property & Casualty. . . . . . . . . . .     0.1      0.7 
 Life . . . . . . . . . . . . . . . . . .     4.0      5.3 
                                           -------  -------        
  Total U.S . . . . . . . . . . . . . . .    14.2     12.5 
International . . . . . . . . . . . . . .     9.9      3.7 
                                           -------  -------        
    Total . . . . . . . . . . . . . . . .    13.1%    10.4%
=========================================  =======  =======        

</TABLE>



<PAGE>
REVENUES
                                    Three  Months
                                  Ended September 30,
  Licensing                        1997       1996     Change
----------------------------------------------------------------
                                (Dollars in Millions)
Initial  charges                $  16.9     $  10.1    68.1%
Monthly  charges                   16.5        14.1    16.5
----------------------------------------------------------------
                                  $  33.4   $  24.2    38.0%
================================================================

Percentage of total revenues         20.3%     16.4%
----------------------------------------------------------------


     Initial license revenues increased $6.8 million from the third quarter of
1996  to  the third quarter of 1997, with the following increases or decreases
by  business  unit:   domestic property and casualty up 464.9% ($4.0 million);
life  insurance  and  financial  solutions  down  16.0%  ($0.9  million);  and
international  up  98.1%  ($3.7  million).

     Initial  license  charges  for  the  third  quarter  of  1997  include
right-to-use  licenses  of  $3.7 million.  The right-to-use licenses represent
acquisitions  by  certain  customers  of  perpetual rights in conjunction with
renewals  of  MESA  by  these  customers.    This  compares to $2.1 million in
right-to-use  licenses  for  the  same  period of 1996 arising from a customer
acquiring  the  perpetual  rights in conjunction with its initial license of a
product.

     Monthly  license charges increased $2.4 million from the third quarter of
1996  to  the  third  quarter of 1997 with the following increases by business
unit:    domestic property and casualty up 4.6% ($0.4 million); life insurance
and  financial  solutions  up 52.9% ($1.2 million); and international up 25.2%
($0.8  million).    These  increases  are related to the increase in licensing
activity.

     Property  and  casualty licensing revenues in the United States are being
impacted  by  various  market factors.  Prospective customers are expressing a
desire  for a Windows NT version of Series III in a client server environment.
The  Company  believes the market priority is for personal lines functionality
in  a Windows NT environment.  The first release of Series III with Windows NT
functionality  is  currently  scheduled  to  be  available  by year end.  This
release  will  support  most  personal  lines  functionality  with  additional
personal  lines  and  commercial  lines functionality scheduled for subsequent
releases.  The Company's operating results could be negatively impacted if the
Company  experiences  delays  in  delivering  Windows  NT  to  its  customers.
Additionally,  many  insurance  companies  are spending significant amounts of
money  to  solve  their  year  2000  problems.   To date, the Company does not
believe  it  has  experienced  a significant impact, positively or negatively,
from  year  2000  issues and at this time is unable to predict what the future
impact,  if  any,  will  be.

<PAGE>
Because  a  significant  portion of initial licensing revenues are recorded at
the  time  new  systems are licensed, there can be significant fluctuations in
revenue  from  quarter to quarter.  Set forth below is a comparison of initial
license  revenues  for  the  last  eight quarters expressed as a percentage of
total  revenues  for  each  of  the  periods  presented:


                                 1997                    1996             1995
                        --------------------- -------------------------- ------
                           3rd    2nd    1st    4th   3rd    2nd    1st    4th
                        --------------------- -------------------------- ------
                                         (Dollars  in  Millions)

Initial license revenues $16.9  $16.6  $11.3  $19.4  $10.1  $12.0  $10.4  $16.1
%  of  total  revenues    10.3%  10.0%   7.3%  11.8%   6.9%   8.8%   7.8%  11.6%


                                     Three Months
                                  Ended September 30,
  Services                         1997       1996       Change
-------------------------------------------------------------------
                                (Dollars  In  Millions)
Professional  and  outsourcing  $  97.8       $  81.6     19.9%
Information                        32.0          39.7    (19.3)
Other                               0.9           1.5     40.4
-------------------------------------------------------------------
                                  $130.7       $122.8      6.4%
===================================================================

Percentage of total revenues        79.7%        83.6%
-------------------------------------------------------------------


     Professional  and  outsourcing  services revenues increased $16.2 million
from  the  third  quarter  of  1996  to  the  third  quarter of 1997, with the
following increases by business unit:  domestic property and casualty up 14.5%
($6.1  million);  life  insurance  and  financial  solutions  up  68.8%  ($7.7
million);  and  international  up  8.6%  ($2.4  million).    The increases are
principally  due to increases in implementation services and in the processing
volumes  of  services  provided  to new and existing customers.  The increases
were partially offset by the elimination of approximately $3.9 million in pass
through  revenue  related  to  the  Florida  outsourcing  unit.

     Information  services revenues decreased $7.7 million from the 1996 third
quarter to the 1997 third quarter.  This decrease is due to the sale in August
1997 of the property and casualty information services business. Additionally,
there  was  a decrease of $0.2 million in life insurance information services,
principally  comprised  of  attending  physician  statements  and  application
processing  services.


OPERATING  EXPENSES

Cost  of  Revenues

     Employee  compensation and benefits increased 27.5% for the third quarter
1997  compared  with  the  third  quarter  of  1996, principally the result of
increased salaries and related costs associated with the growth in staffing in
all  business  units. Compensation and benefits increased 27.2% ($3.3 million)
internationally,  while  domestic  increased  27.6%  ($9.6  million).

     Computer  and  communications  expenses  increased  9.7%  ($0.8  million)
principally  as  a  result  of  increased  communications,  data  circuit  and
maintenance  costs  associated  with  the growth of the Company's domestic and
international  outsourcing  operations.

     Information  services  and data acquisition costs decreased 23.5%, due to
the  sale  in  August  1997  of the property and casualty information services
business.

     Depreciation  and  amortization  of  property,  equipment and capitalized
software  costs  increased  18.7%.  This increase is due principally to higher
amortization  expense  resulting from the recent release of the latest version
of  CyberLife  client/server life insurance software and the recent release of
the  Company's  Series  III  (Release  8)  property  and  casualty  insurance
client/server  software  systems.  In addition, depreciation expense increased
due  to  the  Company's  increased  investment  in  its information technology
equipment  and  expanded  facilities  costs.

     Other  operating  costs and expenses decreased 33.3% primarily related to
the  reduced  pass  through  costs  for  the  outsourcing  unit  in  Florida.

Selling,  general  and  administrative  expenses

     Selling,  general  and  administrative  expenses  increased 36.6% for the
third  quarter  of  1997  compared with the third quarter of 1996, principally
from  the  Company's  investment  in  its  international  sales  force  and
infrastructure.

Amortization  of  goodwill  and  other  intangibles

     Amortization  of  goodwill  and  other  intangibles  remains  relatively
unchanged.

OPERATING  INCOME

     Third  quarter  1997  operating  income  increased  40.1%  ($6.1 million)
compared  with  the  1996  third  quarter.    Property  and casualty insurance
operating  income  increased  33.0%,  domestic life insurance operating income
increased  2.6%  and  international  operating  income  increased 220.5%.  The
increase  in  operating  income is primarily related to increases in licensing
and  professional  services  revenues.


OTHER  INCOME  AND  EXPENSE

     Interest  expense  remained  relatively  unchanged  at  $1.4 million. The
average  nominal  interest  rate  applicable to borrowings under the Company's
credit  facilities  during  the  third  quarter  of  1997  was  6.0%.

<PAGE>
INCOME  TAXES

     The  effective income tax rate (income taxes expressed as a percentage of
pre-tax  income)  was 37.5% and 36.6% for the three months ended September 30,
1997  and 1996, respectively. The effective rate for the third quarter of 1997
is  higher  than  the  federal statutory rate principally due to the effect of
state  and  local  income  taxes.

SALE  OF  BUSINESS  UNIT

     On  August  31, 1997, the Company completed the sale of substantially all
of  the  assets of its property and casualty information services business for
cash  proceeds  of  $2.9 million.  The Company retained the working capital of
this  business,  approximately  $14.3  million.    This transaction produced a
non-recurring  gain  of $1.7 million.  Also, during the third quarter of 1997,
the Company abandoned a related business.  As a result, the Company recorded a
non-recurring  charge  of  $1.8  million,  principally  related to capitalized
software.

<PAGE>
NINE  MONTHS  COMPARISON


     Comparisons  of  revenues, operating income and margins for each business
unit  for  the  periods  presented  are  as  follows:
<TABLE>
<CAPTION>



                                            Nine Months
                                         Ended September 30,
REVENUES                                   1997      1996      Change
----------------------------------------------------------------------
     (Dollars  in  Millions)

<S>                                        <C>      <C>       <C>
Enterprise Software and Services
 Property & Casualty. . . . . . . . . . .  $175.4   $ 148.3      18.3 %
 Life . . . . . . . . . . . . . . . . . .    78.9      53.7      46.8 
Information Services
 Property & Casualty. . . . . . . . . . .    64.9      70.8      (8.3)
 Life . . . . . . . . . . . . . . . . . .    43.4      43.6      (0.5)
                                           -------  --------  --------
  Total U.S. revenues . . . . . . . . . .   362.6     316.4      14.6 
International . . . . . . . . . . . . . .   121.5     101.1      20.2 
                                           -------  --------  --------
    Total revenues. . . . . . . . . . . .  $484.1   $ 417.5     16.0 %
=========================================  =======  ========  ========


OPERATING INCOME
----------------------------------------------------------------------                             
Enterprise Software and Services
 Property & Casualty. . . . . . . . . . .  $ 46.8   $  42.4      10.4 %
 Life . . . . . . . . . . . . . . . . . .    17.1      12.3      38.7 
Information Services
 Property & Casualty. . . . . . . . . . .     0.4      (0.5)   (189.3)
 Life . . . . . . . . . . . . . . . . . .     2.2       2.2    (  2.1)
Corporate . . . . . . . . . . . . . . . .   (19.3)   (7.6)*     152.9 
                                           -------  --------          
  Total U.S. operating income . . . . . .    47.2      48.8    (  3.2)
International . . . . . . . . . . . . . .     8.6       9.6    ( 10.9)
                                           -------  --------  --------
    Total operating income. . . . . . . .  $ 55.8   $  58.4   (  4.5)%
=========================================  =======  ========  ========


OPERATING INCOME AS PERCENTAGE OF REVENUE
----------------------------------------------------------------------                             
Enterprise Software and Services
 Property & Casualty. . . . . . . . . . .    26.7%     28.6%
 Life . . . . . . . . . . . . . . . . . .    21.6      22.9 
Information Services
 Property & Casualty. . . . . . . . . . .     0.7      (0.8)
 Life . . . . . . . . . . . . . . . . . .     5.0       5.1 
                                           -------  --------          
  Total U.S . . . . . . . . . . . . . . .    13.0      15.4 
International . . . . . . . . . . . . . .     7.1       9.6 
                                           -------  --------          
    Total . . . . . . . . . . . . . . . .    11.5%     14.0%
=========================================  =======  ========          
<FN>


*Corporate  operating  income  includes  a  special  credit  of  $9.4 million.
</TABLE>



<PAGE>
REVENUES
                                 Nine Months
                              Ended September 30,
  Licensing                    1997       1996      Change
-------------------------------------------------------------
                            (Dollars  in  Millions)
Initial  charges              $  44.7     $  32.5    37.6%
Monthly  charges                 47.2        41.8    12.8
-------------------------------------------------------------
                              $  91.9     $  74.3    23.7%
=============================================================

Percentage of total revenues     18.9%       17.8%
-------------------------------------------------------------

     Initial  license  charges  increased  $12.2  million  from the first nine
months  of 1996 to the first nine months of 1997, with the following increases
by  business  unit:  domestic  property  and casualty up 22.3% ($2.0 million);
domestic  life  insurance and financial solutions up 37.2% ($4.3 million); and
international  up  50.0%  ($5.9  million).

