SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                     -----------------------

                            FORM 8-K
                                
                         Current Report
   Pursuant to Section 13 or 15(d) of the Securities Exchange
                           Act of 1934
                                
                                
        Date of Report (date of earliest event reported)
                                
                                
                        February 25, 1997
                                
                                
                 HIGHLANDS INSURANCE GROUP, INC.
  ------------------------------------------------------------
     (Exact name of registrant as specified in its charter)
                                
                                
                            Delaware
  ------------------------------------------------------------
         (State or Other Jurisdiction of Incorporation)

     1-14028                            75-2370945
  ------------------------------------------------------------
  (Commission File Number)

   (IRS Employee Identification No.)

     10370 Richmond Avenue, Houston, Texas    77042-4123
  ------------------------------------------------------------
    (Address of principal executive offices)  (Zip Code)

                          (713)952-9555
  ------------------------------------------------------------
     Registrant's telephone number, including area code
















ITEM 5.  Other Events

      The registrant, may at its option, report under this
item any events, with respect to which information is not
otherwise called for by this form, that the registrant
deems of importance to security holders.
    (a) On February 25, 1997, the registrant, Highlands
Insurance Group, Inc. ("Highlands") issued a press release
entitled "Highlands Insurance Group, Inc. Announces Fourth
Quarter 1996 Results."

ITEM 7.

The following exhibit is filed with this report on Form 8-K:

Exhibit 1 - Press release dated February 25, 1997

                         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
hereunto duly authorized.

                         HIGHLANDS INSURANCE GROUP, INC.


March 1, 1997             By:  /s/  DWAYNE D. HALLMAN
                              --------------------------
                              Dwayne D. Hallman
                              Vice President and Secretary

                        EXHIBIT INDEX
EXHIBIT NO.1     Press Release of February 25, 1997
                 Incorporated by Reference

EXHIBIT NO. 1:

FOR IMMEDIATE RELEASE

Contact:  Charles J. Bachand
Vice President
(713)267-8567
(713)267-8688 (Facsimile

                 HIGHLANDS INSURANCE GROUP, INC.
            ANNOUNCES FOURTH QUARTER 1996 RESULTS

     Houston, Texas  -  February 25, 1997 - Highlands Insurance
Group, Inc. (NYSE:HIC), a regional property and casualty insurer,
today announced its fourth quarter 1996 results.  Highlands
reported a net loss of $3.3 million or $.29 per share for the
fourth quarter 1996 compared with a net loss of $2.7 million or
$.23 per share for the fourth quarter 1995.  For the year ended
December 31, 1996, Highlands sustained a loss of $5.3 million or
$.47 per share compared with a net loss of $120.7 million or
$10.55 per share for the same period of 1995.
     
     The fourth quarter 1996 results include a pre-tax reserve
strengthening charge amounting to $12.0 million primarily related
to asbestos, environmental, mass tort and assumed reinsurance
treaties.  Additionally, the fourth quarter includes a $1.0
million pre-tax increase to legal reserves for the settlement of
Proposition 103 and a $1.8 million reduction of net premiums
earned related to prior years reinsurance treaties.  Highlands
recorded an $11.7 million tax benefit associated with these
charges.
     
     Net premiums written declined 27.6% and 33.0% for the fourth
quarter and year ended December 31, 1996, respectively, compared
with the same 1995 periods.  These declines result from exiting
the assumed reinsurance and probate bond business, tightening
underwriting standards, raising rates and declines in premiums
due under retrospective policies.  Net premiums earned declined
18.8%  and 24.5% for the fourth quarter and year ended December
31, 1996, respectively, compared with the same 1995 periods and
are impacted by the above items.

     "Reported results continue to show losses as we continue to
strengthen Highlands' balance sheet.  We are making progress
toward our goal of achieving an underwriting profit.  During
1996, our clean up efforts resulted in $35.9 million of pre-tax
charges for prior year items including prior years loss reserve
charges of $22.9 million.  We enter 1997 with our major legal
issues (Proposition 103 and Weatherford Roofing) behind us and a
much stronger balance sheet," said Richard M. Haverland, Chairman
and Chief Executive Officer of Highlands.

