<PAGE> 1

                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549


                                 FORM 10-Q

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


For Quarter Ended June 30, 1995         Commission file number 0-10175



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



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


One PMS Center (P.O. Box Ten)
Blythewood, S.C. (Columbia, S.C.)                            
29016 (29202)
(Address of principal executive                                
(Zip Code) 
  offices)


Registrant's telephone number, including area code (803) 735-4000
 
     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.

  19,378,465 Common shares, $.01 par value, as of August 4, 1995

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, 1994.


<PAGE> 2

                   POLICY MANAGEMENT SYSTEMS CORPORATION

                                   INDEX


PART I. FINANCIAL INFORMATION                                     
    PAGE

  Item 1. Financial Statements

          Consolidated Statements of Income for 
            the three and six months ended June 30, 1995 
            and 1994.......................................... 3

          Consolidated Balance Sheets as of 
            June 30, 1995 and December 31, 1994............... 4

          Consolidated Statements of Cash Flows for
            the six months ended June 30, 1995 and 1994....... 5

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

  Item 2. Management's Discussion and Analysis of
            Financial Condition and Results of
            Operations........................................10


PART II. OTHER INFORMATION


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

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

Signatures....................................................29 


<PAGE> 3

<TABLE>

<CAPTION>

                                  PART I
                    FINANCIAL INFORMATION

                   POLICY MANAGEMENT SYSTEMS CORPORATION
                     CONSOLIDATED STATEMENTS OF INCOME
                                (Unaudited)

                                         Three Months         Six
Months
                                         Ended June 30,     
Ended June 30,
                                         1995      1994      1995 
    1994  
                                        (In Thousands, Except Per
Share Data)
<S>                                   <C>       <C>       <C>     
 <C>
Revenues:
  Licensing.......................... $ 22,737  $ 23,521  $
48,280  $ 39,991
  Services...........................  110,766   101,220  
218,642   200,692
                                       133,503   124,741  
266,922   240,683
 
Costs and Expenses: 
  Employee compensation & benefits...   47,865    44,872   
95,445    89,842
  Computer and communications 
    expenses.........................    8,103     6,303   
15,152    12,407
  Information services and                                      
    data acquisition costs...........   29,470    33,370   
61,367    67,826
  Depreciation and amortization......   15,374    16,257   
29,567    30,131
  Other operating costs & expenses...   16,174    11,984   
32,136    20,705
  Litigation settlement and
    expenses, net....................    7,866       -      
6,216       -
  Gain on sale of Health business
    and related assets...............   (8,116)      -     
(8,116)      -  
  Impairment and restructuring 
    credits, net.....................     (246)   (1,715)    
(246)   (1,715)
                                       116,490   111,071  
231,521   219,196

Operating income ....................   17,013    13,670   
35,401    21,487 

Other Income and Expenses:
  Investment income..................      535     1,849      
958     3,672
  Loss on sale of marketable
    securities.......................      -        (802)      -  
     (819)
  Interest expense and other
    charges..........................     (827)     (824)  
(1,518)   (1,719)
                                          (292)      223     
(560)    1,134

Income before income taxes...........   16,721    13,893   
34,841    22,621

Income taxes ........................    4,631     5,295   
11,431     8,455

Net income .......................... $ 12,090  $  8,598  $
23,410  $ 14,166

Net income per share................. $    .62  $    .40  $  
1.21  $    .64

Weighted average number of shares....   19,363    21,498   
19,363    22,067

<FN>

See accompanying notes.

</TABLE>



<PAGE> 4

<TABLE>

<CAPTION>

                     POLICY MANAGEMENT SYSTEMS CORPORATION
                           CONSOLIDATED BALANCE SHEETS

                                                 (Unaudited) 
(Audited)
                                                   June 30, 
December 31,
                                                     1995       
1994    
                                                     (In
Thousands,
                                                    Except Share
Data)

<S>                                                <C>        <C>
Assets
Current assets:
  Cash and equivalents............................ $ 24,390   $
17,686
  Marketable securities...........................    8,099    
11,051 
  Receivables, net of allowance for uncollectible 
     amounts of $1,109 ($1,478 at 1994)...........   92,690    
90,474 
  Income tax receivable...........................   28,194    
31,072
  Deferred income taxes...........................    6,132     
6,644
  Other...........................................   14,638    
10,798
     Total current assets.........................  174,143   
167,725

Property and equipment, at cost less accumulated
   depreciation and amortization of $106,900
   ($125,601 at 1994).............................  133,779   
136,503
Receivables.......................................      477       
500
Goodwill and other intangible assets..............   84,031    
77,763
Capitalized software costs........................  128,138   
118,621
Deferred income taxes.............................   12,097    
12,453
Investments.......................................    5,336     
5,567
Other.............................................    4,868     
4,899
        Total assets.............................. $542,869  
$524,031

Liabilities
Current liabilities:
  Accounts payable and accrued expenses........... $ 48,803   $
50,231 
  Accrued restructuring charges...................    5,916     
5,648
  Accrued contract termination costs..............    1,313     
1,819
  Current portion of long-term debt...............    1,741     
4,734
  Income taxes payable............................    3,890     
2,279
  Unearned revenues...............................   11,970    
11,930
  Other...........................................      754       
215
     Total current liabilities....................   74,387    
76,856

Long-term debt....................................      -       
4,162
Deferred income taxes.............................   59,466    
54,671
Accrued restructuring charges.....................    7,348    
10,796
Other.............................................    2,041       
624
     Total liabilities............................  143,242   
147,109
 
Commitments and contingencies (Note 1)

Stockholders' Equity
Special stock, $.01 par value, 5,000,000 shares 
   authorized.....................................      -         
-
Common stock, $.01 par value, 75,000,000 shares 
   authorized, 19,368,681 shares issued and 
   outstanding (19,362,984  at December 31, 1994).      194       
194
Additional paid-in capital........................  170,482   
170,323
Retained earnings.................................  230,384   
206,974
Unrealized holding loss on marketable securities..      (50)     
(118)
Foreign currency translation adjustment...........   (1,383)     
(451)
  Total stockholders' equity......................  399,627   
376,922
     Total liabilities and stockholders' equity... $542,869  
$524,031

<FN>

See accompanying notes.

</TABLE>



<PAGE> 5

<TABLE>

<CAPTION>

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

                                                    Six Months
Ended
                                                    June 30, 
June 30,
                                                      1995     
1994  
                                                       (In
Thousands) 
<S>                                                 <C>       <C>
Operating Activities
  Net income...................................  $ 23,410  $
14,166
  Adjustments to reconcile net income to 
   net cash provided by operating activities:     
    Depreciation and amortization..............    29,566   
30,131
    Deferred income taxes......................     5,050    
5,736
    Loss on sale of marketable securities......       -        
819
    Provision for uncollectible accounts.......       534      
280
  Changes in assets and liabilities:
    Accrued restructuring and lease
      termination costs........................    (3,180)  
(8,803)
    Receivables................................    (2,727)   
7,262
    Income taxes receivable....................     2,878   
(1,822)
    Accounts payable and accrued expenses......    (1,428)   
1,334
    Income taxes payable.......................     2,224    
2,728  
  Other, net...................................    (3,594)  
(4,513)
       Cash provided by operations.............    52,733   
47,318
  
Investing Activities
  Proceeds from sales/maturities of marketable
   securities, net.............................     3,000  
126,710
  Purchases of marketable securities, net......       -    
(87,873)
  Acquisition of property and equipment........   (11,919)  
(7,961)
  Capitalized internal software development  
   costs.......................................   (20,394) 
(17,890)
  Purchased software...........................      (250)    
(157)
  Proceeds from disposal of property & 
   equipment...................................       709      
304
  Contract acquisition costs...................   (10,000)      - 

       Cash (used for)/provided by investing 
         activities............................   (38,854)  
13,133 

Financing Activities
  Payments on long-term debt...................    (7,155)  
(4,597)
  Repurchase of common stock...................       -    
(56,555)
  Issuance of common stock under stock 
   option plans................................       159       - 
   
       Cash used for financing activities......    (6,996) 
(61,152)

Effect of exchange rate changes on cash........      (179)    
(937)
Net increase (decrease) in cash and
  equivalents..................................     6,704   
(1,638) 
Cash and equivalents at beginning of period....    17,686   
24,122
Cash and equivalents at end of period..........  $ 24,390  $
22,484

Noncash Activities
Supplemental Information
  Interest paid................................     1,160    
1,390
  Income taxes paid............................     1,105    
2,099

<FN>

See accompanying notes.

</TABLE>



<PAGE> 6


                   POLICY MANAGEMENT SYSTEMS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               June 30, 1995

NOTE 1. COMMITMENTS AND CONTINGENCIES

Commitments

  On March 27, 1995, the Company entered into a long-term license
and maintenance agreement in order to acquire rights to certain
operating system management software products for use in the
Company's worldwide data center operations.  The agreement, which
has an initial term of ten years, may be renewed and extended for
an additional period of five years, subject to mutual agreement
and
other modifications.  The March 27, 1995 agreement replaces three
five-year term agreements executed in 1993, and other related
agreements.  Minimum contract payments by the Company over the
initial ten year term aggregate $33.0 million payable in
specified
annual installments which escalate over the ten year period.  The
first annual installment due March 31, 1995 was reduced by $1.5
million to reflect the application of a pre-payment credit
relating
to a prior agreement which was terminated.  In addition to
minimum
contract payments, the Company will pay an annual supplemental
revenue fee (beginning 1997 for the 1996 annual period) equal to
a
specified annual percentage of the Company's applicable annual
gross revenues, less the specified annual installment for such
period.  Minimum contract payments will be expensed on a
straight-
line basis over the initial ten year term.  Annual supplemental
revenue fees, if any, will be accrued in the period in which
determined.

  On April 7, 1995, the Company finalized certain terms of a ten-
year agreement with an insurance holding company and its
subsidiaries, initially entered into in November 1994.  The
Company
is to provide certain data processing and other professional
services as required.  The minimum contractual processing
revenues
are expected to be in excess of $60 million over the term of the
agreement.  The Company has incurred costs of $10 million related
to this agreement in the second quarter of 1995 ($5 million in
the
fourth quarter of 1994), which have been deferred as contract
acquisition costs and are being expensed on a straight-line basis
over the term of the agreement.  At June 30, 1995, the net
unamortized amounts related to this continuing agreement,
included
in other intangible assets, were $14.2 million.


Contingencies - Legal Proceedings

  In December 1994, the Company reached an agreement, which was
subsequently approved on May 26, 1995 by the United States
District
Court for the District of South Carolina, to settle its
shareholder
class action.  The settlement of $31 million was paid by the
Company's Directors' and Officers' Liability Insurance Carrier,
the

<PAGE> 7

Company's former accountants and the Company.  The Company's
portion of the settlement and associated litigation costs
resulted
in a special one-time charge of $34.2 million ($21.3 million
after
tax) in the fourth quarter of 1994.  This represents the
Company's
portion of the total settlement, plus the Company's litigation
costs of $18.1 million ($11.2 million after tax), less the
recovery
from the insurance company.  In March 1995, the Company and its
insurance carrier signed an agreement to settle amounts contested
and the carrier agreed to pay an additional amount of $1.7
million
in full settlement of the Company's claims.  Accordingly, the
Company recorded a credit of $1.7 million, in the first quarter
of
1995, as a further adjustment to the estimated costs of settling
the securities class action.  

  In June 1993, the Securities and Exchange Commission (SEC)
commenced a formal investigation into possible violations of the
Federal securities laws in connection with the Company's public
reports and financial statements, as well as trading in the
Company's securities.  The SEC has issued a formal order of
investigation which provides the SEC staff with the power to
subpoena documents and to compel testimony in connection with
their
investigation.  The United States Attorney for the District of
South Carolina also is conducting an investigation into certain
of
these matters.  The Company is cooperating with these
investigations.

  The Company is involved in two lawsuits alleging, among other
things, breach of a life insurance joint development contract and
breach of a contract concerning an early version of its Series
III
property and casualty software.  The Company believes it has
meritorious defenses, is vigorously defending its position in
these
matters and is pursuing counterclaims against the plaintiffs (see
Item 1, Legal Proceedings, of Part II contained in the Company's
report on Form 10-Q for the quarters ended March 31, 1995.  The
Company was informed by its insurer that based upon the
allegations
raised in these two lawsuits, the insurer does not believe it
would
be obligated under the Company's insurance policies to reimburse
defense costs or indemnify the Company for any payments relating
to
these claims.  The Company disagrees with this conclusion and on
June 20, 1995 the Company's insurer commenced a declaratory
judgment action to determine the insurer's obligations related to
defense costs and indemnity related to these two lawsuits.  As a
result of this action, the Company determined it was probable the
Company would incur litigation expenses for certain actual
expenses
previously incurred and for estimated future litigation expenses
arising from these matters through their conclusion, over the
next
twelve months, of $7.9 million, which estimate is based upon the
Company's prior experience in these matters. 

