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, 1999
                         Commission file number 1-10557


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


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


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


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

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

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

        35,566,669 Common shares, $.01 par value, as of August 12, 1999.

     The information furnished herein reflects all adjustments which are, in the
opinion  of  management,  necessary for the fair presentation of the results for
the  periods  reported.  Such information should be read in conjunction with the
Company's  Annual  Report  on  Form  10-K  for the year ended December 31, 1998.

<PAGE>
<TABLE>
<CAPTION>

                      POLICY MANAGEMENT SYSTEMS CORPORATION


                                      INDEX


PART  I.  FINANCIAL  INFORMATION                            PAGE

Item  1.  Financial  Statements


<S>                                                          <C>
Consolidated Statements of Income for the Three and
Six Months Ended June 30, 1999 and 1998 . . . . . . . . . .   3

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

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

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

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

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


PART II. OTHER INFORMATION

Item 1. Legal Proceedings . . . . . . . . . . . . . . . . .  25

Item 4. Submission of Matters to a Vote of Security Holders  25

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . .  25

Signatures. . . . . . . . . . . . . . . . . . . . . . . . .  26
</TABLE>



<PAGE>
<TABLE>
<CAPTION>

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

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

<S>                                     <C>              <C>               <C>        <C>
Revenues
 Licensing . . . . . . . . . . . . . .  $       42,511   $        29,503   $ 78,463   $ 58,240
 Services. . . . . . . . . . . . . . .         129,835           115,386    255,358    227,070
                                        ---------------  ----------------  ---------  ---------
                                               172,346           144,889    333,821    285,310
                                        ---------------  ----------------  ---------  ---------

Operating expenses
 Cost of revenues
  Employee compensation and benefits .          76,385            64,781    150,059    128,089
  Computer and communications expenses          11,718             7,932     23,647     15,745
  Depreciation and amortization of
   property, equipment and
   capitalized software costs. . . . .          17,094            15,889     33,251     31,553
  Other costs & expenses . . . . . . .           9,345             6,572     16,802     12,809
 Selling, general and administrative
   expenses. . . . . . . . . . . . . .          28,362            24,851     54,033     48,979
 Amortization of goodwill and
   other intangibles . . . . . . . . .           3,461             2,489      6,538      4,912
                                        ---------------  ----------------  ---------  ---------
                                               146,365           122,514    284,330    242,087
                                        ---------------  ----------------  ---------  ---------

Operating income . . . . . . . . . . .          25,981            22,375     49,491     43,223

Equity in earnings of
   unconsolidated affiliates . . . . .             148               233        289        438

Minority interest. . . . . . . . . . .             (40)              (30)       (79)       (30)

Other income and expenses:
  Investment income. . . . . . . . . .             183               184        414        686
  Interest expense and other charges .          (2,747)             (554)    (4,260)    (1,481)
                                        ---------------  ----------------  ---------  ---------
                                                (2,564)             (370)    (3,846)      (795)
                                        ---------------  ----------------  ---------  ---------

Income from continuing operations
  before income taxes. . . . . . . . .          23,525            22,208     45,855     42,836
Income taxes . . . . . . . . . . . . .           8,705             8,226     16,967     15,987
                                        ---------------  ----------------  ---------  ---------

Income from continuing operations. . .          14,820            13,982     28,888     26,849

Discontinued operations:
 Income from operations of
  discontinued operations less
  applicable income taxes of
  $37 and $252, respectively                         -                 67        -         389
 Loss on disposal of discontinued
  operations less applicable income
  taxes of $2,439. . . . . . . . . . .                               (453)       -        (453)
                                        ---------------  ----------------  ---------  ---------
                                                     -               (386)       -         (64)
                                        ---------------  ----------------  ---------  ---------

Net income . . . . . . . . . . . . . .  $       14,820   $        13,596   $ 28,888   $ 26,785
                                        ===============  ================  =========  =========

Basic earnings per share:
 Income from continuing operations . .  $         0.42   $          0.38   $   0.81   $   0.73
 Loss from discontinued operations . .               -             (0.01)       -          -
                                        ---------------  ----------------  ---------  ---------
                                        $         0.42   $          0.37   $   0.81   $   0.73
                                        ===============  ================  =========  =========

Diluted earnings per share:
======================================
 Income from continuing operations . .  $         0.41   $          0.35   $   0.77   $   0.68
 Loss from discontinued operations . .               -             (0.01)       -          -
                                        ---------------  ----------------  ---------  ---------
                                        $         0.41   $          0.34   $   0.77   $   0.68
                                        ===============  ================  =========  =========

Weighted average common shares . . . .          35,354            36,763     35,739     36,726
Weighted average common shares
  assuming dilution. . . . . . . . . .          36,588            39,675     37,460     39,434
<FN>

See accompanying notes
</TABLE>



<PAGE>
<TABLE>
<CAPTION>

                      POLICY MANAGEMENT SYSTEMS CORPORATION
                           CONSOLIDATED BALANCE SHEETS

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

<S>                                                <C>        <C>
Assets
Current assets
 Cash and equivalents                              $ 32,828   $ 26,013
 Marketable securities                                2,197          -
 Receivables, net of allowance for uncollectible
  amounts of $1,956 ($2,051 at December 31, 1998)   140,090    104,299
 Accrued revenues                                    52,605     45,686
 Deferred income taxes                                6,605      9,336
 Other receivable                                         -     11,279
 Prepaids                                            15,908      8,645
 Other                                               13,202     11,968
                                                   ---------  ---------
   Total current assets                             263,435    217,226

Property and equipment, at cost less accumulated
 depreciation and amortization of $129,859
 ($128,363 at December 31, 1998)                    145,264    135,436
Accrued revenues                                     11,345      7,844
Income tax receivable                                 4,041      4,041
Goodwill and other intangibles, net                 102,484     81,401
Capitalized software costs, net                     243,134    220,908
Deferred income taxes                                24,970     24,787
Investments                                          10,106      9,661
Cost of acquisition to be allocated                  30,804          -
Other                                                18,694     17,394
                                                   ---------  ---------
     Total assets                                  $854,277   $718,698
                                                   =========  =========

Liabilities
Current liabilities
 Accounts payable and accrued expenses             $ 47,184     57,129
 Current portion of long-term debt                   32,507     15,812
 Income taxes payable                                17,005      9,202
 Unearned revenues                                   19,857     15,804
 Other                                                  946        988
                                                   ---------  ---------
   Total current liabilities                        117,499     98,935

Long-term debt                                      202,000     85,000
Deferred income taxes                               101,302     98,233
Other                                                10,944      3,520
                                                   ---------  ---------
    Total liabilities                               431,745    285,688
                                                   ---------  ---------


Minority interest                                       604        526

Stockholders' equity
Special stock, $.01 par value, 5,000,000 shares
 authorized                                               -          -
Common stock, $.01 par value, 75,000,000 shares
 authorized, 35,551,917 shares issued and
 outstanding (36,357,139 at December 31, 1998)          356        364
Additional paid-in capital                           56,038     82,396
Retained earnings                                   388,342    359,454
Accumulated other comprehensive income              (12,733)    (9,730)
Stock employee compensation trust                   (10,075)         -
                                                   ---------  ---------
    Total stockholders' equity                      421,928    432,484
                                                   ---------  ---------
 Total liabilities and stockholders' equity        $854,277   $718,698
                                                   =========  =========
<FN>


See accompanying notes
</TABLE>



<PAGE>

<PAGE>
<TABLE>
<CAPTION>

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

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


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

Comprehensive income
 Net income . . . . . . . . . .        -          -     28,888         -          -     28,888
 Other comprehensive income,
  net of tax:
   Foreign currency
    translation adjustments . .        -          -          -    (3,003)         -     (3,003)
                                                                                      ---------
Total comprehensive income. . .   25,885
                                 --------

Purchase of shares for SECT . .        -          -          -         -    (10,094)   (10,094)
Restricted stock vested . . . .        -         (3)         -         -         19         16
Stock options exercised
  (208,378 shares). . . . . . .        2      6,680          -         -          -      6,682
Repurchase of 1,013,600 shares
  of common stock . . . . . . .      (10)   (33,035)         -         -          -    (33,045)
                                 --------  ---------  --------  ---------  ---------  ---------

BALANCE, JUNE 30, 1999. . . . .  $   356   $ 56,038   $388,342  $(12,733)  $(10,075)  $421,928
                                 ========  =========  ========  =========  =========  =========
<FN>


See accompanying notes

(1)     Comprehensive income for the three months ended June 30, 1999 and 1998 was $14,178 and
$12,103, respectively.

     Comprehensive income for the six months ended June 30, 1998 was $24,984.

</TABLE>



<PAGE>

<PAGE>
<TABLE>
<CAPTION>

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

                                                           Six Months
                                                          Ended June 30,
                                                       -------------------
                                                        1999        1998
                                                       ------      ------
                                                       (In thousands)

<S>                                                  <C>         <C>
Operating Activities
 Net income                                          $  28,888   $ 26,785
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation and amortization                        42,509     39,595
   Deferred income taxes                                 6,240      1,542
   Provision for uncollectible accounts                    (22)        15
   Gain on disposal of discontinued operations               -     (1,986)
Changes in assets and liabilities:
   Receivables                                         (28,565)       379
   Accrued revenues                                    (10,278)     8,799
   Other receivable                                     11,279          -
   Accounts payable and accrued expenses               (11,761)    (9,589)
   Income taxes payable                                  7,518      9,993
   Unearned revenues                                     1,534     (4,842)
   Other, net                                           (3,880)    (4,302)
                                                     ----------  ---------
      Cash provided by operations                       43,462     66,389
                                                     ----------  ---------

Investing Activities
 Proceeds from sales/maturities of available-for-
  sale securities                                            -      3,257
 Proceeds from sales of held-to-maturity securities          -      2,969
 Proceeds from sale of business segment                      -     23,826
 Acquisition of property and equipment                 (20,081)   (29,785)
 Capitalized internal software development costs       (34,553)   (28,431)
 Business acquisition                                  (67,384)    (2,688)
 Investment in unconsolidated affiliate                     71          -
 Investment in minority interest                             -        425
 Proceeds from disposal of property and equipment          305      1,735
                                                                 ---------
 Other                                                  (9,277)    (7,791)
                                                     ----------  ---------
      Cash used by investing activities               (130,919)   (36,483)
                                                     ----------  ---------

Financing Activities
 Payments on long-term debt                            (34,971)   (41,771)
 Proceeds from borrowing under credit facility         165,700     12,500
 Purchase of stock for Stock Employee
  Compensation Trust                                   (10,094)         -
 Issuance of common stock under stock option plans       6,682     18,224
                                                     ----------  ---------
 Repurchase of common stock                            (33,045)   (26,037)
                                                     ----------  ---------
      Cash provided (used) by financing activities      94,272    (37,084)
                                                     ----------  ---------

Net increase (decrease) in cash and equivalents          6,815     (7,178)
Cash and equivalents at beginning of period             26,013     32,179
                                                     ----------  ---------
Cash and equivalents at end of period                $  32,828   $ 25,001
                                                     ==========  =========

Supplemental Information
 Interest paid                                       $   3,211   $    998
 Income taxes paid                                       4,023      2,725


<FN>

See accompanying notes
</TABLE>



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


NOTE  1.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

BASIS OF PRESENTATION

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

BASIC AND DILUTED EARNINGS PER SHARE

     Basic  and  diluted  earnings per share ("EPS") are calculated according to
the provisions of Statement of Financial Accounting Standards No. 128, "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,
                               --------------  ---------------
                                1999    1998     1999    1998
                               -----   -----    -----   -----
Weighted Average Shares
-----------------------


<S>                             <C>     <C>     <C>     <C>
Basic EPS. . . . . . . . . . .  35,354  36,763  35,739  36,726
Effect of common stock options   1,234   2,912   1,721   2,708
                                ------  ------  ------  ------
Diluted EPS. . . . . . . . . .  36,588  39,675  37,460  39,434
                                ======  ======  ======  ======
</TABLE>



     Options  to purchase 2,527,640 shares of common stock at a weighted average
price  of  $37.41 per share were outstanding but not included in the computation
of  diluted  EPS  for  the  period  ending  June  30,  1999.

