AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 1, 1998

                           REGISTRATION NO. 333-_____
-------------------------------------------------------------------------------


                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               ------------------


                                    FORM S-8
                             REGISTRATION STATEMENT
                                      Under
                           THE SECURITIES ACT OF 1933

                               ------------------


                         HIGHLANDS INSURANCE GROUP, INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                               ------------------


                               DELAWARE 75-2370945
     (State or Other Jurisdiction of (I.R.S. Employer Identification Number)
                         Incorporation or Organization)

                           STEPHEN J. GREENBERG, ESQ.
                  VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
                         HIGHLANDS INSURANCE GROUP, INC.
                                1000 LENOX DRIVE
                         LAWRENCEVILLE, NEW JERSEY 08648
                                 (609) 896-1921
  (Address, including ZIP code, and telephone number, including area code, of
                   registrant's principal executive offices)

          HIGHLANDS INSURANCE GROUP, INC. EMPLOYEE STOCK PURCHASE PLAN

     HIGHLANDS INSURANCE GROUP, INC. EMPLOYEES' RETIREMENT AND SAVINGS PLAN
                             (Full Titles of Plans)

                           STEPHEN J. GREENBERG, ESQ.
                  VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
                         HIGHLANDS INSURANCE GROUP, INC.
                                1000 LENOX DRIVE
                         LAWRENCEVILLE, NEW JERSEY 08648
                                 (609) 896-1921
    (Name, address, including ZIP code, and telephone number, including area
                          code, of agent for service)

                               ------------------

                                   Copies to:

                             ALAN H. LIEBLICH, ESQ.
                       SCHNADER HARRISON SEGAL & LEWIS LLP
                               1600 MARKET STREET
                                   SUITE 3600
                             PHILADELPHIA, PA 19103
                                 (215) 751-2048



<PAGE>

<TABLE>

                                          CALCULATION OF REGISTRATION FEE
<CAPTION>
<S>                                     <C>                   <C>                    <C>                  <C>            
                                                                                   Proposed
                                                                 Maximum             Maximum               Amount of
     Title of Securities to Be           Amount to Be        Offering Price     Aggregate Offering       Registration
            Registered                  Registered(1)         per Share(2)          Price(2)                 Fee
-----------------------------------  -------------------- -------------------- ------------------------ -------------------
Common Stock, par value $.01
per share.......                        500,000               $20.000                $10,000,000           $2,950

</TABLE>


(1)      In addition,  pursuant to Rule 416(c) under the Securities Act of 1933,
         as amended,  this  registration  statement also covers an indeterminate
         amount  of  plan  interests  to be  offered  or  sold  pursuant  to the
         Employees'  Retirement  and  Savings  Plan to which  this  registration
         statement relates.

(2)      Estimated  upon the basis of the  average of the high and low prices of
         the Common  Stock on the New York Stock  Exchange on May 28 1998 solely
         for  purposes of  calculating  the  registration  fee  pursuant to Rule
         457(h) of the Securities Act of 1933, as amended.


<PAGE>



                                     PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.   INCORPORATION OF DOCUMENTS BY REFERENCE.

     The following documents filed with the Commission by Highlands
Insurance Group, Inc. (the "Company") are incorporated herein by reference:

          (a)  The Company's Annual Report on Form 10-K for the year ended
December 31, 1997.

          (b)  The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998.

          (c)  The  description  of the  Common  Stock  contained  in the
Company's Registration  Statement on Form 10 filed on October 27, 1995, as such
Registration Statement  may be  amended  from  time to  time  for  purposes  of
updating, changing or modifying such description.

     All  documents  subsequently  filed  by the  Company  with the
Commission  pursuant to Sections  13(a),  13(c),  14 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),  prior to the filing of a
post-effective amendment to this Registration Statement which indicates that all
securities  offered  have  been  sold or which  registers  all  securities  then
remaining  unsold,  shall be  deemed to be  incorporated  by  reference  in this
Registration  Statement  and to be a part  hereof  from the  respective  date of
filing of each such document.

ITEM 4.   DESCRIPTION OF SECURITIES.

          Not applicable.

ITEM 5.   INTERESTS OF NAMED EXPERTS AND COUNSEL.

          Not applicable.

ITEM 6.   INDEMNIFICATION OF DIRECTORS AND OFFICERS.

          Section  102 of the  Delaware  General  Corporation  Law  (the
"DGCL") allows a corporation to eliminate the personal liability of directors of
a corporation  to the  corporation  or to any of its  stockholders  for monetary
damage  for a breach of his  fiduciary  duty as a  director,  except in the case
where the director  breached  his duty of loyalty,  failed to act in good faith,
engaged in intentional  misconduct or knowingly  violated a law,  authorized the
payment of a dividend or approved a stock  repurchase  in  violation of Delaware
corporate law


                                 II-1

<PAGE>



or obtained an improper  personal  benefit.  The Company's  Amended and Restated
Certificate  of   Incorporation   contains  a  provision  which,  in  substance,
eliminates directors' personal liability as set forth above.