<PAGE> 8

  In addition to the litigation described above, the Company is
presently involved in two contract disputes arising out of the
Company's change in the direction of its future life software
systems development following the acquisition of CYBERTEK.  There
are also various other litigation proceedings and claims arising
in
the ordinary course of business.  The Company believes it has
meritorious defenses and is vigorously defending these matters.

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


NOTE 2. IMPAIRMENT AND RESTRUCTURING CHARGES

  The Company recorded, at October 1, 1994, impairment charges to
write-off the carrying value of certain identifiable assets ($7.7
million), goodwill ($13.9 million) and acquired software ($11.5
million), principally related to its property and casualty
information services business acquisitions and certain software
product acquisitions licensed in the property and casualty market
(see Note 12 of Notes to Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the year ended December
31, 1994).

  The Company established reserves of $2.0 million at December
31,
1994, in connection with the acquisition of Creative Group
Holdings, Limited, to provide for the costs of terminating the
Company's existing lease obligations in the United Kingdom and
relocation and severance costs associated with consolidating its
existing operations (see Note 2 of Notes to Consolidated
Financial
Statements in the Company's Annual Report on Form 10-K for the
year
ended December 31, 1994).


NOTE 3. CREDIT AGREEMENT

  On August 11, 1995, the Company entered into two unsecured
credit
facilities of $100 million each with a syndicate of financial
institutions (the syndicate) to provide an additional source of
funds for general corporate purposes. The first $100 million
facility bears a term of 364 days.  The second $100 million
facility bears a term of 3 years.  Borrowings under the
facilities
bear interest payable at rates based upon the Morgan Guaranty
Trust
Company's Prime Rate, the Federal Funds Rate, the London
Interbank
Offering Rate or the yield on certain certificates of deposit as
appropriate, plus a spread above certain of these rates.  The
Company is subject to certain covenants including, but not
limited
to, the maintenance of certain operating ratios and levels of
tangible net worth. 

<PAGE> 9

NOTE 4. CERTAIN TRANSACTIONS

  On June 30, 1995, the Company sold its Health Insurance Systems
Division for a total consideration of $9.3 million in cash. After
selling expenses of $.5 million, the net book value of assets
sold
of $.5 million, liabilities resulting from the sale, including
severance liabilities for certain employees and other reserves of
$1.5 million, and the present value of a sublease executed by the
purchaser for certain office space of $1.3 million, the Company
recorded a pre-tax gain of $8.1 million, which has been recorded
under "Costs and Expenses" in the Consolidated Statements of
Income
for the three and six months ended June 30, 1995 (see
Management's
Discussion and Analysis of Financial Condition and Results of
Operations).


NOTE 5.  INCOME TAXES

  The Company's effective tax rate for the second quarter of 1995
was 27.7% compared with 37.5% for the first quarter of 1995. The
Company's annual effective income tax rate (income taxes
expressed
as a percentage of pre-tax income) was 32.8% and 37.4% for the
six
months ended June 30, 1995 and 1994, respectively. The effective
rate for 1995 was significantly lower due principally to the
goodwill deducted for tax purposes, providing a benefit of $.9
million in the second quarter of 1995 as a result of the change
in
estimate of the annual effective tax rate, relating to the sale
of
the Company's Health Insurance Systems Division (see Note 4
above).


<PAGE> 10

                   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, 1994.

                           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>
                                                                  
 1995   vs   1994
                                                                  
 Percent Increase
                                                                  
    (Decrease)    
                                Percentage         Percentage     
 Three      Six 
                               of Revenues        of Revenues     
 Months    Months
                               Three Months      Six Months      
Ended     Ended 
                            Ended June 30,     Ended June 30,   
June 30,  June 30,
                       1995      1994     1995      1994     
<S>                          <C>       <C>      <C>       <C>     
 <C>      <C>
Revenues:
Licensing...................  17.0      18.9     18.1      16.6   
  (3.4)    20.8
Services....................  83.0      81.1     81.9      83.4   
   9.5      8.9 
                             100.0     100.0    100.0     100.0   
   7.0     10.9
Costs and Expenses:
Employee compensation
    and benefits............  35.9      36.0     35.8      37.3   
   6.7      6.2 
Computer & communication
    expenses................   6.1       5.1      5.7       5.2   
  28.6     22.1
Information services & data
    acquisition costs.......  22.1      26.8     23.0      28.2   
 (11.7)    (9.5)
Depreciation and amorti-
    zation..................  11.5      13.0     11.1      12.5   
  (5.4)    (1.9)
Other operating costs
    and expenses............  12.1       9.6     12.0       8.6   
  35.0     55.2
Litigation settlement and 
    expenses, net...........   5.9         -      2.3         -   
     -        -
Gain on sale of Health 
    business and related
    assets..................  (6.1)        -     (3.0)        -   
     -        -
Impairment and restructuring
    charges, net............   (.2)     (1.4)    (0.1)      (.7)  
 (85.7)   (85.7)
                              87.3      89.1     86.7      91.1   
   4.9      5.6 

Operating income............  12.7      10.9     13.3       8.9   
  24.5     64.8
Other Income and Expenses...  (0.2)      0.2     (0.2)      0.5   
(230.9)  (149.4)
Income before income taxes..  12.5      11.1     13.1       9.4   
  20.4     54.0
Income taxes................   3.5       4.2      4.3       3.5   
 (12.5)    35.2

Net income..................   9.0       6.9      8.8       5.9   
  40.6     65.3

</TABLE>


<PAGE> 11

  The Company's revenues are generated principally by licensing
standardized insurance software systems and providing automation
and administrative support and information services to the
worldwide insurance industry.  Licensing revenues are provided
for
under the terms of nonexclusive and nontransferable license
agreements, which generally have a noncancelable minimum term of
six years and provide for an initial license charge and a monthly
license charge.  Services revenues are derived from professional
support services, which include implementation and integration
assistance, consulting and education services, information and
outsourcing services ranging from making available software
licensed from the Company on a remote processing basis from the
Company's data centers, to complete systems management,
processing,
administration support and automated information services through
the Company's nationwide telecommunications network using the
Company's database products.


THREE MONTHS COMPARISON

  A comparison of revenues for each line of business and
geographic
market for the periods presented is as follows:
                                         
                                   Revenues    
                                 Three Months  
                                Ended June 30, 
                                1995     1994  
                            (Dollars in Millions)
   Line of Business    
Property & Casualty....       $ 96.8   $ 88.3 
Life...................         32.4     30.0 
Health.................          4.0      6.4 

   Geographic Market   
United States..........       $103.2   $107.3 
International..........         30.0     17.4 


REVENUES

                          Three           Three
                       Months Ended    Months Ended
  Licensing            June 30, 1995   June 30, 1994    Change  
                          (Dollars in Millions)
Initial charges.......... $ 9.5          $ 10.4         (8.7)%
Monthly charges..........  13.2            13.1           .8 %  
                          $22.7           $23.5         (3.4)%  

Percentage of revenues...  17.0%           18.9%                

  Initial license revenues for the three months ended June 30,
1995
decreased $.9 million (8.7%) compared to the corresponding period
in 1994.  The decrease is principally related to a decline in

<PAGE> 12

licensing activity in the life insurance market of $1.5 million,
as
well as a decline in licensing activity in the health insurance
market of $.3 million (see Note 4 of Notes to Consolidated
Financial Statements).  These decreases were partially offset by
an
increase of $.9 million in licensing activities related to the
property and casualty insurance market.  Although down from the
second quarter of 1994 (see table below), the current quarter
licensing activity in the life insurance market continues to
reflect customer interest in the Company's CK/4 Enterprise and
emerging CYBERLife software system solutions.  CYBERLife
incorporates advanced client/server technology and was initially
released in March 1995.  Licensing of property and casualty
systems
from activities in the European, Asian and Canadian markets
increased $3.1 million. This increase was partially offset by a
decline in licensing activities in the domestic property and
casualty insurance market of $2.2 million.  The variance in
initial
license revenues between quarters for both the domestic and
international property and casualty insurance markets continues
to
reflect the timing of customers' decisions to enter into large
license agreements with the Company for either new systems and/or
the migration to client/server technology (see table below).  The
Company recognized $1.1 million in initial license charges for
the
period, relating to a distribution agreement with AT&T Global
Information Solutions (AT&T Global).  Under the distribution
agreement, which is part of the Company's joint marketing
arrangement with AT&T Global, AT&T markets the Company's Series
III
systems worldwide to insurance companies implementing AT&T
Global's
UNIX-based solutions.  Additionally, the Company recognized $1.5
million related to an exclusive marketing arrangement with AT&T
Global.  Under the exclusive marketing arrangement, the Company
markets the UNIX-based version of its mid-range property and
casualty software systems exclusively to AT&T Global UNIX
platform
customers for a period of three years.  There are no monthly
license revenues under the distribution agreement or exclusive
marketing arrangement with AT&T Global, and the Company's current
joint marketing agreement with AT&T Global is subject to
extension
in September 1996.

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

<PAGE> 13

<TABLE>

<CAPTION>
                               1995                        1994   
           
                         Second   First     Fourth   Third   
Second   First 
                         Quarter  Quarter   Quarter  Quarter 
Quarter  Quarter
                                         (Dollars in Millions)
<S>                      <C>      <C>       <C>      <C>      <C> 
    <C>
 Property and Casualty 
Initial license 
  revenues.............  $ 7.3    $ 8.0     $ 5.6    $ 7.4    $
6.4    $ 1.6
Total revenues.........    5.5%     6.0%      4.5%     5.8%    
5.2%     1.4%

         Life          
Initial license 
  revenues.............  $ 2.1    $ 3.7     $ 1.6    $ 3.4    $
3.6    $ 1.6
Total revenues.........    1.6%     2.8%      1.3%     2.7%    
2.8%     1.4%

        Health         
Initial license 
  revenues.............  $  .1    $  .2     $ 2.5    $ 3.5    $ 
 .4    $  .4
Total revenues.........     -        .1%      2.0%     2.8%     
 .3%      .3%

       Combined        
Initial license 
  revenues.............  $ 9.5    $11.9     $ 9.7    $14.3   
$10.4    $ 3.6
Total revenues.........    7.1%     8.9%      7.8%    11.3%    
8.4%     3.1%

</TABLE>


  Revenues from continuing monthly license charges ("MLC") for
Maintenance, Enhancements and Services Availability ("MESA")
remained relatively unchanged for the second quarter of 1995
compared to the corresponding quarter of 1994.

                          Three           Three
                       Months Ended    Months Ended
  Services             June 30,1995    June 30,1994    Change   
                        (Dollars In Millions)
Professional and 
  outsourcing........... $ 65.5          $ 51.2         27.9 %
Information.............   44.5            49.4         (9.9)%
Other...................     .8              .6         33.3 %  
                         $110.8          $101.2          9.5 %  

Percentage of revenues..   83.0%           81.1%                
  

  Professional and outsourcing services for the three months
ended
June 30, 1995 increased $14.3 million (27.9%) compared to the
same
period in 1994.  This increase is principally related to services
from both new and existing contracts amounting to $13.1 million
for
property and casualty insurance business and $2.8 million for
life
insurance business, and was partially offset by a decline in
revenues from the health insurance market of $1.6 million.  The

<PAGE> 14

increase in the property and casualty business resulted from
increased services in both the international and domestic
markets.
The Company's international property and casualty insurance
services increased $6.6 million principally as a result of the
acquisition of Creative Group Holdings, Limited at December 31,
1994 and new services contracts in the European and Asia/Pacific
regions.  Creative, headquartered in the United Kingdom, is a
British holding company whose wholly-owned subsidiaries, located
in
England, Australia and Southeast Asia, provide software
consulting, 
development, licensing and support services to medium-sized
general
insurance companies.  The increase in the domestic property and
casualty insurance market amounted to $6.5 million and
principally
resulted from new professional services contracts and an increase
in the residual markets for total policy management outsourcing
services. Services in the life insurance market increased
principally as a result of additional outsourcing services.  The
decline in professional services revenues from the health
insurance
market of $1.6 million reflected the continued reluctance of
health
insurers to make major system decisions. 
 
  Revenues from information services were $44.5 million for the
second quarter in 1995 compared with $49.4 million for the
corresponding quarter in 1994.  This $4.9 million decrease (9.9%)
is principally attributable to a decline in revenues associated
with the Company's domestic property and casualty automobile and
risk information services business of $5.5 million.  This decline
relates principally to significant changes in the property and
casualty insurance industry, as described more fully in Item 7 of
Part II and Note 12 of Notes to Consolidated Financial Statements
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.  The decrease in revenues associated with the
property and casualty information services business was partially
offset by an increase in life information services of $.6
million.

Costs and Expenses

  Employee compensation and benefits increased $3.0 million
(6.7%)
for the second quarter of 1995 compared to the corresponding
quarter in 1994, principally as a result of increased salaries,
costs associated with the acquisition of Creative Group Holdings,
Limited in December 1994, and increased costs associated with the
growth in staffing for additional services activity and an
increase in Company contributions relating to certain of its
benefit plans. These
increases were partially offset by a reduction in compensation
and
other benefits related to the Company's downsizing of its health
insurance services staff from 209 at the end of the second
quarter
of 1994 to 112 at the end of the second quarter of 1995 (see Note
4 of Notes to  Consolidated Financial Statements). As a
percentage
of revenues, employee compensation and benefits expense remained
significantly unchanged for the second quarter of 1995 as
compared
to the same period of 1994. 