OTHER  MATTERS

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

<PAGE>
NOTE  2.     ACQUISITIONS

On  June 30, 1999, the Company purchased DORN Technology Group, Inc. ("DORN"), a
Michigan-based risk and claims management company, for $32 million in cash. DORN
owns  proprietary claims management software, Riskmaster and Quest, and provides
risk and claims management software and services mainly to the U.S. self-insured
market.  The  Company  intends  to  grow  DORN's  existing services business and
further  develop  the  Riskmaster  and  Quest systems to complement its suite of
claims  products.

The balance sheet reflects approximately $30.8 million as cost of acquisition to
be  allocated,  once the Company obtains an independent evaluation, and does not
anticipate  any  significant  charge  for  purchased  research  and development.

On  June  30,  1999,  the  Company  purchased Financial Administrative Services,
Inc.("FAS"),  a  Connecticut-based  provider  of  business  process  outsourcing
("BPO")  for  total  consideration  of  $13  million.  FAS  uses  the  Company's
PolicyLink  system  to  support  the  rapid  introduction  of variable insurance
products  and  annuities  in  a  business  process  outsourcing  environment.

On March 31, 1999, the Company purchased Legalgard Partners, L.P. ("Legalgard"),
a  Philadelphia-based  legal  cost  containment business for $23.2 million whose
principal  indirect  investor was Reliance Insurance Company. Legalgard provides
legal cost containment services mainly to the US property and casualty insurance
industry  using  the  Counsel Partnership System, a proprietary software system.
The  Company  intends to grow Legalgard's existing services business and develop
the  Counsel  Partnership  System for licensing directly to insurance companies.

The  acquisitions  above  have  been  recorded  using  the  purchase  method  of
accounting. Accordingly, the Consolidated Statement of Operations of the Company
does  not  include the results of operations before the date of the acquisition.


NOTE  3.     CONTINGENCIES

     The  Company  is  involved in litigation which commenced in January 1996 in
the  Circuit  Court  in  Greenville  County,  South  Carolina, with Liberty Life
Insurance  Company  and certain of its affiliates ("Liberty") arising out of the
parties' prior contractual relationship related to the development and licensing
of  Series  III  life  insurance  systems  and  the  subsequent licensing of the
Company's  CYBERTEK  life  insurance systems. Liberty's complaint alleges breach
of  contract,  breach  of express and implied warranties, fraudulent inducement,
breach  of  contract accompanied by a fraudulent act, and recission. Liberty has
alleged  actual  and  consequential  damages  in excess of $260 million and also
seeks  treble and punitive damages. The Company has asserted various affirmative
defenses  and  is pursuing counterclaims against Liberty for breach of contract,
recoupment,  breach  of  good  faith  and  fair  dealing, and breach of contract
accompanied  by  a  fraudulent  act.  The  Company  is seeking equitable relief,
including  injunctive relief, and currently unspecified actual, compensatory and
consequential  damages.

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

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

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


NOTE 4.     SEGMENT INFORMATION

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

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

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

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

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

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

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

                                               Three Months        Six Months
                                              Ended June 30,     Ended June 30,
                                             ----------------   ----------------
                                              1999     1998     1999     1998
                                             ------   ------   ------   ------
REVENUES FROM EXTERNAL CUSTOMERS


<S>                                          <C>        <C>      <C>        <C>
Property and casualty . . . . . . . . . . .  $ 77,077   $66,223   $150,715   $133,748
Life and financial solutions. . . . . . . .    47,531    33,336     89,164     63,761
                                             ---------  --------  ---------  ---------
Total US revenues . . . . . . . . . . . . .   124,608    99,559    239,879    197,509
International . . . . . . . . . . . . . . .    47,738    45,330     93,942     87,801
                                             ---------  --------  ---------  ---------
  Total revenues from
     continuing operations. . . . . . . . .  $172,346   $144,889   $333,821   $285,310
                                             =========  ========  =========  =========



Discontinued operations . . . . . . . . . .  $      -   $  4,843   $      -   $ 11,968

INCOME (EXPENSE) FROM CONTINUING OPERATIONS
Property and casualty . . . . . . . . . . .  $ 20,760   $ 17,673   $ 42,484   $ 35,601
Life and financial solutions. . . . . . . .    10,759      7,612     19,044     14,491
Corporate and US administrative . . . . . .    (8,086)    (7,187)   (16,245)   (13,678)
                                             ---------  ---------  --------  ---------
  Total US operating income . . . . . . . .    23,433     18,098     45,283     36,414
                                             ---------  ---------  --------  ---------

International . . . . . . . . . . . . . . .     4,411      6,375      7,850     10,869
International administrative. . . . . . . .    (1,863)    (2,098)    (3,642)    (4,060)
                                             ---------  ---------  --------  ---------
  Total international . . . . . . . . . . .     2,548      4,277      4,208      6,809
                                             ---------  ---------  --------  ---------

  Operating income. . . . . . . . . . . . .    25,981     22,375     49,491     43,223

Equity in earnings of
  unconsolidated affiliates . . . . . . . .       148        233        289        438
Minority interest . . . . . . . . . . . . .       (40)       (30)       (79)       (30)
Other income and expenses . . . . . . . . .    (2,564)      (370)    (3,846)      (795)
Income taxes. . . . . . . . . . . . . . . .     8,705      8,226     16,967     15,987
                                             ---------  ---------  --------  ---------
  Income from continuing operations . . . .  $ 14,820   $ 13,982   $ 28,888   $ 26,849
                                             =========  =========  ========  =========

Discontinued operations
  Property and casualty . . . . . . . . . .  $      -    $ (1,018)  $           (1,018)
  Life. . . . . . . . . . . . . . . . . . .         -       3,112                3,672
  Other income and expenses . . . . . . . .         -          (4)         -       (27)
  Income taxes. . . . . . . . . . . . . . .         -      (2,476)         -    (2,691)
                                             ---------  ----------  --------  ---------
  Discontinued operations, net. . . . . . .  $      -   $    (386)  $      -   $   (64)
                                             =========  ==========  ========  =========
</TABLE>


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

     The following discussion and analysis provides information which management
believes  is  relevant  to  an  assessment  and  understanding  of the Company's
consolidated  results  of  operations  and  financial condition.  The discussion
should  be  read  in  conjunction with the consolidated financial statements and
notes  thereto  contained  in  Part  I  of this report on Form 10-Q and with the
Company's  Annual  Report  on  Form  10-K  for the year ended December 31, 1998.

                              RESULTS OF OPERATIONS

     Set  forth  below  are certain operating items expressed as a percentage of
revenues and the percent increase (decrease) for those items between the periods
presented:
<TABLE>
<CAPTION>

                                                                       1999 vs. 1998
                                                                          Percent
                                       Percentage of Revenues      Increase (Decrease)
                                      ------------------------     ------------------
                                        Three           Six         Three      Six
                                       Months Ended   Months Ended  Months   Months
                                       June 30,       June 30,      Ended     Ended
                                     ------------   ------------
                                      1999   1998    1999   1998        June 30
                                     -----  -----   -----  -----  ------------------

<S>                                   <C>     <C>     <C>     <C>     <C>     <C>
Revenues
 Licensing . . . . . . . . . . . . .   24.7%   20.4%   23.5%   20.4%   44.1%   34.7%
 Services. . . . . . . . . . . . . .   75.3    79.6    76.5    79.6    12.5    12.5
                                      ------  ------  ------  ------
                                      100.0   100.0   100.0   100.0    19.0    17.0
                                      ------  ------  ------  ------
Operating expenses
 Cost of revenues
  Employee compensation and benefits   44.3    44.7    45.0    44.9    17.9    17.2
  Computer & communication expenses.    6.8     5.5     7.1     5.5    47.7    50.2
  Depreciation & amortization
   of property, equipment &
   capitalized software costs. . . .    9.9    11.0    10.0    11.1     7.6     5.4
  Other costs & expenses . . . . . .    5.4     4.5     5.0     4.5    42.2    31.2
 Selling, general &
   administrative expenses . . . . .   16.5    17.2    16.2    17.2    14.1    10.3
 Amortization of goodwill and
   other intangibles . . . . . . . .    2.0     1.7     2.0     1.7    39.1    33.1
                                      ------  ------  ------  ------
                                       84.9    84.6    85.3    84.9    19.5    17.5
                                      ------  ------  ------  ------
Operating income . . . . . . . . . .   15.1    15.4    14.7    15.1    16.1    14.5
Equity in earnings of unconsolidated
   affiliates. . . . . . . . . . . .    0.1     0.2     0.1     0.2   (36.5)  (34.0)
Other income and expenses. . . . . .   (1.5)   (0.2)   (1.2)   (0.3)  593.0   383.8
                                      ------  ------  ------  ------
Income from continuing operations
  before income taxes. . . . . . . .   13.7    15.4    13.6    15.0     5.9     7.0
Income taxes . . . . . . . . . . . .    5.1     5.7     5.1     5.6     5.8     6.1
                                      ------  ------  ------  ------
Income from continuing operations. .    8.6     9.7     8.5     9.4     6.0     7.6
Discontinued operations, net . . . .      -    (0.3)      -       -   100.0   100.0
                                      ------  ------  ------  ------
Net income . . . . . . . . . . . . .    8.6%    9.4%    8.5%    9.4%    9.0%    7.9%
                                      ======  ======  ======  ======


</TABLE>



<PAGE>
                             THREE MONTH COMPARISON

REVENUES
<TABLE>
<CAPTION>

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

<S>                           <C>     <C>     <C>
Initial charges. . . . . . .  $25.6   $13.0   97%
Monthly charges. . . . . . .   16.9    16.5    3
                              ------  ------
                              $42.5   $29.5   44%
                              ======  ======

Percentage of total revenues     25%     20%
                              ------  ------
</TABLE>


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

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

     Initial  license  charges increased $12.6 million for the second quarter of
1999  compared  with the second quarter of 1998, with the following increases by
business  segment:  property  and  casualty  up  306%  ($10.0 million); life and
financial  solutions  up  50%  ($1.9  million);  and  international up 12% ($0.7
million).

Initial  license  charges  for  the  second quarter of 1999 include right-to-use
licenses  of  $5.3  million.  This  compares  with  $2.1 million in right-to-use
licenses  for  the  second quarter of 1998.  Right-to-use licenses represent the
acquisition  by  certain  customers  of  the  right-to-use  component  of  their
remaining  monthly  license charge obligation, if any, plus the acquisition of a
perpetual  right-to-use  the  product thereafter.  Since these types of licenses
represent an acceleration of future revenues, they reduce future monthly license
charges.  The  Company  expects  the  occurrences of right-to-use licenses to be
minimal  in  the  future.

     Second  quarter  1999  initial  license  charges  include  $2.0  million of
licenses  to  the former owners of FAS, a BPO company acquired at the end of the
second  quarter.

     Two  remarketing agreements for Claim Outcome Adviser ("COA") totaling $3.5
million  are  included  in  initial  licensing revenue for the second quarter of
1999.  These  non-exclusive  agreements  provide two of the Company's nationally
recognized  vendors  the  right to relicense COA to the self-insured market. The
Company  also  renegotiated  with  one  of  these  vendors  an  extension to its
long-term  license  agreement  for operating software used in the Company's data
center.

Initial  license  charges  for  the  1999 second quarter include $1.7 million of
revenue  from the sale of hardware remarketed by the Company in conjunction with
licenses  of  its  software.

<PAGE>
Monthly  license  charges  were  basically  flat  for the second quarter of 1999
compared  with  the  second  quarter  of  1998  with  the following increases or
decreases  by  business  segment:  property and casualty down 16% ($1.4 million)
due  to  weak  1998  licensing and the effect of right-to-use licenses; life and
financial  solutions  up  45%  ($1.5  million)  on  strong  1998 initial license
activity;  and  international  up  7% ($0.3 million)principally due to increased
licensing  revenues  in  the  Asia/Pacific  region.

