UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549


                                   FORM 10-Q

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


                 For the quarterly period ended JUNE 30, 1998
                        Commission file number 1-10557


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


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


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


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

     Indicate  by  check mark whether the registrant (1) has filed all reports
required  to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or for such shorter period that the
registrant  was  required  to  file such reports), and (2) has been subject to
such  filing  requirements  for  the  past  90  days.       Yes   X     No
                                                                 ---       ---

     Indicate the number of shares outstanding of each of the issuer's classes
of  common  stock,  as  of  the  latest  practicable  date.

        36,735,065 Common shares, $.01 par value, as of August 7, 1998.

     The  information  furnished herein reflects all adjustments which are, in
the  opinion of management, necessary for the fair presentation of the results
for the periods reported.  Such information should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended December 31, 1997.

<PAGE>
<TABLE>
<CAPTION>

                     POLICY MANAGEMENT SYSTEMS CORPORATION


                                     INDEX

PART  I.  FINANCIAL  INFORMATION                    PAGE

Item  1.  Financial  Statements

<S>                                                  <C>
Consolidated Statements of Income for the Three and
Six Months Ended June 30, 1998 and 1997 . . . . . .   3

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

Consolidated Statements of Changes in Stockholders'
Equity and Comprehensive Income for the Six Months
Ended June 30, 1998 and 1997. . . . . . . . . . . .   5

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

Notes to Consolidated Financial Statements. . . . .   7

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


PART II. OTHER INFORMATION

Item 1. Legal Proceedings . . . . . . . . . . . . .  24

Item 4. Submission of Matters to a Vote of
  Security Holders. . . . . . . . . . . . . . . . .  24

Item 5. Other Information . . . . . . . . . . . . .  24

Item 6. Exhibits and Reports on Form 8-K. . . . . .  24

Signatures. . . . . . . . . . . . . . . . . . . . .  25
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

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

                                                      Three Months          Six Months
                                                     Ended June 30,        Ended June 30,
                                                    1998       1997       1998       1997
                                                                 (Unaudited)
                                                  ------------------------------------------
                                                     (In Thousands, Except Per Share Data)

<S>                                               <C>        <C>        <C>        <C>
REVENUES
 Licensing . . . . . . . . . . . . . . . . . . .  $ 29,503   $ 32,322   $ 58,240   $ 58,552 
 Services. . . . . . . . . . . . . . . . . . . .   115,386     91,506    227,070    180,359 
                                                  ---------  ---------  ---------  ---------
                                                   144,889    123,828    285,310    238,911 
                                                  ---------  ---------  ---------  ---------
OPERATING EXPENSES
 Cost of revenues
   Employee compensation & benefits. . . . . . .    64,781     51,131    128,089     98,460 
   Computer and communications expenses. . . . .     7,932      8,240     15,745     16,074 
   Depreciation and amortization of property,
    equipment and capitalized software costs . .    15,889     14,309     31,553     28,225 
   Other costs & expenses. . . . . . . . . . . .     6,572      9,326     12,809     14,995 
 Selling, general and administrative expenses. .    24,851     21,742     48,979     43,831 
 Amortization of goodwill and other intangibles.     2,489      2,437      4,912      4,909 
                                                  ---------  ---------  ---------  ---------
                                                   122,514    107,185    242,087    206,494 
                                                  ---------  ---------  ---------  ---------

OPERATING INCOME . . . . . . . . . . . . . . . .    22,375     16,643     43,223     32,417 

Equity in earnings of unconsolidated affiliates.       233        320        438        690 

Minority interest. . . . . . . . . . . . . . . .       (30)         -        (30)         - 

Other Income and Expenses
  Investment income. . . . . . . . . . . . . . .       184        344        686        771 
  Interest expense and other charges . . . . . .      (554)    (1,356)    (1,481)    (2,573)
                                                  ---------  ---------  ---------  ---------
                                                      (370)    (1,012)      (795)    (1,802)
                                                  ---------  ---------  ---------  ---------
Income from continuing operations
  before income taxes. . . . . . . . . . . . . .    22,208     15,951     42,836     31,305 
Income taxes . . . . . . . . . . . . . . . . . .     8,226      5,951     15,987     11,681 
                                                  ---------  ---------  ---------  ---------
INCOME FROM CONTINUING OPERATIONS. . . . . . . .    13,982     10,000     26,849     19,624 


DISCONTINUED OPERATIONS:
  Income from operations of discontinued
    operations less applicable income taxes
    of $37, $481, $252 and $820, respectively. .        67        694        389      1,162 
  Loss on disposal of discontinued operations
    less applicable income taxes of $2,439 . . .      (453)         -       (453)         - 
                                                  ---------  ---------  ---------  ---------
                                                      (386)       694        (64)     1,162 
                                                  ---------  ---------  ---------  ---------

NET INCOME . . . . . . . . . . . . . . . . . . .  $ 13,596   $ 10,694   $ 26,785   $ 20,786 
                                                  =========  =========  =========  =========

BASIC EARNINGS PER SHARE:
  Income from continuing operations. . . . . . .  $   0.38   $   0.27   $   0.73   $   0.54 
  Income (loss) from discontinued operations . .     (0.01)      0.02          -       0.03 
                                                  ---------  ---------  ---------  ---------
                                                  $   0.37   $   0.29   $   0.73   $   0.57 
                                                  =========  =========  =========  =========

DILUTED EARNINGS PER SHARE:
  Income from continuing operations. . . . . . .  $   0.35   $   0.27   $   0.68   $   0.53 
  Income (loss) from discontinued operations . .     (0.01)      0.02          -       0.03 
                                                  ---------  ---------  ---------  ---------
                                                  $   0.34   $   0.29   $   0.68   $   0.56 
                                                  =========  =========  =========  =========

Weighted average common shares . . . . . . . . .    36,763     36,373     36,726     36,366 
Weighted average common shares assuming dilution    39,675     37,068     39,434     36,934 

<FN>

See accompanying notes
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

                       POLICY MANAGEMENT SYSTEMS CORPORATION
                            CONSOLIDATED BALANCE SHEETS

                                                             (Unaudited)  (Audited)
                                                               June 30,  December 31,
                                                                1998        1997
                                                              --------    --------
                                                      (In Thousands, Except Share Data)

<S>                                                           <C>        <C>
Assets
Current assets
 Cash and equivalents. . . . . . . . . . . . . . . . . . . .  $ 25,001   $ 32,179 
 Marketable securities . . . . . . . . . . . . . . . . . . .        20      3,280 
 Receivables, net of allowance for uncollectible
  amounts of $2,141 ($2,628 at 1997) . . . . . . . . . . . .   113,791    128,789 
 Income tax receivable . . . . . . . . . . . . . . . . . . .       670      1,098 
 Deferred income taxes . . . . . . . . . . . . . . . . . . .     9,438      3,628 
 Other . . . . . . . . . . . . . . . . . . . . . . . . . . .    23,054     16,835 
                                                              ---------  ---------
   Total current assets. . . . . . . . . . . . . . . . . . .   171,974    185,809 

Property and equipment, at cost less accumulated
 depreciation and amortization of $140,001
 ($139,522 at 1997). . . . . . . . . . . . . . . . . . . . .   123,872    116,433 
Receivables. . . . . . . . . . . . . . . . . . . . . . . . .     2,320      3,271 
Income tax receivable. . . . . . . . . . . . . . . . . . . .     4,041      4,041 
Goodwill and other intangibles, net. . . . . . . . . . . . .    61,525     69,125 
Capitalized software costs, net. . . . . . . . . . . . . . .   212,566    204,118 
Deferred income taxes. . . . . . . . . . . . . . . . . . . .    21,773     21,996 
Investments. . . . . . . . . . . . . . . . . . . . . . . . .     8,612     11,066 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . .     7,632      2,547 
                                                              ---------  ---------
     Total assets. . . . . . . . . . . . . . . . . . . . . .  $614,315   $618,406 
                                                              =========  =========

Liabilities
Current liabilities
 Accounts payable and accrued expenses . . . . . . . . . . .  $ 49,510   $ 57,345 
 Accrued restructuring charges . . . . . . . . . . . . . . .       303        145 
 Accrued contract termination costs. . . . . . . . . . . . .       472        830 
 Current portion of long-term debt . . . . . . . . . . . . .     9,191      1,191 
 Income taxes payable. . . . . . . . . . . . . . . . . . . .    17,492      7,499 
 Unearned revenues . . . . . . . . . . . . . . . . . . . . .    13,964     18,806 
 Other . . . . . . . . . . . . . . . . . . . . . . . . . . .       396        397 
                                                              ---------  ---------
   Total current liabilities . . . . . . . . . . . . . . . .    91,328     86,213 

Long-term debt . . . . . . . . . . . . . . . . . . . . . . .       443     37,714 
Deferred income taxes. . . . . . . . . . . . . . . . . . . .    88,292     80,496 
Accrued restructuring charges. . . . . . . . . . . . . . . .     1,236      1,366 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . .     4,894      2,121 
                                                              ---------  ---------
    Total liabilities. . . . . . . . . . . . . . . . . . . .   186,193    207,910 
                                                              ---------  ---------

Minority interest. . . . . . . . . . . . . . . . . . . . . .       455          - 

Commitments and contingencies (Note 2)

Stockholders' Equity
Special stock, $.01 par value, 5,000,000 shares authorized .         -          - 
Common stock, $.01 par value, 75,000,000 shares authorized,
 36,768,534 shares issued and outstanding
 (18,339,304 at December 31, 1997) . . . . . . . . . . . . .       368        183 
Additional paid-in capital . . . . . . . . . . . . . . . . .   104,276    112,090 
Retained earnings. . . . . . . . . . . . . . . . . . . . . .   332,968    306,367 
Accumulated other comprehensive income . . . . . . . . . . .    (9,945)    (8,144)
                                                              ---------  ---------
    Total stockholders' equity . . . . . . . . . . . . . . .   427,667    410,496 
                                                              ---------  ---------
     Total liabilities and stockholders' equity. . . . . . .  $614,315   $618,406 
                                                              =========  =========
<FN>

See accompanying notes
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

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

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

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

Comprehensive income
 Net income . . . . . . . . .     -          -     26,785         -     26,785 
 Other comprehensive income,
  net of tax:
   Foreign currency
    translation adjustments .     -          -          -    (1,793)    (1,793)
   Unrealized loss on
    marketable securities . .     -          -          -        (8)        (8)
                                                                      ---------
Total comprehensive income                                              24,984 
                                                                      ---------

Stock dividend. . . . . . . .   184          -       (184)        -          - 
Stock options exercised
  (344,239 shares). . . . . .     4     18,220          -         -     18,224 
Repurchase of 341,700 shares
  of common stock . . . . . .    (3)   (26,034)         -         -    (26,037)
                               -----  ---------  ---------  --------  ---------

BALANCE, JUNE 30, 1998. . . .  $368   $104,276   $332,968   $(9,945)  $427,667 
                               =====  =========  =========  ========  =========
<FN>

See accompanying notes

(1)  Comprehensive income for the three months ended June 30, 1998 and 1997 was
     $12,103 and $8,726, respectively.
     Comprehensive income for the six months ended June 30, 1997 was $16,092.
</TABLE>

