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 quarterly period ended SEPTEMBER 30, 1998
                        Commission file number 1-10557


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


            SOUTH CAROLINA                   57-0723125
     (State or other jurisdiction of       (IRS Employer
     incorporation or organization)      Identification No.)


           ONE PMSC CENTER (PO BOX TEN)
           BLYTHEWOOD, SC (COLUMBIA, SC)      29016 (29202)
     (Address of principal executive offices)  (Zip Code)


       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.

       36,070,812 Common shares, $.01 par value, as of November 6, 1998.

     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, 1997.

<PAGE>
<TABLE>
<CAPTION>

                     POLICY MANAGEMENT SYSTEMS CORPORATION


                                     INDEX


PART  I.  FINANCIAL  INFORMATION                         PAGE

Item  1.  Financial  Statements


<S>                                                       <C>
Consolidated Statements of Income for the Three and
Nine Months Ended September 30, 1998 and 1997              3

Consolidated Balance Sheets as of September 30, 1998 and
December 31, 1997. . . . . . . . . . . . . . . . . . . .   4

Consolidated Statements of Changes in Stockholders'
Equity and Comprehensive Income for the Nine
Months Ended September 30, 1998. . . . . . . . . . . . .   5

Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1998 and 1997. . . . . .   6

Notes to Consolidated Financial Statements . . . . . . .   7

Item 2. Management's Discussion and Analysis of
  Financial Condition and Results of Operations. . . . .  13


PART II. OTHER INFORMATION

Item 1. Legal Proceedings. . . . . . . . . . . . . . . .  27

Item 6. Exhibits and Reports on Form 8-K . . . . . . . .  27

Signatures . . . . . . . . . . . . . . . . . . . . . . .  28
</TABLE>



<PAGE>
<TABLE>
<CAPTION>

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

                                                 Three Months Ended      Nine Months Ended
                                                    September 30,          September 30,
                                                   1998       1997       1998       1997
                                                               (Unaudited)
                                                 ------------------------------------------
                                                    (In thousands, except per share data)

<S>                                               <C>        <C>        <C>        <C>
REVENUES
 Licensing . . . . . . . . . . . . . . . . . . .  $ 31,454   $ 33,316   $ 89,694   $ 91,868 
 Services. . . . . . . . . . . . . . . . . . . .   119,849     98,639    346,919    278,998 
                                                  ---------  ---------  ---------  ---------
                                                   151,303    131,955    436,613    370,866 
                                                  ---------  ---------  ---------  ---------
OPERATING EXPENSES
 Cost of revenues
   Employee compensation and benefits. . . . . .    65,068     55,982    193,157    154,442 
   Computer and communications expenses. . . . .     9,727      8,140     25,472     24,214 
   Depreciation and amortization of property,
    equipment and capitalized software costs . .    15,642     14,736     47,195     42,961 
   Other costs and expenses. . . . . . . . . . .     4,717      5,373     17,526     20,368 
 Selling, general and administrative expenses. .    27,315     24,535     76,294     68,366 
 Amortization of goodwill and other intangibles.     2,673      2,451      7,585      7,360 
 Acquisition related charges:
  Purchased research and development . . . . . .     2,000          -      2,000          - 
  Purchased and internally developed software. .     1,732          -      1,732          - 
                                                  ---------  ---------  ---------  ---------
                                                   128,874    111,217    370,961    317,711 
                                                  ---------  ---------  ---------  ---------

OPERATING INCOME . . . . . . . . . . . . . . . .    22,429     20,738     65,652     53,155 

Equity in earnings of unconsolidated affiliates.       129        274        567        964 
Minority interest. . . . . . . . . . . . . . . .       (44)         -        (74)         - 

Other Income and Expenses
  Investment income. . . . . . . . . . . . . . .       390        371      1,076      1,142 
  Interest expense and other charges . . . . . .      (993)    (1,378)    (2,474)    (3,951)
                                                  ---------  ---------  ---------  ---------
                                                      (603)    (1,007)    (1,398)    (2,809)
                                                  ---------  ---------  ---------  ---------
Income from continuing operations
  before income taxes. . . . . . . . . . . . . .    21,911     20,005     64,747     51,310 
Income taxes . . . . . . . . . . . . . . . . . .     8,740      7,454     24,727     19,135 
                                                  ---------  ---------  ---------  ---------
INCOME FROM CONTINUING OPERATIONS. . . . . . . .    13,171     12,551     40,020     32,175 


DISCONTINUED OPERATIONS:
  Income from operations of discontinued
    operations less applicable income taxes
    of $344, $252 and $1,164, respectively . . .         -        450        389      1,612 
  Loss on disposal of discontinued operations
    less applicable income taxes (benefit) of
    $(38), $2,439, and $(38), respectively . . .         -        (64)      (453)       (64)
                                                  ---------  ---------  ---------  ---------
                                                         -        386        (64)     1,548 
                                                  ---------  ---------  ---------  ---------

NET INCOME . . . . . . . . . . . . . . . . . . .  $ 13,171   $ 12,937   $ 39,956   $ 33,723 
                                                  =========  =========  =========  =========

BASIC EARNINGS PER SHARE:
  Income from continuing operations. . . . . . .  $   0.36   $   0.34   $   1.09   $   0.89 
  Income (loss) from discontinued operations . .         -       0.01          -       0.04 
                                                  ---------  ---------  ---------  ---------
                                                  $   0.36   $   0.35   $   1.09   $   0.93 
                                                  =========  =========  =========  =========
DILUTED EARNINGS PER SHARE:
  Income from continuing operations. . . . . . .  $   0.33   $   0.33   $   1.01   $   0.86 
  Income (loss) from discontinued operations . .         -       0.01          -       0.04 
                                                  ---------  ---------  ---------  ---------
                                                  $   0.33   $   0.34   $   1.01   $   0.90 
                                                  =========  =========  =========  =========


Weighted average common shares . . . . . . . . .    36,458     36,460     36,635     36,398 
Weighted average common shares assuming dilution    39,549     38,022     39,471     37,297 

<FN>

See accompanying notes
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                       POLICY MANAGEMENT SYSTEMS CORPORATION
                            CONSOLIDATED BALANCE SHEETS

                                                            (Unaudited)    (Audited)
                                                            September 30,   December 31,
                                                                1998         1997
                                                              --------     --------
                                                    (In thousands, except share data)

<S>                                                           <C>        <C>
Assets
Current assets
 Cash and equivalents. . . . . . . . . . . . . . . . . . . .  $ 15,896   $ 32,179 
 Marketable securities . . . . . . . . . . . . . . . . . . .         -      3,280 
 Receivables, net of allowance for uncollectible
  amounts of $2,095 ($2,628 at 1997) . . . . . . . . . . . .   130,622    128,789 
 Income tax receivable . . . . . . . . . . . . . . . . . . .     1,014      1,098 
 Deferred income taxes . . . . . . . . . . . . . . . . . . .     9,569      3,628 
 Other receivable. . . . . . . . . . . . . . . . . . . . . .    11,284          - 
 Other . . . . . . . . . . . . . . . . . . . . . . . . . . .    23,710     16,835 
                                                              ---------  ---------
   Total current assets. . . . . . . . . . . . . . . . . . .   192,095    185,809 

Property and equipment, at cost less accumulated
 depreciation and amortization of $121,939
 ($139,522 at 1997). . . . . . . . . . . . . . . . . . . . .   122,102    116,433 
Receivables. . . . . . . . . . . . . . . . . . . . . . . . .     2,188      3,271 
Income tax receivable. . . . . . . . . . . . . . . . . . . .     4,041      4,041 
Goodwill and other intangibles, net. . . . . . . . . . . . .    81,452     69,125 
Capitalized software costs, net. . . . . . . . . . . . . . .   220,476    204,118 
Deferred income taxes. . . . . . . . . . . . . . . . . . . .    22,754     21,996 
Investments. . . . . . . . . . . . . . . . . . . . . . . . .     9,063     11,066 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . .     8,107      2,547 
                                                              ---------  ---------
     Total assets. . . . . . . . . . . . . . . . . . . . . .  $662,278   $618,406 
                                                              =========  =========

Liabilities
Current liabilities
 Accounts payable and accrued expenses . . . . . . . . . . .  $ 46,542   $ 57,345 
 Accrued restructuring charges . . . . . . . . . . . . . . .       187        145 
 Accrued contract termination costs. . . . . . . . . . . . .       418        830 
 Current portion of long-term debt . . . . . . . . . . . . .     1,086      1,191 
 Income taxes payable. . . . . . . . . . . . . . . . . . . .    16,674      7,499 
 Unearned revenues . . . . . . . . . . . . . . . . . . . . .    12,207     18,806 
 Other . . . . . . . . . . . . . . . . . . . . . . . . . . .       315        397 
                                                              ---------  ---------
   Total current liabilities . . . . . . . . . . . . . . . .    77,429     86,213 

Long-term debt . . . . . . . . . . . . . . . . . . . . . . .    77,000     37,714 
Deferred income taxes. . . . . . . . . . . . . . . . . . . .    92,612     80,496 
Accrued restructuring charges. . . . . . . . . . . . . . . .     1,409      1,366 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . .     3,992      2,121 
                                                              ---------  ---------
    Total liabilities. . . . . . . . . . . . . . . . . . . .   252,442    207,910 
                                                              ---------  ---------


Minority interest. . . . . . . . . . . . . . . . . . . . . .       472          - 

Commitments and contingencies (Note 3)

Stockholders' Equity
Special stock, $.01 par value, 5,000,000 shares authorized .         -          - 
Common stock, $.01 par value, 75,000,000 shares authorized,
 36,125,693 shares issued and outstanding
 (18,339,304 at December 31, 1997) . . . . . . . . . . . . .       361        183 
Additional paid-in capital . . . . . . . . . . . . . . . . .    71,237    112,090 
Retained earnings. . . . . . . . . . . . . . . . . . . . . .   346,139    306,367 
Accumulated other comprehensive income . . . . . . . . . . .    (8,373)    (8,144)
                                                              ---------  ---------
    Total stockholders' equity . . . . . . . . . . . . . . .   409,364    410,496 
                                                              ---------  ---------
     Total liabilities and stockholders' equity. . . . . . .  $662,278   $618,406 
                                                              =========  =========
<FN>

See accompanying notes
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                      POLICY MANAGEMENT SYSTEMS CORPORATION
            CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                             AND COMPREHENSIVE INCOME
                                   (Unaudited)

                                                          Accumulated
                                      Additional             Other
                               Common  Paid-In  Retained  Comprehensive                            
                                Stock  Capital  Earnings    Income(1)    Total
                                -----  -------  --------    ---------   -------
                                              (Dollars in thousands)

<S>                              <C>    <C>        <C>        <C>       <C>
BALANCE, DECEMBER 31, 1997. . .  $183   $112,090   $306,367   $(8,144)  $410,496 

Comprehensive income
 Net income . . . . . . . . . .     -          -     39,956         -     39,956 
 Other comprehensive income,
  net of tax:
   Foreign currency
    translation adjustments . .     -          -          -      (221)      (221)
   Unrealized loss on
    marketable securities . . .     -          -          -        (8)        (8)
                                                                        ---------
Total comprehensive income                                                39,727 
                                                                        ---------

Stock dividend. . . . . . . . .   184          -       (184)        -          - 
Stock options exercised
  (709,298 shares). . . . . . .     8     28,793          -         -     28,801 
Repurchase of 1,349,600 shares
  of common stock . . . . . . .   (14)   (69,646)         -         -    (69,660)
                                 -----  ---------  ---------  --------  ---------

BALANCE, SEPTEMBER 30, 1998 . .  $361   $ 71,237   $346,139   $(8,373)  $409,364 
                                 =====  =========  =========  ========  =========
<FN>

See accompanying notes

(1)  Comprehensive income for the three months ended September 30, 1998 and 1997
     was $14,743 and $11,843, respectively.
     Comprehensive income for the nine months ended September 30, 1997 was
     $27,935.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

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

                                                          Nine Months
                                                       Ended September 30,
                                                        1998       1997
                                                       ------     ------
                                                        (In thousands)
Operating  Activities
<S>                                                   <C>        <C>
Net income . . . . . . . . . . . . . . . . . . . . .  $ 39,956   $  33,723 
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation and amortization . . . . . . . . . .    58,993      53,694 
   Deferred income taxes . . . . . . . . . . . . . .     1,517       7,059 
   Provision for uncollectible accounts. . . . . . .        85       1,763 
   Minority interest . . . . . . . . . . . . . . . .        74           - 
   Gain on disposal of discontinued operations . . .    (1,986)          - 
   Acquisition related charges . . . . . . . . . . .     3,732           - 
   Impairment charges. . . . . . . . . . . . . . . .         -         444 
 Changes in assets and liabilities:
   Accrued restructuring and lease termination costs        85      (2,355)
   Receivables . . . . . . . . . . . . . . . . . . .    (5,013)    (23,380)
   Income taxes receivable . . . . . . . . . . . . .        84         (56)
   Accounts payable and accrued expenses . . . . . .   (14,127)    (12,077)
   Income taxes payable. . . . . . . . . . . . . . .     9,036       5,854 
 Other, net. . . . . . . . . . . . . . . . . . . . .   (23,630)       (943)
                                                      ---------  ----------
      Cash provided by operations. . . . . . . . . .    68,806      63,726 
                                                      ---------  ----------

Investing Activities
 Proceeds from sales/maturities of available-for-
  sale securities. . . . . . . . . . . . . . . . . .     3,257         250 
 Proceeds from sales of held-to-
  maturity securities. . . . . . . . . . . . . . . .     2,969           - 
 Proceeds from sale of business segment. . . . . . .    23,826       2,900 
 Acquisition of property and equipment . . . . . . .   (42,204)    (22,430)
 Capitalized internal software development costs . .   (43,599)    (46,809)
 Business acquisition. . . . . . . . . . . . . . . .   (27,143)          - 
 Investment by minority interest . . . . . . . . . .       425           - 
 Investment in unconsolidated affiliate. . . . . . .      (300)          - 
 Proceeds from disposal of property and equipment. .     1,034       1,183 
                                                      ---------  ----------
      Cash used by investing activities. . . . . . .   (81,735)    (64,906)
                                                      ---------  ----------

Financing Activities
 Payments on long-term debt. . . . . . . . . . . . .   (42,319)   (120,597)
 Proceeds from borrowing under credit facility . . .    81,500     113,033 
 Issuance of common stock under stock
  option plans . . . . . . . . . . . . . . . . . . .    28,801       3,933 
 Repurchase of common stock. . . . . . . . . . . . .   (69,660)          - 
                                                      ---------  ----------
      Cash used by financing activities. . . . . . .    (1,678)     (3,631)
                                                      ---------  ----------

Effect of exchange rate changes on cash. . . . . . .    (1,676)      1,329 
Net decrease in cash and equivalents . . . . . . . .   (16,283)     (3,482)
Cash and equivalents at beginning of period. . . . .    32,179      22,121 
                                                      ---------  ----------
Cash and equivalents at end of period. . . . . . . .  $ 15,896   $  18,639 
                                                      =========  ==========

Supplemental Information
 Interest paid . . . . . . . . . . . . . . . . . . .  $  2,489   $   3,636 
 Income taxes paid . . . . . . . . . . . . . . . . .     9,806       5,471 

<FN>

Non-cash investing activities:
  The  Company  transferred  $11.2 million of property, plant and equipment at
  net  book  value  to Lockheed Martin in exchange for an other receivable to be
  paid  in  January  1999.