     Initial  license  charges  for  the  first  nine  months  of 1997 include
right-to-use  licenses  of  $5.6 million.  The right-to-use licenses represent
acquisitions  by  certain  customers  of  perpetual rights in conjunction with
renewals  of  MESA  by  these  customers.    This  compares to $3.6 million in
right-to-use  licenses  for  the  same  period of 1996 arising from a customer
acquiring  the  perpetual  rights in conjunction with its initial license of a
product.

     Monthly license charges increased $5.4 million from the first nine months
of  1996  to  the  first  nine  months of 1997 with the following increases by
business unit:  domestic life insurance and financial solutions up 48.8% ($3.1
million);  and  international  up  25.9%  ($2.1 million).  These increases are
related to the increase in licensing activity.  Domestic property and casualty
was  relatively  unchanged.

     Property  and  casualty licensing revenues in the United States are being
impacted  by  various  market  factors,  as  described  in  the  three  months
comparison  above.

                                  Nine Months
                               Ended September 30,
  Services                      1997       1996       Change
-----------------------------------------------------------------
                             (Dollars  In  Millions)
Professional and outsourcing    $275.4    $221.7        24.0%
Information                      113.1     118.5        (4.5)
Other                              3.7       3.0        20.9
-----------------------------------------------------------------
                                $392.2    $343.2        14.3%
=================================================================

Percentage of total revenues      81.1%     82.2%
-----------------------------------------------------------------


     Professional  and  outsourcing  services revenues increased $53.7 million
from  the first nine months of 1996 to the first nine months of 1997, with the
following increases by business unit:  domestic property and casualty up 22.4%
($24.5  million);  life  insurance  and  financial  solutions up 53.78% ($17.1
million);  and  international  up  15.1%  ($12.1  million).  The increases are
principally  due to increases in implementation services and in the processing
volumes  of  services  provided  to new and existing customers.  The increases
were partially offset by the elimination of approximately $7.1 million in pass
through  revenue  related  to  the  Florida  outsourcing  unit.

     Information  services  revenues decreased $5.4 million.  This decrease is
principally  due  to  the  sale  in  August  1997 of the property and casualty
information  services  business.


OPERATING  EXPENSES

Cost  of  Revenues

     Employee  compensation  and  benefits increased 27.1% from the first nine
months  of  1996  to  the first nine months of 1997, principally the result of
increased salaries and related costs associated with the growth in staffing in
all  business units. Compensation and benefits increased 42.2% ($13.7 million)
internationally,  while  domestic  increased  22.2%  ($21.9  million).

     Computer  and  communications  expenses  increased 8.4%, principally as a
result  of  increased  communications,  data  circuit  and  maintenance  costs
associated  with  the  growth  of  the  Company's  domestic  and international
outsourcing  operations.

     Information  services  and  data  acquisition  costs  decreased  4.0%,
principally  due  to  the  sale  in  August  1997 of the property and casualty
information  services  business.

     Depreciation  and  amortization  of  property,  equipment and capitalized
software  costs  increased  21.9%.  This increase is due principally to higher
amortization  expense  resulting from the recent release of the latest version
of  CyberLife  client/server life insurance software and the recent release of
the  Company's  Series  III  (Release  8)  property  and  casualty  insurance
client/server  software  systems.  In addition, depreciation expense increased
due to Company's increased investment in its information technology equipment.

     Other  operating  costs  and  expenses  increased 8.6%.  This increase is
primarily related to increased fees for the use of consultants and independent
contractors  to  satisfy  staffing  needs for certain development and services
activities.    In addition, third party commissions, rent and other facilities
costs,  and  training  costs in new technologies rose over amounts in the same
period  last  year.  These increases were offset by reduced pass through costs
for  the  outsourcing  unit  in Florida and an increase in amounts capitalized
principally  related  to  the  continued  enhancement  and  development of the
Company's  Series III property and casualty insurance software, CyberLife life
insurance  software  and  Insure  Plus  international  property  and  casualty
software.

<PAGE>
Selling,  general  and  administrative  expenses

Selling,  general  and  administrative  expenses increased 29.0% for the first
nine  months  of 1997 compared with the first nine months of 1996, principally
from  the  Company's  investment  in  its  international  sales  force  and
infrastructure.

Litigation  settlement  and  expenses,  net

     In  May  1996,  the  Company  resolved its litigation with the California
State  Automobile  Association Inter-Insurance Bureau and the California State
Automobile  Association  ("CSAA"), concluding with the mutual dismissal of all
related  claims and counterclaims as well as the Company's recovery of certain
defense  costs  incurred  relative  to  the  CSAA  matter, with interest. As a
result,  the Company recorded a $9.4 million gain for this recovery during the
second  quarter  of  1996.

Amortization  of  goodwill  and  other  intangibles

     Amortization  of  goodwill  and  other  intangibles  remained  relatively
unchanged.


OPERATING  INCOME

     Operating  income  decreased  4.5%  ($2.6  million)  due  primarily  to a
litigation settlement credit of $9.4 million in 1996.  Domestic life insurance
operating  income increased 38.7% and property and casualty insurance business
increased  10.4%  offset  by  a  decrease in international operating income of
10.9%.   International operating income is lower than the first nine months of
1996 due to the fact that expenses rose faster than revenues, primarily in the
sales,  marketing  and  administrative  areas  as the Company has built up its
international infrastructure.  While comparative results for international are
down  versus  the  first  nine  months  of 1996, operating income has improved
significantly  from  the  fourth  quarter  of 1996.  The property and casualty
results  were  negatively  impacted  due to results in its outsourcing unit in
Florida.    The  impact  is  due  in part to the state of Florida's efforts to
depopulate  its  state  run  homeowners'  insurance  program.   This unit also
suffered approximately $1 million in one time operating expenses in the second
quarter  of 1997.  Finally, contributing to the impact are significant startup
costs  the  Company  is  incurring  related  to  new  virtual companies in the
business  unit


OTHER  INCOME  AND  EXPENSES

     As  a  result  of  a  higher average level of borrowed funds, principally
borrowings  under  the Company's credit facilities, interest expense increased
$0.4 million. The average nominal interest rate applicable to borrowings under
these  facilities  during  the  first  nine  months  of  1997  was  6.0%.

     Investment  income  decreased  $0.8  million,  principally due to a lower
average  level  of  interest-bearing  cash  equivalents  during the first nine
months  of  1997  as  compared  to  the  same  period  of  1996.

INCOME  TAXES

     The  effective income tax rate (income taxes expressed as a percentage of
pre-tax  income)  was  37.5% and 35.8% for the nine months ended September 30,
1997  and 1996, respectively. The effective rate for the 1997 period is higher
than  the  federal  statutory  rate due principally to the effect of state and
local  income  taxes.


SALE  OF  BUSINESS  UNIT

     On  August  31, 1997, the Company completed the sale of substantially all
of  the  assets of its property and casualty information services business for
cash  proceeds  of  $2.9 million.  The Company retained the working capital of
this  business unit, approximately $14.3 million.  This transaction produced a
non-recurring  gain  of $1.7 million.  Also, during the third quarter of 1997,
the Company abandoned a related business.  As a result, the Company recorded a
non-recurring  charge  of  $1.8  million,  principally  related to capitalized
software.

<PAGE>
                        LIQUIDITY AND CAPITAL RESOURCES


<TABLE>
<CAPTION>

                              September 30, December  31,
                                  1997         1996
---------------------------------------------------------
                                (Dollars in Millions)

<S>                               <C>     <C>
Cash and equivalents, marketable
  securities, and investments. .  $ 27.9  $ 30.8
Current assets . . . . . . . . .   194.2   173.0
Current liabilities. . . . . . .    74.0   112.6
Working capital. . . . . . . . .   120.2    60.4
Long-term debt                      56.0    34.3
</TABLE>




<TABLE>
<CAPTION>

                                  Nine Months Ended
                                    September 30,
                                    1997      1996
------------------------------------------------------
                                 (Dollars in Millions)

<S>                                 <C>      <C>
Cash provided by operations. . . .  $ 63.7   $ 69.2 
Cash used for investing activities   (64.9)   (69.3)
Cash used for financing activities   ( 3.6)   (26.5)
</TABLE>




     The  Company's  current  ratio  (current  assets  divided  by  current
liabilities)  stood at 2.6 at September 30, 1997, which management believes is
sufficient  when  combined with the available credit facilities to provide for
day-to-day operating needs and the flexibility to take advantage of investment
opportunities.    On  August  8,  1997,  the Company entered into a new credit
facility  for  $200 million for five years.  The Company has available (net of
amounts outstanding at September 30, 1997) $145 million under the $200 million
facility.    Also,  effective  August  5,  1997,  the Company has available an
additional  $15 million uncommitted operating line of credit with which it may
choose to fund temporary operating cash needs.  The uncommitted line of credit
available  had  previously  been  at  $10  million.

     During  the  nine months ended September 30, 1997 the Company capitalized
software  development  costs  of  $46.8  million  principally  related  to the
development  of  its  Series  III client/server property and casualty software
(including  the  incorporation  of  object-oriented technology and support for
Windows  NT), CyberLife object-oriented client/server life insurance software,
and  Insure Plus international property and casualty solution as well as other
ongoing  projects  for  other  domestic  as  well  as  international products.

     Significant expenditures anticipated for the remainder of 1997, excluding
any  possible  business  acquisitions  or  common  stock  repurchases,  are as
follows:  acquisition  of data processing, communications equipment and office
furniture,  fixtures  and  equipment  ($8  million); and costs relating to the
internal  development  of  software  systems  ($19  million).

     The  Company has historically used the cash generated from operations for
the  following:  development  and  acquisition of new products, acquisition of
businesses  and  repurchase  of  the Company's stock.  The Company anticipates
that  it will continue to use its cash for all of these purposes in the future
and  that  projected  cash from operations, cash and investment reserves along
with  amounts available under the Company's debt facilities will be sufficient
to  meet  presently  anticipated  operating  needs  and to accomplish specific
objectives  in  these  areas  and  for  other  general  corporate  purposes.


                    FACTORS THAT MAY AFFECT FUTURE RESULTS

     The  Company's  operating results and financial condition can be impacted
by  a  number of factors, including, but not limited to, the following, any of
which  could  cause  actual  results  to  vary  materially  from  current  and
historical  results  or  the  Company's  anticipated  future  results:

-  Currently,  the Company's business is focused principally within the global
property  and  casualty  and  life  insurance  industries;

-  There  is  increasing  competition for the Company's products and services;

- The market for the Company's products and services is characterized by rapid
changes  in  technology;

-  Contracts  with  governmental  agencies involve a variety of special risks,
including  the  risk  of early contract termination by the governmental agency
and  changes  associated  with  newly  elected  state administrations or newly
appointed  regulators;

-  The  timing and amount of the Company's revenues are subject to a number of
factors,  including, but not limited to, the timing of customers' decisions to
enter  into  large  license  agreements  with  the  Company;

-  Unforeseen  events or adverse economic or business trends may significantly
increase  cash  demands  beyond  those  currently  anticipated  or  affect the
Company's  ability  to  generate/raise  cash  to  satisfy  financing  needs;

-  The  Company's  operations  have  not  proven to be significantly seasonal,
although  quarterly  revenues and net income can be expected to vary at times;

-  Although  the  Company cannot accurately determine the amounts attributable
thereto, the Company has been affected by inflation through increased costs of
employee  compensation  and  other  operating  expenses.