<PAGE> 15

  As a percentage of revenues, computer and communications
expenses
increased to 6.1% for the second quarter of 1995 from 5.1% for
the
corresponding quarter of 1994, representing an increase of $1.8
million (28.6%).  This increase was due principally to expenses
for
certain operating system management software products utilized in
the Company's worldwide data center operations (see Note 1 of
Notes
to Consolidated Financial Statements), and increased
communications, data circuit and maintenance costs associated
with
the expansion of the Company's international operations.

  Information services and data acquisition costs for the second
quarter of 1995 decreased $3.9 million (11.7%) compared to the
corresponding quarter of 1994, due principally to a continued
decrease in the volume of state fees for motor vehicle reports
associated with the domestic property and casualty automobile and
information services business (see Revenue discussion above).

  Depreciation and amortization expense decreased $.9 million
(5.4%) for the second quarter of 1995 compared to the
corresponding
quarter of 1994. The decrease is due principally to lower
amortization charges resulting from the impairment of certain
identifiable intangible assets, goodwill and software products
relating to the Company's property and casualty information
services business (see Note 12 of Notes to Consolidated Financial
Statements in the Company's Annual Report on Form 10-K for the
year
ended December 31, 1994) and lower depreciation charges due to
certain retirements of data processing equipment. These decreases
were partially offset by additional amortization charges relating 
to internally developed software costs.  These costs are
associated
with a new release of the Company's property and casualty
insurance
Series III client/server software system and the initial release
of
its life insurance CYBERLife client/server software system.  Both
became generally available during the first quarter of 1995.

  Other operating costs and expenses for the second quarter of
1995
increased $4.2 million (35%) compared to the corresponding
quarter
in 1994.  This increase relates principally to additional costs
relating to outside consultants and independent contractors
resulting from increased professional services activities and the
acquisition of the Creative Holdings Group, Limited at December
31,
1994, and costs associated with providing total policy management
outsourcing services.  In the second quarter of 1994, a credit of
$1.6 million resulted from the recovery of certain receivables,
previously written-off, and the completion of certain projects
during the second quarter of 1994, for which cost overruns had
been
charged in prior periods.  Also included in other operating costs
and expenses for 1995 is a credit of approximately $1.0 million
related to the amendment of a professional services contract.

<PAGE> 16

  The Company, as of June 30, 1995, has provided for $7.9 million
in estimated litigation costs arising from two lawsuits to which
the Company is both a defendant and counter-claimant. The costs
provided for include, but are not limited to, fees paid or
anticipated to be paid to external counsel and other costs
related
to the Company's defense and claims regarding these matters (see
Item 1, Legal Proceedings, of Part II contained in the Company's
report on Form 10-Q for the quarter ended June 30, 1995).

  On June 30, 1995, the Company completed the sale of its Health
Insurance Systems Division for a total consideration of $9.3
million in cash.  After selling expense and other accrued costs,
the Company recorded a pre-tax gain of $8.1 million.

  In June 1995, the Company reduced certain of its restructuring
reserves by $.4 million for the balances remaining, as of June
30,
1995, as a result of completing certain restructuring activities
for its life and health insurance businesses.  At June 30, 1994,
the Company, as a result of new events occurring, changed its
estimates and reduced its restructuring reserves by $1.7 million,
which were established at June 30, 1993 for employee severance
and
outplacement costs in connection with the downsizing of its
health
staff.


Operating Income

  Operating income, after the effects of the gain from the sale
of
the Health Division and special charges, was $17.0 million for
the
three months ended June 30, 1995, compared with $13.7 million for
the corresponding period in 1994. The Company recorded a gain
from
the sale of the Company's Health Division of approximately $ 8.1
million (see Note 4 of Notes to the Consolidated Financial
Statements), and special charges aggregating $7.6 million for the
three months ended June 30, 1995 relating to legal costs ($7.9
million) and impairment and restructuring credits ($.3 million). 
Special charges for the three months ended June 30, 1994 of $1.7
million relate to impairment and restructuring credits (see Costs
and Expenses).

  Operating income, excluding the gain on the sale of the
Company's
Health Division and special charges, was $16.5 million for the
three months ended June 30, 1995, compared with $12.0 million for
the corresponding period in 1994.  Operating income, excluding
the
gain and special charges, as a percentage of revenues increased
to
12.4% for the second quarter of 1995 from 9.6% for the comparable
quarter in 1994.  The increase in operating income (37.5%),
excluding the gain and special charges,  results principally from
an increase in professional and outsourcing services revenues
provided under new and existing contracts with property and
casualty insurance companies and residual markets ($13.1 million)

<PAGE> 17


and an increase in new professional and outsourcing services
revenues from life insurers ($2.8 million).

  A significant portion of both the Company's revenues 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 are recorded at the time
new
systems are licensed, there can be significant fluctuations from
quarter-to-quarter 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 (see
table
above).

  Investment income decreased $1.3 million as a result of a lower
level of investable funds, resulting from large cash expenditures
for the acquisition of Creative Group Holdings, Limited ($19.9
million), in December 1994, the repurchase in May 1994 of
2,278,537
of the 3,797,561 shares of common stock held by IBM ($56.6
million), the repurchase during the last half of 1994 of 995,500
shares of the Company's outstanding common stock on the open
market
($35.3 million) under its 2.5 million share repurchase
authorization and payments to settle the shareholder class action
and related expenses made principally during the fourth quarter
of
1994.

  As part of the Company's repurchase of 2,278,537 of the
3,797,561
shares of its common stock held by IBM, at a price of $24.77 per
share, the Company liquidated a portion of its marketable
securities.  The Company incurred a loss on the sale of
securities
of approximately $.8 million related directly to the repurchase
during the second quarter of 1994.

  Interest expense and other charges remained relatively
unchanged
for the second quarter in 1995 compared to the corresponding
period
in 1994.

  The effective income tax rate (income taxes expressed as a
percentage of pre-tax income) was 27.7% and 38.1% for the three
months ended June 30, 1995 and 1994, respectively.  The effective
rate for the 1995 second quarter was significantly lower due
principally to goodwill, deducted for tax purposes, relating to
the
sale of the Company's Health Insurance Systems Division (see
Notes
4 and 5 of Notes to Consolidated Financial Statements).  The 1995
second quarter tax was further reduced to adjust the year-to-date
effective tax rate to the expected tax rate for 1995, resulting
in
an estimated effective income tax rate for the remainder of 1995
of
32.8%.

<PAGE> 18

<PAGE>
SIX MONTHS COMPARISON

  A comparison of revenues for each line of business and
geographic
market for the periods presented is as follows:
                                        
                                        
                               Revenues    
                              Six Months  
                            Ended June 30, 
                             1995    1994  
                         (Dollars in Millions)
   Line of Business   
Property & Casualty...     $193.7  $167.8 
Life..................       65.0    57.2 
Health................        7.9    15.7 


  Geographic Market   
United States.........     $207.3  $203.8 
International.........       59.3    36.9 


REVENUES

                        Six            Six  
                    Months Ended   Months Ended
  Licensing         June 30,1995   June 30,1994   Change   
                      (Dollars in Millions)
Initial charges.....  $21.5            $14.1       52.5%
Monthly charges.....   26.8             25.9        3.5%   
                      $48.3            $40.0       20.8%    

Percentage of 
  revenues..........  18.1%             16.6%              

  Total licensing revenues for the six months ended June 30, 1995
increased $8.3 million (20.8%) compared to the corresponding
period
in 1994, due principally to a $7.4 million increase in initial
license revenues. The increase in initial license revenues is
principally related to licensing activities in the property and
casualty insurance market of $7.3 million, as well as an increase
in licensing activities in the life insurance market of $.5
million.  These increases were partially offset by a decrease in
licensing activities related to the health insurance market of
$.4
million (see table below).  Increased  licensing of property and
casualty systems resulted principally from activities in the
United
States, Europe, Canada and Asia-Pacific, and reflect licensing
activity related to the Company's acquisition of Creative Group
Holdings, Limited at December 31, 1994. Licensing activities in
the
property and casualty insurance market include $2.6 million for
the
six months ended June 30, 1995, relating to a distribution

<PAGE> 19

agreement and $1.5 million relating to an exclusive marketing
arrangement, both with AT&T Global.  During the first six months
of
1994, the Company recognized licensing revenue of $2.0 million
from
AT&T Global.  Increased licensing activities in the life
insurance
market principally reflect continuing customer interest in the
Company's CK/4 Enterprise software system and the March 31, 1995
initial release of its CYBERLife client/server software system
solution.

  Because a significant portion of initial license charges are
recorded at the time new systems are licensed, there can be
significant fluctuations in revenue from period to period.  Set
forth below is a comparison of initial license revenues for the
six
months ended June 30, 1995 and 1994, expressed as a percentage of
total revenues for each of the periods presented:

                         Six Months Ended     Six Months Ended
                          June 30, 1995        June 30, 1994  
                                 (Dollars in Millions)
 Property and Casualty 
Initial license 
  revenues.............       $15.3                $ 8.0
Total revenues.........         5.7%                 3.3%

         Life          
Initial license 
  revenues.............       $ 5.8                $ 5.3
Total revenues.........         2.2%                 2.2%

        Health         
Initial license 
  revenues.............       $  .4                $  .8
Total revenues.........          .1%                  .3%

       Combined        
Initial license 
  revenues.............       $21.5                $14.1
Total revenues.........         8.0%                 5.8%


  Revenues from continuing monthly license charges ("MLC") for
Maintenance, Enhancements and Services Availability ("MESA")
remained relatively unchanged for the six months ended June 30,
1995, compared to the corresponding period in 1994.

<PAGE> 20
                          Six              Six
                        Months Ended    Months Ended
  Services              June 30,1995    June 30,1994    Change 
                                 (Dollars in Millions)
Professional and 
  outsourcing............ $126.6          $101.6         24.6 %
Information..............   91.0            98.4         (7.5)%
Other....................    1.0              .7         42.8 %
                          $218.6          $200.7          8.9 %

Percentage of revenues...   81.9%           83.4%              


  Total services revenues for the six months ended June  30, 1995
increased $17.9 million (8.9%) compared to the corresponding
period
in 1994.  

  Revenues from professional and outsourcing  services increased
$25.0 million (24.6%)  to $126.6 million for the  six months
ended
June 30, 1995 from $101.6 million for the corresponding period in
1994. This increase was due primarily to additional services to
new
and existing customers in the property and casualty insurance
market ($26.0 million) and the life insurance market ($5.7
million). These increases were partially offset by a decline  in
health related services of $ 6.5 million. Increased revenues from
the property and casualty insurance market principally relate to
new professional services contracts with domestic insurance
companies and a continued increase in the residual markets for
total policy management outsourcing services. International
property and casualty services revenues increased principally as
a
result of the Company's acquisition of Creative Group Holdings,
Limited at December 31, 1994, and new services contracts in the
Asia/Pacific region. Professional and outsourcing services in the
life insurance market increased primarily as the result of new
professional services and outsourcing contracts in both the
domestic ($3.0 million) and international markets ($2.7 million).
These increases were partially offset by a decline in
professional
services revenues from the health insurance market of $6.5
million
(see Note 4 of Notes to Consolidated Financial Statements).

  Revenues from information services were $91.0 million for the
six
months ended June 30, 1995 compared with $98.4 million for  the
corresponding period in 1994. This $7.4 million decrease is
primarily attributable to a  decrease in revenues associated with
the Company's domestic property and casualty automobile and risk
information services business ($ 8.7 million). This decline
relates
principally to significant changes in the property and casualty
insurance industry, as described more fully in Item 7 of Part II
and Note 12 of Notes to Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the year ended December
31, 1994.  The decrease in revenues associated with the property
and casualty information services business is partially offset by

<PAGE> 21

an increase in life information services of $ 1.3 million
(principally attending physician statements and medical history
reports).

Costs And Expenses

  Employee compensation and benefits increased $5.6 million
(6.2%)
for the six months ended June 30, 1995 compared to the
corresponding period in 1994, principally as a result of
increased
costs associated with the acquisition of Creative Group Holdings,
Limited in December 1994, increased costs associated with the
growth in staffing for additional services activity for both new
and existing customers, and an increase in the Company's
provision
for performance bonus expense as a result of higher earnings per
share. These increases were partially offset by a reduction in
compensation and other benefits related to the Company's
downsizing
of its health insurance services staff from 209 at the end of the
second quarter of 1994 to 112 at the end of the second quarter of
1995 (see Note 4 of Notes to Consolidated Financial Statements).
As
a percentage of revenues, employee compensation and benefits
expense decreased to 35.8% compared to 37.3% for the same period
of
1994.

  As a percentage of revenues, computer and communications
expenses
increased to 5.7% for the six months ended June 30, 1995 from
5.2%
for the corresponding period of 1994, representing an increase of
$2.7 million (22%).  This increase was due principally to
expenses
for certain operating system management software products
utilized
in the Company's worldwide data center operations (see Note 1 of
Notes to Consolidated Financial Statements), and increased
communications, data circuit and maintenance costs associated
with
the expansion of the Company's international operations and
additions of new outsourcing business.

