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 MARCH 31, 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.

          35,510,304 Common shares, $.01 par value, as of May 13, 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 Income for the Three
Months Ended March 31, 1999 and 1998 . . . . . . . .   3

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

Consolidated Statements of Changes in Stockholders'
Equity and Comprehensive Income for the Three
Months Ended March 31, 1999. . . . . . . . . . . . .   5

Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1999 and 1998 . . . . .   6

Notes to Consolidated Financial Statements . . . . .   7

Item 2. Management's Discussion and Analysis of
  Financial Condition and Results of Operations. . .  11


PART II. OTHER INFORMATION

Item 1. Legal Proceedings. . . . . . . . . . . . . .  22

Item 6. Exhibits and Reports on Form 8-K . . . . . .  22

Signatures . . . . . . . . . . . . . . . . . . . . .  23
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

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

                                                      Three Months
                                                     Ended March 31,
                                                     1999       1998
                                                      (Unaudited)
                                                   ------------------
                                                 (In thousands, except
                                                    per share data)

<S>                                               <C>        <C>
REVENUES
 Licensing . . . . . . . . . . . . . . . . . . .  $ 35,952   $ 28,737 
 Services. . . . . . . . . . . . . . . . . . . .   125,523    111,684 
                                                  ---------  ---------
                                                   161,475    140,421 
                                                  ---------  ---------
OPERATING EXPENSES
 Cost of revenues
   Employee compensation and benefits. . . . . .    73,725     63,242 
   Computer and communications expenses. . . . .    11,913      7,790 
   Depreciation and amortization of property,
    equipment and capitalized software costs . .    16,140     15,226 
   Other costs and expenses. . . . . . . . . . .     7,458      6,185 
 Selling, general and administrative expenses. .    25,652     24,707 
 Amortization of goodwill and other intangibles.     3,077      2,423 
                                                  ---------  ---------
                                                   137,965    119,573 
                                                  ---------  ---------

OPERATING INCOME . . . . . . . . . . . . . . . .    23,510     20,848 

Equity in earnings of unconsolidated affiliates.       141        205 

Minority interest. . . . . . . . . . . . . . . .       (39)         - 

Other Income and Expenses
  Investment income. . . . . . . . . . . . . . .       231        502 
  Interest expense and other charges . . . . . .    (1,513)      (927)
                                                  ---------  ---------
                                                    (1,282)      (425)
                                                  ---------  ---------
Income from continuing operations
  before income taxes. . . . . . . . . . . . . .    22,330     20,628 
Income taxes . . . . . . . . . . . . . . . . . .     8,262      7,761 
                                                  ---------  ---------

INCOME FROM CONTINUING OPERATIONS. . . . . . . .    14,068     12,867 

DISCONTINUED OPERATIONS:
  Income from operations of discontinued
    operations less applicable income taxes
    of $215. . . . . . . . . . . . . . . . . . .         -        322 
                                                  ---------  ---------

NET INCOME . . . . . . . . . . . . . . . . . . .  $ 14,068   $ 13,189 
                                                  =========  =========

BASIC EARNINGS PER SHARE:
  Income from continuing operations. . . . . . .  $   0.39   $   0.35 
  Income from discontinued operations. . . . . .         -       0.01 
                                                  ---------  ---------
                                                  $   0.39   $   0.36 
                                                  =========  =========
DILUTED EARNINGS PER SHARE:
  Income from continuing operations. . . . . . .  $   0.37   $   0.33 
  Income from discontinued operations. . . . . .         -       0.01 
                                                  ---------  ---------
                                                  $   0.37   $   0.34 
                                                  =========  =========

Weighted average common shares . . . . . . . . .    36,128     36,687 
Weighted average common shares assuming dilution    38,337     39,192 

<FN>

See  accompanying  notes
</TABLE>


<PAGE>
<TABLE>
<CAPTION>

                       POLICY MANAGEMENT SYSTEMS CORPORATION
                            CONSOLIDATED BALANCE SHEETS
 
                                                          (Unaudited)   (Audited)
                                                            March 31,  December 31,
                                                              1999         1998
                                                             --------    --------
                                                (In thousands, except share data)

<S>                                                           <C>        <C>
Assets
Current assets
 Cash and equivalents. . . . . . . . . . . . . . . . . . . .  $ 14,294   $ 26,013 
 Receivables, net of allowance for uncollectible
  amounts of $1,660 ($2,051 at 1998) . . . . . . . . . . . .   144,095    104,299 
 Accrued revenues. . . . . . . . . . . . . . . . . . . . . .    41,877     45,686 
 Deferred income taxes . . . . . . . . . . . . . . . . . . .     7,121      9,336 
 Other receivable. . . . . . . . . . . . . . . . . . . . . .         -     11,279 
 Prepaids. . . . . . . . . . . . . . . . . . . . . . . . . .    12,818      8,645 
 Other . . . . . . . . . . . . . . . . . . . . . . . . . . .    14,028     11,968 
                                                              ---------  ---------
   Total current assets. . . . . . . . . . . . . . . . . . .   234,233    217,226 

Property and equipment, at cost less accumulated
 depreciation and amortization of $128,740
 ($128,363 at 1998). . . . . . . . . . . . . . . . . . . . .   141,265    135,436 
Accrued revenues . . . . . . . . . . . . . . . . . . . . . .     9,742      7,844 
Income tax receivable. . . . . . . . . . . . . . . . . . . .     4,041      4,041 
Goodwill and other intangibles, net. . . . . . . . . . . . .    82,540     81,401 
Capitalized software costs, net. . . . . . . . . . . . . . .   226,482    220,908 
Deferred income taxes. . . . . . . . . . . . . . . . . . . .    24,277     24,787 
Investments. . . . . . . . . . . . . . . . . . . . . . . . .     9,953      9,661 
Cost of acquisition to be allocated. . . . . . . . . . . . .    22,108          - 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . .    18,929     17,394 
                                                              ---------  ---------
     Total assets. . . . . . . . . . . . . . . . . . . . . .  $773,570   $718,698 
                                                              =========  =========

Liabilities
Current liabilities
 Accounts payable and accrued expenses . . . . . . . . . . .  $ 50,209   $ 57,129 
 Current portion of long-term debt . . . . . . . . . . . . .     7,241     15,812 
 Income taxes payable. . . . . . . . . . . . . . . . . . . .    18,723      9,202 
 Unearned revenues . . . . . . . . . . . . . . . . . . . . .    20,709     15,804 
 Other . . . . . . . . . . . . . . . . . . . . . . . . . . .       890        988 
                                                              ---------  ---------
   Total current liabilities . . . . . . . . . . . . . . . .    97,772     98,935 

Long-term debt . . . . . . . . . . . . . . . . . . . . . . .   157,000     85,000 
Deferred income taxes. . . . . . . . . . . . . . . . . . . .    97,244     98,233 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . .     3,739      3,520 
                                                              ---------  ---------
    Total liabilities. . . . . . . . . . . . . . . . . . . .   355,755    285,688 
                                                              ---------  ---------

Minority interest. . . . . . . . . . . . . . . . . . . . . .       551        526 

Commitments and contingencies (Note 3)

Stockholders' equity
Special stock, $.01 par value, 5,000,000 shares authorized .         -          - 
Common stock, $.01 par value, 75,000,000 shares authorized,
 35,886,073 shares issued and outstanding
 (36,357,139 at December 31, 1998) . . . . . . . . . . . . .       359        364 
Additional paid-in capital . . . . . . . . . . . . . . . . .    65,559     82,396 
Retained earnings. . . . . . . . . . . . . . . . . . . . . .   373,522    359,454 
Accumulated other comprehensive income . . . . . . . . . . .   (12,101)    (9,730)
Stock employee compensation trust. . . . . . . . . . . . . .   (10,075)         - 
                                                              ---------  ---------
    Total stockholders' equity . . . . . . . . . . . . . . .   417,264    432,484 
                                                              ---------  ---------
     Total liabilities and stockholders' equity. . . . . . .  $773,570   $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    Stock
                                        Additional              Other       Employee
                               Common    Paid-In   Retained Comprehensive Compensation
                                Stock    Capital   Earnings    Income(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 income . . . . . . . . .        -          -     14,068         -          -     14,068 
 Other comprehensive income,
  net of tax:
   Foreign currency
    translation adjustments .        -          -          -    (2,371)         -     (2,371)
                                                                                    ---------
Total comprehensive income. .                                                         11,697 
                                                                                    ---------

Purchase of shares for SECT .        -          -          -         -    (10,094)   (10,094)
Restricted stock vested . . .        -         (3)         -         -         19         16 
Stock options exercised
  (108,934 shares). . . . . .        1      3,957          -         -          -      3,958 
Repurchase of 580,000 shares
  of common stock . . . . . .       (6)   (20,791)         -         -          -    (20,797)
                               --------  ---------  --------  ---------  ---------  ---------

BALANCE, MARCH 31, 1999 . . .  $   359   $ 65,559   $373,522  $(12,101)  $(10,075)  $417,264 
                               ========  =========  ========  =========  =========  =========
<FN>

See  accompanying  notes

(1)     Comprehensive  income  for  the  three  months  ended  March  31,  1998 was $12,881.