-  Many  of  the  Company's  current and potential customers are or will spend
significant  amounts  of  money  to  make  their  existing information systems
capable  of  handling  the  year  2000.

     The  preparation  of  financial  statements  in conformity with generally
accepted  accounting  principles  requires  management  to  make estimates and
assumptions  that  affect  the  reported amounts of assets and liabilities and
disclosure  of  contingent assets and liabilities at the date of the financial
statements,  as  well  as the reported amounts of revenues and expenses during
the  reporting  period.  Changes  in the status of certain matters or facts or
circumstances  underlying  these estimates could result in material changes in
these  estimates,  and  actual  results  could  differ  from  these estimates.

     Because  of the foregoing factors, as well as other factors affecting the
Company's  operating  results,  past  financial  performance  should  not  be
considered  to  be  a  reliable indicator of future performance, and investors
should  not  use  historical  trends to anticipate results or trends in future
periods.


SAFE  HARBOR  STATEMENT  UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:  Statements in this report that are not descriptions of historical facts
may be forward-looking statements that are subject to risks and uncertainties,
including  economic,  competitive  and  technological  factors  affecting  the
Company's operations, markets, products, services and prices, as well as other
specific  factors  discussed  in the Company's filings with the Securities and
Exchange  Commission.  These  and  other  factors  may cause actual results to
differ  materially  from  those  anticipated.

<PAGE>

                                    PART II
                               OTHER INFORMATION

                     POLICY MANAGEMENT SYSTEMS CORPORATION


ITEM  1.    LEGAL  PROCEEDINGS

     See Note 1, Contingencies, of Notes to Consolidated Financial Statements,
which  is  incorporated  by  reference  in  this  Item.


ITEMS  2,  3,  4  AND  5  are  not  applicable


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

Exhibits

     Exhibits required to be filed with this Quarterly Report on Form 10-Q are
listed  in  the  following  Exhibit  Index.

Reports  on  Form  8-K

     The Company did not file any reports on Form 8-K during the quarter ended
September  30,  1997.

<PAGE>







                     POLICY MANAGEMENT SYSTEMS CORPORATION


                                  SIGNATURES


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


                     POLICY MANAGEMENT SYSTEMS CORPORATION
                     -------------------------------------
                                 (Registrant)




Date:    November  12,  1997          Timothy  V.  Williams
                                      Executive Vice President
                                      (Chief Financial Officer)

<PAGE>

                  POLICY  MANAGEMENT  SYSTEMS  CORPORATION


                               EXHIBIT  INDEX


Exhibit
Number

 3.          ARTICLES  OF  INCORPORATION  AND  BY-LAWS

A.       Bylaws of the Company, as amended through July 19, 1994 incorporating
all amendments thereto subsequent to December 31, 1993 (filed as an Exhibit to
Form  10-K for the year ended December 31, 1994, and is incorporated herein by
reference)

B.        Articles of Incorporation of the Company, as amended through October
13, 1994, incorporating all amendments thereto subsequent to December 31, 1993
(filed as an Exhibit to Form 10-K for the year ended December 31, 1994, and is
incorporated  herein  by  reference)

 4.          INSTRUMENTS  DEFINING  THE  RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES

A.       Specimen forms of certificates for Common Stock of the Company (filed
as  an Exhibit to Registration Statement No. 2-74821, dated December 16, 1981,
and  is  incorporated  herein  by  reference)

B.        Articles of Incorporation of the Company, as amended through October
13, 1994, incorporating all amendments thereto subsequent to December 31, 1993
(filed as an Exhibit to Form 10-K for the year ended December 31, 1994, and is
incorporated  herein  by  reference)

10.          MATERIAL  CONTRACTS

A.      Policy Management Systems Corporation 1986 Stock Option Plan (filed as
an  Exhibit  to  Form  10-K  for  the  year  ended  December  31, 1986, and is
incorporated  herein  by  reference)

B.          Conformed  copy  of  Development  and  Marketing Agreement between
International  Business  Machines  Corporation  and  Policy Management Systems
Corporation, dated July 26, 1989 (File No. 0-10175 - filed under cover of Form
SE  filed  on  September  29,  1989,  and is incorporated herein by reference)

C.      Policy Management Systems Corporation 1989 Stock Option Plan (File No.
0-10175  - filed under cover of Form SE on March 22, 1991, and is incorporated
herein  by  reference)

D.          Deferred  Compensation Agreement with G. Larry Wilson (filed as an
Exhibit to Form 10-K for the year ended December 31, 1993, and is incorporated
herein  by  reference)

E.          Executive Compensation Agreement with G. Larry Wilson (filed as an
Exhibit to Form 10-K for the year ended December 31, 1993, and is incorporated
herein  by  reference)

F.       Employment Agreement with Stephen G. Morrison (filed as an Exhibit to
Form  10-Q for the quarter ended March 31, 1994, and is incorporated herein by
reference)

G.       Stock Option/Non-Compete Agreement with Stephen G. Morrison (filed as
an  Exhibit  to  Form  10-Q  for  the  quarter  ended  March  31, 1994, and is
incorporated  herein  by  reference)

H.      Shareholders' Agreement, dated April 26, 1994, among Policy Management
Systems  Corporation,  General Atlantic Partners 14, L.P. and GAP Coinvestment
Partners (filed as an Exhibit to Form 10-Q for the quarter ended September 30,
1994,  and  is  incorporated  herein  by  reference)

I.          Registration  Rights  Agreement, dated April 26, 1994 among Policy
Management  Systems  Corporation,  General  Atlantic Partners 14, L.P. and GAP
Coinvestment  Partners (filed as an Exhibit to Form 10-Q for the quarter ended
September  30,  1994,  and  is  incorporated  herein  by  reference)

J.       Employment Agreement with Timothy V. Williams (filed as an Exhibit to
Form  10-K for the year ended December 31, 1994, and is incorporated herein by
reference)

K.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  schedule  identifying  particulars  for  each  named executive
officer  (filed as an Exhibit to Form 10-Q for the quarter ended September 30,
1992,  and  is  incorporated  herein  by  reference)

L.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  schedule  identifying  particulars  for  each  named executive
officer  (filed as an Exhibit to Form 10-Q for the quarter ended September 30,
1994,  and  is  incorporated  herein  by  reference)

M.       Stock Option (Non-Compete Form Agreement for named executive officers
together  with  schedule  identifying  particulars  for  each  named executive
officer  (filed  as  an  Exhibit  to Form 10-K for the year ended December 31,
1994,  and  is  incorporated  herein  by  reference)

N.     Policy Management Systems Corporation 1993 Long-Term Incentive Plan for
Executives  (filed  as an Exhibit to Form 10-K for the year ended December 31,
1994,  and  is  incorporated  herein  by  reference)

O.     First Amendment to the Policy Management Systems Corporation 1989 Stock
Option  Plan (filed as an Exhibit to Form 10-K for the year ended December 31,
1994,  and  is  incorporated  herein  by  reference)

P.          Fourth Amendment to the Policy Management Systems Corporation 1989
Stock  Option  Plan  (filed  as an Exhibit to Form 10-Q for the quarter ending
March  31,  1995,  and  is  incorporated  herein  by  reference)

Q.          Second  and  Third  Amendments  to  the  Policy Management Systems
Corporation  1989 Stock Option Plan (filed as an Exhibits and to Form 10-Q for
the  quarter  ended  June  30,  1995, and is incorporated herein by reference)

R.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  schedule  identifying  particulars  for  each  named executive
officer (filed as an Exhibit to Form 10-Q for the quarter ended June 30, 1995,
and  is  incorporated  herein  by  reference)

S.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  schedule  identifying  particulars  for  each  named executive
officer  (filed  as  an Exhibit to Form 10-K for year ended December 31, 1995,
and  is  incorporated  herein  by  reference)

T.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  schedule  identifying  particulars  for  each  named executive
officer  (filed  as  an Exhibit to Form 10-K for year ended December 31, 1995,
and  is  incorporated  herein  by  reference)

U.        Stock Option/Non-Compete Agreement Amendment No. 1 dated November 8,
1995  to  Stock  Option/Non-Compete Agreement dated July 20, 1995 with Paul R.
Butare (filed as an Exhibit to Form 10-K for year ended December 31, 1995, and
is  incorporated  herein  by  reference)

V.          Stock  Option/Non-Compete Agreement with Timothy V. Williams dated
February 1, 1994 (filed as an Exhibit to Form 10-K for year ended December 31,
1995,  and  is  incorporated  herein  by  reference)

W.       Stock Option/Non-Compete Agreement with Timothy V. Williams dated May
10,  1995  (filed as an Exhibit to Form 10-K for year ended December 31, 1995,
and  is  incorporated  herein  by  reference)

X.          Registration Rights Agreement, dated March 8, 1996, between Policy
Management  Systems  Corporation and Continental Casualty Company (filed as an
Exhibit to Form 10-Q for the quarter ended March 31, 1996, and is incorporated
herein  by  reference)

Y.        Shareholders Agreement dated March 8, 1996 between Policy Management
Systems  Corporation  and Continental Casualty Company (filed as an Exhibit to
Form  10-Q for the quarter ended March 31, 1996, and is incorporated herein by
reference)

Z.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  schedule  identifying  particulars  for  each  named executive
officer (filed as an Exhibit to Form 10-Q for the quarter ended June 30, 1996,
and  is  incorporated  herein  by  reference)

AA.       Employment Agreement Form dated November 7, 1996 for Messrs. Butare,
Morrison  and  Williams  together  with a schedule identifying particulars for
each  executive  officer  (filed  as  an  Exhibit  to Form 10-K for year ended
December  31,  1996,  and  is  incorporated  herein  by  reference)

BB.          Stock Option/Non-Compete Agreement with Stephen G. Morrison dated
October 22, 1996 (filed as an Exhibit to Form 10-K for year ended December 31,
1996,  and  is  incorporated  herein  by  reference)

CC.          Stock Option/Non-Compete Form Agreement dated January 8, 1997 for
named  executive  officers  together with schedule identifying particulars for
each executive officer (filed as an Exhibit to Form 10-Q for the quarter ended
March  31,  1997,  and  is  incorporated  herein  by  reference)

DD.        Annual Bonus Program for Executive Officers (filed as an Exhibit to
Form  10-Q for the quarter ended March 31. 1997, and is incorporated herein by
reference)

EE.          Form of Amendment No. 1 to the Employment Agreements with Messrs.
Butare,  Morrison  and Williams together with schedule identifying particulars
for  each  executive officer (filed as an Exhibit to Form 10-Q for the quarter
ended  June  30,  1997,  and  is  incorporated  herein  by  reference)

FF.          Form  of Employment Agreements with Messrs. Bailey,  Coggiola and
Wilson  together  with  schedule  identifying  particulars  for each executive
officer    (filed  herewith)

GG.        Credit Agreement dated as of August 8, 1997 among Policy Management
Systems  Corporation,  the  Guarantors  Party hereto, Bank of America National
Trust and Savings Association and the Other Financial Institution Party Hereto
(filed  herewith)

11.          STATEMENT  REGARDING  COMPUTATION  OF  PER  SHARE  EARNINGS

A.          Filed  herewith

27.          FINANCIAL  DATA  SCHEDULE

     A.          Filed  herewith  (EDGAR  version  only)
[{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 72041}]
{"company-data": {"conformed-name": "POLICY MANAGEMENT SYSTEMS CORP", "cik": "0000356226", "assigned-sic": "6411", "irs-number": "570723125", "state-of-incorporation": "SC", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-10557", "film-number": "97715700"}, "business-address": {"street1": "ONE PMS CTR", "street2": "PO BOX TEN", "city": "COLUMBIA", "state": "SC", "zip": "29202", "phone": "8037354000"}}
32

                                 UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             Washington, DC  20549

                                   FORM 10-Q

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

   For the Quarter Ended September 30, 1997    Commission file number 1-0557
                         ------------------                           ------

                     POLICY MANAGEMENT SYSTEMS CORPORATION
            (Exact name of registrant as specified in its charter)

     South  Carolina                                             57-0723125
     ---------------                                             ----------
(State  or  other  jurisdiction                               (IRS Employer
 of  incorporation)                                        Identification No.)

