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, 1999
                         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.

        35,572,006 Common shares, $.01 par value, as of November 5, 1999.

     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, 1998.

<PAGE>
<TABLE>
<CAPTION>

                      POLICY MANAGEMENT SYSTEMS CORPORATION


                                      INDEX


PART  I.  FINANCIAL  INFORMATION

                                                        PAGE
Item  1.  Financial  Statements


<S>                                                      <C>
Consolidated Statements of Operations for the Three and
Nine Months Ended September 30, 1999 and 1998 . . . . .   3

Consolidated Balance Sheets as of September 30, 1999
and December 31, 1998 . . . . . . . . . . . . . . . . .   4

Consolidated Statements of Changes in Stockholders'
Equity and Comprehensive Income for the Nine
Months Ended September 30, 1999 . . . . . . . . . . . .   5

Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1999 and 1998 . . . . .   6

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

Item 2. Management's Discussion and Analysis of
  Financial Condition and Results of Operations . . . .  12

PART II. OTHER INFORMATION

Item 1. Legal Proceedings . . . . . . . . . . . . . . .  28

Item 6. Exhibits and Reports on Form 8-K. . . . . . . .  28

Signatures. . . . . . . . . . . . . . . . . . . . . . .  29
</TABLE>



<PAGE>
<TABLE>
<CAPTION>

                                        PART I
                                 FINANCIAL INFORMATION
                         POLICY MANAGEMENT SYSTEMS CORPORATION
                         CONSOLIDATED STATEMENTS OF OPERATIONS
                                      (Unaudited)

                                                 Three Months         Nine Months
                                             Ended September 30,     Ended September 30,
                                             -------------------     -------------------
                                                1999       1998       1999       1998
                                              ------     ------     ------     ------
                                              (In thousands, except per share data)

<S>                                        <C>         <C>        <C>        <C>
Revenues
 Licensing. . . . . . . . . . . . . . . .  $  37,383   $ 31,454   $115,846   $ 89,694
 Services . . . . . . . . . . . . . . . .    131,405    119,849    386,763    346,919
                                           ----------  ---------  ---------  ---------
                                             168,788    151,303    502,609    436,613
                                           ----------  ---------  ---------  ---------

Operating expenses
 Cost of revenues
  Employee compensation and benefits. . .     78,686     65,117    228,796    193,084
  Computer and communications expenses. .     12,644     10,892     36,275     26,612
  Depreciation and amortization of
   property, equipment and
   capitalized software costs . . . . . .    108,543     15,647    141,777     46,550
  Other costs & expenses. . . . . . . . .     15,238      4,778     32,041     17,805
 Selling, general and administrative
   expenses . . . . . . . . . . . . . . .     29,230     26,035     83,243     75,593
 Amortization of goodwill and
   other intangibles. . . . . . . . . . .      9,978      2,673     16,516      7,585
 Restructuring and other charges. . . . .     22,159          -     22,159          -
 Acquisition related charges. . . . . . .          -      3,732          -      3,732
                                           ----------  ---------  ---------  ---------
                                             276,478    128,874    560,807    370,961
                                           ----------  ---------  ---------  ---------

Operating (loss) income . . . . . . . . .   (107,690)    22,429    (58,198)    65,652

Equity in earnings of
   unconsolidated affiliates. . . . . . .        320        129        609        567

Minority interest . . . . . . . . . . . .        (14)       (44)       (94)       (74)

Other income and expenses:
  Investment income . . . . . . . . . . .        239        390        653      1,076
  Interest expense and other charges. . .     (3,564)      (993)    (7,824)    (2,474)
                                           ----------  ---------  ---------  ---------
                                              (3,325)      (603)    (7,171)    (1,398)
                                           ----------  ---------  ---------  ---------

(Loss) income from continuing operations
  before income taxes . . . . . . . . . .   (110,709)    21,911    (64,854)    64,747
Income tax (benefit) expense. . . . . . .    (40,261)     8,740    (23,294)    24,727
                                           ----------  ---------  ---------  ---------

(Loss) income from continuing operations.    (70,448)    13,171    (41,560)    40,020

Discontinued operations:
 Income from operations of
  discontinued operations less
  applicable income taxes of $252 . . . .          -          -          -        389
 Loss on disposal of discontinued
  operations less applicable income
  taxes of $2,439 . . . . . . . . . . . .          -          -          -       (453)
                                           ----------  ---------  ---------  ---------
                                                   -          -          -        (64)
                                           ----------  ---------  ---------  ---------

Net (loss) income . . . . . . . . . . . .  $ (70,448)  $ 13,171   $(41,560)  $ 39,956
                                           ==========  =========  =========  =========

Basic earnings per share:
 (Loss) income from continuing operations  $   (1.99)  $   0.36   $  (1.17)  $   1.09
                                           ==========  =========  =========  =========

Diluted earnings per share:
=========================================
 (Loss) income from continuing operations  $   (1.99)  $   0.33   $  (1.17)  $   1.01
                                           ==========  =========  =========  =========

Weighted average common shares. . . . . .     35,355     36,458     35,610     36,635

Weighted average common shares
  assuming dilution . . . . . . . . . . .     35,355     39,549     35,610     39,471
<FN>


See accompanying notes
</TABLE>





<PAGE>
<TABLE>
<CAPTION>

                      POLICY MANAGEMENT SYSTEMS CORPORATION
                           CONSOLIDATED BALANCE SHEETS

                                               (Unaudited)      (Audited)
                                              September 30,     December 31,
                                                   1999         1998
                                                  ------       ------
                                            (In thousands, except share data)

<S>                                                <C>        <C>
Assets
Current assets
 Cash and equivalents                              $ 28,877   $ 26,013
 Marketable securities                                  228          -
 Receivables, net of allowance for uncollectible
  amounts of $2,437 ($2,051 at 1998)                140,542    123,427
 Accrued revenues                                    41,991     26,558
 Deferred income taxes                                7,494      9,336
 Other receivable                                         -     11,279
 Prepaids                                            16,455      8,645
 Other                                               15,386     11,968
                                                   ---------  ---------
   Total current assets                             250,973    217,226

Property and equipment, at cost less accumulated
 depreciation and amortization of $126,307
 ($128,363 at 1998)                                 144,071    135,436
Accrued revenues                                     12,748      7,844
Income tax receivable                                 4,041      4,041
Goodwill and other intangibles, net                 121,742     81,401
Capitalized software costs, net                     166,453    220,908
Deferred income taxes                                24,371     24,787
Investments                                          10,427      9,661
Other                                                17,444     17,394
                                                   ---------  ---------
     Total assets                                  $752,270   $718,698
                                                   =========  =========

Liabilities
Current liabilities
 Accounts payable and accrued expenses             $ 47,549     57,129
 Current portion of long-term debt                   30,400     15,812
 Income taxes payable                                 6,454      9,202
 Unearned revenues                                   20,095     15,804
 Accrued restructuring and other charges              4,797        806
 Other                                                  776        182
                                                   ---------  ---------
   Total current liabilities                        110,071     98,935

Long-term debt                                      202,000     85,000
Deferred income taxes                                69,662     98,233
Accrued restructuring and other charges               6,031        677
Other                                                 9,026      2,843
                                                   ---------  ---------
    Total liabilities                               396,790    285,688
                                                   ---------  ---------


Minority interest                                       635        526

Stockholders' equity
Special stock, $.01 par value, 5,000,000 shares
 authorized                                               -          -
Common stock, $.01 par value, 75,000,000 shares
 authorized, 35,551,917 shares issued and
 outstanding (36,357,139 at December 31, 1998)          356        364
Additional paid-in capital                           56,460     82,396
Retained earnings                                   317,894    359,454
Accumulated other comprehensive income               (9,804)    (9,730)
Stock employee compensation trust                   (10,061)         -
                                                   ---------  ---------
    Total stockholders' equity                      354,845    432,484
                                                   ---------  ---------
 Total liabilities and stockholders' equity        $752,270   $718,698
                                                   =========  =========
<FN>


See accompanying notes
</TABLE>



<PAGE>
<TABLE>
<CAPTION>

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

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

<S>                              <C>        <C>        <C>        <C>       <C>        <C>
BALANCE, DECEMBER 31, 1998. . .  $    364   $ 82,396   $359,454   $(9,730)  $      -   $432,484

Comprehensive income:
 Net loss . . . . . . . . . . .         -          -    (41,560)        -          -    (41,560)
 Other comprehensive income,
  net of tax:
   Foreign currency
    translation adjustments . .         -          -          -       (74)         -        (74)
                                                                                       ---------
Total comprehensive income
  (loss). . . . . . . . . . . .                                                          (41,634)
                                                                                       ---------

Purchase of shares for SECT . .         -          -          -         -    (10,094)   (10,094)
Restricted stock vested . . . .         -         (3)         -         -         19         16
Restricted stock forfeited. . .         -          -          -         -         14         14
Stock options exercised
  (208,378 shares). . . . . . .         2      7,102          -         -         14      7,104
Repurchase of 1,013,600 shares
  of common stock . . . . . . .       (10)   (33,035)         -         -          -    (33,045)
                                 ---------  ---------  ---------  --------  ---------  ---------

BALANCE, SEPTEMBER 30, 1999 . .  $    356   $ 56,460   $317,894   $(9,804)  $(10,061)  $354,845
                                 =========  =========  =========  ========  =========  =========
<FN>

(1)     Comprehensive  income (loss) for the three months ended September 30, 1999 and 1998 was
$(67,519)  and  $14,744,  respectively. Comprehensive income for the nine months ended September
30,  1998  was  $39,727.

See  accompanying  notes
</TABLE>




<PAGE>

<TABLE>
<CAPTION>

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

                                                        Nine Months
                                                       Ended September 30,
                                                      ---------------------
                                                        1999        1998
                                                       ------      ------
                                                       (In thousands)

<S>                                                  <C>         <C>
Operating Activities
 Net (loss) income                                   $ (41,560)  $ 39,956
 Adjustments to reconcile net  (loss) income to net
  cash provided by operating activities:
   Depreciation and amortization                       163,085     58,993
   Deferred income taxes                               (31,369)     1,517
   Gain on disposal of discontinued operations               -     (1,986)
   Acquisition related charges                               -      3,732
Changes in assets and liabilities:
   Receivables                                         (10,424)      (974)
   Accrued revenues                                    (20,195)    (4,039)
   Other receivable                                     11,279          -
   Accounts payable and accrued expenses               (14,312)   (14,127)
   Accrued restructuring and other charges              13,200         85
   Income taxes payable                                 (3,033)     9,036
   Unearned revenues                                     1,772     (7,422)
   Other, net                                           (9,170)    (5,172)
                                                     ----------  ---------
      Cash provided from operations                     59,273     79,599
                                                     ----------  ---------

Investing Activities
 Proceeds from sales/maturities of available-for-
  sale securities                                        1,969      3,257
 Proceeds from sales of held-to-maturity securities          -      2,969
 Proceeds from sale of business segment                      -     23,826
 Acquisition of property and equipment                 (28,532)   (45,287)
 Capitalized internal software development costs       (50,476)   (43,599)
 Business acquisitions                                 (68,053)   (29,629)
 Proceeds from disposal of property and equipment        1,018      1,034
                                                                 ---------
 Other                                                  (5,888)    (6,775)
                                                     ----------  ---------
      Cash used by investing activities               (149,962)   (94,204)
                                                     ----------  ---------

Financing Activities
 Payments on long-term debt                           (219,312)   (42,319)
 Proceeds from borrowing under credit facility         348,900     81,500
 Purchase of stock for Stock Employee
  Compensation Trust                                   (10,094)         -
 Issuance of common stock under stock option plans       7,104     28,801
                                                                 ---------
 Repurchase of common stock                            (33,045)   (69,660)
                                                     ----------  ---------
      Cash provided (used) by financing activities      93,553     (1,678)
                                                     ----------  ---------

Net increase (decrease) in cash and equivalents          2,864    (16,283)
Cash and equivalents at beginning of period             26,013     32,179
                                                     ----------  ---------
Cash and equivalents at end of period                $  28,877   $ 15,896
                                                     ==========  =========

Supplemental Information
 Interest paid                                       $   6,494   $  1,371
 Income taxes paid                                       6,745      9,806

<FN>


Non-cash investing activities:
     The Company transferred $11.2  million of  property, plant and equipment
to Lockheed Martin in 1998 in exchange for other receivable collected in 1999.


See accompanying notes
</TABLE>




<PAGE>
                     POLICY MANAGEMENT SYSTEMS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

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 may
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 either have
been  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.  For the
Company, the numerator is the same for the calculation of both basic and diluted
EPS.  The  denominator  for basic and diluted EPS is the same for both the three
and  nine  month  periods  ended  September 30, 1999 as the loss from operations
would otherwise cause the inclusion of common stock options to be anti-dilutive.
The  following  is  a  reconciliation  of  the  denominator  used  in  the  EPS
calculations  (in  thousands):
<TABLE>
<CAPTION>


                               Three Months Ended   Nine Months Ended
                                  September 30      September 30
                                 -------------     -------------
                                 1999    1998        1999    1998
                                 -----   -----       -----   -----
Weighted Average Shares
-----------------------

<S>                             <C>     <C>     <C>     <C>
Basic EPS. . . . . . . . . . .  35,355  36,458  35,610  36,635
Effect of common stock options       -   3,091       -   2,836
                                ------  ------  ------  ------
Diluted EPS. . . . . . . . . .  35,355  39,549  35,610  39,471
                                ======  ======  ======  ======
</TABLE>

     Options  to purchase 6,708,967 shares of common stock at a weighted average
price  of $28.84 per share were outstanding but not included in the computations
of  diluted  EPS for the three and nine month periods ending September 30, 1999.


<PAGE>
RECLASSIFICATIONS

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

NOTE  2.     ACQUISITIONS

On  June 30, 1999, the Company purchased DORN Technology Group, Inc. ("DORN"), a
risk  and  claims  management  company,  for $32 million in cash plus additional
consideration  of  up  to  $30 million contingent upon the future performance of
DORN,  to  be  expensed  as incurred until 2001. DORN owns the Riskmaster claims
management  software  and  the  Quest healthcare facility software, and provides
risk  and  claims management software and services mainly to the US self-insured
market.  The  Company  intends  to  grow  DORN's  existing services business and
further  develop  the  Riskmaster  and  Quest systems to complement its suite of
claims  products.

On  June  30,  1999,  the  Company  purchased Financial Administrative Services,
Inc.("FAS"), a provider of business process outsourcing ("BPO"), for $13 million
plus  additional  consideration  of up to $12.0 million contingent on the future
performance  of  FAS,  to  be capitalized as additional goodwill when paid until
2005. FAS uses the Company's PolicyLink system to support the rapid introduction
of  variable  insurance products and annuities in a business process outsourcing
environment.