See accompanying notes
</TABLE>

<PAGE>
                     POLICY MANAGEMENT SYSTEMS CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              SEPTEMBER 30, 1998


NOTE  1.          SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

BASIS OF PRESENTATION

     The  consolidated  financial  statements  of  Policy  Management  Systems
Corporation  (the  "Company")  have been prepared in accordance with the rules
and  regulations of the Securities and Exchange Commission (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.

BASIC AND DILUTED EARNINGS PER SHARE

     Basic  and diluted earnings per share ("EPS") are calculated according to
the  provisions  of  Statement  of  Financial  Accounting  Standards  No. 128,
"Earnings  Per  Share".    For  the Company, the numerator is the same for the
calculation  of both basic and diluted EPS.  The following is a reconciliation
of  the  denominator  used  in  the  EPS  calculations  (in  thousands):
<TABLE>
<CAPTION>


                                  Three Months       Nine Months
                              Ended September 30, Ended September 30,
                              ------------------- -------------------
                                 1998    1997       1998    1997  
                                 -----   -----      -----   -----
Weighted Average Shares
-----------------------
<S>                             <C>     <C>        <C>     <C>
Basic EPS. . . . . . . . . . .  36,458  36,460     36,635  36,398
Effect of common stock options   3,091   1,562      2,836     899
                                ------  ------     ------  ------
Diluted EPS. . . . . . . . . .  39,549  38,022     39,471  37,297
                                ======  ======     ======  ======
</TABLE>


     All  options  to  purchase  shares  of  common stock were included in the
computation  of  diluted  EPS  for  1998.

<PAGE>
NEW  ACCOUNTING  STANDARDS

In  June 1997, Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("SFAS 130") was issued.  SFAS 130 establishes standards
for  reporting  and display of comprehensive income and its components, and is
effective  for  fiscal  years  beginning after December 15, 1997.  The Company
adopted  SFAS  130  at  January  1,  1998  and  has  included  the appropriate
disclosures  in the Consolidated Statements of Changes in Stockholders' Equity
and  Comprehensive  Income.

In October 1997, the American Institute of Certified Public Accountants issued
Statement  of Position 97-2, "Software Revenue Recognition" ("SOP 97-2").  SOP
97-2 provides guidance on applying generally accepted accounting principles in
recognizing  revenue  on  software  transactions,  and  is  effective  for
transactions  entered  into in fiscal years beginning after December 31, 1997.
The  Company adopted SOP 97-2 at January 1, 1998.  The adoption did not have a
material  impact  on  the  Company's  financial  statements.

In  February  1998,  the  American  Institute  of Certified Public Accountants
issued  Statement  of  Position  98-1,  "Accounting  for the Costs of Computer
Software  Developed  or  Obtained  for  Internal  Use" ("SOP 98-1").  SOP 98-1
provides  guidance  on accounting for the costs of computer software developed
or  obtained  for  internal  use,  and is effective for fiscal years beginning
after  December  31,  1998,  with  earlier  adoption  encouraged.  The Company
adopted  SOP  98-1  at  January 1, 1998.  The adoption did not have a material
effect  on  the  Company's  financial  statements.

In  June 1998, Statement of Financial Accounting Standard No. 133, "Accounting
for  Derivative  Instruments  and Hedging Activities" ("SFAS 133") was issued,
effective  for  fiscal  years  beginning  after  June  15,  1999, with earlier
adoption  encouraged.    SFAS  133  requires  companies  to  record derivative
instruments  on  the balance sheet as assets and liabilities, measured at fair
value.    Gain  or  losses  resulting  from  changes  in  the  values of those
derivatives  are  accounted  for  depending  on the use of the derivative. The
Company  does  not  enter  into  derivative instruments except occasionally to
hedge  the  foreign  currency  exchange  and  interest  rate  risk of specific
projected  transactions.    The  Company  was  not  holding  any  derivative
instruments  at  December  31, 1997.  At September 30, 1998, the Company had a
foreign  currency forward contract with a notional amount of 1,000,000 British
pounds  and  a  fair  market  value  of  $78,500.

OTHER MATTERS

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

<PAGE>
NOTE  2.          ACQUISITIONS

     On  August 31, 1998, the Company purchased 100% of the outstanding common
stock  of  The Leverage Group ("TLG") for $25 million in cash.  An independent
appraiser  estimated  the  fair  market  value  of  the  assets  acquired  and
liabilities  assumed  including  the  in-process  research  and  development
("IPR&D").  TLG owns Policy Link , a family of systems designed to support the
administrative  tasks  associated  with administration, commission processing,
payout  processing, and disbursement generation for life insurance and annuity
contracts.    In addition to continuing to market certain systems, the Company
intends  to  integrate  the  family  of  systems  with  its  existing product,
Cyberlife , to provide a local area network solution that administers products
ranging  from  traditional  whole  and term-life insurance to non-traditional,
wealth-accumulation  products including annuities and variable annuities.  The
Company  recorded acquisition charges of approximately $3.7 million related to
the  purchase  of  TLG.

     Approximately $2.0 million of these charges represent estimated purchased
IPR&D based on the income approach valuation method.  This amount reflects the
fair  value  of a single subsystem that is not being marketed and will be used
in  the  Company's  research  and development activities.  Consistent with the
Company's  basis of accounting for costs incurred to develop its software this
subsystem  is  not  capitalizable  under  Statement  of  Financial  Accounting
Standards  No.  86  "Accounting  for the Costs of Computer Software to Be Sold
Leased  or  Otherwise Marketed" ("SFAS 86") and has no alternative future use.
The  Company  will  spend  approximately $1.0 million through 1999 to complete
integration  of  this  subsystem.    The Company believes it will successfully
integrate  the  family  of  systems  with  its  existing  product.

     The  remainder  of  the  acquisition  charges  represents  the previously
capitalized  historical  cost  of  software  purchased and internal in-process
development  that  is  no longer capitalizable based on SFAS 86 as a result of
the  acquisition.

NOTE  3.          CONTINGENCIES

     The  Company  is  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  in excess of $160 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.

<PAGE>

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 4.     SEGMENT INFORMATION

     The  Company's  operating  segments  are  the  five  revenue-producing
components of the Company for which separate financial information is produced
for  internal  decision  making  and  planning  purposes.  The segments are as
follows:

1.  Property and casualty enterprise software and services (generally referred
to  as  the "domestic property and casualty business").  This segment provides
software  products,  product  support,  professional  services and outsourcing
primarily  to  the  US  property  and  casualty  insurance  market.

2.  Life  and  financial solutions enterprise software and services (generally
referred  to  as  the "domestic life and financial solutions business").  This
segment provides software products, product support, professional services and
outsourcing  primarily to the US life insurance and related financial services
markets.

3.  International.   This segment provides software products, product support,
professional  services,  outsourcing  and information services to the property
and  casualty and life insurance markets primarily in Canada, Europe, Asia and
Australia.

4.  Property  and  casualty  information  services.    This  segment  provided
information  services, principally motor vehicle records and claims histories,
to  US  property  and casualty insurers.  This segment was sold in August 1997
and  is  presented  as  a  discontinued  operation.

5.  Life  information  services.   This segment provided information services,
principally physician reports and medical histories, to US life insurers. This
segment  was  sold  in  May 1998 and is presented as a discontinued operation.

<PAGE>
Information about the Company's operations for the three and nine months ended
September  30,  1998  and  1997  is  as  follows:
<TABLE>
<CAPTION>

                                              Three Months          Nine Months
                                           Ended September 30,   Ended September 30,
                                           -------------------   -------------------
                                              1998      1997        1998     1997
                                             ------    ------      ------   ------
                                                        (In thousands)
REVENUES FROM EXTERNAL CUSTOMERS
<S>                                          <C>        <C>        <C>        <C>
 Enterprise software and services
  Property and casualty . . . . . . . . . .  $ 70,343   $ 63,085   $204,912   $174,918 
  Life and financial solutions. . . . . . .    38,081     26,488    101,842     73,012 
                                             ---------  ---------  ---------  ---------
    Total US revenues . . . . . . . . . . .   108,424     89,573    306,754    247,930 
  International . . . . . . . . . . . . . .    42,879     42,382    129,859    122,936 
                                             ---------  ---------  ---------  ---------
    Total revenues from
       continuing operations. . . . . . . .  $151,303   $131,955   $436,613   $370,866 
                                             =========  =========  =========  =========

 Discontinued Operations
  Information Services
   Property and casualty. . . . . . . . . .  $      -   $ 16,408   $      -   $ 64,649 
   Life . . . . . . . . . . . . . . . . . .         -     15,704     11,968     48,608 

INCOME (EXPENSE) FROM CONTINUING OPERATIONS
 Enterprise software and services
  Property and casualty . . . . . . . . . .  $ 19,011   $ 17,988   $ 53,445   $ 46,782 
  Life and financial solutions. . . . . . .     9,558      5,614     24,049     16,823 
  Corporate and US administrative . . . . .    (9,908)    (6,915)   (23,586)   (18,853)
                                             ---------  ---------  ---------  ---------
    Total US operating income . . . . . . .    18,661     16,687     53,908     44,752 
                                             ---------  ---------  ---------  ---------

  International . . . . . . . . . . . . . .     5,819      5,968     17,855     13,505 
  International administrative. . . . . . .    (2,051)    (1,917)    (6,111)    (5,102)
                                             ---------  ---------  ---------  ---------
    Total international . . . . . . . . . .     3,768      4,051     11,744      8,403 
                                             ---------  ---------  ---------  ---------

      Operating income. . . . . . . . . . .    22,429     20,738     65,652     53,155 


Equity in earnings of
  unconsolidated affiliates . . . . . . . .       129        274        567        964 
Minority interest . . . . . . . . . . . . .       (44)         -        (74)         - 
Other income and expenses . . . . . . . . .      (603)    (1,007)    (1,398)    (2,809)
Income taxes. . . . . . . . . . . . . . . .     8,740      7,454     24,727     19,135 
                                             ---------  ---------  ---------  ---------
  Income from continuing operations . . . .  $ 13,171   $ 12,551   $ 40,020   $ 32,175 
                                             =========  =========  =========  =========


DISCONTINUED OPERATIONS
 Information Services
  Property and casualty . . . . . . . . . .  $      -   $    107   $ (1,018)  $    533 
  Life. . . . . . . . . . . . . . . . . . .         -        585      3,672      2,141 
  Other income and expenses . . . . . . . .         -          -        (27)         - 
  Income taxes. . . . . . . . . . . . . . .         -       (306)     2,691      1,126 
                                             ---------  ---------  ---------  ---------
   Discontinued operations, net . . . . . .  $      -   $    386   $    (64)  $  1,548 
                                             =========  =========  =========  =========
</TABLE>


<PAGE>
NOTE 5.     DISCONTINUED OPERATIONS

     The  Company  sold  its life information services segment in May 1998 for
$23.8  million,  net  of  selling expenses, resulting in a pretax gain of $3.0
million and an after-tax gain of $0.1 million.  The difference in gain for tax
purposes  primarily  results  from the inability to deduct goodwill related to
the  sale  for  tax purposes.  The operations of this segment are presented as
discontinued operations in the accompanying Consolidated Statements of Income.
See  Note  4  for  income  from  operations  of  the  discontinued  segment.

The Company also recognized an additional loss of $0.6 million, net of tax, on
the  sale  of its property & casualty information services segment.  This loss
is  included  in  discontinued  operations  in  the  accompanying Consolidated
Statements  of  Income.

NOTE  6.          STOCK  SPLIT

     In  May  1998,  the  Company's  Board of Directors approved a two-for-one
stock split effected in the form of a stock dividend, whereby each shareholder
of  record as of June 1, 1998, received on June 15, 1998, one additional share
of  common  stock  for each share owned as of the record date.  As a result of
the split, 18,426,691 shares were issued and $0.2 million was transferred from
Retained Earnings to Common Stock.  Weighted average common shares outstanding
and  per share amounts for all periods presented have been restated to reflect
the  stock  split.   Share amounts reflected on the Consolidated Balance Sheet
and  Consolidated  Statements  of  Changes  in  Stockholder's  Equity  and
Comprehensive  Income  reflect  the  actual  share  amounts  for  each  period
presented.

<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,  1997.

                             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>

                                                                        1998 vs. 1997
                                                                           Percent
                                          Percentage of Revenues    Increase (Decrease)
                                        -------------------------   ------------------
                                           Three          Nine       Three       Nine
                                        Months Ended  Months Ended   Months    Months
                                        September 30, September 30,  Ended      Ended
                                        ------------- -------------
                                         1998   1997    1998   1997     September 30
                                        -----  -----   -----  -----  -----------------

<S>                                   <C>     <C>     <C>     <C>     <C>      <C>
Revenues
 Licensing . . . . . . . . . . . . .   20.8%   25.2%   20.6%   24.8%   (5.6)%   (2.4)%
 Services. . . . . . . . . . . . . .   79.2    74.8    79.4    75.2     21.5     24.3 
                                      ------  ------  ------  ------                  
                                      100.0   100.0   100.0   100.0     14.7     17.7 
                                      ------  ------  ------  ------                  
Operating expenses
 Cost of revenues
  Employee compensation and benefits   43.0    42.4    44.2    41.7     16.2     25.1 
  Computer & communication expenses.    6.4     6.2     5.8     6.5     19.5      5.2 
  Depreciation & amortization
   property, equipment &
   capitalized software costs. . . .   10.3    11.2    10.8    11.6      6.1      9.9 
  Other costs & expenses . . . . . .    3.1     4.1     4.1     5.5    (12.2)   (14.0)
 Selling, general &
   administrative expenses . . . . .   18.1    18.5    17.5    18.4     11.3     11.6 
 Amortization of goodwill and
   other intangibles . . . . . . . .    1.8     1.9     1.7     2.0      9.1      3.1 
Acquisition related charges
 Purchased research and development.    1.3       -     0.5       -        -        - 
 Purchased and internally developed
   software. . . . . . . . . . . . .    1.2       -     0.4       -        -        - 
                                      ------  ------  ------  ------                  
                                       85.2    84.3    85.0    85.7     15.9     16.8 
                                      ------  ------  ------  ------                  
Operating income . . . . . . . . . .   14.8    15.7    15.0    14.3      8.2     23.5 
Equity in earnings of unconsolidated
   affiliates. . . . . . . . . . . .    0.1     0.2     0.1     0.3    (52.9)   (41.2)
Other income and expenses. . . . . .   (0.4)   (0.7)   (0.3)   (0.7)   (40.1)   (50.2)
                                      ------  ------  ------  ------                  
Income from continuing operations
  before income taxes. . . . . . . .   14.5    15.2    14.8    13.9      9.5     26.2 
Income taxes . . . . . . . . . . . .    5.8     5.7     5.6     5.2     17.3     29.2 
                                      ------  ------  ------  ------                  
Income from continuing operations. .    8.7     9.5     9.2     8.7      4.9     24.4 
Discontinued operations, net . . . .      -     0.3       -     0.4   (100.0)  (104.1)
                                      ------  ------  ------  ------                  
Net income . . . . . . . . . . . . .    8.7%    9.8%    9.2%    9.1%     1.8%    18.5%
                                      ======  ======  ======  ======                  
</TABLE>



<PAGE>
                            THREE MONTH COMPARISON

REVENUES
<TABLE>
<CAPTION>
                              Three Months
                           Ended September 30,
                           -------------------
  Licensing                   1998    1997   Change
                             -----   -----   ------
                           (Dollars in Millions)

<S>                           <C>     <C>     <C>
Initial charges. . . . . . .  $14.7   $16.9   (13.0)%
Monthly charges. . . . . . .   16.8    16.4     2.0
                              ------  ------         
                              $31.5   $33.3    (5.6)%
                              ======  ======         

Percentage of total revenues   20.8%   25.2%
                              ------  ------         
</TABLE>

     In  licensing  the  Company's  products,  customers  generally  obligate
themselves  to  a  non-refundable initial license charge and a monthly license
fee  payable  over  a  specified  period  of time, which is usually six years.