</TABLE>


<PAGE>
<TABLE>
<CAPTION>

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

                                                             Three Months
                                                            Ended March 31,
                                                            1999       1998
                                                           -------    -------
                                                             (In thousands)
Operating  Activities

<S>                                                       <C>        <C>
 Net income. . . . . . . . . . . . . . . . . . . . . . .  $ 14,068   $ 13,189 
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation and amortization . . . . . . . . . . . .    20,403     19,718 
   Deferred income taxes . . . . . . . . . . . . . . . .     1,736      3,264 
   Provision for uncollectible accounts. . . . . . . . .      (299)       (42)
 Changes in assets and liabilities:
   Receivables . . . . . . . . . . . . . . . . . . . . .   (37,803)      (972)
   Accrued revenues. . . . . . . . . . . . . . . . . . .     2,053      3,074 
   Other receivable. . . . . . . . . . . . . . . . . . .    11,279          - 
   Accounts payable and accrued expenses . . . . . . . .    (7,682)    (9,155)
   Income taxes payable. . . . . . . . . . . . . . . . .     9,521      1,208 
   Unearned revenues . . . . . . . . . . . . . . . . . .     4,657     (2,281)
 Other, net. . . . . . . . . . . . . . . . . . . . . . .   (10,895)    (4,425)
                                                          ---------  ---------
      Cash provided by operations. . . . . . . . . . . .     7,038     23,578 
                                                          ---------  ---------

Investing Activities
 Proceeds from sales/maturities of available-for-
  sale securities. . . . . . . . . . . . . . . . . . . .         -      3,257 
 Proceeds from sales of held-to-
  maturity securities. . . . . . . . . . . . . . . . . .         -      2,969 
 Acquisition of property and equipment . . . . . . . . .   (12,123)    (9,244)
 Capitalized internal software development costs . . . .   (16,841)   (14,880)
 Business acquisition. . . . . . . . . . . . . . . . . .    (4,045)    (2,688)
 Cost of acquisition to be allocated . . . . . . . . . .   (22,108)         - 
 Investment in unconsolidated affiliate. . . . . . . . .        36          - 
 Proceeds from disposal of property and equipment. . . .       221        200 
 Other . . . . . . . . . . . . . . . . . . . . . . . . .      (393)    (3,069)
                                                          ---------  ---------
      Cash used by investing activities. . . . . . . . .   (55,253)   (23,455)
                                                          ---------  ---------

Financing Activities
 Payments on long-term debt. . . . . . . . . . . . . . .   (27,471)   (18,271)
 Proceeds from borrowing under credit facility . . . . .    90,900      4,495 
 Purchase of stock for Stock Employee Compensation Trust   (10,094)         - 
 Issuance of common stock under stock
  option plans . . . . . . . . . . . . . . . . . . . . .     3,958     11,025 
 Repurchase of common stock. . . . . . . . . . . . . . .   (20,797)    (9,960)
                                                          ---------  ---------
      Cash provided (used) by financing activities . . .    36,496    (12,711)
                                                          ---------  ---------

Net decrease in cash and equivalents . . . . . . . . . .   (11,719)   (12,588)
Cash and equivalents at beginning of period. . . . . . .    26,013     32,179 
                                                          ---------  ---------
Cash and equivalents at end of period. . . . . . . . . .  $ 14,294   $ 19,591 
                                                          =========  =========

Supplemental Information
 Interest paid . . . . . . . . . . . . . . . . . . . . .  $  1,094   $    703 
 Income taxes (refunded) paid. . . . . . . . . . . . . .    (2,834)     1,129 

<FN>

See  accompanying  notes
</TABLE>


<PAGE>
                      POLICY MANAGEMENT SYSTEMS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 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, "Earnings
Per  Share".  For  the Company, the numerator is the same for the calculation of
both  basic  and  diluted  EPS.  The  following  is  a  reconciliation  of  the
denominator  used  in  the  EPS  calculations  (in  thousands):
<TABLE>
<CAPTION>

                                 Three Months 
                                Ended March 31,
                               ---------------
                                 1999    1998 
                                ------  ------
Weighted  Average  Shares
-------------------------

<S>                             <C>     <C>
Basic EPS. . . . . . . . . . .  36,128  36,687
Effect of common stock options   2,209   2,505
                                ------  ------
Diluted EPS. . . . . . . . . .  38,337  39,192
                                ======  ======
</TABLE>


     Options  to  purchase  2,776 and 1,388 shares of common stock at $42.78 and
$45.56  per  share,  respectively, were outstanding but were not included in the
computation  of  diluted  EPS  for  the  period  ending  March  31,  1999.

OTHER  MATTERS

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


<PAGE>
NOTE  2.     ACQUISITIONS

     On  March  31,  1999,  the  Company  purchased  Legalgard  Partners,  L.P.
("Legalgard"),  a  Philadelphia-based  legal cost containment business for $23.2
million  whose  principal  indirect  investor  was  Reliance  Insurance  Company
("Reliance").  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  acquisition  has  been  recorded  using  the purchase method of accounting.
Accordingly,  the  Consolidated  Statement of Operations of the Company does not
include  Legalgard's results of operations for the first quarter.  The amount in
the  accompanying  balance  sheet "Cost of acquisition to be allocated" reflects
the  unallocated  cost  of  the  Legalgard acquisition in excess of tangible net
assets  which  have  been  consolidated.  The Company has engaged an independent
firm  to  appraise  the  value  of the identifiable intangibles obtained in this
acquisition.  Their  valuation is expected to be finalized over the next several
weeks.


NOTE  3.     CONTINGENCIES

     The  Company  is  involved in litigation which commenced in January 1996 in
the  Circuit  Court  in  Greenville  County,  South  Carolina, with Liberty Life
Insurance  Company  and certain of its affiliates ("Liberty") arising out of the
parties' prior contractual relationship related to the development and licensing
of  Series  III  life  insurance  systems  and  the  subsequent licensing of the
Company's  CYBERTEK  life  insurance systems. Liberty's complaint alleges breach
of  contract,  breach  of express and implied warranties, fraudulent inducement,
breach  of  contract accompanied by a fraudulent act, and recission. Liberty has
alleged  actual  and  consequential  damages  in excess of $180 million and also
seeks  treble and punitive damages. The Company has asserted various affirmative
defenses  and  is pursuing counterclaims against Liberty for breach of contract,
recoupment,  breach  of  good  faith  and  fair  dealing, and breach of contract
accompanied  by  a  fraudulent  act.  The  Company  is seeking equitable relief,
including  injunctive relief, and currently unspecified actual, compensatory and
consequential  damages.

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

     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
them  and  intends  to  vigorously  defend  its  position.

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


NOTE  4.     SEGMENT  INFORMATION

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

1. Property and casualty enterprise software and services (generally referred to
as  "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  and  Canada.

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.

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.

<PAGE>
Information  about the Company's operations for the three months ended March 31,
1999  and  1998  is  as  follows:
<TABLE>
<CAPTION>

                                                Three Months
                                               Ended March 31,
                                             ------------------
                                               1999      1998
                                             --------   -------
                                                (In thousands)
REVENUES  FROM  EXTERNAL  CUSTOMERS

<S>                                          <C>        <C>
Property and casualty . . . . . . . . . . .  $ 73,638   $ 67,525 
Life and financial solutions. . . . . . . .    41,633     30,425 
                                             ---------  ---------
  Total US revenues . . . . . . . . . . . .   115,271     97,950 
International . . . . . . . . . . . . . . .    46,204     42,471 
                                             ---------  ---------
  Total revenues from
     continuing operations. . . . . . . . .  $161,475   $140,421 
                                             =========  =========

Discontinued operations . . . . . . . . . .         -      7,125 

INCOME (EXPENSE) FROM CONTINUING OPERATIONS
Property and casualty . . . . . . . . . . .  $ 21,389   $ 17,928 
Life and financial solutions. . . . . . . .     7,633      6,879 
Corporate and US administrative . . . . . .    (7,172)    (6,491)
                                             ---------  ---------
  Total US operating income . . . . . . . .    21,850     18,316 
                                             ---------  ---------

International . . . . . . . . . . . . . . .     3,439      4,494 
International administrative. . . . . . . .    (1,779)    (1,962)
                                             ---------  ---------
  Total international . . . . . . . . . . .     1,660      2,532 
                                             ---------  ---------

  Operating income. . . . . . . . . . . . .    23,510     20,848 

Equity in earnings of
  unconsolidated affiliates . . . . . . . .       141        205 
Minority interest . . . . . . . . . . . . .       (39)         - 
Other income and expenses . . . . . . . . .    (1,282)      (425)
Income taxes. . . . . . . . . . . . . . . .     8,262      7,761 
                                             ---------  ---------
  Income from continuing operations . . . .  $ 14,068   $ 12,867 
                                             =========  =========

Discontinued operations . . . . . . . . . .  $      -   $    560 
Other income and expenses . . . . . . . . .         -        (23)
Income taxes. . . . . . . . . . . . . . . .         -       (215)
                                             ---------  ---------
  Discontinued operations, net. . . . . . .  $      -   $    322 
                                             =========  =========
</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                Three
                                      Months Ended             Months
                                        March 31,              Ended
                                     --------------
                                      1999    1998            March  31
                                      -----   -----          ------------