On March 31, 1999, the Company purchased Legalgard Partners, L.P. ("Legalgard"),
a  legal  cost  containment  business  for  $23.2  million  plus  additional
consideration  of  up  to $4.3 million contingent upon the future performance of
Legalgard,  to be expensed as incurred until 2003. Legalgard provides legal cost
containment  services  mainly to the US property and casualty insurance industry
using  the  Counsel  Partnership  System,  a  proprietary  software system.  The
Company  intends  to grow Legalgard's existing services business and develop the
Counsel  Partnership  System  for  licensing  directly  to  insurance companies.

The  acquisitions  above  have  been  recorded  using  the  purchase  method  of
accounting.  Accordingly,  the  Consolidated  Statements  of  Operations  of the
Company  do  not  include  the  results of operations of the acquired businesses
before  their  respective  dates  of  acquisition.

NOTE  3.     SPECIAL  CHARGES

     The  Company  considers  special  charges  to  be unusual events or unusual
transactions  related  to  continuing  business  activities.

     The  Company's  operating results for the 1999 third quarter include $126.9
million in special charges of which $100.4 million are non-cash.  These non-cash
charges  result from a reevaluation of capitalized software costs in light of an
increasingly  rapid  pace  of change in technology, changes in market forecasts,
and  the write-down of certain intangibles largely related to past international
acquisitions.  Cash charges of $26.5 million resulted from restructuring charges
incurred  as  the Company eliminated costs through reductions in force and space
requirements,  and  charges  incurred  in  connection

<PAGE>
with  the  settlement  of the Liberty Life litigation and resolution of disputes
with  customers. The Consolidated Statements of Operations include these charges
as  follows  -

     Depreciation  and  amortization  of  property,  equipment  and  capitalized
software  costs:

     Depreciation  and  amortization  of  property,  equipment  and  capitalized
software  costs includes approximately $94.3 million of accelerated amortization
of  capitalized  software  development  costs.  In accordance with the Company's
accounting  policies  and  Statement  of  Financial Accounting Standards No. 86,
these  costs  were  determined  in  the  1999 third quarter to be unrecoverable.

     Amortization  of  goodwill  and  other  intangibles:

     Amortization  of goodwill and other intangibles includes approximately $6.1
million  of  impairment  charges  related  primarily  to  past  international
acquisitions.  These  impairment  charges  were  determined  in  the  1999 third
quarter  in  accordance  with the Company's accounting policies and Statement of
Financial  Accounting  Standards  No.  121.

     Restructuring  and  other  charges:

     Restructuring  and  other  charges  includes approximately $12.6 million of
cash  charges paid or to be paid as a result of initiatives taken by the Company
in  the  1999  third  quarter to eliminate costs through worldwide reductions in
force  and  space  requirements.

     The  remaining $9.6 million of cash charges relate to the settlement of the
Liberty  Life  litigation,  as  more fully discussed in Note 4. "Contingencies".

     Other  costs  and  expenses:

     Other  costs  and  expenses  include approximately $3.7 million of costs to
resolve  disputes  with  customers.

     Employee  compensation  and  benefits:

     Employee  compensation  and benefits includes approximately $0.6 million of
expatriate  taxes.

NOTE  4.     CONTINGENCIES

     On  September  23, 1999, the Company and Liberty Life Insurance Company and
certain  of  its  affiliates  ("Liberty") entered into a confidential settlement
agreement of previously disclosed litigation. (See Item 3, Legal Proceedings, of
Part  I contained in the Company's Annual Report on Form 10-K for the year ended
December  31,  1998.)  As a part of the settlement, both the Company and Liberty
agreed  to  release  the  other  from  all  claims  asserted and the lawsuit was
dismissed.  As  a result of the settlement the Company recorded a charge of $9.6
million  for  legal  expenses  associated  with  this  litigation.

On April 29, 1999, the Company received notice from the Internal Revenue Service
("IRS")  of  proposed  adjustments to its 1994, 1995 and 1996 federal income tax
returns.  Should  the  IRS  prevail  in  its  position,  a  charge  to income of
approximately  $16.3  million  would  result.  The  Company  strongly  disagrees

<PAGE>
with the proposed adjustments, believes it has meritorious arguments against the
proposed  adjustments  and  intends  to  vigorously  defend  its  position.

     In addition, there are various 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 5.     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  "property  and casualty").  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 "life and financial solutions").  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  and  outsourcing  to  the property and casualty and life
insurance  markets primarily in Europe, Asia, Australia, Canada, Central America
and  South  Africa.

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

5.  Life  information  services.  This  segment  provided  information services,
principally  physician  reports  and medical histories, to US life insurers.  It
was  sold  in  May  1998  and  is  included  in  discontinued  operations.

<PAGE>
Information  about  the Company's operations for the three and nine months ended
September  30,  1999  and  1998  is  as  follows  (in  thousands):
<TABLE>
<CAPTION>


                                             Three Months            Nine Months
                                           Ended September 30     Ended September 30
                                          ------------------     ------------------
                                             1999     1998         1999     1998
                                           ------   ------        ------   ------
REVENUES FROM EXTERNAL CUSTOMERS


<S>                                       <C>         <C>        <C>        <C>
Property and casualty. . . . . . . . . .  $  74,032   $ 69,832   $224,747   $203,580
Life and financial solutions . . . . . .     51,837     38,081    141,001    101,842
                                          ----------  ---------  ---------  ---------
Total US revenues. . . . . . . . . . . .    125,869    107,913    365,748    305,422
International. . . . . . . . . . . . . .     42,919     43,390    136,861    131,191
                                          ----------  ---------  ---------  ---------
  Total revenues from
     continuing operations . . . . . . .  $ 168,788   $151,303   $502,609   $436,613
                                          ==========  =========  =========  =========



Discontinued operations. . . . . . . . .  $       -   $      -   $      -   $ 11,968

(LOSS) INCOME FROM CONTINUING OPERATIONS
Property and casualty. . . . . . . . . .  $ (67,086)  $ 19,688   $(24,602)  $ 55,289
Life and financial solutions . . . . . .     (1,527)     9,558     17,517     24,049
Corporate and US administrative. . . . .    (12,129)   (10,000)   (28,373)   (23,678)
                                          ----------  ---------  ---------  ---------
  Total US operating (loss) income . . .    (80,742)    19,246    (35,458)    55,660
                                          ----------  ---------  ---------  ---------

International. . . . . . . . . . . . . .    (24,996)     5,234    (17,146)    16,104
International administrative . . . . . .     (1,952)    (2,051)    (5,594)    (6,112)
                                          ----------  ---------  ---------  ---------
  Total international. . . . . . . . . .    (26,948)     3,183    (22,740)     9,992
                                          ----------  ---------  ---------  ---------

  Operating (loss) income. . . . . . . .   (107,690)    22,429    (58,198)    65,652

Equity in earnings of
  unconsolidated affiliates. . . . . . .        320        129        609        567
Minority interest. . . . . . . . . . . .        (14)       (44)       (94)       (74)
Other income and expenses. . . . . . . .     (3,325)      (603)    (7,171)    (1,398)
Income tax (benefit) expense . . . . . .    (40,261)     8,740    (23,294)    24,727
                                          ----------  ---------  ---------  ---------
  (Loss)income from continuing
    operations . . . . . . . . . . . . .  $ (70,448)  $ 13,171   $(41,560)  $ 40,020
                                          ==========  =========  =========  =========

Discontinued operations
  Property and casualty. . . . . . . . .  $       -   $      -   $      -   $ (1,018)
  Life . . . . . . . . . . . . . . . . .          -          -          -      3,672
  Other income and expenses. . . . . . .          -          -          -        (27)
  Income taxes . . . . . . . . . . . . .          -          -          -     (2,691)
                                          ----------  ---------  ---------  ---------
  Discontinued operations, net . . . . .  $       -   $      -   $      -   $    (64)
                                          ==========  =========  =========  =========

<FN>

     The loss from continuing operations for the three and nine month periods ended
September 30, 1999 included special charges of approximately $126.9 million related
to the following business segments:  property and casualty ($85.9 million), life
($10.6 million), international ($26.8 million), and corporate ($3.6 million).
</TABLE>



<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, 1998.

                              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>

                                                                        1999 vs. 1998
                                                                            Percent
                                            Percentage of Revenues  Increase (Decrease)
                                          ------------------------  -------------------
                                             Three          Nine        Three       Nine
                                          Months Ended   Months Ended   Months     Months
                                          September 30   September 30   Ended      Ended
                                          ------------   ------------
                                           1999   1998    1999   1998     September 30
                                          -----  -----   -----  -----  --------------------


<S>                                       <C>      <C>     <C>     <C>     <C>     <C>
Revenues
 Licensing . . . . . . . . . . . . . . .    22.2%   20.8%   23.1%   20.5%     19%     29%
 Services. . . . . . . . . . . . . . . .    77.8    79.2    76.9    79.5     (10)    (12)
                                          -------  ------  ------  ------
                                           100.0   100.0   100.0   100.0      12      15
                                          -------  ------  ------  ------
Operating expenses
 Cost of revenues
  Employee compensation and benefits . .    46.6    43.0    45.5    44.2      21      19
  Computer & communication expenses. . .     7.5     7.2     7.2     6.1      16      36
  Depreciation & amortization
   of property, equipment &
   capitalized software costs. . . . . .    64.3    10.3    28.2    10.7     594     205
  Other costs & expenses . . . . . . . .     9.0     3.2     6.4     4.1     219      80
 Selling, general &
   administrative expenses . . . . . . .    17.3    17.2    16.6    17.3      12      10
 Amortization of goodwill and
   other intangibles . . . . . . . . . .     5.9     1.8     3.3     1.7     273     118
 Restructuring and other charges . . . .    13.2       -     4.4       -       -       -
 Acquisition related charges . . . . . .       -     2.5       -      .9       -       -
                                          -------  ------  ------  ------
                                           163.8    85.2   111.6    85.0     115      51
                                          -------  ------  ------  ------
Operating (loss) income. . . . . . . . .   (63.8)   14.8   (11.6)   15.0    (580)   (189)
Equity in earnings of unconsolidated
   affiliates. . . . . . . . . . . . . .     0.2     0.1     0.1     0.1     148       7
Other income and expenses. . . . . . . .    (2.0)   (0.4)   (1.4)   (0.3)    451     413
                                          -------  ------  ------  ------
(Loss) income from continuing operations
  before income taxes. . . . . . . . . .   (65.6)   14.5   (12.9)   14.8    (605)   (200)
Income tax (benefit) expense . . . . . .   (23.9)    5.8    (4.6)    5.6    (560)   (194)
                                          -------  ------  ------  ------
(Loss) income from continuing operations   (41.7)    8.7    (8.3)    9.2    (634)   (204)
Discontinued operations, net . . . . . .       -       -       -       -       -       -
                                          -------  ------  ------  ------
Net (loss) income. . . . . . . . . . . .  (41.7)%    8.7%  (8.3)%    9.2%  (634)%  (204)%
                                          =======  ======  ======  ======


</TABLE>


<PAGE>
                             THREE MONTH COMPARISON

REVENUES
<TABLE>
<CAPTION>

                                  Three Months
                               Ended September 30,
                              -------------------
  Licensing                   1999    1998   Change
                             -----   -----   ------
                             (Dollars in millions)


<S>                           <C>     <C>     <C>
Initial charges. . . . . . .  $19.2   $14.7   31%
Monthly charges. . . . . . .   18.1    16.8    8
                              ------  ------
Total licensing revenues . .   37.3   $31.5   18%
                              ======  ======

Percentage of total revenues   22.1%   20.8%
                              ------  ------
</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  charges  increased  $4.6 million for the third quarter of
1999  compared  with  the third quarter of 1998, with the following increases by
business  segment:  property  and  casualty  up  122%  ($5.6  million) primarily
related  to  Point,  internet  and claims products; life and financial solutions
down 19% ($1.1 million) with increases in life enterprise systems licensing more
than offset by weak licensing of lending products; and international up 2% ($0.1
million).

Initial  license  charges  for the third quarter of 1999 include $2.0 million of
right-to-use licenses.  This compares with $2.7 million in right-to-use licenses
for  the third quarter of 1998.  Right-to-use licenses represent the acquisition
by  certain  customers  of the right-to-use component of their remaining monthly
license  charge  obligation,  if  any,  plus  the  acquisition  of  a  perpetual
right-to-use the product thereafter.  Since these types of licenses represent an
acceleration of future revenues, they reduce future monthly license charges. The
Company  expects the occurrences of right-to-use licenses will be reduced in the
future.

Monthly  license  charges  increased  $1.3 million for the third quarter of 1999
compared  with  the  third  quarter  of  1998  with  the  following increases or
decreases  by business segment: property and casualty down 7% ($0.6 million) due
to  weak  1998  licensing  and  the  effect  of  right-to-use licenses; life and
financial  solutions  up  32%  ($1.2  million)  on  strong  1998 initial license
activity;  and  international up 18% ($0.7 million) principally due to increased
licensing  revenues  in  the  United  Kingdom and the Asia/Pacific region during
1998.

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

<PAGE>
license  revenues for the last eight quarters expressed as a percentage of total
revenues  for  each  of  the  periods  presented:

                                   1999                  1998           1997
                          ------------------ -------------------------- ----
                             3rd   2nd   1st   4th    3rd    2nd   1st  4th
                          ------------------ ------------------------- ----
                                          (Dollars in millions)

Initial license revenues  $19.2  $25.6  $18.7  $27.3  $14.7  $13.0  $12.6  $25.1
% of total revenues        11%    15%    12%    16%    10%     9%     9%    17%

     The  increasing  rate  of  change  in  the insurance and banking industries
coupled  with  the rapid evolution of eCommerce technology and the volatility of
initial  license  revenues,  as  illustrated  by the above table, is leading the
Company  to  consider  new  business  models that place less emphasis on initial
license  revenue  and  place  more  emphasis  on  transaction based revenue. The
Company  expects  this transition to occur gradually over the next several years
and  will  likely  affect  the  amount  and  timing of revenue recognized in the
Company's  financial  statements.

<TABLE>
<CAPTION>

                                  Three Months
                                Ended September 30,
                               -------------------
  Services                      1999    1998   Change
                               -----   -----   ------
                               (Dollars in millions)

<S>                           <C>      <C>      <C>
Professional and ITO . . . .  $104.6   $106.0    (1)%
Business Process Outsourcing    26.2     12.6   108 %
Other. . . . . . . . . . . .     0.6      1.3   (54)%
                              -------  -------
Total Services . . . . . . .  $131.4   $119.9    10 %
                              =======  =======

Percentage of total revenues    77.9%    79.2%
                              -------  -------
</TABLE>



Total  Services  revenues  increased $11.5 million for the third quarter of 1999
compared  with  the  third  quarter  of  1998,  with  the following increases or
decreases  by  business  segment:  property  and casualty down 1% ($0.8 million)
with  declines in implementation related professional services due to the effect
of  weak  1998  licensing  and  the  redeployment  of  staff from customers' Y2K
projects  ending  late last year partially offset by a 25% increase in BPO; life
insurance  and  financial  solutions  up  48%  ($13.6  million)  reflecting
approximately  12% growth in traditional professional services and strong growth
in  BPO; and international down 4% ($1.3 million) with increases in Europe being
offset  by  decreases  in  the  Asia/Pacific  region.