     Highlands Insurance Group, Inc. is a Texas based regional
insurer that was spun off from Halliburton Company in January
1996, in a transaction sponsored by Insurance Partners, L.P.  At
that time, Insurance Partners, L.P. and Highlands' management
invested $62.8 million in the Company.  Highlands specializes in
workers' compensation and related coverages in Texas and
Louisiana.




      "Safe Harbor" Statement under Private Securities Litigation
Reform Act of 1995

      Certain  sections of this press release contain  statements
which  represent the company's expectations or beliefs concerning
future  events  and are "forward looking statements"  within  the
meaning of Section 21E of the Exchange Act.  The company cautions
that  there  are  a  variety of factors which  may  cause  actual
results  to  differ materially from those in the forward  looking
statements,   including  without  limitation,  changes   in   the
regulatory   environment,  the  outcome  of  various   litigation
matters,  market acceptance of new products, and  the  effect  of
general economic conditions.



Comparative figures follow
<TABLE>

                HIGHLANDS INSURANCE GROUP, INC.
             CONSOLIDATED STATEMENTS OF OPERATIONS
             (In thousands, except per share data)
<CAPTION>
                                                                                                                
                               Periods Ended December 31                       
                              ---------------------------                      
                                      (Unaudited)                              
                       Fourth Quarter                Year Ended
                       ---------------              -------------
                   1996     1995    Change     1996      1995     Change
                   ----     ----    ------     ----      ----     ------
<S>              <C>      <C>      <C>      <C>        <C>        <C>

Gross premiums                                                   
 written (a)     $37,181  48,570   (23.4%)  $158,546    234,375   (32.4%)
Net premiums                                                     
 written (a)     $25,875  35,734   (27.6%)  $135,051    201,565   (33.0%)
                 =======  ======   ======   ========   ========   ======
                                                                 
REVENUES:                                                        
 Net premiums                                                    
  earned         $30,137   37,120   (18.8%)  $152,048  201,446   (24.5%)
 Net investment                                                  
  income          13,111   11,908    10.1%     50,988   48,529     5.1%
 Net realized                                                    
  investment                                                     
  gains              278      524   (46.9%)     1,199    2,618   (54.2%)
                 -------   ------            --------  -------  
                                                                 
  Total                                                          
     revenues     43,526   49,552   (12.2%)   204,235  252,593   (19.1%)
                 -------   ------             -------  -------  
                                                                 
EXPENSES:                                                        
 Loss and loss                                                   
  adjustment                                                     
  expense         42,446   33,464    26.8%    156,589  300,253   (47.8%)
 Underwriting                                                    
  expenses        14,203   18,786   (24.4%)    56,487   73,905   (23.6%)
Other expenses                                                      
  (income),net     1,837      (21)    NM        8,600     (823)      NM
                 -------   -------            -------   -------  
                                                                 
  Total expenses                                                 
                  58,486   52,229    12.0%    221,676   373,335  (40.6%)
                 -------  -------             -------   -------  
                                                                 
INCOME (LOSS)                                                        
 BEFORE INCOME                                                       
 TAX             (14,960) (2,677)     NM      (17,441) (120,742)    NM
INCOME TAX                                                           
 EXPENSE                                                             
 (BENEFIT) (b)   (11,676)    -        NM      (12,098)     -        NM
                  ------  ------              -------   -------      
 NET INCOME                                                          
 (LOSS)          $(3,284) (2,677)    22.7%    $(5,343)  (120,742)    NM
                 ======= =======              =======    =======  
                                                                 
Earnings (loss)                                                  
 per share (c)   $ (0.29)  (.23)              $ (0.47)    (10.55)
                  ====== ======                ======     ======  
                                                                 