          Section  145 of the  DGCL  provides  that  a  corporation  may
indemnify  any person who was or is a party or is  threatened to be made a party
to any  threatened,  pending or completed  action,  suit or proceeding,  whether
civil, criminal,  administrative or investigative, by reason of the fact that he
is or was a director, officer, employee or agent of the corporation or is or was
serving at its  request in such  capacity  in another  corporation  or  business
association against expenses (including attorneys' fees),  judgments,  fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action,  suit or  proceeding if he acted in good faith and in a manner
he  reasonably  believed  to be in or not opposed to the best  interests  of the
corporation  and,  with respect to any  criminal  action or  proceeding,  had no
reasonable cause to believe his conduct was unlawful.  The Company's Amended and
Restated Certificate of Incorporation  contains a provision which, in substance,
provides for indemnification as set forth above.

ITEM 7.   EXEMPTION FROM REGISTRATION CLAIMED.

          Not applicable.

<TABLE>

ITEM 8.   EXHIBITS.

<CAPTION>
<S>       <C>    

4.1       Amended and Restated  Certificate of  Incorporation  of the Registrant
          (incorporated by reference to the Company's  registration statement on
          Form 10 as filed with the Commission on January 4, 1996).

4.2       Form of Amended and Restated Bylaws of the Registrant  incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.3       Form of Stock  Certificate of Common Stock  (incorporated by reference
          to the Company's  registration  statement on Form 10 as filed with the
          Commission on January 4, 1996).

4.4       Form of 10% Convertible  Subordinated Debentures Due December 31, 2005
          (incorporated by reference to the Company's  registration statement on
          Form 10 as filed with the Commission on January 4, 1996).

4.5       Form of Common Stock Subscription  Warrant,  Series A (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).


                                      II-2

<PAGE>



4.6       Form of Common stock Subscription  Warrant,  Series B (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.7       Form of 10% Convertible Subordinated Debentures Due December 31, 2005,
          Series 2  (incorporated  by  reference to the  Company's  registration
          statement on Form 10 as filed with the Commission on January 4, 1996).

4.8       Form of Common Stock Subscription Warrant, Series A-2 (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.9       Form of Common Stock Subscription Warrant, Series B-2 (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.10      Stockholders   Agreement  among  Highlands   Insurance  Group,   Inc.,
          Insurance Partners,  L.P., Insurance Partners Offshore (Bermuda) L.P.,
          The  Scandinavia  Company,  Inc.,  Erik  M.  Vik  and  Manoeuvre  Ltd.
          (incorporated  by reference to the  Company's  current  report on Form
          8-K/A dated April 30, 1997, Commission File Number 1-14028).

4.11      Form of Amendment Number 1 to 10% Convertible  Subordinated Debenture,
          Due December 31, 2005 of Highlands Insurance Group, Inc. (incorporated
          by reference to the Company's  current report on Form 8-K, as amended,
          dated April 30, 1997 as filed with the Commission).

4.12      Form of Amendment Number 1 to 10% Convertible  Subordinated Debenture,
          Series 2, Due  December 31, 2005 of Highlands  Insurance  Group,  Inc.
          (incorporated  by reference to the  Company's  current  report on Form
          8-K, as amended, dated April 30, 1997 as filed with the Commission).

4.13      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series A (incorporated by reference to the Company's current report on
          Form  8-K,  as  amended,  dated  April  30,  1997 as  filed  with  the
          Commission).

4.14      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series B (incorporated by reference to the Company's


                                      II-3

<PAGE>



          current report on Form 8-K, as amended, dated April 30, 1997 as filed 
          with the Commission).

4.15      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series A-2  (incorporated by reference to the Company's current report
          on Form  8-K,  as  amended,  dated  April 30,  1997 as filed  with the
          Commission).

4.16      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series B-2  (incorporated by reference to the Company's current report
          on Form  8-K,  as  amended,  dated  April 30,  1997 as filed  with the
          Commission).

5.1       Opinion and consent of Schnader Harrison Segal & Lewis LLP.

23.1      Consent of KPMG Peat Marwick LLP.

23.2      Consent of Arthur Andersen LLP

23.3      Consent of Schnader  Harrison  Segal & Lewis LLP  (included in Exhibit
          5.1).

24.1      Powers of Attorney of directors  and officers of the  registrant  (see
          page II-5 of this Registration Statement).

99.1      Highlands Insurance Group, Inc. Employee Stock Purchase Plan.

99.2      Highlands  Insurance  Group,  Inc.  Employees'  Retirement and Savings
          Plan.

</TABLE>


                                      II-4

<PAGE>


ITEM 9.   UNDERTAKINGS.