OPERATING  EXPENSES

COST OF REVENUES

     Employee  compensation  and benefits increased 21% for the third quarter of
1999  compared  with  the  third  quarter  of  1998.  The  net  increase results
principally  from  higher  salary  costs  in  property  and  casualty  and  life
professional  services  and the costs associated with growth in staffing in fast
growing  areas  such  as  claims,  lending,  eCommerce and BPO. Compensation and
benefits  increased  11%  ($2.1 million) internationally and 25% ($11.5 million)
domestically.

<PAGE>
Computer and communications expenses increased 16% for the third quarter of 1999
compared with the third quarter of 1998. This increase is principally the result
of  increased:  communications  volumes;  network  and  PC related expenses; and
license  fees  for  data  center  operating  software.

Depreciation  and  Amortization  increased  significantly  over  the  1998 third
quarter  principally  due  to  the  write-off  or write-down of certain software
described  below  under "Special charges". Excluding these charges, depreciation
and amortization decreased 9% as a result of the 1999 third quarter benefit from
the  write-offs  partially  offset by increased software amortization related to
product  releases  during  the  last twelve months and increased depreciation of
property  and  equipment.  As  a  percentage  of  revenue,  depreciation  and
amortization,  excluding  special  charges, decreased to 8% from 10% in the 1998
third  quarter.

     Other  operating  costs  and expenses increased approximately $10.5 million
over  the  1998  third  quarter  primarily  due to approximately $3.7 million of
charges  related to the resolution of customer disputes.  The remaining increase
is  due to rent on new facilities, higher non-billable travel, and a decrease in
the  amounts  capitalized  related  to  software  and  internal  use  systems.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative expenses increased 12% for the third
quarter of 1999 compared with the third quarter of 1998, but remained relatively
unchanged  as  a  percentage  of  revenue.

AMORTIZATION  OF  GOODWILL  AND  OTHER  INTANGIBLES

     Amortization of goodwill and other intangibles increased significantly over
the 1998 third quarter principally due to the write-off or write-down of certain
acquisition  intangibles  discussed  below  under  "Special charges". Before the
effect  of these charges, amortization of goodwill and intangibles increased 47%
due  to  the  acquisitions  of  The Leverage Group, Inc. in the third quarter of
1998,  and  Legalgard,  Dorn  and  FAS  in  prior  1999  quarters.

SPECIAL  CHARGES

     The  Company considers special charges to include unusual events or unusual
transactions  related  to  continuing  business  activities.

     During  the  1999  third  quarter, the Company commenced assessments of all
major  aspects  of  its  business  based  upon  the increasing rate of change in
technology  in  its  marketplace  due  to the internet and the rapid adoption of
eCommerce. In addition, the Company also initiated a number of international and
domestic restructuring and cost reduction initiatives.  This assessment included
various  international  and domestic intangibles and capitalized software costs.


<PAGE>
As  a  result  of  actions  taken  in  the  1999 third quarter, the Consolidated
Statements  of  Operations  includes  special  charges  of  approximately $126.9
million  as  follows  -

     Depreciation  and  Amortization  of  property,  equipment  and  capitalized
software  costs:

     Depreciation  and  amortization  of  property,  equipment  and  capitalized
software  costs  includes  approximately  $94.3 million of non-cash, accelerated
amortization  of  capitalized software development costs that were determined in
the  1999  third  quarter  to  be  unrecoverable.

     Approximately  $77.6  million  of  this  amount  relates  to several of the
Company's  software  products  that  use  third party technology that is rapidly
becoming  obsolete.  The  single largest component of this charge relates to IBM
OS/2  components  of  Series III , which will no longer be marketed.  The second
largest  component  relates  to  out-of-date,  mainframe,  batch  processing
technology.  The  remainder  relates  to  several  products  based  on  older
programming  languages  that  will  not  be  marketed  in  the  future.

     The  remaining  $16.7  million  of  the  $94.3  million  of  accelerated
amortization  relates  to  other  products  that  will no longer be marketed for
numerous  reasons  unrelated  to  technological  change.

     Of  the  total  $94.3  million,  $77.6  million relates to the property and
casualty  group  and  $16.7  million  relates  to  the  international  group.

The  Company  has  ceased marketing the written-off or written-down products and
any  future cost associated with the continued support of these products will be
expensed  as  incurred.

     The amount of these charges was determined in accordance with the Company's
accounting  policies  and  Statement  of  Financial Accounting Standards No. 86.
Following  the  Company's  third  quarter  decision  to  cease  marketing  these
products,  the  Company  determined  the  estimated net realizable value of each
product.  If  net  book value exceeded net realizable value, then net book value
was  reduced  to  its  estimated  net  realizable  value.

     Amortization  of  goodwill  and  other  intangibles:

     Amortization  of goodwill and other intangibles includes approximately $6.1
million  of  accelerated amortization of intangibles that were determined in the
1999  third  quarter  to be impaired in accordance with the Company's accounting
policies  and  Statement  of  Financial  Accounting  Standards  no.  121.  These
intangibles  relate  primarily  to past international acquisitions for which the
Company  estimates  projected net cash flows will not be adequate to recover its
unamortized  investments.


<PAGE>
Restructuring  and  other  charges:

     Restructuring  and  other  charges,  which  are  discussed  below,  may  be
summarized  as  follows  as  of  September  30,  1999  (in  millions)  -

<TABLE>
<CAPTION>

                      1999
                     Third
                    Quarter          To Be
                    Charges   Paid   Paid
                    -------- ------ ------

<S>                  <C>    <C>   <C>
Facilities. . . . .  $ 5.3  $  -  $ 5.3
Personnel . . . . .    7.3   2.2    5.1
Litigation. . . . .    9.6   6.7    2.9
                     -----  ----  -----

Total restructuring
  and other charges  $22.2  $8.9  $13.3
                     =====  ====  =====

</TABLE>



     Restructuring  and  other  charges  includes approximately $12.6 million of
cash  charges paid or to be paid as a result of initiatives taken by the Company
in  the  1999  third  quarter to eliminate costs through worldwide reductions in
force  and space requirements. Approximately $7.3 million of this amount relates
to  benefits payable to staff who were terminated. Approximately $5.3 million of
this  amount  relates to minimum lease obligations remaining on vacated offices,
reduced  by estimated sublease income.  The charges related primarily to actions
taken  in  the  property  and  casualty  and  international  business  groups.

     The  remaining  approximately  $9.6  million of cash charges relates to the
settlement  of  the  Liberty  Life  litigation.     On  September  23, 1999, the
Company  and  Liberty  Life  Insurance  Company  and  certain  of its affiliates
("Liberty")  entered  into  a  confidential  settlement  agreement of previously
disclosed litigation. (See Item 3, Legal Proceedings, of Part I contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.) As a
part of the settlement, both the Company and Liberty agreed to release the other
from  all  claims  asserted  and  the  lawsuit was dismissed. As a result of the
settlement  the  Company  recorded  a  loss  of  $9.6 million for legal expenses
associated  with  this  litigation.

     Other  costs  and  expenses:

     Other  costs  and  expenses includes approximately $3.7 million of costs to
resolve  disputes  with  customers.

     Employee  compensation  and  benefits:

     Employee  compensation  and benefits includes approximately $0.6 million of
expatriate  taxes.

OPERATING INCOME (LOSS)

     The  1999  third  quarter  produced  an  operating  loss  of $107.6 million
compared with the 1998 third quarter operating income of $22.4 million resulting
primarily  from  the  write-off  or  write-down of certain software, intangibles
related  to  business acquisitions and restructuring and other charges described
above,  Before  these  charges,  1999  third  quarter  operating

<PAGE>
income  decreased  26%  compared with the 1998 third quarter.  Also before these
charges,  decreases  in  segment  operating  income  were: property and casualty
decreased  5%,  life  and  financial  solutions  decreased  5% and international
decreased  65%  (see  discussion  of "Revenues" and "Operating Expenses" above).

OTHER INCOME AND EXPENSE

     Other  income  and expense is comprised primarily of interest expense which
increased  $2.6  million  for  the third quarter of 1999 compared with the third
quarter  of  1998. This increase is due to higher levels of borrowed funds under
the  Company's  credit  facilities  which  were  incurred principally to finance
business  acquisitions  and  repurchases  of  the  Company's  stock during prior
periods.  The  average  nominal interest rate applicable to borrowings under the
Company's  credit  facilities  during  the  third  quarter  of  1999  was  5.7%.

INCOME  TAXES

The  effective income tax (benefit) rate (income taxes expressed as a percentage
of  pre-tax income) on continuing operations including special charges was 36.4%
and  39.9%  for  the third quarter of 1999 and 1998, respectively. The effective
income  tax  rate  on continuing operations before special charges was 33.1% for
the  third  quarter  of  1999.

The  effective  income  tax rate on continuing operations before special charges
for  the  third quarter of 1999 was lower than the federal statutory rate of 35%
principally  due  to  the  effect  of  foreign  income  taxes from operations in
countries  with  tax  rates  lower  than  the  United  States.

                              NINE MONTH COMPARISON

REVENUES
<TABLE>
<CAPTION>

                             Nine Months
                            Ended September 30,
                           -------------------
  Licensing                 1999    1998   Change
                            -----   -----   ------
                            (Dollars in millions)

<S>                           <C>      <C>     <C>
Initial charges. . . . . . .  $ 63.5   $40.3   58%
Monthly charges. . . . . . .    52.3    49.4    6
                              -------  ------
Total licensing revenues . .  $115.8   $89.7   29%
                              =======  ======

Percentage of total revenues    23.0%   20.5%
                              -------  ------
</TABLE>

     Initial  license revenues increased $23.2 million for the first nine months
of  1999  compared  with  the  first  nine  months  of  1998, with the following
increases  by  business  segment:  property and casualty up 163% ($21.3 million)
with  increases  in Point, internet and claims products, one new S3+ license and
two  S3+  license  expansions, combined with increased revenue from right-to-use
transactions; life and financial solutions up 7% ($0.9 million)with increases in
life  enterprise  system licenses offset partially by declines in lending system
licenses;  and  international up 7% ($1.0 million) with increases in continental
Europe  offset  partially by declines in the United Kingdom and the Asia/Pacific
region.

<PAGE>
Initial  license  charges for the first nine months of 1999 include right-to-use
licenses  of  $13.7 million compared with $9.7 million for the first nine months
of  1998.  Right-to-use  licenses represent the acquisition by certain customers
of  the  right-to-use  component  of  their  remaining  monthly  license  charge
obligation, if any, plus the acquisition of a perpetual right-to-use the product
thereafter.  Since  these  types of licenses represent an acceleration of future
revenues,  they  reduce  future monthly license charges. The Company expects the
occurrence  of  right-to-use  licenses  will  be  reduced  in  the  future.

     Initial license charges for the first three quarters of 1999 include a $2.9
million  license  with  the  former owners of Legalgard. In addition, the former
owners  of  FAS  licensed  several of the Company's life and financial solutions
products  for  $2.0  million.

     Two  remarketing  agreements  for  the  Claims  Outcome  Advisor  ("COA  ")
product,  totaling  $3.5 million, are included in initial licensing revenues for
the first nine months of 1999. These non-exclusive agreements provide two of the
Company's  nationally  recognized  vendors  the  right  to re-license COA to the
self-insured market. The Company also renegotiated an extension to its long-term
license  agreement for operating software used in the Company's data center with
one  of  these  vendors.

Initial  license  charges for the first three quarters of 1999 also include $2.6
million  of  revenue  from  the  sale  of  hardware remarketed by the Company in
conjunction  with  licenses  of  its  software.

     Monthly license charges increased $2.9 million for the first nine months of
1999 compared with the first nine months of 1998 with the following increases or
decreases  by  business  segment:  property and casualty down 12% ($3.3 million)
due  to  weak  1998  licensing and the effect of right-to-use licenses; life and
financial  solutions  up  43%  ($4.5  million)  on  strong  1998 initial license
activity;  and  international up 14% ($1.7 million) principally due to increased
licensing  activity  in  1998.

<TABLE>
<CAPTION>

                                Nine Months
                              Ended September 30,
                             -------------------
  Services                    1999    1998   Change
                              -----   -----   ------
                               (Dollars in millions)


<S>                           <C>       <C>     <C>
Professional and ITO . . . .  $  325.6   $310.4    5%
Business Process Outsourcing      58.4     33.0   77
Other. . . . . . . . . . . .       2.8      3.5  (20)
                              --------  ------
Total Services . . . . . . .  $  386.8   $346.9   12%
                              ========  ======  ======

Percentage of total revenues   77.0%    79.5%
                              ---------------
</TABLE>



Total  Services  revenues  increased  $39.9 million for the first nine months of
1999  compared  with the first nine months of 1998, with the following increases
by  business  segment:  property  and  casualty  up  2% ($3.2 million) with a 6%
decline  in  professional  and  ITO  services  offset by a 44% rise in BPO; life
insurance  and financial solutions up 43% ($33.8 million) with a 27% increase in
professional  and  ITO  services  enhanced  by  a  185%  increase  in  BPO;

<PAGE>
and international up 3% ($2.9 million) all in professional and ITO services. The
rise  in  BPO  revenue  reflects  increased  volume  with  existing  customers.

OPERATING EXPENSES

COST OF REVENUES

     Employee  compensation and benefits increased 19% for the first nine months
of  1999  compared  with the first nine months of 1998. The net increase results
principally  from  higher  salary  costs  in  property  and  casualty  and  life
professional  services, and the costs associated with growth in staffing in such
fast  growing  areas as claims, lending, eCommerce and BPO. These increases were
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. Compensation and benefits increased 13% ($7.6
million)  internationally  and  21%  ($29.0  million)  domestically.

Computer  and communications expenses increased 36% for the first nine months of
1999  compared with the first nine months of 1998. At the beginning of the third
quarter  of  1998,  the company entered into a data center outsourcing agreement
with  Lockheed  Martin  entered  into  June 30, 1998. As a result, certain costs
previously  included  in  employee compensation and benefits are now included in
computer  and  communication expense. The savings from the outsourcing agreement
were offset due primarily to increases in communications volumes, network and PC
related  expenses and increased license fees for data center operating software.