GAAP ratios:                                                     
 Loss             140.8%   90.2%                103.0%    149.2%    
 Expense           47.1%   50.6%                 37.2%     36.7%     
                 ------  ------                ------    ------    
  Combined        187.9%  140.8%                140.2%    185.9%    
</TABLE>
a)    Gross premiums and net premiums written have been redefined
      for all periods presented to include the effects of changes  in
      premiums  due under retrospective policies.  Such changes  were
      previously recorded only as net premiums earned.

b)    The Company provides for income taxes on its statements  of
      operations pursuant to SFAS 109, "Accounting for Income  Taxes"
      (SFAS  109).  With respect to losses for periods preceding  the
      spin off (January 23, 1996), no tax benefit was recorded in the
      statements  of  operations pursuant  to  SFAS     109  and  the
      Company's  tax-sharing  arrangement  with  its  former  parent,
      Halliburton Company.  Tax receipts under its intercompany  tax-
      sharing  arrangements with it former parent  were  recorded  as
      additions to stockholders' equity for the periods preceding the
      spin off.

c)   Common stock warrants and stock options are considered to be
     antidilutive for primary and fully dilutive earning per share for
     each of the periods presented.  Earnings per share for 1995 have
     been  computed  based upon 11,448,430 shares of Company  common
     stock distributed on January 23, 1996.
     
[CAPTION]
                 HIGHLANDS INSURANCE GROUP, INC.
                   CONSOLIDATED BALANCE SHEETS
              (In thousands, except per share data)
[CAPTION]
                                
                                                December 31,
                                              ----------------
                                              1996        1995
                                              ----        ----        
                                                 (Unaudited)
[S]                                         [C]         [C]

Assets:  
Investments:                                               
  Fixed income securities:                                 
   Available for sale, at fair value         $  324,905    227,509
  Held to maturity, at amortized cost           355,492    374,364
 Equity securities, at fair value                26,967     33,697
 Other                                            3,770       -
                                             ----------  ---------
       Total investments                        711,134    635,570
                                                         
Cash and cash equivalents                        49,484     85,176
Premiums in course of collection                 24,048     40,959
Premiums due under retrospective                           
 policies                                       121,276    134,428
Receivable from reinsurers                      556,900    602,380
Funds on deposit with reinsurers                 14,456     15,449
Deferred taxes                                   37,126     29,534
Receivable from former affiliates                   250     41,255
Accrued investment income                        12,600     11,131
Deferred policy acquisition costs                 6,436     11,744
Other assets                                     32,321     28,465
                                             ----------  ---------
       Total assets                          $1,566,031  1,636,091
                                             ==========  =========
                                                        
Liabilities:                                            
Loss and loss adjustment expense             $1,156,824  1,253,627
Unearned premiums                                31,474     52,571
Convertible subordinated debentures              55,452       -
Other liabilities                                58,806     62,783
                                             ----------  ---------
       Total liabilities                      1,302,556  1,368,981
                                             ----------  ---------
                                                           
Stockholders' equity:                                       
  Common stock                                      114      1,000
  Additional paid-in capital                    192,273    184,168
  Net unrealized gain on investments              3,036      8,547
  Retained earnings                              68,052     73,395
                                             ----------  ---------
       Total stockholders' equity               263,475    267,110
                                             ----------  ---------
       Total liabilities and stockholders'                
          equity                             $1,566,031  1,636,091
                                             ==========  =========
                                                         
Common shares outstanding - proforma for                 

 December 31, 1995                               11,448     11,448
                                             ==========  =========
                                                         
Book value per common share                  $    23.02      23.33
                                             ==========  =========
                                                         
Fully diluted book value per common                
  share (1)                                  $    18.71      NA
                                             ==========  =========
[/TABLE]
                                