<S>                                   <C>     <C>         <C>
Revenues
 Licensing . . . . . . . . . . . . .   22.3%   20.5%        25.1%
 Services. . . . . . . . . . . . . .   77.7    79.5         12.4 
                                      ------  ------             
                                      100.0   100.0         15.0 
                                      ------  ------             
Operating expenses
 Cost of revenues
  Employee compensation and benefits   45.7    45.0         16.6 
  Computer & communication expenses.    7.4     5.6         52.9 
  Depreciation & amortization
   property, equipment &
   capitalized software costs. . . .   10.0    10.8          6.0 
  Other costs & expenses . . . . . .    4.6     4.4         20.6 
 Selling, general &
   administrative expenses . . . . .   15.9    17.6          3.8 
 Amortization of goodwill and
   other intangibles . . . . . . . .    1.9     1.7         27.0 
                                      ------  ------             
                                       85.5    85.1         15.4 
                                      ------  ------             
Operating income . . . . . . . . . .   14.5    14.9         12.8 
Equity in earnings of unconsolidated
   affiliates. . . . . . . . . . . .    0.1     0.1        (31.2)
Other income and expenses. . . . . .   (0.8)   (0.3)       201.6 
                                      ------  ------             
Income from continuing operations
  before income taxes. . . . . . . .   13.8    14.7          8.3 
Income taxes . . . . . . . . . . . .    5.1     5.5          6.5 
                                      ------  ------             
Income from continuing operations. .    8.7     9.2          9.3 
Discontinued operations, net . . . .      -     0.2       (100.0)
                                      ------  ------             
Net income . . . . . . . . . . . . .    8.7%    9.4%         6.7%
                                      ======  ======             
</TABLE>


<PAGE>
                             THREE MONTH COMPARISON

REVENUES
<TABLE>
<CAPTION>

                              Three Months
                             Ended March 31,
                             ---------------
  Licensing                   1999    1998   Change
                             ------  ------  ------
                      (Dollars in Millions)

<S>                           <C>     <C>     <C>
Initial charges. . . . . . .  $18.7   $12.6   48%
Monthly charges. . . . . . .   17.3    16.1    7 
                              ------  ------     
                              $36.0   $28.7   25%
                              ======  ======     

Percentage of total revenues     22%     21%
                               ------  ------     
</TABLE>



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

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

     Initial  license  revenues  increased $6.1 million for the first quarter of
1999  compared  to  the  first  quarter of 1998, with the following increases by
business  segment:  property  and  casualty  up  111%  ($5.8  million); life and
financial  solutions  up  4%  ($0.1  million);  and  international  up  5% ($0.2
million).

Initial  license  charges  for  the  first  quarter of 1999 include right-to-use
licenses  of  $6.4  million.  This  compares  to  $4.9  million  in right-to-use
licenses  for  the  first  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.

First  quarter  1999  initial  license  charges include the first license of the
Company's  new  workplace injury claims management tool, Claims Outcome Advisor,
which  was  sold  to  Reliance  Insurance  Company.

     Monthly  license  charges  increased  $1.2 million for the first quarter of
1999  compared  to  the  first  quarter  of 1998 with the following increases or
decreases  by  business segment:  property and casualty down 15% ($1.2 million);
life  and  financial  solutions  up 53% ($1.7 million); and international up 16%
($0.7  million).


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


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

Initial license revenues  $18.7  $27.3  $14.7  $13.0  $12.6  $25.1  $16.9  $16.6
% of total revenues        12%     16%    10%     9%     9%    17%    13%    13%


<TABLE>
<CAPTION>

                                Three Months
                               Ended March 31,
                              ----------------
  Services                     1999    1998    Change
                              ------  ------   ------
                          (Dollars In Millions)


<S>                           <C>      <C>      <C>
Professional and outsourcing  $125.2   $110.8    13%
Other. . . . . . . . . . . .     0.3      0.9   (64)
                              -------  -------      
                              $125.5   $111.7    12%
                              =======  =======      

Percentage of total revenues      78%      79%
                               -------  -------      
</TABLE>


Professional  and  outsourcing services revenues increased $14.4 million for the
first  quarter of 1999 compared to the first quarter of 1998, with the following
increases by business segment:  property and casualty up 4% ($2.0 million); life
insurance and financial solutions up 39% ($9.4 million); and international up 9%
($3.0  million).  The  increases  are  principally  due  to  increases  in  both
implementation  services  and  in the processing volumes of services provided to
new  and  existing  customers.  The  1999  first  quarter  revenues include $1.6
million  for  professional services rendered and received in connection with the
settlement of a dispute with a customer who has terminated its relationship with
the  Company.  Amounts  paid by the Company in connection with the resolution of
this  dispute  were  covered by insurance and existing legal reserves and had no
impact  on  the  Company's  operating  results.


OPERATING  EXPENSES

COST  OF  REVENUES

     Employee  compensation  and benefits increased 17% for the first quarter of
1999  compared  to  the  first  quarter  of  1998.  The  net  increase  results
principally from higher salaries and related costs associated with the growth in
professional  services staffing being somewhat offset by the transfer of certain
employee  costs  to  computer  and  communication  expenses  as  a result of the
Company's  data  center  outsourcing  agreement with Lockheed Martin Corporation
("Lockheed  Martin").  Had  these  employee  costs  not  been transferred, first
quarter  1999  employee  compensation  and  benefits would have increased 19% by
comparison  to  the  same period last year.  Compensation and benefits increased
14%  ($2.7  million)  internationally  and  17%  ($7.8  million)  domestically.

<PAGE>
Computer and communications expenses increased 53% for the first quarter of 1999
compared to the first quarter of 1998.  At the beginning of the third quarter of
1998, the Company entered into a data center outsourcing agreement with Lockheed
Martin  Corporation.  As a result, certain costs previously included in employee
compensation  and  benefits  are  now  included  in  computer and communications
expense".  Had  these  employee  costs  not been transferred, first quarter 1999
computer and communication expense would have increased 32% by comparison to the
same  period  last year.  The savings from the outsourcing agreement were offset
by  increased  communications volumes, increased network and PC related expenses
and  increased  license  fees  for  operational  data  center  software.

     Depreciation  of  property  and equipment remained relatively unchanged for
the  first  quarter  of  1999  compared  to  the  first  quarter  of  1998

Amortization  of  capitalized  software  costs  increased  7% due to the various
releases  of  the  Company's  internally  developed  software  products.

     Other  operating  costs and expenses increased 21% for the first quarter of
1999  compared  to the first quarter of 1998, principally due to increased rent,
third  party  commissions  and contract loss expenses, partially offset by lower
consultant  expenses  and  increased amounts of capitalized software development
costs.

SELLING,  GENERAL  AND  ADMINISTRATIVE  EXPENSES

     Selling,  general  and  administrative  expenses increased 4% for the first
quarter  of  1999  compared  to  the  first  quarter of 1998, principally due to
increased  other  salary  costs.

AMORTIZATION  OF  GOODWILL  AND  OTHER  INTANGIBLES

     Amortization  of goodwill and other intangibles increased 27% for the first
quarter  of  1999  compared  to  the  first  quarter of 1998, principally due to
increased  amortization  related  to  the  acquisition  of  The  Leverage Group.


OPERATING  INCOME

     1999  first  quarter  operating  income  increased 13% compared to the 1998
first  quarter.  Increases  or  decreases  in  segment  operating  income  were:
property  and casualty increased 19%, life and financial solutions increased 11%
and  international decreased 23%.  The increase in operating income domestically
is  primarily  related  to increases in initial licensing, professional services
and  outsourcing  revenues while operating costs increased at a slower rate than
the  related  revenue.  The  decrease  internationally  is  due  to  increased
development  costs  and  a  lower  percentage  of  initial license revenues as a
component  of  total  revenue.

<PAGE>
OTHER  INCOME  AND  EXPENSE

     Interest  expense  increased  63% for the first quarter of 1999 compared to
the  first  quarter  of 1998, principally due to higher levels of borrowed funds
under  the  Company's  credit  facility.  The  average  nominal  interest  rate
applicable  to  borrowings  under the Company's credit facility during the first
quarter  of  1999  was  5.2%.

INCOME  TAXES

The effective income tax rate (income taxes expressed as a percentage of pre-tax
income) was 37% and 37.6% for the first quarters of 1999 and 1998, respectively.
The  effective  rate  for  the  first quarter of 1999 is higher than the federal
statutory  rate  principally  due to the effect of state and local income taxes.


DISCONTINUED  OPERATIONS

During  1998, the Company's results included discontinued operations of the life
information  services  segment.  The Company sold these operations in the second
quarter  of  1998.