Depreciation  and Amortization increased significantly for the first nine months
of  1999  compared  with  the  first  nine months of 1998 principally due to the
write-off  or  write-down  of  certain  software  described below under "Special
charges".  Excluding  these  charges, depreciation and amortization increased 2%
due  to  increased  software amortization related to product releases during the
last  twelve  months  and  increased  depreciation  of  property  and  equipment
partially offset by the benefit of the third quarter charges. As a percentage of
revenue, depreciation and amortization, excluding the charges decreased to 9% of
revenue  from  11% in the first nine months of 1999 compared with the first nine
months  of  1998.

Other  operating  costs  and expenses increased 80% for the first nine months of
1999  compared  with  the  first  nine  months  of 1998, due to the inclusion of
approximately $3.7 million of charges related to the resolution of disputes with
customers  and  $2.4 million of costs for computer hardware sold to customers in
conjunction  with  software  licenses  in  which  the  corresponding  revenue is
included  in  initial  licensing  revenue.  Other  increases  for the first nine
months of 1999 include rent on new facilities, higher non-billable travel, and a
decrease  in  the  capitalization  of  software  and internal use systems costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative expenses increased 10% for the first
nine  months  of  1999 compared with the first nine months of 1998, but declined

<PAGE>
slightly  as  a  percentage  of  revenue.

AMORTIZATION  OF  GOODWILL  AND  OTHER  INTANGIBLES

     Amortization of goodwill and other intangibles increased 118% for the first
nine months of 1999 compared with the first nine months of 1998, principally due
to  the  impairment  charges  recorded  in the third quarter which are described
above  under  "Special  charges". Amortization related to the acquisition of The
Leverage Group, Inc. in the third quarter of 1998 and Legalgard, Dorn and FAS in
prior  1999  quarters  also  contributed  to  the  increase.

SPECIAL  CHARGES

   As  discussed  under  "Three  Month  Comparison" the Company recorded special
charges  of  approximately  $126.9  million  in  the  1999  third  quarter.

OPERATING  INCOME  (LOSS)

     The  1999  nine  month  period  produced an operating loss of $58.2 million
compared  with  the  1998  operating income of $65.7 million resulting primarily
from  the  write-off  or  write-down of certain software, intangibles related to
business  acquisitions  and  restructuring, and other charges described above in
"Special  charges".  Before  these  charges, operating income for the first nine
months  of  1999  decreased 1% compared with the first nine months of 1998. Also
before  these  charges, increases or decreases in segment operating income were:
property  and casualty increased 11%, life and financial solutions increased 17%
and  international  decreased  40%  (see discussion of "Revenues" and "Operating
Expenses"  above).

OTHER INCOME AND EXPENSE

     Other  income  and expense is comprised primarily of interest expense which
increased $5.3 million for the first nine months of 1999 compared with the first
nine  months  of  1998, principally due to higher levels of borrowed funds under
the  Company's  credit facility to finance business acquisitions and repurchases
of  the  Company's  stock.  The  average  nominal  interest  rate  applicable to
borrowings  under  the Company's credit facility during the first nine months of
1999  was  5.4%.

INCOME  TAXES

     The  effective  income  tax  (benefit)  rate  (income  taxes expressed as a
percentage of pre-tax income) on continuing operations including special charges
was  35.9%  and  38.2%  for  the  nine months ended September 30, 1999 and 1998,
respectively.

The  effective  income  tax rate on continuing operations before special charges
was  36.0%  for  the nine months ended September 30, 1999.  The effective income
tax  rate  decreased 2.3% for the first nine months of 1999 compared to the same
period  in  1998,  principally  due  to  the effect of foreign income taxes from
operations  in  countries  with  tax  rates  lower  than  in  the United States.

<PAGE>
                         LIQUIDITY AND CAPITAL RESOURCES

<TABLE>
<CAPTION>

                               September 30, December 31,
                                   1999         1998
---------------------------------------------------------
                                   (Dollars in millions)


<S>                                  <C>     <C>
Cash and equivalents and marketable
  securities. . . . . . . . . . . .  $ 29.1  $ 26.0
Current assets. . . . . . . . . . .   251.0   217.2
Current liabilities . . . . . . . .   110.1    98.9
Working capital . . . . . . . . . .   140.9   118.3
Long-term debt. . . . . . . . . . .   202.0    85.0
</TABLE>


<TABLE>
<CAPTION>

                                              Nine Months Ended
                                                 September 30,
                                              1999         1998
-----------------------------------------------------------------
                                          (Dollars in millions)


<S>                                           <C>       <C>
Cash provided by operations. . . . . . . . .  $  59.3   $ 79.6
Cash (used) by investing activities. . . . .   (150.0)   (94.2)
Cash provided (used) by financing activities     93.6     (1.7)
</TABLE>



     The Company's current ratio (current assets divided by current liabilities)
stood at 2.3 at September 30, 1999, which management believes is sufficient when
combined  with  available  credit facilities to provide for day-to-day operating
needs  and  the  flexibility  to take advantage of investment opportunities.  At
September 30, 1999, the Company had $240 million of committed and $20 million of
uncommitted  credit facilities available to it, of which $230.4 million had been
utilized.  On  November  5, 1999 the Company entered into a new committed credit
facility of $70 million replacing $40 million of the $240 million bringing total
committed  to  $270  million.  In  addition, the Company reduced its uncommitted
facility  to  $5  million.

During the nine months ended September 30, 1999 the Company capitalized software
development  costs  of  $50.5 million, principally related to the development of
its  property  and casualty, life and international enterprise software products
and  claims,  eCommerce  and  banking  solutions.

Significant  expenditures  anticipated  for the remainder of 1999, excluding any
possible  business  acquisitions  or  common  stock repurchases, are as follows:
acquisition of computer and communications equipment, support software, 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, capital expenditures, 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.


<PAGE>
                     FACTORS THAT MAY AFFECT FUTURE RESULTS

     The  Company's operating results and financial condition may 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 and financial solutions industries. Significant
changes in the regulatory or market environment of these industries could impact
demand  for the Company's software products and services. Additionally, there is
increasing competition for the Company's products and services, and there can be
no  assurance  that  the  Company's  current  products  and services will remain
competitive,  or  that  the  Company's development efforts will produce products
with  the  cost and performance characteristics necessary to remain competitive.
Furthermore, the market for the Company's products and services is characterized
by  rapid  changes  in  technology and the emergence of the Internet as a viable
insurance  distribution  channel.  In  response  to these changes the Company is
continually  reassessing  and  challenging all major aspects of its business for
the  purpose  of  evaluating  whether it is correctly positioned to maximize its
potential.  The  Company's success will depend on the level of market acceptance
of  the  Company's  products,  technologies and enhancements, and its ability to
introduce such products, technologies and enhancements to the market on a timely
and  cost  effective  basis,  and maintain a labor force sufficiently skilled to
compete  in  the  current  environment.

     The  timing and amount of the Company's revenues are subject to a number of
factors,  such as the timing of customers' decisions to enter into large license
agreements with the Company, which make estimation of operating results prior to
the end of a quarter or year extremely uncertain. Additionally, while management
believes  that  the Company's financing needs for the foreseeable future will be
satisfied  from  cash flows from operations and the Company's currently existing
credit  facilities, 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.

A  significant portion of both the Company's revenue and its operating income is
derived  from  initial  licensing  charges  received  as  part  of the Company's
software  licensing activities.  Because a substantial portion of these revenues
is  recorded  at  the  time  new  systems are licensed, there can be significant
fluctuations  from period to period in the revenues and operating income derived
from  licensing  activities.  This  is attributable principally to the timing of
customers'  decisions  to  enter into license agreements with the Company, which
the  Company  is  unable  to  control.  The  Company  believes  that current and
potential customers' decisions to enter into license agreements with the Company
may  be  significantly affected by strategies to make their existing information
systems  capable of handling the year 2000, however, at this time the Company is
unable  to  predict  what  the  future  impact,  if  any, will be. The Company's
licensing  revenues  have  included significant amounts of right-to-use licenses
and  the Company expects the occurrence of these licenses will be reduced in the
future.

<PAGE>
The  increasing  rate  of change in the insurance and banking industries coupled
with  the  rapid evolution of eCommerce technology and the volatility of initial
licensing  revenue  is  leading the Company to consider new business models that
place  less emphasis on initial license revenue and more emphasis on transaction
based  revenue.  The Company expects this transition to occur gradually over the
next  several  years  and  will  likely  affect the amount and timing of revenue
recognized  in  the  Company's  financial  statements.

     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.

The  following  seven  phases  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 remediation requirements for each component in order of
business  risk  prioritization  determined  during  Triage.
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. Subjecting customer products and internal systems that the Company
relies upon to support its business to tests designed to identify issues related
to  date calculations, functions and routines that are affected by the Year 2000
change.  Such  tests  include  both  system and integrated tests in environments
with  machine  dates advanced to dates in the years 1999 and 2000 ("Time Machine
Environment").
     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

<PAGE>
taking  care  of  residual activities.  This phase also includes the compilation
and  retention of supporting documentation that conforms to prescribed corporate
standards.

     The  Company  has  substantially  completed  all  related  tasks within the
project  phases  presented  above.  A  small  amount  of  product  re-testing to
adequately address discrepancies identified during Time Machine testing remains.
These tests are expected to be completed in November.  The Company will continue
to  remediate  products  based on vendor compliance updates as they are released
and will continue to perform redundant tests on hardware and software until year
end.

     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, into, and beyond the Year 2000. Tests performed on these
primary  products have confirmed the ability of these applications to accurately
process  data  in  both  centuries.  Additional  testing  on  the Company's base
products  was  completed  during  the  first  half  of  1999  in  a Time Machine
Environment.  This  additional  testing  has  sought  to  confirm  that  no
unanticipated  problems  will  occur  due to third party products with which the
Company's  applications  are  designed  to  operate.

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

     The  Company  has  completed  Year  2000  application  code remediation for
customers  who  will  be  Business  Process  Outsourcing  ("BPO")/Information
Technology  Outsourcing ("ITO Services") customers after December 31, 1999. Live
customer  data  that  spans  Year  2000  thresholds  is currently, and has been,
successfully  processed  by  these  remediated  applications  in  production
environments.  Additionally,  subsequent  tests  have been performed on customer
products  and  additional  redundant testing will continue to occur in Year 2000
Time  Machine  Environments  until  year  end  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, assessments, remediation, and testing
efforts  in  order  to satisfy Year 2000 requirements.  Redundant tests for Year
2000  compliance  of  the hardware and operating software in the Blythewood data
center  will  continue  until  year  end.

     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 Lockheed Martin.  The Company's Australian and
European  data centers have completed their inventory and assessment of hardware
and  operating  software for Year 2000 requirements. Finalization of the project
for  all  data  centers  is  substantially  complete.

<PAGE>
Re-tests  of software will continue until year end 1999, as will the application
of  upgrades  to third party products when additional enhancements and fixes are
released.

     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  financial  components of the selected solution are
operational;  however,  only  limited  human  resources  functionality  has been
implemented  at  this  time.  The  human  resources  functionality of the legacy
systems  that  remain  have  been  tested  and  verified  to be Year 2000 ready.

     The  Company  has  inventoried, assessed and remediated its networks and PC
hardware and software as required. The Company has also completed assessment and
remediation  of non-IT systems that 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").  Mission critical
suppliers  and  trading partners have been identified and tests of most of these
interfaces,  to  the  extent  practical,  have  been  performed  in  a Year 2000
environment.  The  Company's  ability  to  influence  cooperation  is  partially
dependent  on  the significance of the Company's relationship with its suppliers
and  trading  partners  and  their  willingness  to share such information.  The
Company  has  completed  this  phase  of  its  Year  2000  readiness  project.

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

     Since  1993, the Company estimates that it has incurred approximately $21.3
million  of  costs in addressing Year 2000 remediation issues. These remediation
costs  were  funded  by  operations and the Company does not expect to incur any
additional  costs  for  the  remainder  of  the  year.

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

The  Company's  products  are  designed  to  be used with and require the 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.
Furthermore,  there  is  a general uncertainty inherent in the Year 2000 problem
stemming,  in  part,  from  the  uncertainty  of  the  Year  2000  readiness  of
third-party  suppliers  and  the  Company's customers and prospective customers.
For  these  reasons,  the  Company  is  unable  to  determine  at  this  time

<PAGE>
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 will continue to modify and finalize contingency and staffing plans
for  worldwide  coverage,  as  applicable,  until  year  end.

     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"  above.


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  4, 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  filed  a  report  under  Item  5  Other  Events on October 5, 1999
disclosing that it expected third quarter earnings to be in the range of $.31 to
$.36  per  share  before  special  and  restructuring  charges.  No  financial
statements  were  filed  with  this  8-K.

<PAGE>








                      POLICY MANAGEMENT SYSTEMS CORPORATION


                                   SIGNATURES


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


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




Date:  November 12, 1999           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  September  2,  1999
incorporating  all  amendments  thereto  subsequent  to  July  19,  1994  (filed
herewith)

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.     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)

B.     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)

C.     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)

D.     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)

E.     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)

F.     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)

G.     Stock  Option/Non-Compete  Form  Agreement  for  named executive officers
together  with  schedule  identifying  particulars  for  each  named

<PAGE>
executive  officer  (filed  as  an  Exhibit  to  Form 10-Q for the quarter ended
September  30,  1992,  and  is  incorporated  herein  by  reference)

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

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

J.     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)

K.     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)

L.     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)

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

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

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

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

Q.     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)

R.     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)

S.     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)

<PAGE>

     T.     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)

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

     V.     Employment  Agreement  Form  dated  November  7,  1996  for  Messrs.
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)

W.     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)

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

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

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

AA.     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  Quarter  ending  September 30, 1997 and is
incorporated  herein  by  reference)

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

CC.     Policy  Management  Systems  Corporation Restricted Stock Ownership Plan
(filed  as  an  Exhibit to Form 10-Q for Quarter ended September 30, 1998 and is
incorporated  herein  by  reference)

DD.     Form  of  Restricted  Stock  Award  Agreement dated August 11, 1998 with
Messrs.  Berkeley,  Feddersen,  Palms,  Sargent,  Seibels  and Trub (filed as an
Exhibit  to  Form  10-Q for Quarter ended September 30, 1998 and is incorporated
herein  by  reference)

<PAGE>

EE.     Employment  Agreement  with  Michael  W. Risley dated February 23, 1999,
effective November 10, 1998 (filed as an Exhibit to Form 10-K for the year ended
December  31,  1998  and  is  incorporated  herein  by  reference)

FF.     Form  of  Restricted  Stock  Award  Agreement  dated  March 1, 1999 with
Messrs.  Berkeley,  Feddersen,  Palms,  Sargent,  Seibels  and Trub (filed as an
Exhibit  to  Form  10-Q  for  Quarter  ending March 31, 1999 and is incorporated
herein  by  reference)

GG.     Form  of  Restricted  Stock Award Agreement for named executive officers
together  with schedule identifying particulars for each named executive officer
(filed  as  an  Exhibit  to  Form  10-Q for Quarter ending March 31, 1999 and is
incorporated  herein  by  reference)

HH.     Stock  Option/Non-Compete  Form  Agreement  for named executive officers
together  with schedule identifying particulars for each named executive officer
(filed  as  an  Exhibit  to  Form  10-Q  for Quarter ending June 30, 1999 and is
incorporated  herein  by  reference)

II.     Stock Option/Non-Compete Form Agreement with Michael W. Risley dated May
11,  1999 (filed as an Exhibit to Form 10-Q for Quarter ending June 30, 1999 and
is  incorporated  herein  by  reference)

     JJ.     Form  of 1999 Bonus Plan for named executive officers together with
schedule  identifying  particulars for each named executive officer (filed as an
Exhibit to Form 10-Q for Quarter ending June 30, 1999 and is incorporated herein
by  reference)

     KK.     Promissory  Note  dated  July  21,  1999  between Policy Management
Systems  Corporation  and  First  Union  National  Bank  (filed  herewith)

27.     FINANCIAL  DATA  SCHEDULE

     A.     Filed  herewith
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{"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": "99750231"}, "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, 1999
                         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.