          (a)  The undersigned registrant hereby undertakes:

               (1)  To file, during any period in which offers or sales are
                    being made, a post-effective amendment to this Registration 
                    Statement;

                    (i)  To include any prospectus required by Section 10(a)(3)
                         of the Securities Act;

                   (ii)  To  reflect in the  prospectus  any facts or events  
                         arising after the effective  date of the  Registration
                         Statement (or the most recent post-effective amendment
                         thereof) which, individually or in the aggregate,
                         represent a fundamental change in the information set  
                         forth in the  Registration Statement;

                   (iii) To include any material information with respect to
                         the plan of distribution not previously disclosed in  
                         the Registration Statement or any material change to 
                         such information in the Registration Statement;

                  provided,  however, that paragraph (a)(1)(i) and (a)(1)(ii) do
                  not apply if the  information  required  to be  included  in a
                  post-effective   amendment  by  the  foregoing  paragraphs  is
                  contained in periodic reports filed by the Company pursuant to
                  Section  13 or  Section  15(d)  of the  Exchange  Act that are
                  incorporated by reference in the Registration Statement.

               (2)  That, for the purpose of determining any liability under the
                    Securities Act, each such post-effective  amendment shall be
                    deemed to be a new  Registration  Statement  relating to the
                    securities  offered  therein,   and  the  offering  of  such
                    securities  at that time  shall be deemed to be the  initial
                    bona fide offering thereof.

               (3)  To remove  from  registration  by means of a  post-effective
                    amendment  any  of the  securities  being  registered  which
                    remain unsold at the termination of the offering.

          (b)  The undersigned  registrant  hereby undertakes that, for purposes
               of  determining  any  liability  under the  Securities  Act, each
               filing of the  registrant's  annual  report  pursuant  to Section
               13(a) or Section  15(d) of the Exchange Act that is  incorporated
               by reference in the Registration  Statement shall be deemed to be
               a new Registration  Statement  relating to the securities offered
               therein,  and the offering of such  securities at that time shall
               be deemed to be the initial bona fide offering thereof.


                                      II-5

<PAGE>



          (c)  Insofar as  indemnification  for  liabilities  arising  under the
               Securities  Act  may be  permitted  to  directors,  officers  and
               controlling  persons of the registrant  pursuant to the foregoing
               provisions, or otherwise, the registrant has been advised that in
               the  opinion  of the  Securities  and  Exchange  Commission  such
               indemnification  is against  public  policy as  expressed  in the
               Securities  Act and is,  therefore,  unenforceable.  In the event
               that a claim for indemnification  against such liabilities (other
               than the payment by the  registrant of expenses  incurred or paid
               by a director, officer or controlling person of the registrant in
               the  successful  defense of any action,  suit or  proceeding)  is
               asserted  by such  director,  officer  or  controlling  person in
               connection with the securities being  registered,  the registrant
               will,  unless in the  opinion of its  counsel the matter has been
               settled  by   controlling   precedent,   submit  to  a  court  of
               appropriate    jurisdiction    the    question    whether    such
               indemnification  by it is against  public  policy as expressed in
               the Securities Act and will be governed by the final adjudication
               of such issue.

                                POWER OF ATTORNEY


          The  registrant and each person whose  signature  appears below hereby
designates and appoints  Richard M.  Haverland,  Charles J. Bachand,  Stephen J.
Greenberg  and  Stephen  L.  Kibblehouse,  and  each  of  them,  as  its  or his
attorneys-in-fact (the "Attorneys-in-Fact") with full power to act alone, and to
execute  in the name and on  behalf  of the  Registrant  and each  such  person,
individually  in each capacity stated below,  one or more amendments  (including
post-effective  amendments)  to this  Registration  Statement on Form S-8, which
amendments may make such changes in this  Registration  Statement on Form S-8 as
any such Attorney-in-Fact deems appropriate,  and to file each such amendment to
this  Registration  Statement on Form S-8 together with all exhibits thereto and
any and all documents in connection therewith.



                                      II-6

<PAGE>



                                   SIGNATURES


          Pursuant  to the  requirements  of the  Securities  Act of  1933,  the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-8 and has duly caused this  Registration
Statement on Form S-8 to be signed on its behalf by the  undersigned,  thereunto
duly authorized, in the City of Houston, State of Texas.




Dated:   May 29, 1998

                                            Highlands Insurance Group, Inc.




                                            By:  /s/Richard M. Haverland
                                                    Richard M. Haverland,
                                                    Chairman, President and
                                                    Chief Executive Officer





                                      II-7

<PAGE>



          Pursuant  to the  requirements  of the  Securities  Act of 1933,  this
Registration  Statement  on Form S-8 has  been  signed  below  by the  following
persons  on  behalf of the  Registrant  and in the  capacities  and on the dates
indicated.