The monthly license charge entitles the customer, over the contract period, to
use  the  licensed  product  and  to receive product support and enhancements.

     Initial  license revenues decreased $2.2 million for the third quarter of
1998  compared  to  the third quarter of 1997, with the following increases or
decreases  by  business  segment:    property  and  casualty  down  2.0% ($0.1
million);  life  and  financial  solutions  up  34.6%  ($1.5  million);  and
international down 48.1% ($3.6 million).  Life and financial solutions license
revenue includes $2.3 million of activity by the Company's recent acquisition,
The  Leverage  Group.

Initial  license  charges  for  the third quarter of 1998 include right-to-use
licenses  of  $2.7  million.    This  compares to $3.7 million in right-to-use
licenses  for  the third quarter of 1997.  Right to use licenses represent the
acquisition  by  certain  customers  of  the  right  to  use  element of their
remaining monthly license charge obligation, if any, plus the acquisition of a
perpetual  right  to use the product thereafter.  These types of licenses have
been  offered  to  customers by the Company with increasing frequency over the
past  three years and are beginning, and will continue, to mitigate the future
monthly  license  charge  growth  rate.   Initial license charges also include
termination charges (related to the buyout of monthly license charges) of $0.9
million  for  the third quarter of 1998.  There were no termination charges in
the  third  quarter  of  1997.

     Monthly  license  charges increased $0.4 million for the third quarter of
1998  compared  to the third quarter of 1997 principally due to strong initial
licensing  activity  in the fourth quarter of 1997.  Increases or decreases by
business  segment  are  as follows:  property and casualty unchanged; life and
financial solutions up 18.1% ($0.6 million); and international down 6.3% ($0.2
million).

<PAGE>
Because  a  significant  portion of initial licensing revenues are recorded at
the  time  new  systems  are  licensed  and  such  licensing activity can vary
dramatically from quarter to quarter, 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:


                                 1998                   1997             1996
                         -------------------  -------------------------  ----
                           3rd    2nd    1st   4th    3rd    2nd    1st   4th
                         -------------------  -------------------------  ----
                                          (Dollars in Millions)

Initial license revenues  $14.7  $13.0  $12.6  $25.1  $16.9  $16.6  $11.3 $19.4
% of total revenues         9.7%   9.0%   9.0%  17.0%  12.8%  13.4%   9.8% 15.5%


<TABLE>
<CAPTION>

                              Three Months
                           Ended September 30,
                           -------------------
  Services                    1998    1997   Change
                             -----   -----   ------
                         (Dollars In Millions)

<S>                           <C>      <C>     <C>
Professional and outsourcing  $118.6   $97.6   21.5%
Information. . . . . . . . .     0.1     0.1   39.0 
Other. . . . . . . . . . . .     1.1     0.9   15.5 
                              -------  ------       
                              $119.8   $98.6   21.5%
                              =======  ======       

Percentage of total revenues    79.2%   74.8%
                              -------  ------       
</TABLE>



Professional and outsourcing services revenues increased $21.0 million for the
third  quarter  of  1998  compared  to  the  third  quarter  of 1997, with the
following  increases  by  business segment:  domestic property and casualty up
14.7%  ($7.1  million);  life insurance and financial solutions up 49.9% ($9.4
million);  and  international  up  15.0%  ($4.5  million).   The increases are
principally  due  to  increases  in  both  implementation  services and in the
processing  volumes  of  services  provided  to  new  and  existing customers.


OPERATING EXPENSES

COST OF REVENUES

     Employee  compensation and benefits increased 16.2% for the third quarter
of  1998  compared  to  the  third  quarter of 1997.  The net increase results
principally  from higher salaries and related costs associated with the growth
in  professional  services  staffing  being somewhat offset by the transfer of
certain  employee  costs to computer and communication expenses as a result of
the  Company's  data  center  outsourcing  agreement  with  Lockheed  Martin
Corporation  ("Lockheed  Martin").    Had  these  employee  costs  not  been
transferred,  third quarter 1998 employee compensation and benefits would have
increased  19.7% by comparison to the same period last year.  Compensation and
benefits  increased  18.7%  ($2.9  million)  internationally  and  15.3% ($6.2
million)  domestically.

<PAGE>
Computer  and communications expenses increased 19.5% for the third quarter of
1998  compared  to  the  third quarter of 1997.  At the beginning of the third
quarter,  the  Company  entered  into a data center outsourcing agreement with
Lockheed  Martin.   As a result, certain costs previously included in employee
compensation  and  benefits  are  now  included in computer and communications
expense.    On  a comparative basis, the data center outsourcing agreement has
resulted  in  savings.

     Depreciation  and  amortization  of  property,  equipment and capitalized
software  costs  increased  6.1% for the third quarter of 1998 compared to the
third  quarter  of  1997,  principally  due  to  higher  amortization  expense
resulting  from  the  various  releases  of the Company's internally developed
software  products.

     Other  operating costs and expenses decreased 12.2% for the third quarter
of  1998  compared  to  the  third  quarter  of 1997, principally due to lower
consultant  and  contract loss expenses, partially offset by decreased amounts
of  capitalized  software  development  costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative  expenses  increased 11.3% for the
third  quarter  of 1998 compared to the third quarter of 1997, principally due
to  increased  commission,  bonus,  and  other  salary  costs.

AMORTIZATION  OF  GOODWILL  AND  OTHER  INTANGIBLES

     Amortization  of  goodwill  and  other intangibles increased 9.1% for the
third  quarter  of 1998 compared to the third quarter of 1997, principally due
to  increased  amortization  related to the acquisition of The Leverage Group.


OPERATING INCOME

     1998 third quarter operating income increased 8.2% compared to 1997 third
quarter  operating income.  Increases or decreases in segment operating income
were:    property  and  casualty  increased 5.7%, life and financial solutions
increased  70.3%  and international decreased 2.5%.  The increase in operating
income  is  primarily  related  to  increases  in  professional  services  and
outsourcing revenues while operating costs increased at a slower rate than the
related  revenue.


OTHER INCOME AND EXPENSE

     Interest  expense  decreased 27.9% for the third quarter of 1998 compared
to  the  third  quarter  of  1997, principally due to lower levels of borrowed
funds  under  the  Company's credit facility and capitalization of interest on
construction  in  progress.    The average nominal interest rate applicable to
borrowings  under  the  Company's  credit facility during the third quarter of
1998  was  5.9%.

<PAGE>
INCOME  TAXES

The  effective  income  tax  rate  (income  taxes expressed as a percentage of
pre-tax  income)  was 39.9% and 37.3% for the third quarters of 1998 and 1997,
respectively.  The effective rate for the third quarter of 1998 is higher than
the  federal  statutory  rate principally due to the effect of state and local
income  taxes.


DISCONTINUED OPERATIONS

There  were  no  operating  results  in  the  third  quarter  of  1998.


                             NINE MONTH COMPARISON

REVENUES
<TABLE>
<CAPTION>

                               Nine Months
                           Ended September 30,
                           -------------------
  Licensing                  1998    1997    Change
                             -----   -----   ------
                         (Dollars in Millions)

<S>                           <C>     <C>     <C>
Initial charges. . . . . . .  $40.3   $44.8   (10.0)%
Monthly charges. . . . . . .   49.4    47.1     4.8
                              ------  ------         
                              $89.7   $91.9    (2.4)%
                              ======  ======         

Percentage of total revenues   20.6%   24.8%
                              ------  ------         
</TABLE>

     Initial license revenues decreased $4.5 million for the first nine months
of  1998  compared to the same period in 1997, with the following increases or
decreases by business segment:  property and casualty up 17.5% ($1.9 million);
life and financial solutions down 18.3% ($2.9 million); and international down
19.9%  ($3.5  million).

Initial license charges for the first nine months of 1998 include right-to-use
licenses  of  $9.7  million.    This  compares to $5.6 million in right-to-use
licenses  for  the  same period of 1997.  Initial license charges also include
termination charges (related to the buyout of monthly license charges) of $1.3
million  for  the  first  nine months of 1998 compared to $0.2 million for the
first  nine  months  of  1997.   Additionally, initial license charges include
license  agreements  of  $2.2  million for the second quarter of 1998 with the
purchaser  of  the  discontinued  life  information  services segment and $1.8
million  for  the third quarter of 1997 with the purchaser of the discontinued
property  &  casualty  information  services  segment.    Life  and  financial
solutions  license revenue for the third quarter of 1998 includes $2.3 million
of  activity  by  the  Company's  recent  acquisition,  The  Leverage  Group.

Monthly  license  charges  increased $2.3 million for the first nine months of
1998  compared  to  the  same period in 1997 principally due to strong initial
licensing  activity  in the fourth quarter of 1997.  Increases or decreases by
business  segment  are  as follows:  property and casualty unchanged; life and
financial  solutions  up 20.9% ($1.8 million); and international up 4.5% ($0.5
million).

<PAGE>

<TABLE>
<CAPTION>
                               Nine Months
                           Ended September 30,
                          -------------------
  Services                    1998    1997   Change
                             -----   -----   ------
                          (Dollars In Millions)

<S>                           <C>      <C>      <C>
Professional and outsourcing  $343.4   $274.9    24.9%
Information. . . . . . . . .     0.5      0.5     7.8 
Other. . . . . . . . . . . .     3.0      3.6   (17.9)
                              -------  -------        
                              $346.9   $279.0    24.3%
                              =======  =======        

Percentage of total revenues    79.4%    75.2%
                              -------  -------        
</TABLE>

     Professional  and  outsourcing  services revenues increased $68.5 million
for  the  first  nine months of 1998 compared to the same period in 1997, with
the  following  increases by business segment:  domestic property and casualty
up  21.5%  ($28.8  million);  life  insurance and financial solutions up 61.5%
($29.8 million); and international up 10.7% ($9.9 million).  The increases are
principally  due  to  increases  in  both  implementation  services and in the
processing  volumes  of  services  provided  to  new  and  existing customers.


OPERATING EXPENSES

COST OF REVENUES

     Employee  compensation  and  benefits  increased 25.1% for the first nine
months  of 1998 compared to the same period in 1997.  The net increase results
principally  from higher salaries and related costs associated with the growth
in  professional  services  staffing  being somewhat offset by the transfer of
certain  employee  costs to computer and communication expenses as a result of
the  Company's  data  center  outsourcing agreement with Lockheed Martin.  Had
these employee costs not been transferred, the first nine months 1998 employee
compensation and benefits would have increased 26.3% by comparison to the same
period  last  year.   Compensation and benefits increased 21.3% ($9.8 million)
internationally  and  26.7%  ($28.9  million)  domestically.

Computer  and communications expenses increased 5.2% for the first nine months
of  1998  compared  to the same period in 1997.  At the beginning of the third
quarter,  the  Company  entered  into a data center outsourcing agreement with
Lockheed  Martin.   As a result, certain costs previously included in employee
compensation  and  benefits  are  now  included in computer and communications
expense.    On  a comparative basis, the data center outsourcing agreement has
resulted  in  savings.

     Depreciation  and  amortization  of  property,  equipment and capitalized
software  costs  increased  9.9% for the first nine months of 1998 compared to
the  same  period  in  1997,  principally  due  to higher amortization expense
resulting  from  the  various  releases  of the Company's internally developed
software  products.

<PAGE>
Other  operating  costs and expenses decreased 14.0% for the first nine months
of  1998  compared  to  the  same  period  in  1997,  principally due to lower
consultant, contract loss and bad debt expenses, partially offset by increased
facility  costs  and  decreased  amounts  of  capitalized software development
costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative  expenses  increased 11.6% for the
first nine months of 1998 compared to the same period in 1997, principally due
to  increased  bonus,  commission,  and advertising costs, partially offset by
decreased  third  party  commissions.

AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES

     Amortization  of  goodwill  and  other intangibles increased 3.1% for the
first nine months of 1998 compared to the same period in 1997, principally due
to  increased  amortization  related to the acquisition of The Leverage Group.


OPERATING INCOME

     1998  nine month operating income increased 23.5% compared with 1997 nine
month operating income.  Increases in segment operating income were:  property
and casualty increased 14.2%, life and financial solutions increased 43.0% and
international  increased 32.2%.  The increase in operating income is primarily
related  to  increases in professional services and outsourcing revenues while
operating  costs  increased  at  a  slower  rate  than  the  related  revenue.

OTHER  INCOME  AND  EXPENSE

     Interest  expense  decreased  37.4%  for  the  first  nine months of 1998
compared  to  the  same  period  in  1997,  principally due to lower levels of
borrowed  funds  under  the  Company's  credit  facility and capitalization of
interest  on  construction  in  progress.    The average nominal interest rate
applicable  to borrowings under the Company's credit facility during the first
nine  months  of  1998  was  5.9%.

INCOME  TAXES

     The  effective income tax rate (income taxes expressed as a percentage of
pre-tax  income)  was  38.2% and 37.3% for the nine months ended September 30,
1998  and 1997, respectively.  The effective rate for the first nine months of
1998  is  higher than the federal statutory rate principally due to the effect
of  state  and  local  income  taxes.


DISCONTINUED OPERATIONS

Loss  from discontinued operations increased for the first nine months of 1998
compared to the same period in 1997, principally due to (i) an additional loss
of  $0.6  million  recognized  during  the second quarter of 1998 on the sale 
<PAGE>
of  the  property  &  casualty information services segment; (ii) partial year
operating  results  in  the  first  nine  months of 1998 compared to full year
operating  results  in  the first nine months of 1997 for the life information
services  segment;  and (iii) no operating results in the first nine months of
1998  compared  to  eight months operating results in the first nine months of
1997  for  the  property  &  casualty  information  services  segment.