One  PMSC  Center  (PO  Box  Ten)
Blythewood,  SC  (Columbia,  SC)                            29016  (29202)
--------------------------------                            --------------
(Address  of  principal  executive                           (Zip  Code)
  offices)

Registrant's  telephone  number,  including  area  code  (803)  333-4000

     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.

       18,331,102 Common shares, $.01 par value, as of November 7, 1997

     The  information  furnished herein reflects all adjustments which are, in
the  opinion of management, necessary for the fair presentation of the results
for the periods reported.  Such information should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended December 31, 1996.
POLICY MANAGEMENT SYSTEMS CORPORATION

                                                INDEX

PART  I. FINANCIAL  INFORMATION                                                                   PAGE
Item 1. Financial Statements

Consolidated Statements of Income for the Three and Nine Months ended September 30, 1997 and 1996   3

Consolidated Balance Sheets as of September 30, 1997 and December 31, 1996. . . . . . . . . . . .   4

Consolidated Statements of Cash Flows for the Nine Months ended September 30, 1997 and 1996 . . .   5

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

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . . . . . . . . . . . . . . . .  23

Signatures. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .  24
PART I
                              FINANCIAL INFORMATION
                      POLICY MANAGEMENT SYSTEMS CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME

                                        Three  Months          Nine  Months
                                      Ended September 30,   Ended September 30,
                                       1997        1996       1997       1996
                                                     (Unaudited)
-------------------------------------------------------------------------------
                                        (In Thousands, Except Per Share Data)
Revenues
 Licensing . . . . . . . . . . . . .  $ 33,375   $ 24,186   $ 91,900   $ 74,320 
 Services. . . . . . . . . . . . . .   130,692    122,812    392,223    343,193 
                                      ---------  ---------  ---------  ---------
                                       164,067    146,998    484,123    417,513 
                                      ---------  ---------  ---------  ---------
Operating expenses
 Cost of revenues
  Employee compensation & benefits .    60,163     47,192    167,179    131,523 
  Computer and communications
   expenses. . . . . . . . . . . . .     8,737      7,967     26,052     24,038 
  Information services and
   data acquisition costs. . . . . .    22,925     29,981     84,389     87,890 
  Depreciation and amortization of
   property, equipment and
   capitalized software costs. . . .    14,882     12,539     43,297     35,512 
  Other costs & expenses                 9,115     13,669     31,952     29,419 
 Selling, general and administrative
   expenses. . . . . . . . . . . . .    24,227     17,738     67,508     52,329 
 Amortization of goodwill and
   other intangibles . . . . . . . .     2,588      2,616      7,918      7,777 
 Litigation settlement . . . . . . .         -          -          -     (9,422)
                                      ---------  ---------  ---------  ---------
                                       142,637    131,702    428,295    359,066 
                                      ---------  ---------  ---------  ---------

Operating income . . . . . . . . . .    21,430     15,296     55,828     58,447 

Equity in earnings of
   unconsolidated affiliate. . . . .       274          -        964          - 

Other Income and Expenses
  Investment income. . . . . . . . .       372        376      1,143      1,898 
  Interest expense and other
   charges . . . . . . . . . . . . .    (1,378)    (1,475)    (3,951)    (3,544)
                                      ---------  ---------  ---------  ---------
                                        (1,006)    (1,099)    (2,808)    (1,646)
                                      ---------  ---------  ---------  ---------
Income before income taxes . . . . .    20,698     14,197     53,984     56,801 
Income taxes . . . . . . . . . . . .     7,760      5,190     20,261     20,363 
                                      ---------  ---------  ---------  ---------
Net income . . . . . . . . . . . . .  $ 12,938   $  9,007   $ 33,723   $ 36,438 
                                      =========  =========  =========  =========
Net income per share . . . . . . . .  $    .71   $    .50   $   1.85   $   1.94 
                                      =========  =========  =========  =========

Weighted average number of shares. .    18,230     18,179     18,199     18,747
See  accompanying  notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                          CONSOLIDATED BALANCE SHEETS

                                                (Unaudited)    (Audited)
                                                September 30, December 31,
                                                    1997        1996
-------------------------------------------------------------------------
                                        (In Thousands, Except Share Data)
Assets
Current assets
 Cash and equivalents . . . . . . . . . . . . . .  $ 18,639   $ 22,121
 Marketable securities. . . . . . . . . . . . . .     3,006      2,234
 Receivables, net of allowance for uncollectible
  amounts of $1,057 ($883 at 1996). . . . . . . .   139,115    116,113
 Income tax receivable. . . . . . . . . . . . . .     1,439      1,383
 Deferred income taxes. . . . . . . . . . . . . .    15,281     15,343
 Other. . . . . . . . . . . . . . . . . . . . . .    16,684     15,840
                                                   ---------  --------
   Total current assets . . . . . . . . . . . . .   194,164    173,034

Property and equipment, at cost less accumulated
 depreciation and amortization of $134,375
 ($122,462 at 1996) . . . . . . . . . . . . . . .   114,357    115,757
Receivables . . . . . . . . . . . . . . . . . . .     3,481      4,866
Income tax receivable . . . . . . . . . . . . . .     4,041      4,041
Goodwill and other intangibles, net . . . . . . .    71,703     83,363
Capitalized software costs, net . . . . . . . . .   197,412    177,875
Deferred income taxes . . . . . . . . . . . . . .       803      1,560
Investments . . . . . . . . . . . . . . . . . . .     6,211      6,483
Other . . . . . . . . . . . . . . . . . . . . . .     2,001      5,239
                                                   ---------  --------
     Total assets . . . . . . . . . . . . . . . .  $594,173   $572,218
                                                   =========  ========

Liabilities
Current liabilities
 Accounts payable and accrued expenses. . . . . .  $ 49,690   $ 61,435
 Accrued restructuring charges. . . . . . . . . .       164      2,478
 Accrued contract termination costs . . . . . . .       845        407
 Current portion of long-term debt. . . . . . . .     1,941     31,222
 Income taxes payable . . . . . . . . . . . . . .    12,477      6,623
 Unearned revenues. . . . . . . . . . . . . . . .     8,478      9,840
 Other. . . . . . . . . . . . . . . . . . . . . .       396        631
                                                   ---------  --------
   Total current liabilities. . . . . . . . . . .    73,991    112,636

Long-term debt. . . . . . . . . . . . . . . . . .    55,985     34,268
Deferred income taxes . . . . . . . . . . . . . .    64,650     58,370
Accrued restructuring charges . . . . . . . . . .     1,299      1,340
Other . . . . . . . . . . . . . . . . . . . . . .     3,128      2,352
                                                   ---------  --------
    Total liabilities . . . . . . . . . . . . . .   199,053    208,966
                                                   ---------  --------

Commitments and contingencies (Note 1)

Stockholders' Equity
Special stock, $.01 par value, 5,000,000 shares
 authorized . . . . . . . . . . . . . . . . . . .         -          -
Common stock, $.01 par value, 75,000,000 shares
 authorized, 18,269,339 shares issued and
 outstanding (18,179,186 at December 31, 1996). .       183        182
Additional paid-in capital. . . . . . . . . . . .   110,036    106,104
Retained earnings . . . . . . . . . . . . . . . .   289,833    256,110
Foreign currency translation adjustment . . . . .    (4,932)       856
                                                   ---------  --------
    Total stockholders' equity. . . . . . . . . .   395,120    363,252
                                                   ---------  --------
     Total liabilities and stockholders' equity .  $594,173   $572,218
                                                   =========  ========
See  accompanying  notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

                                                      Nine Months
                                                  Ended September 30,
                                                   1997         1996
----------------------------------------------------------------------
                                                     (In Thousands)
Operating Activities
 Net income . . . . . . . . . . . . . . . . . .  $  33,723   $  36,438 
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation and amortization. . . . . . . .     53,694      45,507 
   Deferred income taxes. . . . . . . . . . . .      7,059       6,342 
   Provision for uncollectible accounts . . . .      1,763         456 
   Impairment and restructuring charges . . . .        444           - 
 Changes in assets and liabilities:
   Accrued restructuring and lease
    termination costs . . . . . . . . . . . . .   (  2,355)   (  8,080)
   Receivables. . . . . . . . . . . . . . . . .   ( 23,380)   (  4,742)
   Income taxes receivable. . . . . . . . . . .   (     56)     10,181 
   Accounts payable and accrued expenses. . . .   ( 12,077)   ( 21,421)
   Income taxes payable . . . . . . . . . . . .      5,854       6,561 
 Other, net . . . . . . . . . . . . . . . . . .   (    943)   (  2,001)
                                                 ----------  ----------
      Cash provided by operations . . . . . . .     63,726      69,241 
                                                 ----------  ----------

Investing Activities
 Proceeds from sales/maturities of marketable
  securities. . . . . . . . . . . . . . . . . .        250       2,850 
 Investment in unconsolidated affiliate . . . .          -    (  2,315)
 Acquisition of property and equipment. . . . .   ( 22,430)   ( 20,676)
 Capitalized internal software development
  costs . . . . . . . . . . . . . . . . . . . .   ( 46,809)   ( 41,953)
 Proceeds from sale of business unit. . . . . .      2,900           - 
 Purchased software . . . . . . . . . . . . . .          -    (  1,192)
 Business acquisition . . . . . . . . . . . . .          -    (  6,777)
 Proceeds from disposal of property and
  equipment . . . . . . . . . . . . . . . . . .      1,183         747 
                                                 ----------  ----------
      Cash used by investing activities . . . .   ( 64,906)   ( 69,316)
                                                 ----------  ----------

Financing Activities
 Payments on long-term debt . . . . . . . . . .   (120,597)   (138,693)
 Repurchase of common stock . . . . . . . . . .          -    ( 73,603)
 Proceeds from borrowing under credit facility.    113,033     179,550 
 Issuance of common stock under stock
  option plans. . . . . . . . . . . . . . . . .      3,933       6,283 
                                                 ----------  ----------
      Cash used by financing activities . . . .   (  3,631)   ( 26,463)
                                                 ----------  ----------

Effect of exchange rate changes on cash . . . .      1,329    (    526)
Net decrease in cash and
 equivalents. . . . . . . . . . . . . . . . . .   (  3,482)    (27,064)
Cash and equivalents at beginning of period . .     22,121      35,094 
                                                 ----------  ----------
Cash and equivalents at end of period . . . . .  $  18,639   $   8,030 
                                                 ==========  ==========

Supplemental Information
 Interest paid. . . . . . . . . . . . . . . . .  $   3,636   $   1,116 
 Income taxes paid (refunded) . . . . . . . . .      5,471     ( 3,425)
See  accompanying  notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              SEPTEMBER 30, 1997

NOTE  1.          CONTINGENCIES

     In  June 1993, the Securities and Exchange Commission ("SEC") commenced a
formal  investigation  into possible violations of the Federal securities laws
in  connection with Policy Management Systems Corporation's ("Company") public
reports  and  financial  statements,  as  well  as  trading  in  the Company's
securities.