<TABLE>

    SIGNATURE                           TITLE                                   DATE
    ---------                           -----                                   ----
<CAPTION>
<S>                                     <C>                                     <C>    

/s/ Richard M. Haverland                Chairman, President and                 May 29, 1998
----------------------------
   Richard M. Haverland                 Chief Executive Officer
/s/ Charles J. Bachand                  Vice President, Treasurer               May 29, 1998
-------------------------------
   Charles J. Bachand                   Principal Accounting Officer
/s/ Robert A. Spass                     Director                                May 29, 1998
--------------------------------
   Robert A. Spass
/s/ Bradley E. Cooper                   Director                                May 29, 1998
------------------------------
   Bradley E. Cooper
/s/ W. Bernard Pieper                   Director                                May 29, 1998
------------------------------
   W. Bernard Pieper
/s/ Kenneth S. Crews                    Director                                May 29, 1998
------------------------------
   Kenneth S. Crews
/s/ Philip J. Hawk                      Director                                May 29, 1998
--------------------------------
   Philip J. Hawk
/s/ Robert W. Shower                    Director                                May 29, 1998
-----------------------------
   Robert W. Shower

</TABLE>


                                                                                

                                      II-8

<PAGE>

<TABLE>
                    EXHIBIT INDEX
<CAPTION>
<S>       <C>


4.1       Amended and Restated  Certificate of  Incorporation  of the Registrant
          (incorporated by reference to the Company's  registration statement on
          Form 10 as filed with the Commission on January 4, 1996).

4.2       Form of Amended and Restated Bylaws of the Registrant  incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.3       Form of Stock  Certificate of Common Stock  (incorporated by reference
          to the Company's  registration  statement on Form 10 as filed with the
          Commission on January 4, 1996).

4.4       Form of 10% Convertible  Subordinated Debentures Due December 31, 2005
          (incorporated by reference to the Company's  registration statement on
          Form 10 as filed with the Commission on January 4, 1996).

4.5       Form of Common Stock Subscription  Warrant,  Series A (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.6       Form of Common stock Subscription  Warrant,  Series B (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.7       Form of 10% Convertible Subordinated Debentures Due December 31, 2005,
          Series 2  (incorporated  by  reference to the  Company's  registration
          statement on Form 10 as filed with the Commission on January 4, 1996).

4.8       Form of Common Stock Subscription Warrant, Series A-2 (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.9       Form of Common Stock Subscription Warrant, Series B-2 (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.10      Stockholders   Agreement  among  Highlands   Insurance  Group,   Inc.,
          Insurance Partners,  L.P., Insurance Partners Offshore (Bermuda) L.P.,
          The  Scandinavia  Company,  Inc.,  Erik  M.  Vik  and  Manoeuvre  Ltd.
          (incorporated by reference to the Company's current report on


                                      II-9

<PAGE>



          Form  8-K/A  dated  April 30,  1997,  Commission  File  Number
          1-14028).

4.11      Form of Amendment Number 1 to 10% Convertible  Subordinated Debenture,
          Due December 31, 2005 of Highlands Insurance Group, Inc. (incorporated
          by reference to the Company's  current report on Form 8-K, as amended,
          dated April 30, 1997 as filed with the Commission).

4.12      Form of Amendment Number 1 to 10% Convertible  Subordinated Debenture,
          Series 2, Due  December 31, 2005 of Highlands  Insurance  Group,  Inc.
          (incorporated  by reference to the  Company's  current  report on Form
          8-K, as amended, dated April 30, 1997 as filed with the Commission).

4.13      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series A (incorporated by reference to the Company's current report on
          Form  8-K,  as  amended,  dated  April  30,  1997 as  filed  with  the
          Commission).

4.14      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series B (incorporated by reference to the Company's current report on
          Form  8-K,  as  amended,  dated  April  30,  1997 as  filed  with  the
          Commission).

4.15      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series A-2  (incorporated by reference to the Company's current report
          on Form  8-K,  as  amended,  dated  April 30,  1997 as filed  with the
          Commission).

4.16      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series B-2  (incorporated by reference to the Company's current report
          on Form  8-K,  as  amended,  dated  April 30,  1997 as filed  with the
          Commission).

5.1       Opinion and consent of Schnader Harrison Segal & Lewis LLP.

23.1      Consent of KPMG Peat Marwick LLP.

23.2      Consent of Arthur Andersen LLP

23.3      Consent of Schnader  Harrison  Segal & Lewis LLP  (included in Exhibit
          5.1).


                                      II-10

<PAGE>



24.1      Powers of Attorney of directors  and officers of the  registrant  (see
          page II-5 of this Registration Statement).