<PAGE>
<TABLE>
<CAPTION>

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

                                                       Six Months
                                                     Ended June 30,
                                                    1998        1997
                                                   -------     -------
                                                     (In Thousands)
Operating  Activities
<S>                                                <C>        <C>
 Net income . . . . . . . . . . . . . . . . . . .  $ 26,785   $ 20,786 
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation and amortization. . . . . . . . .    39,595     35,063 
   Deferred income taxes. . . . . . . . . . . . .     1,542      4,999 
   Provision for uncollectible accounts . . . . .        15      1,516 
   Minority interest. . . . . . . . . . . . . . .        30          - 
   Gain on disposal of discontinued operations. .    (1,986)         - 
   Impairment charges . . . . . . . . . . . . . .         -        444 
 Changes in assets and liabilities:
   Accrued restructuring and lease
    termination costs . . . . . . . . . . . . . .        29     (2,207)
   Receivables. . . . . . . . . . . . . . . . . .     9,178    (16,236)
   Income taxes receivable. . . . . . . . . . . .       428         18 
   Accounts payable and accrued expenses. . . . .    (9,589)    (9,358)
   Income taxes payable . . . . . . . . . . . . .     9,993      1,981 
 Other, net . . . . . . . . . . . . . . . . . . .   (17,389)        17 
                                                   ---------  ---------
      Cash provided by operations . . . . . . . .    58,631     37,023 
                                                   ---------  ---------

Investing Activities
 Proceeds from sales/maturities of available-for-
  sale securities . . . . . . . . . . . . . . . .     3,257        250 
 Proceeds from sales of held-to-
  maturity securities . . . . . . . . . . . . . .     2,969          - 
 Proceeds from sale of business segment . . . . .    23,826          - 
 Acquisition of property and equipment. . . . . .   (27,893)   (16,428)
 Capitalized internal software development
  costs . . . . . . . . . . . . . . . . . . . . .   (28,431)   (29,623)
 Business acquisition . . . . . . . . . . . . . .    (2,688)         - 
 Investment by minority interest. . . . . . . . .       425          - 
 Proceeds from disposal of property and
  equipment . . . . . . . . . . . . . . . . . . .     1,735        805 
                                                   ---------  ---------
      Cash used by investing activities . . . . .   (26,800)   (44,996)
                                                   ---------  ---------

Financing Activities
 Payments on long-term debt . . . . . . . . . . .   (41,771)   (77,427)
 Proceeds from borrowing under credit facility. .    12,500     72,138 
 Issuance of common stock under stock
  option plans. . . . . . . . . . . . . . . . . .    18,224        691 
 Repurchase of common stock . . . . . . . . . . .   (26,037)         - 
                                                   ---------  ---------
      Cash used by financing activities . . . . .   (37,084)    (4,598)
                                                   ---------  ---------

Effect of exchange rate changes on cash . . . . .    (1,925)        76 
Net decrease in cash and equivalents. . . . . . .    (7,178)   (12,495)
Cash and equivalents at beginning of period . . .    32,179     22,121 
                                                   ---------  ---------
Cash and equivalents at end of period . . . . . .  $ 25,001   $  9,626 
                                                   =========  =========

Supplemental Information
 Interest paid. . . . . . . . . . . . . . . . . .  $  1,533   $  2,212 
 Income taxes paid. . . . . . . . . . . . . . . .     2,725      3,790 

<FN>

See accompanying notes
</TABLE>

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


NOTE  1.          SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

BASIS OF PRESENTATION

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

BASIC AND DILUTED EARNINGS PER SHARE

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

                                 Three Months     Six Months
                                Ended June 30,  Ended June 30,
                                --------------  --------------
                                 1998    1997    1998    1997  
                                -----   ------  -----   ------
Weighted Average Shares
-----------------------
<S>                             <C>     <C>     <C>     <C>
Basic EPS. . . . . . . . . . .  36,763  36,373  36,726  36,366
Effect of common stock options   2,912     695   2,708     568
                                ------  ------  ------  ------
Diluted EPS. . . . . . . . . .  39,675  37,068  39,434  36,934
                                ======  ======  ======  ======
</TABLE>

     Options  to  purchase  750,000 shares of common stock at $40.95 per share
were  outstanding  but were not included in the computation of diluted EPS for
1998  because  the options' exercise price was greater than the average market
price  of  the  Company's  common  stock  for the period ending June 30, 1998.

<PAGE>
NEW  ACCOUNTING  STANDARDS

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

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

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

     In  June  1998,  Statement  of  Financial  Accounting  Standard  No. 133,
"Accounting  for  Derivative  Instruments and Hedging Activities" ("SFAS 133")
was  issued,  effective  for  fiscal years beginning after June 15, 1999, with
earlier adoption encouraged.  SFAS 133 requires companies to record derivative
instruments  on  the balance sheet as assets and liabilities, measured at fair
value.    Gain  or  losses  resulting  from  changes  in  the  values of those
derivatives  are  accounted  for  depending  on the use of the derivative. The
Company  does  not  enter  into  derivative instruments except occasionally to
hedge  the  foreign  currency  exchange  and  interest  rate  risk of specific
projected  transactions.    The  Company  was  not  holding  any  derivative
instruments  at  any  of  the  balance  sheet  periods  presented.

OTHER MATTERS

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


NOTE 2.     CONTINGENCIES

     The  Company  is  presently  involved  in  litigation  which commenced in
January  of  1996  in  the Circuit Court in Greenville County, South Carolina,
with  Liberty Life Insurance Company and certain of its affiliates ("Liberty")
arising  out  of  the  parties'  prior contractual relationship related to the
development  and  licensing  of  Series  III  life  insurance systems and the 
<PAGE>
subsequent  licensing  of  the  Company's  CYBERTEK  life  insurance  systems.
Liberty's  complaint alleges breach of contract, breach of express and implied
warranties,  fraudulent  inducement,  breach  of  contract  accompanied  by  a
fraudulent  act,  and recission.  Liberty has alleged actual and consequential
damages  in excess of $160 million and also seeks treble and punitive damages.
The  Company  has  asserted  various  affirmative  defenses  and  is  pursuing
counterclaims  against  Liberty  for breach of contract, recoupment, breach of
good  faith  and  fair  dealing,  and  breach  of  contract  accompanied  by a
fraudulent act.  The Company is seeking equitable relief, including injunctive
relief,  and  currently  unspecified  actual,  compensatory  and consequential
damages.

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

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


NOTE 3.     SEGMENT INFORMATION

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

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

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

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

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

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

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

                                                Three Months           Six Months
                                                Ended June 30,        Ended June 30,
                                              ----------------      ----------------
                                               1998      1997        1998      1997
                                              ------    ------      ------    ------
                                                           (In thousands)
REVENUES FROM EXTERNAL CUSTOMERS
<S>                                          <C>        <C>        <C>        <C>
 Enterprise software and services
  Property and casualty . . . . . . . . . .  $ 66,618   $ 55,559   $134,569   $111,833 
  Life and financial solutions. . . . . . .    33,336     26,369     63,761     46,524 
                                             ---------  ---------  ---------  ---------
    Total US revenues . . . . . . . . . . .    99,954     81,928    198,330    158,357 
  International . . . . . . . . . . . . . .    44,935     41,900     86,980     80,554 
                                             ---------  ---------  ---------  ---------
    Total revenues from
       continuing operations. . . . . . . .  $144,889   $123,828   $285,310   $238,911 
                                             =========  =========  =========  =========

 Discontinued Operations
  Information Services
   Property and casualty. . . . . . . . . .  $      -   $ 24,172   $      -   $ 48,241 
   Life . . . . . . . . . . . . . . . . . .     4,843     16,800     11,968     32,904 

INCOME (EXPENSE) FROM CONTINUING OPERATIONS
 Enterprise software and services
  Property and casualty . . . . . . . . . .  $ 16,974   $ 13,277   $ 34,434   $ 28,794 
  Life and financial solutions. . . . . . .     7,612      7,259     14,491     11,209 
  Corporate and US administrative . . . . .    (7,187)    (7,207)   (13,678)   (11,938)
                                             ---------  ---------  ---------  ---------
    Total US operating income . . . . . . .    17,399     13,329     35,247     28,065 
                                             ---------  ---------  ---------  ---------

  International . . . . . . . . . . . . . .     7,074      5,003     12,036      7,537 
  International administrative. . . . . . .    (2,098)    (1,689)    (4,060)    (3,185)
                                             ---------  ---------  ---------  ---------
    Total international . . . . . . . . . .     4,976      3,314      7,976      4,352 
                                             ---------  ---------  ---------  ---------

      Operating income. . . . . . . . . . .    22,375     16,643     43,223     32,417 


Equity in earnings of
  unconsolidated affiliates . . . . . . . .       233        320        438        690 
Minority interest . . . . . . . . . . . . .       (30)         -        (30)         - 
Other income and expenses . . . . . . . . .      (370)    (1,012)      (795)    (1,802)
Income taxes. . . . . . . . . . . . . . . .     8,226      5,951     15,987     11,681 
                                             ---------  ---------  ---------  ---------
  Income from continuing operations . . . .  $ 13,982   $ 10,000   $ 26,849   $ 19,624 
                                             =========  =========  =========  =========


DISCONTINUED OPERATIONS
 Information Services
  Property and casualty . . . . . . . . . .  $ (1,018)  $    152   $ (1,018)  $    426 
  Life. . . . . . . . . . . . . . . . . . .     3,112      1,023      3,672      1,556 
  Other income and expenses . . . . . . . .        (4)         -        (27)         - 
  Income taxes. . . . . . . . . . . . . . .     2,476        481      2,691        820 
                                             ---------  ---------  ---------  ---------
   Discontinued operations, net . . . . . .  $   (386)  $    694   $    (64)  $  1,162 
                                             =========  =========  =========  =========
</TABLE>

<PAGE>
NOTE 4.     DISCONTINUED OPERATIONS

     The  Company  sold its life information services segment in May 1998, net
of  selling  expenses,  for  $23.8 million, resulting in a pretax gain of $3.0
million and an after-tax gain of $0.1 million.  The difference in gain for tax
purposes  primarily  results  from the inability to deduct goodwill related to
the  sale  for  tax purposes.  The operations of this segment are presented as
discontinued operations in the accompanying Consolidated Statements of Income.
See  Note  3  for  income  from  operations  of  the  discontinued  segment.

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

NOTE  5.          STOCK  SPLIT

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

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

     The  following  discussion  and  analysis  provides  information  which
management  believes  is  relevant  to  an assessment and understanding of the
Company's  consolidated  results  of  operations and financial condition.  The
discussion  should  be  read  in  conjunction  with the consolidated financial
statements  and  notes thereto contained in Part I of this report on Form 10-Q
and  with the Company's Annual Report on Form 10-K for the year ended December
31,  1997.