STRATEGIC ALLIANCES

Microsoft.      In  April 1998, the Company announced a new strategic business
alliance  with  Microsoft  Corporation.    Under  this strategic alliance, the
Company  and  Microsoft  will engage in joint development, sales and marketing
activities  geared  toward  the  insurance  and  related  financial  services
industries.    This  alliance  is  not  exclusive.

Lockheed  Martin.    The  Company  formed  a  strategic  alliance  for systems
outsourcing with Integrated Business Solutions, a unit of Lockheed Martin.  In
June  1998,  a  Data Processing Services Agreement was completed and under its
terms,  the  Company  turned over operation of its Blythewood, South Carolina,
data  center  to Lockheed Martin on July 1, 1998.  As part of the transaction,
the  Company  transferred  to  Lockheed  Martin  substantially all of the data
processing  equipment used in the data center operations, at net book value of
approximately  $11.3  million,  to  be  paid  in  January  1999.


                        LIQUIDITY AND CAPITAL RESOURCES


<TABLE>
<CAPTION>

                             September 30, December 31,
                                 1998         1997
---------------------------------------------------
                              (Dollars in Millions)

<S>                               <C>     <C>
Cash and equivalents, marketable
  securities, and investments. .  $ 24.9  $ 46.5
Current assets . . . . . . . . .   192.1   185.8
Current liabilities. . . . . . .    77.4    86.2
Working capital. . . . . . . . .   114.7    99.6
Long-term debt . . . . . . . . .    77.0    37.7
</TABLE>


<TABLE>
<CAPTION>

                                  Nine Months Ended
                                    September 30,
                                  1998         1997
------------------------------------------------------
                                (Dollars in Millions)

<S>                                 <C>      <C>
Cash provided by operations. . . .  $ 68.8   $ 63.7 
Cash used for investing activities   (81.7)   (64.9)
Cash used for financing activities    (1.7)    (3.6)
</TABLE>


     The  Company's  current  ratio  (current  assets  divided  by  current
liabilities)  stood at 2.5 at September 30, 1998, which management believes is
sufficient  when  combined  with  the available credit facility to provide for
day-to-day  
<PAGE>
operating  needs  and  the  flexibility  to  take  advantage  of  investment
opportunities.    The  Company  has  available  (net of amounts outstanding at
September  30,  1998)  $123  million of its $200 million credit facility.  The
Company also has available a $15 million uncommitted operating line of credit.

     During  the  nine months ended September 30, 1998 the Company capitalized
software  development  costs  of  $43.6  million,  principally  related to the
development  of  its  S3+    client/server  property  and  casualty  software,
CyberLife  object-oriented  client/server  life  insurance  software,  and  I+
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 1998, excluding
any  possible  business  acquisitions  or  common  stock  repurchases,  are as
follows:  acquisition  of  computer  and  communications  equipment,  support
software,  buildings, building improvements and office furniture, fixtures and
equipment  and costs relating to the internal development of software systems.

     The  Company has historically used the cash generated from operations for
development  and  acquisition  of  new products, acquisition of businesses and
repurchase  of  the Company's stock.  The Company anticipates that, subject to
market  conditions, it will continue to use its cash for all of these purposes
in  the  future  and that projected cash from operations, along with currently
available  borrowing  capacity,  will  be  able  to meet presently anticipated
needs.


                    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 and related financial services
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;

<PAGE>

-          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 spending 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.

YEAR 2000

General
-------

     Many  existing  computer programs were designed to use only two digits to
identify  a  year  in date fields.  If not corrected, these applications could
fail or produce erroneous results when working with dates of the Year 2000 and
beyond.

     Beginning  in  the  fourth  quarter  of  1997,  the  Company  initiated
consolidation  of  its  Year  2000  activities  under  a centralized Year 2000
Project Office.  Prior to that, individual business units were responsible for
the  assessment,  remediation,  validation  and  implementation  of  Year 2000
corrective  actions.

     There  are  seven  phases  that  are  included in the Company's Year 2000
project:

<PAGE>

Planning  -  Educating  the organization on Year 2000 issues and concerns, the
readiness  efforts necessary and preparing for the next phase of the Year 2000
readiness  project.
Inventory  -  Cataloguing  all  organizational components, including products,
external  or  internal  interfaces,  hardware  and  software  that may require
remediation  and  testing  to  adequately  address  Year  2000  concerns.
Triage  -  Prioritizing  and categorizing all products, equipment, interfaces,
data,  and  facilities  identified  during  the  Inventory phase.  Emphasis is
placed  on the identification of:  all mission critical components, those that
are  least  important,  and  those  that  fall  in  the  middle.
Assessment  - Identifying areas requiring remediation for every aspect of each
component  identified  in  the  Triage  phase  as  mission  critical.
Remediation  -  Repairing, replacing, or retiring components based on the work
identified  during  the Assessment phase.  Unit tests on repaired applications
are  also  included  in  this  phase.
Testing  -  Testing  components  that  were repaired.  Such tests include both
system  tests  and  integrated  tests  in test environments with machine dates
advanced  to  reflect  dates  in  the  years  1999  and  2000.
Implementation  -  Migrating systems, applications, and hardware to production
environments,  installation  of  replacement  systems  and  the  retirement of
designated  components,  as well as finalizing, documenting and taking care of
residual  activities.   This phase also includes the compilation and retention
of  supporting  documentation that conforms to prescribed corporate standards.

All  phases  are  currently  scheduled  to  be  completed  by August 31, 1999.

     The Year 2000 issue may potentially affect the Company in four areas: its
product  offerings,  its  service  offerings,  its  internal  systems, and its
suppliers  and  trading  partners.

Product  Offerings
------------------

     The  Company  has  updated  the  code of its primary product offerings to
process  dates across the century boundary.  Current testing has confirmed the
ability  of  the  applications to process data in both centuries. Beyond that,
continuous  testing  is scheduled for the first half of 1999 in an environment
simulating  a  processing  date after January 1, 2000 (Year 2000 environment).
This  additional  testing seeks to confirm that no unanticipated problems will
occur  due  to  third party products with which the Company's applications are
designed  to  operate.    The  Company is also in the process of conducting an
inventory  and assessment of other Company and third-party products previously
licensed  by  the  Company  to  customers  to  determine  if  they require any
remediation  efforts.    The Company anticipates completing this inventory and
assessment  by  December  31,  1998.

Service  Offerings
------------------

     The  Company has completed Year 2000 application code remediation for all
domestic  property  and  casualty  customers  who  will  be  Business  Process
Outsourcing ("BPO")/Information Technology Outsourcing ("ITO") customers after
December  31, 1999.  Live customer data is currently being processed on these 
<PAGE>
remediated  applications  in  a production environment.  Additional testing is
scheduled  for  the  first  half of 1999 in a Year 2000 environment to confirm
that  no  unanticipated  problems  will occur due to third party products with
which  the  Company's applications are designed to operate.  The Company has a
limited  number  of  BPO/ITO  customers  in  its  Life and Financial Solutions
Enterprise Software and Services and International segments for whom Year 2000
remediation  efforts  continue.  These efforts, including related testing in a
Year  2000 environment, are scheduled to be completed in the second quarter of
1999.

Internal  Systems
-----------------

     Internal  systems  consist  primarily of third-party products used by the
Company  for  its  internal  operations which include data center hardware and
software,  internal  financial  and human resource systems, and network and PC
hardware and software.  The Company's Blythewood data center has completed its
hardware  and operating software inventory and has substantially completed the
assessment,  remediation,  and  testing efforts of updating these hardware and
software  assets  for  Year  2000  requirements.  As of July 1, 1998, Lockheed
Martin  took over the data processing equipment and operational control of the
Blythewood  data  center and remaining remediation efforts will be coordinated
with  it.   The Company's Illinois, Australian, and European data centers have
also completed their inventories and are currently in the Assessment phase for
hardware  and  operating  software  enhancements  required  for  Year  2000
remediation.    Assessment  is scheduled for completion by March 31, 1999 with
final  implementation  scheduled  for  completion  by  June  30,  1999.

     In  1996, the Company commenced the process of identifying, selecting and
implementing  an  enterprise  wide  financial  and  human  resources system to
replace  its  existing  systems.    The  selected  solution  is  substantially
operational,  is  designed to meet Year 2000 requirements, and is scheduled to
be  fully  operational  at  the  end  of  1998.

  The Company is inventorying and assessing all of its network and PC hardware
and  software  to  determine  if  any  Year  2000 remediation upgrades will be
required.   This inventory and assessment phase is scheduled for completion in
the  first  quarter  of  1999  and  any  required  remediation  will  commence
immediately  thereafter.    The  Company  is also assessing its readiness with
respect  to  non-IT systems which relate primarily to the ordinary maintenance
and  operation  of its physical facilities, such as elevators, heating and air
conditioning.

Suppliers  and  Trading  Partners
---------------------------------

     The  Company's  ability  to  operate  is  dependent on relationships with
certain  suppliers  and  trading  partners,  such  as  electric  utilities and
telephone companies, who provide services to the Company's various offices and
data centers ("mission critical suppliers and trading partners").  The Company
expects  to complete the process of identifying all potential mission critical
suppliers  and trading partners by December 31, 1998.  In the first quarter of
1999,  the  Company  will  commence  its planned process of evaluating mission
critical  supplier  and  trading partner Year 2000 readiness.  Any identified 
<PAGE>
mission  critical  third  party systems and data interfaces will be tested, to
the  extent  practical,  in  a  Year  2000 environment.  The Company will seek
substantive  assurances  from  its  mission  critical  suppliers  and  trading
partners  as  to their Year 2000 readiness where actual testing is impractical
or  impossible.    The Company's ability to influence cooperation is partially
dependent on the significance of the Company's relationship with its suppliers
and  trading  partners.   The Company anticipates completing this phase of its
Year  2000  readiness  project  in  the  second  quarter  of  1999.

Year  2000  Costs
-----------------

     Since 1995, the Company estimates that it has incurred approximately $6.7
million  of  costs  in  addressing Year 2000 remediation issues.  Based on the
Company's experience to date, it is not anticipated that the completion of the
remaining  Year  2000  remediation efforts will have a material adverse effect
upon  the Company's financial position or results of operations. The Company's
past  and  anticipated  future  remediation  costs  are  funded by operations.

Year  2000  Risks
-----------------

     The  Company's  products  are designed to be used with and require use of
third-party  products,  such  as  operating  systems  and  compilers.    Also,
customers  often  modify  the  Company's  products  to  suit  their  unique
requirements.    If these third parties experience Year 2000 failures of their
products,  or  if  customers  experience  system failures as a result of their
modifications  or  for  other  reasons,  the  Company could become involved in
disputes  or  litigation  related  to  the  cause  of  such  system  failures.

 In addition,  the failure to correct material Year 2000 problems could result
in  an interruption in, or a failure of, certain normal business activities or
operations  and  litigation.    Such  failures  could materially and adversely
affect the Company's results of operations, liquidity and financial condition.
Due to the general uncertainty inherent in the Year 2000 problem, resulting in
part  from the uncertainty of the Year 2000 readiness of third-party suppliers
and  the  Company's customers and prospective customers, the Company is unable
to  determine at this time whether the consequences of Year 2000 failures will
have  a  material  impact on the Company's results of operations, liquidity or
financial  condition.    The  Year  2000  Project is expected to significantly
reduce  the Company's level of uncertainty about the Year 2000 problem and, in
particular,  about  the  Year  2000  compliance  and  readiness of its mission
critical  suppliers and trading partners.  The Company believes that, with the
implementation  of  new  business  systems  and  completion  of the Project as
scheduled,  the  possibility of significant interruptions of normal operations
should  be  reduced.

The  Company  is currently developing contingency plans to minimize the effect
of  such disruptions.  Such contingency plans are scheduled to be completed by
June  30,  1999.

Readers  are  cautioned that forward-looking statements contained in this Year
2000  section  should  be  read in conjunction with the Company's disclosures 
<PAGE>
under  the  heading "Factors That May Affect Future Results" beginning on page
21.


EURO CONVERSION

     On  January,  1, 1999, certain member countries of the European Union are
scheduled to establish fixed conversion rates between their existing sovereign
currencies and the euro.  The participating countries have agreed to adopt the
euro  as  their  common legal currency on that date.  It is also possible that
some of the non-participating countries may also choose to convert to the euro
at  a later date.  From January 1, 1999, to December 31, 2001, there will be a
transition  period,  during  which  the  participating  countries  may conduct
transactions in either their legacy currency or the euro.  On January 1, 2002,
new  euro-denominated bills and coins will be issued, and by July 1, 2002, all
legacy  currency  bills and coins will be withdrawn, finalizing the conversion
to  the  euro.

    The Company is currently evaluating methods to address the issues involved
with the introduction of the euro, including the conversion of its products in
the  relevant  markets and impacts on the processes for preparing taxation and
accounting  records.

The Company is surveying licensees of its products domiciled or doing business
in  the  participating  countries.    The needs of each licensee may vary with
regards  to  converting  to  the euro depending on how and when they choose to
convert.   The Company is preparing strategies to modify its products licensed
in  the  participating  countries to convert to the euro.  These modifications
will  be  made  available  to  licensees  for  a  fee.   Implementation of the
modifications  is  the  responsibility  of  each  licensee.

 Company subsidiaries are incorporated in four of the participating countries:
Germany,  Austria,  the  Netherlands and Ireland.  The Company has implemented
new  financial  accounting systems that will enable it to convert the affected
operations  to  the  euro  in  a  timely  and  effective  manner.

   Based upon the Company's experience to date, it is not anticipated that the
euro  conversion  will  have  a  material impact on the Company's consolidated
financial  statements.


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  above  and  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 3, 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, 1998.
<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 13, 1998     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.       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)

<PAGE>

F.       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)

G.      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)

H.          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)

I.       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)

J.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  a  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)

K.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  a  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)

L.        Stock Option Non-Compete Form Agreement for named executive officers
together  with  a  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)

M.     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)

N.     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)

O.          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)

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

<PAGE>

Q.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  a  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)

R.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  a  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)

S.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  a  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 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)

U.          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)

V.       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)

W.          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)

X.       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)

Y.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  a  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)

Z.       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)


<PAGE>
AA.          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)

BB.          Stock Option/Non-Compete Form Agreement dated January 8, 1997 for
named  executive officers together with a 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)

CC.        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)

DD.          Form of Amendment No. 1 to the Employment Agreements with Messrs.
Butare,  Morrison  and  Williams,  together  with  a  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)

EE.     Form of Employment Agreements with Messrs. Wilson, Bailey and Coggiola
together  with  schedule  identifying  particulars  for each executive officer
(filed  as  an  Exhibit to Form 10-Q for the quarter ended September 30, 1997,
and  is  incorporated  herein  by  reference)

FF.       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  as  an  exhibit to Form 10-Q for the quarter ended September 30, 1997,
and  is  incorporated  herein  by  reference)

GG.     Employment Agreement dated January 1, 1998, and Addendum No. 1 thereto
dated  January  26, 1998, with Donald A. Coggiola (filed as an exhibit to Form
10-K  for  the  year  ended  December  31,  1997 and is incorporated herein by
reference)

HH.       Stock Option/Non-Compete Form Agreement for named executive officers
together  with  a  schedule  identifying  particulars for each named executive
officer (filed as an exhibit to Form 10-Q for the quarter ended March 31, 1998
and  is  incorporated  herein  by  reference)

II.      Policy Management Systems Corporation Restricted Stock Ownership Plan
(filed  herewith)

JJ.        Form of Restricted Stock Award Agreement dated August 11, 1998 with
Messrs. Berkeley, Feddersen, Palms, Sargent, Seibels and Trub (filed herewith)


<PAGE>
27.          FINANCIAL  DATA  SCHEDULES

     A.     Nine Months Ended September 30, 1998 filed herewith (EDGAR version
only)

     B.      Nine Months Ended September 30, 1997, as restated, filed herewith
(EDGAR  version  only)2
[{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 92752}]
{"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": "98749016"}, "business-address": {"street1": "ONE PMSC CTR", "street2": "PO BOX TEN", "city": "COLUMBIA", "state": "SC", "zip": "29202", "phone": "8037354000"}}
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 quarterly period ended SEPTEMBER 30, 1998
                        Commission file number 1-10557

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

            SOUTH CAROLINA                   57-0723125
     (State or other jurisdiction of       (IRS Employer
     incorporation or organization)      Identification No.)