  Information services and data acquisition costs for the six
months ended June 30, 1995 decreased $6.5 million (9.5%) compared
to the corresponding period of 1994, due principally to a
continued
decrease in the volume of state fees for motor vehicle reports
associated with the domestic property and casualty automobile and
information services business (see Revenue discussion above).

  Depreciation and amortization expense decreased $.6 million
(1.9%) for the six months ended June 30, 1995 compared to the
corresponding period of 1994. The decrease is due principally to
lower amortization charges resulting from the impairment of
certain
identifiable intangible assets, goodwill and software products
relating to the Company's property and casualty information
services business (see Note 12 of Notes to Consolidated Financial
Statements in the Company's Annual Report on Form 10-K for the
year
ended December 31, 1994) and lower depreciation charges due to
certain retirements of data processing equipment. These decreases

<PAGE> 22

were partially offset by additional amortization charges relating
to internally developed software costs.  These costs are
associated
with a new release of the Company's property and casualty
insurance
Series III client/server software and the initial release of its
life insurance CYBERLife client/server software system.  Both
became generally available during the first quarter of 1995.

  Other operating costs and expenses for the six months ended
June
30, 1995 increased $11.4 million (55%) compared to the
corresponding period in 1994. The increase is principally
attributable to an increase in outside consultants and
independent
contractors relating to increased professional services
activities 
and the acquisition of the Creative Holdings Group, Limited. 
Additionally, operating costs associated with providing total
policy management outsourcing services increased.  In the second
quarter of 1994, a credit of $1.6 million resulted from the
recovery of certain receivables, previously written-off, and the
completion of certain projects during the second quarter of 1994,
for which cost overruns had been charged in prior periods.  These
increases were partially offset by a decrease in outside legal
and professional fees and an increase in amounts
capitalized, principally associated with the internal development
of the Company's life insurance CYBERLife client/server software
system.  Also included in other operating costs and expenses is a
credit of approximately $1.0 million related to the amendment of
a
professional services contract.

  Litigation settlement and expenses, net for the six months
ended
June 30, 1995, amounted to $6.2 million.  The Company, as of June
30, 1995, has provided for $7.9 million in estimated litigation
costs arising from two lawsuits to which the Company is both a
defendant and counter-claimant.  The costs provided for include,
but are not limited to, fees paid or anticipated to be paid to
external counsel and other costs related to the Company's defense
and claims regarding these matters (see Item 1, Legal
Proceedings,
of Part II contained in the Company's report on Form 10-Q for the
quarter ended June 30, 1995).  On March 20, 1995, the Company and
its Directors' and Officers' Liability Insurance Carrier signed
an
agreement to settle amounts contested and the carrier agreed to
pay
an additional amount of $1.7 million, in the first quarter of
1995,
in full settlement of the Company's claims.  Accordingly, the
Company recorded a credit of $1.7 million as a further adjustment
to the estimated costs of settling the securities class action
which were recorded in the fourth quarter of 1994 (see Note 1 of
Notes to Consolidated Financial Statements and Note 8 of Notes to
Consolidated Financial Statements in the Company's Annual Report
on
Form 10-K for the year ended December 31, 1994).  

  On June 30, 1995, the Company completed the sale of its Health
Insurance Systems Division for a total consideration of $9.3
million in cash.  After selling expense and other accrued costs
the
Company recorded a pre-tax gain of $8.1 million.

<PAGE> 23

  In June 1995, the Company reduced certain of its restructuring
reserves by $.4 million for the balances remaining, as of June
30,
1995, as a result of completing certain restructuring activities
for its life and health insurance businesses.  At June 30, 1994,
the Company, as a result of new events occurring, changed its
estimates and reduced its restructuring reserves by $1.7 million,
which were established at June 30, 1993 for employee severance
and
outplacement costs in connection with the downsizing of its
health
staff.

Operating Income

  Operating income, after the effects of the gain from the sale
of
the Health Division and special charges, was $35.4 million for
the
six months ended June 30, 1995, compared with $21.5 million for
the
corresponding period in 1994. The Company recorded a gain from
the
sale of the Company's Health Division of approximately $ 8.1
million (see Note 4 of Notes to the Consolidated Financial
Statements). Special charges aggregating $5.9 million for the six
months ended June 30, 1995 relate to litigation settlement and
other legal expenses, net ($6.2 million) and impairment and
restructuring credits ($.3 million).  Special charges for the six
months ended June 30, 1994 of $1.7 million relate to impairment
and
restructuring credits (see Costs and Expenses).

  Operating income, excluding the gain and special charges, was
$33.3 million for the six months ended June 30, 1995, compared
with
$19.8 million for the corresponding period in 1994.  Operating
income, excluding the gain and special charges, as a percentage
of
revenues increased to 12.5% for the first six months of 1995 from
8.2% for the comparable quarter in 1994.  The increase in
operating
income, excluding the gain and special charges (68%), results
principally from an increase in professional and outsourcing
services revenues provided under new and existing contracts
principally with property and casualty insurance companies and
residual markets, partially offset by a decrease in health
services
revenues of $6.5 million, and an increase in initial license
revenues of $7.4 million from both property and casualty and life
insurers.

  A significant portion of both the Company's revenues 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 are recorded at the time
new
systems are licensed, there can be significant fluctuations from
quarter-to-quarter and 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 (see table above).

<PAGE> 24

  Investment income decreased $2.7 million as a result of a lower
level of investable funds, resulting from large cash expenditures
for the acquisition of Creative Group Holdings, Limited ($19.9
million) in December 1994, the repurchase in May 1994 of
2,278,537
of the 3,797,561 shares of common stock held by IBM ($56.6
million), the repurchase during the last half of 1994 of 995,500
shares of the Company's outstanding common stock on the open
market
($35.3 million) under its 2.5 million share repurchase
authorization and payments to settle the shareholder class action
and related expenses made principally during the fourth quarter
of
1994.

  As part of the Company's repurchase of 2,278,537 of the
3,797,561
shares of its common stock held by IBM, at a price of $24.77 per
share, the Company liquidated a portion of its marketable
securities.  The Company incurred a loss on the sale of
securities
of approximately $.8 million related directly to the repurchase
during May 1994.

  Interest expense and other charges decreased $.2 million for
the
six months ended June 30, 1994 compared to the corresponding
period
in 1993, principally as a result of the repayment of long-term
debt
associated with business acquisitions.

  The effective income tax rate (income taxes expressed as a
percentage of pre-tax income) was 32.8% and 37.4% for the six
months ended June 30, 1995 and 1994, respectively. The effective
rate for 1995 was significantly lower due principally to
goodwill,
deducted for tax purposes, relating to the sale of the Company's
Health Insurance Systems Division (see Notes 4 and 5 of Notes to
Consolidated Financial Statements).

<PAGE> 25


                     LIQUIDITY AND CAPITAL RESOURCES 


                                        June 30,     December 31,
                                          1995           1994    
Cash and equivalents, marketable         (Dollars in Millions)
  securities, and investments.......... $ 37.8         $ 34.3    
Current assets.........................  174.1          167.7
Current liabilities....................   74.3           76.8
Working capital........................   99.8           90.9
Long-term debt.........................    -              4.2

                                       Six-months     Six-months  
                                         ended          ended
                                        June 30,       June 30,
                                          1995           1994    
                                         (Dollars in Millions)
Cash provided by operations............ $ 52.7         $ 47.3
Cash (used for) provided by          
  investing activities.................  (38.9)          13.1
Cash used for financing activities.....   (7.0)         (61.2)


  The Company's financial condition remained strong at June 30,
1995. The increase in cash and equivalents, marketable securities
and investments compared to December 31, 1994 is due principally
to
cash flows generated by operations.  The $8.9 million increase
(9.8%) in working capital is principally due to a $6.7 million
increase in cash and a $8.6 million reduction in accounts payable
and long-term debt. 

  Net cash provided by operations increased $5.4 million (11.4%)
for the six months ended June 30, 1995 compared to the 
corresponding period for 1994. This increase is principally the
result of higher net income for the six months ended June 30,
1995
compared to the corresponding period of 1994, and a $5.6 million
increase associated with reductions in accrued restructuring and
lease termination costs from the 1994 period to the 1995 period.
These increases were offset in part by the increase in accounts
receivable of $2.7 million during the six months ended June 30,
1995 compared to a decrease of $7.3 million for the same period
of
1994.  During the six months ended June 30, 1995, the Company
reduced its liabilities for accrued restructuring charges by $2.0
million ($2.9 million in cash outlays, less $.5 million in
non-cash
discount amortization, and $.4 million associated with an
increased
estimate of lease termination costs) for lease terminations, and
$1.2 million in cash outlays for employee severance and
outplacement costs. 

<PAGE> 26

  Net cash used for investing activities increased $52.0 million. 
During the first six months of 1994, as part of the Company's
repurchase of 2.3 million shares of its common stock, the Company
liquidated a portion of its marketable securities and had net
positive cash flow from marketable securities sales/purchasing
activity of $38.8 million.  The Company did not repurchase any of
its outstanding common shares during the six months ended June
30,
1995, and had no significant sales/purchases of securities during
this period.  Additionally, the Company expended $10 million to
acquire a significant outsourcing contract, which is expected to
have minimum contractual processing revenues in excess of $60
million over the next ten years, resulting in an increase in cash
used for investing activities.

  Net cash used for financing activities decreased $54.2 million
during the six months ended June 30, 1995 compared to the
corresponding period in 1994, due principally to the Company's
not
repurchasing any of its outstanding common stock during the 1995
period, which it did in the corresponding period in 1994.

  During the six months ended June 30, 1995, the Company utilized
its $30 million line of credit for certain short-term operating
needs and general corporate purposes (see discussion of
significant
terms in Note 7 of Notes to Consolidated Financial Statements in
the Company's Annual Report on Form 10-K for the year ended
December 31, 1994). The average daily balance carried during the
period was $6.2 million and the highest balance carried during
the
period was $14.8 million. At June 30, 1995, there were no amounts
outstanding under this line of credit, and it has been the
Company's practice to regularly liquidate any outstanding
balance.

  On August 11, 1995 the Company entered into two unsecured
credit
facilities of $100 million each with a syndicate of financial
institutions.  These lines of credit may be used for general
corporate purposes (see Note 3 of Notes to Consolidated Financial
Statements).

  Significant expenditures anticipated for the remainder of 1995,
excluding any possible business and/or contract acquisitions and
stock repurchases, are as follows:  acquisition of data
processing,
communications equipment and office furniture, fixtures and
equipment ($5.0 million) and costs relating to the internal
development of software systems ($20.0 million).

  The Company has historically used the cash generated from
operations for the following:  development and acquisition of new
products, acquisition of businesses and repurchase of the
Company's
stock.  The Company anticipates that it will continue to use its
cash for all of these purposes in the future and that projected
cash from operations and cash and investment reserves will be
able
to meet presently anticipated needs;  however, the Company may
also
consider incurring debt as needed to accomplish specific
objectives
in these areas and for other general corporate purposes.

<PAGE> 27

                  FACTORS THAT MAY AFFECT FUTURE RESULTS

  The Company's future operating results may be affected by a
number of factors, including uncertainties relative to economic
conditions; industry factors; the Company's ability to develop
and
sell its products profitably; the Company's ability to
successfully
increase market share in its core business while expanding its
product base into other markets; and the Company's ability to
effectively manage expense growth relative to revenue growth in
anticipation of continued pressure on gross margins.  The
Company's
operating results could be adversely affected should the Company
be
unable to anticipate customer demand accurately, to introduce new
products on a timely basis, or to effectively manage the impact
on
the Company of changes in the insurance marketplace.

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

  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 are 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 based upon the timing of the licensing of
new
systems.

  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.  

<PAGE> 28

                                  PART II
                             OTHER INFORMATION

                   POLICY MANAGEMENT SYSTEMS CORPORATION

Item 1. Legal Proceedings

  The Company is involved in lawsuits with Security Life of
Denver
Insurance Company and with the California State Automobile Inter-
Insurance Bureau and the California State Automobile Association
(see Item 1, Legal Proceedings, of Part II contained in the
Company's report on Form 10-Q for the quarter ended March 31,
1995).  The Company was informed by its insurer that based upon
the
allegations raised in these two lawsuits, the insurer does not
believe it would be obligated under the Company's insurance
policies to reimburse defense costs or indemnify the Company for
any payments relating to these claims.  The Company disagrees
with
this conclusion and on June 20, 1995 the Company's insurer
commenced a declaratory judgment action to determine the
insurer's
obligations related to defense costs and indemnity related to
these
two lawsuits.  As a result of this action, the Company determined
it was probable the Company would incur litigation expenses for
certain actual expenses previously incurred and for estimated
future litigation expenses arising from these matters through
their
conclusion, over the next twelve months, of $7.9 million, which
estimate is based upon the Company's prior experience in these
matters.  