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


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

Initial license revenues $25.6  $18.7  $27.3  $14.7  $13.0  $12.6  $25.1 $16.9
% of total revenues        15%    12%    16%    10%     9%     9%    17%   13%


<TABLE>
<CAPTION>

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

<S>                           <C>      <C>      <C>
Professional and outsourcing  $128.0   $114.1   12%
Other. . . . . . . . . . . .     1.8      1.3   38
                              -------  -------
                              $129.8   $115.4   13%
                              =======  =======

Percentage of total revenues      75%      80%
                              -------  -------
</TABLE>

Professional  and  outsourcing services revenues increased $13.9 million for the
second  quarter  of  1999  compared  with  the  second quarter of 1998, with the
following  increases  by  business  segment:  property  and casualty up 2% ($1.3
million)  with strong growth in the Company's Point product related services and
outsourcing offset by the effect of weak 1998 licensing of the Company's S3+ and
the  redeployment  of  staff from customer's Y2K projects ending late last year;
life insurance and financial solutions up 42% ($10.9 million) due to strong 1998
initial  licensing  activity  particularly  in  banking; and international up 5%
($1.7  million)  due  principally  to  strong  growth in the Nordic region being
offset  by  decreases  in  the  UK,  Canada  and  Asia/Pacific  region.

The  Company  believes  that there is an increasing rate of change in technology
and in its marketplace due to the internet and the rapid adoption of e-commerce.
In  response  to  these  changes  the  Company  has  commenced  the  process  of
reassessing and challenging all major aspects of its business for the purpose of
evaluating  whether  it  is  correctly positioned to maximize its potential. The
results  of  this  process  and  the impact, if any, on the Company's results of
operations  are  unknown  at  this  time.

<PAGE>
OPERATING  EXPENSES

COST OF REVENUES

     Employee  compensation and benefits increased 18% for the second quarter of
1999  compared  with  the  second  quarter  of  1998.  The  net increase results
principally from higher salaries and related costs associated with the growth in
professional  services staffing being somewhat offset by the transfer of certain
employee  costs  to  computer  and  communication  expenses  as  a result of the
Company's  data  center  outsourcing  agreement with Lockheed Martin Corporation
("Lockheed  Martin").  Had  these  employee  costs  not been transferred, second
quarter  1999  employee  compensation  and  benefits  would  have  increased 21%
compared  with  the  same period last year.  Compensation and benefits increased
15%  ($2.9  million)  internationally  and  19%  ($8.7  million)  domestically.

Computer  and  communications  expenses  increased 48% for the second quarter of
1999 compared with the second quarter of 1998.  However, at the beginning of the
third  quarter  of  1998,  the  Company  entered  into a data center outsourcing
agreement  with Lockheed Martin.  As a result, certain costs previously included
in  employee  compensation  and  benefits  are  now  included  in  computer  and
communications  expense.  Had  these employee costs not been transferred, second
quarter  1999  computer  and  communication  expense would have increased 26% by
comparison  with  the  same  period last year.  The savings from the outsourcing
agreement were offset by increased communications volumes, increased network and
PC  related  expenses  and  increased  license  fees  for  data center operating
software.

     Depreciation  of property and equipment increased 5% for the second quarter
of  1999  compared with the second quarter of 1998. Several elements within this
line  have  fluctuated,  but  none  are  individually  significant.

Amortization  of capitalized software costs increased 10% for the second quarter
of  1999 compared with the second quarter of 1998 due to various releases of the
Company's  internally  developed  software  products.

     Other  operating costs and expenses increased 42% for the second quarter of
1999  compared with the second quarter of 1998, principally due to the inclusion
of  $1.6 million of costs for computer hardware sold to customers in conjunction
with  software  licenses.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and administrative expenses increased 14% for the second
quarter  of 1999 compared with the second quarter of 1998, but declined slightly
as  a  percentage of revenue. Several elements within this line have fluctuated,
but  none  are  individually  significant.

AMORTIZATION  OF  GOODWILL  AND  OTHER  INTANGIBLES

     Amortization of goodwill and other intangibles increased 39% for the second
quarter  of  1999  compared  with the second quarter of 1998, principally due to

<PAGE>
increased amortization related to the acquisition of The Leverage Group, Inc. in
the  third  quarter  of  1998  and  Legalgard  in  the  first  quarter  of 1999,
amortization  of  deferred costs associated with the Lockheed Martin data center
outsourcing  arrangement  and  contingent  consideration  related  to  prior
acquisitions  in  Europe.


OPERATING INCOME

     1999  second  quarter operating income increased 16% compared with the 1998
second  quarter.  Increases  or  decreases  in  segment  operating  income were:
property  and casualty increased 17%, life and financial solutions increased 41%
and  international  decreased 31%.  The increase in domestic operating income is
primarily  related  to  increases  in  initial  licensing  revenue, professional
services  and  outsourcing  revenues  being  somewhat offset by higher operating
costs which increased at a slower rate than the related revenue. The decrease in
international  operating  income  is  primarily  due  to  increased professional
services  expenses,  which  grew  at  a  faster  rate than the related revenues.

OTHER INCOME AND EXPENSE

     Other  income  and expense is comprised primarily of interest expense which
increased  $2.2  million for the second quarter of 1999 compared with the second
quarter  of  1998. This increase is due to higher levels of borrowed funds under
the  Company's  credit  facilities  which  were  incurred principally to finance
business  acquisitions  and  repurchases  of  the  Company's stock.  The average
nominal  interest  rate  applicable  to  borrowings  under  the Company's credit
facilities  during  the  second  quarter  of  1999  was  5.2%.

INCOME  TAXES

The effective income tax rate (income taxes expressed as a percentage of pre-tax
income)  was  37.0% for the second quarters of 1999 and 1998. The effective rate
for  the  second  quarter  of  1999  is  higher  than the federal statutory rate
principally  due  to  the  effect  of  state  and  local  income  taxes.

DISCONTINUED OPERATIONS

During  the  second  quarter  of  1998,  the  Company  sold its life information
services  segment.


<PAGE>
                              SIX MONTH COMPARISON

REVENUES
<TABLE>
<CAPTION>

                                Six Months
                              Ended June 30,
                              --------------
  Licensing                   1999    1998   Change
                              -----   -----   ------
                             (Dollars in millions)

<S>                           <C>     <C>     <C>
Initial charges. . . . . . .  $44.3   $25.6   73%
Monthly charges. . . . . . .   34.2    32.6    5
                              ------  ------
                              $78.5   $58.2   35%
                              ======  ======

Percentage of total revenues     24%     20%
                              ------  ------
</TABLE>

     Initial  license  revenues increased $18.7 million for the first six months
of 1999 compared with the first six months of 1998, with the following increases
by  business  segment:  property  and casualty up 186% ($15.7 million); life and
financial  solutions  up  29%  ($2.0  million);  and  international  up 9% ($1.0
million).

Initial  license  charges  for the first six months of 1999 include right-to-use
licenses of $11.4 million compared with $7.0 million for the first six months of
1998.  Right-to-use  licenses  represent the acquisition by certain customers of
the right-to-use component of their remaining monthly license charge obligation,
if any, plus the acquisition of a perpetual right-to-use the product thereafter.
Since these types of licenses represent an acceleration of future revenues, they
reduce  future  monthly  license  charges. The Company expects the occurrence of
right-to-use  licenses  to  be  minimal  in  the  future.

     1999  six  month  initial license charges include a $2.9 million license to
the  former  owners  of  Legalgard. In addition, the former owners of FAS, a BPO
company  acquired  at  the  end  of  the second quarter, licensed several of the
Company's  life  and  financial  solutions  products  for  $2.0  million.

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

1999  six month license charges include $2.1 million of revenue from the sale of
hardware remarketed by the Company in conjunction with licenses of its software.

     Monthly  license charges increased $1.6 million for the first six months of
1999  compared with the first six months of 1998 with the following increases or
decreases  by  business  segment:  property and casualty down 15% ($2.7 million)
due  to  weak  1998  licensing and the effect of right-to-use licenses; life and
financial  solutions  up  49%  ($3.3  million)  on  strong  1998 initial license
activity;  and  international up 12% ($1.0 million) principally due to increased
licensing  revenues  in  the  Asia/Pacific  region.

<PAGE>
<TABLE>
<CAPTION>

                                 Six Months
                              Ended June 30,
                             --------------
  Services                   1999    1998   Change
                             -----   -----   ------
                             (Dollars in millions)

<S>                           <C>      <C>      <C>
Professional and outsourcing  $253.3   $224.9   13%
Other. . . . . . . . . . . .     2.1      2.2   (5)
                              -------  -------
                              $255.4   $227.1   13%
                              =======  =======

Percentage of total revenues      77%      80%
                              -------  -------
</TABLE>



Professional  and  outsourcing services revenues increased $28.4 million for the
first  six  months  of 1999 compared with the first six months of 1998, with the
following  increases  by  business  segment:  property  and casualty up 3% ($3.3
million);  life  insurance  and  financial solutions up 41% ($20.3 million); and
international  up  7%  ($4.8  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.  1999  six month revenues
include  $1.6  million  for  professional  services  rendered  and  received  in
connection  with  the settlement of a dispute with a customer who has terminated
its  relationship  with  the  Company. Amounts paid by the Company in connection
with the resolution of this dispute were covered by insurance and existing legal
reserves  and  had  no  impact  on  the  Company's  operating  results.


OPERATING EXPENSES

COST OF REVENUES

     Employee  compensation  and benefits increased 17% for the first six months
of  1999  compared  with the first six months of 1998.  The net increase results
principally from higher salaries and related costs associated with the growth in
professional  services staffing being somewhat offset by the transfer of certain
employee  costs  to  computer  and  communication  expenses  as  a result of the
Company's  data  center  outsourcing  agreement with Lockheed Martin.  Had these
employee  costs  not  been transferred, 1999 six month employee compensation and
benefits  would have increased 20% by comparison with the same period last year.
Compensation  and  benefits increased 21% ($7.9 million) internationally and 16%
($14.1  million)  domestically.

Computer  and  communications expenses increased 50% for the first six months of
1999  compared with the first six months of 1998.  At the beginning of the third
quarter  of  1998,  the Company entered into a data center outsourcing agreement
with  Lockheed  Martin.  As  a  result,  certain  costs  previously  included in
employee  compensation  and  benefits  are  now  included  in  computer  and
communications  expense.  Had  these employee costs not been transferred, second
quarter  1999  computer  and  communication  expense would have increased 29% by
comparison  with  the  same  period last year.  The savings from the outsourcing
agreement were offset by increased communications volumes, increased network and
PC  related  expenses  and  increased  license  fees  for  data center operating
software.

     Depreciation  of  property  and equipment remained relatively unchanged for
the  first  six  months  of  1999  compared  with  the first six months of 1998.

<PAGE>
Amortization of capitalized software costs increased 7% for the first six months
of  1999  compared  with the first six months of 1998 due to various releases of
the  Company's  internally  developed  software  products.

     Other  operating  costs and expenses increased 31% for the first six months
of  1999  compared  with  the  first  six months of 1998, principally due to the
inclusion  of  $1.9  million of costs for computer hardware sold to customers in
conjunction  with  software  licenses.  The corresponding revenue is included in
initial  licensing  revenue.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative expenses increased 10% for the first
six  months  of  1999  compared  with the first six months of 1998, but declined
slightly  as  a  percentage  of  revenue. Several elements within this line have
fluctuated,  but  none  are  individually  significant.

AMORTIZATION  OF  GOODWILL  AND  OTHER  INTANGIBLES

     Amortization  of goodwill and other intangibles increased 33% for the first
six  months  of 1999 compared with the first six months of 1998, principally due
to increased amortization related to the acquisition of The Leverage Group, Inc.
in  the  third  quarter  of  1998  and  Legalgard  in the first quarter of 1999,
amortization  of  deferred costs associated with the Lockheed Martin data center
outsourcing  arrangement  and  contingent  consideration  related  to  prior
acquisitions  in  Europe.

OPERATING  INCOME

     1999  six month operating income increased 15% compared with 1998 six month
operating  income.  Increases  or  decreases  in  segment operating income were:
property  and casualty increased 19%, life and financial solutions increased 31%
and  international  decreased 28%. The increase in operating income domestically
is  primarily  related  to increases in initial licensing, professional services
and  outsourcing  revenues while operating costs increased at a slower rate than
the  related  revenue.  The  decrease  internationally  is  due  to  increased
development  costs  and  a  lower  percentage  of  initial license revenues as a
component  of  total  revenue.