(1)  Warrant exercise price at December 31, 1996 reduced by $1.80
     per share due to the reserve  development adjustment mechanism.
[{"type": "8-K", "sequence": "1", "secsgml_size_bytes": 16406}]
{"company-data": {"conformed-name": "HIGHLANDS INSURANCE GROUP INC", "cik": "0001002816", "assigned-sic": "6331", "irs-number": "752370945", "state-of-incorporation": "DE", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "001-14028", "film-number": "97549610"}, "business-address": {"street1": "10370 RICHMOND AVE", "city": "HOUSTON", "state": "TX", "zip": "77042-4123", "phone": "7139529555"}, "mail-address": {"street1": "10370 RICHMOND AVE", "city": "HOUSTON", "state": "TX", "zip": "77042-4123"}}
SECURITIES AND EXCHANGE COMMISSION
                     Washington, D.C. 20549
                     -----------------------

                            FORM 8-K
                                
                         Current Report
   Pursuant to Section 13 or 15(d) of the Securities Exchange
                           Act of 1934
                                
                                
        Date of Report (date of earliest event reported)
                                
                                
                        February 25, 1997
                                
                                
                 HIGHLANDS INSURANCE GROUP, INC.
  ------------------------------------------------------------
     (Exact name of registrant as specified in its charter)
                                
                                
                            Delaware
  ------------------------------------------------------------
         (State or Other Jurisdiction of Incorporation)

     1-14028                            75-2370945
  ------------------------------------------------------------
  (Commission File Number)

   (IRS Employee Identification No.)

     10370 Richmond Avenue, Houston, Texas    77042-4123
  ------------------------------------------------------------
    (Address of principal executive offices)  (Zip Code)

                          (713)952-9555
  ------------------------------------------------------------
     Registrant's telephone number, including area code

ITEM 5.  Other Events

      The registrant, may at its option, report under this
item any events, with respect to which information is not
otherwise called for by this form, that the registrant
deems of importance to security holders.
    (a) On February 25, 1997, the registrant, Highlands
Insurance Group, Inc. ("Highlands") issued a press release
entitled "Highlands Insurance Group, Inc. Announces Fourth
Quarter 1996 Results."

ITEM 7.

The following exhibit is filed with this report on Form 8-K:

Exhibit 1 - Press release dated February 25, 1997

                         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
hereunto duly authorized.

                         HIGHLANDS INSURANCE GROUP, INC.

March 1, 1997             By:  /s/  DWAYNE D. HALLMAN
                              --------------------------
                              Dwayne D. Hallman
                              Vice President and Secretary

                        EXHIBIT INDEX
EXHIBIT NO.1     Press Release of February 25, 1997
                 Incorporated by Reference

EXHIBIT NO. 1:

FOR IMMEDIATE RELEASE

Contact:  Charles J. Bachand
Vice President
(713)267-8567
(713)267-8688 (Facsimile

                 HIGHLANDS INSURANCE GROUP, INC.
            ANNOUNCES FOURTH QUARTER 1996 RESULTS

     Houston, Texas  -  February 25, 1997 - Highlands Insurance
Group, Inc. (NYSE:HIC), a regional property and casualty insurer,
today announced its fourth quarter 1996 results.  Highlands
reported a net loss of $3.3 million or $.29 per share for the
fourth quarter 1996 compared with a net loss of $2.7 million or
$.23 per share for the fourth quarter 1995.  For the year ended
December 31, 1996, Highlands sustained a loss of $5.3 million or
$.47 per share compared with a net loss of $120.7 million or
$10.55 per share for the same period of 1995.
     
     The fourth quarter 1996 results include a pre-tax reserve
strengthening charge amounting to $12.0 million primarily related
to asbestos, environmental, mass tort and assumed reinsurance
treaties.  Additionally, the fourth quarter includes a $1.0
million pre-tax increase to legal reserves for the settlement of
Proposition 103 and a $1.8 million reduction of net premiums
earned related to prior years reinsurance treaties.  Highlands
recorded an $11.7 million tax benefit associated with these
charges.
     
     Net premiums written declined 27.6% and 33.0% for the fourth
quarter and year ended December 31, 1996, respectively, compared
with the same 1995 periods.  These declines result from exiting
the assumed reinsurance and probate bond business, tightening
underwriting standards, raising rates and declines in premiums
due under retrospective policies.  Net premiums earned declined
18.8%  and 24.5% for the fourth quarter and year ended December
31, 1996, respectively, compared with the same 1995 periods and
are impacted by the above items.