99.1      Highlands Insurance Group, Inc. Employee Stock Purchase Plan.

99.2      Highlands  Insurance  Group,  Inc.  Employees'  Retirement and Savings
          Plan.

</TABLE>
                                      II-11
<PAGE>
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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 1, 1998

                           REGISTRATION NO. 333-_____
-------------------------------------------------------------------------------

                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                               ------------------

                                    FORM S-8
                             REGISTRATION STATEMENT
                                      Under
                           THE SECURITIES ACT OF 1933

                               ------------------

                         HIGHLANDS INSURANCE GROUP, INC.

             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

                               ------------------

                               DELAWARE 75-2370945
     (State or Other Jurisdiction of (I.R.S. Employer Identification Number)
                         Incorporation or Organization)

                           STEPHEN J. GREENBERG, ESQ.
                  VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
                         HIGHLANDS INSURANCE GROUP, INC.
                                1000 LENOX DRIVE
                         LAWRENCEVILLE, NEW JERSEY 08648
                                 (609) 896-1921
  (Address, including ZIP code, and telephone number, including area code, of
                   registrant's principal executive offices)

          HIGHLANDS INSURANCE GROUP, INC. EMPLOYEE STOCK PURCHASE PLAN

     HIGHLANDS INSURANCE GROUP, INC. EMPLOYEES' RETIREMENT AND SAVINGS PLAN
                             (Full Titles of Plans)

                           STEPHEN J. GREENBERG, ESQ.
                  VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY
                         HIGHLANDS INSURANCE GROUP, INC.
                                1000 LENOX DRIVE
                         LAWRENCEVILLE, NEW JERSEY 08648
                                 (609) 896-1921
    (Name, address, including ZIP code, and telephone number, including area
                          code, of agent for service)

                               ------------------

                                   Copies to:

                             ALAN H. LIEBLICH, ESQ.
                       SCHNADER HARRISON SEGAL & LEWIS LLP
                               1600 MARKET STREET
                                   SUITE 3600
                             PHILADELPHIA, PA 19103
                                 (215) 751-2048
CALCULATION OF REGISTRATION FEE
Proposed
                                                                 Maximum             Maximum               Amount of
     Title of Securities to Be           Amount to Be        Offering Price     Aggregate Offering       Registration
            Registered                  Registered(1)         per Share(2)          Price(2)                 Fee
-----------------------------------  -------------------- -------------------- ------------------------ -------------------
Common Stock, par value $.01
per share.......                        500,000               $20.000                $10,000,000           $2,950
(1)      In addition,  pursuant to Rule 416(c) under the Securities Act of 1933,
         as amended,  this  registration  statement also covers an indeterminate
         amount  of  plan  interests  to be  offered  or  sold  pursuant  to the
         Employees'  Retirement  and  Savings  Plan to which  this  registration
         statement relates.

(2)      Estimated  upon the basis of the  average of the high and low prices of
         the Common  Stock on the New York Stock  Exchange on May 28 1998 solely
         for  purposes of  calculating  the  registration  fee  pursuant to Rule
         457(h) of the Securities Act of 1933, as amended.
PART II

               INFORMATION REQUIRED IN THE REGISTRATION STATEMENT

ITEM 3.   INCORPORATION OF DOCUMENTS BY REFERENCE.

     The following documents filed with the Commission by Highlands
Insurance Group, Inc. (the "Company") are incorporated herein by reference:

          (a)  The Company's Annual Report on Form 10-K for the year ended
December 31, 1997.

          (b)  The Company's Quarterly Report on Form 10-Q for the quarter
ended March 31, 1998.

          (c)  The  description  of the  Common  Stock  contained  in the
Company's Registration  Statement on Form 10 filed on October 27, 1995, as such
Registration Statement  may be  amended  from  time to  time  for  purposes  of
updating, changing or modifying such description.

     All  documents  subsequently  filed  by the  Company  with the
Commission  pursuant to Sections  13(a),  13(c),  14 and 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"),  prior to the filing of a
post-effective amendment to this Registration Statement which indicates that all
securities  offered  have  been  sold or which  registers  all  securities  then
remaining  unsold,  shall be  deemed to be  incorporated  by  reference  in this
Registration  Statement  and to be a part  hereof  from the  respective  date of
filing of each such document.

ITEM 4.   DESCRIPTION OF SECURITIES.

          Not applicable.

ITEM 5.   INTERESTS OF NAMED EXPERTS AND COUNSEL.

          Not applicable.

ITEM 6.   INDEMNIFICATION OF DIRECTORS AND OFFICERS.

          Section  102 of the  Delaware  General  Corporation  Law  (the
"DGCL") allows a corporation to eliminate the personal liability of directors of
a corporation  to the  corporation  or to any of its  stockholders  for monetary
damage  for a breach of his  fiduciary  duty as a  director,  except in the case
where the director  breached  his duty of loyalty,  failed to act in good faith,
engaged in intentional  misconduct or knowingly  violated a law,  authorized the
payment of a dividend or approved a stock  repurchase  in  violation of Delaware
corporate law

                                 II-1
or obtained an improper  personal  benefit.  The Company's  Amended and Restated
Certificate  of   Incorporation   contains  a  provision  which,  in  substance,
eliminates directors' personal liability as set forth above.