OTHER INCOME AND EXPENSE

     Other  income  and expense is comprised primarily of interest expense which
increased  $3.1 million for the first six months of 1999 compared with the first
six months of 1998, principally due to higher levels of borrowed funds under the
Company's  credit  facility  to finance business acquisitions and repurchases of
the Company's stock.  The average nominal interest rate applicable to borrowings
under  the  Company's  credit  facility  during the first six months of 1999 was
5.2%.


<PAGE>
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  first  six  months  of 1999 and 1998,
respectively.  The  effective  rate  for  the first six months of 1999 is higher
than the federal statutory rate principally due to the effect of state and local
income  taxes.

DISCONTINUED OPERATIONS

During  the  second  quarter  of  1998,  the  Company  sold its life information
services  segment.

                         LIQUIDITY AND CAPITAL RESOURCES

<TABLE>
<CAPTION>

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

<S>                               <C>     <C>
Cash and equivalents, marketable
  securities, and investments. .  $ 45.1  $ 35.7
Current assets . . . . . . . . .   263.4   217.2
Current liabilities. . . . . . .   117.5    98.9
Working capital. . . . . . . . .   145.9   118.3
Long-term debt . . . . . . . . .   202.0    85.0
</TABLE>


<TABLE>
<CAPTION>
                                            Six Months Ended
                                                June 30,
                                            1999         1998
--------------------------------------------------------------
                                         (Dollars in millions)

<S>                                           <C>       <C>
Cash provided by operations. . . . . . . . .  $  43.5   $ 66.4
Cash (used) by investing activities. . . . .   (130.9)   (36.5)
Cash provided (used) by financing activities     94.3    (37.1)
</TABLE>


     The Company's current ratio (current assets divided by current liabilities)
stood  at  2.2  at  June  30, 1999, which management believes is sufficient when
combined  with  available  credit facilities to provide for day-to-day operating
needs  and  the  flexibility  to take advantage of investment opportunities.  At
June  30,  1999,  the  Company  had $200 million of committed and $40 million of
uncommitted  credit facilities available to it, of which $231.0 million had been
utilized.  In  July 1999, the Company increased its committed facilities to $240
million  and  reduced  its uncommitted facilities to $20 million, resulting in a
$20  million net increase in borrowing capacity which increased its total credit
facilities  to  $260  million.

During  the  six  months  ended  June  30, 1999 the Company capitalized software
development  costs  of  $34.6 million, principally related to the development of
its  property  and casualty, life and international enterprise software products
and  e-commerce  and  banking  solutions.

<PAGE>
Significant  expenditures  anticipated  for the remainder of 1999, excluding any
possible  business  acquisitions  or  common  stock repurchases, are as follows:
acquisition of computer and communications equipment, support software, building
improvements  and office furniture, fixtures and equipment and costs relating to
the  internal  development  of  software  systems.

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

                     FACTORS THAT MAY AFFECT FUTURE RESULTS

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

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

     The  timing and amount of the Company's revenues are subject to a number of
factors,  such as the timing of customers' decisions to enter into large license
agreements with the Company, which make estimation of operating results prior to
the end of a quarter or year extremely uncertain. Additionally, while management
believes  that  the Company's financing needs for the foreseeable future will be
satisfied  from  cash flows from operations and the Company's currently existing
credit  facilities, unforeseen events or adverse economic or business trends may
significantly increase cash demands beyond those currently anticipated or affect
the  Company's  ability  to  generate/raise  cash  to  satisfy  financing needs.

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

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

YEAR 2000

General
-------

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

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

The  following  seven  phases  are  included in the Company's Year 2000 project:

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

     Significant  progress  has been made in all project phases, and the project
is  scheduled for completion during the third quarter of 1999.  After completion
of  the  project,  the  Company plans to continue to remediate products based on
vendor  compliance  updates  and  will  continue  to  perform redundant tests on
hardware  and  software  until  year  end.

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

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

     The  Company  has  updated  the  code  of  its primary product offerings to
process  dates  across  the century boundary.  Current testing has confirmed the
ability  of  the  applications  to  process  data in both centuries.  Additional
testing  on the Company's base products has been completed during the first half
of  1999  in  an  environment  that utilizes accelerated system dates (Year 2000
environment).  This  additional  testing  has  sought  to  confirm  that  no
unanticipated  problems  will  occur  due to third party products with which the
Company's  applications  are  designed  to  operate.

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

     The  Company  has  completed  Year  2000  application  code remediation for
customers  who  will  be  Business  Process  Outsourcing  ("BPO")/Information
Technology  Outsourcing  ("ITO")  customers  after  December  31,  1999.   Live
customer  data  that  spans  Year  2000  thresholds  is currently, and has been,
successfully  processed  by  these  remediated  applications  in  production
environments.  Additionally,  subsequent  tests  have  been  performed  on  our
customer  products  and  additional  redundant testing will continue to occur in
Year  2000  time  machine  environments  until  year  end 1999.  This testing is
designed to confirm that no unanticipated problems will occur due to third party
products  with  which  the  Company's  applications  are  designed  to  operate.

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

Internal  systems  consist primarily of third-party products used by the Company
for  its  internal  operations  which include data center hardware and software,
internal  financial  and human resource systems, and network and PC hardware and
software.  The  Company's  Blythewood data center has completed its hardware and
operating  software  inventory, assessments, remediation, and testing efforts in
order  to  satisfy  Year  2000  requirements.  Redundant  tests  for  Year  2000
compliance  of the hardware and operating software in the Blythewood data center
will  continue  until  year  end.

As  of July 1, 1998, Lockheed Martin took over the data processing equipment and
operational  control  of  the  Blythewood  data center and remaining remediation
efforts  will be coordinated with Lockheed Martin.  The Company's Australian and
European  data centers have completed their inventory and assessment of hardware
and  operating software for Year 2000 requirements.  Finalization of the project
for  all  data  centers was substantially completed by June 30, 1999, with minor
issues  scheduled for completion by the end of the third quarter.  Regardless of
project  completion  dates,  the  Company  will  continue to retest hardware and
software  until  year  end  1999.

In  1996,  the  Company  commenced  the  process  of  identifying, selecting and
implementing  an enterprise wide financial and human resources system to replace
its  existing  systems.  The  financial  components of the selected solution are
operational  and  the human resources functionality is currently scheduled to be
fully  operational  during  the  third  quarter of 1999.  This selected solution
meets  Year  2000  requirements.

     The  Company  has inventoried and assessed its networks and PC hardware and
software and has identified Year 2000 remediation upgrades that are required. As
a  secondary  measure, an internal test lab for verification of vendor claims of
Year  2000  compliance  for  core  systems  and  mission  critical  products was
established.  Remediation  efforts  of  internal  systems  are  schedule  to  be
completed  by  October,  1999.

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

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

The  Company's  ability  to  operate  is dependent on relationships with certain
suppliers  and  trading  partners,  such  as  electric  utilities  and telephone
companies,  who  provide  services  to  the  Company's  various offices and data
centers  ("mission  critical suppliers and trading partners").  Mission critical
suppliers  and  trading partners have been identified and tests of most of these
interfaces,  to  the  extent  practical,  have  been  performed  in  a Year 2000
environment.  The  Company's  ability  to  influence  cooperation  is  partially
dependent  on  the significance of the Company's relationship with its suppliers
and  trading  partners  and  their  willingness  to share such information.  The
Company  has  substantially  completed  this  phase  of  its Year 2000 readiness
project.

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

     Since  1993, the Company estimates that it has incurred approximately $17.4
million  of costs in addressing Year 2000 remediation issues and will anticipate
spending  approximately $1.5 million during the remainder of 1999.  Based on the
Company's  experience  to date, it is not anticipated that the completion of the
remaining Year 2000 remediation efforts will have a material adverse effect upon
the  Company's  financial  position or results of operations. The Company's past
and  anticipated  future  remediation  costs  are  funded  by  operations.

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

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

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

The  Company  is  in the process of finalizing contingency plans to minimize the
effect  of  such  disruptions.

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



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

<PAGE>

                                     PART II
                                OTHER INFORMATION

                      POLICY MANAGEMENT SYSTEMS CORPORATION


ITEM 1.  LEGAL PROCEEDINGS

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

ITEMS 2, 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 11, 1999, the
Company's stockholders approved:  (i) the election of two directors, Dr. John M.
Palms  (30,576,293  votes  for  and  109,588  withheld)  and  John  P.  Seibels
(30,576,293 votes for and 109,588 withheld) to serve a term of three years; (ii)
the  approval  of the 1999 Stock Option Plan (24,219,907 votes for and 6,465,472
withheld);  and  (iii)  the  ratification  of  the  selection  of
PricewaterhouseCoopers,  LLP  as  independent auditors (30,673,379 votes for and
12,001  withheld).
The  following  directors'  terms  continued  through the 1999 Annual Meeting of
Stockholders:  Alfred  R. Berkeley, III, Donald W. Feddersen, Joseph D. Sargent,
Richard  G.  Trub,  and  G.  Larry  Wilson.

ITEM 5 is not applicable.

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

Exhibits

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

Reports  on  Form  8-K

     The Company did not file any reports on Form 8-K during the quarter ended
June 30, 1999.
<PAGE>







                      POLICY MANAGEMENT SYSTEMS CORPORATION


                                   SIGNATURES


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


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




Date:  August 16, 1999     Timothy V. Williams
     Executive Vice President
     (Chief Financial Officer)

<PAGE>
                      POLICY MANAGEMENT SYSTEMS CORPORATION
                                  EXHIBIT INDEX

Exhibit
Number

3.     ARTICLES  OF  INCORPORATION  AND  BY-LAWS

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

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

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

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

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

10.     MATERIAL  CONTRACTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

KK.     Stock  Option/Non-Compete  Form  Agreement  for named executive officers
together with schedule identifying particulars for each named executive officers
(filed  herewith)

LL.     Stock  Option/Non-Compete Agreement with Michael W. Risley dated May 11,
1999  (filed  herewith)

MM.     Form  of  1999  Bonus  Plan  for  named executive officers together with
schedule  identifying  particulars  for  each  named  executive  officer  (filed
herewith)

27.     FINANCIAL  DATA  SCHEDULES

A.     Six  Months  Ended  June  30,  1999  filed  herewith (EDGAR version only)
[{"type": "10-Q", "sequence": "1", "secsgml_size_bytes": 90368}]
{"company-data": {"conformed-name": "POLICY MANAGEMENT SYSTEMS CORP", "cik": "0000356226", "assigned-sic": "6411", "irs-number": "570723125", "state-of-incorporation": "SC", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "10-Q", "act": "34", "file-number": "001-10557", "film-number": "99693943"}, "business-address": {"street1": "ONE PMSC CTR", "street2": "PO BOX TEN", "city": "COLUMBIA", "state": "SC", "zip": "29202", "phone": "8037354000"}}
UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              WASHINGTON, DC  20549

                                    FORM 10-Q

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

                  For the quarterly period ended JUNE 30, 1999
                         Commission file number 1-10557

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

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

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

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

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

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

        35,566,669 Common shares, $.01 par value, as of August 12, 1999.