                         LIQUIDITY AND CAPITAL RESOURCES

<TABLE>
<CAPTION>

                                March 31, December 31,
                                   1999      1998
---------------------------------------------------
                               (Dollars in Millions)

<S>                               <C>     <C>
Cash and equivalents, marketable
  securities, and investments. .  $ 24.2  $ 35.7
Current assets . . . . . . . . .   234.2   217.2
Current liabilities. . . . . . .    97.8    98.9
Working capital. . . . . . . . .   136.4   118.3
Long-term debt . . . . . . . . .   157.0    85.0
</TABLE>




<TABLE>
<CAPTION>

                                             Three Months Ended
                                                 March 31,
                                              1999        1998
---------------------------------------------------------------
                                            (Dollars in Millions)

<S>                                           <C>      <C>
Cash provided by operations. . . . . . . . .  $  7.0   $ 23.6 
Cash (used) by investing activities. . . . .   (55.3)   (23.5)
Cash provided (used) by financing activities    36.5    (12.7)
</TABLE>


     The Company's current ratio (current assets divided by current liabilities)
stood  at  2.4  at  March 31, 1999, which management believes is sufficient when
combined  with the available credit facility to provide for day-to-day operating
needs  and  the  flexibility  to take advantage of investment opportunities.  At
March 31, 1999, the Company had available $43 million of its $200 million credit
facility.  Also  at  March 31, 1999, the Company had $6.7 million outstanding on
its  uncommitted  operating  line  of  credit.  During  April  1999, the Company
obtained  an increase in this line of credit to $40 million, which will decrease
to  $20  million  at  June  30,  1999.

<PAGE>
     During  the  three  months  ended  March  31,  1999 the Company capitalized
software  development  costs  of  $16.8  million,  principally  related  to  the
development  of its S3+  client/server property and casualty software, CyberLife
object-oriented  client/server  life  insurance  software, and I+  international
property  and  casualty  solution  as  well  as other ongoing projects for other
domestic  as  well  as  international  products.

     Significant  expenditures  anticipated for the remainder of 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.  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

<PAGE>
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  facility,  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.

     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
designate  the  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.

     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.

     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.


<PAGE>
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.

<PAGE>
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.  Testing  components  that have been repaired.  Such tests include both
system  tests  and  integrated  tests  in  test  environments with machine dates
advanced  to  reflect  future  dates  in  the  year  1999  and  the  year  2000.
IMPLEMENTATION.  Migrating  systems,  applications,  and  hardware to production
environments,  installation  of  replacement  systems  and  the  retirement  of
designated  components,  as  well  as finalizing, documenting and taking care of
residual  activities.  This phase also includes the compilation and retention of
supporting  documentation  that  conforms  to  prescribed  corporate  standards.

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

     The  Company  has  updated  the  code  of  its primary product offerings to
process  dates  across  the century boundary.  Current testing has confirmed the
ability  of  the  applications  to  process data in both centuries. Beyond that,
additional  testing  is  continuing  on  the  Company's  base  products  in  an
environment  that  utilizes  accelerated system dates ("Year 2000 environment").
This  additional  testing  seeks  to confirm that no unanticipated problems will
occur  due  to  third  party  products with which the Company's applications are
designed  to  operate.  Once all of the Company's base products have been tested
in  a  Year  2000  environment,  redundant  testing  will  continue  through the
remainder  of  1999.

     The  Year 2000 environment testing of the Company's products was originally
scheduled  for  completion  by  June 30, 1999.  However, efforts to validate the
Company's  readiness  through  internal  audits  have  identified  the  need for
additional areas of testing and have lead to a re-prioritization of final tests.
The  scheduled  completion  date  of  June  30,  1999 is in the process of being
re-evaluated  in light of the additional testing requirements and may need to be
extended  to  ensure  that  all  products  are  adequately  tested.

     Based  on  current  inventories,  the  Company is continuing the process of
contacting  critical,  third party dependencies to determine whether remediation
efforts  or  alternative  measures  to  handle  Year 2000 impacts are necessary.

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

     The  Company  has  completed Year 2000 application code remediation for all
domestic  property  and  casualty  customers  who  will  be  Business  Process
Outsourcing  ("BPO")/Information  Technology Outsourcing ("ITO") customers after
December  31,  1999.  Live  customer  data is currently being processed on these

<PAGE>
remediated  applications  in  a  production  environment.  Based  upon  customer
preference,  additional testing is scheduled through and to the end of 1999 in a
Year  2000  environment.  This  testing  is  designed  to  confirm  that  no
unanticipated  problems  will  occur  due to third party products with which the
Company's  applications  are  designed  to  operate.

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

     Internal  systems  consist  primarily  of  third-party products used by the
Company  for  its  internal  operations  which  include data center hardware and
software,  internal  financial  and  human  resource systems, and network and PC
hardware  and  software.  The Company's Blythewood data center has completed its
hardware  and  operating  software  inventory, and assessments.  Remediation and
testing  efforts,  which are substantially complete, are on schedule in order to
satisfy  Year  2000 requirements.  As of July 1, 1998, Lockheed Martin took over
the  data  processing  equipment  and operational control of the Blythewood data
center.  Remaining  remediation  efforts  for  this  data  center  are  being
coordinated  with  Lockheed  Martin.  The Company's Australian and European data
centers  have  also  completed  their  inventory  and assessment of hardware and
operating  software  for  Year  2000 requirements.  Final implementation for all
data centers is on schedule for completion by June 30, 1999.  Independent audits
of  these  data  centers,  which  are  scheduled throughout the second and third
quarters of 1999, will verify their readiness. Any additional efforts identified
during  these  audits  will  be  addressed  immediately.

     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
substantially  operational.  The  solution's  human  resources  functionality is
scheduled  to  be  fully  operational  during  the  third  quarter of 1999.  The
selected  solution  meets  Year  2000  requirements.

     The Company has substantially completed its inventory and assessment of its
network  and  PC hardware and software to determine if any Year 2000 remediation
upgrades will be required. As part of the assessment and verification processes,
a number of unanticipated upgrades to the Company's network and desktop software
systems  necessary  to meet Year 2000 requirements have been identified. Further
analysis  is in process to evaluate the impact of these issues on the originally
scheduled  completion  date  of  September  30,  1999.

     The  Company  has  also  assessed  readiness with respect to non-IT systems
which relate primarily to the ordinary maintenance and operation of its physical
facilities,  such  as  elevators,  heating  and  air  conditioning.


<PAGE>
------
Suppliers  and  Trading  Partners
---------------------------------

     The Company's ability to operate is dependent on relationships with certain
suppliers  and  trading  partners,  such  as  electric  utilities  and telephone
companies,  who  provide  services  to  the  Company's  various offices and data
centers  ("mission  critical  suppliers and trading partners").  The Company has
completed  the  process  of identifying all potential mission critical suppliers
and  trading  partners.  All identified mission critical third party systems and
data  interfaces  will  be  tested,  to  the  extent  practical,  in a Year 2000
environment.

     The  Company's  ability to influence the full disclosure and cooperation of
its  mission  critical  suppliers and trading partners is partially dependent on
the  significance  of the Company's relationship with them and their willingness
to  comply.

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

     Since  1993,  the  Company estimates that it has incurred approximately $17
million  of  costs  in  addressing  Year  2000 remediation issues and will spend
approximately  $3  million during the remainder of 1999.  Based on the Company's
experience  to  date, it is not anticipated that the completion of the remaining
Year  2000  remediation  efforts  will  have  a material adverse effect upon the
Company's  financial  position  or results of operations. The Company's past and
anticipated  future  remediation  costs  are  funded  by  operations.

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

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

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

<PAGE>
     The Company has prepared contingency plans for its facilities and is in the
process  of  developing  operational  contingency  plans  for  mission  critical
organizations  to  minimize  the  effect  of  unforeseen  disruptions.

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

ITEMS  2,  3,  4  AND  5  are  not  applicable.

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

Exhibits

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

Reports  on  Form  8-K

     The  Company  did not file any reports on Form 8-K during the quarter ended
March  31,  1999.
<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: May 17, 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 July 19, 1994, incorporating
all  amendments  thereto subsequent to December 31, 1993 (filed as an Exhibit to
Form  10-K  for  the year ended December 31, 1994, and is incorporated herein by
reference)

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

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

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

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

10.     MATERIAL  CONTRACTS

A.     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  a  schedule  identifying  particulars  for  each named executive

<PAGE>
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  a  schedule  identifying  particulars  for  each named executive
officer  (filed  as  an Exhibit to Form 10-Q for the quarter ended September 30,
1994,  and  is  incorporated  herein  by  reference)

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

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 Exhibits 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  a  schedule  identifying  particulars  for  each named executive
officer  (filed  as an Exhibit to Form 10-Q for the quarter ended June 30, 1995,
and  is  incorporated  herein  by  reference)

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

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

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

R.     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)

S.     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)

T.     Registration  Rights  Agreement,  dated  March  8,  1996,  between Policy
Management  Systems  Corporation  and  Continental Casualty Company (filed as an

<PAGE>
Exhibit  to  Form 10-Q for the quarter ended March 31, 1996, and is incorporated
herein  by  reference)

U.     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)

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

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

X.     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)

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

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

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

BB.     Credit  Agreement  dated  as  of August 8, 1997, among Policy Management
Systems Corporation, the Guarantors Party hereto, Bank of America National Trust
and  Savings Association and the Other Financial Institution Party Hereto (filed
as  an  exhibit  to  Form  10-Q for the quarter ended September 30, 1997, and is
incorporated  herein  by  reference)

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

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

EE.     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  the  quarter  ended  September  30,  1998  and  is
incorporated  herein  by  reference)

<PAGE>
FF.     Memorandum  of  Amendment  of  Employment  Agreement with Paul R. Butare
dated  December  10,  1998  (filed as an exhibit to Form 10-K for the year ended
December  31,  1998  and  is  incorporated  herein  by  reference)

GG.     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)

HH.     Annual Bonus Program for Executive Officers (filed as an exhibit to Form
10-K  for  the  year  ended  December  31,  1998  and  is incorporated herein by
reference)

II.     Form  of  Restricted  Stock  Award  Agreement  dated  March 1, 1999 with
Messrs.  Berkeley,  Feddersen, Palms, Sargent, Seibels and Trub (filed herewith)

JJ.     Form  of  Restricted  Stock Award Agreement for named executive officers
together  with schedule identifying particulars for each named executive officer
(filed  herewith)

27.     FINANCIAL  DATA  SCHEDULES

A.     Three  Months  Ended  March  31, 1999 filed herewith (EDGAR version only)
[{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 73714}]
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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 MARCH 31, 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.