        35,572,006 Common shares, $.01 par value, as of November 5, 1999.

     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, 1998.
POLICY MANAGEMENT SYSTEMS CORPORATION

                                      INDEX

PART  I.  FINANCIAL  INFORMATION

                                                        PAGE
Item  1.  Financial  Statements
Consolidated Statements of Operations for the Three and
Nine Months Ended September 30, 1999 and 1998 . . . . .   3

Consolidated Balance Sheets as of September 30, 1999
and December 31, 1998 . . . . . . . . . . . . . . . . .   4

Consolidated Statements of Changes in Stockholders'
Equity and Comprehensive Income for the Nine
Months Ended September 30, 1999 . . . . . . . . . . . .   5

Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1999 and 1998 . . . . .   6

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

Item 2. Management's Discussion and Analysis of
  Financial Condition and Results of Operations . . . .  12

PART II. OTHER INFORMATION

Item 1. Legal Proceedings . . . . . . . . . . . . . . .  28

Item 6. Exhibits and Reports on Form 8-K. . . . . . . .  28

Signatures. . . . . . . . . . . . . . . . . . . . . . .  29
PART I
                                 FINANCIAL INFORMATION
                         POLICY MANAGEMENT SYSTEMS CORPORATION
                         CONSOLIDATED STATEMENTS OF OPERATIONS
                                      (Unaudited)

                                                 Three Months         Nine Months
                                             Ended September 30,     Ended September 30,
                                             -------------------     -------------------
                                                1999       1998       1999       1998
                                              ------     ------     ------     ------
                                              (In thousands, except per share data)
Revenues
 Licensing. . . . . . . . . . . . . . . .  $  37,383   $ 31,454   $115,846   $ 89,694
 Services . . . . . . . . . . . . . . . .    131,405    119,849    386,763    346,919
                                           ----------  ---------  ---------  ---------
                                             168,788    151,303    502,609    436,613
                                           ----------  ---------  ---------  ---------

Operating expenses
 Cost of revenues
  Employee compensation and benefits. . .     78,686     65,117    228,796    193,084
  Computer and communications expenses. .     12,644     10,892     36,275     26,612
  Depreciation and amortization of
   property, equipment and
   capitalized software costs . . . . . .    108,543     15,647    141,777     46,550
  Other costs & expenses. . . . . . . . .     15,238      4,778     32,041     17,805
 Selling, general and administrative
   expenses . . . . . . . . . . . . . . .     29,230     26,035     83,243     75,593
 Amortization of goodwill and
   other intangibles. . . . . . . . . . .      9,978      2,673     16,516      7,585
 Restructuring and other charges. . . . .     22,159          -     22,159          -
 Acquisition related charges. . . . . . .          -      3,732          -      3,732
                                           ----------  ---------  ---------  ---------
                                             276,478    128,874    560,807    370,961
                                           ----------  ---------  ---------  ---------

Operating (loss) income . . . . . . . . .   (107,690)    22,429    (58,198)    65,652

Equity in earnings of
   unconsolidated affiliates. . . . . . .        320        129        609        567

Minority interest . . . . . . . . . . . .        (14)       (44)       (94)       (74)

Other income and expenses:
  Investment income . . . . . . . . . . .        239        390        653      1,076
  Interest expense and other charges. . .     (3,564)      (993)    (7,824)    (2,474)
                                           ----------  ---------  ---------  ---------
                                              (3,325)      (603)    (7,171)    (1,398)
                                           ----------  ---------  ---------  ---------

(Loss) income from continuing operations
  before income taxes . . . . . . . . . .   (110,709)    21,911    (64,854)    64,747
Income tax (benefit) expense. . . . . . .    (40,261)     8,740    (23,294)    24,727
                                           ----------  ---------  ---------  ---------

(Loss) income from continuing operations.    (70,448)    13,171    (41,560)    40,020

Discontinued operations:
 Income from operations of
  discontinued operations less
  applicable income taxes of $252 . . . .          -          -          -        389
 Loss on disposal of discontinued
  operations less applicable income
  taxes of $2,439 . . . . . . . . . . . .          -          -          -       (453)
                                           ----------  ---------  ---------  ---------
                                                   -          -          -        (64)
                                           ----------  ---------  ---------  ---------

Net (loss) income . . . . . . . . . . . .  $ (70,448)  $ 13,171   $(41,560)  $ 39,956
                                           ==========  =========  =========  =========

Basic earnings per share:
 (Loss) income from continuing operations  $   (1.99)  $   0.36   $  (1.17)  $   1.09
                                           ==========  =========  =========  =========

Diluted earnings per share:
=========================================
 (Loss) income from continuing operations  $   (1.99)  $   0.33   $  (1.17)  $   1.01
                                           ==========  =========  =========  =========

Weighted average common shares. . . . . .     35,355     36,458     35,610     36,635

Weighted average common shares
  assuming dilution . . . . . . . . . . .     35,355     39,549     35,610     39,471
See accompanying notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                           CONSOLIDATED BALANCE SHEETS

                                               (Unaudited)      (Audited)
                                              September 30,     December 31,
                                                   1999         1998
                                                  ------       ------
                                            (In thousands, except share data)
Assets
Current assets
 Cash and equivalents                              $ 28,877   $ 26,013
 Marketable securities                                  228          -
 Receivables, net of allowance for uncollectible
  amounts of $2,437 ($2,051 at 1998)                140,542    123,427
 Accrued revenues                                    41,991     26,558
 Deferred income taxes                                7,494      9,336
 Other receivable                                         -     11,279
 Prepaids                                            16,455      8,645
 Other                                               15,386     11,968
                                                   ---------  ---------
   Total current assets                             250,973    217,226

Property and equipment, at cost less accumulated
 depreciation and amortization of $126,307
 ($128,363 at 1998)                                 144,071    135,436
Accrued revenues                                     12,748      7,844
Income tax receivable                                 4,041      4,041
Goodwill and other intangibles, net                 121,742     81,401
Capitalized software costs, net                     166,453    220,908
Deferred income taxes                                24,371     24,787
Investments                                          10,427      9,661
Other                                                17,444     17,394
                                                   ---------  ---------
     Total assets                                  $752,270   $718,698
                                                   =========  =========

Liabilities
Current liabilities
 Accounts payable and accrued expenses             $ 47,549     57,129
 Current portion of long-term debt                   30,400     15,812
 Income taxes payable                                 6,454      9,202
 Unearned revenues                                   20,095     15,804
 Accrued restructuring and other charges              4,797        806
 Other                                                  776        182
                                                   ---------  ---------
   Total current liabilities                        110,071     98,935

Long-term debt                                      202,000     85,000
Deferred income taxes                                69,662     98,233
Accrued restructuring and other charges               6,031        677
Other                                                 9,026      2,843
                                                   ---------  ---------
    Total liabilities                               396,790    285,688
                                                   ---------  ---------

Minority interest                                       635        526

Stockholders' equity
Special stock, $.01 par value, 5,000,000 shares
 authorized                                               -          -
Common stock, $.01 par value, 75,000,000 shares
 authorized, 35,551,917 shares issued and
 outstanding (36,357,139 at December 31, 1998)          356        364
Additional paid-in capital                           56,460     82,396
Retained earnings                                   317,894    359,454
Accumulated other comprehensive income               (9,804)    (9,730)
Stock employee compensation trust                   (10,061)         -
                                                   ---------  ---------
    Total stockholders' equity                      354,845    432,484
                                                   ---------  ---------
 Total liabilities and stockholders' equity        $752,270   $718,698
                                                   =========  =========
See accompanying notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                   CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                    AND COMPREHENSIVE INCOME
                                           (Unaudited)

                                                                   Accumulated
                                                                    Other        Stock
                                            Additional           Comprehensive   Employee
                                   Common     Paid-In  Retained  Income(Loss) Compensation
                                    Stock     Capital  Earnings       (1)        Trust    Total
                                    -----     -------  --------- ------------ --------- ----------
                                              (Dollars in thousands)
BALANCE, DECEMBER 31, 1998. . .  $    364   $ 82,396   $359,454   $(9,730)  $      -   $432,484

Comprehensive income:
 Net loss . . . . . . . . . . .         -          -    (41,560)        -          -    (41,560)
 Other comprehensive income,
  net of tax:
   Foreign currency
    translation adjustments . .         -          -          -       (74)         -        (74)
                                                                                       ---------
Total comprehensive income
  (loss). . . . . . . . . . . .                                                          (41,634)
                                                                                       ---------

Purchase of shares for SECT . .         -          -          -         -    (10,094)   (10,094)
Restricted stock vested . . . .         -         (3)         -         -         19         16
Restricted stock forfeited. . .         -          -          -         -         14         14
Stock options exercised
  (208,378 shares). . . . . . .         2      7,102          -         -         14      7,104
Repurchase of 1,013,600 shares
  of common stock . . . . . . .       (10)   (33,035)         -         -          -    (33,045)
                                 ---------  ---------  ---------  --------  ---------  ---------

BALANCE, SEPTEMBER 30, 1999 . .  $    356   $ 56,460   $317,894   $(9,804)  $(10,061)  $354,845
                                 =========  =========  =========  ========  =========  =========
(1)     Comprehensive  income (loss) for the three months ended September 30, 1999 and 1998 was
$(67,519)  and  $14,744,  respectively. Comprehensive income for the nine months ended September
30,  1998  was  $39,727.

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

                                                        Nine Months
                                                       Ended September 30,
                                                      ---------------------
                                                        1999        1998
                                                       ------      ------
                                                       (In thousands)
Operating Activities
 Net (loss) income                                   $ (41,560)  $ 39,956
 Adjustments to reconcile net  (loss) income to net
  cash provided by operating activities:
   Depreciation and amortization                       163,085     58,993
   Deferred income taxes                               (31,369)     1,517
   Gain on disposal of discontinued operations               -     (1,986)
   Acquisition related charges                               -      3,732
Changes in assets and liabilities:
   Receivables                                         (10,424)      (974)
   Accrued revenues                                    (20,195)    (4,039)
   Other receivable                                     11,279          -
   Accounts payable and accrued expenses               (14,312)   (14,127)
   Accrued restructuring and other charges              13,200         85
   Income taxes payable                                 (3,033)     9,036
   Unearned revenues                                     1,772     (7,422)
   Other, net                                           (9,170)    (5,172)
                                                     ----------  ---------
      Cash provided from operations                     59,273     79,599
                                                     ----------  ---------

Investing Activities
 Proceeds from sales/maturities of available-for-
  sale securities                                        1,969      3,257
 Proceeds from sales of held-to-maturity securities          -      2,969
 Proceeds from sale of business segment                      -     23,826
 Acquisition of property and equipment                 (28,532)   (45,287)
 Capitalized internal software development costs       (50,476)   (43,599)
 Business acquisitions                                 (68,053)   (29,629)
 Proceeds from disposal of property and equipment        1,018      1,034
                                                                 ---------
 Other                                                  (5,888)    (6,775)
                                                     ----------  ---------
      Cash used by investing activities               (149,962)   (94,204)
                                                     ----------  ---------

Financing Activities
 Payments on long-term debt                           (219,312)   (42,319)
 Proceeds from borrowing under credit facility         348,900     81,500
 Purchase of stock for Stock Employee
  Compensation Trust                                   (10,094)         -
 Issuance of common stock under stock option plans       7,104     28,801
                                                                 ---------
 Repurchase of common stock                            (33,045)   (69,660)
                                                     ----------  ---------
      Cash provided (used) by financing activities      93,553     (1,678)
                                                     ----------  ---------

Net increase (decrease) in cash and equivalents          2,864    (16,283)
Cash and equivalents at beginning of period             26,013     32,179
                                                     ----------  ---------
Cash and equivalents at end of period                $  28,877   $ 15,896
                                                     ==========  =========

Supplemental Information
 Interest paid                                       $   6,494   $  1,371
 Income taxes paid                                       6,745      9,806
Non-cash investing activities:
     The Company transferred $11.2  million of  property, plant and equipment
to Lockheed Martin in 1998 in exchange for other receivable collected in 1999.

See accompanying notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1999

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 may
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 either have
been  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.  For the
Company, the numerator is the same for the calculation of both basic and diluted
EPS.  The  denominator  for basic and diluted EPS is the same for both the three
and  nine  month  periods  ended  September 30, 1999 as the loss from operations
would otherwise cause the inclusion of common stock options to be anti-dilutive.
The  following  is  a  reconciliation  of  the  denominator  used  in  the  EPS
calculations  (in  thousands):
Three Months Ended   Nine Months Ended
                                  September 30      September 30
                                 -------------     -------------
                                 1999    1998        1999    1998
                                 -----   -----       -----   -----
Weighted Average Shares
-----------------------
Basic EPS. . . . . . . . . . .  35,355  36,458  35,610  36,635
Effect of common stock options       -   3,091       -   2,836
                                ------  ------  ------  ------
Diluted EPS. . . . . . . . . .  35,355  39,549  35,610  39,471
                                ======  ======  ======  ======
Options  to purchase 6,708,967 shares of common stock at a weighted average
price  of $28.84 per share were outstanding but not included in the computations
of  diluted  EPS for the three and nine month periods ending September 30, 1999.
RECLASSIFICATIONS

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

NOTE  2.     ACQUISITIONS

On  June 30, 1999, the Company purchased DORN Technology Group, Inc. ("DORN"), a
risk  and  claims  management  company,  for $32 million in cash plus additional
consideration  of  up  to  $30 million contingent upon the future performance of
DORN,  to  be  expensed  as incurred until 2001. DORN owns the Riskmaster claims
management  software  and  the  Quest healthcare facility software, and provides
risk  and  claims management software and services mainly to the US self-insured
market.  The  Company  intends  to  grow  DORN's  existing services business and
further  develop  the  Riskmaster  and  Quest systems to complement its suite of
claims  products.