     The information furnished herein reflects all adjustments which are, in the
opinion  of  management,  necessary for the fair presentation of the results for
the  periods  reported.  Such information should be read in conjunction with the
Company's  Annual  Report  on  Form  10-K  for the year ended December 31, 1998.
POLICY MANAGEMENT SYSTEMS CORPORATION

                                      INDEX

PART  I.  FINANCIAL  INFORMATION                            PAGE

Item  1.  Financial  Statements
Consolidated Statements of Income for the Three and
Six Months Ended June 30, 1999 and 1998 . . . . . . . . . .   3

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

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

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

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

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

PART II. OTHER INFORMATION

Item 1. Legal Proceedings . . . . . . . . . . . . . . . . .  25

Item 4. Submission of Matters to a Vote of Security Holders  25

Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . .  25

Signatures. . . . . . . . . . . . . . . . . . . . . . . . .  26
PART I
                                     FINANCIAL INFORMATION
                             POLICY MANAGEMENT SYSTEMS CORPORATION
                               CONSOLIDATED STATEMENTS OF INCOME
                                          (Unaudited)

                                               Three Months           Six Months
                                              Ended June 30,        Ended June 30,
                                            ------------------      ----------------
                                              1999         1998       1999       1998
                                            --------     --------     ------     ------
                                              (In thousands, except per share data)
Revenues
 Licensing . . . . . . . . . . . . . .  $       42,511   $        29,503   $ 78,463   $ 58,240
 Services. . . . . . . . . . . . . . .         129,835           115,386    255,358    227,070
                                        ---------------  ----------------  ---------  ---------
                                               172,346           144,889    333,821    285,310
                                        ---------------  ----------------  ---------  ---------

Operating expenses
 Cost of revenues
  Employee compensation and benefits .          76,385            64,781    150,059    128,089
  Computer and communications expenses          11,718             7,932     23,647     15,745
  Depreciation and amortization of
   property, equipment and
   capitalized software costs. . . . .          17,094            15,889     33,251     31,553
  Other costs & expenses . . . . . . .           9,345             6,572     16,802     12,809
 Selling, general and administrative
   expenses. . . . . . . . . . . . . .          28,362            24,851     54,033     48,979
 Amortization of goodwill and
   other intangibles . . . . . . . . .           3,461             2,489      6,538      4,912
                                        ---------------  ----------------  ---------  ---------
                                               146,365           122,514    284,330    242,087
                                        ---------------  ----------------  ---------  ---------

Operating income . . . . . . . . . . .          25,981            22,375     49,491     43,223

Equity in earnings of
   unconsolidated affiliates . . . . .             148               233        289        438

Minority interest. . . . . . . . . . .             (40)              (30)       (79)       (30)

Other income and expenses:
  Investment income. . . . . . . . . .             183               184        414        686
  Interest expense and other charges .          (2,747)             (554)    (4,260)    (1,481)
                                        ---------------  ----------------  ---------  ---------
                                                (2,564)             (370)    (3,846)      (795)
                                        ---------------  ----------------  ---------  ---------

Income from continuing operations
  before income taxes. . . . . . . . .          23,525            22,208     45,855     42,836
Income taxes . . . . . . . . . . . . .           8,705             8,226     16,967     15,987
                                        ---------------  ----------------  ---------  ---------

Income from continuing operations. . .          14,820            13,982     28,888     26,849

Discontinued operations:
 Income from operations of
  discontinued operations less
  applicable income taxes of
  $37 and $252, respectively                         -                 67        -         389
 Loss on disposal of discontinued
  operations less applicable income
  taxes of $2,439. . . . . . . . . . .                               (453)       -        (453)
                                        ---------------  ----------------  ---------  ---------
                                                     -               (386)       -         (64)
                                        ---------------  ----------------  ---------  ---------

Net income . . . . . . . . . . . . . .  $       14,820   $        13,596   $ 28,888   $ 26,785
                                        ===============  ================  =========  =========

Basic earnings per share:
 Income from continuing operations . .  $         0.42   $          0.38   $   0.81   $   0.73
 Loss from discontinued operations . .               -             (0.01)       -          -
                                        ---------------  ----------------  ---------  ---------
                                        $         0.42   $          0.37   $   0.81   $   0.73
                                        ===============  ================  =========  =========

Diluted earnings per share:
======================================
 Income from continuing operations . .  $         0.41   $          0.35   $   0.77   $   0.68
 Loss from discontinued operations . .               -             (0.01)       -          -
                                        ---------------  ----------------  ---------  ---------
                                        $         0.41   $          0.34   $   0.77   $   0.68
                                        ===============  ================  =========  =========

Weighted average common shares . . . .          35,354            36,763     35,739     36,726
Weighted average common shares
  assuming dilution. . . . . . . . . .          36,588            39,675     37,460     39,434
See accompanying notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                           CONSOLIDATED BALANCE SHEETS

                                                  (Unaudited)   (Audited)
                                                   June 30,    December 31,
                                                     1999         1998
                                                    -------      -------
                                          (In thousands, except share data)
Assets
Current assets
 Cash and equivalents                              $ 32,828   $ 26,013
 Marketable securities                                2,197          -
 Receivables, net of allowance for uncollectible
  amounts of $1,956 ($2,051 at December 31, 1998)   140,090    104,299
 Accrued revenues                                    52,605     45,686
 Deferred income taxes                                6,605      9,336
 Other receivable                                         -     11,279
 Prepaids                                            15,908      8,645
 Other                                               13,202     11,968
                                                   ---------  ---------
   Total current assets                             263,435    217,226

Property and equipment, at cost less accumulated
 depreciation and amortization of $129,859
 ($128,363 at December 31, 1998)                    145,264    135,436
Accrued revenues                                     11,345      7,844
Income tax receivable                                 4,041      4,041
Goodwill and other intangibles, net                 102,484     81,401
Capitalized software costs, net                     243,134    220,908
Deferred income taxes                                24,970     24,787
Investments                                          10,106      9,661
Cost of acquisition to be allocated                  30,804          -
Other                                                18,694     17,394
                                                   ---------  ---------
     Total assets                                  $854,277   $718,698
                                                   =========  =========

Liabilities
Current liabilities
 Accounts payable and accrued expenses             $ 47,184     57,129
 Current portion of long-term debt                   32,507     15,812
 Income taxes payable                                17,005      9,202
 Unearned revenues                                   19,857     15,804
 Other                                                  946        988
                                                   ---------  ---------
   Total current liabilities                        117,499     98,935

Long-term debt                                      202,000     85,000
Deferred income taxes                               101,302     98,233
Other                                                10,944      3,520
                                                   ---------  ---------
    Total liabilities                               431,745    285,688
                                                   ---------  ---------

Minority interest                                       604        526

Stockholders' equity
Special stock, $.01 par value, 5,000,000 shares
 authorized                                               -          -
Common stock, $.01 par value, 75,000,000 shares
 authorized, 35,551,917 shares issued and
 outstanding (36,357,139 at December 31, 1998)          356        364
Additional paid-in capital                           56,038     82,396
Retained earnings                                   388,342    359,454
Accumulated other comprehensive income              (12,733)    (9,730)
Stock employee compensation trust                   (10,075)         -
                                                   ---------  ---------
    Total stockholders' equity                      421,928    432,484
                                                   ---------  ---------
 Total liabilities and stockholders' equity        $854,277   $718,698
                                                   =========  =========
See accompanying notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                   CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                    AND COMPREHENSIVE INCOME
                                          (Unaudited)

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

Comprehensive income
 Net income . . . . . . . . . .        -          -     28,888         -          -     28,888
 Other comprehensive income,
  net of tax:
   Foreign currency
    translation adjustments . .        -          -          -    (3,003)         -     (3,003)
                                                                                      ---------
Total comprehensive income. . .   25,885
                                 --------

Purchase of shares for SECT . .        -          -          -         -    (10,094)   (10,094)
Restricted stock vested . . . .        -         (3)         -         -         19         16
Stock options exercised
  (208,378 shares). . . . . . .        2      6,680          -         -          -      6,682
Repurchase of 1,013,600 shares
  of common stock . . . . . . .      (10)   (33,035)         -         -          -    (33,045)
                                 --------  ---------  --------  ---------  ---------  ---------

BALANCE, JUNE 30, 1999. . . . .  $   356   $ 56,038   $388,342  $(12,733)  $(10,075)  $421,928
                                 ========  =========  ========  =========  =========  =========
See accompanying notes

(1)     Comprehensive income for the three months ended June 30, 1999 and 1998 was $14,178 and
$12,103, respectively.

     Comprehensive income for the six months ended June 30, 1998 was $24,984.
POLICY MANAGEMENT SYSTEMS CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

                                                           Six Months
                                                          Ended June 30,
                                                       -------------------
                                                        1999        1998
                                                       ------      ------
                                                       (In thousands)
Operating Activities
 Net income                                          $  28,888   $ 26,785
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation and amortization                        42,509     39,595
   Deferred income taxes                                 6,240      1,542
   Provision for uncollectible accounts                    (22)        15
   Gain on disposal of discontinued operations               -     (1,986)
Changes in assets and liabilities:
   Receivables                                         (28,565)       379
   Accrued revenues                                    (10,278)     8,799
   Other receivable                                     11,279          -
   Accounts payable and accrued expenses               (11,761)    (9,589)
   Income taxes payable                                  7,518      9,993
   Unearned revenues                                     1,534     (4,842)
   Other, net                                           (3,880)    (4,302)
                                                     ----------  ---------
      Cash provided by operations                       43,462     66,389
                                                     ----------  ---------

Investing Activities
 Proceeds from sales/maturities of available-for-
  sale securities                                            -      3,257
 Proceeds from sales of held-to-maturity securities          -      2,969
 Proceeds from sale of business segment                      -     23,826
 Acquisition of property and equipment                 (20,081)   (29,785)
 Capitalized internal software development costs       (34,553)   (28,431)
 Business acquisition                                  (67,384)    (2,688)
 Investment in unconsolidated affiliate                     71          -
 Investment in minority interest                             -        425
 Proceeds from disposal of property and equipment          305      1,735
                                                                 ---------
 Other                                                  (9,277)    (7,791)
                                                     ----------  ---------
      Cash used by investing activities               (130,919)   (36,483)
                                                     ----------  ---------

Financing Activities
 Payments on long-term debt                            (34,971)   (41,771)
 Proceeds from borrowing under credit facility         165,700     12,500
 Purchase of stock for Stock Employee
  Compensation Trust                                   (10,094)         -
 Issuance of common stock under stock option plans       6,682     18,224
                                                     ----------  ---------
 Repurchase of common stock                            (33,045)   (26,037)
                                                     ----------  ---------
      Cash provided (used) by financing activities      94,272    (37,084)
                                                     ----------  ---------

Net increase (decrease) in cash and equivalents          6,815     (7,178)
Cash and equivalents at beginning of period             26,013     32,179
                                                     ----------  ---------
Cash and equivalents at end of period                $  32,828   $ 25,001
                                                     ==========  =========

Supplemental Information
 Interest paid                                       $   3,211   $    998
 Income taxes paid                                       4,023      2,725
See accompanying notes
POLICY MANAGEMENT SYSTEMS CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                  JUNE 30, 1999

NOTE  1.     SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES

BASIS OF PRESENTATION

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

BASIC AND DILUTED EARNINGS PER SHARE

     Basic  and  diluted  earnings per share ("EPS") are calculated according to
the provisions of Statement of Financial Accounting Standards No. 128, "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,
                               --------------  ---------------
                                1999    1998     1999    1998
                               -----   -----    -----   -----
Weighted Average Shares
-----------------------
Basic EPS. . . . . . . . . . .  35,354  36,763  35,739  36,726
Effect of common stock options   1,234   2,912   1,721   2,708
                                ------  ------  ------  ------
Diluted EPS. . . . . . . . . .  36,588  39,675  37,460  39,434
                                ======  ======  ======  ======
Options  to purchase 2,527,640 shares of common stock at a weighted average
price  of  $37.41 per share were outstanding but not included in the computation
of  diluted  EPS  for  the  period  ending  June  30,  1999.

OTHER  MATTERS

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

On  June 30, 1999, the Company purchased DORN Technology Group, Inc. ("DORN"), a
Michigan-based risk and claims management company, for $32 million in cash. DORN
owns  proprietary claims management software, Riskmaster and Quest, and provides
risk and claims management software and services mainly to the U.S. self-insured
market.  The  Company  intends  to  grow  DORN's  existing services business and
further  develop  the  Riskmaster  and  Quest systems to complement its suite of
claims  products.

The balance sheet reflects approximately $30.8 million as cost of acquisition to
be  allocated,  once the Company obtains an independent evaluation, and does not
anticipate  any  significant  charge  for  purchased  research  and development.

On  June  30,  1999,  the  Company  purchased Financial Administrative Services,
Inc.("FAS"),  a  Connecticut-based  provider  of  business  process  outsourcing
("BPO")  for  total  consideration  of  $13  million.  FAS  uses  the  Company's
PolicyLink  system  to  support  the  rapid  introduction  of variable insurance
products  and  annuities  in  a  business  process  outsourcing  environment.