          Section  145 of the  DGCL  provides  that  a  corporation  may
indemnify  any person who was or is a party or is  threatened to be made a party
to any  threatened,  pending or completed  action,  suit or proceeding,  whether
civil, criminal,  administrative or investigative, by reason of the fact that he
is or was a director, officer, employee or agent of the corporation or is or was
serving at its  request in such  capacity  in another  corporation  or  business
association against expenses (including attorneys' fees),  judgments,  fines and
amounts paid in settlement actually and reasonably incurred by him in connection
with such action,  suit or  proceeding if he acted in good faith and in a manner
he  reasonably  believed  to be in or not opposed to the best  interests  of the
corporation  and,  with respect to any  criminal  action or  proceeding,  had no
reasonable cause to believe his conduct was unlawful.  The Company's Amended and
Restated Certificate of Incorporation  contains a provision which, in substance,
provides for indemnification as set forth above.

ITEM 7.   EXEMPTION FROM REGISTRATION CLAIMED.

          Not applicable.

ITEM 8.   EXHIBITS.
4.1       Amended and Restated  Certificate of  Incorporation  of the Registrant
          (incorporated by reference to the Company's  registration statement on
          Form 10 as filed with the Commission on January 4, 1996).

4.2       Form of Amended and Restated Bylaws of the Registrant  incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.3       Form of Stock  Certificate of Common Stock  (incorporated by reference
          to the Company's  registration  statement on Form 10 as filed with the
          Commission on January 4, 1996).

4.4       Form of 10% Convertible  Subordinated Debentures Due December 31, 2005
          (incorporated by reference to the Company's  registration statement on
          Form 10 as filed with the Commission on January 4, 1996).

4.5       Form of Common Stock Subscription  Warrant,  Series A (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

                                      II-2
4.6       Form of Common stock Subscription  Warrant,  Series B (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.7       Form of 10% Convertible Subordinated Debentures Due December 31, 2005,
          Series 2  (incorporated  by  reference to the  Company's  registration
          statement on Form 10 as filed with the Commission on January 4, 1996).

4.8       Form of Common Stock Subscription Warrant, Series A-2 (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.9       Form of Common Stock Subscription Warrant, Series B-2 (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.10      Stockholders   Agreement  among  Highlands   Insurance  Group,   Inc.,
          Insurance Partners,  L.P., Insurance Partners Offshore (Bermuda) L.P.,
          The  Scandinavia  Company,  Inc.,  Erik  M.  Vik  and  Manoeuvre  Ltd.
          (incorporated  by reference to the  Company's  current  report on Form
          8-K/A dated April 30, 1997, Commission File Number 1-14028).

4.11      Form of Amendment Number 1 to 10% Convertible  Subordinated Debenture,
          Due December 31, 2005 of Highlands Insurance Group, Inc. (incorporated
          by reference to the Company's  current report on Form 8-K, as amended,
          dated April 30, 1997 as filed with the Commission).

4.12      Form of Amendment Number 1 to 10% Convertible  Subordinated Debenture,
          Series 2, Due  December 31, 2005 of Highlands  Insurance  Group,  Inc.
          (incorporated  by reference to the  Company's  current  report on Form
          8-K, as amended, dated April 30, 1997 as filed with the Commission).

4.13      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series A (incorporated by reference to the Company's current report on
          Form  8-K,  as  amended,  dated  April  30,  1997 as  filed  with  the
          Commission).

4.14      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series B (incorporated by reference to the Company's

                                      II-3
current report on Form 8-K, as amended, dated April 30, 1997 as filed 
          with the Commission).

4.15      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series A-2  (incorporated by reference to the Company's current report
          on Form  8-K,  as  amended,  dated  April 30,  1997 as filed  with the
          Commission).

4.16      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series B-2  (incorporated by reference to the Company's current report
          on Form  8-K,  as  amended,  dated  April 30,  1997 as filed  with the
          Commission).

5.1       Opinion and consent of Schnader Harrison Segal & Lewis LLP.

23.1      Consent of KPMG Peat Marwick LLP.

23.2      Consent of Arthur Andersen LLP

23.3      Consent of Schnader  Harrison  Segal & Lewis LLP  (included in Exhibit
          5.1).

24.1      Powers of Attorney of directors  and officers of the  registrant  (see
          page II-5 of this Registration Statement).

99.1      Highlands Insurance Group, Inc. Employee Stock Purchase Plan.

99.2      Highlands  Insurance  Group,  Inc.  Employees'  Retirement and Savings
          Plan.
II-4
ITEM 9.   UNDERTAKINGS.