     On  July  22,  1997, the Company announced a settlement with the SEC that
closed  the  investigation  of the Company's 1990 to 1993 financial statements
and  reports.   The settlement became effective on July 22 simultaneously with
the  filing  of  an  SEC  civil  complaint  in the U.S. District Court for the
District  of  South  Carolina.    In consenting to the settlement, the Company
neither  admitted  nor  denied  the  SEC  allegations  of reporting, books and
records, and internal control violations. The key provisions of the settlement
are  an  injunction  requiring  future  compliance with the federal securities
laws,  payment  by  the  Company of a $1 million civil penalty and payments by
five  current  and  former  officers  of  $20,000  civil  penalties.

     In  March 1994, Security Life of Denver Insurance Company ("SLD") brought
suit  against the Company in the United States District Court for the District
of  Colorado  alleging  breach of a life insurance joint development contract,
unfair trade practices, and fraud. SLD sought direct, indirect, consequential,
and  punitive  damages in excess of $80 million. In February 1997, following a
jury  trial,  the  Court  and  jury  entered judgments in favor of the Company
against  SLD  on the claims of fraud and unfair trade practices. A verdict and
judgment  was  returned against the Company for breach of contract and damages
of  $3.5  million,  together with pre-judgment interest. In addition, the jury
found that SLD was using the Company's trade secrets without permission.  As a
result  of post trial motions, the judgment was amended to delete the award of
pre-judgment  interest  and  SLD  was ordered to return the Company's systems.
Both  the Company and SLD have appealed to the United States Court of Appeals.
Changes  in  the  status  of  this  proceeding could result in a change in the
Company's  estimate  of  anticipated  liability  for the costs associated with
these  matters.

     The  Company  is also presently involved in litigation which commenced in
January  of  1996  in  the Circuit Court in Greenville County, South Carolina,
with  Liberty Life Insurance Company and certain of its affiliates ("Liberty")
arising  out  of  the  parties'  prior contractual relationship related to the
development  and  licensing  of  Series  III  life  insurance  systems and the
subsequent  licensing  of  the  Company's  Cybertek  life  insurance  systems.
Liberty's  complaint alleges breach of contract, breach of express and implied
warranties,  fraudulent  inducement,  breach  of  contract  accompanied  by  a
fraudulent  act,  and  recission. Liberty has alleged actual and consequential
damages  of  approximately  $30  million  and  also  seeks treble and punitive
damages. The Company has asserted various affirmative defenses and is pursuing
counterclaims  against  Liberty  for breach of contract, recoupment, breach of
good  faith  and  fair  dealing,  and  breach  of  contract  accompanied  by a
fraudulent act.  The Company is seeking equitable relief, including injunctive
relief,  and  currently  unspecified  actual,  compensatory  and consequential
damages.

     Based upon the allegations raised in a prior lawsuit and the SLD lawsuit,
the Company's insurer, St. Paul Mercury Insurance Company ("St. Paul"),in June
1995  commenced  a  declaratory  judgment action in the United States District
Court  for the District of South Carolina against the Company to determine St.
Paul's  obligation  for  defense  costs  and  to indemnify the Company for any
payment  related to these claims. The Company filed a counterclaim against St.
Paul  seeking to recover the Company's defense costs in both matters, coverage
for  damages, if any, awarded in those matters, and consequential and punitive
damages.

     In  connection  with the dismissal of the prior lawsuit, St. Paul and the
Company  agreed  to  dismiss with prejudice all claims against each other with
respect  to  the  matter, and St. Paul agreed to reimburse the Company for the
Company's legal fees. The action continues as to the parties claims related to
insurance  coverage  for  the  SLD  matter.

     In  addition  to  the  litigation described above, there are also various
other  litigation  proceedings  and  claims  arising in the ordinary course of
business.  The  Company believes it has meritorious defenses and is vigorously
defending  these  matters.

     While  the  resolution  of any of the above matters could have a material
adverse  effect  on  the  results of operations in future periods, the Company
does  not  expect  these  matters  to  have  a  material adverse effect on its
consolidated  financial  position.  The Company, however, is unable to predict
the  ultimate  outcome  or  the  potential  financial impact of these matters.

NOTE  2.          PREPARATION  OF  INTERIM  FINANCIAL  STATEMENTS

     The  consolidated  financial  statements  of  Policy  Management  Systems
Corporation have been prepared in accordance with the rules and regulations of
the  SEC.    These  consolidated  financial  statements  include estimates and
assumptions  that  affect  the  reported  amounts  of  assets and liabilities,
disclosure  of  contingent  assets and liabilities and the amounts of revenues
and  expenses.    Actual  results  could  differ from those estimated.  In the
opinion  of management, these statements include all adjustments necessary for
a fair presentation of the results of all interim periods reported herein. All
adjustments  are  of  a  normal  recurring  nature unless otherwise disclosed.
Certain  information  and  footnote  disclosures  prepared  in accordance with
generally accepted accounting principles have been either condensed or omitted
pursuant  to SEC rules and regulations.  However, management believes that the
disclosures  made  are  adequate  for  a  fair  presentation  of  results  of
operations,  financial  position and cash flows.  These consolidated financial
statements  should  be  read  in  conjunction  with the consolidated financial
statements  and  accompanying  notes  included  in the Company's latest annual
report  on  Form  10-K.

NOTE  3.          NEW  ACCOUNTING  STANDARDS

     In  February  1997,  Statement of Financial Accounting Standards No. 128,
"Earnings  Per Share" ("FAS 128"), was issued.  FAS 128 is designed to improve
the  earnings  per  share  information  provided  in  financial  statements by
simplifying  the  existing  computational  guidelines, revising the disclosure
requirements,  and  increasing the comparability of earnings per share data on
an  international basis.  FAS 128 is effective for financial statements issued
for  periods  ending  after  December  15, 1997, including interim periods and
earlier  application  is not permitted.  The Company will adopt FAS 128 on its
effective  date.    Pro forma earnings per share of the Company computed using
FAS  128  is  not  different  from  earnings per share computed using existing
standards  and  guidelines.

     In  June  1997,  Statement  of  Financial  Accounting  Standards  No. 130
"Reporting  Comprehensive Income" ("FAS 130") was issued.  FAS 130 establishes
standards  for  reporting  and  display  of  comprehensive  income  and  its
components.    FAS  130 is effective for fiscal years beginning after December
15, 1997. The effect on the Company's financial statements will be immaterial.
The  Company  will  adopt  FAS  130  on  its  effective  date.

     In  June  1997,  Statement  of  Financial  Accounting  Standards  No. 131
"Disclosures  about  Segments  of an Enterprise and Related Information" ("FAS
131")  was issued.  FAS 131 is designed to improve the information provided in
financial statements about the different types of business activities in which
the  enterprise  engages  and  economic  environments  in which the enterprise
operates.   FAS 131 is effective for fiscal years beginning after December 15,
1997.    Earlier  application is encouraged.  The Company does not believe the
adoption  of  FAS 131 will have a material impact on its financial statements.

NOTE  4.          RECLASSIFICATION

     Certain  prior  year amounts have been reclassified to conform to current
year  presentation.
POLICY MANAGEMENT SYSTEMS CORPORATION
                    MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                 FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The  following  discussion  and  analysis  provides  information  which
management  believes  is  relevant  to  an assessment and understanding of the
Company's  consolidated  results  of  operations and financial condition.  The
discussion  should  be  read  in  conjunction  with the consolidated financial
statements  and  notes thereto contained in Part I of this report on Form 10-Q
and  with the Company's Annual Report on Form 10-K for the year ended December
31,  1996.

                             RESULTS OF OPERATIONS

     Set  forth below are certain operating items expressed as a percentage of
revenues  and  the  percent  increase  (decrease)  for those items between the
periods  presented:
1997 vs. 1996
                                                                           Percent
                                          Percentage of Revenues      Increase (Decrease)
                                      ------------------------------  ------------------
                                          Three           Nine         Three    Nine
                                       Months Ended    Months Ended    Months   Months
                                       September 30,   September 30,   Ended    Ended
                                      --------------  --------------
                                       1997    1996    1997    1996      September 30
                                      ------  ------  ------  ------  ------------------
Revenues
 Licensing . . . . . . . . . . . . .   20.3%   16.4%   18.9%   17.8%   38.0%   23.7%
 Services. . . . . . . . . . . . . .   79.7    83.6    81.1    82.2     6.4    14.3 
                                      ------  ------  ------  ------                
                                      100.0   100.0   100.0   100.0    11.6    16.0 
Operating expenses
 Cost of revenues
  Employee compensation and benefits   36.7    32.1    34.5    31.5    27.5    27.1 
  Computer & communication expenses.    5.3     5.4     5.4     5.8     9.7     8.4 
  Information services & data
   acquisition costs . . . . . . . .   14.0    20.4    17.4    21.1   (23.5)   (4.0)
  Depreciation & amortization
   of property, equipment &
   capitalized software costs. . . .    9.1     8.5     8.9     8.5    18.7    21.9 
  Other costs & expenses . . . . . .    5.5     9.3     6.7     7.0   (33.3)    8.6 
 Selling, general &
   administrative expenses . . . . .   14.8    12.1    13.9    12.5    36.6    29.0 
 Amortization of goodwill and
   other intangibles . . . . . . . .    1.5     1.8     1.7     1.9    (1.1)    1.8 
 Litigation settlement and
   expenses, net . . . . . . . . . .      -       -       -    (2.3)      -       - 
                                      ------  ------  ------  ------                
                                       86.9    89.6    88.5    86.0     8.3    19.3 
Operating income . . . . . . . . . .   13.1    10.4    11.5    14.0    40.1    (4.5)
Equity in earnings of unconsolidated
   affiliate . . . . . . . . . . . .    0.1       -     0.2       -       -       - 
Other income and expenses. . . . . .   (0.6)   (0.7)   (0.6)   (0.4)      -       - 
                                      ------  ------  ------  ------                
Income before income taxes . . . . .   12.6     9.7    11.1    13.6    45.8    (5.0)
Income taxes . . . . . . . . . . . .    4.7     3.5     4.2     4.9    49.5    (0.5)
                                      ------  ------  ------  ------                
Net income . . . . . . . . . . . . .    7.9%    6.2%    6.9%    8.7%   43.6%  (7.5)%
                                      ======  ======  ======  ======
THREE  MONTHS  COMPARISON

     Comparisons  of  revenues, operating income and margins for each business
unit  for  the  periods  presented  are  as  follows:
Three Months
                                         Ended September 30,
REVENUES                                   1997     1996    Change
--------------------------------------------------------------------
                                       (Dollars in Millions)
Enterprise Software and Services
 Property & Casualty                       $ 63.2   $ 53.6    17.9%
 Life . . . . . . . . . . . . . . . . . .    28.5     20.5    39.3 
Information Services
 Property & Casualty                         16.5     24.0   (31.4)
 Life . . . . . . . . . . . . . . . . . .    14.0     14.2   ( 1.5)
                                           -------  -------  ------
  Total U.S. revenues . . . . . . . . . .   122.2    112.3     8.8 
International . . . . . . . . . . . . . .    41.9     34.7    20.7 
                                           -------  -------  ------
    Total revenues. . . . . . . . . . . .  $164.1   $147.0    11.6%
=========================================  =======  =======  ======