On March 31, 1999, the Company purchased Legalgard Partners, L.P. ("Legalgard"),
a  Philadelphia-based  legal  cost  containment business for $23.2 million whose
principal  indirect  investor was Reliance Insurance Company. Legalgard provides
legal cost containment services mainly to the US property and casualty insurance
industry  using  the  Counsel Partnership System, a proprietary software system.
The  Company  intends to grow Legalgard's existing services business and develop
the  Counsel  Partnership  System for licensing directly to insurance companies.

The  acquisitions  above  have  been  recorded  using  the  purchase  method  of
accounting. Accordingly, the Consolidated Statement of Operations of the Company
does  not  include the results of operations before the date of the acquisition.

NOTE  3.     CONTINGENCIES

     The  Company  is  involved in litigation which commenced in January 1996 in
the  Circuit  Court  in  Greenville  County,  South  Carolina, with Liberty Life
Insurance  Company  and certain of its affiliates ("Liberty") arising out of the
parties' prior contractual relationship related to the development and licensing
of  Series  III  life  insurance  systems  and  the  subsequent licensing of the
Company's  CYBERTEK  life  insurance systems. Liberty's complaint alleges breach
of  contract,  breach  of express and implied warranties, fraudulent inducement,
breach  of  contract accompanied by a fraudulent act, and recission. Liberty has
alleged  actual  and  consequential  damages  in excess of $260 million and also
seeks  treble and punitive damages. The Company has asserted various affirmative
defenses  and  is pursuing counterclaims against Liberty for breach of contract,
recoupment,  breach  of  good  faith  and  fair  dealing, and breach of contract
accompanied  by  a  fraudulent  act.  The  Company  is seeking equitable relief,
including  injunctive relief, and currently unspecified actual, compensatory and
consequential  damages.
In  addition  to  the  litigation  described above, there are also various other
litigation  proceedings  and  claims arising in the ordinary course of business.
The  Company  believes  it  has meritorious defenses and is vigorously defending
these  matters.

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

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

NOTE 4.     SEGMENT INFORMATION

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

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

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

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

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

5.  Life  information  services.  This  segment  provided  information services,
principally  physician  reports  and medical histories, to US life insurers.  It
was  sold  in  May  1998.
Information  about  the  Company's operations for the three and six months ended
June  30,  1999  and  1998  is  as  follows  (in  thousands):
Three Months        Six Months
                                              Ended June 30,     Ended June 30,
                                             ----------------   ----------------
                                              1999     1998     1999     1998
                                             ------   ------   ------   ------
REVENUES FROM EXTERNAL CUSTOMERS
Property and casualty . . . . . . . . . . .  $ 77,077   $66,223   $150,715   $133,748
Life and financial solutions. . . . . . . .    47,531    33,336     89,164     63,761
                                             ---------  --------  ---------  ---------
Total US revenues . . . . . . . . . . . . .   124,608    99,559    239,879    197,509
International . . . . . . . . . . . . . . .    47,738    45,330     93,942     87,801
                                             ---------  --------  ---------  ---------
  Total revenues from
     continuing operations. . . . . . . . .  $172,346   $144,889   $333,821   $285,310
                                             =========  ========  =========  =========

Discontinued operations . . . . . . . . . .  $      -   $  4,843   $      -   $ 11,968

INCOME (EXPENSE) FROM CONTINUING OPERATIONS
Property and casualty . . . . . . . . . . .  $ 20,760   $ 17,673   $ 42,484   $ 35,601
Life and financial solutions. . . . . . . .    10,759      7,612     19,044     14,491
Corporate and US administrative . . . . . .    (8,086)    (7,187)   (16,245)   (13,678)
                                             ---------  ---------  --------  ---------
  Total US operating income . . . . . . . .    23,433     18,098     45,283     36,414
                                             ---------  ---------  --------  ---------

International . . . . . . . . . . . . . . .     4,411      6,375      7,850     10,869
International administrative. . . . . . . .    (1,863)    (2,098)    (3,642)    (4,060)
                                             ---------  ---------  --------  ---------
  Total international . . . . . . . . . . .     2,548      4,277      4,208      6,809
                                             ---------  ---------  --------  ---------

  Operating income. . . . . . . . . . . . .    25,981     22,375     49,491     43,223

Equity in earnings of
  unconsolidated affiliates . . . . . . . .       148        233        289        438
Minority interest . . . . . . . . . . . . .       (40)       (30)       (79)       (30)
Other income and expenses . . . . . . . . .    (2,564)      (370)    (3,846)      (795)
Income taxes. . . . . . . . . . . . . . . .     8,705      8,226     16,967     15,987
                                             ---------  ---------  --------  ---------
  Income from continuing operations . . . .  $ 14,820   $ 13,982   $ 28,888   $ 26,849
                                             =========  =========  ========  =========

Discontinued operations
  Property and casualty . . . . . . . . . .  $      -    $ (1,018)  $           (1,018)
  Life. . . . . . . . . . . . . . . . . . .         -       3,112                3,672
  Other income and expenses . . . . . . . .         -          (4)         -       (27)
  Income taxes. . . . . . . . . . . . . . .         -      (2,476)         -    (2,691)
                                             ---------  ----------  --------  ---------
  Discontinued operations, net. . . . . . .  $      -   $    (386)  $      -   $   (64)
                                             =========  ==========  ========  =========
POLICY MANAGEMENT SYSTEMS CORPORATION
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS

     The following discussion and analysis provides information which management
believes  is  relevant  to  an  assessment  and  understanding  of the Company's
consolidated  results  of  operations  and  financial condition.  The discussion
should  be  read  in  conjunction with the consolidated financial statements and
notes  thereto  contained  in  Part  I  of this report on Form 10-Q and with the
Company's  Annual  Report  on  Form  10-K  for the year ended December 31, 1998.

                              RESULTS OF OPERATIONS

     Set  forth  below  are certain operating items expressed as a percentage of
revenues and the percent increase (decrease) for those items between the periods
presented:
1999 vs. 1998
                                                                          Percent
                                       Percentage of Revenues      Increase (Decrease)
                                      ------------------------     ------------------
                                        Three           Six         Three      Six
                                       Months Ended   Months Ended  Months   Months
                                       June 30,       June 30,      Ended     Ended
                                     ------------   ------------
                                      1999   1998    1999   1998        June 30
                                     -----  -----   -----  -----  ------------------
Revenues
 Licensing . . . . . . . . . . . . .   24.7%   20.4%   23.5%   20.4%   44.1%   34.7%
 Services. . . . . . . . . . . . . .   75.3    79.6    76.5    79.6    12.5    12.5
                                      ------  ------  ------  ------
                                      100.0   100.0   100.0   100.0    19.0    17.0
                                      ------  ------  ------  ------
Operating expenses
 Cost of revenues
  Employee compensation and benefits   44.3    44.7    45.0    44.9    17.9    17.2
  Computer & communication expenses.    6.8     5.5     7.1     5.5    47.7    50.2
  Depreciation & amortization
   of property, equipment &
   capitalized software costs. . . .    9.9    11.0    10.0    11.1     7.6     5.4
  Other costs & expenses . . . . . .    5.4     4.5     5.0     4.5    42.2    31.2
 Selling, general &
   administrative expenses . . . . .   16.5    17.2    16.2    17.2    14.1    10.3
 Amortization of goodwill and
   other intangibles . . . . . . . .    2.0     1.7     2.0     1.7    39.1    33.1
                                      ------  ------  ------  ------
                                       84.9    84.6    85.3    84.9    19.5    17.5
                                      ------  ------  ------  ------
Operating income . . . . . . . . . .   15.1    15.4    14.7    15.1    16.1    14.5
Equity in earnings of unconsolidated
   affiliates. . . . . . . . . . . .    0.1     0.2     0.1     0.2   (36.5)  (34.0)
Other income and expenses. . . . . .   (1.5)   (0.2)   (1.2)   (0.3)  593.0   383.8
                                      ------  ------  ------  ------
Income from continuing operations
  before income taxes. . . . . . . .   13.7    15.4    13.6    15.0     5.9     7.0
Income taxes . . . . . . . . . . . .    5.1     5.7     5.1     5.6     5.8     6.1
                                      ------  ------  ------  ------
Income from continuing operations. .    8.6     9.7     8.5     9.4     6.0     7.6
Discontinued operations, net . . . .      -    (0.3)      -       -   100.0   100.0
                                      ------  ------  ------  ------
Net income . . . . . . . . . . . . .    8.6%    9.4%    8.5%    9.4%    9.0%    7.9%
                                      ======  ======  ======  ======
THREE MONTH COMPARISON

REVENUES
Three Months
                               Ended June 30,
                              --------------
  Licensing                    1999    1998   Change
                              -----   -----   ------
                              (Dollars in millions)
Initial charges. . . . . . .  $25.6   $13.0   97%
Monthly charges. . . . . . .   16.9    16.5    3
                              ------  ------
                              $42.5   $29.5   44%
                              ======  ======

Percentage of total revenues     25%     20%
                              ------  ------
In  licensing  the  Company's  products,  customers  generally  obligate
themselves  to a non-refundable initial license charge and a monthly license fee
payable  over  a  specified  period  of  time,  which  is  usually  six  years.

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

     Initial  license  charges increased $12.6 million for the second quarter of
1999  compared  with the second quarter of 1998, with the following increases by
business  segment:  property  and  casualty  up  306%  ($10.0 million); life and
financial  solutions  up  50%  ($1.9  million);  and  international up 12% ($0.7
million).

Initial  license  charges  for  the  second quarter of 1999 include right-to-use
licenses  of  $5.3  million.  This  compares  with  $2.1 million in right-to-use
licenses  for  the  second quarter of 1998.  Right-to-use licenses represent the
acquisition  by  certain  customers  of  the  right-to-use  component  of  their
remaining  monthly  license charge obligation, if any, plus the acquisition of a
perpetual  right-to-use  the  product thereafter.  Since these types of licenses
represent an acceleration of future revenues, they reduce future monthly license
charges.  The  Company  expects  the  occurrences of right-to-use licenses to be
minimal  in  the  future.

     Second  quarter  1999  initial  license  charges  include  $2.0  million of
licenses  to  the former owners of FAS, a BPO company acquired at the end of the
second  quarter.

     Two  remarketing agreements for Claim Outcome Adviser ("COA") totaling $3.5
million  are  included  in  initial  licensing revenue for the second quarter of
1999.  These  non-exclusive  agreements  provide two of the Company's nationally
recognized  vendors  the  right to relicense COA to the self-insured market. The
Company  also  renegotiated  with  one  of  these  vendors  an  extension to its
long-term  license  agreement  for operating software used in the Company's data
center.

Initial  license  charges  for  the  1999 second quarter include $1.7 million of
revenue  from the sale of hardware remarketed by the Company in conjunction with
licenses  of  its  software.
Monthly  license  charges  were  basically  flat  for the second quarter of 1999
compared  with  the  second  quarter  of  1998  with  the following increases or
decreases  by  business  segment:  property and casualty down 16% ($1.4 million)
due  to  weak  1998  licensing and the effect of right-to-use licenses; life and
financial  solutions  up  45%  ($1.5  million)  on  strong  1998 initial license
activity;  and  international  up  7% ($0.3 million)principally due to increased
licensing  revenues  in  the  Asia/Pacific  region.

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

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

Initial license revenues $25.6  $18.7  $27.3  $14.7  $13.0  $12.6  $25.1 $16.9
% of total revenues        15%    12%    16%    10%     9%     9%    17%   13%
Three Months
                                Ended June 30,
                               --------------
  Services                     1999    1998   Change
                              -----   -----   ------
                              (Dollars in millions)
Professional and outsourcing  $128.0   $114.1   12%
Other. . . . . . . . . . . .     1.8      1.3   38
                              -------  -------
                              $129.8   $115.4   13%
                              =======  =======

Percentage of total revenues      75%      80%
                              -------  -------
Professional  and  outsourcing services revenues increased $13.9 million for the
second  quarter  of  1999  compared  with  the  second quarter of 1998, with the
following  increases  by  business  segment:  property  and casualty up 2% ($1.3
million)  with strong growth in the Company's Point product related services and
outsourcing offset by the effect of weak 1998 licensing of the Company's S3+ and
the  redeployment  of  staff from customer's Y2K projects ending late last year;
life insurance and financial solutions up 42% ($10.9 million) due to strong 1998
initial  licensing  activity  particularly  in  banking; and international up 5%
($1.7  million)  due  principally  to  strong  growth in the Nordic region being
offset  by  decreases  in  the  UK,  Canada  and  Asia/Pacific  region.