          (a)  The undersigned registrant hereby undertakes:

               (1)  To file, during any period in which offers or sales are
                    being made, a post-effective amendment to this Registration 
                    Statement;

                    (i)  To include any prospectus required by Section 10(a)(3)
                         of the Securities Act;

                   (ii)  To  reflect in the  prospectus  any facts or events  
                         arising after the effective  date of the  Registration
                         Statement (or the most recent post-effective amendment
                         thereof) which, individually or in the aggregate,
                         represent a fundamental change in the information set  
                         forth in the  Registration Statement;

                   (iii) To include any material information with respect to
                         the plan of distribution not previously disclosed in  
                         the Registration Statement or any material change to 
                         such information in the Registration Statement;

                  provided,  however, that paragraph (a)(1)(i) and (a)(1)(ii) do
                  not apply if the  information  required  to be  included  in a
                  post-effective   amendment  by  the  foregoing  paragraphs  is
                  contained in periodic reports filed by the Company pursuant to
                  Section  13 or  Section  15(d)  of the  Exchange  Act that are
                  incorporated by reference in the Registration Statement.

               (2)  That, for the purpose of determining any liability under the
                    Securities Act, each such post-effective  amendment shall be
                    deemed to be a new  Registration  Statement  relating to the
                    securities  offered  therein,   and  the  offering  of  such
                    securities  at that time  shall be deemed to be the  initial
                    bona fide offering thereof.

               (3)  To remove  from  registration  by means of a  post-effective
                    amendment  any  of the  securities  being  registered  which
                    remain unsold at the termination of the offering.

          (b)  The undersigned  registrant  hereby undertakes that, for purposes
               of  determining  any  liability  under the  Securities  Act, each
               filing of the  registrant's  annual  report  pursuant  to Section
               13(a) or Section  15(d) of the Exchange Act that is  incorporated
               by reference in the Registration  Statement shall be deemed to be
               a new Registration  Statement  relating to the securities offered
               therein,  and the offering of such  securities at that time shall
               be deemed to be the initial bona fide offering thereof.

                                      II-5
(c)  Insofar as  indemnification  for  liabilities  arising  under the
               Securities  Act  may be  permitted  to  directors,  officers  and
               controlling  persons of the registrant  pursuant to the foregoing
               provisions, or otherwise, the registrant has been advised that in
               the  opinion  of the  Securities  and  Exchange  Commission  such
               indemnification  is against  public  policy as  expressed  in the
               Securities  Act and is,  therefore,  unenforceable.  In the event
               that a claim for indemnification  against such liabilities (other
               than the payment by the  registrant of expenses  incurred or paid
               by a director, officer or controlling person of the registrant in
               the  successful  defense of any action,  suit or  proceeding)  is
               asserted  by such  director,  officer  or  controlling  person in
               connection with the securities being  registered,  the registrant
               will,  unless in the  opinion of its  counsel the matter has been
               settled  by   controlling   precedent,   submit  to  a  court  of
               appropriate    jurisdiction    the    question    whether    such
               indemnification  by it is against  public  policy as expressed in
               the Securities Act and will be governed by the final adjudication
               of such issue.

                                POWER OF ATTORNEY

          The  registrant and each person whose  signature  appears below hereby
designates and appoints  Richard M.  Haverland,  Charles J. Bachand,  Stephen J.
Greenberg  and  Stephen  L.  Kibblehouse,  and  each  of  them,  as  its  or his
attorneys-in-fact (the "Attorneys-in-Fact") with full power to act alone, and to
execute  in the name and on  behalf  of the  Registrant  and each  such  person,
individually  in each capacity stated below,  one or more amendments  (including
post-effective  amendments)  to this  Registration  Statement on Form S-8, which
amendments may make such changes in this  Registration  Statement on Form S-8 as
any such Attorney-in-Fact deems appropriate,  and to file each such amendment to
this  Registration  Statement on Form S-8 together with all exhibits thereto and
any and all documents in connection therewith.

                                      II-6
SIGNATURES

          Pursuant  to the  requirements  of the  Securities  Act of  1933,  the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements of filing on Form S-8 and has duly caused this  Registration
Statement on Form S-8 to be signed on its behalf by the  undersigned,  thereunto
duly authorized, in the City of Houston, State of Texas.

Dated:   May 29, 1998

                                            Highlands Insurance Group, Inc.

                                            By:  /s/Richard M. Haverland
                                                    Richard M. Haverland,
                                                    Chairman, President and
                                                    Chief Executive Officer

                                      II-7
Pursuant  to the  requirements  of the  Securities  Act of 1933,  this
Registration  Statement  on Form S-8 has  been  signed  below  by the  following
persons  on  behalf of the  Registrant  and in the  capacities  and on the dates
indicated.