           ONE PMSC CENTER (PO BOX TEN)
           BLYTHEWOOD, SC (COLUMBIA, SC)      29016 (29202)
     (Address of principal executive offices)  (Zip Code)

       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.

       36,070,812 Common shares, $.01 par value, as of November 6, 1998.

     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, 1997.
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, 1998 and 1997              3

Consolidated Balance Sheets as of September 30, 1998 and
December 31, 1997. . . . . . . . . . . . . . . . . . . .   4

Consolidated Statements of Changes in Stockholders'
Equity and Comprehensive Income for the Nine
Months Ended September 30, 1998. . . . . . . . . . . . .   5

Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1998 and 1997. . . . . .   6

Notes to Consolidated Financial Statements . . . . . . .   7

Item 2. Management's Discussion and Analysis of
  Financial Condition and Results of Operations. . . . .  13

PART II. OTHER INFORMATION

Item 1. Legal Proceedings. . . . . . . . . . . . . . . .  27

Item 6. Exhibits and Reports on Form 8-K . . . . . . . .  27

Signatures . . . . . . . . . . . . . . . . . . . . . . .  28
PART I
                                    FINANCIAL INFORMATION
                            POLICY MANAGEMENT SYSTEMS CORPORATION
                              CONSOLIDATED STATEMENTS OF INCOME

                                                 Three Months Ended      Nine Months Ended
                                                    September 30,          September 30,
                                                   1998       1997       1998       1997
                                                               (Unaudited)
                                                 ------------------------------------------
                                                    (In thousands, except per share data)
REVENUES
 Licensing . . . . . . . . . . . . . . . . . . .  $ 31,454   $ 33,316   $ 89,694   $ 91,868 
 Services. . . . . . . . . . . . . . . . . . . .   119,849     98,639    346,919    278,998 
                                                  ---------  ---------  ---------  ---------
                                                   151,303    131,955    436,613    370,866 
                                                  ---------  ---------  ---------  ---------
OPERATING EXPENSES
 Cost of revenues
   Employee compensation and benefits. . . . . .    65,068     55,982    193,157    154,442 
   Computer and communications expenses. . . . .     9,727      8,140     25,472     24,214 
   Depreciation and amortization of property,
    equipment and capitalized software costs . .    15,642     14,736     47,195     42,961 
   Other costs and expenses. . . . . . . . . . .     4,717      5,373     17,526     20,368 
 Selling, general and administrative expenses. .    27,315     24,535     76,294     68,366 
 Amortization of goodwill and other intangibles.     2,673      2,451      7,585      7,360 
 Acquisition related charges:
  Purchased research and development . . . . . .     2,000          -      2,000          - 
  Purchased and internally developed software. .     1,732          -      1,732          - 
                                                  ---------  ---------  ---------  ---------
                                                   128,874    111,217    370,961    317,711 
                                                  ---------  ---------  ---------  ---------

OPERATING INCOME . . . . . . . . . . . . . . . .    22,429     20,738     65,652     53,155 

Equity in earnings of unconsolidated affiliates.       129        274        567        964 
Minority interest. . . . . . . . . . . . . . . .       (44)         -        (74)         - 

Other Income and Expenses
  Investment income. . . . . . . . . . . . . . .       390        371      1,076      1,142 
  Interest expense and other charges . . . . . .      (993)    (1,378)    (2,474)    (3,951)
                                                  ---------  ---------  ---------  ---------
                                                      (603)    (1,007)    (1,398)    (2,809)
                                                  ---------  ---------  ---------  ---------
Income from continuing operations
  before income taxes. . . . . . . . . . . . . .    21,911     20,005     64,747     51,310 
Income taxes . . . . . . . . . . . . . . . . . .     8,740      7,454     24,727     19,135 
                                                  ---------  ---------  ---------  ---------
INCOME FROM CONTINUING OPERATIONS. . . . . . . .    13,171     12,551     40,020     32,175 

DISCONTINUED OPERATIONS:
  Income from operations of discontinued
    operations less applicable income taxes
    of $344, $252 and $1,164, respectively . . .         -        450        389      1,612 
  Loss on disposal of discontinued operations
    less applicable income taxes (benefit) of
    $(38), $2,439, and $(38), respectively . . .         -        (64)      (453)       (64)
                                                  ---------  ---------  ---------  ---------
                                                         -        386        (64)     1,548 
                                                  ---------  ---------  ---------  ---------

NET INCOME . . . . . . . . . . . . . . . . . . .  $ 13,171   $ 12,937   $ 39,956   $ 33,723 
                                                  =========  =========  =========  =========

BASIC EARNINGS PER SHARE:
  Income from continuing operations. . . . . . .  $   0.36   $   0.34   $   1.09   $   0.89 
  Income (loss) from discontinued operations . .         -       0.01          -       0.04 
                                                  ---------  ---------  ---------  ---------
                                                  $   0.36   $   0.35   $   1.09   $   0.93 
                                                  =========  =========  =========  =========
DILUTED EARNINGS PER SHARE:
  Income from continuing operations. . . . . . .  $   0.33   $   0.33   $   1.01   $   0.86 
  Income (loss) from discontinued operations . .         -       0.01          -       0.04 
                                                  ---------  ---------  ---------  ---------
                                                  $   0.33   $   0.34   $   1.01   $   0.90 
                                                  =========  =========  =========  =========

Weighted average common shares . . . . . . . . .    36,458     36,460     36,635     36,398 
Weighted average common shares assuming dilution    39,549     38,022     39,471     37,297
See accompanying notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                            CONSOLIDATED BALANCE SHEETS

                                                            (Unaudited)    (Audited)
                                                            September 30,   December 31,
                                                                1998         1997
                                                              --------     --------
                                                    (In thousands, except share data)
Assets
Current assets
 Cash and equivalents. . . . . . . . . . . . . . . . . . . .  $ 15,896   $ 32,179 
 Marketable securities . . . . . . . . . . . . . . . . . . .         -      3,280 
 Receivables, net of allowance for uncollectible
  amounts of $2,095 ($2,628 at 1997) . . . . . . . . . . . .   130,622    128,789 
 Income tax receivable . . . . . . . . . . . . . . . . . . .     1,014      1,098 
 Deferred income taxes . . . . . . . . . . . . . . . . . . .     9,569      3,628 
 Other receivable. . . . . . . . . . . . . . . . . . . . . .    11,284          - 
 Other . . . . . . . . . . . . . . . . . . . . . . . . . . .    23,710     16,835 
                                                              ---------  ---------
   Total current assets. . . . . . . . . . . . . . . . . . .   192,095    185,809 

Property and equipment, at cost less accumulated
 depreciation and amortization of $121,939
 ($139,522 at 1997). . . . . . . . . . . . . . . . . . . . .   122,102    116,433 
Receivables. . . . . . . . . . . . . . . . . . . . . . . . .     2,188      3,271 
Income tax receivable. . . . . . . . . . . . . . . . . . . .     4,041      4,041 
Goodwill and other intangibles, net. . . . . . . . . . . . .    81,452     69,125 
Capitalized software costs, net. . . . . . . . . . . . . . .   220,476    204,118 
Deferred income taxes. . . . . . . . . . . . . . . . . . . .    22,754     21,996 
Investments. . . . . . . . . . . . . . . . . . . . . . . . .     9,063     11,066 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . .     8,107      2,547 
                                                              ---------  ---------
     Total assets. . . . . . . . . . . . . . . . . . . . . .  $662,278   $618,406 
                                                              =========  =========

Liabilities
Current liabilities
 Accounts payable and accrued expenses . . . . . . . . . . .  $ 46,542   $ 57,345 
 Accrued restructuring charges . . . . . . . . . . . . . . .       187        145 
 Accrued contract termination costs. . . . . . . . . . . . .       418        830 
 Current portion of long-term debt . . . . . . . . . . . . .     1,086      1,191 
 Income taxes payable. . . . . . . . . . . . . . . . . . . .    16,674      7,499 
 Unearned revenues . . . . . . . . . . . . . . . . . . . . .    12,207     18,806 
 Other . . . . . . . . . . . . . . . . . . . . . . . . . . .       315        397 
                                                              ---------  ---------
   Total current liabilities . . . . . . . . . . . . . . . .    77,429     86,213 

Long-term debt . . . . . . . . . . . . . . . . . . . . . . .    77,000     37,714 
Deferred income taxes. . . . . . . . . . . . . . . . . . . .    92,612     80,496 
Accrued restructuring charges. . . . . . . . . . . . . . . .     1,409      1,366 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . .     3,992      2,121 
                                                              ---------  ---------
    Total liabilities. . . . . . . . . . . . . . . . . . . .   252,442    207,910 
                                                              ---------  ---------

Minority interest. . . . . . . . . . . . . . . . . . . . . .       472          - 

Commitments and contingencies (Note 3)

Stockholders' Equity
Special stock, $.01 par value, 5,000,000 shares authorized .         -          - 
Common stock, $.01 par value, 75,000,000 shares authorized,
 36,125,693 shares issued and outstanding
 (18,339,304 at December 31, 1997) . . . . . . . . . . . . .       361        183 
Additional paid-in capital . . . . . . . . . . . . . . . . .    71,237    112,090 
Retained earnings. . . . . . . . . . . . . . . . . . . . . .   346,139    306,367 
Accumulated other comprehensive income . . . . . . . . . . .    (8,373)    (8,144)
                                                              ---------  ---------
    Total stockholders' equity . . . . . . . . . . . . . . .   409,364    410,496 
                                                              ---------  ---------
     Total liabilities and stockholders' equity. . . . . . .  $662,278   $618,406 
                                                              =========  =========
See accompanying notes
POLICY MANAGEMENT SYSTEMS CORPORATION
            CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                             AND COMPREHENSIVE INCOME
                                   (Unaudited)

                                                          Accumulated
                                      Additional             Other
                               Common  Paid-In  Retained  Comprehensive                            
                                Stock  Capital  Earnings    Income(1)    Total
                                -----  -------  --------    ---------   -------
                                              (Dollars in thousands)
BALANCE, DECEMBER 31, 1997. . .  $183   $112,090   $306,367   $(8,144)  $410,496 

Comprehensive income
 Net income . . . . . . . . . .     -          -     39,956         -     39,956 
 Other comprehensive income,
  net of tax:
   Foreign currency
    translation adjustments . .     -          -          -      (221)      (221)
   Unrealized loss on
    marketable securities . . .     -          -          -        (8)        (8)
                                                                        ---------
Total comprehensive income                                                39,727 
                                                                        ---------

Stock dividend. . . . . . . . .   184          -       (184)        -          - 
Stock options exercised
  (709,298 shares). . . . . . .     8     28,793          -         -     28,801 
Repurchase of 1,349,600 shares
  of common stock . . . . . . .   (14)   (69,646)         -         -    (69,660)
                                 -----  ---------  ---------  --------  ---------

BALANCE, SEPTEMBER 30, 1998 . .  $361   $ 71,237   $346,139   $(8,373)  $409,364 
                                 =====  =========  =========  ========  =========
See accompanying notes

(1)  Comprehensive income for the three months ended September 30, 1998 and 1997
     was $14,743 and $11,843, respectively.
     Comprehensive income for the nine months ended September 30, 1997 was
     $27,935.
POLICY MANAGEMENT SYSTEMS CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

                                                          Nine Months
                                                       Ended September 30,
                                                        1998       1997
                                                       ------     ------
                                                        (In thousands)
Operating  Activities
Net income . . . . . . . . . . . . . . . . . . . . .  $ 39,956   $  33,723 
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation and amortization . . . . . . . . . .    58,993      53,694 
   Deferred income taxes . . . . . . . . . . . . . .     1,517       7,059 
   Provision for uncollectible accounts. . . . . . .        85       1,763 
   Minority interest . . . . . . . . . . . . . . . .        74           - 
   Gain on disposal of discontinued operations . . .    (1,986)          - 
   Acquisition related charges . . . . . . . . . . .     3,732           - 
   Impairment charges. . . . . . . . . . . . . . . .         -         444 
 Changes in assets and liabilities:
   Accrued restructuring and lease termination costs        85      (2,355)
   Receivables . . . . . . . . . . . . . . . . . . .    (5,013)    (23,380)
   Income taxes receivable . . . . . . . . . . . . .        84         (56)
   Accounts payable and accrued expenses . . . . . .   (14,127)    (12,077)
   Income taxes payable. . . . . . . . . . . . . . .     9,036       5,854 
 Other, net. . . . . . . . . . . . . . . . . . . . .   (23,630)       (943)
                                                      ---------  ----------
      Cash provided by operations. . . . . . . . . .    68,806      63,726 
                                                      ---------  ----------

Investing Activities
 Proceeds from sales/maturities of available-for-
  sale securities. . . . . . . . . . . . . . . . . .     3,257         250 
 Proceeds from sales of held-to-
  maturity securities. . . . . . . . . . . . . . . .     2,969           - 
 Proceeds from sale of business segment. . . . . . .    23,826       2,900 
 Acquisition of property and equipment . . . . . . .   (42,204)    (22,430)
 Capitalized internal software development costs . .   (43,599)    (46,809)
 Business acquisition. . . . . . . . . . . . . . . .   (27,143)          - 
 Investment by minority interest . . . . . . . . . .       425           - 
 Investment in unconsolidated affiliate. . . . . . .      (300)          - 
 Proceeds from disposal of property and equipment. .     1,034       1,183 
                                                      ---------  ----------
      Cash used by investing activities. . . . . . .   (81,735)    (64,906)
                                                      ---------  ----------

Financing Activities
 Payments on long-term debt. . . . . . . . . . . . .   (42,319)   (120,597)
 Proceeds from borrowing under credit facility . . .    81,500     113,033 
 Issuance of common stock under stock
  option plans . . . . . . . . . . . . . . . . . . .    28,801       3,933 
 Repurchase of common stock. . . . . . . . . . . . .   (69,660)          - 
                                                      ---------  ----------
      Cash used by financing activities. . . . . . .    (1,678)     (3,631)
                                                      ---------  ----------

Effect of exchange rate changes on cash. . . . . . .    (1,676)      1,329 
Net decrease in cash and equivalents . . . . . . . .   (16,283)     (3,482)
Cash and equivalents at beginning of period. . . . .    32,179      22,121 
                                                      ---------  ----------
Cash and equivalents at end of period. . . . . . . .  $ 15,896   $  18,639 
                                                      =========  ==========

Supplemental Information
 Interest paid . . . . . . . . . . . . . . . . . . .  $  2,489   $   3,636 
 Income taxes paid . . . . . . . . . . . . . . . . .     9,806       5,471
Non-cash investing activities:
  The  Company  transferred  $11.2 million of property, plant and equipment at
  net  book  value  to Lockheed Martin in exchange for an other receivable to be
  paid  in  January  1999.