The  Company  believes  that there is an increasing rate of change in technology
and in its marketplace due to the internet and the rapid adoption of e-commerce.
In  response  to  these  changes  the  Company  has  commenced  the  process  of
reassessing and challenging all major aspects of its business for the purpose of
evaluating  whether  it  is  correctly positioned to maximize its potential. The
results  of  this  process  and  the impact, if any, on the Company's results of
operations  are  unknown  at  this  time.
OPERATING  EXPENSES

COST OF REVENUES

     Employee  compensation and benefits increased 18% for the second quarter of
1999  compared  with  the  second  quarter  of  1998.  The  net increase results
principally from higher salaries and related costs associated with the growth in
professional  services staffing being somewhat offset by the transfer of certain
employee  costs  to  computer  and  communication  expenses  as  a result of the
Company's  data  center  outsourcing  agreement with Lockheed Martin Corporation
("Lockheed  Martin").  Had  these  employee  costs  not been transferred, second
quarter  1999  employee  compensation  and  benefits  would  have  increased 21%
compared  with  the  same period last year.  Compensation and benefits increased
15%  ($2.9  million)  internationally  and  19%  ($8.7  million)  domestically.

Computer  and  communications  expenses  increased 48% for the second quarter of
1999 compared with the second quarter of 1998.  However, at the beginning of the
third  quarter  of  1998,  the  Company  entered  into a data center outsourcing
agreement  with Lockheed Martin.  As a result, certain costs previously included
in  employee  compensation  and  benefits  are  now  included  in  computer  and
communications  expense.  Had  these employee costs not been transferred, second
quarter  1999  computer  and  communication  expense would have increased 26% by
comparison  with  the  same  period last year.  The savings from the outsourcing
agreement were offset by increased communications volumes, increased network and
PC  related  expenses  and  increased  license  fees  for  data center operating
software.

     Depreciation  of property and equipment increased 5% for the second quarter
of  1999  compared with the second quarter of 1998. Several elements within this
line  have  fluctuated,  but  none  are  individually  significant.

Amortization  of capitalized software costs increased 10% for the second quarter
of  1999 compared with the second quarter of 1998 due to various releases of the
Company's  internally  developed  software  products.

     Other  operating costs and expenses increased 42% for the second quarter of
1999  compared with the second quarter of 1998, principally due to the inclusion
of  $1.6 million of costs for computer hardware sold to customers in conjunction
with  software  licenses.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and administrative expenses increased 14% for the second
quarter  of 1999 compared with the second quarter of 1998, but declined slightly
as  a  percentage of revenue. Several elements within this line have fluctuated,
but  none  are  individually  significant.

AMORTIZATION  OF  GOODWILL  AND  OTHER  INTANGIBLES

     Amortization of goodwill and other intangibles increased 39% for the second
quarter  of  1999  compared  with the second quarter of 1998, principally due to
increased amortization related to the acquisition of The Leverage Group, Inc. in
the  third  quarter  of  1998  and  Legalgard  in  the  first  quarter  of 1999,
amortization  of  deferred costs associated with the Lockheed Martin data center
outsourcing  arrangement  and  contingent  consideration  related  to  prior
acquisitions  in  Europe.

OPERATING INCOME

     1999  second  quarter operating income increased 16% compared with the 1998
second  quarter.  Increases  or  decreases  in  segment  operating  income were:
property  and casualty increased 17%, life and financial solutions increased 41%
and  international  decreased 31%.  The increase in domestic operating income is
primarily  related  to  increases  in  initial  licensing  revenue, professional
services  and  outsourcing  revenues  being  somewhat offset by higher operating
costs which increased at a slower rate than the related revenue. The decrease in
international  operating  income  is  primarily  due  to  increased professional
services  expenses,  which  grew  at  a  faster  rate than the related revenues.

OTHER INCOME AND EXPENSE

     Other  income  and expense is comprised primarily of interest expense which
increased  $2.2  million for the second quarter of 1999 compared with the second
quarter  of  1998. This increase is due to higher levels of borrowed funds under
the  Company's  credit  facilities  which  were  incurred principally to finance
business  acquisitions  and  repurchases  of  the  Company's stock.  The average
nominal  interest  rate  applicable  to  borrowings  under  the Company's credit
facilities  during  the  second  quarter  of  1999  was  5.2%.

INCOME  TAXES

The effective income tax rate (income taxes expressed as a percentage of pre-tax
income)  was  37.0% for the second quarters of 1999 and 1998. The effective rate
for  the  second  quarter  of  1999  is  higher  than the federal statutory rate
principally  due  to  the  effect  of  state  and  local  income  taxes.

DISCONTINUED OPERATIONS

During  the  second  quarter  of  1998,  the  Company  sold its life information
services  segment.
SIX MONTH COMPARISON

REVENUES
Six Months
                              Ended June 30,
                              --------------
  Licensing                   1999    1998   Change
                              -----   -----   ------
                             (Dollars in millions)
Initial charges. . . . . . .  $44.3   $25.6   73%
Monthly charges. . . . . . .   34.2    32.6    5
                              ------  ------
                              $78.5   $58.2   35%
                              ======  ======

Percentage of total revenues     24%     20%
                              ------  ------
Initial  license  revenues increased $18.7 million for the first six months
of 1999 compared with the first six months of 1998, with the following increases
by  business  segment:  property  and casualty up 186% ($15.7 million); life and
financial  solutions  up  29%  ($2.0  million);  and  international  up 9% ($1.0
million).

Initial  license  charges  for the first six months of 1999 include right-to-use
licenses of $11.4 million compared with $7.0 million for the first six months of
1998.  Right-to-use  licenses  represent the acquisition by certain customers of
the right-to-use component of their remaining monthly license charge obligation,
if any, plus the acquisition of a perpetual right-to-use the product thereafter.
Since these types of licenses represent an acceleration of future revenues, they
reduce  future  monthly  license  charges. The Company expects the occurrence of
right-to-use  licenses  to  be  minimal  in  the  future.

     1999  six  month  initial license charges include a $2.9 million license to
the  former  owners  of  Legalgard. In addition, the former owners of FAS, a BPO
company  acquired  at  the  end  of  the second quarter, licensed several of the
Company's  life  and  financial  solutions  products  for  $2.0  million.

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

1999  six month license charges include $2.1 million of revenue from the sale of
hardware remarketed by the Company in conjunction with licenses of its software.

     Monthly  license charges increased $1.6 million for the first six months of
1999  compared with the first six months of 1998 with the following increases or
decreases  by  business  segment:  property and casualty down 15% ($2.7 million)
due  to  weak  1998  licensing and the effect of right-to-use licenses; life and
financial  solutions  up  49%  ($3.3  million)  on  strong  1998 initial license
activity;  and  international up 12% ($1.0 million) principally due to increased
licensing  revenues  in  the  Asia/Pacific  region.
Six Months
                              Ended June 30,
                             --------------
  Services                   1999    1998   Change
                             -----   -----   ------
                             (Dollars in millions)
Professional and outsourcing  $253.3   $224.9   13%
Other. . . . . . . . . . . .     2.1      2.2   (5)
                              -------  -------
                              $255.4   $227.1   13%
                              =======  =======

Percentage of total revenues      77%      80%
                              -------  -------
Professional  and  outsourcing services revenues increased $28.4 million for the
first  six  months  of 1999 compared with the first six months of 1998, with the
following  increases  by  business  segment:  property  and casualty up 3% ($3.3
million);  life  insurance  and  financial solutions up 41% ($20.3 million); and
international  up  7%  ($4.8  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.  1999  six month revenues
include  $1.6  million  for  professional  services  rendered  and  received  in
connection  with  the settlement of a dispute with a customer who has terminated
its  relationship  with  the  Company. Amounts paid by the Company in connection
with the resolution of this dispute were covered by insurance and existing legal
reserves  and  had  no  impact  on  the  Company's  operating  results.

OPERATING EXPENSES

COST OF REVENUES

     Employee  compensation  and benefits increased 17% for the first six months
of  1999  compared  with the first six months of 1998.  The net increase results
principally from higher salaries and related costs associated with the growth in
professional  services staffing being somewhat offset by the transfer of certain
employee  costs  to  computer  and  communication  expenses  as  a result of the
Company's  data  center  outsourcing  agreement with Lockheed Martin.  Had these
employee  costs  not  been transferred, 1999 six month employee compensation and
benefits  would have increased 20% by comparison with the same period last year.
Compensation  and  benefits increased 21% ($7.9 million) internationally and 16%
($14.1  million)  domestically.

Computer  and  communications expenses increased 50% for the first six months of
1999  compared with the first six months of 1998.  At the beginning of the third
quarter  of  1998,  the Company entered into a data center outsourcing agreement
with  Lockheed  Martin.  As  a  result,  certain  costs  previously  included in
employee  compensation  and  benefits  are  now  included  in  computer  and
communications  expense.  Had  these employee costs not been transferred, second
quarter  1999  computer  and  communication  expense would have increased 29% by
comparison  with  the  same  period last year.  The savings from the outsourcing
agreement were offset by increased communications volumes, increased network and
PC  related  expenses  and  increased  license  fees  for  data center operating
software.

     Depreciation  of  property  and equipment remained relatively unchanged for
the  first  six  months  of  1999  compared  with  the first six months of 1998.
Amortization of capitalized software costs increased 7% for the first six months
of  1999  compared  with the first six months of 1998 due to various releases of
the  Company's  internally  developed  software  products.

     Other  operating  costs and expenses increased 31% for the first six months
of  1999  compared  with  the  first  six months of 1998, principally due to the
inclusion  of  $1.9  million of costs for computer hardware sold to customers in
conjunction  with  software  licenses.  The corresponding revenue is included in
initial  licensing  revenue.

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

     Selling,  general  and  administrative expenses increased 10% for the first
six  months  of  1999  compared  with the first six months of 1998, but declined
slightly  as  a  percentage  of  revenue. Several elements within this line have
fluctuated,  but  none  are  individually  significant.

AMORTIZATION  OF  GOODWILL  AND  OTHER  INTANGIBLES

     Amortization  of goodwill and other intangibles increased 33% for the first
six  months  of 1999 compared with the first six months of 1998, principally due
to increased amortization related to the acquisition of The Leverage Group, Inc.
in  the  third  quarter  of  1998  and  Legalgard  in the first quarter of 1999,
amortization  of  deferred costs associated with the Lockheed Martin data center
outsourcing  arrangement  and  contingent  consideration  related  to  prior
acquisitions  in  Europe.

OPERATING  INCOME

     1999  six month operating income increased 15% compared with 1998 six month
operating  income.  Increases  or  decreases  in  segment operating income were:
property  and casualty increased 19%, life and financial solutions increased 31%
and  international  decreased 28%. The increase in operating income domestically
is  primarily  related  to increases in initial licensing, professional services
and  outsourcing  revenues while operating costs increased at a slower rate than
the  related  revenue.  The  decrease  internationally  is  due  to  increased
development  costs  and  a  lower  percentage  of  initial license revenues as a
component  of  total  revenue.

OTHER INCOME AND EXPENSE

     Other  income  and expense is comprised primarily of interest expense which
increased  $3.1 million for the first six months of 1999 compared with the first
six months of 1998, principally due to higher levels of borrowed funds under the
Company's  credit  facility  to finance business acquisitions and repurchases of
the Company's stock.  The average nominal interest rate applicable to borrowings
under  the  Company's  credit  facility  during the first six months of 1999 was
5.2%.
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  first  six  months  of 1999 and 1998,
respectively.  The  effective  rate  for  the first six months of 1999 is higher
than the federal statutory rate principally due to the effect of state and local
income  taxes.