          35,510,304 Common shares, $.01 par value, as of May 13, 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 Income for the Three
Months Ended March 31, 1999 and 1998 . . . . . . . .   3

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

Consolidated Statements of Changes in Stockholders'
Equity and Comprehensive Income for the Three
Months Ended March 31, 1999. . . . . . . . . . . . .   5

Consolidated Statements of Cash Flows for the
Three Months Ended March 31, 1999 and 1998 . . . . .   6

Notes to Consolidated Financial Statements . . . . .   7

Item 2. Management's Discussion and Analysis of
  Financial Condition and Results of Operations. . .  11

PART II. OTHER INFORMATION

Item 1. Legal Proceedings. . . . . . . . . . . . . .  22

Item 6. Exhibits and Reports on Form 8-K . . . . . .  22

Signatures . . . . . . . . . . . . . . . . . . . . .  23
PART I
                              FINANCIAL INFORMATION
                      POLICY MANAGEMENT SYSTEMS CORPORATION
                        CONSOLIDATED STATEMENTS OF INCOME

                                                      Three Months
                                                     Ended March 31,
                                                     1999       1998
                                                      (Unaudited)
                                                   ------------------
                                                 (In thousands, except
                                                    per share data)
REVENUES
 Licensing . . . . . . . . . . . . . . . . . . .  $ 35,952   $ 28,737 
 Services. . . . . . . . . . . . . . . . . . . .   125,523    111,684 
                                                  ---------  ---------
                                                   161,475    140,421 
                                                  ---------  ---------
OPERATING EXPENSES
 Cost of revenues
   Employee compensation and benefits. . . . . .    73,725     63,242 
   Computer and communications expenses. . . . .    11,913      7,790 
   Depreciation and amortization of property,
    equipment and capitalized software costs . .    16,140     15,226 
   Other costs and expenses. . . . . . . . . . .     7,458      6,185 
 Selling, general and administrative expenses. .    25,652     24,707 
 Amortization of goodwill and other intangibles.     3,077      2,423 
                                                  ---------  ---------
                                                   137,965    119,573 
                                                  ---------  ---------

OPERATING INCOME . . . . . . . . . . . . . . . .    23,510     20,848 

Equity in earnings of unconsolidated affiliates.       141        205 

Minority interest. . . . . . . . . . . . . . . .       (39)         - 

Other Income and Expenses
  Investment income. . . . . . . . . . . . . . .       231        502 
  Interest expense and other charges . . . . . .    (1,513)      (927)
                                                  ---------  ---------
                                                    (1,282)      (425)
                                                  ---------  ---------
Income from continuing operations
  before income taxes. . . . . . . . . . . . . .    22,330     20,628 
Income taxes . . . . . . . . . . . . . . . . . .     8,262      7,761 
                                                  ---------  ---------

INCOME FROM CONTINUING OPERATIONS. . . . . . . .    14,068     12,867 

DISCONTINUED OPERATIONS:
  Income from operations of discontinued
    operations less applicable income taxes
    of $215. . . . . . . . . . . . . . . . . . .         -        322 
                                                  ---------  ---------

NET INCOME . . . . . . . . . . . . . . . . . . .  $ 14,068   $ 13,189 
                                                  =========  =========

BASIC EARNINGS PER SHARE:
  Income from continuing operations. . . . . . .  $   0.39   $   0.35 
  Income from discontinued operations. . . . . .         -       0.01 
                                                  ---------  ---------
                                                  $   0.39   $   0.36 
                                                  =========  =========
DILUTED EARNINGS PER SHARE:
  Income from continuing operations. . . . . . .  $   0.37   $   0.33 
  Income from discontinued operations. . . . . .         -       0.01 
                                                  ---------  ---------
                                                  $   0.37   $   0.34 
                                                  =========  =========

Weighted average common shares . . . . . . . . .    36,128     36,687 
Weighted average common shares assuming dilution    38,337     39,192
See  accompanying  notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                            CONSOLIDATED BALANCE SHEETS
 
                                                          (Unaudited)   (Audited)
                                                            March 31,  December 31,
                                                              1999         1998
                                                             --------    --------
                                                (In thousands, except share data)
Assets
Current assets
 Cash and equivalents. . . . . . . . . . . . . . . . . . . .  $ 14,294   $ 26,013 
 Receivables, net of allowance for uncollectible
  amounts of $1,660 ($2,051 at 1998) . . . . . . . . . . . .   144,095    104,299 
 Accrued revenues. . . . . . . . . . . . . . . . . . . . . .    41,877     45,686 
 Deferred income taxes . . . . . . . . . . . . . . . . . . .     7,121      9,336 
 Other receivable. . . . . . . . . . . . . . . . . . . . . .         -     11,279 
 Prepaids. . . . . . . . . . . . . . . . . . . . . . . . . .    12,818      8,645 
 Other . . . . . . . . . . . . . . . . . . . . . . . . . . .    14,028     11,968 
                                                              ---------  ---------
   Total current assets. . . . . . . . . . . . . . . . . . .   234,233    217,226 

Property and equipment, at cost less accumulated
 depreciation and amortization of $128,740
 ($128,363 at 1998). . . . . . . . . . . . . . . . . . . . .   141,265    135,436 
Accrued revenues . . . . . . . . . . . . . . . . . . . . . .     9,742      7,844 
Income tax receivable. . . . . . . . . . . . . . . . . . . .     4,041      4,041 
Goodwill and other intangibles, net. . . . . . . . . . . . .    82,540     81,401 
Capitalized software costs, net. . . . . . . . . . . . . . .   226,482    220,908 
Deferred income taxes. . . . . . . . . . . . . . . . . . . .    24,277     24,787 
Investments. . . . . . . . . . . . . . . . . . . . . . . . .     9,953      9,661 
Cost of acquisition to be allocated. . . . . . . . . . . . .    22,108          - 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . .    18,929     17,394 
                                                              ---------  ---------
     Total assets. . . . . . . . . . . . . . . . . . . . . .  $773,570   $718,698 
                                                              =========  =========

Liabilities
Current liabilities
 Accounts payable and accrued expenses . . . . . . . . . . .  $ 50,209   $ 57,129 
 Current portion of long-term debt . . . . . . . . . . . . .     7,241     15,812 
 Income taxes payable. . . . . . . . . . . . . . . . . . . .    18,723      9,202 
 Unearned revenues . . . . . . . . . . . . . . . . . . . . .    20,709     15,804 
 Other . . . . . . . . . . . . . . . . . . . . . . . . . . .       890        988 
                                                              ---------  ---------
   Total current liabilities . . . . . . . . . . . . . . . .    97,772     98,935 

Long-term debt . . . . . . . . . . . . . . . . . . . . . . .   157,000     85,000 
Deferred income taxes. . . . . . . . . . . . . . . . . . . .    97,244     98,233 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . .     3,739      3,520 
                                                              ---------  ---------
    Total liabilities. . . . . . . . . . . . . . . . . . . .   355,755    285,688 
                                                              ---------  ---------

Minority interest. . . . . . . . . . . . . . . . . . . . . .       551        526 

Commitments and contingencies (Note 3)

Stockholders' equity
Special stock, $.01 par value, 5,000,000 shares authorized .         -          - 
Common stock, $.01 par value, 75,000,000 shares authorized,
 35,886,073 shares issued and outstanding
 (36,357,139 at December 31, 1998) . . . . . . . . . . . . .       359        364 
Additional paid-in capital . . . . . . . . . . . . . . . . .    65,559     82,396 
Retained earnings. . . . . . . . . . . . . . . . . . . . . .   373,522    359,454 
Accumulated other comprehensive income . . . . . . . . . . .   (12,101)    (9,730)
Stock employee compensation trust. . . . . . . . . . . . . .   (10,075)         - 
                                                              ---------  ---------
    Total stockholders' equity . . . . . . . . . . . . . . .   417,264    432,484 
                                                              ---------  ---------
     Total liabilities and stockholders' equity. . . . . . .  $773,570   $718,698 
                                                              =========  =========
See  accompanying  notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                  CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                   AND COMPREHENSIVE INCOME
                                         (Unaudited)

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

Comprehensive income
 Net income . . . . . . . . .        -          -     14,068         -          -     14,068 
 Other comprehensive income,
  net of tax:
   Foreign currency
    translation adjustments .        -          -          -    (2,371)         -     (2,371)
                                                                                    ---------
Total comprehensive income. .                                                         11,697 
                                                                                    ---------

Purchase of shares for SECT .        -          -          -         -    (10,094)   (10,094)
Restricted stock vested . . .        -         (3)         -         -         19         16 
Stock options exercised
  (108,934 shares). . . . . .        1      3,957          -         -          -      3,958 
Repurchase of 580,000 shares
  of common stock . . . . . .       (6)   (20,791)         -         -          -    (20,797)
                               --------  ---------  --------  ---------  ---------  ---------