OPERATING INCOME
--------------------------------------------------------------------                          
Enterprise Software and Services
 Property & Casualty. . . . . . . . . . .  $ 18.1   $ 13.6    33.0%
 Life . . . . . . . . . . . . . . . . . .     5.7      5.6     2.6 
Information Services
 Property & Casualty. . . . . . . . . . .       -      0.2   (89.8)
 Life . . . . . . . . . . . . . . . . . .     0.6      0.7   (26.3 
Corporate . . . . . . . . . . . . . . . .    (7.1)    (6.1)   16.2 
                                           -------  -------  ------
  Total U.S. operating income . . . . . .    17.3     14.0    23.5 
International . . . . . . . . . . . . . .     4.1      1.3   220.5 
                                           -------  -------  ------
    Total operating income. . . . . . . .  $ 21.4   $ 15.3    40.1%
=========================================  =======  =======  ======

OPERATING INCOME AS PERCENTAGE OF REVENUE
-------------------------------------------------------------------                          
Enterprise Software and Services
 Property & Casualty. . . . . . . . . . .    28.6%    25.4%
 Life . . . . . . . . . . . . . . . . . .    20.2     27.4 
Information Services
 Property & Casualty. . . . . . . . . . .     0.1      0.7 
 Life . . . . . . . . . . . . . . . . . .     4.0      5.3 
                                           -------  -------        
  Total U.S . . . . . . . . . . . . . . .    14.2     12.5 
International . . . . . . . . . . . . . .     9.9      3.7 
                                           -------  -------        
    Total . . . . . . . . . . . . . . . .    13.1%    10.4%
=========================================  =======  =======
REVENUES
                                    Three  Months
                                  Ended September 30,
  Licensing                        1997       1996     Change
----------------------------------------------------------------
                                (Dollars in Millions)
Initial  charges                $  16.9     $  10.1    68.1%
Monthly  charges                   16.5        14.1    16.5
----------------------------------------------------------------
                                  $  33.4   $  24.2    38.0%
================================================================

Percentage of total revenues         20.3%     16.4%
----------------------------------------------------------------

     Initial license revenues increased $6.8 million from the third quarter of
1996  to  the third quarter of 1997, with the following increases or decreases
by  business  unit:   domestic property and casualty up 464.9% ($4.0 million);
life  insurance  and  financial  solutions  down  16.0%  ($0.9  million);  and
international  up  98.1%  ($3.7  million).

     Initial  license  charges  for  the  third  quarter  of  1997  include
right-to-use  licenses  of  $3.7 million.  The right-to-use licenses represent
acquisitions  by  certain  customers  of  perpetual rights in conjunction with
renewals  of  MESA  by  these  customers.    This  compares to $2.1 million in
right-to-use  licenses  for  the  same  period of 1996 arising from a customer
acquiring  the  perpetual  rights in conjunction with its initial license of a
product.

     Monthly  license charges increased $2.4 million from the third quarter of
1996  to  the  third  quarter of 1997 with the following increases by business
unit:    domestic property and casualty up 4.6% ($0.4 million); life insurance
and  financial  solutions  up 52.9% ($1.2 million); and international up 25.2%
($0.8  million).    These  increases  are related to the increase in licensing
activity.

     Property  and  casualty licensing revenues in the United States are being
impacted  by  various  market factors.  Prospective customers are expressing a
desire  for a Windows NT version of Series III in a client server environment.
The  Company  believes the market priority is for personal lines functionality
in  a Windows NT environment.  The first release of Series III with Windows NT
functionality  is  currently  scheduled  to  be  available  by year end.  This
release  will  support  most  personal  lines  functionality  with  additional
personal  lines  and  commercial  lines functionality scheduled for subsequent
releases.  The Company's operating results could be negatively impacted if the
Company  experiences  delays  in  delivering  Windows  NT  to  its  customers.
Additionally,  many  insurance  companies  are spending significant amounts of
money  to  solve  their  year  2000  problems.   To date, the Company does not
believe  it  has  experienced  a significant impact, positively or negatively,
from  year  2000  issues and at this time is unable to predict what the future
impact,  if  any,  will  be.
Because  a  significant  portion of initial licensing revenues are recorded at
the  time  new  systems are licensed, there can be significant fluctuations in
revenue  from  quarter to quarter.  Set forth below is a comparison of initial
license  revenues  for  the  last  eight quarters expressed as a percentage of
total  revenues  for  each  of  the  periods  presented:

                                 1997                    1996             1995
                        --------------------- -------------------------- ------
                           3rd    2nd    1st    4th   3rd    2nd    1st    4th
                        --------------------- -------------------------- ------
                                         (Dollars  in  Millions)

Initial license revenues $16.9  $16.6  $11.3  $19.4  $10.1  $12.0  $10.4  $16.1
%  of  total  revenues    10.3%  10.0%   7.3%  11.8%   6.9%   8.8%   7.8%  11.6%

                                     Three Months
                                  Ended September 30,
  Services                         1997       1996       Change
-------------------------------------------------------------------
                                (Dollars  In  Millions)
Professional  and  outsourcing  $  97.8       $  81.6     19.9%
Information                        32.0          39.7    (19.3)
Other                               0.9           1.5     40.4
-------------------------------------------------------------------
                                  $130.7       $122.8      6.4%
===================================================================

Percentage of total revenues        79.7%        83.6%
-------------------------------------------------------------------

     Professional  and  outsourcing  services revenues increased $16.2 million
from  the  third  quarter  of  1996  to  the  third  quarter of 1997, with the
following increases by business unit:  domestic property and casualty up 14.5%
($6.1  million);  life  insurance  and  financial  solutions  up  68.8%  ($7.7
million);  and  international  up  8.6%  ($2.4  million).    The increases are
principally  due to increases in implementation services and in the processing
volumes  of  services  provided  to new and existing customers.  The increases
were partially offset by the elimination of approximately $3.9 million in pass
through  revenue  related  to  the  Florida  outsourcing  unit.

     Information  services revenues decreased $7.7 million from the 1996 third
quarter to the 1997 third quarter.  This decrease is due to the sale in August
1997 of the property and casualty information services business. Additionally,
there  was  a decrease of $0.2 million in life insurance information services,
principally  comprised  of  attending  physician  statements  and  application
processing  services.

OPERATING  EXPENSES

Cost  of  Revenues

     Employee  compensation and benefits increased 27.5% for the third quarter
1997  compared  with  the  third  quarter  of  1996, principally the result of
increased salaries and related costs associated with the growth in staffing in
all  business  units. Compensation and benefits increased 27.2% ($3.3 million)
internationally,  while  domestic  increased  27.6%  ($9.6  million).

     Computer  and  communications  expenses  increased  9.7%  ($0.8  million)
principally  as  a  result  of  increased  communications,  data  circuit  and
maintenance  costs  associated  with  the growth of the Company's domestic and
international  outsourcing  operations.

     Information  services  and data acquisition costs decreased 23.5%, due to
the  sale  in  August  1997  of the property and casualty information services
business.

     Depreciation  and  amortization  of  property,  equipment and capitalized
software  costs  increased  18.7%.  This increase is due principally to higher
amortization  expense  resulting from the recent release of the latest version
of  CyberLife  client/server life insurance software and the recent release of
the  Company's  Series  III  (Release  8)  property  and  casualty  insurance
client/server  software  systems.  In addition, depreciation expense increased
due  to  the  Company's  increased  investment  in  its information technology
equipment  and  expanded  facilities  costs.

     Other  operating  costs and expenses decreased 33.3% primarily related to
the  reduced  pass  through  costs  for  the  outsourcing  unit  in  Florida.

Selling,  general  and  administrative  expenses

     Selling,  general  and  administrative  expenses  increased 36.6% for the
third  quarter  of  1997  compared with the third quarter of 1996, principally
from  the  Company's  investment  in  its  international  sales  force  and
infrastructure.

Amortization  of  goodwill  and  other  intangibles

     Amortization  of  goodwill  and  other  intangibles  remains  relatively
unchanged.

OPERATING  INCOME

     Third  quarter  1997  operating  income  increased  40.1%  ($6.1 million)
compared  with  the  1996  third  quarter.    Property  and casualty insurance
operating  income  increased  33.0%,  domestic life insurance operating income
increased  2.6%  and  international  operating  income  increased 220.5%.  The
increase  in  operating  income is primarily related to increases in licensing
and  professional  services  revenues.

OTHER  INCOME  AND  EXPENSE

     Interest  expense  remained  relatively  unchanged  at  $1.4 million. The
average  nominal  interest  rate  applicable to borrowings under the Company's
credit  facilities  during  the  third  quarter  of  1997  was  6.0%.
INCOME  TAXES

     The  effective income tax rate (income taxes expressed as a percentage of
pre-tax  income)  was 37.5% and 36.6% for the three months ended September 30,
1997  and 1996, respectively. The effective rate for the third quarter of 1997
is  higher  than  the  federal statutory rate principally due to the effect of
state  and  local  income  taxes.

SALE  OF  BUSINESS  UNIT

     On  August  31, 1997, the Company completed the sale of substantially all
of  the  assets of its property and casualty information services business for
cash  proceeds  of  $2.9 million.  The Company retained the working capital of
this  business,  approximately  $14.3  million.    This transaction produced a
non-recurring  gain  of $1.7 million.  Also, during the third quarter of 1997,
the Company abandoned a related business.  As a result, the Company recorded a
non-recurring  charge  of  $1.8  million,  principally  related to capitalized
software.
NINE  MONTHS  COMPARISON

     Comparisons  of  revenues, operating income and margins for each business
unit  for  the  periods  presented  are  as  follows:
Nine Months
                                         Ended September 30,
REVENUES                                   1997      1996      Change
----------------------------------------------------------------------
     (Dollars  in  Millions)
Enterprise Software and Services
 Property & Casualty. . . . . . . . . . .  $175.4   $ 148.3      18.3 %
 Life . . . . . . . . . . . . . . . . . .    78.9      53.7      46.8 
Information Services
 Property & Casualty. . . . . . . . . . .    64.9      70.8      (8.3)
 Life . . . . . . . . . . . . . . . . . .    43.4      43.6      (0.5)
                                           -------  --------  --------
  Total U.S. revenues . . . . . . . . . .   362.6     316.4      14.6 
International . . . . . . . . . . . . . .   121.5     101.1      20.2 
                                           -------  --------  --------
    Total revenues. . . . . . . . . . . .  $484.1   $ 417.5     16.0 %
=========================================  =======  ========  ========

OPERATING INCOME
----------------------------------------------------------------------                             
Enterprise Software and Services
 Property & Casualty. . . . . . . . . . .  $ 46.8   $  42.4      10.4 %
 Life . . . . . . . . . . . . . . . . . .    17.1      12.3      38.7 
Information Services
 Property & Casualty. . . . . . . . . . .     0.4      (0.5)   (189.3)
 Life . . . . . . . . . . . . . . . . . .     2.2       2.2    (  2.1)
Corporate . . . . . . . . . . . . . . . .   (19.3)   (7.6)*     152.9 
                                           -------  --------          
  Total U.S. operating income . . . . . .    47.2      48.8    (  3.2)
International . . . . . . . . . . . . . .     8.6       9.6    ( 10.9)
                                           -------  --------  --------
    Total operating income. . . . . . . .  $ 55.8   $  58.4   (  4.5)%
=========================================  =======  ========  ========

OPERATING INCOME AS PERCENTAGE OF REVENUE
----------------------------------------------------------------------                             
Enterprise Software and Services
 Property & Casualty. . . . . . . . . . .    26.7%     28.6%
 Life . . . . . . . . . . . . . . . . . .    21.6      22.9 
Information Services
 Property & Casualty. . . . . . . . . . .     0.7      (0.8)
 Life . . . . . . . . . . . . . . . . . .     5.0       5.1 
                                           -------  --------          
  Total U.S . . . . . . . . . . . . . . .    13.0      15.4 
International . . . . . . . . . . . . . .     7.1       9.6 
                                           -------  --------          
    Total . . . . . . . . . . . . . . . .    11.5%     14.0%
=========================================  =======  ========
*Corporate  operating  income  includes  a  special  credit  of  $9.4 million.
REVENUES
                                 Nine Months
                              Ended September 30,
  Licensing                    1997       1996      Change
-------------------------------------------------------------
                            (Dollars  in  Millions)
Initial  charges              $  44.7     $  32.5    37.6%
Monthly  charges                 47.2        41.8    12.8
-------------------------------------------------------------
                              $  91.9     $  74.3    23.7%
=============================================================

Percentage of total revenues     18.9%       17.8%
-------------------------------------------------------------

     Initial  license  charges  increased  $12.2  million  from the first nine
months  of 1996 to the first nine months of 1997, with the following increases
by  business  unit:  domestic  property  and casualty up 22.3% ($2.0 million);
domestic  life  insurance and financial solutions up 37.2% ($4.3 million); and
international  up  50.0%  ($5.9  million).