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 June 30, 1995.


<PAGE> 29

                   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)



                                        
BY (SIGNATURE)                   /s/ Timothy V. Williams
                                     Timothy V. Williams
                                        Executive Vice President
                                        (Chief Financial Officer) 
DATE                                 August 14, 1995
[{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 71721}]
1

                    SECURITIES AND EXCHANGE COMMISSION
                          Washington, D.C.  20549

                                 FORM 10-Q

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

For Quarter Ended June 30, 1995         Commission file number 0-10175

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

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

One PMS Center (P.O. Box Ten)
Blythewood, S.C. (Columbia, S.C.)                            
29016 (29202)
(Address of principal executive                                
(Zip Code) 
  offices)

Registrant's telephone number, including area code (803) 735-4000
 
     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.

  19,378,465 Common shares, $.01 par value, as of August 4, 1995

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, 1994.
2

                   POLICY MANAGEMENT SYSTEMS CORPORATION

                                   INDEX

PART I. FINANCIAL INFORMATION                                     
    PAGE

  Item 1. Financial Statements

          Consolidated Statements of Income for 
            the three and six months ended June 30, 1995 
            and 1994.......................................... 3

          Consolidated Balance Sheets as of 
            June 30, 1995 and December 31, 1994............... 4

          Consolidated Statements of Cash Flows for
            the six months ended June 30, 1995 and 1994....... 5

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

  Item 2. Management's Discussion and Analysis of
            Financial Condition and Results of
            Operations........................................10

PART II. OTHER INFORMATION

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

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

Signatures....................................................29
3
PART I
                    FINANCIAL INFORMATION

                   POLICY MANAGEMENT SYSTEMS CORPORATION
                     CONSOLIDATED STATEMENTS OF INCOME
                                (Unaudited)

                                         Three Months         Six
Months
                                         Ended June 30,     
Ended June 30,
                                         1995      1994      1995 
    1994  
                                        (In Thousands, Except Per
Share Data)
Revenues:
  Licensing.......................... $ 22,737  $ 23,521  $
48,280  $ 39,991
  Services...........................  110,766   101,220  
218,642   200,692
                                       133,503   124,741  
266,922   240,683
 
Costs and Expenses: 
  Employee compensation & benefits...   47,865    44,872   
95,445    89,842
  Computer and communications 
    expenses.........................    8,103     6,303   
15,152    12,407
  Information services and                                      
    data acquisition costs...........   29,470    33,370   
61,367    67,826
  Depreciation and amortization......   15,374    16,257   
29,567    30,131
  Other operating costs & expenses...   16,174    11,984   
32,136    20,705
  Litigation settlement and
    expenses, net....................    7,866       -      
6,216       -
  Gain on sale of Health business
    and related assets...............   (8,116)      -     
(8,116)      -  
  Impairment and restructuring 
    credits, net.....................     (246)   (1,715)    
(246)   (1,715)
                                       116,490   111,071  
231,521   219,196

Operating income ....................   17,013    13,670   
35,401    21,487 

Other Income and Expenses:
  Investment income..................      535     1,849      
958     3,672
  Loss on sale of marketable
    securities.......................      -        (802)      -  
     (819)
  Interest expense and other
    charges..........................     (827)     (824)  
(1,518)   (1,719)
                                          (292)      223     
(560)    1,134

Income before income taxes...........   16,721    13,893   
34,841    22,621

Income taxes ........................    4,631     5,295   
11,431     8,455

Net income .......................... $ 12,090  $  8,598  $
23,410  $ 14,166

Net income per share................. $    .62  $    .40  $  
1.21  $    .64

Weighted average number of shares....   19,363    21,498   
19,363    22,067
See accompanying notes.
4
POLICY MANAGEMENT SYSTEMS CORPORATION
                           CONSOLIDATED BALANCE SHEETS

                                                 (Unaudited) 
(Audited)
                                                   June 30, 
December 31,
                                                     1995       
1994    
                                                     (In
Thousands,
                                                    Except Share
Data)
Assets
Current assets:
  Cash and equivalents............................ $ 24,390   $
17,686
  Marketable securities...........................    8,099    
11,051 
  Receivables, net of allowance for uncollectible 
     amounts of $1,109 ($1,478 at 1994)...........   92,690    
90,474 
  Income tax receivable...........................   28,194    
31,072
  Deferred income taxes...........................    6,132     
6,644
  Other...........................................   14,638    
10,798
     Total current assets.........................  174,143   
167,725

Property and equipment, at cost less accumulated
   depreciation and amortization of $106,900
   ($125,601 at 1994).............................  133,779   
136,503
Receivables.......................................      477       
500
Goodwill and other intangible assets..............   84,031    
77,763
Capitalized software costs........................  128,138   
118,621
Deferred income taxes.............................   12,097    
12,453
Investments.......................................    5,336     
5,567
Other.............................................    4,868     
4,899
        Total assets.............................. $542,869  
$524,031

Liabilities
Current liabilities:
  Accounts payable and accrued expenses........... $ 48,803   $
50,231 
  Accrued restructuring charges...................    5,916     
5,648
  Accrued contract termination costs..............    1,313     
1,819
  Current portion of long-term debt...............    1,741     
4,734
  Income taxes payable............................    3,890     
2,279
  Unearned revenues...............................   11,970    
11,930
  Other...........................................      754       
215
     Total current liabilities....................   74,387    
76,856

Long-term debt....................................      -       
4,162
Deferred income taxes.............................   59,466    
54,671
Accrued restructuring charges.....................    7,348    
10,796
Other.............................................    2,041       
624
     Total liabilities............................  143,242   
147,109
 
Commitments and contingencies (Note 1)

Stockholders' Equity
Special stock, $.01 par value, 5,000,000 shares 
   authorized.....................................      -         
-
Common stock, $.01 par value, 75,000,000 shares 
   authorized, 19,368,681 shares issued and 
   outstanding (19,362,984  at December 31, 1994).      194       
194
Additional paid-in capital........................  170,482   
170,323
Retained earnings.................................  230,384   
206,974
Unrealized holding loss on marketable securities..      (50)     
(118)
Foreign currency translation adjustment...........   (1,383)     
(451)
  Total stockholders' equity......................  399,627   
376,922
     Total liabilities and stockholders' equity... $542,869  
$524,031
See accompanying notes.
5
POLICY MANAGEMENT SYSTEMS CORPORATION
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                                (Unaudited)

                                                    Six Months
Ended
                                                    June 30, 
June 30,
                                                      1995     
1994  
                                                       (In
Thousands)
Operating Activities
  Net income...................................  $ 23,410  $
14,166
  Adjustments to reconcile net income to 
   net cash provided by operating activities:     
    Depreciation and amortization..............    29,566   
30,131
    Deferred income taxes......................     5,050    
5,736
    Loss on sale of marketable securities......       -        
819
    Provision for uncollectible accounts.......       534      
280
  Changes in assets and liabilities:
    Accrued restructuring and lease
      termination costs........................    (3,180)  
(8,803)
    Receivables................................    (2,727)   
7,262
    Income taxes receivable....................     2,878   
(1,822)
    Accounts payable and accrued expenses......    (1,428)   
1,334
    Income taxes payable.......................     2,224    
2,728  
  Other, net...................................    (3,594)  
(4,513)
       Cash provided by operations.............    52,733   
47,318
  
Investing Activities
  Proceeds from sales/maturities of marketable
   securities, net.............................     3,000  
126,710
  Purchases of marketable securities, net......       -    
(87,873)
  Acquisition of property and equipment........   (11,919)  
(7,961)
  Capitalized internal software development  
   costs.......................................   (20,394) 
(17,890)
  Purchased software...........................      (250)    
(157)
  Proceeds from disposal of property & 
   equipment...................................       709      
304
  Contract acquisition costs...................   (10,000)      - 

       Cash (used for)/provided by investing 
         activities............................   (38,854)  
13,133 

Financing Activities
  Payments on long-term debt...................    (7,155)  
(4,597)
  Repurchase of common stock...................       -    
(56,555)
  Issuance of common stock under stock 
   option plans................................       159       - 
   
       Cash used for financing activities......    (6,996) 
(61,152)

Effect of exchange rate changes on cash........      (179)    
(937)
Net increase (decrease) in cash and
  equivalents..................................     6,704   
(1,638) 
Cash and equivalents at beginning of period....    17,686   
24,122
Cash and equivalents at end of period..........  $ 24,390  $
22,484

Noncash Activities
Supplemental Information
  Interest paid................................     1,160    
1,390
  Income taxes paid............................     1,105    
2,099
See accompanying notes.
6

                   POLICY MANAGEMENT SYSTEMS CORPORATION
                NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               June 30, 1995

NOTE 1. COMMITMENTS AND CONTINGENCIES

Commitments

  On March 27, 1995, the Company entered into a long-term license
and maintenance agreement in order to acquire rights to certain
operating system management software products for use in the
Company's worldwide data center operations.  The agreement, which
has an initial term of ten years, may be renewed and extended for
an additional period of five years, subject to mutual agreement
and
other modifications.  The March 27, 1995 agreement replaces three
five-year term agreements executed in 1993, and other related
agreements.  Minimum contract payments by the Company over the
initial ten year term aggregate $33.0 million payable in
specified
annual installments which escalate over the ten year period.  The
first annual installment due March 31, 1995 was reduced by $1.5
million to reflect the application of a pre-payment credit
relating
to a prior agreement which was terminated.  In addition to
minimum
contract payments, the Company will pay an annual supplemental
revenue fee (beginning 1997 for the 1996 annual period) equal to
a
specified annual percentage of the Company's applicable annual
gross revenues, less the specified annual installment for such
period.  Minimum contract payments will be expensed on a
straight-
line basis over the initial ten year term.  Annual supplemental
revenue fees, if any, will be accrued in the period in which
determined.

  On April 7, 1995, the Company finalized certain terms of a ten-
year agreement with an insurance holding company and its
subsidiaries, initially entered into in November 1994.  The
Company
is to provide certain data processing and other professional
services as required.  The minimum contractual processing
revenues
are expected to be in excess of $60 million over the term of the
agreement.  The Company has incurred costs of $10 million related
to this agreement in the second quarter of 1995 ($5 million in
the
fourth quarter of 1994), which have been deferred as contract
acquisition costs and are being expensed on a straight-line basis
over the term of the agreement.  At June 30, 1995, the net
unamortized amounts related to this continuing agreement,
included
in other intangible assets, were $14.2 million.

Contingencies - Legal Proceedings

  In December 1994, the Company reached an agreement, which was
subsequently approved on May 26, 1995 by the United States
District
Court for the District of South Carolina, to settle its
shareholder
class action.  The settlement of $31 million was paid by the
Company's Directors' and Officers' Liability Insurance Carrier,
the
7

Company's former accountants and the Company.  The Company's
portion of the settlement and associated litigation costs
resulted
in a special one-time charge of $34.2 million ($21.3 million
after
tax) in the fourth quarter of 1994.  This represents the
Company's
portion of the total settlement, plus the Company's litigation
costs of $18.1 million ($11.2 million after tax), less the
recovery
from the insurance company.  In March 1995, the Company and its
insurance carrier signed an agreement to settle amounts contested
and the carrier agreed to pay an additional amount of $1.7
million
in full settlement of the Company's claims.  Accordingly, the
Company recorded a credit of $1.7 million, in the first quarter
of
1995, as a further adjustment to the estimated costs of settling
the securities class action.  

  In June 1993, the Securities and Exchange Commission (SEC)
commenced a formal investigation into possible violations of the
Federal securities laws in connection with the Company's public
reports and financial statements, as well as trading in the
Company's securities.  The SEC has issued a formal order of
investigation which provides the SEC staff with the power to
subpoena documents and to compel testimony in connection with
their
investigation.  The United States Attorney for the District of
South Carolina also is conducting an investigation into certain
of
these matters.  The Company is cooperating with these
investigations.

  The Company is involved in two lawsuits alleging, among other
things, breach of a life insurance joint development contract and
breach of a contract concerning an early version of its Series
III
property and casualty software.  The Company believes it has
meritorious defenses, is vigorously defending its position in
these
matters and is pursuing counterclaims against the plaintiffs (see
Item 1, Legal Proceedings, of Part II contained in the Company's
report on Form 10-Q for the quarters ended March 31, 1995.  The
Company was informed by its insurer that based upon the
allegations
raised in these two lawsuits, the insurer does not believe it
would
be obligated under the Company's insurance policies to reimburse
defense costs or indemnify the Company for any payments relating
to
these claims.  The Company disagrees with this conclusion and on
June 20, 1995 the Company's insurer commenced a declaratory
judgment action to determine the insurer's obligations related to
defense costs and indemnity related to these two lawsuits.  As a
result of this action, the Company determined it was probable the
Company would incur litigation expenses for certain actual
expenses
previously incurred and for estimated future litigation expenses
arising from these matters through their conclusion, over the
next
twelve months, of $7.9 million, which estimate is based upon the
Company's prior experience in these matters.
8

  In addition to the litigation described above, the Company is
presently involved in two contract disputes arising out of the
Company's change in the direction of its future life software
systems development following the acquisition of CYBERTEK.  There
are also various other litigation proceedings and claims arising
in
the ordinary course of business.  The Company believes it has
meritorious defenses and is vigorously defending these matters.