On  June  30,  1999,  the  Company  purchased Financial Administrative Services,
Inc.("FAS"), a provider of business process outsourcing ("BPO"), for $13 million
plus  additional  consideration  of up to $12.0 million contingent on the future
performance  of  FAS,  to  be capitalized as additional goodwill when paid until
2005. FAS uses the Company's PolicyLink system to support the rapid introduction
of  variable  insurance products and annuities in a business process outsourcing
environment.

On March 31, 1999, the Company purchased Legalgard Partners, L.P. ("Legalgard"),
a  legal  cost  containment  business  for  $23.2  million  plus  additional
consideration  of  up  to $4.3 million contingent upon the future performance of
Legalgard,  to be expensed as incurred until 2003. Legalgard provides legal cost
containment  services  mainly to the US property and casualty insurance industry
using  the  Counsel  Partnership  System,  a  proprietary  software system.  The
Company  intends  to grow Legalgard's existing services business and develop the
Counsel  Partnership  System  for  licensing  directly  to  insurance companies.

The  acquisitions  above  have  been  recorded  using  the  purchase  method  of
accounting.  Accordingly,  the  Consolidated  Statements  of  Operations  of the
Company  do  not  include  the  results of operations of the acquired businesses
before  their  respective  dates  of  acquisition.

NOTE  3.     SPECIAL  CHARGES

     The  Company  considers  special  charges  to  be unusual events or unusual
transactions  related  to  continuing  business  activities.

     The  Company's  operating results for the 1999 third quarter include $126.9
million in special charges of which $100.4 million are non-cash.  These non-cash
charges  result from a reevaluation of capitalized software costs in light of an
increasingly  rapid  pace  of change in technology, changes in market forecasts,
and  the write-down of certain intangibles largely related to past international
acquisitions.  Cash charges of $26.5 million resulted from restructuring charges
incurred  as  the Company eliminated costs through reductions in force and space
requirements,  and  charges  incurred  in  connection
with  the  settlement  of the Liberty Life litigation and resolution of disputes
with  customers. The Consolidated Statements of Operations include these charges
as  follows  -

     Depreciation  and  amortization  of  property,  equipment  and  capitalized
software  costs:

     Depreciation  and  amortization  of  property,  equipment  and  capitalized
software  costs includes approximately $94.3 million of accelerated amortization
of  capitalized  software  development  costs.  In accordance with the Company's
accounting  policies  and  Statement  of  Financial Accounting Standards No. 86,
these  costs  were  determined  in  the  1999 third quarter to be unrecoverable.

     Amortization  of  goodwill  and  other  intangibles:

     Amortization  of goodwill and other intangibles includes approximately $6.1
million  of  impairment  charges  related  primarily  to  past  international
acquisitions.  These  impairment  charges  were  determined  in  the  1999 third
quarter  in  accordance  with the Company's accounting policies and Statement of
Financial  Accounting  Standards  No.  121.

     Restructuring  and  other  charges:

     Restructuring  and  other  charges  includes approximately $12.6 million of
cash  charges paid or to be paid as a result of initiatives taken by the Company
in  the  1999  third  quarter to eliminate costs through worldwide reductions in
force  and  space  requirements.

     The  remaining $9.6 million of cash charges relate to the settlement of the
Liberty  Life  litigation,  as  more fully discussed in Note 4. "Contingencies".

     Other  costs  and  expenses:

     Other  costs  and  expenses  include approximately $3.7 million of costs to
resolve  disputes  with  customers.

     Employee  compensation  and  benefits:

     Employee  compensation  and benefits includes approximately $0.6 million of
expatriate  taxes.

NOTE  4.     CONTINGENCIES

     On  September  23, 1999, the Company and Liberty Life Insurance Company and
certain  of  its  affiliates  ("Liberty") entered into a confidential settlement
agreement of previously disclosed litigation. (See Item 3, Legal Proceedings, of
Part  I contained in the Company's Annual Report on Form 10-K for the year ended
December  31,  1998.)  As a part of the settlement, both the Company and Liberty
agreed  to  release  the  other  from  all  claims  asserted and the lawsuit was
dismissed.  As  a result of the settlement the Company recorded a charge of $9.6
million  for  legal  expenses  associated  with  this  litigation.

On April 29, 1999, the Company received notice from the Internal Revenue Service
("IRS")  of  proposed  adjustments to its 1994, 1995 and 1996 federal income tax
returns.  Should  the  IRS  prevail  in  its  position,  a  charge  to income of
approximately  $16.3  million  would  result.  The  Company  strongly  disagrees
with the proposed adjustments, believes it has meritorious arguments against the
proposed  adjustments  and  intends  to  vigorously  defend  its  position.

     In addition, there are various 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 5.     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  "property  and casualty").  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 "life and financial solutions").  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  and  outsourcing  to  the property and casualty and life
insurance  markets primarily in Europe, Asia, Australia, Canada, Central America
and  South  Africa.

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

5.  Life  information  services.  This  segment  provided  information services,
principally  physician  reports  and medical histories, to US life insurers.  It
was  sold  in  May  1998  and  is  included  in  discontinued  operations.
Information  about  the Company's operations for the three and nine months ended
September  30,  1999  and  1998  is  as  follows  (in  thousands):
Three Months            Nine Months
                                           Ended September 30     Ended September 30
                                          ------------------     ------------------
                                             1999     1998         1999     1998
                                           ------   ------        ------   ------
REVENUES FROM EXTERNAL CUSTOMERS
Property and casualty. . . . . . . . . .  $  74,032   $ 69,832   $224,747   $203,580
Life and financial solutions . . . . . .     51,837     38,081    141,001    101,842
                                          ----------  ---------  ---------  ---------
Total US revenues. . . . . . . . . . . .    125,869    107,913    365,748    305,422
International. . . . . . . . . . . . . .     42,919     43,390    136,861    131,191
                                          ----------  ---------  ---------  ---------
  Total revenues from
     continuing operations . . . . . . .  $ 168,788   $151,303   $502,609   $436,613
                                          ==========  =========  =========  =========

Discontinued operations. . . . . . . . .  $       -   $      -   $      -   $ 11,968

(LOSS) INCOME FROM CONTINUING OPERATIONS
Property and casualty. . . . . . . . . .  $ (67,086)  $ 19,688   $(24,602)  $ 55,289
Life and financial solutions . . . . . .     (1,527)     9,558     17,517     24,049
Corporate and US administrative. . . . .    (12,129)   (10,000)   (28,373)   (23,678)
                                          ----------  ---------  ---------  ---------
  Total US operating (loss) income . . .    (80,742)    19,246    (35,458)    55,660
                                          ----------  ---------  ---------  ---------

International. . . . . . . . . . . . . .    (24,996)     5,234    (17,146)    16,104
International administrative . . . . . .     (1,952)    (2,051)    (5,594)    (6,112)
                                          ----------  ---------  ---------  ---------
  Total international. . . . . . . . . .    (26,948)     3,183    (22,740)     9,992
                                          ----------  ---------  ---------  ---------

  Operating (loss) income. . . . . . . .   (107,690)    22,429    (58,198)    65,652

Equity in earnings of
  unconsolidated affiliates. . . . . . .        320        129        609        567
Minority interest. . . . . . . . . . . .        (14)       (44)       (94)       (74)
Other income and expenses. . . . . . . .     (3,325)      (603)    (7,171)    (1,398)
Income tax (benefit) expense . . . . . .    (40,261)     8,740    (23,294)    24,727
                                          ----------  ---------  ---------  ---------
  (Loss)income from continuing
    operations . . . . . . . . . . . . .  $ (70,448)  $ 13,171   $(41,560)  $ 40,020
                                          ==========  =========  =========  =========

Discontinued operations
  Property and casualty. . . . . . . . .  $       -   $      -   $      -   $ (1,018)
  Life . . . . . . . . . . . . . . . . .          -          -          -      3,672
  Other income and expenses. . . . . . .          -          -          -        (27)
  Income taxes . . . . . . . . . . . . .          -          -          -     (2,691)
                                          ----------  ---------  ---------  ---------
  Discontinued operations, net . . . . .  $       -   $      -   $      -   $    (64)
                                          ==========  =========  =========  =========
The loss from continuing operations for the three and nine month periods ended
September 30, 1999 included special charges of approximately $126.9 million related
to the following business segments:  property and casualty ($85.9 million), life
($10.6 million), international ($26.8 million), and corporate ($3.6 million).
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, 1998.

                              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:
1999 vs. 1998
                                                                            Percent
                                            Percentage of Revenues  Increase (Decrease)
                                          ------------------------  -------------------
                                             Three          Nine        Three       Nine
                                          Months Ended   Months Ended   Months     Months
                                          September 30   September 30   Ended      Ended
                                          ------------   ------------
                                           1999   1998    1999   1998     September 30
                                          -----  -----   -----  -----  --------------------
Revenues
 Licensing . . . . . . . . . . . . . . .    22.2%   20.8%   23.1%   20.5%     19%     29%
 Services. . . . . . . . . . . . . . . .    77.8    79.2    76.9    79.5     (10)    (12)
                                          -------  ------  ------  ------
                                           100.0   100.0   100.0   100.0      12      15
                                          -------  ------  ------  ------
Operating expenses
 Cost of revenues
  Employee compensation and benefits . .    46.6    43.0    45.5    44.2      21      19
  Computer & communication expenses. . .     7.5     7.2     7.2     6.1      16      36
  Depreciation & amortization
   of property, equipment &
   capitalized software costs. . . . . .    64.3    10.3    28.2    10.7     594     205
  Other costs & expenses . . . . . . . .     9.0     3.2     6.4     4.1     219      80
 Selling, general &
   administrative expenses . . . . . . .    17.3    17.2    16.6    17.3      12      10
 Amortization of goodwill and
   other intangibles . . . . . . . . . .     5.9     1.8     3.3     1.7     273     118
 Restructuring and other charges . . . .    13.2       -     4.4       -       -       -
 Acquisition related charges . . . . . .       -     2.5       -      .9       -       -
                                          -------  ------  ------  ------
                                           163.8    85.2   111.6    85.0     115      51
                                          -------  ------  ------  ------
Operating (loss) income. . . . . . . . .   (63.8)   14.8   (11.6)   15.0    (580)   (189)
Equity in earnings of unconsolidated
   affiliates. . . . . . . . . . . . . .     0.2     0.1     0.1     0.1     148       7
Other income and expenses. . . . . . . .    (2.0)   (0.4)   (1.4)   (0.3)    451     413
                                          -------  ------  ------  ------
(Loss) income from continuing operations
  before income taxes. . . . . . . . . .   (65.6)   14.5   (12.9)   14.8    (605)   (200)
Income tax (benefit) expense . . . . . .   (23.9)    5.8    (4.6)    5.6    (560)   (194)
                                          -------  ------  ------  ------
(Loss) income from continuing operations   (41.7)    8.7    (8.3)    9.2    (634)   (204)
Discontinued operations, net . . . . . .       -       -       -       -       -       -
                                          -------  ------  ------  ------
Net (loss) income. . . . . . . . . . . .  (41.7)%    8.7%  (8.3)%    9.2%  (634)%  (204)%
                                          =======  ======  ======  ======
THREE MONTH COMPARISON

REVENUES
Three Months
                               Ended September 30,
                              -------------------
  Licensing                   1999    1998   Change
                             -----   -----   ------
                             (Dollars in millions)
Initial charges. . . . . . .  $19.2   $14.7   31%
Monthly charges. . . . . . .   18.1    16.8    8
                              ------  ------
Total licensing revenues . .   37.3   $31.5   18%
                              ======  ======

Percentage of total revenues   22.1%   20.8%
                              ------  ------
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  charges  increased  $4.6 million for the third quarter of
1999  compared  with  the third quarter of 1998, with the following increases by
business  segment:  property  and  casualty  up  122%  ($5.6  million) primarily
related  to  Point,  internet  and claims products; life and financial solutions
down 19% ($1.1 million) with increases in life enterprise systems licensing more
than offset by weak licensing of lending products; and international up 2% ($0.1
million).

Initial  license  charges  for the third quarter of 1999 include $2.0 million of
right-to-use licenses.  This compares with $2.7 million in right-to-use licenses
for  the third quarter of 1998.  Right-to-use licenses represent the acquisition
by  certain  customers  of the right-to-use component of their remaining monthly
license  charge  obligation,  if  any,  plus  the  acquisition  of  a  perpetual
right-to-use the product thereafter.  Since these types of licenses represent an
acceleration of future revenues, they reduce future monthly license charges. The
Company  expects the occurrences of right-to-use licenses will be reduced in the
future.

Monthly  license  charges  increased  $1.3 million for the third quarter of 1999
compared  with  the  third  quarter  of  1998  with  the  following increases or
decreases  by business segment: property and casualty down 7% ($0.6 million) due
to  weak  1998  licensing  and  the  effect  of  right-to-use licenses; life and
financial  solutions  up  32%  ($1.2  million)  on  strong  1998 initial license
activity;  and  international up 18% ($0.7 million) principally due to increased
licensing  revenues  in  the  United  Kingdom and the Asia/Pacific region during
1998.

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:

                                   1999                  1998           1997
                          ------------------ -------------------------- ----
                             3rd   2nd   1st   4th    3rd    2nd   1st  4th
                          ------------------ ------------------------- ----
                                          (Dollars in millions)

Initial license revenues  $19.2  $25.6  $18.7  $27.3  $14.7  $13.0  $12.6  $25.1
% of total revenues        11%    15%    12%    16%    10%     9%     9%    17%

     The  increasing  rate  of  change  in  the insurance and banking industries
coupled  with  the rapid evolution of eCommerce technology and the volatility of
initial  license  revenues,  as  illustrated  by the above table, is leading the
Company  to  consider  new  business  models that place less emphasis on initial
license  revenue  and  place  more  emphasis  on  transaction based revenue. The
Company  expects  this transition to occur gradually over the next several years
and  will  likely  affect  the  amount  and  timing of revenue recognized in the
Company's  financial  statements.
Three Months
                                Ended September 30,
                               -------------------
  Services                      1999    1998   Change
                               -----   -----   ------
                               (Dollars in millions)
Professional and ITO . . . .  $104.6   $106.0    (1)%
Business Process Outsourcing    26.2     12.6   108 %
Other. . . . . . . . . . . .     0.6      1.3   (54)%
                              -------  -------
Total Services . . . . . . .  $131.4   $119.9    10 %
                              =======  =======

Percentage of total revenues    77.9%    79.2%
                              -------  -------
Total  Services  revenues  increased $11.5 million for the third quarter of 1999
compared  with  the  third  quarter  of  1998,  with  the following increases or
decreases  by  business  segment:  property  and casualty down 1% ($0.8 million)
with  declines in implementation related professional services due to the effect
of  weak  1998  licensing  and  the  redeployment  of  staff from customers' Y2K
projects  ending  late last year partially offset by a 25% increase in BPO; life
insurance  and  financial  solutions  up  48%  ($13.6  million)  reflecting
approximately  12% growth in traditional professional services and strong growth
in  BPO; and international down 4% ($1.3 million) with increases in Europe being
offset  by  decreases  in  the  Asia/Pacific  region.