     Initial  license  charges  for  the  first  nine  months  of 1997 include
right-to-use  licenses  of  $5.6 million.  The right-to-use licenses represent
acquisitions  by  certain  customers  of  perpetual rights in conjunction with
renewals  of  MESA  by  these  customers.    This  compares to $3.6 million in
right-to-use  licenses  for  the  same  period of 1996 arising from a customer
acquiring  the  perpetual  rights in conjunction with its initial license of a
product.

     Monthly license charges increased $5.4 million from the first nine months
of  1996  to  the  first  nine  months of 1997 with the following increases by
business unit:  domestic life insurance and financial solutions up 48.8% ($3.1
million);  and  international  up  25.9%  ($2.1 million).  These increases are
related to the increase in licensing activity.  Domestic property and casualty
was  relatively  unchanged.

     Property  and  casualty licensing revenues in the United States are being
impacted  by  various  market  factors,  as  described  in  the  three  months
comparison  above.

                                  Nine Months
                               Ended September 30,
  Services                      1997       1996       Change
-----------------------------------------------------------------
                             (Dollars  In  Millions)
Professional and outsourcing    $275.4    $221.7        24.0%
Information                      113.1     118.5        (4.5)
Other                              3.7       3.0        20.9
-----------------------------------------------------------------
                                $392.2    $343.2        14.3%
=================================================================

Percentage of total revenues      81.1%     82.2%
-----------------------------------------------------------------

     Professional  and  outsourcing  services revenues increased $53.7 million
from  the first nine months of 1996 to the first nine months of 1997, with the
following increases by business unit:  domestic property and casualty up 22.4%
($24.5  million);  life  insurance  and  financial  solutions up 53.78% ($17.1
million);  and  international  up  15.1%  ($12.1  million).  The increases are
principally  due to increases in implementation services and in the processing
volumes  of  services  provided  to new and existing customers.  The increases
were partially offset by the elimination of approximately $7.1 million in pass
through  revenue  related  to  the  Florida  outsourcing  unit.

     Information  services  revenues decreased $5.4 million.  This decrease is
principally  due  to  the  sale  in  August  1997 of the property and casualty
information  services  business.

OPERATING  EXPENSES

Cost  of  Revenues

     Employee  compensation  and  benefits increased 27.1% from the first nine
months  of  1996  to  the first nine months of 1997, principally the result of
increased salaries and related costs associated with the growth in staffing in
all  business units. Compensation and benefits increased 42.2% ($13.7 million)
internationally,  while  domestic  increased  22.2%  ($21.9  million).

     Computer  and  communications  expenses  increased 8.4%, principally as a
result  of  increased  communications,  data  circuit  and  maintenance  costs
associated  with  the  growth  of  the  Company's  domestic  and international
outsourcing  operations.

     Information  services  and  data  acquisition  costs  decreased  4.0%,
principally  due  to  the  sale  in  August  1997 of the property and casualty
information  services  business.

     Depreciation  and  amortization  of  property,  equipment and capitalized
software  costs  increased  21.9%.  This increase is due principally to higher
amortization  expense  resulting from the recent release of the latest version
of  CyberLife  client/server life insurance software and the recent release of
the  Company's  Series  III  (Release  8)  property  and  casualty  insurance
client/server  software  systems.  In addition, depreciation expense increased
due to Company's increased investment in its information technology equipment.

     Other  operating  costs  and  expenses  increased 8.6%.  This increase is
primarily related to increased fees for the use of consultants and independent
contractors  to  satisfy  staffing  needs for certain development and services
activities.    In addition, third party commissions, rent and other facilities
costs,  and  training  costs in new technologies rose over amounts in the same
period  last  year.  These increases were offset by reduced pass through costs
for  the  outsourcing  unit  in Florida and an increase in amounts capitalized
principally  related  to  the  continued  enhancement  and  development of the
Company's  Series III property and casualty insurance software, CyberLife life
insurance  software  and  Insure  Plus  international  property  and  casualty
software.
Selling,  general  and  administrative  expenses

Selling,  general  and  administrative  expenses increased 29.0% for the first
nine  months  of 1997 compared with the first nine months of 1996, principally
from  the  Company's  investment  in  its  international  sales  force  and
infrastructure.

Litigation  settlement  and  expenses,  net

     In  May  1996,  the  Company  resolved its litigation with the California
State  Automobile  Association Inter-Insurance Bureau and the California State
Automobile  Association  ("CSAA"), concluding with the mutual dismissal of all
related  claims and counterclaims as well as the Company's recovery of certain
defense  costs  incurred  relative  to  the  CSAA  matter, with interest. As a
result,  the Company recorded a $9.4 million gain for this recovery during the
second  quarter  of  1996.

Amortization  of  goodwill  and  other  intangibles

     Amortization  of  goodwill  and  other  intangibles  remained  relatively
unchanged.

OPERATING  INCOME

     Operating  income  decreased  4.5%  ($2.6  million)  due  primarily  to a
litigation settlement credit of $9.4 million in 1996.  Domestic life insurance
operating  income increased 38.7% and property and casualty insurance business
increased  10.4%  offset  by  a  decrease in international operating income of
10.9%.   International operating income is lower than the first nine months of
1996 due to the fact that expenses rose faster than revenues, primarily in the
sales,  marketing  and  administrative  areas  as the Company has built up its
international infrastructure.  While comparative results for international are
down  versus  the  first  nine  months  of 1996, operating income has improved
significantly  from  the  fourth  quarter  of 1996.  The property and casualty
results  were  negatively  impacted  due to results in its outsourcing unit in
Florida.    The  impact  is  due  in part to the state of Florida's efforts to
depopulate  its  state  run  homeowners'  insurance  program.   This unit also
suffered approximately $1 million in one time operating expenses in the second
quarter  of 1997.  Finally, contributing to the impact are significant startup
costs  the  Company  is  incurring  related  to  new  virtual companies in the
business  unit

OTHER  INCOME  AND  EXPENSES

     As  a  result  of  a  higher average level of borrowed funds, principally
borrowings  under  the Company's credit facilities, interest expense increased
$0.4 million. The average nominal interest rate applicable to borrowings under
these  facilities  during  the  first  nine  months  of  1997  was  6.0%.

     Investment  income  decreased  $0.8  million,  principally due to a lower
average  level  of  interest-bearing  cash  equivalents  during the first nine
months  of  1997  as  compared  to  the  same  period  of  1996.

INCOME  TAXES

     The  effective income tax rate (income taxes expressed as a percentage of
pre-tax  income)  was  37.5% and 35.8% for the nine months ended September 30,
1997  and 1996, respectively. The effective rate for the 1997 period is higher
than  the  federal  statutory  rate due principally to the effect of state and
local  income  taxes.

SALE  OF  BUSINESS  UNIT

     On  August  31, 1997, the Company completed the sale of substantially all
of  the  assets of its property and casualty information services business for
cash  proceeds  of  $2.9 million.  The Company retained the working capital of
this  business unit, approximately $14.3 million.  This transaction produced a
non-recurring  gain  of $1.7 million.  Also, during the third quarter of 1997,
the Company abandoned a related business.  As a result, the Company recorded a
non-recurring  charge  of  $1.8  million,  principally  related to capitalized
software.
LIQUIDITY AND CAPITAL RESOURCES
September 30, December  31,
                                  1997         1996
---------------------------------------------------------
                                (Dollars in Millions)
Cash and equivalents, marketable
  securities, and investments. .  $ 27.9  $ 30.8
Current assets . . . . . . . . .   194.2   173.0
Current liabilities. . . . . . .    74.0   112.6
Working capital. . . . . . . . .   120.2    60.4
Long-term debt                      56.0    34.3
Nine Months Ended
                                    September 30,
                                    1997      1996
------------------------------------------------------
                                 (Dollars in Millions)
Cash provided by operations. . . .  $ 63.7   $ 69.2 
Cash used for investing activities   (64.9)   (69.3)
Cash used for financing activities   ( 3.6)   (26.5)
The  Company's  current  ratio  (current  assets  divided  by  current
liabilities)  stood at 2.6 at September 30, 1997, which management believes is
sufficient  when  combined with the available credit facilities to provide for
day-to-day operating needs and the flexibility to take advantage of investment
opportunities.    On  August  8,  1997,  the Company entered into a new credit
facility  for  $200 million for five years.  The Company has available (net of
amounts outstanding at September 30, 1997) $145 million under the $200 million
facility.    Also,  effective  August  5,  1997,  the Company has available an
additional  $15 million uncommitted operating line of credit with which it may
choose to fund temporary operating cash needs.  The uncommitted line of credit
available  had  previously  been  at  $10  million.

     During  the  nine months ended September 30, 1997 the Company capitalized
software  development  costs  of  $46.8  million  principally  related  to the
development  of  its  Series  III client/server property and casualty software
(including  the  incorporation  of  object-oriented technology and support for
Windows  NT), CyberLife object-oriented client/server life insurance software,
and  Insure Plus international property and casualty solution as well as other
ongoing  projects  for  other  domestic  as  well  as  international products.

     Significant expenditures anticipated for the remainder of 1997, excluding
any  possible  business  acquisitions  or  common  stock  repurchases,  are as
follows:  acquisition  of data processing, communications equipment and office
furniture,  fixtures  and  equipment  ($8  million); and costs relating to the
internal  development  of  software  systems  ($19  million).

     The  Company has historically used the cash generated from operations for
the  following:  development  and  acquisition of new products, acquisition of
businesses  and  repurchase  of  the Company's stock.  The Company anticipates
that  it will continue to use its cash for all of these purposes in the future
and  that  projected  cash from operations, cash and investment reserves along
with  amounts available under the Company's debt facilities will be sufficient
to  meet  presently  anticipated  operating  needs  and to accomplish specific
objectives  in  these  areas  and  for  other  general  corporate  purposes.

                    FACTORS THAT MAY AFFECT FUTURE RESULTS

     The  Company's  operating results and financial condition can be impacted
by  a  number of factors, including, but not limited to, the following, any of
which  could  cause  actual  results  to  vary  materially  from  current  and
historical  results  or  the  Company's  anticipated  future  results:

-  Currently,  the Company's business is focused principally within the global
property  and  casualty  and  life  insurance  industries;

-  There  is  increasing  competition for the Company's products and services;

- The market for the Company's products and services is characterized by rapid
changes  in  technology;

-  Contracts  with  governmental  agencies involve a variety of special risks,
including  the  risk  of early contract termination by the governmental agency
and  changes  associated  with  newly  elected  state administrations or newly
appointed  regulators;

-  The  timing and amount of the Company's revenues are subject to a number of
factors,  including, but not limited to, the timing of customers' decisions to
enter  into  large  license  agreements  with  the  Company;

-  Unforeseen  events or adverse economic or business trends may significantly
increase  cash  demands  beyond  those  currently  anticipated  or  affect the
Company's  ability  to  generate/raise  cash  to  satisfy  financing  needs;

-  The  Company's  operations  have  not  proven to be significantly seasonal,
although  quarterly  revenues and net income can be expected to vary at times;

-  Although  the  Company cannot accurately determine the amounts attributable
thereto, the Company has been affected by inflation through increased costs of
employee  compensation  and  other  operating  expenses.