                             RESULTS OF OPERATIONS

     Set  forth below are certain operating items expressed as a percentage of
revenues  and  the  percent  increase  (decrease)  for those items between the
periods  presented:
<TABLE>
<CAPTION>
                                                                       1998 vs. 1997
                                                                         Percent
                                         Percentage of Revenues     Increase (Decrease)
                                       ---------------------------  -------------------
                                          Three           Six        Three       Six
                                       Months Ended   Months Ended   Months    Months
                                         June 30,       June 30,     Ended     Ended
                                       ------------   ------------
                                        1998   1997    1998   1997       June 30
                                       -----  -----   -----  -----  -----------------

<S>                                   <C>     <C>     <C>     <C>     <C>      <C>
Revenues
 Licensing . . . . . . . . . . . . .   20.4%   26.1%   20.4%   24.5%   (8.7)%   (0.5)%
 Services. . . . . . . . . . . . . .   79.6    73.9    79.6    75.5     26.1     25.9 
                                      ------  ------  ------  ------                  
                                      100.0   100.0   100.0   100.0     17.0     19.4 
                                      ------  ------  ------  ------                  
Operating expenses
 Cost of revenues
  Employee compensation and benefits   44.7    41.2    44.9    41.2     26.7     30.1 
  Computer & communication expenses.    5.5     6.7     5.5     6.7     (3.7)    (2.0)
  Depreciation & amortization
   of property, equipment &
   capitalized software costs. . . .   11.0    11.6    11.1    11.8     11.0     11.8 
  Other costs & expenses . . . . . .    4.5     7.5     4.5     6.3    (29.5)   (14.6)
 Selling, general &
   administrative expenses . . . . .   17.2    17.6    17.2    18.3     14.3     11.7 
 Amortization of goodwill and
   other intangibles . . . . . . . .    1.7     2.0     1.7     2.1      2.1      0.1 
                                      ------  ------  ------  ------                  
                                       84.6    86.6    84.9    86.4     14.3     17.2 
                                      ------  ------  ------  ------                  
Operating income . . . . . . . . . .   15.4    13.4    15.1    13.6     34.4     33.3 
Equity in earnings of unconsolidated
   affiliates. . . . . . . . . . . .    0.2     0.3     0.2     0.3    (27.2)   (36.5)
Other income and expenses. . . . . .   (0.2)   (0.8)   (0.3)   (0.8)   (63.4)   (55.9)
                                      ------  ------  ------  ------                  
Income from continuing operations
  before income taxes. . . . . . . .   15.4    12.9    15.0    13.1     39.2     36.8 
Income taxes . . . . . . . . . . . .    5.7     5.0     5.6     5.0     38.2     36.9 
                                      ------  ------  ------  ------                  
Income from continuing operations. .    9.7     7.9     9.4     8.1     39.8     36.8 
Discontinued operations, net . . . .   (0.3)    0.7       -     0.6   (155.6)  (105.5)
                                      ------  ------  ------  ------                  
Net income . . . . . . . . . . . . .    9.4%    8.6%    9.4%    8.7%    27.1%    28.9%
                                      ======  ======  ======  ======                  
</TABLE>

<PAGE>
                            THREE MONTH COMPARISON

REVENUES
<TABLE>
<CAPTION>
                                Three Months
                               Ended June 30,
                              --------------
  Licensing                    1998    1997   Change
                              -----   -----   ------
                          (Dollars in Millions)
<S>                           <C>     <C>     <C>
Initial charges. . . . . . .  $13.0   $16.6   (21.6)%
Monthly charges. . . . . . .   16.5    15.7     4.8
                              ------  ------         
                              $29.5   $32.3    (8.7)%
                              ======  ======         

Percentage of total revenues   20.4%   26.1%
                              ------  ------         
</TABLE>

     Initial license revenues decreased $3.6 million for the second quarter of
1998  compared  to the second quarter of 1997, with the following increases or
decreases by business segment:  domestic property and casualty down 6.0% ($0.2
million);  life  insurance  and financial solutions down 48.8% ($3.6 million);
and  international  up  3.7%  ($0.2  million).

     Initial  license  charges  for  the  second  quarter  of  1998  include
right-to-use  licenses  of  $2.1 million.  The right-to-use licenses represent
acquisitions  by certain customers of perpetual rights.  This compares to $0.9
million  in  right-to-use  licenses  for  the second quarter of 1997.  Initial
license charges also include license agreements of $2.2 million for the second
quarter  of  1998  with  the  purchaser  of  the discontinued life information
services  segment  and  $1.8  million  for the second quarter of 1997 with the
purchaser  of  the  discontinued  property  &  casualty  information  services
segment.

     Monthly  license charges increased $0.8 million for the second quarter of
1998  compared  to  the second quarter of 1997 with the following increases or
decreases by business segment:  domestic property and casualty down 2.5% ($0.2
million);  life insurance and financial solutions up 21.5% ($0.6 million); and
international  up  10.9%  ($0.4  million).

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


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

Initial license revenues $13.0  $12.6  $25.1  $16.9  $16.6  $11.3  $19.4 $10.0
% of total revenues        9.0%   9.0%  17.0%  12.8%  13.4%   9.8%  15.5%  9.3%

<PAGE>
<TABLE>
<CAPTION>
                               Three Months
                               Ended June 30,
                              --------------
  Services                     1998    1997   Change
                              -----   -----   ------
                         (Dollars In Millions)
<S>                           <C>      <C>     <C>
Professional and outsourcing  $114.1   $90.2   26.5%
Information. . . . . . . . .     0.2     0.2   16.5 
Other. . . . . . . . . . . .     1.1     1.1   (3.2)
                              -------  ------       
                              $115.4   $91.5   26.1%
                              =======  ======       

Percentage of total revenues    79.6%   73.9%
                              -------  ------       
</TABLE>

     Professional  and  outsourcing  services revenues increased $23.9 million
for  the  second  quarter of 1998 compared to the second quarter of 1997, with
the  following  increases by business segment:  domestic property and casualty
up  28.4%  ($11.9  million);  life  insurance and financial solutions up 61.3%
($9.9  million);  and international up 6.5% ($2.1 million).  The increases are
principally  due  to  increases  in  both  implementation  services and in the
processing  volumes  of  services  provided  to  new  and  existing customers.


OPERATING EXPENSES

COST OF REVENUES

     Employee compensation and benefits increased 26.7% for the second quarter
of  1998  compared  to  the  second quarter of 1997, principally the result of
increased  salaries  and  related  costs  associated  with  the  growth  in
professional  services  staffing.    Compensation and benefits increased 22.4%
($3.5  million)  internationally,  while  domestic  increased  28.6%  ($10.2
million).

     Computer  and  communications  expenses  remained  relatively  unchanged.

     Depreciation  and  amortization  of  property,  equipment and capitalized
software  costs increased 11.0% for the second quarter of 1998 compared to the
second  quarter  of  1997,  principally  due  to  higher  amortization expense
resulting  from the recent release of the Company's S3+  property and casualty
insurance  client/server  software systems.  In addition, depreciation expense
increased  due  to  the  Company's  increased  investment  in  its information
technology  equipment.

     Other operating costs and expenses decreased 29.5% for the second quarter
of  1998  compared  to  the  second  quarter of 1997, principally due to lower
consultant, contract loss and bad debt expenses, partially offset by decreased
amounts  of  software  development  costs  capitalized.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative  expenses  increased 14.3% for the
second quarter of 1998 compared to the second quarter of 1997, principally due
to  increased bonus, commission, and other salary costs, partially offset by a
decrease  in  third  party  commissions.

<PAGE>

AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES

     Amortization  of  goodwill  and  other  intangibles  remained  relatively
unchanged.


OPERATING INCOME

     1998  second  quarter  operating  income increased 34.4% compared to 1997
second  quarter  operating  income.  Property and casualty insurance operating
income  increased  27.8%,  domestic  life insurance operating income increased
4.9%  and  international  operating  income  increased 41.4%.  The increase in
operating  income  is  primarily related to increases in professional services
and outsourcing revenues while operating costs increased at a slower rate than
the  respective  revenue.


OTHER INCOME AND EXPENSE

     Interest  expense decreased 59.1% for the second quarter of 1998 compared
to  the  second  quarter  of 1997, principally due to lower levels of borrowed
funds  under  the  Company's credit facility and capitalization of interest on
construction  in  progress.    The average nominal interest rate applicable to
borrowings  under  the  Company's credit facility during the second quarter of
1998  was  5.9%.


INCOME TAXES

     The  effective income tax rate (income taxes expressed as a percentage of
pre-tax  income) was 37.0% and 37.3% for the second quarters of 1998 and 1997,
respectively.    The  effective  rate for the second quarter of 1998 is higher
than  the  federal  statutory  rate principally due to the effect of state and
local  income  taxes.


DISCONTINUED OPERATIONS

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

<PAGE>
                             SIX MONTH COMPARISON

REVENUES
<TABLE>
<CAPTION>
                               Six Months
                              Ended June 30,
                             --------------
  Licensing                   1998    1997   Change
                             -----   -----   ------
                         (Dollars in Millions)
<S>                           <C>     <C>     <C>
Initial charges. . . . . . .  $25.6   $27.9   (8.1)%
Monthly charges. . . . . . .   32.6    30.7    6.4
                              ------  ------        
                              $58.2   $58.6   (0.5)%
                              ======  ======        

Percentage of total revenues   20.4%   24.5%
                              ------  ------        
</TABLE>

     Initial  license revenues decreased $2.3 million for the first six months
of  1998  compared to the same period in 1997, with the following increases or
decreases  by business segment:  domestic property and casualty up 32.3% ($2.1
million);  life  insurance  and financial solutions down 39.2% ($4.5 million);
and  international  up  1.2%  ($0.1  million).

     Initial  license  charges  for  the  first  six  months  of  1998 include
right-to-use  licenses  of  $7.0 million.  The right-to-use licenses represent
acquisitions  by certain customers of perpetual rights.  This compares to $1.9
million in right-to-use licenses for the same period of 1997.  Initial license
charges also include license agreements of $2.2 million for the second quarter
of  1998  with  the  purchaser  of  the discontinued life information services
segment  and $1.8 million for the second quarter of 1997 with the purchaser of
the  discontinued  property  &  casualty  information  services  segment.

     Monthly  license  charges increased $1.9 million for the first six months
of  1998  compared to the same period in 1997, with the following increases or
decreases by business segment:  domestic property and casualty down 0.3% ($0.1
million);  life insurance and financial solutions up 22.6% ($1.2 million); and
international  up  11.0%  ($0.8  million).

<TABLE>
<CAPTION>
                                 Six Months
                               Ended June 30,
                              --------------
  Services                     1998    1997   Change
                              -----   -----   ------
                          (Dollars In Millions)
<S>                           <C>      <C>      <C>
Professional and outsourcing  $224.9   $177.4    26.8%
Information. . . . . . . . .     0.3      0.3    (5.3)
Other. . . . . . . . . . . .     1.9      2.7   (29.6)
                              -------  -------        
                              $227.1   $180.4    25.9%
                              =======  =======        

Percentage of total revenues    79.6%    75.5%
                              -------  -------        
</TABLE>

<PAGE>

     Professional  and  outsourcing  services revenues increased $47.5 million
for the first six months of 1998 compared to the same period in 1997, with the
following  increases  by  business segment:  domestic property and casualty up
25.5%  ($21.7 million); life insurance and financial solutions up 68.9% ($20.4
million);  and  international  up  8.6%  ($5.4  million).    The increases are
principally  due  to  increases  in  both  implementation  services and in the
processing  volumes  of  services  provided  to  new  and  existing customers.


OPERATING EXPENSES

COST OF REVENUES

     Employee  compensation  and  benefits  increased  30.1% for the first six
months  of 1998 compared to the same period in 1997, principally the result of
increased  salaries  and  related  costs  associated  with  the  growth  in
professional  services  staffing.    Compensation and benefits increased 22.6%
($6.9  million)  internationally,  while  domestic  increased  33.5%  ($22.7
million).

     Computer  and  communications  expenses  remained  relatively  unchanged.