OPERATING  EXPENSES

COST OF REVENUES

     Employee  compensation  and benefits increased 21% for the third quarter of
1999  compared  with  the  third  quarter  of  1998.  The  net  increase results
principally  from  higher  salary  costs  in  property  and  casualty  and  life
professional  services  and the costs associated with growth in staffing in fast
growing  areas  such  as  claims,  lending,  eCommerce and BPO. Compensation and
benefits  increased  11%  ($2.1 million) internationally and 25% ($11.5 million)
domestically.
Computer and communications expenses increased 16% for the third quarter of 1999
compared with the third quarter of 1998. This increase is principally the result
of  increased:  communications  volumes;  network  and  PC related expenses; and
license  fees  for  data  center  operating  software.

Depreciation  and  Amortization  increased  significantly  over  the  1998 third
quarter  principally  due  to  the  write-off  or write-down of certain software
described  below  under "Special charges". Excluding these charges, depreciation
and amortization decreased 9% as a result of the 1999 third quarter benefit from
the  write-offs  partially  offset by increased software amortization related to
product  releases  during  the  last twelve months and increased depreciation of
property  and  equipment.  As  a  percentage  of  revenue,  depreciation  and
amortization,  excluding  special  charges, decreased to 8% from 10% in the 1998
third  quarter.

     Other  operating  costs  and expenses increased approximately $10.5 million
over  the  1998  third  quarter  primarily  due to approximately $3.7 million of
charges  related to the resolution of customer disputes.  The remaining increase
is  due to rent on new facilities, higher non-billable travel, and a decrease in
the  amounts  capitalized  related  to  software  and  internal  use  systems.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative expenses increased 12% for the third
quarter of 1999 compared with the third quarter of 1998, but remained relatively
unchanged  as  a  percentage  of  revenue.

AMORTIZATION  OF  GOODWILL  AND  OTHER  INTANGIBLES

     Amortization of goodwill and other intangibles increased significantly over
the 1998 third quarter principally due to the write-off or write-down of certain
acquisition  intangibles  discussed  below  under  "Special charges". Before the
effect  of these charges, amortization of goodwill and intangibles increased 47%
due  to  the  acquisitions  of  The Leverage Group, Inc. in the third quarter of
1998,  and  Legalgard,  Dorn  and  FAS  in  prior  1999  quarters.

SPECIAL  CHARGES

     The  Company considers special charges to include unusual events or unusual
transactions  related  to  continuing  business  activities.

     During  the  1999  third  quarter, the Company commenced assessments of all
major  aspects  of  its  business  based  upon  the increasing rate of change in
technology  in  its  marketplace  due  to the internet and the rapid adoption of
eCommerce. In addition, the Company also initiated a number of international and
domestic restructuring and cost reduction initiatives.  This assessment included
various  international  and domestic intangibles and capitalized software costs.
As  a  result  of  actions  taken  in  the  1999 third quarter, the Consolidated
Statements  of  Operations  includes  special  charges  of  approximately $126.9
million  as  follows  -

     Depreciation  and  Amortization  of  property,  equipment  and  capitalized
software  costs:

     Depreciation  and  amortization  of  property,  equipment  and  capitalized
software  costs  includes  approximately  $94.3 million of non-cash, accelerated
amortization  of  capitalized software development costs that were determined in
the  1999  third  quarter  to  be  unrecoverable.

     Approximately  $77.6  million  of  this  amount  relates  to several of the
Company's  software  products  that  use  third party technology that is rapidly
becoming  obsolete.  The  single largest component of this charge relates to IBM
OS/2  components  of  Series III , which will no longer be marketed.  The second
largest  component  relates  to  out-of-date,  mainframe,  batch  processing
technology.  The  remainder  relates  to  several  products  based  on  older
programming  languages  that  will  not  be  marketed  in  the  future.

     The  remaining  $16.7  million  of  the  $94.3  million  of  accelerated
amortization  relates  to  other  products  that  will no longer be marketed for
numerous  reasons  unrelated  to  technological  change.

     Of  the  total  $94.3  million,  $77.6  million relates to the property and
casualty  group  and  $16.7  million  relates  to  the  international  group.

The  Company  has  ceased marketing the written-off or written-down products and
any  future cost associated with the continued support of these products will be
expensed  as  incurred.

     The amount of these charges was determined in accordance with the Company's
accounting  policies  and  Statement  of  Financial Accounting Standards No. 86.
Following  the  Company's  third  quarter  decision  to  cease  marketing  these
products,  the  Company  determined  the  estimated net realizable value of each
product.  If  net  book value exceeded net realizable value, then net book value
was  reduced  to  its  estimated  net  realizable  value.

     Amortization  of  goodwill  and  other  intangibles:

     Amortization  of goodwill and other intangibles includes approximately $6.1
million  of  accelerated amortization of intangibles that were determined in the
1999  third  quarter  to be impaired in accordance with the Company's accounting
policies  and  Statement  of  Financial  Accounting  Standards  no.  121.  These
intangibles  relate  primarily  to past international acquisitions for which the
Company  estimates  projected net cash flows will not be adequate to recover its
unamortized  investments.
Restructuring  and  other  charges:

     Restructuring  and  other  charges,  which  are  discussed  below,  may  be
summarized  as  follows  as  of  September  30,  1999  (in  millions)  -
1999
                     Third
                    Quarter          To Be
                    Charges   Paid   Paid
                    -------- ------ ------
Facilities. . . . .  $ 5.3  $  -  $ 5.3
Personnel . . . . .    7.3   2.2    5.1
Litigation. . . . .    9.6   6.7    2.9
                     -----  ----  -----

Total restructuring
  and other charges  $22.2  $8.9  $13.3
                     =====  ====  =====
Restructuring  and  other  charges  includes approximately $12.6 million of
cash  charges paid or to be paid as a result of initiatives taken by the Company
in  the  1999  third  quarter to eliminate costs through worldwide reductions in
force  and space requirements. Approximately $7.3 million of this amount relates
to  benefits payable to staff who were terminated. Approximately $5.3 million of
this  amount  relates to minimum lease obligations remaining on vacated offices,
reduced  by estimated sublease income.  The charges related primarily to actions
taken  in  the  property  and  casualty  and  international  business  groups.

     The  remaining  approximately  $9.6  million of cash charges relates to the
settlement  of  the  Liberty  Life  litigation.     On  September  23, 1999, the
Company  and  Liberty  Life  Insurance  Company  and  certain  of its affiliates
("Liberty")  entered  into  a  confidential  settlement  agreement of previously
disclosed litigation. (See Item 3, Legal Proceedings, of Part I contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.) As a
part of the settlement, both the Company and Liberty agreed to release the other
from  all  claims  asserted  and  the  lawsuit was dismissed. As a result of the
settlement  the  Company  recorded  a  loss  of  $9.6 million for legal expenses
associated  with  this  litigation.

     Other  costs  and  expenses:

     Other  costs  and  expenses includes approximately $3.7 million of costs to
resolve  disputes  with  customers.

     Employee  compensation  and  benefits:

     Employee  compensation  and benefits includes approximately $0.6 million of
expatriate  taxes.

OPERATING INCOME (LOSS)

     The  1999  third  quarter  produced  an  operating  loss  of $107.6 million
compared with the 1998 third quarter operating income of $22.4 million resulting
primarily  from  the  write-off  or  write-down of certain software, intangibles
related  to  business acquisitions and restructuring and other charges described
above,  Before  these  charges,  1999  third  quarter  operating
income  decreased  26%  compared with the 1998 third quarter.  Also before these
charges,  decreases  in  segment  operating  income  were: property and casualty
decreased  5%,  life  and  financial  solutions  decreased  5% and international
decreased  65%  (see  discussion  of "Revenues" and "Operating Expenses" above).

OTHER INCOME AND EXPENSE

     Other  income  and expense is comprised primarily of interest expense which
increased  $2.6  million  for  the third quarter of 1999 compared with the third
quarter  of  1998. This increase is due to higher levels of borrowed funds under
the  Company's  credit  facilities  which  were  incurred principally to finance
business  acquisitions  and  repurchases  of  the  Company's  stock during prior
periods.  The  average  nominal interest rate applicable to borrowings under the
Company's  credit  facilities  during  the  third  quarter  of  1999  was  5.7%.

INCOME  TAXES

The  effective income tax (benefit) rate (income taxes expressed as a percentage
of  pre-tax income) on continuing operations including special charges was 36.4%
and  39.9%  for  the third quarter of 1999 and 1998, respectively. The effective
income  tax  rate  on continuing operations before special charges was 33.1% for
the  third  quarter  of  1999.

The  effective  income  tax rate on continuing operations before special charges
for  the  third quarter of 1999 was lower than the federal statutory rate of 35%
principally  due  to  the  effect  of  foreign  income  taxes from operations in
countries  with  tax  rates  lower  than  the  United  States.

                              NINE MONTH COMPARISON

REVENUES
Nine Months
                            Ended September 30,
                           -------------------
  Licensing                 1999    1998   Change
                            -----   -----   ------
                            (Dollars in millions)
Initial charges. . . . . . .  $ 63.5   $40.3   58%
Monthly charges. . . . . . .    52.3    49.4    6
                              -------  ------
Total licensing revenues . .  $115.8   $89.7   29%
                              =======  ======

Percentage of total revenues    23.0%   20.5%
                              -------  ------
Initial  license revenues increased $23.2 million for the first nine months
of  1999  compared  with  the  first  nine  months  of  1998, with the following
increases  by  business  segment:  property and casualty up 163% ($21.3 million)
with  increases  in Point, internet and claims products, one new S3+ license and
two  S3+  license  expansions, combined with increased revenue from right-to-use
transactions; life and financial solutions up 7% ($0.9 million)with increases in
life  enterprise  system licenses offset partially by declines in lending system
licenses;  and  international up 7% ($1.0 million) with increases in continental
Europe  offset  partially by declines in the United Kingdom and the Asia/Pacific
region.
Initial  license  charges for the first nine months of 1999 include right-to-use
licenses  of  $13.7 million compared with $9.7 million for the first nine months
of  1998.  Right-to-use  licenses represent the acquisition by certain customers
of  the  right-to-use  component  of  their  remaining  monthly  license  charge
obligation, if any, plus the acquisition of a perpetual right-to-use the product
thereafter.  Since  these  types of licenses represent an acceleration of future
revenues,  they  reduce  future monthly license charges. The Company expects the
occurrence  of  right-to-use  licenses  will  be  reduced  in  the  future.

     Initial license charges for the first three quarters of 1999 include a $2.9
million  license  with  the  former owners of Legalgard. In addition, the former
owners  of  FAS  licensed  several of the Company's life and financial solutions
products  for  $2.0  million.

     Two  remarketing  agreements  for  the  Claims  Outcome  Advisor  ("COA  ")
product,  totaling  $3.5 million, are included in initial licensing revenues for
the first nine months of 1999. These non-exclusive agreements provide two of the
Company's  nationally  recognized  vendors  the  right  to re-license COA to the
self-insured market. The Company also renegotiated an extension to its long-term
license  agreement for operating software used in the Company's data center with
one  of  these  vendors.

Initial  license  charges for the first three quarters of 1999 also include $2.6
million  of  revenue  from  the  sale  of  hardware remarketed by the Company in
conjunction  with  licenses  of  its  software.

     Monthly license charges increased $2.9 million for the first nine months of
1999 compared with the first nine months of 1998 with the following increases or
decreases  by  business  segment:  property and casualty down 12% ($3.3 million)
due  to  weak  1998  licensing and the effect of right-to-use licenses; life and
financial  solutions  up  43%  ($4.5  million)  on  strong  1998 initial license
activity;  and  international up 14% ($1.7 million) principally due to increased
licensing  activity  in  1998.
Nine Months
                              Ended September 30,
                             -------------------
  Services                    1999    1998   Change
                              -----   -----   ------
                               (Dollars in millions)
Professional and ITO . . . .  $  325.6   $310.4    5%
Business Process Outsourcing      58.4     33.0   77
Other. . . . . . . . . . . .       2.8      3.5  (20)
                              --------  ------
Total Services . . . . . . .  $  386.8   $346.9   12%
                              ========  ======  ======

Percentage of total revenues   77.0%    79.5%
                              ---------------
Total  Services  revenues  increased  $39.9 million for the first nine months of
1999  compared  with the first nine months of 1998, with the following increases
by  business  segment:  property  and  casualty  up  2% ($3.2 million) with a 6%
decline  in  professional  and  ITO  services  offset by a 44% rise in BPO; life
insurance  and financial solutions up 43% ($33.8 million) with a 27% increase in
professional  and  ITO  services  enhanced  by  a  185%  increase  in  BPO;
and international up 3% ($2.9 million) all in professional and ITO services. The
rise  in  BPO  revenue  reflects  increased  volume  with  existing  customers.

OPERATING EXPENSES

COST OF REVENUES

     Employee  compensation and benefits increased 19% for the first nine months
of  1999  compared  with the first nine months of 1998. The net increase results
principally  from  higher  salary  costs  in  property  and  casualty  and  life
professional  services, and the costs associated with growth in staffing in such
fast  growing  areas as claims, lending, eCommerce and BPO. These increases were
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. Compensation and benefits increased 13% ($7.6
million)  internationally  and  21%  ($29.0  million)  domestically.

Computer  and communications expenses increased 36% for the first nine months of
1999  compared with the first nine months of 1998. At the beginning of the third
quarter  of  1998,  the company entered into a data center outsourcing agreement
with  Lockheed  Martin  entered  into  June 30, 1998. As a result, certain costs
previously  included  in  employee compensation and benefits are now included in
computer  and  communication expense. The savings from the outsourcing agreement
were offset due primarily to increases in communications volumes, network and PC
related  expenses and increased license fees for data center operating software.

Depreciation  and Amortization increased significantly for the first nine months
of  1999  compared  with  the  first  nine months of 1998 principally due to the
write-off  or  write-down  of  certain  software  described below under "Special
charges".  Excluding  these  charges, depreciation and amortization increased 2%
due  to  increased  software amortization related to product releases during the
last  twelve  months  and  increased  depreciation  of  property  and  equipment
partially offset by the benefit of the third quarter charges. As a percentage of
revenue, depreciation and amortization, excluding the charges decreased to 9% of
revenue  from  11% in the first nine months of 1999 compared with the first nine
months  of  1998.