BALANCE, MARCH 31, 1999 . . .  $   359   $ 65,559   $373,522  $(12,101)  $(10,075)  $417,264 
                               ========  =========  ========  =========  =========  =========
See  accompanying  notes

(1)     Comprehensive  income  for  the  three  months  ended  March  31,  1998 was $12,881.
POLICY MANAGEMENT SYSTEMS CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                             Three Months
                                                            Ended March 31,
                                                            1999       1998
                                                           -------    -------
                                                             (In thousands)
Operating  Activities
Net income. . . . . . . . . . . . . . . . . . . . . . .  $ 14,068   $ 13,189 
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation and amortization . . . . . . . . . . . .    20,403     19,718 
   Deferred income taxes . . . . . . . . . . . . . . . .     1,736      3,264 
   Provision for uncollectible accounts. . . . . . . . .      (299)       (42)
 Changes in assets and liabilities:
   Receivables . . . . . . . . . . . . . . . . . . . . .   (37,803)      (972)
   Accrued revenues. . . . . . . . . . . . . . . . . . .     2,053      3,074 
   Other receivable. . . . . . . . . . . . . . . . . . .    11,279          - 
   Accounts payable and accrued expenses . . . . . . . .    (7,682)    (9,155)
   Income taxes payable. . . . . . . . . . . . . . . . .     9,521      1,208 
   Unearned revenues . . . . . . . . . . . . . . . . . .     4,657     (2,281)
 Other, net. . . . . . . . . . . . . . . . . . . . . . .   (10,895)    (4,425)
                                                          ---------  ---------
      Cash provided by operations. . . . . . . . . . . .     7,038     23,578 
                                                          ---------  ---------

Investing Activities
 Proceeds from sales/maturities of available-for-
  sale securities. . . . . . . . . . . . . . . . . . . .         -      3,257 
 Proceeds from sales of held-to-
  maturity securities. . . . . . . . . . . . . . . . . .         -      2,969 
 Acquisition of property and equipment . . . . . . . . .   (12,123)    (9,244)
 Capitalized internal software development costs . . . .   (16,841)   (14,880)
 Business acquisition. . . . . . . . . . . . . . . . . .    (4,045)    (2,688)
 Cost of acquisition to be allocated . . . . . . . . . .   (22,108)         - 
 Investment in unconsolidated affiliate. . . . . . . . .        36          - 
 Proceeds from disposal of property and equipment. . . .       221        200 
 Other . . . . . . . . . . . . . . . . . . . . . . . . .      (393)    (3,069)
                                                          ---------  ---------
      Cash used by investing activities. . . . . . . . .   (55,253)   (23,455)
                                                          ---------  ---------

Financing Activities
 Payments on long-term debt. . . . . . . . . . . . . . .   (27,471)   (18,271)
 Proceeds from borrowing under credit facility . . . . .    90,900      4,495 
 Purchase of stock for Stock Employee Compensation Trust   (10,094)         - 
 Issuance of common stock under stock
  option plans . . . . . . . . . . . . . . . . . . . . .     3,958     11,025 
 Repurchase of common stock. . . . . . . . . . . . . . .   (20,797)    (9,960)
                                                          ---------  ---------
      Cash provided (used) by financing activities . . .    36,496    (12,711)
                                                          ---------  ---------

Net decrease in cash and equivalents . . . . . . . . . .   (11,719)   (12,588)
Cash and equivalents at beginning of period. . . . . . .    26,013     32,179 
                                                          ---------  ---------
Cash and equivalents at end of period. . . . . . . . . .  $ 14,294   $ 19,591 
                                                          =========  =========

Supplemental Information
 Interest paid . . . . . . . . . . . . . . . . . . . . .  $  1,094   $    703 
 Income taxes (refunded) paid. . . . . . . . . . . . . .    (2,834)     1,129
See  accompanying  notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 MARCH 31, 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, "Earnings
Per  Share".  For  the Company, the numerator is the same for the calculation of
both  basic  and  diluted  EPS.  The  following  is  a  reconciliation  of  the
denominator  used  in  the  EPS  calculations  (in  thousands):
Three Months 
                                Ended March 31,
                               ---------------
                                 1999    1998 
                                ------  ------
Weighted  Average  Shares
-------------------------
Basic EPS. . . . . . . . . . .  36,128  36,687
Effect of common stock options   2,209   2,505
                                ------  ------
Diluted EPS. . . . . . . . . .  38,337  39,192
                                ======  ======
Options  to  purchase  2,776 and 1,388 shares of common stock at $42.78 and
$45.56  per  share,  respectively, were outstanding but were not included in the
computation  of  diluted  EPS  for  the  period  ending  March  31,  1999.

OTHER  MATTERS

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

     On  March  31,  1999,  the  Company  purchased  Legalgard  Partners,  L.P.
("Legalgard"),  a  Philadelphia-based  legal cost containment business for $23.2
million  whose  principal  indirect  investor  was  Reliance  Insurance  Company
("Reliance").  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  acquisition  has  been  recorded  using  the purchase method of accounting.
Accordingly,  the  Consolidated  Statement of Operations of the Company does not
include  Legalgard's results of operations for the first quarter.  The amount in
the  accompanying  balance  sheet "Cost of acquisition to be allocated" reflects
the  unallocated  cost  of  the  Legalgard acquisition in excess of tangible net
assets  which  have  been  consolidated.  The Company has engaged an independent
firm  to  appraise  the  value  of the identifiable intangibles obtained in this
acquisition.  Their  valuation is expected to be finalized over the next several
weeks.

NOTE  3.     CONTINGENCIES

     The  Company  is  involved in litigation which commenced in January 1996 in
the  Circuit  Court  in  Greenville  County,  South  Carolina, with Liberty Life
Insurance  Company  and certain of its affiliates ("Liberty") arising out of the
parties' prior contractual relationship related to the development and licensing
of  Series  III  life  insurance  systems  and  the  subsequent licensing of the
Company's  CYBERTEK  life  insurance systems. Liberty's complaint alleges breach
of  contract,  breach  of express and implied warranties, fraudulent inducement,
breach  of  contract accompanied by a fraudulent act, and recission. Liberty has
alleged  actual  and  consequential  damages  in excess of $180 million and also
seeks  treble and punitive damages. The Company has asserted various affirmative
defenses  and  is pursuing counterclaims against Liberty for breach of contract,
recoupment,  breach  of  good  faith  and  fair  dealing, and breach of contract
accompanied  by  a  fraudulent  act.  The  Company  is seeking equitable relief,
including  injunctive relief, and currently unspecified actual, compensatory and
consequential  damages.

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

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

NOTE  4.     SEGMENT  INFORMATION

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

1. Property and casualty enterprise software and services (generally referred to
as  "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  and  Canada.

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.

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.
Information  about the Company's operations for the three months ended March 31,
1999  and  1998  is  as  follows:
Three Months
                                               Ended March 31,
                                             ------------------
                                               1999      1998
                                             --------   -------
                                                (In thousands)
REVENUES  FROM  EXTERNAL  CUSTOMERS
Property and casualty . . . . . . . . . . .  $ 73,638   $ 67,525 
Life and financial solutions. . . . . . . .    41,633     30,425 
                                             ---------  ---------
  Total US revenues . . . . . . . . . . . .   115,271     97,950 
International . . . . . . . . . . . . . . .    46,204     42,471 
                                             ---------  ---------
  Total revenues from
     continuing operations. . . . . . . . .  $161,475   $140,421 
                                             =========  =========

Discontinued operations . . . . . . . . . .         -      7,125 

INCOME (EXPENSE) FROM CONTINUING OPERATIONS
Property and casualty . . . . . . . . . . .  $ 21,389   $ 17,928 
Life and financial solutions. . . . . . . .     7,633      6,879 
Corporate and US administrative . . . . . .    (7,172)    (6,491)
                                             ---------  ---------
  Total US operating income . . . . . . . .    21,850     18,316 
                                             ---------  ---------

International . . . . . . . . . . . . . . .     3,439      4,494 
International administrative. . . . . . . .    (1,779)    (1,962)
                                             ---------  ---------
  Total international . . . . . . . . . . .     1,660      2,532 
                                             ---------  ---------

  Operating income. . . . . . . . . . . . .    23,510     20,848 

Equity in earnings of
  unconsolidated affiliates . . . . . . . .       141        205 
Minority interest . . . . . . . . . . . . .       (39)         - 
Other income and expenses . . . . . . . . .    (1,282)      (425)
Income taxes. . . . . . . . . . . . . . . .     8,262      7,761 
                                             ---------  ---------
  Income from continuing operations . . . .  $ 14,068   $ 12,867 
                                             =========  =========