See accompanying notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                              SEPTEMBER 30, 1998

NOTE  1.          SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

BASIS OF PRESENTATION

     The  consolidated  financial  statements  of  Policy  Management  Systems
Corporation  (the  "Company")  have been prepared in accordance with the rules
and  regulations of the Securities and Exchange Commission (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.

BASIC AND DILUTED EARNINGS PER SHARE

     Basic  and diluted earnings per share ("EPS") are calculated according to
the  provisions  of  Statement  of  Financial  Accounting  Standards  No. 128,
"Earnings  Per  Share".    For  the Company, the numerator is the same for the
calculation  of both basic and diluted EPS.  The following is a reconciliation
of  the  denominator  used  in  the  EPS  calculations  (in  thousands):
Three Months       Nine Months
                              Ended September 30, Ended September 30,
                              ------------------- -------------------
                                 1998    1997       1998    1997  
                                 -----   -----      -----   -----
Weighted Average Shares
-----------------------
Basic EPS. . . . . . . . . . .  36,458  36,460     36,635  36,398
Effect of common stock options   3,091   1,562      2,836     899
                                ------  ------     ------  ------
Diluted EPS. . . . . . . . . .  39,549  38,022     39,471  37,297
                                ======  ======     ======  ======
All  options  to  purchase  shares  of  common stock were included in the
computation  of  diluted  EPS  for  1998.
NEW  ACCOUNTING  STANDARDS

In  June 1997, Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" ("SFAS 130") was issued.  SFAS 130 establishes standards
for  reporting  and display of comprehensive income and its components, and is
effective  for  fiscal  years  beginning after December 15, 1997.  The Company
adopted  SFAS  130  at  January  1,  1998  and  has  included  the appropriate
disclosures  in the Consolidated Statements of Changes in Stockholders' Equity
and  Comprehensive  Income.

In October 1997, the American Institute of Certified Public Accountants issued
Statement  of Position 97-2, "Software Revenue Recognition" ("SOP 97-2").  SOP
97-2 provides guidance on applying generally accepted accounting principles in
recognizing  revenue  on  software  transactions,  and  is  effective  for
transactions  entered  into in fiscal years beginning after December 31, 1997.
The  Company adopted SOP 97-2 at January 1, 1998.  The adoption did not have a
material  impact  on  the  Company's  financial  statements.

In  February  1998,  the  American  Institute  of Certified Public Accountants
issued  Statement  of  Position  98-1,  "Accounting  for the Costs of Computer
Software  Developed  or  Obtained  for  Internal  Use" ("SOP 98-1").  SOP 98-1
provides  guidance  on accounting for the costs of computer software developed
or  obtained  for  internal  use,  and is effective for fiscal years beginning
after  December  31,  1998,  with  earlier  adoption  encouraged.  The Company
adopted  SOP  98-1  at  January 1, 1998.  The adoption did not have a material
effect  on  the  Company's  financial  statements.

In  June 1998, Statement of Financial Accounting Standard No. 133, "Accounting
for  Derivative  Instruments  and Hedging Activities" ("SFAS 133") was issued,
effective  for  fiscal  years  beginning  after  June  15,  1999, with earlier
adoption  encouraged.    SFAS  133  requires  companies  to  record derivative
instruments  on  the balance sheet as assets and liabilities, measured at fair
value.    Gain  or  losses  resulting  from  changes  in  the  values of those
derivatives  are  accounted  for  depending  on the use of the derivative. The
Company  does  not  enter  into  derivative instruments except occasionally to
hedge  the  foreign  currency  exchange  and  interest  rate  risk of specific
projected  transactions.    The  Company  was  not  holding  any  derivative
instruments  at  December  31, 1997.  At September 30, 1998, the Company had a
foreign  currency forward contract with a notional amount of 1,000,000 British
pounds  and  a  fair  market  value  of  $78,500.

OTHER MATTERS

     Certain prior period amounts have been reclassified to conform to current
period  presentation.
NOTE  2.          ACQUISITIONS

     On  August 31, 1998, the Company purchased 100% of the outstanding common
stock  of  The Leverage Group ("TLG") for $25 million in cash.  An independent
appraiser  estimated  the  fair  market  value  of  the  assets  acquired  and
liabilities  assumed  including  the  in-process  research  and  development
("IPR&D").  TLG owns Policy Link , a family of systems designed to support the
administrative  tasks  associated  with administration, commission processing,
payout  processing, and disbursement generation for life insurance and annuity
contracts.    In addition to continuing to market certain systems, the Company
intends  to  integrate  the  family  of  systems  with  its  existing product,
Cyberlife , to provide a local area network solution that administers products
ranging  from  traditional  whole  and term-life insurance to non-traditional,
wealth-accumulation  products including annuities and variable annuities.  The
Company  recorded acquisition charges of approximately $3.7 million related to
the  purchase  of  TLG.

     Approximately $2.0 million of these charges represent estimated purchased
IPR&D based on the income approach valuation method.  This amount reflects the
fair  value  of a single subsystem that is not being marketed and will be used
in  the  Company's  research  and development activities.  Consistent with the
Company's  basis of accounting for costs incurred to develop its software this
subsystem  is  not  capitalizable  under  Statement  of  Financial  Accounting
Standards  No.  86  "Accounting  for the Costs of Computer Software to Be Sold
Leased  or  Otherwise Marketed" ("SFAS 86") and has no alternative future use.
The  Company  will  spend  approximately $1.0 million through 1999 to complete
integration  of  this  subsystem.    The Company believes it will successfully
integrate  the  family  of  systems  with  its  existing  product.

     The  remainder  of  the  acquisition  charges  represents  the previously
capitalized  historical  cost  of  software  purchased and internal in-process
development  that  is  no longer capitalizable based on SFAS 86 as a result of
the  acquisition.

NOTE  3.          CONTINGENCIES

     The  Company  is  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  in excess of $160 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.
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 4.     SEGMENT INFORMATION

     The  Company's  operating  segments  are  the  five  revenue-producing
components of the Company for which separate financial information is produced
for  internal  decision  making  and  planning  purposes.  The segments are as
follows:

1.  Property and casualty enterprise software and services (generally referred
to  as  the "domestic property and casualty business").  This segment provides
software  products,  product  support,  professional  services and outsourcing
primarily  to  the  US  property  and  casualty  insurance  market.

2.  Life  and  financial solutions enterprise software and services (generally
referred  to  as  the "domestic life and financial solutions business").  This
segment provides software products, product support, professional services and
outsourcing  primarily to the US life insurance and related financial services
markets.

3.  International.   This segment provides software products, product support,
professional  services,  outsourcing  and information services to the property
and  casualty and life insurance markets primarily in Canada, Europe, Asia and
Australia.

4.  Property  and  casualty  information  services.    This  segment  provided
information  services, principally motor vehicle records and claims histories,
to  US  property  and casualty insurers.  This segment was sold in August 1997
and  is  presented  as  a  discontinued  operation.

5.  Life  information  services.   This segment provided information services,
principally physician reports and medical histories, to US life insurers. This
segment  was  sold  in  May 1998 and is presented as a discontinued operation.
Information about the Company's operations for the three and nine months ended
September  30,  1998  and  1997  is  as  follows:
Three Months          Nine Months
                                           Ended September 30,   Ended September 30,
                                           -------------------   -------------------
                                              1998      1997        1998     1997
                                             ------    ------      ------   ------
                                                        (In thousands)
REVENUES FROM EXTERNAL CUSTOMERS
Enterprise software and services
  Property and casualty . . . . . . . . . .  $ 70,343   $ 63,085   $204,912   $174,918 
  Life and financial solutions. . . . . . .    38,081     26,488    101,842     73,012 
                                             ---------  ---------  ---------  ---------
    Total US revenues . . . . . . . . . . .   108,424     89,573    306,754    247,930 
  International . . . . . . . . . . . . . .    42,879     42,382    129,859    122,936 
                                             ---------  ---------  ---------  ---------
    Total revenues from
       continuing operations. . . . . . . .  $151,303   $131,955   $436,613   $370,866 
                                             =========  =========  =========  =========

 Discontinued Operations
  Information Services
   Property and casualty. . . . . . . . . .  $      -   $ 16,408   $      -   $ 64,649 
   Life . . . . . . . . . . . . . . . . . .         -     15,704     11,968     48,608 

INCOME (EXPENSE) FROM CONTINUING OPERATIONS
 Enterprise software and services
  Property and casualty . . . . . . . . . .  $ 19,011   $ 17,988   $ 53,445   $ 46,782 
  Life and financial solutions. . . . . . .     9,558      5,614     24,049     16,823 
  Corporate and US administrative . . . . .    (9,908)    (6,915)   (23,586)   (18,853)
                                             ---------  ---------  ---------  ---------
    Total US operating income . . . . . . .    18,661     16,687     53,908     44,752 
                                             ---------  ---------  ---------  ---------

  International . . . . . . . . . . . . . .     5,819      5,968     17,855     13,505 
  International administrative. . . . . . .    (2,051)    (1,917)    (6,111)    (5,102)
                                             ---------  ---------  ---------  ---------
    Total international . . . . . . . . . .     3,768      4,051     11,744      8,403 
                                             ---------  ---------  ---------  ---------

      Operating income. . . . . . . . . . .    22,429     20,738     65,652     53,155 

Equity in earnings of
  unconsolidated affiliates . . . . . . . .       129        274        567        964 
Minority interest . . . . . . . . . . . . .       (44)         -        (74)         - 
Other income and expenses . . . . . . . . .      (603)    (1,007)    (1,398)    (2,809)
Income taxes. . . . . . . . . . . . . . . .     8,740      7,454     24,727     19,135 
                                             ---------  ---------  ---------  ---------
  Income from continuing operations . . . .  $ 13,171   $ 12,551   $ 40,020   $ 32,175 
                                             =========  =========  =========  =========

DISCONTINUED OPERATIONS
 Information Services
  Property and casualty . . . . . . . . . .  $      -   $    107   $ (1,018)  $    533 
  Life. . . . . . . . . . . . . . . . . . .         -        585      3,672      2,141 
  Other income and expenses . . . . . . . .         -          -        (27)         - 
  Income taxes. . . . . . . . . . . . . . .         -       (306)     2,691      1,126 
                                             ---------  ---------  ---------  ---------
   Discontinued operations, net . . . . . .  $      -   $    386   $    (64)  $  1,548 
                                             =========  =========  =========  =========
NOTE 5.     DISCONTINUED OPERATIONS

     The  Company  sold  its life information services segment in May 1998 for
$23.8  million,  net  of  selling expenses, resulting in a pretax gain of $3.0
million and an after-tax gain of $0.1 million.  The difference in gain for tax
purposes  primarily  results  from the inability to deduct goodwill related to
the  sale  for  tax purposes.  The operations of this segment are presented as
discontinued operations in the accompanying Consolidated Statements of Income.
See  Note  4  for  income  from  operations  of  the  discontinued  segment.

The Company also recognized an additional loss of $0.6 million, net of tax, on
the  sale  of its property & casualty information services segment.  This loss
is  included  in  discontinued  operations  in  the  accompanying Consolidated
Statements  of  Income.

NOTE  6.          STOCK  SPLIT

     In  May  1998,  the  Company's  Board of Directors approved a two-for-one
stock split effected in the form of a stock dividend, whereby each shareholder
of  record as of June 1, 1998, received on June 15, 1998, one additional share
of  common  stock  for each share owned as of the record date.  As a result of
the split, 18,426,691 shares were issued and $0.2 million was transferred from
Retained Earnings to Common Stock.  Weighted average common shares outstanding
and  per share amounts for all periods presented have been restated to reflect
the  stock  split.   Share amounts reflected on the Consolidated Balance Sheet
and  Consolidated  Statements  of  Changes  in  Stockholder's  Equity  and
Comprehensive  Income  reflect  the  actual  share  amounts  for  each  period
presented.
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,  1997.

                             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:
1998 vs. 1997
                                                                           Percent
                                          Percentage of Revenues    Increase (Decrease)
                                        -------------------------   ------------------
                                           Three          Nine       Three       Nine
                                        Months Ended  Months Ended   Months    Months
                                        September 30, September 30,  Ended      Ended
                                        ------------- -------------
                                         1998   1997    1998   1997     September 30
                                        -----  -----   -----  -----  -----------------
Revenues
 Licensing . . . . . . . . . . . . .   20.8%   25.2%   20.6%   24.8%   (5.6)%   (2.4)%
 Services. . . . . . . . . . . . . .   79.2    74.8    79.4    75.2     21.5     24.3 
                                      ------  ------  ------  ------                  
                                      100.0   100.0   100.0   100.0     14.7     17.7 
                                      ------  ------  ------  ------                  
Operating expenses
 Cost of revenues
  Employee compensation and benefits   43.0    42.4    44.2    41.7     16.2     25.1 
  Computer & communication expenses.    6.4     6.2     5.8     6.5     19.5      5.2 
  Depreciation & amortization
   property, equipment &
   capitalized software costs. . . .   10.3    11.2    10.8    11.6      6.1      9.9 
  Other costs & expenses . . . . . .    3.1     4.1     4.1     5.5    (12.2)   (14.0)
 Selling, general &
   administrative expenses . . . . .   18.1    18.5    17.5    18.4     11.3     11.6 
 Amortization of goodwill and
   other intangibles . . . . . . . .    1.8     1.9     1.7     2.0      9.1      3.1 
Acquisition related charges
 Purchased research and development.    1.3       -     0.5       -        -        - 
 Purchased and internally developed
   software. . . . . . . . . . . . .    1.2       -     0.4       -        -        - 
                                      ------  ------  ------  ------                  
                                       85.2    84.3    85.0    85.7     15.9     16.8 
                                      ------  ------  ------  ------                  
Operating income . . . . . . . . . .   14.8    15.7    15.0    14.3      8.2     23.5 
Equity in earnings of unconsolidated
   affiliates. . . . . . . . . . . .    0.1     0.2     0.1     0.3    (52.9)   (41.2)
Other income and expenses. . . . . .   (0.4)   (0.7)   (0.3)   (0.7)   (40.1)   (50.2)
                                      ------  ------  ------  ------                  
Income from continuing operations
  before income taxes. . . . . . . .   14.5    15.2    14.8    13.9      9.5     26.2 
Income taxes . . . . . . . . . . . .    5.8     5.7     5.6     5.2     17.3     29.2 
                                      ------  ------  ------  ------                  
Income from continuing operations. .    8.7     9.5     9.2     8.7      4.9     24.4 
Discontinued operations, net . . . .      -     0.3       -     0.4   (100.0)  (104.1)
                                      ------  ------  ------  ------                  
Net income . . . . . . . . . . . . .    8.7%    9.8%    9.2%    9.1%     1.8%    18.5%
                                      ======  ======  ======  ======
THREE MONTH COMPARISON

REVENUES
Three Months
                           Ended September 30,
                           -------------------
  Licensing                   1998    1997   Change
                             -----   -----   ------
                           (Dollars in Millions)
Initial charges. . . . . . .  $14.7   $16.9   (13.0)%
Monthly charges. . . . . . .   16.8    16.4     2.0
                              ------  ------         
                              $31.5   $33.3    (5.6)%
                              ======  ======         

Percentage of total revenues   20.8%   25.2%
                              ------  ------
In  licensing  the  Company's  products,  customers  generally  obligate
themselves  to  a  non-refundable initial license charge and a monthly license
fee  payable  over  a  specified  period  of time, which is usually six years.