DISCONTINUED OPERATIONS

During  the  second  quarter  of  1998,  the  Company  sold its life information
services  segment.

                         LIQUIDITY AND CAPITAL RESOURCES
June 30, December 31,
                                1999         1998
---------------------------------------------------------------------
                             (Dollars in millions)
Cash and equivalents, marketable
  securities, and investments. .  $ 45.1  $ 35.7
Current assets . . . . . . . . .   263.4   217.2
Current liabilities. . . . . . .   117.5    98.9
Working capital. . . . . . . . .   145.9   118.3
Long-term debt . . . . . . . . .   202.0    85.0
Six Months Ended
                                                June 30,
                                            1999         1998
--------------------------------------------------------------
                                         (Dollars in millions)
Cash provided by operations. . . . . . . . .  $  43.5   $ 66.4
Cash (used) by investing activities. . . . .   (130.9)   (36.5)
Cash provided (used) by financing activities     94.3    (37.1)
The Company's current ratio (current assets divided by current liabilities)
stood  at  2.2  at  June  30, 1999, which management believes is sufficient when
combined  with  available  credit facilities to provide for day-to-day operating
needs  and  the  flexibility  to take advantage of investment opportunities.  At
June  30,  1999,  the  Company  had $200 million of committed and $40 million of
uncommitted  credit facilities available to it, of which $231.0 million had been
utilized.  In  July 1999, the Company increased its committed facilities to $240
million  and  reduced  its uncommitted facilities to $20 million, resulting in a
$20  million net increase in borrowing capacity which increased its total credit
facilities  to  $260  million.

During  the  six  months  ended  June  30, 1999 the Company capitalized software
development  costs  of  $34.6 million, principally related to the development of
its  property  and casualty, life and international enterprise software products
and  e-commerce  and  banking  solutions.
Significant  expenditures  anticipated  for the remainder of 1999, excluding any
possible  business  acquisitions  or  common  stock repurchases, are as follows:
acquisition of computer and communications equipment, support software, building
improvements  and office furniture, fixtures and equipment and costs relating to
the  internal  development  of  software  systems.

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

                     FACTORS THAT MAY AFFECT FUTURE RESULTS

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

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

     The  timing and amount of the Company's revenues are subject to a number of
factors,  such as the timing of customers' decisions to enter into large license
agreements with the Company, which make estimation of operating results prior to
the end of a quarter or year extremely uncertain. Additionally, while management
believes  that  the Company's financing needs for the foreseeable future will be
satisfied  from  cash flows from operations and the Company's currently existing
credit  facilities, unforeseen events or adverse economic or business trends may
significantly increase cash demands beyond those currently anticipated or affect
the  Company's  ability  to  generate/raise  cash  to  satisfy  financing needs.
A  significant portion of both the Company's revenue and its operating income is
derived  from  initial  licensing  charges  received  as  part  of the Company's
software  licensing activities.  Because a substantial portion of these revenues
is  recorded  at  the  time  new  systems are licensed, there can be significant
fluctuations  from period to period in the revenues and operating income derived
from  licensing  activities.  This  is attributable principally to the timing of
customers'  decisions  to  enter into license agreements with the Company, which
the  Company  is  unable  to  control.  The  Company  believes  that current and
potential customers' decisions to enter into license agreements with the Company
may  be  significantly affected by strategies to make their existing information
systems  capable of handling the year 2000, however, at this time the Company is
unable  to  predict  what  the  future  impact,  if  any, will be. The Company's
licensing  revenues  have  included significant amounts of right-to-use licenses
and  the  Company  expects the occurrence of these licenses to be minimal in the
future.

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

YEAR 2000

General
-------

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

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

The  following  seven  phases  are  included in the Company's Year 2000 project:

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

     Significant  progress  has been made in all project phases, and the project
is  scheduled for completion during the third quarter of 1999.  After completion
of  the  project,  the  Company plans to continue to remediate products based on
vendor  compliance  updates  and  will  continue  to  perform redundant tests on
hardware  and  software  until  year  end.

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

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

     The  Company  has  updated  the  code  of  its primary product offerings to
process  dates  across  the century boundary.  Current testing has confirmed the
ability  of  the  applications  to  process  data in both centuries.  Additional
testing  on the Company's base products has been completed during the first half
of  1999  in  an  environment  that utilizes accelerated system dates (Year 2000
environment).  This  additional  testing  has  sought  to  confirm  that  no
unanticipated  problems  will  occur  due to third party products with which the
Company's  applications  are  designed  to  operate.

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

     The  Company  has  completed  Year  2000  application  code remediation for
customers  who  will  be  Business  Process  Outsourcing  ("BPO")/Information
Technology  Outsourcing  ("ITO")  customers  after  December  31,  1999.   Live
customer  data  that  spans  Year  2000  thresholds  is currently, and has been,
successfully  processed  by  these  remediated  applications  in  production
environments.  Additionally,  subsequent  tests  have  been  performed  on  our
customer  products  and  additional  redundant testing will continue to occur in
Year  2000  time  machine  environments  until  year  end 1999.  This testing is
designed to confirm that no unanticipated problems will occur due to third party
products  with  which  the  Company's  applications  are  designed  to  operate.

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

Internal  systems  consist primarily of third-party products used by the Company
for  its  internal  operations  which include data center hardware and software,
internal  financial  and human resource systems, and network and PC hardware and
software.  The  Company's  Blythewood data center has completed its hardware and
operating  software  inventory, assessments, remediation, and testing efforts in
order  to  satisfy  Year  2000  requirements.  Redundant  tests  for  Year  2000
compliance  of the hardware and operating software in the Blythewood data center
will  continue  until  year  end.

As  of July 1, 1998, Lockheed Martin took over the data processing equipment and
operational  control  of  the  Blythewood  data center and remaining remediation
efforts  will be coordinated with Lockheed Martin.  The Company's Australian and
European  data centers have completed their inventory and assessment of hardware
and  operating software for Year 2000 requirements.  Finalization of the project
for  all  data  centers was substantially completed by June 30, 1999, with minor
issues  scheduled for completion by the end of the third quarter.  Regardless of
project  completion  dates,  the  Company  will  continue to retest hardware and
software  until  year  end  1999.

In  1996,  the  Company  commenced  the  process  of  identifying, selecting and
implementing  an enterprise wide financial and human resources system to replace
its  existing  systems.  The  financial  components of the selected solution are
operational  and  the human resources functionality is currently scheduled to be
fully  operational  during  the  third  quarter of 1999.  This selected solution
meets  Year  2000  requirements.

     The  Company  has inventoried and assessed its networks and PC hardware and
software and has identified Year 2000 remediation upgrades that are required. As
a  secondary  measure, an internal test lab for verification of vendor claims of
Year  2000  compliance  for  core  systems  and  mission  critical  products was
established.  Remediation  efforts  of  internal  systems  are  schedule  to  be
completed  by  October,  1999.

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

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

The  Company's  ability  to  operate  is dependent on relationships with certain
suppliers  and  trading  partners,  such  as  electric  utilities  and telephone
companies,  who  provide  services  to  the  Company's  various offices and data
centers  ("mission  critical suppliers and trading partners").  Mission critical
suppliers  and  trading partners have been identified and tests of most of these
interfaces,  to  the  extent  practical,  have  been  performed  in  a Year 2000
environment.  The  Company's  ability  to  influence  cooperation  is  partially
dependent  on  the significance of the Company's relationship with its suppliers
and  trading  partners  and  their  willingness  to share such information.  The
Company  has  substantially  completed  this  phase  of  its Year 2000 readiness
project.

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

     Since  1993, the Company estimates that it has incurred approximately $17.4
million  of costs in addressing Year 2000 remediation issues and will anticipate
spending  approximately $1.5 million during the remainder of 1999.  Based on the
Company's  experience  to date, it is not anticipated that the completion of the
remaining Year 2000 remediation efforts will have a material adverse effect upon
the  Company's  financial  position or results of operations. The Company's past
and  anticipated  future  remediation  costs  are  funded  by  operations.

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

The  Company's  products  are  designed  to  be used with and require the use of
third-party  products, such as operating systems and compilers.  Also, customers
often modify the Company's products to suit their unique requirements.  If these
third  parties  experience Year 2000 failures of their products, or if customers
experience  system  failures  as  a  result  of their modifications or for other
reasons,  the Company could become involved in disputes or litigation related to
the  cause  of  such  system  failures.
In  addition, the failure to correct material Year 2000 problems could result in
an  interruption  in,  or  a  failure  of, certain normal business activities or
operations  and litigation.  Such failures could materially and adversely affect
the  Company's  results  of  operations,  liquidity  and  financial  condition.
Furthermore,  there  is  a general uncertainty inherent in the Year 2000 problem
stemming,  in  part,  from  the  uncertainty  of  the  Year  2000  readiness  of
third-party  suppliers  and  the  Company's customers and prospective customers.
For  these  reasons, the Company is unable to determine at this time whether the
consequences  of Year 2000 failures will have a material impact on the Company's
results  of operations, liquidity or financial condition.  The Year 2000 Project
is expected to significantly reduce the Company's level of uncertainty about the
Year  2000  problem  and,  in  particular,  about  the  Year 2000 compliance and
readiness  of  its mission critical suppliers and trading partners.  The Company
believes that, with the implementation of new business systems and completion of
the Project as scheduled, the possibility of significant interruptions of normal
operations  should  be  reduced.

The  Company  is  in the process of finalizing contingency plans to minimize the
effect  of  such  disruptions.

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

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

                      POLICY MANAGEMENT SYSTEMS CORPORATION

ITEM 1.  LEGAL PROCEEDINGS

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

ITEMS 2, 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 11, 1999, the
Company's stockholders approved:  (i) the election of two directors, Dr. John M.
Palms  (30,576,293  votes  for  and  109,588  withheld)  and  John  P.  Seibels
(30,576,293 votes for and 109,588 withheld) to serve a term of three years; (ii)
the  approval  of the 1999 Stock Option Plan (24,219,907 votes for and 6,465,472
withheld);  and  (iii)  the  ratification  of  the  selection  of
PricewaterhouseCoopers,  LLP  as  independent auditors (30,673,379 votes for and
12,001  withheld).
The  following  directors'  terms  continued  through the 1999 Annual Meeting of
Stockholders:  Alfred  R. Berkeley, III, Donald W. Feddersen, Joseph D. Sargent,
Richard  G.  Trub,  and  G.  Larry  Wilson.

ITEM 5 is not applicable.

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

Exhibits

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

Reports  on  Form  8-K

     The Company did not file any reports on Form 8-K during the quarter ended
June 30, 1999.
POLICY MANAGEMENT SYSTEMS CORPORATION

                                   SIGNATURES

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

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

Date:  August 16, 1999     Timothy V. Williams
     Executive Vice President
     (Chief Financial Officer)
POLICY MANAGEMENT SYSTEMS CORPORATION
                                  EXHIBIT INDEX

Exhibit
Number

3.     ARTICLES  OF  INCORPORATION  AND  BY-LAWS

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

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

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

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

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

10.     MATERIAL  CONTRACTS

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

EE.     Form  of  Restricted  Stock  Award  Agreement dated August 11, 1998 with
Messrs.  Berkeley,  Feddersen,  Palms,  Sargent,  Seibels  and Trub (filed as an
exhibit  to  Form  10-Q  for  the  quarter  ended  September  30,  1998  and  is
incorporated  herein  by  reference)
FF.     Memorandum  of  Amendment  of  Employment  Agreement with Paul R. Butare
dated  December  10,  1998  (filed as an exhibit to Form 10-K for the year ended
December  31,  1998  and  is  incorporated  herein  by  reference)

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

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

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

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

KK.     Stock  Option/Non-Compete  Form  Agreement  for named executive officers
together with schedule identifying particulars for each named executive officers
(filed  herewith)

LL.     Stock  Option/Non-Compete Agreement with Michael W. Risley dated May 11,
1999  (filed  herewith)

MM.     Form  of  1999  Bonus  Plan  for  named executive officers together with
schedule  identifying  particulars  for  each  named  executive  officer  (filed
herewith)

27.     FINANCIAL  DATA  SCHEDULES

A.     Six  Months  Ended  June  30,  1999  filed  herewith (EDGAR version only)