Other  operating  costs  and expenses increased 80% for the first nine months of
1999  compared  with  the  first  nine  months  of 1998, due to the inclusion of
approximately $3.7 million of charges related to the resolution of disputes with
customers  and  $2.4 million of costs for computer hardware sold to customers in
conjunction  with  software  licenses  in  which  the  corresponding  revenue is
included  in  initial  licensing  revenue.  Other  increases  for the first nine
months of 1999 include rent on new facilities, higher non-billable travel, and a
decrease  in  the  capitalization  of  software  and internal use systems costs.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative expenses increased 10% for the first
nine  months  of  1999 compared with the first nine months of 1998, but declined
slightly  as  a  percentage  of  revenue.

AMORTIZATION  OF  GOODWILL  AND  OTHER  INTANGIBLES

     Amortization of goodwill and other intangibles increased 118% for the first
nine months of 1999 compared with the first nine months of 1998, principally due
to  the  impairment  charges  recorded  in the third quarter which are described
above  under  "Special  charges". Amortization related to the acquisition of The
Leverage Group, Inc. in the third quarter of 1998 and Legalgard, Dorn and FAS in
prior  1999  quarters  also  contributed  to  the  increase.

SPECIAL  CHARGES

   As  discussed  under  "Three  Month  Comparison" the Company recorded special
charges  of  approximately  $126.9  million  in  the  1999  third  quarter.

OPERATING  INCOME  (LOSS)

     The  1999  nine  month  period  produced an operating loss of $58.2 million
compared  with  the  1998  operating income of $65.7 million resulting primarily
from  the  write-off  or  write-down of certain software, intangibles related to
business  acquisitions  and  restructuring, and other charges described above in
"Special  charges".  Before  these  charges, operating income for the first nine
months  of  1999  decreased 1% compared with the first nine months of 1998. Also
before  these  charges, increases or decreases in segment operating income were:
property  and casualty increased 11%, life and financial solutions increased 17%
and  international  decreased  40%  (see discussion of "Revenues" and "Operating
Expenses"  above).

OTHER INCOME AND EXPENSE

     Other  income  and expense is comprised primarily of interest expense which
increased $5.3 million for the first nine months of 1999 compared with the first
nine  months  of  1998, principally due to higher levels of borrowed funds under
the  Company's  credit facility to finance business acquisitions and repurchases
of  the  Company's  stock.  The  average  nominal  interest  rate  applicable to
borrowings  under  the Company's credit facility during the first nine months of
1999  was  5.4%.

INCOME  TAXES

     The  effective  income  tax  (benefit)  rate  (income  taxes expressed as a
percentage of pre-tax income) on continuing operations including special charges
was  35.9%  and  38.2%  for  the  nine months ended September 30, 1999 and 1998,
respectively.

The  effective  income  tax rate on continuing operations before special charges
was  36.0%  for  the nine months ended September 30, 1999.  The effective income
tax  rate  decreased 2.3% for the first nine months of 1999 compared to the same
period  in  1998,  principally  due  to  the effect of foreign income taxes from
operations  in  countries  with  tax  rates  lower  than  in  the United States.
LIQUIDITY AND CAPITAL RESOURCES
September 30, December 31,
                                   1999         1998
---------------------------------------------------------
                                   (Dollars in millions)
Cash and equivalents and marketable
  securities. . . . . . . . . . . .  $ 29.1  $ 26.0
Current assets. . . . . . . . . . .   251.0   217.2
Current liabilities . . . . . . . .   110.1    98.9
Working capital . . . . . . . . . .   140.9   118.3
Long-term debt. . . . . . . . . . .   202.0    85.0
Nine Months Ended
                                                 September 30,
                                              1999         1998
-----------------------------------------------------------------
                                          (Dollars in millions)
Cash provided by operations. . . . . . . . .  $  59.3   $ 79.6
Cash (used) by investing activities. . . . .   (150.0)   (94.2)
Cash provided (used) by financing activities     93.6     (1.7)
The Company's current ratio (current assets divided by current liabilities)
stood at 2.3 at September 30, 1999, which management believes is sufficient when
combined  with  available  credit facilities to provide for day-to-day operating
needs  and  the  flexibility  to take advantage of investment opportunities.  At
September 30, 1999, the Company had $240 million of committed and $20 million of
uncommitted  credit facilities available to it, of which $230.4 million had been
utilized.  On  November  5, 1999 the Company entered into a new committed credit
facility of $70 million replacing $40 million of the $240 million bringing total
committed  to  $270  million.  In  addition, the Company reduced its uncommitted
facility  to  $5  million.

During the nine months ended September 30, 1999 the Company capitalized software
development  costs  of  $50.5 million, principally related to the development of
its  property  and casualty, life and international enterprise software products
and  claims,  eCommerce  and  banking  solutions.

Significant  expenditures  anticipated  for the remainder of 1999, excluding any
possible  business  acquisitions  or  common  stock repurchases, are as follows:
acquisition of computer and communications equipment, support software, 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, capital expenditures, 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 may 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 and financial solutions industries. Significant
changes in the regulatory or market environment of these industries could impact
demand  for the Company's software products and services. Additionally, there is
increasing competition for the Company's products and services, and there can be
no  assurance  that  the  Company's  current  products  and services will remain
competitive,  or  that  the  Company's development efforts will produce products
with  the  cost and performance characteristics necessary to remain competitive.
Furthermore, the market for the Company's products and services is characterized
by  rapid  changes  in  technology and the emergence of the Internet as a viable
insurance  distribution  channel.  In  response  to these changes the Company is
continually  reassessing  and  challenging all major aspects of its business for
the  purpose  of  evaluating  whether it is correctly positioned to maximize its
potential.  The  Company's success will depend on the level of market acceptance
of  the  Company's  products,  technologies and enhancements, and its ability to
introduce such products, technologies and enhancements to the market on a timely
and  cost  effective  basis,  and maintain a labor force sufficiently skilled to
compete  in  the  current  environment.

     The  timing and amount of the Company's revenues are subject to a number of
factors,  such as the timing of customers' decisions to enter into large license
agreements with the Company, which make estimation of operating results prior to
the end of a quarter or year extremely uncertain. Additionally, while management
believes  that  the Company's financing needs for the foreseeable future will be
satisfied  from  cash flows from operations and the Company's currently existing
credit  facilities, 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.

A  significant portion of both the Company's revenue and its operating income is
derived  from  initial  licensing  charges  received  as  part  of the Company's
software  licensing activities.  Because a substantial portion of these revenues
is  recorded  at  the  time  new  systems are licensed, there can be significant
fluctuations  from period to period in the revenues and operating income derived
from  licensing  activities.  This  is attributable principally to the timing of
customers'  decisions  to  enter into license agreements with the Company, which
the  Company  is  unable  to  control.  The  Company  believes  that current and
potential customers' decisions to enter into license agreements with the Company
may  be  significantly affected by strategies to make their existing information
systems  capable of handling the year 2000, however, at this time the Company is
unable  to  predict  what  the  future  impact,  if  any, will be. The Company's
licensing  revenues  have  included significant amounts of right-to-use licenses
and  the Company expects the occurrence of these licenses will be reduced in the
future.
The  increasing  rate  of change in the insurance and banking industries coupled
with  the  rapid evolution of eCommerce technology and the volatility of initial
licensing  revenue  is  leading the Company to consider new business models that
place  less emphasis on initial license revenue and more emphasis on transaction
based  revenue.  The Company expects this transition to occur gradually over the
next  several  years  and  will  likely  affect the amount and timing of revenue
recognized  in  the  Company's  financial  statements.

     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.

The  following  seven  phases  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 remediation requirements for each component in order of
business  risk  prioritization  determined  during  Triage.
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. Subjecting customer products and internal systems that the Company
relies upon to support its business to tests designed to identify issues related
to  date calculations, functions and routines that are affected by the Year 2000
change.  Such  tests  include  both  system and integrated tests in environments
with  machine  dates advanced to dates in the years 1999 and 2000 ("Time Machine
Environment").
     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.

     The  Company  has  substantially  completed  all  related  tasks within the
project  phases  presented  above.  A  small  amount  of  product  re-testing to
adequately address discrepancies identified during Time Machine testing remains.
These tests are expected to be completed in November.  The Company will continue
to  remediate  products  based on vendor compliance updates as they are released
and will continue to perform redundant tests on hardware and software until year
end.

     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, into, and beyond the Year 2000. Tests performed on these
primary  products have confirmed the ability of these applications to accurately
process  data  in  both  centuries.  Additional  testing  on  the Company's base
products  was  completed  during  the  first  half  of  1999  in  a Time Machine
Environment.  This  additional  testing  has  sought  to  confirm  that  no
unanticipated  problems  will  occur  due to third party products with which the
Company's  applications  are  designed  to  operate.

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

     The  Company  has  completed  Year  2000  application  code remediation for
customers  who  will  be  Business  Process  Outsourcing  ("BPO")/Information
Technology  Outsourcing ("ITO Services") customers after December 31, 1999. Live
customer  data  that  spans  Year  2000  thresholds  is currently, and has been,
successfully  processed  by  these  remediated  applications  in  production
environments.  Additionally,  subsequent  tests  have been performed on customer
products  and  additional  redundant testing will continue to occur in Year 2000
Time  Machine  Environments  until  year  end  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, assessments, remediation, and testing
efforts  in  order  to satisfy Year 2000 requirements.  Redundant tests for Year
2000  compliance  of  the hardware and operating software in the Blythewood data
center  will  continue  until  year  end.

     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 Lockheed Martin.  The Company's Australian and
European  data centers have completed their inventory and assessment of hardware
and  operating  software for Year 2000 requirements. Finalization of the project
for  all  data  centers  is  substantially  complete.
Re-tests  of software will continue until year end 1999, as will the application
of  upgrades  to third party products when additional enhancements and fixes are
released.

     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  financial  components of the selected solution are
operational;  however,  only  limited  human  resources  functionality  has been
implemented  at  this  time.  The  human  resources  functionality of the legacy
systems  that  remain  have  been  tested  and  verified  to be Year 2000 ready.

     The  Company  has  inventoried, assessed and remediated its networks and PC
hardware and software as required. The Company has also completed assessment and
remediation  of non-IT systems that 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").  Mission critical
suppliers  and  trading partners have been identified and tests of most of these
interfaces,  to  the  extent  practical,  have  been  performed  in  a Year 2000
environment.  The  Company's  ability  to  influence  cooperation  is  partially
dependent  on  the significance of the Company's relationship with its suppliers
and  trading  partners  and  their  willingness  to share such information.  The
Company  has  completed  this  phase  of  its  Year  2000  readiness  project.

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

     Since  1993, the Company estimates that it has incurred approximately $21.3
million  of  costs in addressing Year 2000 remediation issues. These remediation
costs  were  funded  by  operations and the Company does not expect to incur any
additional  costs  for  the  remainder  of  the  year.

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

The  Company's  products  are  designed  to  be used with and require the 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.
Furthermore,  there  is  a general uncertainty inherent in the Year 2000 problem
stemming,  in  part,  from  the  uncertainty  of  the  Year  2000  readiness  of
third-party  suppliers  and  the  Company's customers and prospective customers.
For  these  reasons,  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 will continue to modify and finalize contingency and staffing plans
for  worldwide  coverage,  as  applicable,  until  year  end.

     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"  above.

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  4, 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  filed  a  report  under  Item  5  Other  Events on October 5, 1999
disclosing that it expected third quarter earnings to be in the range of $.31 to
$.36  per  share  before  special  and  restructuring  charges.  No  financial
statements  were  filed  with  this  8-K.
POLICY MANAGEMENT SYSTEMS CORPORATION

                                   SIGNATURES

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

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

Date:  November 12, 1999           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  September  2,  1999
incorporating  all  amendments  thereto  subsequent  to  July  19,  1994  (filed
herewith)

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.     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)

B.     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)

C.     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)

D.     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)

E.     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)

F.     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)

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

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

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

J.     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)

K.     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)

L.     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)

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

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

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

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

Q.     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)

R.     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)

S.     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)
T.     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)

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

     V.     Employment  Agreement  Form  dated  November  7,  1996  for  Messrs.
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)

W.     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)

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

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

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

AA.     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  Quarter  ending  September 30, 1997 and is
incorporated  herein  by  reference)

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

CC.     Policy  Management  Systems  Corporation Restricted Stock Ownership Plan
(filed  as  an  Exhibit to Form 10-Q for Quarter ended September 30, 1998 and is
incorporated  herein  by  reference)

DD.     Form  of  Restricted  Stock  Award  Agreement dated August 11, 1998 with
Messrs.  Berkeley,  Feddersen,  Palms,  Sargent,  Seibels  and Trub (filed as an
Exhibit  to  Form  10-Q for Quarter ended September 30, 1998 and is incorporated
herein  by  reference)
EE.     Employment  Agreement  with  Michael  W. Risley dated February 23, 1999,
effective November 10, 1998 (filed as an Exhibit to Form 10-K for the year ended
December  31,  1998  and  is  incorporated  herein  by  reference)

FF.     Form  of  Restricted  Stock  Award  Agreement  dated  March 1, 1999 with
Messrs.  Berkeley,  Feddersen,  Palms,  Sargent,  Seibels  and Trub (filed as an
Exhibit  to  Form  10-Q  for  Quarter  ending March 31, 1999 and is incorporated
herein  by  reference)

GG.     Form  of  Restricted  Stock Award Agreement for named executive officers
together  with schedule identifying particulars for each named executive officer
(filed  as  an  Exhibit  to  Form  10-Q for Quarter ending March 31, 1999 and is
incorporated  herein  by  reference)

HH.     Stock  Option/Non-Compete  Form  Agreement  for named executive officers
together  with schedule identifying particulars for each named executive officer
(filed  as  an  Exhibit  to  Form  10-Q  for Quarter ending June 30, 1999 and is
incorporated  herein  by  reference)

II.     Stock Option/Non-Compete Form Agreement with Michael W. Risley dated May
11,  1999 (filed as an Exhibit to Form 10-Q for Quarter ending June 30, 1999 and
is  incorporated  herein  by  reference)

     JJ.     Form  of 1999 Bonus Plan for named executive officers together with
schedule  identifying  particulars for each named executive officer (filed as an
Exhibit to Form 10-Q for Quarter ending June 30, 1999 and is incorporated herein
by  reference)

     KK.     Promissory  Note  dated  July  21,  1999  between Policy Management
Systems  Corporation  and  First  Union  National  Bank  (filed  herewith)

27.     FINANCIAL  DATA  SCHEDULE

     A.     Filed  herewith