The monthly license charge entitles the customer, over the contract period, to
use  the  licensed  product  and  to receive product support and enhancements.

     Initial  license revenues decreased $2.2 million for the third quarter of
1998  compared  to  the third quarter of 1997, with the following increases or
decreases  by  business  segment:    property  and  casualty  down  2.0% ($0.1
million);  life  and  financial  solutions  up  34.6%  ($1.5  million);  and
international down 48.1% ($3.6 million).  Life and financial solutions license
revenue includes $2.3 million of activity by the Company's recent acquisition,
The  Leverage  Group.

Initial  license  charges  for  the third quarter of 1998 include right-to-use
licenses  of  $2.7  million.    This  compares to $3.7 million in right-to-use
licenses  for  the third quarter of 1997.  Right to use licenses represent the
acquisition  by  certain  customers  of  the  right  to  use  element of their
remaining monthly license charge obligation, if any, plus the acquisition of a
perpetual  right  to use the product thereafter.  These types of licenses have
been  offered  to  customers by the Company with increasing frequency over the
past  three years and are beginning, and will continue, to mitigate the future
monthly  license  charge  growth  rate.   Initial license charges also include
termination charges (related to the buyout of monthly license charges) of $0.9
million  for  the third quarter of 1998.  There were no termination charges in
the  third  quarter  of  1997.

     Monthly  license  charges increased $0.4 million for the third quarter of
1998  compared  to the third quarter of 1997 principally due to strong initial
licensing  activity  in the fourth quarter of 1997.  Increases or decreases by
business  segment  are  as follows:  property and casualty unchanged; life and
financial solutions up 18.1% ($0.6 million); and international down 6.3% ($0.2
million).
Because  a  significant  portion of initial licensing revenues are recorded at
the  time  new  systems  are  licensed  and  such  licensing activity can vary
dramatically from quarter to quarter, 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:

                                 1998                   1997             1996
                         -------------------  -------------------------  ----
                           3rd    2nd    1st   4th    3rd    2nd    1st   4th
                         -------------------  -------------------------  ----
                                          (Dollars in Millions)

Initial license revenues  $14.7  $13.0  $12.6  $25.1  $16.9  $16.6  $11.3 $19.4
% of total revenues         9.7%   9.0%   9.0%  17.0%  12.8%  13.4%   9.8% 15.5%
Three Months
                           Ended September 30,
                           -------------------
  Services                    1998    1997   Change
                             -----   -----   ------
                         (Dollars In Millions)
Professional and outsourcing  $118.6   $97.6   21.5%
Information. . . . . . . . .     0.1     0.1   39.0 
Other. . . . . . . . . . . .     1.1     0.9   15.5 
                              -------  ------       
                              $119.8   $98.6   21.5%
                              =======  ======       

Percentage of total revenues    79.2%   74.8%
                              -------  ------
Professional and outsourcing services revenues increased $21.0 million for the
third  quarter  of  1998  compared  to  the  third  quarter  of 1997, with the
following  increases  by  business segment:  domestic property and casualty up
14.7%  ($7.1  million);  life insurance and financial solutions up 49.9% ($9.4
million);  and  international  up  15.0%  ($4.5  million).   The increases are
principally  due  to  increases  in  both  implementation  services and in the
processing  volumes  of  services  provided  to  new  and  existing customers.

OPERATING EXPENSES

COST OF REVENUES

     Employee  compensation and benefits increased 16.2% for the third quarter
of  1998  compared  to  the  third  quarter of 1997.  The net increase results
principally  from higher salaries and related costs associated with the growth
in  professional  services  staffing  being somewhat offset by the transfer of
certain  employee  costs to computer and communication expenses as a result of
the  Company's  data  center  outsourcing  agreement  with  Lockheed  Martin
Corporation  ("Lockheed  Martin").    Had  these  employee  costs  not  been
transferred,  third quarter 1998 employee compensation and benefits would have
increased  19.7% by comparison to the same period last year.  Compensation and
benefits  increased  18.7%  ($2.9  million)  internationally  and  15.3% ($6.2
million)  domestically.
Computer  and communications expenses increased 19.5% for the third quarter of
1998  compared  to  the  third quarter of 1997.  At the beginning of the third
quarter,  the  Company  entered  into a data center outsourcing agreement with
Lockheed  Martin.   As a result, certain costs previously included in employee
compensation  and  benefits  are  now  included in computer and communications
expense.    On  a comparative basis, the data center outsourcing agreement has
resulted  in  savings.

     Depreciation  and  amortization  of  property,  equipment and capitalized
software  costs  increased  6.1% for the third quarter of 1998 compared to the
third  quarter  of  1997,  principally  due  to  higher  amortization  expense
resulting  from  the  various  releases  of the Company's internally developed
software  products.

     Other  operating costs and expenses decreased 12.2% for the third quarter
of  1998  compared  to  the  third  quarter  of 1997, principally due to lower
consultant  and  contract loss expenses, partially offset by decreased amounts
of  capitalized  software  development  costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative  expenses  increased 11.3% for the
third  quarter  of 1998 compared to the third quarter of 1997, principally due
to  increased  commission,  bonus,  and  other  salary  costs.

AMORTIZATION  OF  GOODWILL  AND  OTHER  INTANGIBLES

     Amortization  of  goodwill  and  other intangibles increased 9.1% for the
third  quarter  of 1998 compared to the third quarter of 1997, principally due
to  increased  amortization  related to the acquisition of The Leverage Group.

OPERATING INCOME

     1998 third quarter operating income increased 8.2% compared to 1997 third
quarter  operating income.  Increases or decreases in segment operating income
were:    property  and  casualty  increased 5.7%, life and financial solutions
increased  70.3%  and international decreased 2.5%.  The increase in operating
income  is  primarily  related  to  increases  in  professional  services  and
outsourcing revenues while operating costs increased at a slower rate than the
related  revenue.

OTHER INCOME AND EXPENSE

     Interest  expense  decreased 27.9% for the third quarter of 1998 compared
to  the  third  quarter  of  1997, principally due to lower levels of borrowed
funds  under  the  Company's credit facility and capitalization of interest on
construction  in  progress.    The average nominal interest rate applicable to
borrowings  under  the  Company's  credit facility during the third quarter of
1998  was  5.9%.
INCOME  TAXES

The  effective  income  tax  rate  (income  taxes expressed as a percentage of
pre-tax  income)  was 39.9% and 37.3% for the third quarters of 1998 and 1997,
respectively.  The effective rate for the third quarter of 1998 is higher than
the  federal  statutory  rate principally due to the effect of state and local
income  taxes.

DISCONTINUED OPERATIONS

There  were  no  operating  results  in  the  third  quarter  of  1998.

                             NINE MONTH COMPARISON

REVENUES
Nine Months
                           Ended September 30,
                           -------------------
  Licensing                  1998    1997    Change
                             -----   -----   ------
                         (Dollars in Millions)
Initial charges. . . . . . .  $40.3   $44.8   (10.0)%
Monthly charges. . . . . . .   49.4    47.1     4.8
                              ------  ------         
                              $89.7   $91.9    (2.4)%
                              ======  ======         

Percentage of total revenues   20.6%   24.8%
                              ------  ------
Initial license revenues decreased $4.5 million for the first nine months
of  1998  compared to the same period in 1997, with the following increases or
decreases by business segment:  property and casualty up 17.5% ($1.9 million);
life and financial solutions down 18.3% ($2.9 million); and international down
19.9%  ($3.5  million).

Initial license charges for the first nine months of 1998 include right-to-use
licenses  of  $9.7  million.    This  compares to $5.6 million in right-to-use
licenses  for  the  same period of 1997.  Initial license charges also include
termination charges (related to the buyout of monthly license charges) of $1.3
million  for  the  first  nine months of 1998 compared to $0.2 million for the
first  nine  months  of  1997.   Additionally, initial license charges include
license  agreements  of  $2.2  million for the second quarter of 1998 with the
purchaser  of  the  discontinued  life  information  services segment and $1.8
million  for  the third quarter of 1997 with the purchaser of the discontinued
property  &  casualty  information  services  segment.    Life  and  financial
solutions  license revenue for the third quarter of 1998 includes $2.3 million
of  activity  by  the  Company's  recent  acquisition,  The  Leverage  Group.

Monthly  license  charges  increased $2.3 million for the first nine months of
1998  compared  to  the  same period in 1997 principally due to strong initial
licensing  activity  in the fourth quarter of 1997.  Increases or decreases by
business  segment  are  as follows:  property and casualty unchanged; life and
financial  solutions  up 20.9% ($1.8 million); and international up 4.5% ($0.5
million).
Nine Months
                           Ended September 30,
                          -------------------
  Services                    1998    1997   Change
                             -----   -----   ------
                          (Dollars In Millions)
Professional and outsourcing  $343.4   $274.9    24.9%
Information. . . . . . . . .     0.5      0.5     7.8 
Other. . . . . . . . . . . .     3.0      3.6   (17.9)
                              -------  -------        
                              $346.9   $279.0    24.3%
                              =======  =======        

Percentage of total revenues    79.4%    75.2%
                              -------  -------
Professional  and  outsourcing  services revenues increased $68.5 million
for  the  first  nine months of 1998 compared to the same period in 1997, with
the  following  increases by business segment:  domestic property and casualty
up  21.5%  ($28.8  million);  life  insurance and financial solutions up 61.5%
($29.8 million); and international up 10.7% ($9.9 million).  The increases are
principally  due  to  increases  in  both  implementation  services and in the
processing  volumes  of  services  provided  to  new  and  existing customers.

OPERATING EXPENSES

COST OF REVENUES

     Employee  compensation  and  benefits  increased 25.1% for the first nine
months  of 1998 compared to the same period in 1997.  The net increase results
principally  from higher salaries and related costs associated with the growth
in  professional  services  staffing  being somewhat offset by the transfer of
certain  employee  costs to computer and communication expenses as a result of
the  Company's  data  center  outsourcing agreement with Lockheed Martin.  Had
these employee costs not been transferred, the first nine months 1998 employee
compensation and benefits would have increased 26.3% by comparison to the same
period  last  year.   Compensation and benefits increased 21.3% ($9.8 million)
internationally  and  26.7%  ($28.9  million)  domestically.

Computer  and communications expenses increased 5.2% for the first nine months
of  1998  compared  to the same period in 1997.  At the beginning of the third
quarter,  the  Company  entered  into a data center outsourcing agreement with
Lockheed  Martin.   As a result, certain costs previously included in employee
compensation  and  benefits  are  now  included in computer and communications
expense.    On  a comparative basis, the data center outsourcing agreement has
resulted  in  savings.

     Depreciation  and  amortization  of  property,  equipment and capitalized
software  costs  increased  9.9% for the first nine months of 1998 compared to
the  same  period  in  1997,  principally  due  to higher amortization expense
resulting  from  the  various  releases  of the Company's internally developed
software  products.
Other  operating  costs and expenses decreased 14.0% for the first nine months
of  1998  compared  to  the  same  period  in  1997,  principally due to lower
consultant, contract loss and bad debt expenses, partially offset by increased
facility  costs  and  decreased  amounts  of  capitalized software development
costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative  expenses  increased 11.6% for the
first nine months of 1998 compared to the same period in 1997, principally due
to  increased  bonus,  commission,  and advertising costs, partially offset by
decreased  third  party  commissions.

AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES

     Amortization  of  goodwill  and  other intangibles increased 3.1% for the
first nine months of 1998 compared to the same period in 1997, principally due
to  increased  amortization  related to the acquisition of The Leverage Group.

OPERATING INCOME

     1998  nine month operating income increased 23.5% compared with 1997 nine
month operating income.  Increases in segment operating income were:  property
and casualty increased 14.2%, life and financial solutions increased 43.0% and
international  increased 32.2%.  The increase in operating income is primarily
related  to  increases in professional services and outsourcing revenues while
operating  costs  increased  at  a  slower  rate  than  the  related  revenue.

OTHER  INCOME  AND  EXPENSE

     Interest  expense  decreased  37.4%  for  the  first  nine months of 1998
compared  to  the  same  period  in  1997,  principally due to lower levels of
borrowed  funds  under  the  Company's  credit  facility and capitalization of
interest  on  construction  in  progress.    The average nominal interest rate
applicable  to borrowings under the Company's credit facility during the first
nine  months  of  1998  was  5.9%.

INCOME  TAXES

     The  effective income tax rate (income taxes expressed as a percentage of
pre-tax  income)  was  38.2% and 37.3% for the nine months ended September 30,
1998  and 1997, respectively.  The effective rate for the first nine months of
1998  is  higher than the federal statutory rate principally due to the effect
of  state  and  local  income  taxes.

DISCONTINUED OPERATIONS

Loss  from discontinued operations increased for the first nine months of 1998
compared to the same period in 1997, principally due to (i) an additional loss
of  $0.6  million  recognized  during  the second quarter of 1998 on the sale
of  the  property  &  casualty information services segment; (ii) partial year
operating  results  in  the  first  nine  months of 1998 compared to full year
operating  results  in  the first nine months of 1997 for the life information
services  segment;  and (iii) no operating results in the first nine months of
1998  compared  to  eight months operating results in the first nine months of
1997  for  the  property  &  casualty  information  services  segment.

STRATEGIC ALLIANCES

Microsoft.      In  April 1998, the Company announced a new strategic business
alliance  with  Microsoft  Corporation.    Under  this strategic alliance, the
Company  and  Microsoft  will engage in joint development, sales and marketing
activities  geared  toward  the  insurance  and  related  financial  services
industries.    This  alliance  is  not  exclusive.

Lockheed  Martin.    The  Company  formed  a  strategic  alliance  for systems
outsourcing with Integrated Business Solutions, a unit of Lockheed Martin.  In
June  1998,  a  Data Processing Services Agreement was completed and under its
terms,  the  Company  turned over operation of its Blythewood, South Carolina,
data  center  to Lockheed Martin on July 1, 1998.  As part of the transaction,
the  Company  transferred  to  Lockheed  Martin  substantially all of the data
processing  equipment used in the data center operations, at net book value of
approximately  $11.3  million,  to  be  paid  in  January  1999.