     Depreciation  and  amortization  of  property,  equipment and capitalized
software  costs  increased  11.8% for the first six months of 1998 compared to
the  same  period  in  1997,  principally  due  to higher amortization expense
resulting  from the recent release of the Company's S3+  property and casualty
insurance  client/server  software systems.  In addition, depreciation expense
increased  due  to  the  Company's  increased  investment  in  its information
technology  equipment.

     Other  operating  costs  and  expenses  decreased 14.6% for the first six
months  of  1998 compared to the same period in 1997, principally due to lower
consultant, contract loss and bad debt expenses, partially offset by increased
facility  costs  and  decreased  amounts  of  software  development  costs
capitalized.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative  expenses  increased 11.7% for the
first  six months of 1998 compared to the same period in 1997, principally due
to  increased  bonus,  commission,  and advertising costs, partially offset by
decreased  third  party  commissions.

AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES

     Amortization  of  goodwill  and  other  intangibles  remained  relatively
unchanged.


OPERATING INCOME

     1998  six  month  operating income increased 33.3% compared with 1997 six
month  operating  income.    Property  and casualty insurance operating income
increased  19.6%, domestic life insurance operating income increased 29.3% and
international  operating  income  increased  59.7%.  The increase in operating
income  is  primarily  related  to  increases  in  professional  services  and
outsourcing revenues while operating costs increased at a slower rate than the
respective  revenue.

<PAGE>
OTHER  INCOME  AND  EXPENSE

     Interest  expense  decreased  42.4%  for  the  first  six  months of 1998
compared  to  the  same  period  in  1997,  principally due to lower levels of
borrowed  funds  under  the  Company's  credit  facility and capitalization of
interest  on  construction  in  progress.    The average nominal interest rate
applicable  to borrowings under the Company's credit facility during the first
six  months  of  1998  was  5.9%.


INCOME TAXES

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


DISCONTINUED OPERATIONS

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


STRATEGIC ALLIANCES

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

     Lockheed  Martin.    In March 1998, the Company announced an agreement in
principle to form a strategic alliance for systems outsourcing with Integrated
Business Solutions, a unit of Lockheed Martin Corporation ("Lockheed Martin").
A  Data Processing Services Agreement was completed in June 1998 and under its
terms,  the  Company  turned over operation of its Blythewood, South Carolina,
data  center  to Lockheed Martin on July 1, 1998.  As part of the transaction,
the  Company  transferred  to  Lockheed  Martin  substantially all of the data
processing  equipment used in the data center operations, at net book value of
approximately  $10  million,  to  be  paid  in  January  1999.

<PAGE>
                        LIQUIDITY AND CAPITAL RESOURCES


<TABLE>
<CAPTION>
                               June 30, December 31,
                                 1998       1997
---------------------------------------------------
                              (Dollars in Millions)
<S>                               <C>     <C>
Cash and equivalents, marketable
  securities, and investments. .  $ 33.6  $ 46.5
Current assets . . . . . . . . .   172.0   185.8
Current liabilities. . . . . . .    91.3    86.2
Working capital. . . . . . . . .    80.7    99.6
Long-term debt . . . . . . . . .     0.4    37.7
</TABLE>


<TABLE>
<CAPTION>
                                    Six Months Ended
                                        June 30,
                                     1998     1997
-----------------------------------------------------
                                (Dollars in Millions)
<S>                                 <C>      <C>
Cash provided by operations. . . .  $ 58.6   $ 37.0 
Cash used for investing activities   (26.8)   (45.0)
Cash used for financing activities   (37.1)    (4.6)
</TABLE>

     The  Company's  current  ratio  (current  assets  divided  by  current
liabilities)  stood  at  1.9  at  June  30, 1998, which management believes is
sufficient  when  combined  with  the available credit facility to provide for
day-to-day operating needs and the flexibility to take advantage of investment
opportunities.    The Company has available, at June 30, 1998, all of its $200
million  credit  facility.    Also,  the Company has available (net of amounts
outstanding  at  June  30,  1998) $7 million under its $15 million uncommitted
operating  line of credit with which it may choose to fund temporary operating
cash  needs.

     During  the  six  months  ended  June  30,  1998  the Company capitalized
software  development  costs  of  $28.4  million,  principally  related to the
development of its S3+ client/server property and casualty software, CyberLife
object-oriented  client/server  life insurance software, and I+  international
property  and  casualty  solution  as well as other ongoing projects for other
domestic  as  well  as  international  products.

     Significant expenditures anticipated for the remainder of 1998, excluding
any  possible  business  acquisitions  or  common  stock  repurchases,  are as
follows:  acquisition of data processing and communications equipment, support
software,  buildings, building improvements and office furniture, fixtures and
equipment  and costs relating to the internal development of software systems.

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


                    FACTORS THAT MAY AFFECT FUTURE RESULTS

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

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

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

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

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

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

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

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

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

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

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

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

YEAR 2000 READINESS

     Many  existing  computer programs were designed to use only two digits to
identify  a  year  in date fields.  If not corrected, these applications could
fail or produce erroneous results when working with dates in the Year 2000 and
beyond.    This  Year  2000  issue  may potentially affect the Company in four
areas:    its  product offerings, its services offerings, third-party products
used internally, and its suppliers.  The Company's various business units have
been  responsible  for  the  assessment,  remediation,  validation  and
implementation  of  Year  2000  corrective  actions.

     The  application  code  of  the Company's primary product offerings, S3+,
Series  II  ,  INSURE/90,  POINT , CyberLife and CYBERTEK CK/4  products, were
either  initially  designed  or have been updated in their currently available
releases  to be capable of processing and storing date data with dates in both
the  twentieth  (1900's)  and twenty-first (2000's) centuries.  The Company is
currently conducting an inventory and verifying the Year 2000 readiness of the
third-party  products  with  which  these Company applications are designed to
operate in order to validate that no unanticipated Year 2000 issues exist.  In
addition,  the  Company  also is in the process of conducting an inventory and
assessing  other  Company  and third-party products previously licensed by the
Company  to  customers to determine if any remediation efforts may be required
in  relation  to  these  products.

     In  its  services  offerings, the Company has assessed and commenced Year
2000  remediation  of  the  applications  used  in  processing the data of its
Information  Technology  Outsourcing and Business Process Outsourcing services
customers.  Some  of these remediation efforts are complete and some are still
in  various  stages of coding, testing or implementation.  The Company intends
to  complete  these  Year  2000 remediation efforts and required testing, in a
Year  2000  test  environment, prior to the need for these services to process
data  involving  dates  in  the  twenty-first  century.

     The  primary  third-party  products  used by the Company for its internal
operation  include  its  data center hardware and software, internal financial
systems,  and  network and PC hardware and software.  The Company's Blythewood
data  center  has  completed  its  hardware  and  operating software inventory
assessments  and  has  substantially  completed  the  remediation  efforts  of
updating these hardware and software assets for the Year 2000 requirements. As
of  July  1, 1998, Lockheed Martin took over the data processing equipment and
operational  control  of the Blythewood data center and remaining remediation 
<PAGE>
efforts  will be coordinated with them.  The Company's Australian and European
data  centers  also  have  completed  their  inventory  assessment  and  are
implementing  the  hardware  and  operating software enhancements required for
Year  2000  remediation.

     In  1996, the Company commenced the process of identifying, selecting and
implementing  an  enterprise  wide  financial  and  human  resources system to
replace  its  existing  systems.    The  selected  solution is currently being
implemented,  is  designed to meet Year 2000 requirements, and is scheduled to
be  operational at the end of 1998.  The Company is inventorying and assessing
all  of its network and PC hardware and software to determine if any Year 2000
remediation  upgrades  will  be  required.   The Company is also assessing its
readiness  with  respect  to  non-IT  systems  which  relate  primarily to the
ordinary  maintenance  and  operation  of  its  physical  facilities,  such as
elevators,  heating  and  air  conditioning.

     Finally,  the  primary  suppliers  upon  whom  the Company's services are
dependent are electric utility and telephone companies who provide services to
the  Company's  various  offices  and  data  centers.    If these services are
interrupted  for  a prolonged period due to the suppliers' Year 2000 problems,
it  will  disrupt  the Company's ability to provide its services to customers,
notwithstanding the backup battery and diesel power supplies available for the
data  center  locations.

     As discussed above, the Company has not yet fully completed its Year 2000
evaluations  or  its remediation efforts.  If such remediation efforts are not
completed  on a timely basis, Year 2000 issues could have a material impact on
the  Company's  operations  and  financial  results.   However, based upon the
Company's  experience  to  date,  at this time, it is not anticipated that the
completion  of  remaining  Year  2000 remediation efforts will have an adverse
material  effect  upon  the  Company's  financial  position  or  results  of
operations.

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

<PAGE>

                                    PART II
                               OTHER INFORMATION

                     POLICY MANAGEMENT SYSTEMS CORPORATION


ITEM 1.  LEGAL PROCEEDINGS

     See Note 2, Contingencies, of Notes to Consolidated Financial Statements,
which  is  incorporated  by  reference  in  this  Item.

ITEMS 2, and 3 are not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     At  the  Company's  Annual Meeting of Stockholders, held on May 12, 1998,
the Company's stockholders approved: (i) the election of two directors, Joseph
D.  Sargent  (15,847,241  votes  for and 117,835 withheld) and G. Larry Wilson
(15,847,155  votes  for  and 117,921 withheld) to serve a term of three years;
and  (ii)  the  ratification  of  the  selection  of Coopers & Lybrand, LLP as
independent  auditors  (15,965,076  votes  for,  1,949 votes against and 6,387
abstentions).

     The  following directors' terms continued through the 1998 Annual Meeting
of  Stockholders:    Alfred R. Berkeley, III, Donald W. Feddersen, Dr. John M.
Palms,  John  P.  Seibels  and  Richard  G.  Trub.

ITEM  5.    OTHER  INFORMATION

     The  Securities and Exchange Commission (the "SEC") recently amended Rule
14a-4,  which governs the use by the Company of discretionary voting authority
with  respect  to shareholder proposals.  SEC Rule 14a-4c(1) provides that, if
the  proponent  of a shareholder proposal fails to notify the Company at least
45  days  prior  to  the  month  and  day  of  mailing  the prior year's proxy
statement,  the  proxies of the Company's management would be permitted to use
their  discretionary  authority  at  the  Company's  next  annual  meeting  of
shareholders if the proposal were raised at the meeting without any discussion
of  the  matter  in  the  proxy statement.  For purposes of the Company's 1999
Annual  Meeting  of  Shareholders,  this  deadline  is  February  10,  1999.

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

Exhibits

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

Reports  on  Form  8-K

     The  Company  filed  a  report  under Item 5 on Form 8-K on May 12, 1998,
disclosing  the  stock  split  described  in  Note  5 of Notes to Consolidated
Financial  Statements.    No  financial  statements  were filed with this 8-K.