     "Reported results continue to show losses as we continue to
strengthen Highlands' balance sheet.  We are making progress
toward our goal of achieving an underwriting profit.  During
1996, our clean up efforts resulted in $35.9 million of pre-tax
charges for prior year items including prior years loss reserve
charges of $22.9 million.  We enter 1997 with our major legal
issues (Proposition 103 and Weatherford Roofing) behind us and a
much stronger balance sheet," said Richard M. Haverland, Chairman
and Chief Executive Officer of Highlands.

     Highlands Insurance Group, Inc. is a Texas based regional
insurer that was spun off from Halliburton Company in January
1996, in a transaction sponsored by Insurance Partners, L.P.  At
that time, Insurance Partners, L.P. and Highlands' management
invested $62.8 million in the Company.  Highlands specializes in
workers' compensation and related coverages in Texas and
Louisiana.

      "Safe Harbor" Statement under Private Securities Litigation
Reform Act of 1995

      Certain  sections of this press release contain  statements
which  represent the company's expectations or beliefs concerning
future  events  and are "forward looking statements"  within  the
meaning of Section 21E of the Exchange Act.  The company cautions
that  there  are  a  variety of factors which  may  cause  actual
results  to  differ materially from those in the forward  looking
statements,   including  without  limitation,  changes   in   the
regulatory   environment,  the  outcome  of  various   litigation
matters,  market acceptance of new products, and  the  effect  of
general economic conditions.

Comparative figures follow

                HIGHLANDS INSURANCE GROUP, INC.
             CONSOLIDATED STATEMENTS OF OPERATIONS
             (In thousands, except per share data)
Periods Ended December 31                       
                              ---------------------------                      
                                      (Unaudited)                              
                       Fourth Quarter                Year Ended
                       ---------------              -------------
                   1996     1995    Change     1996      1995     Change
                   ----     ----    ------     ----      ----     ------
Gross premiums                                                   
 written (a)     $37,181  48,570   (23.4%)  $158,546    234,375   (32.4%)
Net premiums                                                     
 written (a)     $25,875  35,734   (27.6%)  $135,051    201,565   (33.0%)
                 =======  ======   ======   ========   ========   ======
                                                                 
REVENUES:                                                        
 Net premiums                                                    
  earned         $30,137   37,120   (18.8%)  $152,048  201,446   (24.5%)
 Net investment                                                  
  income          13,111   11,908    10.1%     50,988   48,529     5.1%
 Net realized                                                    
  investment                                                     
  gains              278      524   (46.9%)     1,199    2,618   (54.2%)
                 -------   ------            --------  -------  
                                                                 
  Total                                                          
     revenues     43,526   49,552   (12.2%)   204,235  252,593   (19.1%)
                 -------   ------             -------  -------  
                                                                 
EXPENSES:                                                        
 Loss and loss                                                   
  adjustment                                                     
  expense         42,446   33,464    26.8%    156,589  300,253   (47.8%)
 Underwriting                                                    
  expenses        14,203   18,786   (24.4%)    56,487   73,905   (23.6%)
Other expenses                                                      
  (income),net     1,837      (21)    NM        8,600     (823)      NM
                 -------   -------            -------   -------  
                                                                 
  Total expenses                                                 
                  58,486   52,229    12.0%    221,676   373,335  (40.6%)
                 -------  -------             -------   -------  
                                                                 
INCOME (LOSS)                                                        
 BEFORE INCOME                                                       
 TAX             (14,960) (2,677)     NM      (17,441) (120,742)    NM
INCOME TAX                                                           
 EXPENSE                                                             
 (BENEFIT) (b)   (11,676)    -        NM      (12,098)     -        NM
                  ------  ------              -------   -------      
 NET INCOME                                                          
 (LOSS)          $(3,284) (2,677)    22.7%    $(5,343)  (120,742)    NM
                 ======= =======              =======    =======  
                                                                 