Discontinued operations . . . . . . . . . .  $      -   $    560 
Other income and expenses . . . . . . . . .         -        (23)
Income taxes. . . . . . . . . . . . . . . .         -       (215)
                                             ---------  ---------
  Discontinued operations, net. . . . . . .  $      -   $    322 
                                             =========  =========
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                Three
                                      Months Ended             Months
                                        March 31,              Ended
                                     --------------
                                      1999    1998            March  31
                                      -----   -----          ------------
Revenues
 Licensing . . . . . . . . . . . . .   22.3%   20.5%        25.1%
 Services. . . . . . . . . . . . . .   77.7    79.5         12.4 
                                      ------  ------             
                                      100.0   100.0         15.0 
                                      ------  ------             
Operating expenses
 Cost of revenues
  Employee compensation and benefits   45.7    45.0         16.6 
  Computer & communication expenses.    7.4     5.6         52.9 
  Depreciation & amortization
   property, equipment &
   capitalized software costs. . . .   10.0    10.8          6.0 
  Other costs & expenses . . . . . .    4.6     4.4         20.6 
 Selling, general &
   administrative expenses . . . . .   15.9    17.6          3.8 
 Amortization of goodwill and
   other intangibles . . . . . . . .    1.9     1.7         27.0 
                                      ------  ------             
                                       85.5    85.1         15.4 
                                      ------  ------             
Operating income . . . . . . . . . .   14.5    14.9         12.8 
Equity in earnings of unconsolidated
   affiliates. . . . . . . . . . . .    0.1     0.1        (31.2)
Other income and expenses. . . . . .   (0.8)   (0.3)       201.6 
                                      ------  ------             
Income from continuing operations
  before income taxes. . . . . . . .   13.8    14.7          8.3 
Income taxes . . . . . . . . . . . .    5.1     5.5          6.5 
                                      ------  ------             
Income from continuing operations. .    8.7     9.2          9.3 
Discontinued operations, net . . . .      -     0.2       (100.0)
                                      ------  ------             
Net income . . . . . . . . . . . . .    8.7%    9.4%         6.7%
                                      ======  ======
THREE MONTH COMPARISON

REVENUES
Three Months
                             Ended March 31,
                             ---------------
  Licensing                   1999    1998   Change
                             ------  ------  ------
                      (Dollars in Millions)
Initial charges. . . . . . .  $18.7   $12.6   48%
Monthly charges. . . . . . .   17.3    16.1    7 
                              ------  ------     
                              $36.0   $28.7   25%
                              ======  ======     

Percentage of total revenues     22%     21%
                               ------  ------
In  licensing  the  Company's  products,  customers  generally  obligate
themselves  to a non-refundable initial license charge and a monthly license fee
payable  over  a  specified  period  of  time,  which  is  usually  six  years.

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

     Initial  license  revenues  increased $6.1 million for the first quarter of
1999  compared  to  the  first  quarter of 1998, with the following increases by
business  segment:  property  and  casualty  up  111%  ($5.8  million); life and
financial  solutions  up  4%  ($0.1  million);  and  international  up  5% ($0.2
million).

Initial  license  charges  for  the  first  quarter of 1999 include right-to-use
licenses  of  $6.4  million.  This  compares  to  $4.9  million  in right-to-use
licenses  for  the  first  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.

First  quarter  1999  initial  license  charges include the first license of the
Company's  new  workplace injury claims management tool, Claims Outcome Advisor,
which  was  sold  to  Reliance  Insurance  Company.

     Monthly  license  charges  increased  $1.2 million for the first quarter of
1999  compared  to  the  first  quarter  of 1998 with the following increases or
decreases  by  business segment:  property and casualty down 15% ($1.2 million);
life  and  financial  solutions  up 53% ($1.7 million); and international up 16%
($0.7  million).
Because  a significant portion of initial licensing revenues are recorded at the
time  new systems are licensed and such licensing activity can vary dramatically
from  quarter  to quarter, there can be significant fluctuations in revenue from
quarter to quarter.  Set forth below is a comparison of initial license revenues
for the last eight quarters expressed as a percentage of total revenues for each
of  the  periods  presented:

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

Initial license revenues  $18.7  $27.3  $14.7  $13.0  $12.6  $25.1  $16.9  $16.6
% of total revenues        12%     16%    10%     9%     9%    17%    13%    13%
Three Months
                               Ended March 31,
                              ----------------
  Services                     1999    1998    Change
                              ------  ------   ------
                          (Dollars In Millions)
Professional and outsourcing  $125.2   $110.8    13%
Other. . . . . . . . . . . .     0.3      0.9   (64)
                              -------  -------      
                              $125.5   $111.7    12%
                              =======  =======      

Percentage of total revenues      78%      79%
                               -------  -------
Professional  and  outsourcing services revenues increased $14.4 million for the
first  quarter of 1999 compared to the first quarter of 1998, with the following
increases by business segment:  property and casualty up 4% ($2.0 million); life
insurance and financial solutions up 39% ($9.4 million); and international up 9%
($3.0  million).  The  increases  are  principally  due  to  increases  in  both
implementation  services  and  in the processing volumes of services provided to
new  and  existing  customers.  The  1999  first  quarter  revenues include $1.6
million  for  professional services rendered and received in connection with the
settlement of a dispute with a customer who has terminated its relationship with
the  Company.  Amounts  paid by the Company in connection with the resolution of
this  dispute  were  covered by insurance and existing legal reserves and had no
impact  on  the  Company's  operating  results.

OPERATING  EXPENSES

COST  OF  REVENUES

     Employee  compensation  and benefits increased 17% for the first quarter of
1999  compared  to  the  first  quarter  of  1998.  The  net  increase  results
principally from higher salaries and related costs associated with the growth in
professional  services staffing being somewhat offset by the transfer of certain
employee  costs  to  computer  and  communication  expenses  as  a result of the
Company's  data  center  outsourcing  agreement with Lockheed Martin Corporation
("Lockheed  Martin").  Had  these  employee  costs  not  been transferred, first
quarter  1999  employee  compensation  and  benefits would have increased 19% by
comparison  to  the  same period last year.  Compensation and benefits increased
14%  ($2.7  million)  internationally  and  17%  ($7.8  million)  domestically.
Computer and communications expenses increased 53% for the first quarter of 1999
compared to the first quarter of 1998.  At the beginning of the third quarter of
1998, the Company entered into a data center outsourcing agreement with Lockheed
Martin  Corporation.  As a result, certain costs previously included in employee
compensation  and  benefits  are  now  included  in  computer and communications
expense".  Had  these  employee  costs  not been transferred, first quarter 1999
computer and communication expense would have increased 32% by comparison to the
same  period  last year.  The savings from the outsourcing agreement were offset
by  increased  communications volumes, increased network and PC related expenses
and  increased  license  fees  for  operational  data  center  software.

     Depreciation  of  property  and equipment remained relatively unchanged for
the  first  quarter  of  1999  compared  to  the  first  quarter  of  1998

Amortization  of  capitalized  software  costs  increased  7% due to the various
releases  of  the  Company's  internally  developed  software  products.

     Other  operating  costs and expenses increased 21% for the first quarter of
1999  compared  to the first quarter of 1998, principally due to increased rent,
third  party  commissions  and contract loss expenses, partially offset by lower
consultant  expenses  and  increased amounts of capitalized software development
costs.

SELLING,  GENERAL  AND  ADMINISTRATIVE  EXPENSES

     Selling,  general  and  administrative  expenses increased 4% for the first
quarter  of  1999  compared  to  the  first  quarter of 1998, principally due to
increased  other  salary  costs.

AMORTIZATION  OF  GOODWILL  AND  OTHER  INTANGIBLES

     Amortization  of goodwill and other intangibles increased 27% for the first
quarter  of  1999  compared  to  the  first  quarter of 1998, principally due to
increased  amortization  related  to  the  acquisition  of  The  Leverage Group.

OPERATING  INCOME

     1999  first  quarter  operating  income  increased 13% compared to the 1998
first  quarter.  Increases  or  decreases  in  segment  operating  income  were:
property  and casualty increased 19%, life and financial solutions increased 11%
and  international decreased 23%.  The increase in operating income domestically
is  primarily  related  to increases in initial licensing, professional services
and  outsourcing  revenues while operating costs increased at a slower rate than
the  related  revenue.  The  decrease  internationally  is  due  to  increased
development  costs  and  a  lower  percentage  of  initial license revenues as a
component  of  total  revenue.
OTHER  INCOME  AND  EXPENSE

     Interest  expense  increased  63% for the first quarter of 1999 compared to
the  first  quarter  of 1998, principally due to higher levels of borrowed funds
under  the  Company's  credit  facility.  The  average  nominal  interest  rate
applicable  to  borrowings  under the Company's credit facility during the first
quarter  of  1999  was  5.2%.

INCOME  TAXES

The effective income tax rate (income taxes expressed as a percentage of pre-tax
income) was 37% and 37.6% for the first quarters of 1999 and 1998, respectively.
The  effective  rate  for  the  first quarter of 1999 is higher than the federal
statutory  rate  principally  due to the effect of state and local income taxes.

DISCONTINUED  OPERATIONS

During  1998, the Company's results included discontinued operations of the life
information  services  segment.  The Company sold these operations in the second
quarter  of  1998.