<PAGE>



                     POLICY MANAGEMENT SYSTEMS CORPORATION


                                  SIGNATURES


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


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




Date:    August 11, 1998            Timothy V. Williams
                                    Executive Vice President
                                    (Chief Financial Officer)

<PAGE>
                     POLICY MANAGEMENT SYSTEMS CORPORATION
                                 EXHIBIT INDEX

Exhibit
Number

 3.          ARTICLES  OF  INCORPORATION  AND  BY-LAWS

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

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

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

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

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

10.          MATERIAL  CONTRACTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

27.          FINANCIAL  DATA  SCHEDULES

     A.     Six Months Ended June 30, 1998 filed herewith (EDGAR version only)

     B.     Six Months Ended June 30, 1997, as restated, filed herewith (EDGAR
version  only)
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UNITED STATES
                      SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, DC  20549

                                   FORM 10-Q

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

                 For the quarterly period ended JUNE 30, 1998
                        Commission file number 1-10557

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

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

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

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

     Indicate  by  check mark whether the registrant (1) has filed all reports
required  to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934  during  the  preceding  12  months  (or for such shorter period that the
registrant  was  required  to  file such reports), and (2) has been subject to
such  filing  requirements  for  the  past  90  days.       Yes   X     No
                                                                 ---       ---

     Indicate the number of shares outstanding of each of the issuer's classes
of  common  stock,  as  of  the  latest  practicable  date.

        36,735,065 Common shares, $.01 par value, as of August 7, 1998.

     The  information  furnished herein reflects all adjustments which are, in
the  opinion of management, necessary for the fair presentation of the results
for the periods reported.  Such information should be read in conjunction with
the Company's Annual Report on Form 10-K for the year ended December 31, 1997.
POLICY MANAGEMENT SYSTEMS CORPORATION

                                     INDEX

PART  I.  FINANCIAL  INFORMATION                    PAGE

Item  1.  Financial  Statements
Consolidated Statements of Income for the Three and
Six Months Ended June 30, 1998 and 1997 . . . . . .   3

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

Consolidated Statements of Changes in Stockholders'
Equity and Comprehensive Income for the Six Months
Ended June 30, 1998 and 1997. . . . . . . . . . . .   5

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

Notes to Consolidated Financial Statements. . . . .   7

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings . . . . . . . . . . . . .  24

Item 4. Submission of Matters to a Vote of
  Security Holders. . . . . . . . . . . . . . . . .  24

Item 5. Other Information . . . . . . . . . . . . .  24

Item 6. Exhibits and Reports on Form 8-K. . . . . .  24

Signatures. . . . . . . . . . . . . . . . . . . . .  25
PART I
                                    FINANCIAL INFORMATION
                            POLICY MANAGEMENT SYSTEMS CORPORATION
                              CONSOLIDATED STATEMENTS OF INCOME

                                                      Three Months          Six Months
                                                     Ended June 30,        Ended June 30,
                                                    1998       1997       1998       1997
                                                                 (Unaudited)
                                                  ------------------------------------------
                                                     (In Thousands, Except Per Share Data)
REVENUES
 Licensing . . . . . . . . . . . . . . . . . . .  $ 29,503   $ 32,322   $ 58,240   $ 58,552 
 Services. . . . . . . . . . . . . . . . . . . .   115,386     91,506    227,070    180,359 
                                                  ---------  ---------  ---------  ---------
                                                   144,889    123,828    285,310    238,911 
                                                  ---------  ---------  ---------  ---------
OPERATING EXPENSES
 Cost of revenues
   Employee compensation & benefits. . . . . . .    64,781     51,131    128,089     98,460 
   Computer and communications expenses. . . . .     7,932      8,240     15,745     16,074 
   Depreciation and amortization of property,
    equipment and capitalized software costs . .    15,889     14,309     31,553     28,225 
   Other costs & expenses. . . . . . . . . . . .     6,572      9,326     12,809     14,995 
 Selling, general and administrative expenses. .    24,851     21,742     48,979     43,831 
 Amortization of goodwill and other intangibles.     2,489      2,437      4,912      4,909 
                                                  ---------  ---------  ---------  ---------
                                                   122,514    107,185    242,087    206,494 
                                                  ---------  ---------  ---------  ---------

OPERATING INCOME . . . . . . . . . . . . . . . .    22,375     16,643     43,223     32,417 

Equity in earnings of unconsolidated affiliates.       233        320        438        690 

Minority interest. . . . . . . . . . . . . . . .       (30)         -        (30)         - 

Other Income and Expenses
  Investment income. . . . . . . . . . . . . . .       184        344        686        771 
  Interest expense and other charges . . . . . .      (554)    (1,356)    (1,481)    (2,573)
                                                  ---------  ---------  ---------  ---------
                                                      (370)    (1,012)      (795)    (1,802)
                                                  ---------  ---------  ---------  ---------
Income from continuing operations
  before income taxes. . . . . . . . . . . . . .    22,208     15,951     42,836     31,305 
Income taxes . . . . . . . . . . . . . . . . . .     8,226      5,951     15,987     11,681 
                                                  ---------  ---------  ---------  ---------
INCOME FROM CONTINUING OPERATIONS. . . . . . . .    13,982     10,000     26,849     19,624 

DISCONTINUED OPERATIONS:
  Income from operations of discontinued
    operations less applicable income taxes
    of $37, $481, $252 and $820, respectively. .        67        694        389      1,162 
  Loss on disposal of discontinued operations
    less applicable income taxes of $2,439 . . .      (453)         -       (453)         - 
                                                  ---------  ---------  ---------  ---------
                                                      (386)       694        (64)     1,162 
                                                  ---------  ---------  ---------  ---------

NET INCOME . . . . . . . . . . . . . . . . . . .  $ 13,596   $ 10,694   $ 26,785   $ 20,786 
                                                  =========  =========  =========  =========

BASIC EARNINGS PER SHARE:
  Income from continuing operations. . . . . . .  $   0.38   $   0.27   $   0.73   $   0.54 
  Income (loss) from discontinued operations . .     (0.01)      0.02          -       0.03 
                                                  ---------  ---------  ---------  ---------
                                                  $   0.37   $   0.29   $   0.73   $   0.57 
                                                  =========  =========  =========  =========

DILUTED EARNINGS PER SHARE:
  Income from continuing operations. . . . . . .  $   0.35   $   0.27   $   0.68   $   0.53 
  Income (loss) from discontinued operations . .     (0.01)      0.02          -       0.03 
                                                  ---------  ---------  ---------  ---------
                                                  $   0.34   $   0.29   $   0.68   $   0.56 
                                                  =========  =========  =========  =========

Weighted average common shares . . . . . . . . .    36,763     36,373     36,726     36,366 
Weighted average common shares assuming dilution    39,675     37,068     39,434     36,934
See accompanying notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                            CONSOLIDATED BALANCE SHEETS

                                                             (Unaudited)  (Audited)
                                                               June 30,  December 31,
                                                                1998        1997
                                                              --------    --------
                                                      (In Thousands, Except Share Data)
Assets
Current assets
 Cash and equivalents. . . . . . . . . . . . . . . . . . . .  $ 25,001   $ 32,179 
 Marketable securities . . . . . . . . . . . . . . . . . . .        20      3,280 
 Receivables, net of allowance for uncollectible
  amounts of $2,141 ($2,628 at 1997) . . . . . . . . . . . .   113,791    128,789 
 Income tax receivable . . . . . . . . . . . . . . . . . . .       670      1,098 
 Deferred income taxes . . . . . . . . . . . . . . . . . . .     9,438      3,628 
 Other . . . . . . . . . . . . . . . . . . . . . . . . . . .    23,054     16,835 
                                                              ---------  ---------
   Total current assets. . . . . . . . . . . . . . . . . . .   171,974    185,809 

Property and equipment, at cost less accumulated
 depreciation and amortization of $140,001
 ($139,522 at 1997). . . . . . . . . . . . . . . . . . . . .   123,872    116,433 
Receivables. . . . . . . . . . . . . . . . . . . . . . . . .     2,320      3,271 
Income tax receivable. . . . . . . . . . . . . . . . . . . .     4,041      4,041 
Goodwill and other intangibles, net. . . . . . . . . . . . .    61,525     69,125 
Capitalized software costs, net. . . . . . . . . . . . . . .   212,566    204,118 
Deferred income taxes. . . . . . . . . . . . . . . . . . . .    21,773     21,996 
Investments. . . . . . . . . . . . . . . . . . . . . . . . .     8,612     11,066 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . .     7,632      2,547 
                                                              ---------  ---------
     Total assets. . . . . . . . . . . . . . . . . . . . . .  $614,315   $618,406 
                                                              =========  =========

Liabilities
Current liabilities
 Accounts payable and accrued expenses . . . . . . . . . . .  $ 49,510   $ 57,345 
 Accrued restructuring charges . . . . . . . . . . . . . . .       303        145 
 Accrued contract termination costs. . . . . . . . . . . . .       472        830 
 Current portion of long-term debt . . . . . . . . . . . . .     9,191      1,191 
 Income taxes payable. . . . . . . . . . . . . . . . . . . .    17,492      7,499 
 Unearned revenues . . . . . . . . . . . . . . . . . . . . .    13,964     18,806 
 Other . . . . . . . . . . . . . . . . . . . . . . . . . . .       396        397 
                                                              ---------  ---------
   Total current liabilities . . . . . . . . . . . . . . . .    91,328     86,213 

Long-term debt . . . . . . . . . . . . . . . . . . . . . . .       443     37,714 
Deferred income taxes. . . . . . . . . . . . . . . . . . . .    88,292     80,496 
Accrued restructuring charges. . . . . . . . . . . . . . . .     1,236      1,366 
Other. . . . . . . . . . . . . . . . . . . . . . . . . . . .     4,894      2,121 
                                                              ---------  ---------
    Total liabilities. . . . . . . . . . . . . . . . . . . .   186,193    207,910 
                                                              ---------  ---------

Minority interest. . . . . . . . . . . . . . . . . . . . . .       455          - 

Commitments and contingencies (Note 2)

Stockholders' Equity
Special stock, $.01 par value, 5,000,000 shares authorized .         -          - 
Common stock, $.01 par value, 75,000,000 shares authorized,
 36,768,534 shares issued and outstanding
 (18,339,304 at December 31, 1997) . . . . . . . . . . . . .       368        183 
Additional paid-in capital . . . . . . . . . . . . . . . . .   104,276    112,090 
Retained earnings. . . . . . . . . . . . . . . . . . . . . .   332,968    306,367 
Accumulated other comprehensive income . . . . . . . . . . .    (9,945)    (8,144)
                                                              ---------  ---------
    Total stockholders' equity . . . . . . . . . . . . . . .   427,667    410,496 
                                                              ---------  ---------
     Total liabilities and stockholders' equity. . . . . . .  $614,315   $618,406 
                                                              =========  =========
See accompanying notes
POLICY MANAGEMENT SYSTEMS CORPORATION
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                            AND COMPREHENSIVE INCOME
                                  (Unaudited)

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

Comprehensive income
 Net income . . . . . . . . .     -          -     26,785         -     26,785 
 Other comprehensive income,
  net of tax:
   Foreign currency
    translation adjustments .     -          -          -    (1,793)    (1,793)
   Unrealized loss on
    marketable securities . .     -          -          -        (8)        (8)
                                                                      ---------
Total comprehensive income                                              24,984 
                                                                      ---------

Stock dividend. . . . . . . .   184          -       (184)        -          - 
Stock options exercised
  (344,239 shares). . . . . .     4     18,220          -         -     18,224 
Repurchase of 341,700 shares
  of common stock . . . . . .    (3)   (26,034)         -         -    (26,037)
                               -----  ---------  ---------  --------  ---------

BALANCE, JUNE 30, 1998. . . .  $368   $104,276   $332,968   $(9,945)  $427,667 
                               =====  =========  =========  ========  =========
See accompanying notes