    SIGNATURE                           TITLE                                   DATE
    ---------                           -----                                   ----
/s/ Richard M. Haverland                Chairman, President and                 May 29, 1998
----------------------------
   Richard M. Haverland                 Chief Executive Officer
/s/ Charles J. Bachand                  Vice President, Treasurer               May 29, 1998
-------------------------------
   Charles J. Bachand                   Principal Accounting Officer
/s/ Robert A. Spass                     Director                                May 29, 1998
--------------------------------
   Robert A. Spass
/s/ Bradley E. Cooper                   Director                                May 29, 1998
------------------------------
   Bradley E. Cooper
/s/ W. Bernard Pieper                   Director                                May 29, 1998
------------------------------
   W. Bernard Pieper
/s/ Kenneth S. Crews                    Director                                May 29, 1998
------------------------------
   Kenneth S. Crews
/s/ Philip J. Hawk                      Director                                May 29, 1998
--------------------------------
   Philip J. Hawk
/s/ Robert W. Shower                    Director                                May 29, 1998
-----------------------------
   Robert W. Shower
II-8
EXHIBIT INDEX
4.1       Amended and Restated  Certificate of  Incorporation  of the Registrant
          (incorporated by reference to the Company's  registration statement on
          Form 10 as filed with the Commission on January 4, 1996).

4.2       Form of Amended and Restated Bylaws of the Registrant  incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.3       Form of Stock  Certificate of Common Stock  (incorporated by reference
          to the Company's  registration  statement on Form 10 as filed with the
          Commission on January 4, 1996).

4.4       Form of 10% Convertible  Subordinated Debentures Due December 31, 2005
          (incorporated by reference to the Company's  registration statement on
          Form 10 as filed with the Commission on January 4, 1996).

4.5       Form of Common Stock Subscription  Warrant,  Series A (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.6       Form of Common stock Subscription  Warrant,  Series B (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.7       Form of 10% Convertible Subordinated Debentures Due December 31, 2005,
          Series 2  (incorporated  by  reference to the  Company's  registration
          statement on Form 10 as filed with the Commission on January 4, 1996).

4.8       Form of Common Stock Subscription Warrant, Series A-2 (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.9       Form of Common Stock Subscription Warrant, Series B-2 (incorporated by
          reference to the Company's  registration statement on Form 10 as filed
          with the Commission on January 4, 1996).

4.10      Stockholders   Agreement  among  Highlands   Insurance  Group,   Inc.,
          Insurance Partners,  L.P., Insurance Partners Offshore (Bermuda) L.P.,
          The  Scandinavia  Company,  Inc.,  Erik  M.  Vik  and  Manoeuvre  Ltd.
          (incorporated by reference to the Company's current report on

                                      II-9
Form  8-K/A  dated  April 30,  1997,  Commission  File  Number
          1-14028).

4.11      Form of Amendment Number 1 to 10% Convertible  Subordinated Debenture,
          Due December 31, 2005 of Highlands Insurance Group, Inc. (incorporated
          by reference to the Company's  current report on Form 8-K, as amended,
          dated April 30, 1997 as filed with the Commission).

4.12      Form of Amendment Number 1 to 10% Convertible  Subordinated Debenture,
          Series 2, Due  December 31, 2005 of Highlands  Insurance  Group,  Inc.
          (incorporated  by reference to the  Company's  current  report on Form
          8-K, as amended, dated April 30, 1997 as filed with the Commission).

4.13      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series A (incorporated by reference to the Company's current report on
          Form  8-K,  as  amended,  dated  April  30,  1997 as  filed  with  the
          Commission).

4.14      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series B (incorporated by reference to the Company's current report on
          Form  8-K,  as  amended,  dated  April  30,  1997 as  filed  with  the
          Commission).

4.15      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series A-2  (incorporated by reference to the Company's current report
          on Form  8-K,  as  amended,  dated  April 30,  1997 as filed  with the
          Commission).

4.16      Form of  Amendment  Number 1 to  Common  Stock  Subscription  Warrant,
          Series B-2  (incorporated by reference to the Company's current report
          on Form  8-K,  as  amended,  dated  April 30,  1997 as filed  with the
          Commission).

5.1       Opinion and consent of Schnader Harrison Segal & Lewis LLP.

23.1      Consent of KPMG Peat Marwick LLP.

23.2      Consent of Arthur Andersen LLP

23.3      Consent of Schnader  Harrison  Segal & Lewis LLP  (included in Exhibit
          5.1).

                                      II-10
24.1      Powers of Attorney of directors  and officers of the  registrant  (see
          page II-5 of this Registration Statement).

99.1      Highlands Insurance Group, Inc. Employee Stock Purchase Plan.

99.2      Highlands  Insurance  Group,  Inc.  Employees'  Retirement and Savings
          Plan.
II-11