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

NOTE 2. IMPAIRMENT AND RESTRUCTURING CHARGES

  The Company recorded, at October 1, 1994, impairment charges to
write-off the carrying value of certain identifiable assets ($7.7
million), goodwill ($13.9 million) and acquired software ($11.5
million), principally related to its property and casualty
information services business acquisitions and certain software
product acquisitions licensed in the property and casualty market
(see Note 12 of Notes to Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the year ended December
31, 1994).

  The Company established reserves of $2.0 million at December
31,
1994, in connection with the acquisition of Creative Group
Holdings, Limited, to provide for the costs of terminating the
Company's existing lease obligations in the United Kingdom and
relocation and severance costs associated with consolidating its
existing operations (see Note 2 of Notes to Consolidated
Financial
Statements in the Company's Annual Report on Form 10-K for the
year
ended December 31, 1994).

NOTE 3. CREDIT AGREEMENT

  On August 11, 1995, the Company entered into two unsecured
credit
facilities of $100 million each with a syndicate of financial
institutions (the syndicate) to provide an additional source of
funds for general corporate purposes. The first $100 million
facility bears a term of 364 days.  The second $100 million
facility bears a term of 3 years.  Borrowings under the
facilities
bear interest payable at rates based upon the Morgan Guaranty
Trust
Company's Prime Rate, the Federal Funds Rate, the London
Interbank
Offering Rate or the yield on certain certificates of deposit as
appropriate, plus a spread above certain of these rates.  The
Company is subject to certain covenants including, but not
limited
to, the maintenance of certain operating ratios and levels of
tangible net worth.
9

NOTE 4. CERTAIN TRANSACTIONS

  On June 30, 1995, the Company sold its Health Insurance Systems
Division for a total consideration of $9.3 million in cash. After
selling expenses of $.5 million, the net book value of assets
sold
of $.5 million, liabilities resulting from the sale, including
severance liabilities for certain employees and other reserves of
$1.5 million, and the present value of a sublease executed by the
purchaser for certain office space of $1.3 million, the Company
recorded a pre-tax gain of $8.1 million, which has been recorded
under "Costs and Expenses" in the Consolidated Statements of
Income
for the three and six months ended June 30, 1995 (see
Management's
Discussion and Analysis of Financial Condition and Results of
Operations).

NOTE 5.  INCOME TAXES

  The Company's effective tax rate for the second quarter of 1995
was 27.7% compared with 37.5% for the first quarter of 1995. The
Company's annual effective income tax rate (income taxes
expressed
as a percentage of pre-tax income) was 32.8% and 37.4% for the
six
months ended June 30, 1995 and 1994, respectively. The effective
rate for 1995 was significantly lower due principally to the
goodwill deducted for tax purposes, providing a benefit of $.9
million in the second quarter of 1995 as a result of the change
in
estimate of the annual effective tax rate, relating to the sale
of
the Company's Health Insurance Systems Division (see Note 4
above).
10

                   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, 1994.

                           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:
1995   vs   1994
                                                                  
 Percent Increase
                                                                  
    (Decrease)    
                                Percentage         Percentage     
 Three      Six 
                               of Revenues        of Revenues     
 Months    Months
                               Three Months      Six Months      
Ended     Ended 
                            Ended June 30,     Ended June 30,   
June 30,  June 30,
                       1995      1994     1995      1994
Revenues:
Licensing...................  17.0      18.9     18.1      16.6   
  (3.4)    20.8
Services....................  83.0      81.1     81.9      83.4   
   9.5      8.9 
                             100.0     100.0    100.0     100.0   
   7.0     10.9
Costs and Expenses:
Employee compensation
    and benefits............  35.9      36.0     35.8      37.3   
   6.7      6.2 
Computer & communication
    expenses................   6.1       5.1      5.7       5.2   
  28.6     22.1
Information services & data
    acquisition costs.......  22.1      26.8     23.0      28.2   
 (11.7)    (9.5)
Depreciation and amorti-
    zation..................  11.5      13.0     11.1      12.5   
  (5.4)    (1.9)
Other operating costs
    and expenses............  12.1       9.6     12.0       8.6   
  35.0     55.2
Litigation settlement and 
    expenses, net...........   5.9         -      2.3         -   
     -        -
Gain on sale of Health 
    business and related
    assets..................  (6.1)        -     (3.0)        -   
     -        -
Impairment and restructuring
    charges, net............   (.2)     (1.4)    (0.1)      (.7)  
 (85.7)   (85.7)
                              87.3      89.1     86.7      91.1   
   4.9      5.6 

Operating income............  12.7      10.9     13.3       8.9   
  24.5     64.8
Other Income and Expenses...  (0.2)      0.2     (0.2)      0.5   
(230.9)  (149.4)
Income before income taxes..  12.5      11.1     13.1       9.4   
  20.4     54.0
Income taxes................   3.5       4.2      4.3       3.5   
 (12.5)    35.2

Net income..................   9.0       6.9      8.8       5.9   
  40.6     65.3
11

  The Company's revenues are generated principally by licensing
standardized insurance software systems and providing automation
and administrative support and information services to the
worldwide insurance industry.  Licensing revenues are provided
for
under the terms of nonexclusive and nontransferable license
agreements, which generally have a noncancelable minimum term of
six years and provide for an initial license charge and a monthly
license charge.  Services revenues are derived from professional
support services, which include implementation and integration
assistance, consulting and education services, information and
outsourcing services ranging from making available software
licensed from the Company on a remote processing basis from the
Company's data centers, to complete systems management,
processing,
administration support and automated information services through
the Company's nationwide telecommunications network using the
Company's database products.

THREE MONTHS COMPARISON

  A comparison of revenues for each line of business and
geographic
market for the periods presented is as follows:
                                         
                                   Revenues    
                                 Three Months  
                                Ended June 30, 
                                1995     1994  
                            (Dollars in Millions)
   Line of Business    
Property & Casualty....       $ 96.8   $ 88.3 
Life...................         32.4     30.0 
Health.................          4.0      6.4 

   Geographic Market   
United States..........       $103.2   $107.3 
International..........         30.0     17.4 

REVENUES

                          Three           Three
                       Months Ended    Months Ended
  Licensing            June 30, 1995   June 30, 1994    Change  
                          (Dollars in Millions)
Initial charges.......... $ 9.5          $ 10.4         (8.7)%
Monthly charges..........  13.2            13.1           .8 %  
                          $22.7           $23.5         (3.4)%  

Percentage of revenues...  17.0%           18.9%                

  Initial license revenues for the three months ended June 30,
1995
decreased $.9 million (8.7%) compared to the corresponding period
in 1994.  The decrease is principally related to a decline in
12

licensing activity in the life insurance market of $1.5 million,
as
well as a decline in licensing activity in the health insurance
market of $.3 million (see Note 4 of Notes to Consolidated
Financial Statements).  These decreases were partially offset by
an
increase of $.9 million in licensing activities related to the
property and casualty insurance market.  Although down from the
second quarter of 1994 (see table below), the current quarter
licensing activity in the life insurance market continues to
reflect customer interest in the Company's CK/4 Enterprise and
emerging CYBERLife software system solutions.  CYBERLife
incorporates advanced client/server technology and was initially
released in March 1995.  Licensing of property and casualty
systems
from activities in the European, Asian and Canadian markets
increased $3.1 million. This increase was partially offset by a
decline in licensing activities in the domestic property and
casualty insurance market of $2.2 million.  The variance in
initial
license revenues between quarters for both the domestic and
international property and casualty insurance markets continues
to
reflect the timing of customers' decisions to enter into large
license agreements with the Company for either new systems and/or
the migration to client/server technology (see table below).  The
Company recognized $1.1 million in initial license charges for
the
period, relating to a distribution agreement with AT&T Global
Information Solutions (AT&T Global).  Under the distribution
agreement, which is part of the Company's joint marketing
arrangement with AT&T Global, AT&T markets the Company's Series
III
systems worldwide to insurance companies implementing AT&T
Global's
UNIX-based solutions.  Additionally, the Company recognized $1.5
million related to an exclusive marketing arrangement with AT&T
Global.  Under the exclusive marketing arrangement, the Company
markets the UNIX-based version of its mid-range property and
casualty software systems exclusively to AT&T Global UNIX
platform
customers for a period of three years.  There are no monthly
license revenues under the distribution agreement or exclusive
marketing arrangement with AT&T Global, and the Company's current
joint marketing agreement with AT&T Global is subject to
extension
in September 1996.

  Because a significant portion of initial license charges are
recorded at the time new systems are licensed, there can be
significant fluctuations in revenue from quarter to quarter.  Set
forth below is a comparison of initial license revenues for the
preceding six quarters expressed as a percentage of total
revenues
for each of the periods presented:
13
1995                        1994   
           
                         Second   First     Fourth   Third   
Second   First 
                         Quarter  Quarter   Quarter  Quarter 
Quarter  Quarter
                                         (Dollars in Millions)
Property and Casualty 
Initial license 
  revenues.............  $ 7.3    $ 8.0     $ 5.6    $ 7.4    $
6.4    $ 1.6
Total revenues.........    5.5%     6.0%      4.5%     5.8%    
5.2%     1.4%

         Life          
Initial license 
  revenues.............  $ 2.1    $ 3.7     $ 1.6    $ 3.4    $
3.6    $ 1.6
Total revenues.........    1.6%     2.8%      1.3%     2.7%    
2.8%     1.4%

        Health         
Initial license 
  revenues.............  $  .1    $  .2     $ 2.5    $ 3.5    $ 
 .4    $  .4
Total revenues.........     -        .1%      2.0%     2.8%     
 .3%      .3%

       Combined        
Initial license 
  revenues.............  $ 9.5    $11.9     $ 9.7    $14.3   
$10.4    $ 3.6
Total revenues.........    7.1%     8.9%      7.8%    11.3%    
8.4%     3.1%
Revenues from continuing monthly license charges ("MLC") for
Maintenance, Enhancements and Services Availability ("MESA")
remained relatively unchanged for the second quarter of 1995
compared to the corresponding quarter of 1994.

                          Three           Three
                       Months Ended    Months Ended
  Services             June 30,1995    June 30,1994    Change   
                        (Dollars In Millions)
Professional and 
  outsourcing........... $ 65.5          $ 51.2         27.9 %
Information.............   44.5            49.4         (9.9)%
Other...................     .8              .6         33.3 %  
                         $110.8          $101.2          9.5 %  

Percentage of revenues..   83.0%           81.1%                
  

  Professional and outsourcing services for the three months
ended
June 30, 1995 increased $14.3 million (27.9%) compared to the
same
period in 1994.  This increase is principally related to services
from both new and existing contracts amounting to $13.1 million
for
property and casualty insurance business and $2.8 million for
life
insurance business, and was partially offset by a decline in
revenues from the health insurance market of $1.6 million.  The
14

increase in the property and casualty business resulted from
increased services in both the international and domestic
markets.
The Company's international property and casualty insurance
services increased $6.6 million principally as a result of the
acquisition of Creative Group Holdings, Limited at December 31,
1994 and new services contracts in the European and Asia/Pacific
regions.  Creative, headquartered in the United Kingdom, is a
British holding company whose wholly-owned subsidiaries, located
in
England, Australia and Southeast Asia, provide software
consulting, 
development, licensing and support services to medium-sized
general
insurance companies.  The increase in the domestic property and
casualty insurance market amounted to $6.5 million and
principally
resulted from new professional services contracts and an increase
in the residual markets for total policy management outsourcing
services. Services in the life insurance market increased
principally as a result of additional outsourcing services.  The
decline in professional services revenues from the health
insurance
market of $1.6 million reflected the continued reluctance of
health
insurers to make major system decisions. 
 
  Revenues from information services were $44.5 million for the
second quarter in 1995 compared with $49.4 million for the
corresponding quarter in 1994.  This $4.9 million decrease (9.9%)
is principally attributable to a decline in revenues associated
with the Company's domestic property and casualty automobile and
risk information services business of $5.5 million.  This decline
relates principally to significant changes in the property and
casualty insurance industry, as described more fully in Item 7 of
Part II and Note 12 of Notes to Consolidated Financial Statements
in the Company's Annual Report on Form 10-K for the year ended
December 31, 1994.  The decrease in revenues associated with the
property and casualty information services business was partially
offset by an increase in life information services of $.6
million.