(1)  Comprehensive income for the three months ended June 30, 1998 and 1997 was
     $12,103 and $8,726, respectively.
     Comprehensive income for the six months ended June 30, 1997 was $16,092.
POLICY MANAGEMENT SYSTEMS CORPORATION
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                                  (Unaudited)

                                                       Six Months
                                                     Ended June 30,
                                                    1998        1997
                                                   -------     -------
                                                     (In Thousands)
Operating  Activities
Net income . . . . . . . . . . . . . . . . . . .  $ 26,785   $ 20,786 
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation and amortization. . . . . . . . .    39,595     35,063 
   Deferred income taxes. . . . . . . . . . . . .     1,542      4,999 
   Provision for uncollectible accounts . . . . .        15      1,516 
   Minority interest. . . . . . . . . . . . . . .        30          - 
   Gain on disposal of discontinued operations. .    (1,986)         - 
   Impairment charges . . . . . . . . . . . . . .         -        444 
 Changes in assets and liabilities:
   Accrued restructuring and lease
    termination costs . . . . . . . . . . . . . .        29     (2,207)
   Receivables. . . . . . . . . . . . . . . . . .     9,178    (16,236)
   Income taxes receivable. . . . . . . . . . . .       428         18 
   Accounts payable and accrued expenses. . . . .    (9,589)    (9,358)
   Income taxes payable . . . . . . . . . . . . .     9,993      1,981 
 Other, net . . . . . . . . . . . . . . . . . . .   (17,389)        17 
                                                   ---------  ---------
      Cash provided by operations . . . . . . . .    58,631     37,023 
                                                   ---------  ---------

Investing Activities
 Proceeds from sales/maturities of available-for-
  sale securities . . . . . . . . . . . . . . . .     3,257        250 
 Proceeds from sales of held-to-
  maturity securities . . . . . . . . . . . . . .     2,969          - 
 Proceeds from sale of business segment . . . . .    23,826          - 
 Acquisition of property and equipment. . . . . .   (27,893)   (16,428)
 Capitalized internal software development
  costs . . . . . . . . . . . . . . . . . . . . .   (28,431)   (29,623)
 Business acquisition . . . . . . . . . . . . . .    (2,688)         - 
 Investment by minority interest. . . . . . . . .       425          - 
 Proceeds from disposal of property and
  equipment . . . . . . . . . . . . . . . . . . .     1,735        805 
                                                   ---------  ---------
      Cash used by investing activities . . . . .   (26,800)   (44,996)
                                                   ---------  ---------

Financing Activities
 Payments on long-term debt . . . . . . . . . . .   (41,771)   (77,427)
 Proceeds from borrowing under credit facility. .    12,500     72,138 
 Issuance of common stock under stock
  option plans. . . . . . . . . . . . . . . . . .    18,224        691 
 Repurchase of common stock . . . . . . . . . . .   (26,037)         - 
                                                   ---------  ---------
      Cash used by financing activities . . . . .   (37,084)    (4,598)
                                                   ---------  ---------

Effect of exchange rate changes on cash . . . . .    (1,925)        76 
Net decrease in cash and equivalents. . . . . . .    (7,178)   (12,495)
Cash and equivalents at beginning of period . . .    32,179     22,121 
                                                   ---------  ---------
Cash and equivalents at end of period . . . . . .  $ 25,001   $  9,626 
                                                   =========  =========

Supplemental Information
 Interest paid. . . . . . . . . . . . . . . . . .  $  1,533   $  2,212 
 Income taxes paid. . . . . . . . . . . . . . . .     2,725      3,790
See accompanying notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                 JUNE 30, 1998

NOTE  1.          SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

BASIS OF PRESENTATION

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

BASIC AND DILUTED EARNINGS PER SHARE

     Basic  and diluted earnings per share ("EPS") are calculated according to
the  provisions  of  Statement  of  Financial  Accounting  Standards  No. 128,
"Earnings  Per  Share".    For  the Company, the numerator is the same for the
calculation  of both basic and diluted EPS.  The following is a reconciliation
of  the  denominator  used  in  the  EPS  calculations  (in  thousands):
Three Months     Six Months
                                Ended June 30,  Ended June 30,
                                --------------  --------------
                                 1998    1997    1998    1997  
                                -----   ------  -----   ------
Weighted Average Shares
-----------------------
Basic EPS. . . . . . . . . . .  36,763  36,373  36,726  36,366
Effect of common stock options   2,912     695   2,708     568
                                ------  ------  ------  ------
Diluted EPS. . . . . . . . . .  39,675  37,068  39,434  36,934
                                ======  ======  ======  ======
Options  to  purchase  750,000 shares of common stock at $40.95 per share
were  outstanding  but were not included in the computation of diluted EPS for
1998  because  the options' exercise price was greater than the average market
price  of  the  Company's  common  stock  for the period ending June 30, 1998.
NEW  ACCOUNTING  STANDARDS

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

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

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

     In  June  1998,  Statement  of  Financial  Accounting  Standard  No. 133,
"Accounting  for  Derivative  Instruments and Hedging Activities" ("SFAS 133")
was  issued,  effective  for  fiscal years beginning after June 15, 1999, with
earlier adoption encouraged.  SFAS 133 requires companies to record derivative
instruments  on  the balance sheet as assets and liabilities, measured at fair
value.    Gain  or  losses  resulting  from  changes  in  the  values of those
derivatives  are  accounted  for  depending  on the use of the derivative. The
Company  does  not  enter  into  derivative instruments except occasionally to
hedge  the  foreign  currency  exchange  and  interest  rate  risk of specific
projected  transactions.    The  Company  was  not  holding  any  derivative
instruments  at  any  of  the  balance  sheet  periods  presented.

OTHER MATTERS

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

NOTE 2.     CONTINGENCIES

     The  Company  is  presently  involved  in  litigation  which commenced in
January  of  1996  in  the Circuit Court in Greenville County, South Carolina,
with  Liberty Life Insurance Company and certain of its affiliates ("Liberty")
arising  out  of  the  parties'  prior contractual relationship related to the
development  and  licensing  of  Series  III  life  insurance systems and the
subsequent  licensing  of  the  Company's  CYBERTEK  life  insurance  systems.
Liberty's  complaint alleges breach of contract, breach of express and implied
warranties,  fraudulent  inducement,  breach  of  contract  accompanied  by  a
fraudulent  act,  and recission.  Liberty has alleged actual and consequential
damages  in excess of $160 million and also seeks treble and punitive damages.
The  Company  has  asserted  various  affirmative  defenses  and  is  pursuing
counterclaims  against  Liberty  for breach of contract, recoupment, breach of
good  faith  and  fair  dealing,  and  breach  of  contract  accompanied  by a
fraudulent act.  The Company is seeking equitable relief, including injunctive
relief,  and  currently  unspecified  actual,  compensatory  and consequential
damages.

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

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

NOTE 3.     SEGMENT INFORMATION

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

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

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

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

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

5.  Life  information  services.   This segment provided information services,
principally physician reports and medical histories, to US life insurers. This
segment  was  sold  in  May 1998 and is presented as a discontinued operation.
Information  about the Company's operations for the three and six months ended
June  30,  1998  and  1997  is  as  follows:
Three Months           Six Months
                                                Ended June 30,        Ended June 30,
                                              ----------------      ----------------
                                               1998      1997        1998      1997
                                              ------    ------      ------    ------
                                                           (In thousands)
REVENUES FROM EXTERNAL CUSTOMERS
Enterprise software and services
  Property and casualty . . . . . . . . . .  $ 66,618   $ 55,559   $134,569   $111,833 
  Life and financial solutions. . . . . . .    33,336     26,369     63,761     46,524 
                                             ---------  ---------  ---------  ---------
    Total US revenues . . . . . . . . . . .    99,954     81,928    198,330    158,357 
  International . . . . . . . . . . . . . .    44,935     41,900     86,980     80,554 
                                             ---------  ---------  ---------  ---------
    Total revenues from
       continuing operations. . . . . . . .  $144,889   $123,828   $285,310   $238,911 
                                             =========  =========  =========  =========

 Discontinued Operations
  Information Services
   Property and casualty. . . . . . . . . .  $      -   $ 24,172   $      -   $ 48,241 
   Life . . . . . . . . . . . . . . . . . .     4,843     16,800     11,968     32,904 

INCOME (EXPENSE) FROM CONTINUING OPERATIONS
 Enterprise software and services
  Property and casualty . . . . . . . . . .  $ 16,974   $ 13,277   $ 34,434   $ 28,794 
  Life and financial solutions. . . . . . .     7,612      7,259     14,491     11,209 
  Corporate and US administrative . . . . .    (7,187)    (7,207)   (13,678)   (11,938)
                                             ---------  ---------  ---------  ---------
    Total US operating income . . . . . . .    17,399     13,329     35,247     28,065 
                                             ---------  ---------  ---------  ---------

  International . . . . . . . . . . . . . .     7,074      5,003     12,036      7,537 
  International administrative. . . . . . .    (2,098)    (1,689)    (4,060)    (3,185)
                                             ---------  ---------  ---------  ---------
    Total international . . . . . . . . . .     4,976      3,314      7,976      4,352 
                                             ---------  ---------  ---------  ---------

      Operating income. . . . . . . . . . .    22,375     16,643     43,223     32,417 

Equity in earnings of
  unconsolidated affiliates . . . . . . . .       233        320        438        690 
Minority interest . . . . . . . . . . . . .       (30)         -        (30)         - 
Other income and expenses . . . . . . . . .      (370)    (1,012)      (795)    (1,802)
Income taxes. . . . . . . . . . . . . . . .     8,226      5,951     15,987     11,681 
                                             ---------  ---------  ---------  ---------
  Income from continuing operations . . . .  $ 13,982   $ 10,000   $ 26,849   $ 19,624 
                                             =========  =========  =========  =========

DISCONTINUED OPERATIONS
 Information Services
  Property and casualty . . . . . . . . . .  $ (1,018)  $    152   $ (1,018)  $    426 
  Life. . . . . . . . . . . . . . . . . . .     3,112      1,023      3,672      1,556 
  Other income and expenses . . . . . . . .        (4)         -        (27)         - 
  Income taxes. . . . . . . . . . . . . . .     2,476        481      2,691        820 
                                             ---------  ---------  ---------  ---------
   Discontinued operations, net . . . . . .  $   (386)  $    694   $    (64)  $  1,162 
                                             =========  =========  =========  =========
NOTE 4.     DISCONTINUED OPERATIONS

     The  Company  sold its life information services segment in May 1998, net
of  selling  expenses,  for  $23.8 million, resulting in a pretax gain of $3.0
million and an after-tax gain of $0.1 million.  The difference in gain for tax
purposes  primarily  results  from the inability to deduct goodwill related to
the  sale  for  tax purposes.  The operations of this segment are presented as
discontinued operations in the accompanying Consolidated Statements of Income.
See  Note  3  for  income  from  operations  of  the  discontinued  segment.

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

NOTE  5.          STOCK  SPLIT

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

     The  following  discussion  and  analysis  provides  information  which
management  believes  is  relevant  to  an assessment and understanding of the
Company's  consolidated  results  of  operations and financial condition.  The
discussion  should  be  read  in  conjunction  with the consolidated financial
statements  and  notes thereto contained in Part I of this report on Form 10-Q
and  with the Company's Annual Report on Form 10-K for the year ended December
31,  1997.