                         LIQUIDITY AND CAPITAL RESOURCES
March 31, December 31,
                                   1999      1998
---------------------------------------------------
                               (Dollars in Millions)
Cash and equivalents, marketable
  securities, and investments. .  $ 24.2  $ 35.7
Current assets . . . . . . . . .   234.2   217.2
Current liabilities. . . . . . .    97.8    98.9
Working capital. . . . . . . . .   136.4   118.3
Long-term debt . . . . . . . . .   157.0    85.0
Three Months Ended
                                                 March 31,
                                              1999        1998
---------------------------------------------------------------
                                            (Dollars in Millions)
Cash provided by operations. . . . . . . . .  $  7.0   $ 23.6 
Cash (used) by investing activities. . . . .   (55.3)   (23.5)
Cash provided (used) by financing activities    36.5    (12.7)
The Company's current ratio (current assets divided by current liabilities)
stood  at  2.4  at  March 31, 1999, which management believes is sufficient when
combined  with the available credit facility to provide for day-to-day operating
needs  and  the  flexibility  to take advantage of investment opportunities.  At
March 31, 1999, the Company had available $43 million of its $200 million credit
facility.  Also  at  March 31, 1999, the Company had $6.7 million outstanding on
its  uncommitted  operating  line  of  credit.  During  April  1999, the Company
obtained  an increase in this line of credit to $40 million, which will decrease
to  $20  million  at  June  30,  1999.
During  the  three  months  ended  March  31,  1999 the Company capitalized
software  development  costs  of  $16.8  million,  principally  related  to  the
development  of its S3+  client/server property and casualty software, CyberLife
object-oriented  client/server  life  insurance  software, and I+  international
property  and  casualty  solution  as  well  as other ongoing projects for other
domestic  as  well  as  international  products.

     Significant  expenditures  anticipated for the remainder of 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.  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  facility,  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.

     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
designate  the  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.

     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.

     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.  Testing  components  that have been repaired.  Such tests include both
system  tests  and  integrated  tests  in  test  environments with machine dates
advanced  to  reflect  future  dates  in  the  year  1999  and  the  year  2000.
IMPLEMENTATION.  Migrating  systems,  applications,  and  hardware to production
environments,  installation  of  replacement  systems  and  the  retirement  of
designated  components,  as  well  as finalizing, documenting and taking care of
residual  activities.  This phase also includes the compilation and retention of
supporting  documentation  that  conforms  to  prescribed  corporate  standards.

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

     The  Company  has  updated  the  code  of  its primary product offerings to
process  dates  across  the century boundary.  Current testing has confirmed the
ability  of  the  applications  to  process data in both centuries. Beyond that,
additional  testing  is  continuing  on  the  Company's  base  products  in  an
environment  that  utilizes  accelerated system dates ("Year 2000 environment").
This  additional  testing  seeks  to confirm that no unanticipated problems will
occur  due  to  third  party  products with which the Company's applications are
designed  to  operate.  Once all of the Company's base products have been tested
in  a  Year  2000  environment,  redundant  testing  will  continue  through the
remainder  of  1999.

     The  Year 2000 environment testing of the Company's products was originally
scheduled  for  completion  by  June 30, 1999.  However, efforts to validate the
Company's  readiness  through  internal  audits  have  identified  the  need for
additional areas of testing and have lead to a re-prioritization of final tests.
The  scheduled  completion  date  of  June  30,  1999 is in the process of being
re-evaluated  in light of the additional testing requirements and may need to be
extended  to  ensure  that  all  products  are  adequately  tested.

     Based  on  current  inventories,  the  Company is continuing the process of
contacting  critical,  third party dependencies to determine whether remediation
efforts  or  alternative  measures  to  handle  Year 2000 impacts are necessary.

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

     The  Company  has  completed Year 2000 application code remediation for all
domestic  property  and  casualty  customers  who  will  be  Business  Process
Outsourcing  ("BPO")/Information  Technology Outsourcing ("ITO") customers after
December  31,  1999.  Live  customer  data is currently being processed on these
remediated  applications  in  a  production  environment.  Based  upon  customer
preference,  additional testing is scheduled through and to the end of 1999 in a
Year  2000  environment.  This  testing  is  designed  to  confirm  that  no
unanticipated  problems  will  occur  due to third party products with which the
Company's  applications  are  designed  to  operate.

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

     Internal  systems  consist  primarily  of  third-party products used by the
Company  for  its  internal  operations  which  include data center hardware and
software,  internal  financial  and  human  resource systems, and network and PC
hardware  and  software.  The Company's Blythewood data center has completed its
hardware  and  operating  software  inventory, and assessments.  Remediation and
testing  efforts,  which are substantially complete, are on schedule in order to
satisfy  Year  2000 requirements.  As of July 1, 1998, Lockheed Martin took over
the  data  processing  equipment  and operational control of the Blythewood data
center.  Remaining  remediation  efforts  for  this  data  center  are  being
coordinated  with  Lockheed  Martin.  The Company's Australian and European data
centers  have  also  completed  their  inventory  and assessment of hardware and
operating  software  for  Year  2000 requirements.  Final implementation for all
data centers is on schedule for completion by June 30, 1999.  Independent audits
of  these  data  centers,  which  are  scheduled throughout the second and third
quarters of 1999, will verify their readiness. Any additional efforts identified
during  these  audits  will  be  addressed  immediately.

     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
substantially  operational.  The  solution's  human  resources  functionality is
scheduled  to  be  fully  operational  during  the  third  quarter of 1999.  The
selected  solution  meets  Year  2000  requirements.

     The Company has substantially completed its inventory and assessment of its
network  and  PC hardware and software to determine if any Year 2000 remediation
upgrades will be required. As part of the assessment and verification processes,
a number of unanticipated upgrades to the Company's network and desktop software
systems  necessary  to meet Year 2000 requirements have been identified. Further
analysis  is in process to evaluate the impact of these issues on the originally
scheduled  completion  date  of  September  30,  1999.

     The  Company  has  also  assessed  readiness with respect to non-IT systems
which relate primarily to the ordinary maintenance and operation of its physical
facilities,  such  as  elevators,  heating  and  air  conditioning.
------
Suppliers  and  Trading  Partners
---------------------------------

     The Company's ability to operate is dependent on relationships with certain
suppliers  and  trading  partners,  such  as  electric  utilities  and telephone
companies,  who  provide  services  to  the  Company's  various offices and data
centers  ("mission  critical  suppliers and trading partners").  The Company has
completed  the  process  of identifying all potential mission critical suppliers
and  trading  partners.  All identified mission critical third party systems and
data  interfaces  will  be  tested,  to  the  extent  practical,  in a Year 2000
environment.

     The  Company's  ability to influence the full disclosure and cooperation of
its  mission  critical  suppliers and trading partners is partially dependent on
the  significance  of the Company's relationship with them and their willingness
to  comply.

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

     Since  1993,  the  Company estimates that it has incurred approximately $17
million  of  costs  in  addressing  Year  2000 remediation issues and will spend
approximately  $3  million during the remainder of 1999.  Based on the Company's
experience  to  date, it is not anticipated that the completion of the remaining
Year  2000  remediation  efforts  will  have  a material adverse effect upon the
Company's  financial  position  or results of operations. The Company's past and
anticipated  future  remediation  costs  are  funded  by  operations.

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

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

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

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

ITEMS  2,  3,  4  AND  5  are  not  applicable.

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

Exhibits

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

Reports  on  Form  8-K

     The  Company  did not file any reports on Form 8-K during the quarter ended
March  31,  1999.
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: May 17, 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 July 19, 1994, incorporating
all  amendments  thereto subsequent to December 31, 1993 (filed as an Exhibit to
Form  10-K  for  the year ended December 31, 1994, and is incorporated herein by
reference)

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

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

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

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

10.     MATERIAL  CONTRACTS

A.     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  a  schedule  identifying  particulars  for  each named executive
officer  (filed  as  an Exhibit to Form 10-Q for the quarter ended September 30,
1992,  and  is  incorporated  herein  by  reference)

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

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

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 Exhibits 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  a  schedule  identifying  particulars  for  each named executive
officer  (filed  as an Exhibit to Form 10-Q for the quarter ended June 30, 1995,
and  is  incorporated  herein  by  reference)

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

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

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

R.     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)

S.     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)

T.     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)

U.     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)

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

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

X.     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)

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

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

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

BB.     Credit  Agreement  dated  as  of August 8, 1997, among Policy Management
Systems Corporation, the Guarantors Party hereto, Bank of America National Trust
and  Savings Association and the Other Financial Institution Party Hereto (filed
as  an  exhibit  to  Form  10-Q for the quarter ended September 30, 1997, and is
incorporated  herein  by  reference)

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

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

EE.     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  the  quarter  ended  September  30,  1998  and  is
incorporated  herein  by  reference)
FF.     Memorandum  of  Amendment  of  Employment  Agreement with Paul R. Butare
dated  December  10,  1998  (filed as an exhibit to Form 10-K for the year ended
December  31,  1998  and  is  incorporated  herein  by  reference)

GG.     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)

HH.     Annual Bonus Program for Executive Officers (filed as an exhibit to Form
10-K  for  the  year  ended  December  31,  1998  and  is incorporated herein by
reference)

II.     Form  of  Restricted  Stock  Award  Agreement  dated  March 1, 1999 with
Messrs.  Berkeley,  Feddersen, Palms, Sargent, Seibels and Trub (filed herewith)

JJ.     Form  of  Restricted  Stock Award Agreement for named executive officers
together  with schedule identifying particulars for each named executive officer
(filed  herewith)

27.     FINANCIAL  DATA  SCHEDULES

A.     Three  Months  Ended  March  31, 1999 filed herewith (EDGAR version only)