Earnings (loss)                                                  
 per share (c)   $ (0.29)  (.23)              $ (0.47)    (10.55)
                  ====== ======                ======     ======  
                                                                 
GAAP ratios:                                                     
 Loss             140.8%   90.2%                103.0%    149.2%    
 Expense           47.1%   50.6%                 37.2%     36.7%     
                 ------  ------                ------    ------    
  Combined        187.9%  140.8%                140.2%    185.9%
a)    Gross premiums and net premiums written have been redefined
      for all periods presented to include the effects of changes  in
      premiums  due under retrospective policies.  Such changes  were
      previously recorded only as net premiums earned.

b)    The Company provides for income taxes on its statements  of
      operations pursuant to SFAS 109, "Accounting for Income  Taxes"
      (SFAS  109).  With respect to losses for periods preceding  the
      spin off (January 23, 1996), no tax benefit was recorded in the
      statements  of  operations pursuant  to  SFAS     109  and  the
      Company's  tax-sharing  arrangement  with  its  former  parent,
      Halliburton Company.  Tax receipts under its intercompany  tax-
      sharing  arrangements with it former parent  were  recorded  as
      additions to stockholders' equity for the periods preceding the
      spin off.

c)   Common stock warrants and stock options are considered to be
     antidilutive for primary and fully dilutive earning per share for
     each of the periods presented.  Earnings per share for 1995 have
     been  computed  based upon 11,448,430 shares of Company  common
     stock distributed on January 23, 1996.
     
[CAPTION]
                 HIGHLANDS INSURANCE GROUP, INC.
                   CONSOLIDATED BALANCE SHEETS
              (In thousands, except per share data)
[CAPTION]
                                
                                                December 31,
                                              ----------------
                                              1996        1995
                                              ----        ----        
                                                 (Unaudited)
[S]                                         [C]         [C]

Assets:  
Investments:                                               
  Fixed income securities:                                 
   Available for sale, at fair value         $  324,905    227,509
  Held to maturity, at amortized cost           355,492    374,364
 Equity securities, at fair value                26,967     33,697
 Other                                            3,770       -
                                             ----------  ---------
       Total investments                        711,134    635,570
                                                         
Cash and cash equivalents                        49,484     85,176
Premiums in course of collection                 24,048     40,959
Premiums due under retrospective                           
 policies                                       121,276    134,428
Receivable from reinsurers                      556,900    602,380
Funds on deposit with reinsurers                 14,456     15,449
Deferred taxes                                   37,126     29,534
Receivable from former affiliates                   250     41,255
Accrued investment income                        12,600     11,131
Deferred policy acquisition costs                 6,436     11,744
Other assets                                     32,321     28,465
                                             ----------  ---------
       Total assets                          $1,566,031  1,636,091
                                             ==========  =========
                                                        
Liabilities:                                            
Loss and loss adjustment expense             $1,156,824  1,253,627
Unearned premiums                                31,474     52,571
Convertible subordinated debentures              55,452       -
Other liabilities                                58,806     62,783
                                             ----------  ---------
       Total liabilities                      1,302,556  1,368,981
                                             ----------  ---------
                                                           
Stockholders' equity:                                       
  Common stock                                      114      1,000
  Additional paid-in capital                    192,273    184,168
  Net unrealized gain on investments              3,036      8,547
  Retained earnings                              68,052     73,395
                                             ----------  ---------
       Total stockholders' equity               263,475    267,110
                                             ----------  ---------
       Total liabilities and stockholders'                
          equity                             $1,566,031  1,636,091
                                             ==========  =========
                                                         
Common shares outstanding - proforma for                 

 December 31, 1995                               11,448     11,448
                                             ==========  =========
                                                         
Book value per common share                  $    23.02      23.33
                                             ==========  =========
                                                         
Fully diluted book value per common                
  share (1)                                  $    18.71      NA
                                             ==========  =========
[/TABLE]
                                
(1)  Warrant exercise price at December 31, 1996 reduced by $1.80
     per share due to the reserve  development adjustment mechanism.