Costs and Expenses

  Employee compensation and benefits increased $3.0 million
(6.7%)
for the second quarter of 1995 compared to the corresponding
quarter in 1994, principally as a result of increased salaries,
costs associated with the acquisition of Creative Group Holdings,
Limited in December 1994, and increased costs associated with the
growth in staffing for additional services activity and an
increase in Company contributions relating to certain of its
benefit plans. These
increases were partially offset by a reduction in compensation
and
other benefits related to the Company's downsizing of its health
insurance services staff from 209 at the end of the second
quarter
of 1994 to 112 at the end of the second quarter of 1995 (see Note
4 of Notes to  Consolidated Financial Statements). As a
percentage
of revenues, employee compensation and benefits expense remained
significantly unchanged for the second quarter of 1995 as
compared
to the same period of 1994.
15

  As a percentage of revenues, computer and communications
expenses
increased to 6.1% for the second quarter of 1995 from 5.1% for
the
corresponding quarter of 1994, representing an increase of $1.8
million (28.6%).  This increase was due principally to expenses
for
certain operating system management software products utilized in
the Company's worldwide data center operations (see Note 1 of
Notes
to Consolidated Financial Statements), and increased
communications, data circuit and maintenance costs associated
with
the expansion of the Company's international operations.

  Information services and data acquisition costs for the second
quarter of 1995 decreased $3.9 million (11.7%) compared to the
corresponding quarter of 1994, due principally to a continued
decrease in the volume of state fees for motor vehicle reports
associated with the domestic property and casualty automobile and
information services business (see Revenue discussion above).

  Depreciation and amortization expense decreased $.9 million
(5.4%) for the second quarter of 1995 compared to the
corresponding
quarter of 1994. The decrease is due principally to lower
amortization charges resulting from the impairment of certain
identifiable intangible assets, goodwill and software products
relating to the Company's property and casualty information
services business (see Note 12 of Notes to Consolidated Financial
Statements in the Company's Annual Report on Form 10-K for the
year
ended December 31, 1994) and lower depreciation charges due to
certain retirements of data processing equipment. These decreases
were partially offset by additional amortization charges relating 
to internally developed software costs.  These costs are
associated
with a new release of the Company's property and casualty
insurance
Series III client/server software system and the initial release
of
its life insurance CYBERLife client/server software system.  Both
became generally available during the first quarter of 1995.

  Other operating costs and expenses for the second quarter of
1995
increased $4.2 million (35%) compared to the corresponding
quarter
in 1994.  This increase relates principally to additional costs
relating to outside consultants and independent contractors
resulting from increased professional services activities and the
acquisition of the Creative Holdings Group, Limited at December
31,
1994, and costs associated with providing total policy management
outsourcing services.  In the second quarter of 1994, a credit of
$1.6 million resulted from the recovery of certain receivables,
previously written-off, and the completion of certain projects
during the second quarter of 1994, for which cost overruns had
been
charged in prior periods.  Also included in other operating costs
and expenses for 1995 is a credit of approximately $1.0 million
related to the amendment of a professional services contract.
16

  The Company, as of June 30, 1995, has provided for $7.9 million
in estimated litigation costs arising from two lawsuits to which
the Company is both a defendant and counter-claimant. The costs
provided for include, but are not limited to, fees paid or
anticipated to be paid to external counsel and other costs
related
to the Company's defense and claims regarding these matters (see
Item 1, Legal Proceedings, of Part II contained in the Company's
report on Form 10-Q for the quarter ended June 30, 1995).

  On June 30, 1995, the Company completed the sale of its Health
Insurance Systems Division for a total consideration of $9.3
million in cash.  After selling expense and other accrued costs,
the Company recorded a pre-tax gain of $8.1 million.

  In June 1995, the Company reduced certain of its restructuring
reserves by $.4 million for the balances remaining, as of June
30,
1995, as a result of completing certain restructuring activities
for its life and health insurance businesses.  At June 30, 1994,
the Company, as a result of new events occurring, changed its
estimates and reduced its restructuring reserves by $1.7 million,
which were established at June 30, 1993 for employee severance
and
outplacement costs in connection with the downsizing of its
health
staff.

Operating Income

  Operating income, after the effects of the gain from the sale
of
the Health Division and special charges, was $17.0 million for
the
three months ended June 30, 1995, compared with $13.7 million for
the corresponding period in 1994. The Company recorded a gain
from
the sale of the Company's Health Division of approximately $ 8.1
million (see Note 4 of Notes to the Consolidated Financial
Statements), and special charges aggregating $7.6 million for the
three months ended June 30, 1995 relating to legal costs ($7.9
million) and impairment and restructuring credits ($.3 million). 
Special charges for the three months ended June 30, 1994 of $1.7
million relate to impairment and restructuring credits (see Costs
and Expenses).

  Operating income, excluding the gain on the sale of the
Company's
Health Division and special charges, was $16.5 million for the
three months ended June 30, 1995, compared with $12.0 million for
the corresponding period in 1994.  Operating income, excluding
the
gain and special charges, as a percentage of revenues increased
to
12.4% for the second quarter of 1995 from 9.6% for the comparable
quarter in 1994.  The increase in operating income (37.5%),
excluding the gain and special charges,  results principally from
an increase in professional and outsourcing services revenues
provided under new and existing contracts with property and
casualty insurance companies and residual markets ($13.1 million)
17

and an increase in new professional and outsourcing services
revenues from life insurers ($2.8 million).

  A significant portion of both the Company's revenues 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 are recorded at the time
new
systems are licensed, there can be significant fluctuations from
quarter-to-quarter 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 (see
table
above).

  Investment income decreased $1.3 million as a result of a lower
level of investable funds, resulting from large cash expenditures
for the acquisition of Creative Group Holdings, Limited ($19.9
million), in December 1994, the repurchase in May 1994 of
2,278,537
of the 3,797,561 shares of common stock held by IBM ($56.6
million), the repurchase during the last half of 1994 of 995,500
shares of the Company's outstanding common stock on the open
market
($35.3 million) under its 2.5 million share repurchase
authorization and payments to settle the shareholder class action
and related expenses made principally during the fourth quarter
of
1994.

  As part of the Company's repurchase of 2,278,537 of the
3,797,561
shares of its common stock held by IBM, at a price of $24.77 per
share, the Company liquidated a portion of its marketable
securities.  The Company incurred a loss on the sale of
securities
of approximately $.8 million related directly to the repurchase
during the second quarter of 1994.

  Interest expense and other charges remained relatively
unchanged
for the second quarter in 1995 compared to the corresponding
period
in 1994.

  The effective income tax rate (income taxes expressed as a
percentage of pre-tax income) was 27.7% and 38.1% for the three
months ended June 30, 1995 and 1994, respectively.  The effective
rate for the 1995 second quarter was significantly lower due
principally to goodwill, deducted for tax purposes, relating to
the
sale of the Company's Health Insurance Systems Division (see
Notes
4 and 5 of Notes to Consolidated Financial Statements).  The 1995
second quarter tax was further reduced to adjust the year-to-date
effective tax rate to the expected tax rate for 1995, resulting
in
an estimated effective income tax rate for the remainder of 1995
of
32.8%.
18
SIX MONTHS COMPARISON

  A comparison of revenues for each line of business and
geographic
market for the periods presented is as follows:
                                        
                                        
                               Revenues    
                              Six Months  
                            Ended June 30, 
                             1995    1994  
                         (Dollars in Millions)
   Line of Business   
Property & Casualty...     $193.7  $167.8 
Life..................       65.0    57.2 
Health................        7.9    15.7 

  Geographic Market   
United States.........     $207.3  $203.8 
International.........       59.3    36.9 

REVENUES

                        Six            Six  
                    Months Ended   Months Ended
  Licensing         June 30,1995   June 30,1994   Change   
                      (Dollars in Millions)
Initial charges.....  $21.5            $14.1       52.5%
Monthly charges.....   26.8             25.9        3.5%   
                      $48.3            $40.0       20.8%    

Percentage of 
  revenues..........  18.1%             16.6%              

  Total licensing revenues for the six months ended June 30, 1995
increased $8.3 million (20.8%) compared to the corresponding
period
in 1994, due principally to a $7.4 million increase in initial
license revenues. The increase in initial license revenues is
principally related to licensing activities in the property and
casualty insurance market of $7.3 million, as well as an increase
in licensing activities in the life insurance market of $.5
million.  These increases were partially offset by a decrease in
licensing activities related to the health insurance market of
$.4
million (see table below).  Increased  licensing of property and
casualty systems resulted principally from activities in the
United
States, Europe, Canada and Asia-Pacific, and reflect licensing
activity related to the Company's acquisition of Creative Group
Holdings, Limited at December 31, 1994. Licensing activities in
the
property and casualty insurance market include $2.6 million for
the
six months ended June 30, 1995, relating to a distribution
19

agreement and $1.5 million relating to an exclusive marketing
arrangement, both with AT&T Global.  During the first six months
of
1994, the Company recognized licensing revenue of $2.0 million
from
AT&T Global.  Increased licensing activities in the life
insurance
market principally reflect continuing customer interest in the
Company's CK/4 Enterprise software system and the March 31, 1995
initial release of its CYBERLife client/server software system
solution.

  Because a significant portion of initial license charges are
recorded at the time new systems are licensed, there can be
significant fluctuations in revenue from period to period.  Set
forth below is a comparison of initial license revenues for the
six
months ended June 30, 1995 and 1994, expressed as a percentage of
total revenues for each of the periods presented:

                         Six Months Ended     Six Months Ended
                          June 30, 1995        June 30, 1994  
                                 (Dollars in Millions)
 Property and Casualty 
Initial license 
  revenues.............       $15.3                $ 8.0
Total revenues.........         5.7%                 3.3%

         Life          
Initial license 
  revenues.............       $ 5.8                $ 5.3
Total revenues.........         2.2%                 2.2%

        Health         
Initial license 
  revenues.............       $  .4                $  .8
Total revenues.........          .1%                  .3%

       Combined        
Initial license 
  revenues.............       $21.5                $14.1
Total revenues.........         8.0%                 5.8%

  Revenues from continuing monthly license charges ("MLC") for
Maintenance, Enhancements and Services Availability ("MESA")
remained relatively unchanged for the six months ended June 30,
1995, compared to the corresponding period in 1994.
20
                          Six              Six
                        Months Ended    Months Ended
  Services              June 30,1995    June 30,1994    Change 
                                 (Dollars in Millions)
Professional and 
  outsourcing............ $126.6          $101.6         24.6 %
Information..............   91.0            98.4         (7.5)%
Other....................    1.0              .7         42.8 %
                          $218.6          $200.7          8.9 %

Percentage of revenues...   81.9%           83.4%              

  Total services revenues for the six months ended June  30, 1995
increased $17.9 million (8.9%) compared to the corresponding
period
in 1994.  

  Revenues from professional and outsourcing  services increased
$25.0 million (24.6%)  to $126.6 million for the  six months
ended
June 30, 1995 from $101.6 million for the corresponding period in
1994. This increase was due primarily to additional services to
new
and existing customers in the property and casualty insurance
market ($26.0 million) and the life insurance market ($5.7
million). These increases were partially offset by a decline  in
health related services of $ 6.5 million. Increased revenues from
the property and casualty insurance market principally relate to
new professional services contracts with domestic insurance
companies and a continued increase in the residual markets for
total policy management outsourcing services. International
property and casualty services revenues increased principally as
a
result of the Company's acquisition of Creative Group Holdings,
Limited at December 31, 1994, and new services contracts in the
Asia/Pacific region. Professional and outsourcing services in the
life insurance market increased primarily as the result of new
professional services and outsourcing contracts in both the
domestic ($3.0 million) and international markets ($2.7 million).
These increases were partially offset by a decline in
professional
services revenues from the health insurance market of $6.5
million
(see Note 4 of Notes to Consolidated Financial Statements).

  Revenues from information services were $91.0 million for the
six
months ended June 30, 1995 compared with $98.4 million for  the
corresponding period in 1994. This $7.4 million decrease is
primarily attributable to a  decrease in revenues associated with
the Company's domestic property and casualty automobile and risk
information services business ($ 8.7 million). This decline
relates
principally to significant changes in the property and casualty
insurance industry, as described more fully in Item 7 of Part II
and Note 12 of Notes to Consolidated Financial Statements in the
Company's Annual Report on Form 10-K for the year ended December
31, 1994.  The decrease in revenues associated with the property
and casualty information services business is partially offset by
21

an increase in life information services of $ 1.3 million
(principally attending physician statements and medical history
reports).

Costs And Expenses

  Employee compensation and benefits increased $5.6 million
(6.2%)
for the six months ended June 30, 1995 compared to the
corresponding period in 1994, principally as a result of
increased
costs associated with the acquisition of Creative Group Holdings,
Limited in December 1994, increased costs associated with the
growth in staffing for additional services activity for both new
and existing customers, and an increase in the Company's
provision
for performance bonus expense as a result of higher earnings per
share. These increases were partially offset by a reduction in
compensation and other benefits related to the Company's
downsizing
of its health insurance services staff from 209 at the end of the
second quarter of 1994 to 112 at the end of the second quarter of
1995 (see Note 4 of Notes to Consolidated Financial Statements).
As
a percentage of revenues, employee compensation and benefits
expense decreased to 35.8% compared to 37.3% for the same period
of
1994.

  As a percentage of revenues, computer and communications
expenses
increased to 5.7% for the six months ended June 30, 1995 from
5.2%
for the corresponding period of 1994, representing an increase of
$2.7 million (22%).  This increase was due principally to
expenses
for certain operating system management software products
utilized
in the Company's worldwide data center operations (see Note 1 of
Notes to Consolidated Financial Statements), and increased
communications, data circuit and maintenance costs associated
with
the expansion of the Company's international operations and
additions of new outsourcing business.