-  Many  of  the  Company's  current and potential customers are or will spend
significant  amounts  of  money  to  make  their  existing information systems
capable  of  handling  the  year  2000.

     The  preparation  of  financial  statements  in conformity with generally
accepted  accounting  principles  requires  management  to  make estimates and
assumptions  that  affect  the  reported amounts of assets and liabilities and
disclosure  of  contingent assets and liabilities at the date of the financial
statements,  as  well  as the reported amounts of revenues and expenses during
the  reporting  period.  Changes  in the status of certain matters or facts or
circumstances  underlying  these estimates could result in material changes in
these  estimates,  and  actual  results  could  differ  from  these estimates.

     Because  of the foregoing factors, as well as other factors affecting the
Company's  operating  results,  past  financial  performance  should  not  be
considered  to  be  a  reliable indicator of future performance, and investors
should  not  use  historical  trends to anticipate results or trends in future
periods.

SAFE  HARBOR  STATEMENT  UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995:  Statements in this report that are not descriptions of historical facts
may be forward-looking statements that are subject to risks and uncertainties,
including  economic,  competitive  and  technological  factors  affecting  the
Company's operations, markets, products, services and prices, as well as other
specific  factors  discussed  in the Company's filings with the Securities and
Exchange  Commission.  These  and  other  factors  may cause actual results to
differ  materially  from  those  anticipated.
PART II
                               OTHER INFORMATION

                     POLICY MANAGEMENT SYSTEMS CORPORATION

ITEM  1.    LEGAL  PROCEEDINGS

     See Note 1, Contingencies, of Notes to Consolidated Financial Statements,
which  is  incorporated  by  reference  in  this  Item.

ITEMS  2,  3,  4  AND  5  are  not  applicable

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

Exhibits

     Exhibits required to be filed with this Quarterly Report on Form 10-Q are
listed  in  the  following  Exhibit  Index.

Reports  on  Form  8-K

     The Company did not file any reports on Form 8-K during the quarter ended
September  30,  1997.
POLICY MANAGEMENT SYSTEMS CORPORATION

                                  SIGNATURES

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

                     POLICY MANAGEMENT SYSTEMS CORPORATION
                     -------------------------------------
                                 (Registrant)

Date:    November  12,  1997          Timothy  V.  Williams
                                      Executive Vice President
                                      (Chief Financial Officer)
POLICY  MANAGEMENT  SYSTEMS  CORPORATION

                               EXHIBIT  INDEX

Exhibit
Number

 3.          ARTICLES  OF  INCORPORATION  AND  BY-LAWS

A.       Bylaws of the Company, as amended through July 19, 1994 incorporating
all amendments thereto subsequent to December 31, 1993 (filed as an Exhibit to
Form  10-K for the year ended December 31, 1994, and is incorporated herein by
reference)

B.        Articles of Incorporation of the Company, as amended through October
13, 1994, incorporating all amendments thereto subsequent to December 31, 1993
(filed as an Exhibit to Form 10-K for the year ended December 31, 1994, and is
incorporated  herein  by  reference)

 4.          INSTRUMENTS  DEFINING  THE  RIGHTS OF SECURITY HOLDERS, INCLUDING
INDENTURES

A.       Specimen forms of certificates for Common Stock of the Company (filed
as  an Exhibit to Registration Statement No. 2-74821, dated December 16, 1981,
and  is  incorporated  herein  by  reference)

B.        Articles of Incorporation of the Company, as amended through October
13, 1994, incorporating all amendments thereto subsequent to December 31, 1993
(filed as an Exhibit to Form 10-K for the year ended December 31, 1994, and is
incorporated  herein  by  reference)

10.          MATERIAL  CONTRACTS

A.      Policy Management Systems Corporation 1986 Stock Option Plan (filed as
an  Exhibit  to  Form  10-K  for  the  year  ended  December  31, 1986, and is
incorporated  herein  by  reference)

B.          Conformed  copy  of  Development  and  Marketing Agreement between
International  Business  Machines  Corporation  and  Policy Management Systems
Corporation, dated July 26, 1989 (File No. 0-10175 - filed under cover of Form
SE  filed  on  September  29,  1989,  and is incorporated herein by reference)

C.      Policy Management Systems Corporation 1989 Stock Option Plan (File No.
0-10175  - filed under cover of Form SE on March 22, 1991, and is incorporated
herein  by  reference)

D.          Deferred  Compensation Agreement with G. Larry Wilson (filed as an
Exhibit to Form 10-K for the year ended December 31, 1993, and is incorporated
herein  by  reference)

E.          Executive Compensation Agreement with G. Larry Wilson (filed as an
Exhibit to Form 10-K for the year ended December 31, 1993, and is incorporated
herein  by  reference)

F.       Employment Agreement with Stephen G. Morrison (filed as an Exhibit to
Form  10-Q for the quarter ended March 31, 1994, and is incorporated herein by
reference)

G.       Stock Option/Non-Compete Agreement with Stephen G. Morrison (filed as
an  Exhibit  to  Form  10-Q  for  the  quarter  ended  March  31, 1994, and is
incorporated  herein  by  reference)

H.      Shareholders' Agreement, dated April 26, 1994, among Policy Management
Systems  Corporation,  General Atlantic Partners 14, L.P. and GAP Coinvestment
Partners (filed as an Exhibit to Form 10-Q for the quarter ended September 30,
1994,  and  is  incorporated  herein  by  reference)

I.          Registration  Rights  Agreement, dated April 26, 1994 among Policy
Management  Systems  Corporation,  General  Atlantic Partners 14, L.P. and GAP
Coinvestment  Partners (filed as an Exhibit to Form 10-Q for the quarter ended
September  30,  1994,  and  is  incorporated  herein  by  reference)

J.       Employment Agreement with Timothy V. Williams (filed as an Exhibit to
Form  10-K for the year ended December 31, 1994, and is incorporated herein by
reference)

K.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  schedule  identifying  particulars  for  each  named executive
officer  (filed as an Exhibit to Form 10-Q for the quarter ended September 30,
1992,  and  is  incorporated  herein  by  reference)

L.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  schedule  identifying  particulars  for  each  named executive
officer  (filed as an Exhibit to Form 10-Q for the quarter ended September 30,
1994,  and  is  incorporated  herein  by  reference)

M.       Stock Option (Non-Compete Form Agreement for named executive officers
together  with  schedule  identifying  particulars  for  each  named executive
officer  (filed  as  an  Exhibit  to Form 10-K for the year ended December 31,
1994,  and  is  incorporated  herein  by  reference)

N.     Policy Management Systems Corporation 1993 Long-Term Incentive Plan for
Executives  (filed  as an Exhibit to Form 10-K for the year ended December 31,
1994,  and  is  incorporated  herein  by  reference)

O.     First Amendment to the Policy Management Systems Corporation 1989 Stock
Option  Plan (filed as an Exhibit to Form 10-K for the year ended December 31,
1994,  and  is  incorporated  herein  by  reference)

P.          Fourth Amendment to the Policy Management Systems Corporation 1989
Stock  Option  Plan  (filed  as an Exhibit to Form 10-Q for the quarter ending
March  31,  1995,  and  is  incorporated  herein  by  reference)

Q.          Second  and  Third  Amendments  to  the  Policy Management Systems
Corporation  1989 Stock Option Plan (filed as an Exhibits and to Form 10-Q for
the  quarter  ended  June  30,  1995, and is incorporated herein by reference)

R.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  schedule  identifying  particulars  for  each  named executive
officer (filed as an Exhibit to Form 10-Q for the quarter ended June 30, 1995,
and  is  incorporated  herein  by  reference)

S.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  schedule  identifying  particulars  for  each  named executive
officer  (filed  as  an Exhibit to Form 10-K for year ended December 31, 1995,
and  is  incorporated  herein  by  reference)

T.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  schedule  identifying  particulars  for  each  named executive
officer  (filed  as  an Exhibit to Form 10-K for year ended December 31, 1995,
and  is  incorporated  herein  by  reference)

U.        Stock Option/Non-Compete Agreement Amendment No. 1 dated November 8,
1995  to  Stock  Option/Non-Compete Agreement dated July 20, 1995 with Paul R.
Butare (filed as an Exhibit to Form 10-K for year ended December 31, 1995, and
is  incorporated  herein  by  reference)

V.          Stock  Option/Non-Compete Agreement with Timothy V. Williams dated
February 1, 1994 (filed as an Exhibit to Form 10-K for year ended December 31,
1995,  and  is  incorporated  herein  by  reference)

W.       Stock Option/Non-Compete Agreement with Timothy V. Williams dated May
10,  1995  (filed as an Exhibit to Form 10-K for year ended December 31, 1995,
and  is  incorporated  herein  by  reference)

X.          Registration Rights Agreement, dated March 8, 1996, between Policy
Management  Systems  Corporation and Continental Casualty Company (filed as an
Exhibit to Form 10-Q for the quarter ended March 31, 1996, and is incorporated
herein  by  reference)

Y.        Shareholders Agreement dated March 8, 1996 between Policy Management
Systems  Corporation  and Continental Casualty Company (filed as an Exhibit to
Form  10-Q for the quarter ended March 31, 1996, and is incorporated herein by
reference)

Z.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  schedule  identifying  particulars  for  each  named executive
officer (filed as an Exhibit to Form 10-Q for the quarter ended June 30, 1996,
and  is  incorporated  herein  by  reference)

AA.       Employment Agreement Form dated November 7, 1996 for Messrs. Butare,
Morrison  and  Williams  together  with a schedule identifying particulars for
each  executive  officer  (filed  as  an  Exhibit  to Form 10-K for year ended
December  31,  1996,  and  is  incorporated  herein  by  reference)

BB.          Stock Option/Non-Compete Agreement with Stephen G. Morrison dated
October 22, 1996 (filed as an Exhibit to Form 10-K for year ended December 31,
1996,  and  is  incorporated  herein  by  reference)

CC.          Stock Option/Non-Compete Form Agreement dated January 8, 1997 for
named  executive  officers  together with schedule identifying particulars for
each executive officer (filed as an Exhibit to Form 10-Q for the quarter ended
March  31,  1997,  and  is  incorporated  herein  by  reference)

DD.        Annual Bonus Program for Executive Officers (filed as an Exhibit to
Form  10-Q for the quarter ended March 31. 1997, and is incorporated herein by
reference)

EE.          Form of Amendment No. 1 to the Employment Agreements with Messrs.
Butare,  Morrison  and Williams together with schedule identifying particulars
for  each  executive officer (filed as an Exhibit to Form 10-Q for the quarter
ended  June  30,  1997,  and  is  incorporated  herein  by  reference)

FF.          Form  of Employment Agreements with Messrs. Bailey,  Coggiola and
Wilson  together  with  schedule  identifying  particulars  for each executive
officer    (filed  herewith)

GG.        Credit Agreement dated as of August 8, 1997 among Policy Management
Systems  Corporation,  the  Guarantors  Party hereto, Bank of America National
Trust and Savings Association and the Other Financial Institution Party Hereto
(filed  herewith)

11.          STATEMENT  REGARDING  COMPUTATION  OF  PER  SHARE  EARNINGS

A.          Filed  herewith

27.          FINANCIAL  DATA  SCHEDULE

     A.          Filed  herewith  (EDGAR  version  only)