                        LIQUIDITY AND CAPITAL RESOURCES
September 30, December 31,
                                 1998         1997
---------------------------------------------------
                              (Dollars in Millions)
Cash and equivalents, marketable
  securities, and investments. .  $ 24.9  $ 46.5
Current assets . . . . . . . . .   192.1   185.8
Current liabilities. . . . . . .    77.4    86.2
Working capital. . . . . . . . .   114.7    99.6
Long-term debt . . . . . . . . .    77.0    37.7
Nine Months Ended
                                    September 30,
                                  1998         1997
------------------------------------------------------
                                (Dollars in Millions)
Cash provided by operations. . . .  $ 68.8   $ 63.7 
Cash used for investing activities   (81.7)   (64.9)
Cash used for financing activities    (1.7)    (3.6)
The  Company's  current  ratio  (current  assets  divided  by  current
liabilities)  stood at 2.5 at September 30, 1998, which management believes is
sufficient  when  combined  with  the available credit facility to provide for
day-to-day
operating  needs  and  the  flexibility  to  take  advantage  of  investment
opportunities.    The  Company  has  available  (net of amounts outstanding at
September  30,  1998)  $123  million of its $200 million credit facility.  The
Company also has available a $15 million uncommitted operating line of credit.

     During  the  nine months ended September 30, 1998 the Company capitalized
software  development  costs  of  $43.6  million,  principally  related to the
development  of  its  S3+    client/server  property  and  casualty  software,
CyberLife  object-oriented  client/server  life  insurance  software,  and  I+
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 1998, excluding
any  possible  business  acquisitions  or  common  stock  repurchases,  are as
follows:  acquisition  of  computer  and  communications  equipment,  support
software,  buildings, building improvements and office furniture, fixtures and
equipment  and costs relating to the internal development of software systems.

     The  Company has historically used the cash generated from operations for
development  and  acquisition  of  new products, acquisition of businesses and
repurchase  of  the Company's stock.  The Company anticipates that, subject to
market  conditions, it will continue to use its cash for all of these purposes
in  the  future  and that projected cash from operations, along with currently
available  borrowing  capacity,  will  be  able  to meet presently anticipated
needs.

                    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 and related financial services
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 spending 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.

YEAR 2000

General
-------

     Many  existing  computer programs were designed to use only two digits to
identify  a  year  in date fields.  If not corrected, these applications could
fail or produce erroneous results when working with dates of the Year 2000 and
beyond.

     Beginning  in  the  fourth  quarter  of  1997,  the  Company  initiated
consolidation  of  its  Year  2000  activities  under  a centralized Year 2000
Project Office.  Prior to that, individual business units were responsible for
the  assessment,  remediation,  validation  and  implementation  of  Year 2000
corrective  actions.

     There  are  seven  phases  that  are  included in the Company's Year 2000
project:
Planning  -  Educating  the organization on Year 2000 issues and concerns, the
readiness  efforts necessary and preparing for the next phase of the Year 2000
readiness  project.
Inventory  -  Cataloguing  all  organizational components, including products,
external  or  internal  interfaces,  hardware  and  software  that may require
remediation  and  testing  to  adequately  address  Year  2000  concerns.
Triage  -  Prioritizing  and categorizing all products, equipment, interfaces,
data,  and  facilities  identified  during  the  Inventory phase.  Emphasis is
placed  on the identification of:  all mission critical components, those that
are  least  important,  and  those  that  fall  in  the  middle.
Assessment  - Identifying areas requiring remediation for every aspect of each
component  identified  in  the  Triage  phase  as  mission  critical.
Remediation  -  Repairing, replacing, or retiring components based on the work
identified  during  the Assessment phase.  Unit tests on repaired applications
are  also  included  in  this  phase.
Testing  -  Testing  components  that  were repaired.  Such tests include both
system  tests  and  integrated  tests  in test environments with machine dates
advanced  to  reflect  dates  in  the  years  1999  and  2000.
Implementation  -  Migrating systems, applications, and hardware to production
environments,  installation  of  replacement  systems  and  the  retirement of
designated  components,  as well as finalizing, documenting and taking care of
residual  activities.   This phase also includes the compilation and retention
of  supporting  documentation that conforms to prescribed corporate standards.

All  phases  are  currently  scheduled  to  be  completed  by August 31, 1999.

     The Year 2000 issue may potentially affect the Company in four areas: its
product  offerings,  its  service  offerings,  its  internal  systems, and its
suppliers  and  trading  partners.

Product  Offerings
------------------

     The  Company  has  updated  the  code of its primary product offerings to
process  dates across the century boundary.  Current testing has confirmed the
ability  of  the  applications to process data in both centuries. Beyond that,
continuous  testing  is scheduled for the first half of 1999 in an environment
simulating  a  processing  date after January 1, 2000 (Year 2000 environment).
This  additional  testing seeks to confirm that no unanticipated problems will
occur  due  to  third party products with which the Company's applications are
designed  to  operate.    The  Company is also in the process of conducting an
inventory  and assessment of other Company and third-party products previously
licensed  by  the  Company  to  customers  to  determine  if  they require any
remediation  efforts.    The Company anticipates completing this inventory and
assessment  by  December  31,  1998.

Service  Offerings
------------------

     The  Company has completed Year 2000 application code remediation for all
domestic  property  and  casualty  customers  who  will  be  Business  Process
Outsourcing ("BPO")/Information Technology Outsourcing ("ITO") customers after
December  31, 1999.  Live customer data is currently being processed on these
remediated  applications  in  a production environment.  Additional testing is
scheduled  for  the  first  half of 1999 in a Year 2000 environment to confirm
that  no  unanticipated  problems  will occur due to third party products with
which  the  Company's applications are designed to operate.  The Company has a
limited  number  of  BPO/ITO  customers  in  its  Life and Financial Solutions
Enterprise Software and Services and International segments for whom Year 2000
remediation  efforts  continue.  These efforts, including related testing in a
Year  2000 environment, are scheduled to be completed in the second quarter of
1999.

Internal  Systems
-----------------

     Internal  systems  consist  primarily of third-party products used by the
Company  for  its  internal  operations which include data center hardware and
software,  internal  financial  and human resource systems, and network and PC
hardware and software.  The Company's Blythewood data center has completed its
hardware  and operating software inventory and has substantially completed the
assessment,  remediation,  and  testing efforts of updating these hardware and
software  assets  for  Year  2000  requirements.  As of July 1, 1998, Lockheed
Martin  took over the data processing equipment and operational control of the
Blythewood  data  center and remaining remediation efforts will be coordinated
with  it.   The Company's Illinois, Australian, and European data centers have
also completed their inventories and are currently in the Assessment phase for
hardware  and  operating  software  enhancements  required  for  Year  2000
remediation.    Assessment  is scheduled for completion by March 31, 1999 with
final  implementation  scheduled  for  completion  by  June  30,  1999.

     In  1996, the Company commenced the process of identifying, selecting and
implementing  an  enterprise  wide  financial  and  human  resources system to
replace  its  existing  systems.    The  selected  solution  is  substantially
operational,  is  designed to meet Year 2000 requirements, and is scheduled to
be  fully  operational  at  the  end  of  1998.

  The Company is inventorying and assessing all of its network and PC hardware
and  software  to  determine  if  any  Year  2000 remediation upgrades will be
required.   This inventory and assessment phase is scheduled for completion in
the  first  quarter  of  1999  and  any  required  remediation  will  commence
immediately  thereafter.    The  Company  is also assessing its readiness with
respect  to  non-IT systems which relate primarily to the ordinary maintenance
and  operation  of its physical facilities, such as elevators, heating and air
conditioning.

Suppliers  and  Trading  Partners
---------------------------------

     The  Company's  ability  to  operate  is  dependent on relationships with
certain  suppliers  and  trading  partners,  such  as  electric  utilities and
telephone companies, who provide services to the Company's various offices and
data centers ("mission critical suppliers and trading partners").  The Company
expects  to complete the process of identifying all potential mission critical
suppliers  and trading partners by December 31, 1998.  In the first quarter of
1999,  the  Company  will  commence  its planned process of evaluating mission
critical  supplier  and  trading partner Year 2000 readiness.  Any identified
mission  critical  third  party systems and data interfaces will be tested, to
the  extent  practical,  in  a  Year  2000 environment.  The Company will seek
substantive  assurances  from  its  mission  critical  suppliers  and  trading
partners  as  to their Year 2000 readiness where actual testing is impractical
or  impossible.    The Company's ability to influence cooperation is partially
dependent on the significance of the Company's relationship with its suppliers
and  trading  partners.   The Company anticipates completing this phase of its
Year  2000  readiness  project  in  the  second  quarter  of  1999.

Year  2000  Costs
-----------------

     Since 1995, the Company estimates that it has incurred approximately $6.7
million  of  costs  in  addressing Year 2000 remediation issues.  Based on the
Company's experience to date, it is not anticipated that the completion of the
remaining  Year  2000  remediation efforts will have a material adverse effect
upon  the Company's financial position or results of operations. The Company's
past  and  anticipated  future  remediation  costs  are  funded by operations.

Year  2000  Risks
-----------------

     The  Company's  products  are designed to be used with and require use of
third-party  products,  such  as  operating  systems  and  compilers.    Also,
customers  often  modify  the  Company's  products  to  suit  their  unique
requirements.    If these third parties experience Year 2000 failures of their
products,  or  if  customers  experience  system failures as a result of their
modifications  or  for  other  reasons,  the  Company could become involved in
disputes  or  litigation  related  to  the  cause  of  such  system  failures.

 In addition,  the failure to correct material Year 2000 problems could result
in  an interruption in, or a failure of, certain normal business activities or
operations  and  litigation.    Such  failures  could materially and adversely
affect the Company's results of operations, liquidity and financial condition.
Due to the general uncertainty inherent in the Year 2000 problem, resulting in
part  from the uncertainty of the Year 2000 readiness of third-party suppliers
and  the  Company's customers and prospective customers, the Company is unable
to  determine at this time whether the consequences of Year 2000 failures will
have  a  material  impact on the Company's results of operations, liquidity or
financial  condition.    The  Year  2000  Project is expected to significantly
reduce  the Company's level of uncertainty about the Year 2000 problem and, in
particular,  about  the  Year  2000  compliance  and  readiness of its mission
critical  suppliers and trading partners.  The Company believes that, with the
implementation  of  new  business  systems  and  completion  of the Project as
scheduled,  the  possibility of significant interruptions of normal operations
should  be  reduced.

The  Company  is currently developing contingency plans to minimize the effect
of  such disruptions.  Such contingency plans are scheduled to be completed by
June  30,  1999.

Readers  are  cautioned that forward-looking statements contained in this Year
2000  section  should  be  read in conjunction with the Company's disclosures
under  the  heading "Factors That May Affect Future Results" beginning on page
21.

EURO CONVERSION

     On  January,  1, 1999, certain member countries of the European Union are
scheduled to establish fixed conversion rates between their existing sovereign
currencies and the euro.  The participating countries have agreed to adopt the
euro  as  their  common legal currency on that date.  It is also possible that
some of the non-participating countries may also choose to convert to the euro
at  a later date.  From January 1, 1999, to December 31, 2001, there will be a
transition  period,  during  which  the  participating  countries  may conduct
transactions in either their legacy currency or the euro.  On January 1, 2002,
new  euro-denominated bills and coins will be issued, and by July 1, 2002, all
legacy  currency  bills and coins will be withdrawn, finalizing the conversion
to  the  euro.

    The Company is currently evaluating methods to address the issues involved
with the introduction of the euro, including the conversion of its products in
the  relevant  markets and impacts on the processes for preparing taxation and
accounting  records.

The Company is surveying licensees of its products domiciled or doing business
in  the  participating  countries.    The needs of each licensee may vary with
regards  to  converting  to  the euro depending on how and when they choose to
convert.   The Company is preparing strategies to modify its products licensed
in  the  participating  countries to convert to the euro.  These modifications
will  be  made  available  to  licensees  for  a  fee.   Implementation of the
modifications  is  the  responsibility  of  each  licensee.

 Company subsidiaries are incorporated in four of the participating countries:
Germany,  Austria,  the  Netherlands and Ireland.  The Company has implemented
new  financial  accounting systems that will enable it to convert the affected
operations  to  the  euro  in  a  timely  and  effective  manner.

   Based upon the Company's experience to date, it is not anticipated that the
euro  conversion  will  have  a  material impact on the Company's consolidated
financial  statements.

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  above  and  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 3, 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, 1998.
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 13, 1998     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.       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)
F.       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)

G.      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)

H.          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)

I.       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)

J.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  a  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)

K.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  a  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)

L.        Stock Option Non-Compete Form Agreement for named executive officers
together  with  a  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)

M.     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)

N.     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)

O.          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)

P.          Second  and  Third  Amendments  to  the  Policy Management Systems
Corporation  1989  Stock  Option  Plan (filed as Exhibits to Form 10-Q for the
quarter  ended  June  30,  1995,  and  is  incorporated  herein  by reference)
Q.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  a  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)

R.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  a  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)

S.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  a  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 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)

U.          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)

V.       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)

W.          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)

X.       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)

Y.        Stock Option/Non-Compete Form Agreement for named executive officers
together  with  a  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)

Z.       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)
AA.          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)

BB.          Stock Option/Non-Compete Form Agreement dated January 8, 1997 for
named  executive officers together with a 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)

CC.        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)

DD.          Form of Amendment No. 1 to the Employment Agreements with Messrs.
Butare,  Morrison  and  Williams,  together  with  a  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)

EE.     Form of Employment Agreements with Messrs. Wilson, Bailey and Coggiola
together  with  schedule  identifying  particulars  for each executive officer
(filed  as  an  Exhibit to Form 10-Q for the quarter ended September 30, 1997,
and  is  incorporated  herein  by  reference)

FF.       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  as  an  exhibit to Form 10-Q for the quarter ended September 30, 1997,
and  is  incorporated  herein  by  reference)

GG.     Employment Agreement dated January 1, 1998, and Addendum No. 1 thereto
dated  January  26, 1998, with Donald A. Coggiola (filed as an exhibit to Form
10-K  for  the  year  ended  December  31,  1997 and is incorporated herein by
reference)

HH.       Stock Option/Non-Compete Form Agreement for named executive officers
together  with  a  schedule  identifying  particulars for each named executive
officer (filed as an exhibit to Form 10-Q for the quarter ended March 31, 1998
and  is  incorporated  herein  by  reference)

II.      Policy Management Systems Corporation Restricted Stock Ownership Plan
(filed  herewith)

JJ.        Form of Restricted Stock Award Agreement dated August 11, 1998 with
Messrs. Berkeley, Feddersen, Palms, Sargent, Seibels and Trub (filed herewith)
27.          FINANCIAL  DATA  SCHEDULES

     A.     Nine Months Ended September 30, 1998 filed herewith (EDGAR version
only)

     B.      Nine Months Ended September 30, 1997, as restated, filed herewith
(EDGAR  version  only)2