  Information services and data acquisition costs for the six
months ended June 30, 1995 decreased $6.5 million (9.5%) compared
to the corresponding period of 1994, due principally to a
continued
decrease in the volume of state fees for motor vehicle reports
associated with the domestic property and casualty automobile and
information services business (see Revenue discussion above).

  Depreciation and amortization expense decreased $.6 million
(1.9%) for the six months ended June 30, 1995 compared to the
corresponding period of 1994. The decrease is due principally to
lower amortization charges resulting from the impairment of
certain
identifiable intangible assets, goodwill and software products
relating to the Company's property and casualty information
services business (see Note 12 of Notes to Consolidated Financial
Statements in the Company's Annual Report on Form 10-K for the
year
ended December 31, 1994) and lower depreciation charges due to
certain retirements of data processing equipment. These decreases
22

were partially offset by additional amortization charges relating
to internally developed software costs.  These costs are
associated
with a new release of the Company's property and casualty
insurance
Series III client/server software and the initial release of its
life insurance CYBERLife client/server software system.  Both
became generally available during the first quarter of 1995.

  Other operating costs and expenses for the six months ended
June
30, 1995 increased $11.4 million (55%) compared to the
corresponding period in 1994. The increase is principally
attributable to an increase in outside consultants and
independent
contractors relating to increased professional services
activities 
and the acquisition of the Creative Holdings Group, Limited. 
Additionally, operating costs associated with providing total
policy management outsourcing services increased.  In the second
quarter of 1994, a credit of $1.6 million resulted from the
recovery of certain receivables, previously written-off, and the
completion of certain projects during the second quarter of 1994,
for which cost overruns had been charged in prior periods.  These
increases were partially offset by a decrease in outside legal
and professional fees and an increase in amounts
capitalized, principally associated with the internal development
of the Company's life insurance CYBERLife client/server software
system.  Also included in other operating costs and expenses is a
credit of approximately $1.0 million related to the amendment of
a
professional services contract.

  Litigation settlement and expenses, net for the six months
ended
June 30, 1995, amounted to $6.2 million.  The Company, as of June
30, 1995, has provided for $7.9 million in estimated litigation
costs arising from two lawsuits to which the Company is both a
defendant and counter-claimant.  The costs provided for include,
but are not limited to, fees paid or anticipated to be paid to
external counsel and other costs related to the Company's defense
and claims regarding these matters (see Item 1, Legal
Proceedings,
of Part II contained in the Company's report on Form 10-Q for the
quarter ended June 30, 1995).  On March 20, 1995, the Company and
its Directors' and Officers' Liability Insurance Carrier signed
an
agreement to settle amounts contested and the carrier agreed to
pay
an additional amount of $1.7 million, in the first quarter of
1995,
in full settlement of the Company's claims.  Accordingly, the
Company recorded a credit of $1.7 million as a further adjustment
to the estimated costs of settling the securities class action
which were recorded in the fourth quarter of 1994 (see Note 1 of
Notes to Consolidated Financial Statements and Note 8 of Notes to
Consolidated Financial Statements in the Company's Annual Report
on
Form 10-K for the year ended December 31, 1994).  

  On June 30, 1995, the Company completed the sale of its Health
Insurance Systems Division for a total consideration of $9.3
million in cash.  After selling expense and other accrued costs
the
Company recorded a pre-tax gain of $8.1 million.
23

  In June 1995, the Company reduced certain of its restructuring
reserves by $.4 million for the balances remaining, as of June
30,
1995, as a result of completing certain restructuring activities
for its life and health insurance businesses.  At June 30, 1994,
the Company, as a result of new events occurring, changed its
estimates and reduced its restructuring reserves by $1.7 million,
which were established at June 30, 1993 for employee severance
and
outplacement costs in connection with the downsizing of its
health
staff.

Operating Income

  Operating income, after the effects of the gain from the sale
of
the Health Division and special charges, was $35.4 million for
the
six months ended June 30, 1995, compared with $21.5 million for
the
corresponding period in 1994. The Company recorded a gain from
the
sale of the Company's Health Division of approximately $ 8.1
million (see Note 4 of Notes to the Consolidated Financial
Statements). Special charges aggregating $5.9 million for the six
months ended June 30, 1995 relate to litigation settlement and
other legal expenses, net ($6.2 million) and impairment and
restructuring credits ($.3 million).  Special charges for the six
months ended June 30, 1994 of $1.7 million relate to impairment
and
restructuring credits (see Costs and Expenses).

  Operating income, excluding the gain and special charges, was
$33.3 million for the six months ended June 30, 1995, compared
with
$19.8 million for the corresponding period in 1994.  Operating
income, excluding the gain and special charges, as a percentage
of
revenues increased to 12.5% for the first six months of 1995 from
8.2% for the comparable quarter in 1994.  The increase in
operating
income, excluding the gain and special charges (68%), results
principally from an increase in professional and outsourcing
services revenues provided under new and existing contracts
principally with property and casualty insurance companies and
residual markets, partially offset by a decrease in health
services
revenues of $6.5 million, and an increase in initial license
revenues of $7.4 million from both property and casualty and life
insurers.

  A significant portion of both the Company's revenues 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 are recorded at the time
new
systems are licensed, there can be significant fluctuations from
quarter-to-quarter and 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 (see table above).
24

  Investment income decreased $2.7 million as a result of a lower
level of investable funds, resulting from large cash expenditures
for the acquisition of Creative Group Holdings, Limited ($19.9
million) in December 1994, the repurchase in May 1994 of
2,278,537
of the 3,797,561 shares of common stock held by IBM ($56.6
million), the repurchase during the last half of 1994 of 995,500
shares of the Company's outstanding common stock on the open
market
($35.3 million) under its 2.5 million share repurchase
authorization and payments to settle the shareholder class action
and related expenses made principally during the fourth quarter
of
1994.

  As part of the Company's repurchase of 2,278,537 of the
3,797,561
shares of its common stock held by IBM, at a price of $24.77 per
share, the Company liquidated a portion of its marketable
securities.  The Company incurred a loss on the sale of
securities
of approximately $.8 million related directly to the repurchase
during May 1994.

  Interest expense and other charges decreased $.2 million for
the
six months ended June 30, 1994 compared to the corresponding
period
in 1993, principally as a result of the repayment of long-term
debt
associated with business acquisitions.

  The effective income tax rate (income taxes expressed as a
percentage of pre-tax income) was 32.8% and 37.4% for the six
months ended June 30, 1995 and 1994, respectively. The effective
rate for 1995 was significantly lower due principally to
goodwill,
deducted for tax purposes, relating to the sale of the Company's
Health Insurance Systems Division (see Notes 4 and 5 of Notes to
Consolidated Financial Statements).
25

                     LIQUIDITY AND CAPITAL RESOURCES 

                                        June 30,     December 31,
                                          1995           1994    
Cash and equivalents, marketable         (Dollars in Millions)
  securities, and investments.......... $ 37.8         $ 34.3    
Current assets.........................  174.1          167.7
Current liabilities....................   74.3           76.8
Working capital........................   99.8           90.9
Long-term debt.........................    -              4.2

                                       Six-months     Six-months  
                                         ended          ended
                                        June 30,       June 30,
                                          1995           1994    
                                         (Dollars in Millions)
Cash provided by operations............ $ 52.7         $ 47.3
Cash (used for) provided by          
  investing activities.................  (38.9)          13.1
Cash used for financing activities.....   (7.0)         (61.2)

  The Company's financial condition remained strong at June 30,
1995. The increase in cash and equivalents, marketable securities
and investments compared to December 31, 1994 is due principally
to
cash flows generated by operations.  The $8.9 million increase
(9.8%) in working capital is principally due to a $6.7 million
increase in cash and a $8.6 million reduction in accounts payable
and long-term debt. 

  Net cash provided by operations increased $5.4 million (11.4%)
for the six months ended June 30, 1995 compared to the 
corresponding period for 1994. This increase is principally the
result of higher net income for the six months ended June 30,
1995
compared to the corresponding period of 1994, and a $5.6 million
increase associated with reductions in accrued restructuring and
lease termination costs from the 1994 period to the 1995 period.
These increases were offset in part by the increase in accounts
receivable of $2.7 million during the six months ended June 30,
1995 compared to a decrease of $7.3 million for the same period
of
1994.  During the six months ended June 30, 1995, the Company
reduced its liabilities for accrued restructuring charges by $2.0
million ($2.9 million in cash outlays, less $.5 million in
non-cash
discount amortization, and $.4 million associated with an
increased
estimate of lease termination costs) for lease terminations, and
$1.2 million in cash outlays for employee severance and
outplacement costs.
26

  Net cash used for investing activities increased $52.0 million. 
During the first six months of 1994, as part of the Company's
repurchase of 2.3 million shares of its common stock, the Company
liquidated a portion of its marketable securities and had net
positive cash flow from marketable securities sales/purchasing
activity of $38.8 million.  The Company did not repurchase any of
its outstanding common shares during the six months ended June
30,
1995, and had no significant sales/purchases of securities during
this period.  Additionally, the Company expended $10 million to
acquire a significant outsourcing contract, which is expected to
have minimum contractual processing revenues in excess of $60
million over the next ten years, resulting in an increase in cash
used for investing activities.

  Net cash used for financing activities decreased $54.2 million
during the six months ended June 30, 1995 compared to the
corresponding period in 1994, due principally to the Company's
not
repurchasing any of its outstanding common stock during the 1995
period, which it did in the corresponding period in 1994.

  During the six months ended June 30, 1995, the Company utilized
its $30 million line of credit for certain short-term operating
needs and general corporate purposes (see discussion of
significant
terms in Note 7 of Notes to Consolidated Financial Statements in
the Company's Annual Report on Form 10-K for the year ended
December 31, 1994). The average daily balance carried during the
period was $6.2 million and the highest balance carried during
the
period was $14.8 million. At June 30, 1995, there were no amounts
outstanding under this line of credit, and it has been the
Company's practice to regularly liquidate any outstanding
balance.

  On August 11, 1995 the Company entered into two unsecured
credit
facilities of $100 million each with a syndicate of financial
institutions.  These lines of credit may be used for general
corporate purposes (see Note 3 of Notes to Consolidated Financial
Statements).

  Significant expenditures anticipated for the remainder of 1995,
excluding any possible business and/or contract acquisitions and
stock repurchases, are as follows:  acquisition of data
processing,
communications equipment and office furniture, fixtures and
equipment ($5.0 million) and costs relating to the internal
development of software systems ($20.0 million).

  The Company has historically used the cash generated from
operations for the following:  development and acquisition of new
products, acquisition of businesses and repurchase of the
Company's
stock.  The Company anticipates that it will continue to use its
cash for all of these purposes in the future and that projected
cash from operations and cash and investment reserves will be
able
to meet presently anticipated needs;  however, the Company may
also
consider incurring debt as needed to accomplish specific
objectives
in these areas and for other general corporate purposes.
27

                  FACTORS THAT MAY AFFECT FUTURE RESULTS

  The Company's future operating results may be affected by a
number of factors, including uncertainties relative to economic
conditions; industry factors; the Company's ability to develop
and
sell its products profitably; the Company's ability to
successfully
increase market share in its core business while expanding its
product base into other markets; and the Company's ability to
effectively manage expense growth relative to revenue growth in
anticipation of continued pressure on gross margins.  The
Company's
operating results could be adversely affected should the Company
be
unable to anticipate customer demand accurately, to introduce new
products on a timely basis, or to effectively manage the impact
on
the Company of changes in the insurance marketplace.

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

  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 are 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 based upon the timing of the licensing of
new
systems.

  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.
28

                                  PART II
                             OTHER INFORMATION

                   POLICY MANAGEMENT SYSTEMS CORPORATION

Item 1. Legal Proceedings

  The Company is involved in lawsuits with Security Life of
Denver
Insurance Company and with the California State Automobile Inter-
Insurance Bureau and the California State Automobile Association
(see Item 1, Legal Proceedings, of Part II contained in the
Company's report on Form 10-Q for the quarter ended March 31,
1995).  The Company was informed by its insurer that based upon
the
allegations raised in these two lawsuits, the insurer does not
believe it would be obligated under the Company's insurance
policies to reimburse defense costs or indemnify the Company for
any payments relating to these claims.  The Company disagrees
with
this conclusion and on June 20, 1995 the Company's insurer
commenced a declaratory judgment action to determine the
insurer's
obligations related to defense costs and indemnity related to
these
two lawsuits.  As a result of this action, the Company determined
it was probable the Company would incur litigation expenses for
certain actual expenses previously incurred and for estimated
future litigation expenses arising from these matters through
their
conclusion, over the next twelve months, of $7.9 million, which
estimate is based upon the Company's prior experience in these
matters.  

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 June 30, 1995.
29

                   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)

                                        
BY (SIGNATURE)                   /s/ Timothy V. Williams
                                     Timothy V. Williams
                                        Executive Vice President
                                        (Chief Financial Officer) 
DATE                                 August 14, 1995