                             RESULTS OF OPERATIONS

     Set  forth below are certain operating items expressed as a percentage of
revenues  and  the  percent  increase  (decrease)  for those items between the
periods  presented:
1998 vs. 1997
                                                                         Percent
                                         Percentage of Revenues     Increase (Decrease)
                                       ---------------------------  -------------------
                                          Three           Six        Three       Six
                                       Months Ended   Months Ended   Months    Months
                                         June 30,       June 30,     Ended     Ended
                                       ------------   ------------
                                        1998   1997    1998   1997       June 30
                                       -----  -----   -----  -----  -----------------
Revenues
 Licensing . . . . . . . . . . . . .   20.4%   26.1%   20.4%   24.5%   (8.7)%   (0.5)%
 Services. . . . . . . . . . . . . .   79.6    73.9    79.6    75.5     26.1     25.9 
                                      ------  ------  ------  ------                  
                                      100.0   100.0   100.0   100.0     17.0     19.4 
                                      ------  ------  ------  ------                  
Operating expenses
 Cost of revenues
  Employee compensation and benefits   44.7    41.2    44.9    41.2     26.7     30.1 
  Computer & communication expenses.    5.5     6.7     5.5     6.7     (3.7)    (2.0)
  Depreciation & amortization
   of property, equipment &
   capitalized software costs. . . .   11.0    11.6    11.1    11.8     11.0     11.8 
  Other costs & expenses . . . . . .    4.5     7.5     4.5     6.3    (29.5)   (14.6)
 Selling, general &
   administrative expenses . . . . .   17.2    17.6    17.2    18.3     14.3     11.7 
 Amortization of goodwill and
   other intangibles . . . . . . . .    1.7     2.0     1.7     2.1      2.1      0.1 
                                      ------  ------  ------  ------                  
                                       84.6    86.6    84.9    86.4     14.3     17.2 
                                      ------  ------  ------  ------                  
Operating income . . . . . . . . . .   15.4    13.4    15.1    13.6     34.4     33.3 
Equity in earnings of unconsolidated
   affiliates. . . . . . . . . . . .    0.2     0.3     0.2     0.3    (27.2)   (36.5)
Other income and expenses. . . . . .   (0.2)   (0.8)   (0.3)   (0.8)   (63.4)   (55.9)
                                      ------  ------  ------  ------                  
Income from continuing operations
  before income taxes. . . . . . . .   15.4    12.9    15.0    13.1     39.2     36.8 
Income taxes . . . . . . . . . . . .    5.7     5.0     5.6     5.0     38.2     36.9 
                                      ------  ------  ------  ------                  
Income from continuing operations. .    9.7     7.9     9.4     8.1     39.8     36.8 
Discontinued operations, net . . . .   (0.3)    0.7       -     0.6   (155.6)  (105.5)
                                      ------  ------  ------  ------                  
Net income . . . . . . . . . . . . .    9.4%    8.6%    9.4%    8.7%    27.1%    28.9%
                                      ======  ======  ======  ======
THREE MONTH COMPARISON

REVENUES
Three Months
                               Ended June 30,
                              --------------
  Licensing                    1998    1997   Change
                              -----   -----   ------
                          (Dollars in Millions)
Initial charges. . . . . . .  $13.0   $16.6   (21.6)%
Monthly charges. . . . . . .   16.5    15.7     4.8
                              ------  ------         
                              $29.5   $32.3    (8.7)%
                              ======  ======         

Percentage of total revenues   20.4%   26.1%
                              ------  ------
Initial license revenues decreased $3.6 million for the second quarter of
1998  compared  to the second quarter of 1997, with the following increases or
decreases by business segment:  domestic property and casualty down 6.0% ($0.2
million);  life  insurance  and financial solutions down 48.8% ($3.6 million);
and  international  up  3.7%  ($0.2  million).

     Initial  license  charges  for  the  second  quarter  of  1998  include
right-to-use  licenses  of  $2.1 million.  The right-to-use licenses represent
acquisitions  by certain customers of perpetual rights.  This compares to $0.9
million  in  right-to-use  licenses  for  the second quarter of 1997.  Initial
license charges also include license agreements of $2.2 million for the second
quarter  of  1998  with  the  purchaser  of  the discontinued life information
services  segment  and  $1.8  million  for the second quarter of 1997 with the
purchaser  of  the  discontinued  property  &  casualty  information  services
segment.

     Monthly  license charges increased $0.8 million for the second quarter of
1998  compared  to  the second quarter of 1997 with the following increases or
decreases by business segment:  domestic property and casualty down 2.5% ($0.2
million);  life insurance and financial solutions up 21.5% ($0.6 million); and
international  up  10.9%  ($0.4  million).

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

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

Initial license revenues $13.0  $12.6  $25.1  $16.9  $16.6  $11.3  $19.4 $10.0
% of total revenues        9.0%   9.0%  17.0%  12.8%  13.4%   9.8%  15.5%  9.3%
Three Months
                               Ended June 30,
                              --------------
  Services                     1998    1997   Change
                              -----   -----   ------
                         (Dollars In Millions)
Professional and outsourcing  $114.1   $90.2   26.5%
Information. . . . . . . . .     0.2     0.2   16.5 
Other. . . . . . . . . . . .     1.1     1.1   (3.2)
                              -------  ------       
                              $115.4   $91.5   26.1%
                              =======  ======       

Percentage of total revenues    79.6%   73.9%
                              -------  ------
Professional  and  outsourcing  services revenues increased $23.9 million
for  the  second  quarter of 1998 compared to the second quarter of 1997, with
the  following  increases by business segment:  domestic property and casualty
up  28.4%  ($11.9  million);  life  insurance and financial solutions up 61.3%
($9.9  million);  and international up 6.5% ($2.1 million).  The increases are
principally  due  to  increases  in  both  implementation  services and in the
processing  volumes  of  services  provided  to  new  and  existing customers.

OPERATING EXPENSES

COST OF REVENUES

     Employee compensation and benefits increased 26.7% for the second quarter
of  1998  compared  to  the  second quarter of 1997, principally the result of
increased  salaries  and  related  costs  associated  with  the  growth  in
professional  services  staffing.    Compensation and benefits increased 22.4%
($3.5  million)  internationally,  while  domestic  increased  28.6%  ($10.2
million).

     Computer  and  communications  expenses  remained  relatively  unchanged.

     Depreciation  and  amortization  of  property,  equipment and capitalized
software  costs increased 11.0% for the second quarter of 1998 compared to the
second  quarter  of  1997,  principally  due  to  higher  amortization expense
resulting  from the recent release of the Company's S3+  property and casualty
insurance  client/server  software systems.  In addition, depreciation expense
increased  due  to  the  Company's  increased  investment  in  its information
technology  equipment.

     Other operating costs and expenses decreased 29.5% for the second quarter
of  1998  compared  to  the  second  quarter of 1997, principally due to lower
consultant, contract loss and bad debt expenses, partially offset by decreased
amounts  of  software  development  costs  capitalized.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative  expenses  increased 14.3% for the
second quarter of 1998 compared to the second quarter of 1997, principally due
to  increased bonus, commission, and other salary costs, partially offset by a
decrease  in  third  party  commissions.
AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES

     Amortization  of  goodwill  and  other  intangibles  remained  relatively
unchanged.

OPERATING INCOME

     1998  second  quarter  operating  income increased 34.4% compared to 1997
second  quarter  operating  income.  Property and casualty insurance operating
income  increased  27.8%,  domestic  life insurance operating income increased
4.9%  and  international  operating  income  increased 41.4%.  The increase in
operating  income  is  primarily related to increases in professional services
and outsourcing revenues while operating costs increased at a slower rate than
the  respective  revenue.

OTHER INCOME AND EXPENSE

     Interest  expense decreased 59.1% for the second quarter of 1998 compared
to  the  second  quarter  of 1997, principally due to lower levels of borrowed
funds  under  the  Company's credit facility and capitalization of interest on
construction  in  progress.    The average nominal interest rate applicable to
borrowings  under  the  Company's credit facility during the second quarter of
1998  was  5.9%.

INCOME TAXES

     The  effective income tax rate (income taxes expressed as a percentage of
pre-tax  income) was 37.0% and 37.3% for the second quarters of 1998 and 1997,
respectively.    The  effective  rate for the second quarter of 1998 is higher
than  the  federal  statutory  rate principally due to the effect of state and
local  income  taxes.

DISCONTINUED OPERATIONS

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

REVENUES
Six Months
                              Ended June 30,
                             --------------
  Licensing                   1998    1997   Change
                             -----   -----   ------
                         (Dollars in Millions)
Initial charges. . . . . . .  $25.6   $27.9   (8.1)%
Monthly charges. . . . . . .   32.6    30.7    6.4
                              ------  ------        
                              $58.2   $58.6   (0.5)%
                              ======  ======        

Percentage of total revenues   20.4%   24.5%
                              ------  ------
Initial  license revenues decreased $2.3 million for the first six months
of  1998  compared to the same period in 1997, with the following increases or
decreases  by business segment:  domestic property and casualty up 32.3% ($2.1
million);  life  insurance  and financial solutions down 39.2% ($4.5 million);
and  international  up  1.2%  ($0.1  million).

     Initial  license  charges  for  the  first  six  months  of  1998 include
right-to-use  licenses  of  $7.0 million.  The right-to-use licenses represent
acquisitions  by certain customers of perpetual rights.  This compares to $1.9
million in right-to-use licenses for the same period of 1997.  Initial license
charges also include license agreements of $2.2 million for the second quarter
of  1998  with  the  purchaser  of  the discontinued life information services
segment  and $1.8 million for the second quarter of 1997 with the purchaser of
the  discontinued  property  &  casualty  information  services  segment.

     Monthly  license  charges increased $1.9 million for the first six months
of  1998  compared to the same period in 1997, with the following increases or
decreases by business segment:  domestic property and casualty down 0.3% ($0.1
million);  life insurance and financial solutions up 22.6% ($1.2 million); and
international  up  11.0%  ($0.8  million).
Six Months
                               Ended June 30,
                              --------------
  Services                     1998    1997   Change
                              -----   -----   ------
                          (Dollars In Millions)
Professional and outsourcing  $224.9   $177.4    26.8%
Information. . . . . . . . .     0.3      0.3    (5.3)
Other. . . . . . . . . . . .     1.9      2.7   (29.6)
                              -------  -------        
                              $227.1   $180.4    25.9%
                              =======  =======        

Percentage of total revenues    79.6%    75.5%
                              -------  -------
Professional  and  outsourcing  services revenues increased $47.5 million
for the first six months of 1998 compared to the same period in 1997, with the
following  increases  by  business segment:  domestic property and casualty up
25.5%  ($21.7 million); life insurance and financial solutions up 68.9% ($20.4
million);  and  international  up  8.6%  ($5.4  million).    The increases are
principally  due  to  increases  in  both  implementation  services and in the
processing  volumes  of  services  provided  to  new  and  existing customers.

OPERATING EXPENSES

COST OF REVENUES

     Employee  compensation  and  benefits  increased  30.1% for the first six
months  of 1998 compared to the same period in 1997, principally the result of
increased  salaries  and  related  costs  associated  with  the  growth  in
professional  services  staffing.    Compensation and benefits increased 22.6%
($6.9  million)  internationally,  while  domestic  increased  33.5%  ($22.7
million).

     Computer  and  communications  expenses  remained  relatively  unchanged.

     Depreciation  and  amortization  of  property,  equipment and capitalized
software  costs  increased  11.8% for the first six months of 1998 compared to
the  same  period  in  1997,  principally  due  to higher amortization expense
resulting  from the recent release of the Company's S3+  property and casualty
insurance  client/server  software systems.  In addition, depreciation expense
increased  due  to  the  Company's  increased  investment  in  its information
technology  equipment.

     Other  operating  costs  and  expenses  decreased 14.6% for the first six
months  of  1998 compared to the same period in 1997, principally due to lower
consultant, contract loss and bad debt expenses, partially offset by increased
facility  costs  and  decreased  amounts  of  software  development  costs
capitalized.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative  expenses  increased 11.7% for the
first  six months of 1998 compared to the same period in 1997, principally due
to  increased  bonus,  commission,  and advertising costs, partially offset by
decreased  third  party  commissions.

AMORTIZATION OF GOODWILL AND OTHER INTANGIBLES

     Amortization  of  goodwill  and  other  intangibles  remained  relatively
unchanged.

OPERATING INCOME

     1998  six  month  operating income increased 33.3% compared with 1997 six
month  operating  income.    Property  and casualty insurance operating income
increased  19.6%, domestic life insurance operating income increased 29.3% and
international  operating  income  increased  59.7%.  The increase in operating
income  is  primarily  related  to  increases  in  professional  services  and
outsourcing revenues while operating costs increased at a slower rate than the
respective  revenue.
OTHER  INCOME  AND  EXPENSE

     Interest  expense  decreased  42.4%  for  the  first  six  months of 1998
compared  to  the  same  period  in  1997,  principally due to lower levels of
borrowed  funds  under  the  Company's  credit  facility and capitalization of
interest  on  construction  in  progress.    The average nominal interest rate
applicable  to borrowings under the Company's credit facility during the first
six  months  of  1998  was  5.9%.

INCOME TAXES

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

DISCONTINUED OPERATIONS

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

STRATEGIC ALLIANCES

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

     Lockheed  Martin.    In March 1998, the Company announced an agreement in
principle to form a strategic alliance for systems outsourcing with Integrated
Business Solutions, a unit of Lockheed Martin Corporation ("Lockheed Martin").
A  Data Processing Services Agreement was completed in June 1998 and under its
terms,  the  Company  turned over operation of its Blythewood, South Carolina,
data  center  to Lockheed Martin on July 1, 1998.  As part of the transaction,
the  Company  transferred  to  Lockheed  Martin  substantially all of the data
processing  equipment used in the data center operations, at net book value of
approximately  $10  million,  to  be  paid  in  January  1999.
LIQUIDITY AND CAPITAL RESOURCES
June 30, December 31,
                                 1998       1997
---------------------------------------------------
                              (Dollars in Millions)
Cash and equivalents, marketable
  securities, and investments. .  $ 33.6  $ 46.5
Current assets . . . . . . . . .   172.0   185.8
Current liabilities. . . . . . .    91.3    86.2
Working capital. . . . . . . . .    80.7    99.6
Long-term debt . . . . . . . . .     0.4    37.7
Six Months Ended
                                        June 30,
                                     1998     1997
-----------------------------------------------------
                                (Dollars in Millions)
Cash provided by operations. . . .  $ 58.6   $ 37.0 
Cash used for investing activities   (26.8)   (45.0)
Cash used for financing activities   (37.1)    (4.6)
The  Company's  current  ratio  (current  assets  divided  by  current
liabilities)  stood  at  1.9  at  June  30, 1998, which management believes is
sufficient  when  combined  with  the available credit facility to provide for
day-to-day operating needs and the flexibility to take advantage of investment
opportunities.    The Company has available, at June 30, 1998, all of its $200
million  credit  facility.    Also,  the Company has available (net of amounts
outstanding  at  June  30,  1998) $7 million under its $15 million uncommitted
operating  line of credit with which it may choose to fund temporary operating
cash  needs.

     During  the  six  months  ended  June  30,  1998  the Company capitalized
software  development  costs  of  $28.4  million,  principally  related to the
development of its S3+ client/server property and casualty software, CyberLife
object-oriented  client/server  life insurance software, and I+  international
property  and  casualty  solution  as well as other ongoing projects for other
domestic  as  well  as  international  products.

     Significant expenditures anticipated for the remainder of 1998, excluding
any  possible  business  acquisitions  or  common  stock  repurchases,  are as
follows:  acquisition of data processing and communications equipment, support
software,  buildings, building improvements and office furniture, fixtures and
equipment  and costs relating to the internal development of software systems.

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

                    FACTORS THAT MAY AFFECT FUTURE RESULTS

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

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

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

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

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

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

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

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

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

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

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

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

YEAR 2000 READINESS

     Many  existing  computer programs were designed to use only two digits to
identify  a  year  in date fields.  If not corrected, these applications could
fail or produce erroneous results when working with dates in the Year 2000 and
beyond.    This  Year  2000  issue  may potentially affect the Company in four
areas:    its  product offerings, its services offerings, third-party products
used internally, and its suppliers.  The Company's various business units have
been  responsible  for  the  assessment,  remediation,  validation  and
implementation  of  Year  2000  corrective  actions.

     The  application  code  of  the Company's primary product offerings, S3+,
Series  II  ,  INSURE/90,  POINT , CyberLife and CYBERTEK CK/4  products, were
either  initially  designed  or have been updated in their currently available
releases  to be capable of processing and storing date data with dates in both
the  twentieth  (1900's)  and twenty-first (2000's) centuries.  The Company is
currently conducting an inventory and verifying the Year 2000 readiness of the
third-party  products  with  which  these Company applications are designed to
operate in order to validate that no unanticipated Year 2000 issues exist.  In
addition,  the  Company  also is in the process of conducting an inventory and
assessing  other  Company  and third-party products previously licensed by the
Company  to  customers to determine if any remediation efforts may be required
in  relation  to  these  products.

     In  its  services  offerings, the Company has assessed and commenced Year
2000  remediation  of  the  applications  used  in  processing the data of its
Information  Technology  Outsourcing and Business Process Outsourcing services
customers.  Some  of these remediation efforts are complete and some are still
in  various  stages of coding, testing or implementation.  The Company intends
to  complete  these  Year  2000 remediation efforts and required testing, in a
Year  2000  test  environment, prior to the need for these services to process
data  involving  dates  in  the  twenty-first  century.

     The  primary  third-party  products  used by the Company for its internal
operation  include  its  data center hardware and software, internal financial
systems,  and  network and PC hardware and software.  The Company's Blythewood
data  center  has  completed  its  hardware  and  operating software inventory
assessments  and  has  substantially  completed  the  remediation  efforts  of
updating these hardware and software assets for the Year 2000 requirements. As
of  July  1, 1998, Lockheed Martin took over the data processing equipment and
operational  control  of the Blythewood data center and remaining remediation
efforts  will be coordinated with them.  The Company's Australian and European
data  centers  also  have  completed  their  inventory  assessment  and  are
implementing  the  hardware  and  operating software enhancements required for
Year  2000  remediation.

     In  1996, the Company commenced the process of identifying, selecting and
implementing  an  enterprise  wide  financial  and  human  resources system to
replace  its  existing  systems.    The  selected  solution is currently being
implemented,  is  designed to meet Year 2000 requirements, and is scheduled to
be  operational at the end of 1998.  The Company is inventorying and assessing
all  of its network and PC hardware and software to determine if any Year 2000
remediation  upgrades  will  be  required.   The Company is also assessing its
readiness  with  respect  to  non-IT  systems  which  relate  primarily to the
ordinary  maintenance  and  operation  of  its  physical  facilities,  such as
elevators,  heating  and  air  conditioning.

     Finally,  the  primary  suppliers  upon  whom  the Company's services are
dependent are electric utility and telephone companies who provide services to
the  Company's  various  offices  and  data  centers.    If these services are
interrupted  for  a prolonged period due to the suppliers' Year 2000 problems,
it  will  disrupt  the Company's ability to provide its services to customers,
notwithstanding the backup battery and diesel power supplies available for the
data  center  locations.

     As discussed above, the Company has not yet fully completed its Year 2000
evaluations  or  its remediation efforts.  If such remediation efforts are not
completed  on a timely basis, Year 2000 issues could have a material impact on
the  Company's  operations  and  financial  results.   However, based upon the
Company's  experience  to  date,  at this time, it is not anticipated that the
completion  of  remaining  Year  2000 remediation efforts will have an adverse
material  effect  upon  the  Company's  financial  position  or  results  of
operations.

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

                     POLICY MANAGEMENT SYSTEMS CORPORATION

ITEM 1.  LEGAL PROCEEDINGS

     See Note 2, Contingencies, of Notes to Consolidated Financial Statements,
which  is  incorporated  by  reference  in  this  Item.

ITEMS 2, and 3 are not applicable.

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

     At  the  Company's  Annual Meeting of Stockholders, held on May 12, 1998,
the Company's stockholders approved: (i) the election of two directors, Joseph
D.  Sargent  (15,847,241  votes  for and 117,835 withheld) and G. Larry Wilson
(15,847,155  votes  for  and 117,921 withheld) to serve a term of three years;
and  (ii)  the  ratification  of  the  selection  of Coopers & Lybrand, LLP as
independent  auditors  (15,965,076  votes  for,  1,949 votes against and 6,387
abstentions).

     The  following directors' terms continued through the 1998 Annual Meeting
of  Stockholders:    Alfred R. Berkeley, III, Donald W. Feddersen, Dr. John M.
Palms,  John  P.  Seibels  and  Richard  G.  Trub.

ITEM  5.    OTHER  INFORMATION

     The  Securities and Exchange Commission (the "SEC") recently amended Rule
14a-4,  which governs the use by the Company of discretionary voting authority
with  respect  to shareholder proposals.  SEC Rule 14a-4c(1) provides that, if
the  proponent  of a shareholder proposal fails to notify the Company at least
45  days  prior  to  the  month  and  day  of  mailing  the prior year's proxy
statement,  the  proxies of the Company's management would be permitted to use
their  discretionary  authority  at  the  Company's  next  annual  meeting  of
shareholders if the proposal were raised at the meeting without any discussion
of  the  matter  in  the  proxy statement.  For purposes of the Company's 1999
Annual  Meeting  of  Shareholders,  this  deadline  is  February  10,  1999.

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

Exhibits

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

Reports  on  Form  8-K

     The  Company  filed  a  report  under Item 5 on Form 8-K on May 12, 1998,
disclosing  the  stock  split  described  in  Note  5 of Notes to Consolidated
Financial  Statements.    No  financial  statements  were filed with this 8-K.
POLICY MANAGEMENT SYSTEMS CORPORATION

                                  SIGNATURES

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

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

Date:    August 11, 1998            Timothy V. Williams
                                    Executive Vice President
                                    (Chief Financial Officer)
POLICY MANAGEMENT SYSTEMS CORPORATION
                                 EXHIBIT INDEX

Exhibit
Number

 3.          ARTICLES  OF  INCORPORATION  AND  BY-LAWS

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

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

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

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

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

10.          MATERIAL  CONTRACTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

27.          FINANCIAL  DATA  SCHEDULES

     A.     Six Months Ended June 30, 1998 filed herewith (EDGAR version only)

     B.     Six Months Ended June 30, 1997, as restated, filed herewith (EDGAR
version  only)